§ 1961. — Eligibility for loans.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 7USC1961]
TITLE 7--AGRICULTURE
CHAPTER 50--AGRICULTURAL CREDIT
SUBCHAPTER III--EMERGENCY LOANS
Sec. 1961. Eligibility for loans
(a) Persons eligible
The Secretary shall make and insure loans under this subchapter only
to the extent and in such amounts as provided in advance in
appropriation Acts to (1) established farmers, ranchers, or persons
engaged in aquaculture, who are citizens of the United States and who
are owner-operators (in the case of loans for a purpose under subchapter
I of this chapter) or operators (in the case of loans for a purpose
under subchapter II of this chapter) of not larger than family farms,
and (2) farm cooperatives, private domestic corporations, partnerships,
joint operations, trusts, or limited liability companies (A) that are
engaged primarily in farming, ranching, or aquaculture, and (B) in which
a majority interest is held by individuals who are citizens of the
United States and who are owner-operators (in the case of loans for a
purpose under subchapter I of this chapter) or operators (in the case of
loans for a purpose under subchapter II of this chapter) of not larger
than family farms (or in the case of such cooperatives, corporations,
partnerships, joint operations, trusts, or limited liability companies
in which a majority interest is held by individuals who are related by
blood or marriage, as defined by the Secretary, such individuals must be
either owners or operators of not larger than a family farm and at least
one such individual must be an operator of not larger than a family
farm), where the Secretary finds that the applicants' farming, ranching,
or aquaculture operations have been substantially affected by a
quarantine imposed by the Secretary under the Plant Protection Act [7
U.S.C. 7701] or the animal quarantine laws (as defined in section 136a
of title 21), a natural disaster in the United States, or a major
disaster or emergency designated by the President under the Robert T.
Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et
seq.): Provided, That they have experience and resources necessary to
assure a reasonable prospect for successful operation with the
assistance of such loan and are not able to obtain sufficient credit
elsewhere. In addition to the foregoing requirements of this subsection,
in the case of farm cooperatives, private domestic corporations,
partnerships, joint operations, trusts, and limited liability companies,
the family farm requirement of the preceding sentence shall apply as
well to all farms in which the entity has an ownership and operator
interest (in the case of loans for a purpose under subchapter I of this
chapter) or an operator interest (in the case of loans for a purpose
under subchapter II of this chapter). The Secretary shall accept
applications from, and make or insure loans pursuant to the requirements
of this subchapter to, applicants, otherwise eligible under this
subchapter, that conduct farming, ranching, or aquaculture operations in
any county contiguous to a county where the Secretary has found that
farming, ranching, or aquaculture operations have been substantially
affected by a quarantine imposed by the Secretary under the Plant
Protection Act [7 U.S.C. 7701] or the animal quarantine laws (as defined
in section 136a of title 21), a natural disaster in the United States,
or a major disaster or emergency designated by the President under the
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42
U.S.C. 5121 et seq.). The Secretary shall accept applications for
assistance under this subchapter from persons affected by such a
quarantine or natural disaster at any time during the eight-month period
beginning (A) on the date on which the Secretary determines that
farming, ranching, or aquaculture operations have been substantially
affected by such quarantine or natural disaster or (B) on the date the
President makes the major disaster or emergency designation with respect
to such natural disaster, as the case may be.
(b) Hazard insurance requirement
(1) In general
After the Secretary makes the determination required by
paragraph (2), the Secretary may not make a loan to a farmer or
rancher under this subchapter to cover a property loss unless the
farmer or rancher had hazard insurance that insured the property at
the time of the loss.
(2) Determination
Not later than 180 days after April 4, 1996, the Secretary shall
determine the appropriate level of insurance to be required under
paragraph (1).
(3) Loans to poultry farmers
(A) Inability to obtain insurance
(i) In general
Notwithstanding any other provision of this subchapter,
the Secretary may make a loan to a poultry farmer under this
subchapter to cover the loss of a chicken house for which
the farmer did not have hazard insurance at the time of the
loss, if the farmer--
(I) applied for, but was unable, to obtain hazard
insurance for the chicken house;
(II) uses the loan to rebuild the chicken house in
accordance with industry standards in effect on the date
the farmer submits an application for the loan (referred
to in this paragraph as ``current industry standards'');
(III) obtains, for the term of the loan, hazard
insurance for the full market value of the chicken
house; and
(IV) meets the other requirements for the loan under
this subchapter.
(ii) Amount
Subject to the limitation contained in section
1964(a)(2) of this title, the amount of a loan made to a
poultry farmer under clause (i) shall be an amount that will
allow the farmer to rebuild the chicken house in accordance
with current industry standards.
(B) Loans to comply with current industry standards
(i) In general
Notwithstanding any other provision of this subchapter,
the Secretary may make a loan to a poultry farmer under this
subchapter to cover the loss of a chicken house for which
the farmer had hazard insurance at the time of the loss,
if--
(I) the amount of the hazard insurance is less than
the cost of rebuilding the chicken house in accordance
with current industry standards;
(II) the farmer uses the loan to rebuild the chicken
house in accordance with current industry standards;
(III) the farmer obtains, for the term of the loan,
hazard insurance for the full market value of the
chicken house; and
(IV) the farmer meets the other requirements for the
loan under this subchapter.
(ii) Amount
Subject to the limitation contained in section
1964(a)(2) of this title, the amount of a loan made to a
poultry farmer under clause (i) shall be the difference
between--
(I) the amount of the hazard insurance obtained by
the farmer; and
(II) the cost of rebuilding the chicken house in
accordance with current industry standards.
(c) Family farm system
The Secretary shall conduct the emergency loan program under this
subchapter in a manner that will foster and encourage the family farm
system of agriculture, consistent with the reaffirmation of policy and
declaration of the intent of Congress contained in section 2266(a) of
this title.
(d) Definitions
For the purposes of this subchapter--
(1) ``aquaculture'' means the husbandry of aquatic organisms
under a controlled or selected environment; and
(2) ``able to obtain sufficient credit elsewhere'' means able to
obtain sufficient credit elsewhere to finance the applicant's actual
needs at reasonable rates and terms, taking into consideration
prevailing private and cooperative rates and terms in the community
in or near which the applicant resides for loans for similar
purposes and periods of time.
(Pub. L. 87-128, title III, Sec. 321, Aug. 8, 1961, 75 Stat. 311; Pub.
L. 87-832, Oct. 15, 1962, 76 Stat. 958; Pub. L. 93-24, Secs. 2, 3, 6,
Apr. 20, 1973, 87 Stat. 24, 25; Pub. L. 93-237, Sec. 10(a), (d), Jan. 2,
1974, 87 Stat. 1025; Pub. L. 94-68, Secs. 2, 3, Aug. 5, 1975, 89 Stat.
381; Pub. L. 95-334, title I, Sec. 118, Aug. 4, 1978, 92 Stat. 426; Pub.
L. 96-302, title I, Sec. 120(a), July 2, 1980, 94 Stat. 841; Pub. L. 96-
438, Sec. 3(a), (b)(1), Oct. 13, 1980, 94 Stat. 1872; Pub. L. 97-35,
title I, Sec. 161, Aug. 13, 1981, 95 Stat. 378; Pub. L. 98-258, title
VI, Sec. 602(a), Apr. 10, 1984, 98 Stat. 138; Pub. L. 99-198, title
XIII, Sec. 1308(a), (b)(1), Dec. 23, 1985, 99 Stat. 1522; Pub. L. 100-
707, title I, Sec. 109(c)(1), Nov. 23, 1988, 102 Stat. 4708; Pub. L.
104-127, title VI, Sec. 621(a), Apr. 4, 1996, 110 Stat. 1091; Pub. L.
106-387, Sec. 1(a) [title VIII, Sec. 833], Oct. 28, 2000, 114 Stat.
1549, 1549A-61; Pub. L. 107-171, title V, Secs. 5201(a), 5302, 5501(a),
May 13, 2002, 116 Stat. 344, 351.)
References in Text
The Plant Protection Act, referred to in subsec. (a), is title IV of
Pub. L. 106-224, June 20, 2000, 114 Stat. 438, as amended, which is
classified principally to chapter 104 (Sec. 7701 et seq.) of this title.
For complete classification of this Act to the Code, see Short Title
note set out under section 7701 of this title and Tables.
The Robert T. Stafford Disaster Relief and Emergency Assistance Act,
referred to in subsec. (a), is Pub. L. 93-288, May 22, 1974, 88 Stat.
143, as amended, which is classified principally to chapter 68
(Sec. 5121 et seq.) of Title 42, The Public Health and Welfare. For
complete classification of this Act to the Code, see Short Title note
set out under section 5121 of Title 42 and Tables.
Amendments
2002--Subsec. (a). Pub. L. 107-171 substituted ``a quarantine
imposed by the Secretary under the Plant Protection Act or the animal
quarantine laws (as defined in section 136a of title 21), a natural
disaster in the United States, or'' for ``a natural disaster in the
United States or by'' in two places, ``Robert T. Stafford Disaster
Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.)'' for
``Disaster Relief and Emergency Assistance Act'' in two places, ``joint
operations, trusts, or limited liability companies'' for ``or joint
operations'' in two places, ``joint operations, trusts, and limited
liability companies'' for ``and joint operations'', ``such a quarantine
or natural disaster at any time'' for ``a natural disaster at any
time'', and ``by such quarantine or natural disaster or (B)'' for ``by
such natural disaster or (B)''.
2000--Subsec. (b)(3). Pub. L. 106-387 added par. (3).
1996--Subsec. (b). Pub. L. 104-127 added subsec. (b) and struck out
former subsec. (b) which read as follows: ``An applicant shall be
ineligible for financial assistance under this subchapter for crop
losses if crop insurance was available to the applicant for such crop
losses under the Federal Crop Insurance Act (7 U.S.C. 1501 et seq.).''
1988--Subsec. (a). Pub. L. 100-707 substituted ``and Emergency
Assistance Act'' for ``Act of 1974'' in two places.
1985--Subsec. (a)(1). Pub. L. 99-198, Sec. 1308(a), inserted ``and
who are owner-operators (in the case of loans for a purpose under
subchapter I of this chapter) or operators (in the case of loans for a
purpose under subchapter II of this chapter) of not larger than family
farms'' after ``United States'' in cl. (1) of first sentence, extended
applicability to joint operations, and substituted requirement that a
majority interest be held by individuals who are citizens of the United
States and who are owner-operators (in the case of loans for a purpose
under subchapter I of this chapter) or operators (in the case of loans
for a purpose under subchapter II of this chapter) of not larger than
family farms (or in the case of such cooperatives, corporations,
partnerships, or joint operations in which a majority interest is held
by individuals who are related by blood or marriage, as defined by the
Secretary, that such individuals must be either owners or operators of
not larger than a family farm and at least one such individual must be
an operator of not larger than a family farm) for requirement that a
majority interest be held by members, stockholders or partners who are
citizens of the United States, in cl. (2) of first sentence, and
inserted provision extending the family farm requirement to all farms in
which the entity has an ownership and operator interest (in the case of
loans for a purpose under subchapter I of this chapter) or an operator
interest (in the case of loans for a purpose under subchapter II of this
chapter).
Subsec. (b). Pub. L. 99-198, Sec. 1308(b)(1), amended subsec. (b)
generally, substituting provision declaring a loan applicant ineligible
for financial assistance for crop losses where crop insurance was
available to the applicant for former provision which made applicants
eligible for loans, though able to obtain credit elsewhere, subject to
the other terms and conditions for loans under this subchapter and as
prescribed under regulations by the Secretary.
1984--Subsec. (a). Pub. L. 98-258 inserted provisions directing the
Secretary to accept applications from, and make or insure loans pursuant
to the requirements of this subchapter to, applicants, otherwise
eligible under this subchapter, that conduct farming, ranching, or
aquaculture operations in any county contiguous to a county where the
Secretary has found that farming, ranching, or aquaculture operations
have been substantially affected by a natural disaster in the United
States or by a major disaster or emergency designated by the President
under the Disaster Relief Act of 1974, and further directing the
Secretary to accept applications for assistance under this subchapter
from persons affected by a natural disaster at any time during the
eight-month period beginning (A) on the date on which the Secretary
determines that farming, ranching, or aquaculture operations have been
substantially affected by such natural disaster or (B) on the date the
President makes the major disaster or emergency designation with respect
to such natural disaster, as the case may be.
1981--Subsec. (a). Pub. L. 97-35 inserted provisions relating to
requirement for advance appropriation of amounts.
1980--Subsec. (a). Pub. L. 96-348, Sec. 3(a), (b)(1), repealed
section 120 of Pub. L. 96-302 (see par. below) and amended section
generally, designating existing provisions as subsec. (a) and, as so
designated, restoring provision to proviso requiring loan recipients to
be unable to obtain sufficient credit elsewhere.
Pub. L. 96-302, Sec. 120(a) (see par. above), struck out from
proviso requirement that persons to be eligible for loans be unable to
obtain sufficient credit elsewhere to finance their actual needs at
reasonable rates and terms, taking into consideration prevailing private
and cooperative rates and terms in the community in or near which they
reside for loans for similar purposes and periods of time.
Subsecs. (b) to (d). Pub. L. 96-438, Sec. 3(b)(1), added subsecs.
(b) to (d).
1978--Pub. L. 95-334 struck out subsec. (a) which set forth
provisions relating to designation of emergency areas and definition of
term ``aquaculture'', and incorporated provisions of subsec. (b) as
entire section and, as so incorporated, substituted provisions relating
to criteria authorizing the Secretary to make and insure loans, for
provisions relating to criteria authorizing the Secretary to make loans
in designated areas.
1975--Subsec. (a). Pub. L. 94-68, Sec. 2, substituted provisions
authorizing the Secretary to designate an emergency area if he finds
that a natural disaster has occurred in that area which substantially
affected farming, ranching, or aquaculture operations for provisions
authorizing the Secretary to designate an emergency area if he finds
that there exists in that area a general need for agricultural credit
and that the need for such credit in that area is the result of a
natural disaster, and inserted definition of ``aquaculture''.
Subsec. (b). Pub. L. 94-68, Sec. 3, extended the authority of the
Secretary to make loans to areas designated by the President as
``Emergency'' pursuant to Disaster Relief Act of 1970, substituted
reference to persons engaged in aquaculture and aquaculture for
reference to oyster planters and oyster planting respectively, struck
out provision that such loans be made without regard to whether the
required financial assistance is otherwise available from private,
cooperative, or other responsible sources, inserted requirement that the
loan applicant be unable to obtain credit elsewhere at reasonable rates
and terms, and inserted sentence that the provisions of this subsection
shall not apply to loan applications filed prior to July 9, 1975.
1974--Subsec. (a). Pub. L. 93-237, Sec. 10(d), struck out ``which
cannot be met for temporary periods of time by private, cooperative, or
other responsible sources (including loans the Secretary is authorized
to make or insure under subchapters I and II of this chapter or any
other Act of Congress), at reasonable rates and terms for loans for
similar purposes and periods of time'' after ``a general need for
agricultural credit''.
Subsec. (b). Pub. L. 93-237, Sec. 10(a), struck out ``, and are
unable to obtain sufficient credit elsewhere to finance their actual
needs at reasonable rates and terms, taking into consideration
prevailing practice and cooperative rates and terms in the community in
or near which the applicant resides for loans for similar purposes and
periods of time'' after ``a reasonable prospect for successful operation
with the assistance of such loan'' and inserted provision that the loans
be made without regard to whether the required financial assistance is
otherwise available from the private, cooperative, or other responsible
sources.
1973--Subsec. (a). Pub. L. 93-24, Secs. 2, 6, substituted in
parenthetical text ``authorized to make or insure under subchapters I
and II of this chapter'' for ``authorized to make under subchapter II of
this chapter or to make or insure under subchapter I of this chapter''
and introductory words ``shall designate'' for ``may designate''.
Subsec. (b). Pub. L. 93-24, Sec. 3, substituted introductory text
``shall make loans in any such area designated by the Secretary in
accordance with subsection (a) of this section and in any area
designated as a major disaster by the President pursuant to the
provisions of the Disaster Relief Act of 1970, as amended,'' for ``is
authorized to make loans in any such area'' and ``: Provided, That'' for
``provided'' before ``they have experience''.
1962--Subsec. (b). Pub. L. 87-832 authorized loans to established
oyster planters and to private domestic corporations or partnerships
engaged primarily in oyster planting.
Effective Date of 1996 Amendment
Section 621(b) of Pub. L. 104-127 provided that: ``Section 321(b)(1)
of the Consolidated Farm and Rural Development Act [7 U.S.C. 1961(b)(1)]
shall not apply until the Secretary of Agriculture makes the
determination required by section 321(b)(2) of the Act.'' [The
Secretary's determination relating to hazard insurance under this
provision was contained in interim rules published Mar. 3, 1997, and
effective Mar. 24, 1997, see 62 F.R. 9351.]
Effective Date of 1985 Amendment
Section 1308(b)(2) of Pub. L. 99-198 provided that: ``The amendment
made by paragraph (1) [amending this section] shall not apply to a
person whose eligibility for an emergency loan is the result of damage
to an annual crop planted or harvested before the end of 1986.''
Effective Date of 1984 Amendment
Section 602(c) of Pub. L. 98-258 provided that: ``the amendments
made by this section [amending this section and section 1964 of this
title] shall be applicable to disasters occurring after May 30, 1983.''
Effective Date of 1980 Amendments
Section 3(d) of Pub. L. 96-438 provided that: ``The amendments to
subtitle C of the Consolidated Farm and Rural Development Act made by
subsection (b) of this section [amending this section and sections 1962
to 1964 and 1971 of this title] shall be effective with respect to loans
approved by the Secretary of Agriculture under subtitle C [this
subchapter] after the date of enactment of this Act [Oct. 13, 1980],
except that, for borrowers with loans outstanding under subtitle C as of
December 15, 1979--
``(1) the limits on loans under section 324 of the Consolidated
Farm and Rural Development Act [section 1964 of this title] made by
subsection (b)(1) of this section [amending this section and
sections 1962 to 1964 of this title], and
``(2) the reduction in the time limit on subsequent emergency
loans under section 330 of the Consolidated Farm and Rural
Development Act [section 1971 of this title] made by subsection
(b)(2) of this section [amending section 1971 of this title]
shall not apply to subsequent emergency loans under section 330 (as in
effect on the date preceding the date of enactment of this Act) that are
made to such borrowers for the disasters for which the borrowers
obtained loans under subtitle C prior to December 16, 1979.''
Amendment by Pub. L. 96-302 effective Oct. 1, 1980, see section 507
of Pub. L. 96-302, set out as a note under section 631 of Title 15,
Commerce and Trade.
Effective Date of 1974 Amendment
Section 10(b) of Pub. L. 93-237 provided that: ``The provisions of
subsection (a) of this section [amending this section] shall be given
effect with respect to all loan applications and loans made in
connection with a disaster occurring on or after April 20, 1973.''
Section 10(d) of Pub. L. 93-237 provided in part that: ``The
provisions of this subsection [amending this section] shall be given
effect with respect to all loan applications and loans made in
connection with a disaster occurring on or after December 27, 1972.''
Ineligibility for Emergency Loans
Pub. L. 101-82, title III, Sec. 301, Aug. 14, 1989, 103 Stat. 581,
provided that: ``Section 321(b) of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1961(b)) shall not apply to a person who
otherwise would be eligible for an emergency loan under subtitle C of
such Act [7 U.S.C. 1961 et seq.], if such eligibility is the result of
damage to an annual crop planted for harvest in 1989.''
Similar provisions were contained in the following prior act:
Pub. L. 100-387, title III, Sec. 311, Aug. 11, 1988, 102 Stat. 948.
Ninety-Day Extension After January 2, 1974, of Deadline for Seeking
Assistance With Regard to Disasters Occurring on or After December 27,
1972
Section 10(c) of Pub. L. 93-237 provided that: ``With regard to all
disasters occurring on or after December 27, 1972, the Secretary of
Agriculture shall extend for ninety days after the date of enactment of
this section [Jan. 2, 1974] the deadline for seeking assistance under
section 321 of the Consolidated Farm and Rural Development Act [this
section] as amended by this section [amending this section].''
Section Referred to in Other Sections
This section is referred to in sections 1964, 1991, 2008f, 2008h of
this title; title 15 section 636; title 42 section 5154a.
