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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3126 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 3126
To amend the Consolidated Farm and Rural Development Act to reform farm
loans, to amend the Department of Agriculture Reorganization Act of
1994 to reform the National Appeals Division process, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
November 6, 2025
Mr. Welch (for himself and Mrs. Gillibrand) introduced the following
bill; which was read twice and referred to the Committee on
Agriculture, Nutrition, and Forestry
_______________________________________________________________________
A BILL
To amend the Consolidated Farm and Rural Development Act to reform farm
loans, to amend the Department of Agriculture Reorganization Act of
1994 to reform the National Appeals Division process, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Fair Credit for Farmers Act of
2025''.
SEC. 2. DEFERMENT OF PAYMENTS FOR BORROWERS OF FARM LOANS.
(a) Definitions.--In this section:
(1) Covered producer.--The term ``covered producer''
means--
(A) a limited resource farmer or rancher (as
defined in section 718.2 of title 7, Code of Federal
Regulations (as in effect on the date of enactment of
this Act));
(B) a socially disadvantaged farmer or rancher (as
defined in section 2501(a) of the Food, Agriculture,
Conservation, and Trade Act of 1990 (7 U.S.C.
2279(a)));
(C) a beginning farmer or rancher (as defined in
that section); and
(D) a veteran farmer or rancher (as defined in that
section).
(2) Eligible borrower.--The term ``eligible borrower''
means a borrower that is a farmer or rancher that is--
(A) delinquent, as described in the definition of
the term ``delinquent borrower'' in section 761.2(b) of
title 7, Code of Federal Regulations (as in effect on
the date of enactment of this Act); or
(B) financially distressed, as described in the
definition of the term ``financially distressed
borrower'' in section 761.2(b) of title 7, Code of
Federal Regulations (as in effect on the date of
enactment of this Act).
(3) Farm loan.--The term ``farm loan'' means a direct or
guaranteed--
(A) farm ownership loan under subtitle A of the
Consolidated Farm and Rural Development Act (7 U.S.C.
1922 et seq.);
(B) operating loan under subtitle B of that Act (7
U.S.C. 1941 et seq.); or
(C) emergency loan under subtitle C of that Act (7
U.S.C. 1961 et seq.).
(4) Secretary.--The term ``Secretary'' means the Secretary
of Agriculture.
(b) Deferment of Payments on Direct Farm Loans.--
(1) In general.--The Secretary shall--
(A) defer payments of principal and interest due on
direct farm loans by eligible borrowers during the 2-
year period beginning on the date of enactment of this
Act; and
(B) extend by 2 years the maturity date and
repayment period of each direct farm loan the payments
on which are deferred under subparagraph (A).
(2) Exclusion.--Paragraph (1) does not apply to a direct
farm loan the term of which is 12 months or less.
(3) Authority to exceed loan maturity dates.--In extending
a date under paragraph (1)(B), the Secretary may exceed by not
more than 2 years--
(A) the maximum period of repayment described in
section 307 of the Consolidated Farm and Rural
Development Act (7 U.S.C. 1927) for a farm ownership
loan under subtitle A of that Act (7 U.S.C. 1922 et
seq.);
(B) the maximum period of repayment described in
section 316(b) of that Act (7 U.S.C. 1946(b)) for an
operating loan under subtitle B of that Act (7 U.S.C.
1941 et seq.); and
(C) the maximum period of repayment described in
section 324(d) of that Act (7 U.S.C. 1964(d)) for an
emergency loan under subtitle C of that Act (7 U.S.C.
1961 et seq.).
(c) Interest Rate During Deferral.--The Secretary shall modify each
direct farm loan of an eligible borrower that is outstanding as of the
date of enactment of this Act such that the interest rate on all
remaining principal of the farm loan is 0.125 percent during the 2-year
period beginning on that date of enactment.
(d) Waiver of Guaranteed Farm Loan Fees for Covered Producers.--
(1) In general.--The Secretary shall require lenders of
guaranteed farm loans to covered producers to waive guarantee
fees (as described in section 762.130(d)(4) of title 7, Code of
Federal Regulations (as in effect on the date of enactment of
this Act)) on those loans during the period--
(A) beginning on the date of enactment of this Act;
and
(B) ending not earlier than 2 years after that date
of enactment.
(2) Extension.--The Secretary may extend a deadline under
paragraph (1)(B) by an additional 180 days if the Secretary
determines the extension to be necessary.
SEC. 3. FARM LOAN REFORM.
(a) General Reforms.--
(1) In general.--Subtitle D of the Consolidated Farm and
Rural Development Act is amended by inserting after section 374
(7 U.S.C. 2008i) the following:
``SEC. 375. FARMER PROGRAM LOAN REFORM.
``(a) Definitions.--In this section:
``(1) Adverse decision.--The term `adverse decision' has
the meaning given the term in section 271 of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. 6991).
``(2) Principal residence.--The term `principal residence'
means the principal residence (as determined by the Secretary)
of a borrower of a farmer program loan, including a residence
and not more than 10 acres of adjoining land possessed and
occupied by the borrower.
``(b) Determination Letters and Adverse Decisions.--
``(1) In general.--In the case of any adverse decision
relating to a farmer program loan, a Farm Service Agency
program benefit, or the noninsured crop disaster assistance
program established by section 196 of the Federal Agriculture
Improvement and Reform Act of 1996 (7 U.S.C. 7333), the
Secretary shall include in a determination letter provided to
the applicant, to the maximum extent practicable--
``(A) a description of each reason known, or that
reasonably should have been known, to the Secretary for
that adverse decision;
``(B) a reference to each regulation and each
relevant instruction in the Farm Loan Programs
handbook, the Noninsured Crop Disaster Assistance
Program handbook, or any other appropriate handbook
published by the Farm Service Agency; and
``(C) instructions for accessing the Electronic
Code of Federal Regulations and the handbooks described
in subparagraph (B) online.
``(2) Effect of failure to state reasons.--If the Secretary
issues any adverse decision relating to an application for a
farmer program loan, a Farm Service Agency program benefit, or
the noninsured crop disaster assistance program established by
section 196 of the Federal Agriculture Improvement and Reform
Act of 1996 (7 U.S.C. 7333) and does not include in a
determination letter provided to the applicant a reason known
or which should have reasonably been known to the Secretary for
that adverse decision, the Secretary may not subsequently issue
an adverse decision to that applicant on the basis of the same
reason, known or which should have reasonably been known to the
Secretary, unless the circumstances of the applicant have
substantially changed since the issuance of the prior adverse
decision.
``(c) Collateralization.--
``(1) Origination.--The Secretary may secure a direct
farmer program loan with a principal residence only if the
total value of other assets available to secure the farmer
program loan does not provide adequate security (as defined in
section 761.2(b) of title 7, Code of Federal Regulations (as in
effect on the date of enactment of the Fair Credit for Farmers
Act of 2025)) for the loan.
``(2) Partial release of principal residence security.--In
the case of a farmer program loan secured in part by a
principal residence, the Secretary shall initiate a partial
release of the principal residence as security in accordance
with subpart H of part 765 of title 7, Code of Federal
Regulations (as in effect on the date of enactment of the Fair
Credit for Farmers Act of 2025), without any action required by
the borrower, when the total value of other assets securing the
farmer program loan is equal to 100 percent of the remaining
loan amount.
``(3) Loan servicing.--
``(A) In general.--In the case of a farmer program
loan borrower who is delinquent prior to restructuring
the farmer program loan, the borrower shall execute and
provide to the Secretary a lien on assets necessary to
achieve not more than 100 percent collateralization of
the loan value.
``(B) Best lien.--Except as provided in section
764.106 of title 7, Code of Federal Regulations (as in
effect on the date of enactment of the Fair Credit for
Farmers Act of 2025), the Secretary shall take the best
lien obtainable on assets described in subparagraph
(A), subject to the condition that a primary residence
shall be the last option available to the Secretary to
achieve 100 percent collateralization of the loan
value.
``(4) Prohibition on additional security.--The Secretary
may not secure a direct farmer program loan with any property
that provides security in excess of the amount of security
value equal to the loan amount.
``(d) Eligibility Requirements.--The Secretary shall not impose any
limitation relating to the number of years in which a farmer program
loan may be closed by a borrower.''.
(2) Conforming amendment.--Section 196(b) of the Federal
Agriculture Improvement and Reform Act of 1996 (7 U.S.C.
7333(b)) is amended by adding at the end the following:
``(5) Adverse decisions.--In the case of an adverse
decision relating to an application under this subsection,
section 375(b) of the Consolidated Farm and Rural Development
Act shall apply.''.
(b) Farm Loan Eligibility.--
(1) Persons eligible for direct farm ownership loans.--
Section 302(b) of the Consolidated Farm and Rural Development
Act (7 U.S.C. 1922(b)) is amended--
(A) by striking paragraph (1) and inserting the
following:
``(1) In general.--The Secretary may make a direct loan
under this subtitle only to a farmer or rancher who has at
least 1 year of experience substantially participating in the
management and business operations of a farm or ranch, as
determined by the Secretary.''; and
(B) by striking paragraphs (3) and (4) and
inserting the following:
``(3) Waiver authority.--In the case of a qualified
beginning farmer or rancher, the Secretary may waive the 1-year
requirement described in paragraph (1) if the qualified
beginning farmer or rancher--
``(A) has an established relationship with an
individual who has experience in farming or ranching,
or with a local farm or ranch operator or organization,
approved by the Secretary, that is committed to
mentoring the qualified beginning farmer or rancher; or
``(B) has other acceptable education or experience
for an appropriate period of time, as determined by the
Secretary.''.
(2) Persons eligible for direct farm operating loans.--
Section 311 of the Consolidated Farm and Rural Development Act
(7 U.S.C. 1941) is amended by striking subsection (c).
(c) Refinancing of Debt With Farm Loans.--
(1) Allowed purposes of farm ownership loans.--Section
303(a)(1) of the Consolidated Farm and Rural Development Act (7
U.S.C. 1923(a)(1)) is amended by striking subparagraph (E) and
inserting the following:
``(E) refinancing the indebtedness of the farmer or
rancher, if the farmer or rancher--
``(i) has used a direct loan under this
subtitle to refinance indebtedness not more
than 4 times previously; and
``(ii) is refinancing a debt obtained from
a creditor other than the Secretary, including
a guaranteed loan.''.
(2) Allowed purposes of direct operating loans.--Section
312(a) of the Consolidated Farm and Rural Development Act (7
U.S.C. 1942(a)) is amended by striking paragraph (9) and
inserting the following:
``(9) refinancing the indebtedness of a borrower; or''.
(d) Effect of Preferred Lender Certification.--Section 339(d)(4)(B)
of the Consolidated Farm and Rural Development Act (7 U.S.C.
1989(d)(4)(B)) is amended--
(1) by striking ``institutions to'' and inserting the
following: ``institutions--
``(i) to''; and
(2) in clause (i) (as so designated)--
(A) by striking ``subsection relating'' and
inserting ``subsection, relating'';
(B) by striking ``worthiness, the'' and inserting
``worthiness or the''; and
(C) by striking ``collection and liquidation of
loans, and to'' and inserting the following: ``or
collection of loans; and
``(ii) to''.
(e) Loan Fund Set-Asides for Beginning Farmers and Ranchers.--
Section 346(b)(2) of the Consolidated Farm and Rural Development Act (7
U.S.C. 1994(b)(2)) is amended--
(1) in subparagraph (A)--
(A) in clause (i)(II), by inserting ``, to the
extent practicable'' after ``April 1 of the fiscal
year''; and
(B) in clause (iii), by inserting ``, to the extent
practicable'' after ``September 1 of the fiscal year'';
and
(2) in subparagraph (B)(iii), by inserting ``, to the
extent practicable'' after ``April 1 of the fiscal year''.
(f) Removal of Eligibility Restriction Based on Previous Debt
Write-Down or Other Loss.--Section 373 of the Consolidated Farm and
Rural Development Act (7 U.S.C. 2008h) is amended--
(1) in subsection (b)(2)(A)--
(A) by striking clause (i);
(B) in clause (ii), by striking ``chapters 11, 12,
or 13 of Title 11 of the'' and inserting ``chapter 11,
12, or 13 of title 11,''; and
(C) by redesignating clauses (ii) and (iii) as
clauses (i) and (ii), respectively; and
(2) by striking subsection (c) and inserting the following:
``(c) Prohibition on Eligibility Restriction Based on Debt Write-
Down or Other Loss.--The Secretary shall not restrict the eligibility
of a borrower for a farm ownership or operating loan under subtitle A
or B based on a previous debt write-down or other loss to the
Secretary.''.
(g) Equitable Relief.--
(1) In general.--Section 366 of the Consolidated Farm and
Rural Development Act (7 U.S.C. 2008a) is amended--
(A) in subsection (a)--
(i) in paragraph (1), by striking ``(1)
received'' and inserting ``(1)(A) received'';
(ii) in paragraph (2)--
(I) by striking the period at the
end and inserting ``; or''; and
(II) by striking ``(2) the
Secretary'' and inserting ``(B) the
Secretary''; and
(iii) by adding at the end the following:
``(2)(A) received a benefit under any other program
administered by an agency (as defined in section 271 of the
Department of Agriculture Reorganization Act of 1994 (7 U.S.C.
6991)); and
``(B) the Secretary determines is not in compliance with
the requirements of the provisions of law that authorize that
program.'';
(B) in subsection (b)(2), by inserting ``,
including having made management or financial decisions
for the farming or ranching operation of the farmer or
rancher that were detrimental due to the erroneous
nature of an official communication from the Department
of Agriculture, regardless of whether a financial
benefit was received or only promised'' before the
period at the end;
(C) in subsection (c)(1), by striking ``(a)(2)''
and inserting ``(a)(1)(B)'';
(D) in subsection (e), by striking ``section'' in
the matter preceding paragraph (1) and all that follows
through ``shall not be'' in paragraph (2) and inserting
``section shall be''; and
(E) by adding at the end the following:
``(f) Authority of National Appeals Division Hearing Officers.--
``(1) In general.--A hearing officer (as defined in section
271 of the Department of Agriculture Reorganization Act of 1994
(7 U.S.C. 6991)) may provide equitable relief under this
section.
``(2) Review.--The Secretary may review a decision of a
hearing officer (as so defined) to grant equitable relief
pursuant to paragraph (1).
``(g) Cases in Which an Applicant Is Eligible.--
``(1) Definitions.--In this subsection:
``(A) Adverse decision.--The term `adverse
decision' has the meaning given the term in section 271
of the Department of Agriculture Reorganization Act of
1994 (7 U.S.C. 6991).
``(B) Applicant.--The term `applicant' means a
person who submitted to, or attempted to submit to, the
Farm Service Agency an application for--
``(i) a direct farm ownership, operating,
or emergency loan under this title; or
``(ii) a Farm Service Agency program
benefit.
``(2) Denial based on feasibility.--
``(A) In general.--A loan applicant shall be
eligible for equitable relief under this section if--
``(i) the National Appeals Division
determines that the Farm Service Agency was in
error in denying the loan, benefit, or payment
based on feasibility;
``(ii) the National Appeals Division has
confirmed the accuracy of the projected income
and projected expenses described in the
original application submitted by the
applicant; and
``(iii) the original application submitted
by the applicant is no longer feasible due to
the delay caused by the erroneous denial by the
Farm Service Agency and the length of the
appeals process.
``(B) Amount.--The amount of equitable relief under
subparagraph (A) shall be the amount equal to the
difference between--
``(i) the projected income described in the
application; and
``(ii) the projected expenses described in
the application.
``(3) Denial based on eligibility.--A loan applicant shall
be eligible for equitable relief under this section if--
``(A) feasibility was not listed as a reason for an
adverse decision in the determination letter provided
to the applicant;
``(B) eligibility was listed as a reason for an
adverse decision in the determination letter provided
to the applicant;
``(C) the National Appeals Division determines that
the Farm Service Agency was in error in denying the
loan based on eligibility; and
``(D) the original application submitted by the
applicant is no longer feasible due to the delay caused
by the erroneous denial by the Farm Service Agency and
the length of the appeals process.
``(4) Subsequently withdrawn adverse decision.--An
applicant shall be eligible for equitable relief under this
section if--
``(A) the Farm Service Agency issued an adverse
decision on an application that the Farm Service Agency
subsequently withdrew; and
``(B) the original application submitted by the
applicant is no longer feasible due to the delay caused
by the adverse decision.
``(5) Promised program benefits not received.--An applicant
shall be eligible for equitable relief under this section if--
``(A) the Farm Service Agency indicated in an
official communication made after the date of enactment
of this subsection that the applicant could expect the
loan, benefit, or payment, and then reversed its
decision; and
``(B) the applicant acted in good faith.''.
(2) Application.--Subsection (g) of section 366 of the
Consolidated Farm and Rural Development Act (7 U.S.C. 2008a)--
(A) applies only with respect to applications
submitted or attempted to be submitted, and decisions
or communications made, after the date of enactment of
this Act; and
(B) does not apply retroactively with respect to--
(i) any application submitted or attempted
to be submitted, or decision or communication
made, before that date of enactment; or
(ii) any action, inaction, or consequence
resulting from a decision or communication made
before that date of enactment.
SEC. 4. NATIONAL APPEALS DIVISION REFORM.
(a) Burden of Proof.--Section 277(c)(4) of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. 6997(c)(4)) is
amended--
(1) by striking ``The appellant'' and inserting the
following:
``(A) In general.--Except as provided in
subparagraph (B), the appellant''; and
(2) by adding at the end the following:
``(B) Appellants below income threshold.--
``(i) In general.--In the case of an
appellant described in clause (ii), the agency
shall bear the burden of proving by substantial
evidence that the adverse decision of the
agency was not erroneous.
``(ii) Appellants described.--An appellant
referred to in clause (i) is an appellant--
``(I) the adjusted gross income of
which for the previous year is not more
than $300,000; or
``(II) the average annual adjusted
gross income of which for the previous
5-year period is not more than
$300,000.''.
(b) Implementation.--Section 280 of the Department of Agriculture
Reorganization Act of 1994 (7 U.S.C. 7000) is amended--
(1) by redesignating subsection (b) as subsection (c); and
(2) by inserting after subsection (a) the following:
``(b) Requirement.--In implementing a final determination in
accordance with subsection (a), the head of an agency shall use the
information used by the Division to make the final determination,
without requiring additional information on which implementation would
be conditioned, except as otherwise provided in the decision letter
relating to the final determination.''.
<all>
Introduced in Senate
Read twice and referred to the Committee on Agriculture, Nutrition, and Forestry.
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