ESTABLISHMENT OF PROGRAM.

SEC. 1466. ESTABLISHMENT OF PROGRAM. (a) In General.— (1) Purpose.— The Secretary, acting through the Farmers Home Administration, shall establish and implement a program, to be known as the “Agricultural Resource Conservation Demonstration Program”, to provide Federal guarantees and interest rate assistance for loans made by lending institutions to State trust funds. (2) Assistance.— Under the program, the Secretary shall guarantee the timely payment of the principal amount and interest due on eligible loans made by lending institutions to State trust funds and shall subsidize the interest on such loans at the allowable interest rate for the first 5 years after such loan is made, and at no less than three percentage points for the second 5 years under procedures described in subsection (b). Each State trust fund shall pay the rate of interest, and the principal at the end of the 10tn year, as provided for in the loan agreement regarding each eligible loan. (b) Mandatory Assistance to Each Eligible State Trust Fund.— The Secretary shall— (1) fully guarantee each eligible loan made by lending institutions to each State trust fund under regulations promulgated by the Secretary; (2) annually pay to each State trust fund an amount calculated by applying the allowable interest rate to the amount of each loan the State trust fund receives, as determined under procedures developed by the Secretary, during each of the first 5 years after the date on which each such loan is made; and (3) annually pay to each State trust fund, for each year during the second 5-year period after each such eligible loan is made, an amount calculated by applying the interest rate difference, between the rate of interest charged to borrowers of direct loans as described in section 316(a)(2) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1946(a)(2)) and the allowable interest rate, to the amount of each loan the State trust fund receives from any given lending institution, as determined under procedures issued by the Secretary. (c) Funding Provided by the Secretary of the Treasury.— The Secretary of Agriculture is required to make and issue stock, in the same manner as notes are issued under section 309(c) or 309A(d) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1929(c) or 1929a(d)), to the Secretary of the Treasury for the purpose of obtaining Funds from the Secretary of the Treasury that are necessary for discharging the obligations of the Secretary of Agriculture under this chapter. Such stock shall not pay dividends and shall not be redeemable. (d) Required Purchases of Stock.— The Secretary shall promptly notify, in writing, the Secretary of the Treasury each time an application of an eligible State is approved by the Secretary under this chapter. The Secretary of the Treasury shall purchase stock offered by the Secretary under subsection (c) on the day offered and the Secretary of Agriculture shall deposit the proceeds from each such sale of stock in accounts created to administer this program. 104 STAT. 3618 (e) Entitlements.— The Secretary is entitled to receive funds, and shall receive funds, from the Secretary of the Treasury in an amount equal to the total par-value of the stock issued to the Secretary of the Treasury. Each State trust fund is entitled to receive, and the Secretary of Agriculture shall promptly pay to each such trust fund, amounts calculated under procedures described in section (b). (f) Regulations.— The Secretary shall promulgate proposed and final regulations, under the prior public comment provisions of section 553 of title 5, United States Code, setting forth— (1) the application procedures for eligible States; (2) the factors to be used in approving applicants; (3) procedures for the prompt payment of the obligations of the Secretary under section (b); (4) recordkeeping requirements for approved State trust funds; (5) requirements to prevent program abuse and procedures to recover improperly obtained funds; (6) rules permitting State trust funds to act as revolving funds or to otherwise accumulate additional capital, based on investments, to be subsequently used to promote the purposes of this chapter; and (7) any other rules necessary and appropriate to carry out this program. (g) Duration of Program.— The program established under this chapter shall expire on September 30, 1996, except that any financial obligations of the Secretary shall continue to be met as required by this chapter.