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(8) Geographic spread

fiscal year 1992, $8,600,000 for fiscal year 1993, (A) In general

$6,700,000 for fiscal year 1994, and $4,700,000 In awarding lines of credit under this sec

for each of fiscal years 1995 and 1996. Amounts tion the Board shall attempt, as much as

appropriated under this subsection shall reasonably practicable and consistent with

remain available until expended or until the sound financial judgment, to assure that all

Board is terminated. rural regions of the United States benefit (e) Relocation and refinancing from such awards.

The Board shall establish rules and proce(B) Minimum amount of funds

dures to prohibit eligible entities from using After considering the availability of quali- the assistance received under sections 2007a to fied applications, and if consistent with 2007e of this title for loans and investments, or good investment practices and the other re- for issuing guarantees, that wouldquirements of sections 2007a to 2007e of (1) facilitate the relocation of a local busithis title, the Board shall approve the appli- ness from one community to another; cation of at least one eligible entity in each (2) refinance the existing debt of a local State selected under section 2007(b)(1) of business, except that such refinancing may be this title. The Board shall, to the maximum

undertaken with such assistance if it is underextent practicable and appropriate, ensure

taken in conjunction with a substantial exthat eligible entities that are approved by pansion effort by the local business; or the Board in any given State receive at least (3) significantly reduce the viability of a $750,000 (per State) out of the funds provid- then existing business engaged in substantialed under subsection (d) of this section. In ly the same business activities in the same addition, to the maximum extent practica- community. ble the Board shall approve the applica

(Pub. L. 101-624, title XXIII, § 2313, Nov. 28, tions of at least two eligible entities in each

1990, 104 Stat. 3986; Pub. L. 102-237, title VII, State containing an approved eligible

$ 702(c), Dec. 13, 1991, 105 Stat. 1880.) entity. (C) Maximum amount of funds

CODIFICATION The total amount of funds provided under Section was enacted as part of the Rural Economic sections 2007a to 2007e of this title to eligi- Development Act of 1990, and also as part of the Food, ble entities in any State shall not exceed

Agriculture, Conservation, and Trade Act of 1990, and $10,000,000.

not as part of the Consolidated Farm and Rural Devel

opment Act which comprises this chapter. (D) Special program (i) In general

AMENDMENTS The Board shall issue regulations to es- 1991–Subsec. (a)(2). Pub. L. 102-237, $ 702(c)(1), tablish a program that targets the bene

substituted "Rural Business Investment Fund" for fits of the Federal lines of credit provided

"Frnd established under paragraph (1)".

Subsec. (b)(1). Pub. L. 102-237, $ 702(c)(2), substitutunder this section to those rural areas and

ed "Rural Business Investment Fund" for "fund estabresidents with special needs.

lished by subsection (a)". (ii) Limits

Subsec. (c)(6). Pub. L. 102-237, $ 702(c)(3), inserted If consistent with sound investment

“Business Investment" before "Fund” in introductory

provisions. practices, not less than 5 percent, nor more than 15 percent, of the funds appro

EFFECTIVE DATE OF 1991 AMENDMENT priated under subsection (d) of this sec

Amendment by Pub. L. 102-237 effective as if includtion shall be issued to eligible entities

ed in the provision of the Food, Agriculture, Conservathat will serve

tion, and Trade Act of 1990, Pub. L. 101-624, to which (I) local businesses located in very dis

the amendment relates, see section 1101(b)(7) of Pub. tressed rural areas, as defined by the

L. 102-237, set out as a note under section 1421 of this Board, that may include areas with spe- title. cial needs arising from actual or threatened severe unemployment which re

EFFECTIVE DATE sults from economic dislocation; and

Section effective Oct. 1, 1991, see section 2007(d) of (II) local businesses that provide bene- this title. ficial services to rural residents such as improved medical, hospital, or health

SECTION REFERRED TO IN OTHER SECTIONS care, licensed day care facilities or cen

This section is referred to in sections 2007, 2007a, ters, improved services for the handi.

2007b, 2007, 2007e of this title.
capped, the disabled, the elderly or
other needy individuals, improved edu- 8 2007d. Local revolving funds
cational opportunities, improved public
transportation services for needy indi- (a) Establishment
viduals, or other related services as de- (1) In general
termined appropriate by the Board.

Each eligible entity approved by the Board (d) Limitation on authorization of appropriations

to participate in the program established To carry out sections 2007a to 2007e of this under sections 2007a to 2007e of this title title, there are authorized to be appropriated to shall establish a local revolving fund account the Rural Fund and the Board $10,000,000 for in which to deposit

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(A)(i) amounts received under sections 2007a to 2007e of this title from the Rural Business Investment Fund;

(ii) any local matching funds described in section 2007c(c)(3)(A) of this title; and

(iii) any profits or income, repayments of loans, proceeds from the sale of equity investments, or other gains or returns on investments or loans, derived from the activities of the revolving fund established under this subsection; less

(B) reasonable operating expenses or losses incurred in administering such fund. (2) Place of establishment

Each local revolving fund established under this subsection may be established in one or more member banks of the Federal Reserve System, any Federally insured State nonmember bank (as defined in section 1813(b) of title 12), or any State owned bank whose deposits are backed by the full faith and credit of the State, and the funds, except as provided in subsection (b) of this section, shall be held in cash and receive interest or be invested in direct obligations of the United States or in obligations guaranteed by the United

States or an agency thereof. (b) Use of fund

Amounts in a local revolving fund may be used

(1) to provide loans or equity capital, or loan guarantees, to approved local businesses as authorized in sections 2007a to 200ie of this title, under procedures established by the Board;

(2) to cover the costs of providing training, business or financial planning, or management or technical assistance to approved local businesses in amounts that do not exceed amounts or levels described in standards established by the Board;

(3) if financial investments are made in the eligible entity, in accordance with item (aa) or (bb) of section 2007c(c)(3)(A)(ii)(I) of this title, to provide for a return of capital to nonFederal investors in the revolving fund, except that if such revolving fund experiences capital or other losses the share of returned capital under this paragraph shall be proportionately, or otherwise appropriately reduced to reflect such losses, under procedures established by the Board; or

(4) to cover reasonable operating or capital expenses, losses, or for other charges as prescribed in rules or standards established by

the Board. (c) Decisions concerning funding

Eligible entities that receive a line of credit under section 2007c of this title shall make case-by-case determinations concerning applications submitted by each local business for loans, equity capital, or loan guarantees, under general procedures and requirements established by the Board. (d) Requirement of partnerships for loans or invest.

ments Funds in each local revolving fund shall be loaned, invested, or used to provide a guaran

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(A) Amount per local business

The amount of Federal funds provided from any revolving fund for use in making loans or investments, or available regarding each guarantee, shall not exceed $250,000 in any given calendar year, to any single approved local business or to other local businesses that are financially connected or otherwise related to such local business as defined by the Board. (B) Other sources

Sections 2007a to 2007e of this title shall not be construed to limit the total amount of loans, investments, or guarantees that each local business may receive from sources other than eligible entities. (C) Procedures

In implementing this paragraph the Board shall develop procedures to establish, impute, or determine the amount of Federal funds that shall be considered available in the revolving funds created by approved eli

gible entities. (2) Ineligibility

Any local business that employs 100 or more employees shall not be eligible to receive assistance from a local revolving fund that receives assistance under sections 2007a

to 2007e of this title. (f) Subordinated interest of local revolving fund

If a depository institution (as defined in section 1813(c)(1) of title 121 or a community development credit union described in section 2007b(a) of this title has made an investment or loan in a local business in conjunction with an investment or loan made out of the revolving fund of an approved eligible entity, the amount invested or loaned by such revolving fund in such local business may be subordinated to any degree and in any manner. (g) Other investors

A depository institution (as defined in section 1813(c)(1) of title 12 ·, community development credit union described in section 2007b(a) of this title, similar Federally regulated financial institution, State owned bank, local or State government, private philanthrophic 2 founda

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* So in original. Probably should be "philanthropic".

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shall annually prepare and submit to the Board, at such time and in such form as the Board may require, a report describing the financial condition of the eligible entity, and the investments, cash revenues, income from investments, loans made, equity positions taken, guarantees issued, losses sustained or taken, any training, business, or technical assistance, or financial planning provided, operating expenses, loss rates, and such other matters as the Board determines appropriate concerning the eligible entity. (2) Post termination

After the Board terminates under subsection (n) of this section, the reports required under paragraph (1) shall be submitted to the Secretary who shall stand in the same posi

tion as the Board. (n) Termination of Board

The Investment Board established by section 2007b(a) of this title shall terminate on the last day of the 5th calendar year following November 28, 1990, and on and after November 28, 1990, the Secretary shall act in place of such Board. (Pub. L. 101-624, title XXIII, § 2314, Nov. 28, 1990, 104 Stat. 3991; Pub. L. 102-237, title VII, $ 702(d), Dec. 13, 1991, 105 Stat. 1880.)

tion, or other entity that contributes capital to 1935. an eligible entity that receives Federal assist19ance under sections 2007a to 2007e of this title 13 may establish contractual arrangements with

2 such eligible entity concerning the return of m): such investments in the local revolving fund 1: consistent with subsection (b)(3) of this section. 21! (h) Additional capital ta

The Board shall promulgate regulations that provide each participating eligible entity with a sufficient amount of time to obtain additional capital, lines of credit, or letters of intent, if any investor, pursuant to the contract with the eligible entity under subsection (g) of this sec

tion, withdraws some or all of its investment. 1 (i) Continuation of line of credit

A line of credit provided to an approved eligible entity under section 2007c of this title for use in a local revolving fund shall be available

to be drawn upon until the Investment Board is 3 terminated or until the line of credit is can

celed, revoked, or suspended by the Board or
the Secretary as described in section 2007e of
this title or subsection (1) of this section.
(j) Continuation of business promotion activities

The Federal assistance provided to any eligible entity under sections 2007a to 2007e of this title shall become the property of such entity on the termination of the Investment Board if

(1) the Board determines that the eligible entity that administers the local revolving fund has operated the fund in a manner that is consistent with sections 2007a to 2007e of this title; and

(2) the eligible entity contracts with the Secretary to continue to provide lending, investment, and guarantee assistance consistent

with sections 2007a to 2007e of this title. (k) Development of monitoring procedures

On and after the date on which the Investment Board is terminated, the Secretary shall act in place of the Board and shall monitor the operations of eligible entities that receive Federal assistance under sections 2007a to 2007e of this title which continue to exist on such date. (1) Refund of funds

Notwithstanding subsection (j) of this section, and in addition to any actions taken under section 2007e of this title, if the Secretary finds that the purpose of any eligible entity is no longer to promote business development in a manner consistent with sections 2007a to 2007e of this title, the Secretary shall revoke the approval of the eligible entity, obtain a refund in an amount equal to the amount of funds drawn out of the Federal line of credit issued to the eligible entity together with an appropriate amount of interest on such amount, as determined by the Secretary, and succeed to, or acquire the rights, privileges, and assets, investments of, and the payments due from such eligible entity, as described in section 2007e(h) of this title. (m) Annual reports to Board (1) In general

Each eligible entity that receives assistance under sections 2007a to 2007e of this title

CODIFICATION Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.

AMENDMENTS 1991- Subsec. (a)(1)(A)(1). Pub. L. 102-237 substituted “under sections 2007a to 2007e of this title from the Rural Business Investment Fund” for “from the Fund under sections 2007a to 2007e of this title".

EFFECTIVE DATE OF 1991 AMENDMENT Amendment by Pub. L. 102-237 effective as if includ. ed in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101-624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102-237, set out as a note under section 1421 of this title.

EFFECTIVE DATE

Section effective Oct. 1, 1991, see section 2007(d) of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 2007, 2007a, 2007b, 2007c, 2007e of this title.

8 2007e. Compliance and enforcement

(a) Revocation or cancellation of line of credit and

refund (1) Grounds for revocation

The Board shall revoke or suspend a line of credit, and shall request a full or partial refund of the Federal investment, with an appropriate amount of interest

(A) for false statements knowingly made in any written statement required under sections 2007a to 2007e of this title, or

under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title;

(B) if any written statement required under sections 2007a to 2007e of this title, or under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title, fails to state a material fact necessary in order to make the statement not misleading in the light of the circumstances under which the statement was made;

(C) for willful or repeated violation of, or willful or repeated failure to observe, any provision of sections 2007a to 2007e of this title;

(D) for willful or repeated violation of, or willful or repeated failure to observe, any rule or regulation authorized under sections 2007a to 2007e of this title; or

(E) for violation of, or failure to observe, any cease and desist order issued by the

Board under this subsection. (2) Cancellation of line of credit

Notwithstanding any action taken under paragraph (1), the Board may cancel any prospective payments to be made from any approved line of credit under sections 2007a to 2007e of this title if the Board determines that the eligible entity participating in the program established under sections 2007a to 2007e of this title made an investment, or acted in a manner, that was inconsistent with any provision of sections 2007a to 2007e of this title. (3) Cease and desist orders

If an eligible entity has not complied with any provision of sections 2007a to 2007e of this title, or of any regulation issued pursuant thereto, or is engaging or is about to engage in conduct that constitutes or will constitute a violation of sections 2007a to 2007e of this title or such regulation, the Board may order such entity to cease and desist from such conduct. The Board may further order such entity to take such action or to refrain from such action as the Board determines necessary to ensure compliance with sections 2007a to 2007e of this title and the regulations issued thereunder. (4) Order to show cause, contents, and hearing (A) Order

Prior to revoking or suspending a line of credit under paragraph (1) or (2), or issuing a cease and desist order under paragraph (3), the Board shall serve on the eligible entity an order to show cause why an order revoking or suspending the line of credit or a cease and desist order should not be issued. (B) Contents

An order to show cause under subparagraph (A) shall contain a statement of the matters of fact and law asserted by the Board and the legal authority and jurisdiction under which a hearing is to be held, and shall state that a hearing will be held before the Board at a time and place stated in the order.

(C) Hearing

If, after a hearing under subparagraph
(B) or a waiver thereof, the Board deter-
mines on the record that an order revoking
or suspending the line of credit, or a cease
and desist order should be issued, or an
order requiring a refund of the Federal in-
vestment in addition to reasonable interest
thereon should issue, the Board shall
promptly issue such order, which shall in-
clude a statement of the findings of the Ad-
ministration and the reasons for such find-
ings and specify the effective date of the
order, and shall cause the order to be served

on the entity.
(5) Subpoena of persons, books, papers, and docu-

ments; fees and mileage; enforcement
(A) Subpoena

The Board may require by subpoena the
attendance and testimony of witnesses and
the production of all books, papers, and
documents relating to the hearing from any
place in the United States.
(B) Fees and mileage

Witnesses summoned before the Board
shall be paid by the party at whose instance
such witnesses were called the same fees
and mileage that are paid witnesses in the
courts of the United States.
(C) Enforcement

In the case of disobedience to a subpoena
under this paragraph, the Board, or any
party to a proceeding before the Board

, may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the produc

tion of books, papers, and documents. (6) Petition to modify or set aside order, filing

, time and place, administration to submit

record; action of court; review
(A) In general

An order issued by the Board under this
subsection shall be final and conclusive
unless not later than 30 days after the serv:
ice thereof the eligible entity appeals to the
United States Court of Appeals for the cir-
cuit in which such corporation has its prin-
cipal place of business by filing with the
clerk of such court a petition praying that
the order of the Board be set aside or modi-
fied in the manner stated in the petition.
(B) Filing
(i) Leave of court

After the expiration of the 30-day
period referred to in subparagraph (A),
petition may be filed only by leave of
court on a showing of reasonable grounds
for failure to file the petition prior to the
expiration of such period.
(ii) Certification

The clerk of the court shall, on filing,
cause a copy of the petition to be deliv.
ered to the Board and the Board shall cer

tify and file in the court a transcript of

the record on which the order was en

(b) Investigations and examinations
(1) Authority
(A) In general

The Board may conduct such investigations as the Board considers necessary to determine whether an eligible entity has engaged in any conduct that constitutes or will constitute a violation of any provision of sections 2007a to 2007e of this title, of any regulation issued under sections 2007a to 2007e of this title, or of any order issued under this section.

(B) Filing of statements

The Board shall permit any individual to file a statement with the Board in writing, under oath, or otherwise as the Board shall determine, as to all the facts and circumstances concerning the matter to be investigated. (C) Subpoena

For the purpose of any investigation under this subsection, the Board may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, and documents that are relevant to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States.

tered. If prior to the filing of such record
the Board amends or sets aside its order,
in whole or in part, the petitioner may
amend the petition within such time as
the court may determine, after providing

notice to the Board.
(C) Stay or suspension of order

The filing of a petition for review under this paragraph shall not of itself stay or suspend the operation of the order of the Board, but the court of appeals in its discretion may restrain or suspend, in whole or in part, the operation of the order pending the final hearing and determination of the petition. (D) Action by court

The court may affirm, modify, or set aside the order of the Board. (E) Additional evidence (i) Determination

If the court determines that the just and proper disposition of the case requires the taking of additional evidence, the court shall order the Board to reopen the hearing for the taking of such evi. dence, in such manner and on such terms and conditions as the court may consider appropriate. (ii) Findings

The Board may modify its findings as to the facts, or make new findings, by reason of the additional evidence taken under this subparagraph, and it shall file its modified or new findings and the amendments, if any, of its order, with the

records of such additional evidence. (F) Consideration of objections

The court shall not consider an objection to an order of the Board unless the objection was argued before the Board or, if it were not so argued, unless there were reasonable grounds for failure to do so. (G) Review

The judgment and decree of the court af. firming, modifying, or setting aside any such order of the Board shall be subject only to review by the Supreme Court of the United States on certification or certiorari

as provided in section 1254 of title 28. (7) Enforcement of order

If the entity against which or against whom an order is issued under this subsection fails to obey the order, the Board may apply to the United States Court of Appeals for the circuit where the entity has its principal place of business, for the enforcement of the order, and shall file a transcript of the record on which the order complained of was entered. On the filing of the application, the court shall cause notice thereof to be served on the entity. The evidence to be considered, the procedure to be followed, and the jurisdiction of the court shall be the same as is provided in paragraph (6) for applications to set aside or modify orders.

(D) Refusal to obey

In case of contumacy by, or refusal to obey a subpoena issued to, any individual, including an entity or corporation, the Board may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such individual resides or carries on business activity, in requiring the attendance and testimony of witnesses and the production of books, papers, and documents, and such court may issue an order requiring such individual to appear before the Board, to produce records, if so ordered, or to give testimony touching the matter under investigation. (E) Contempt

A failure to obey an order of the court under this subsection shall be punishable by such court as a contempt thereof. All process in any such case may be served in the judicial district where such individual is an inhabitant or wherever such individual

may be found. (2) Examinations and reports (A) Examinations

An eligible entity under sections 2007a to 2007e of this title shall be subject to examinations made by the Board through examiners selected or approved by the Board, and the cost of such examinations, including the compensation of the examiners, may in the discretion of the Board be assessed against the entity examined and

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