I 

108TH CONGRESS 

1ST SESSION H. R. 138

To bridge the digital divide in rural areas. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 7, 2003

Mr. MCHUGH introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committees on 

Ways and Means, and Science, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

A BILL

To bridge the digital divide in rural areas.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Rural America Digital 

5 Accessibility Act’’. 

6 SEC. 2. GRANTS TO FACILITATE DEPLOYMENT OF 

7 BROADBAND TELECOMMUNICATIONS CAPA8 BILITIES TO UNDERSERVED RURAL AREAS. 

9 (a) IN GENERAL.—In order to facilitate the deploy10 ment by the private sector of broadband telecommuni-
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1 cations networks and capabilities (including wireless and 

2 satellite networks and capabilities) to underserved rural 

3 areas, the Secretary of Commerce (in this section, referred 

4 to as the ‘‘Secretary’’) may— 

5 (1) make grants to eligible recipients for that 

6 purpose; 

7 (2) guarantee loans, either whole or in part, of 

8 eligible recipients the proceeds of which are to be 

9 used for that purpose; or 

10 (3) carry out activities under both paragraphs 

11 (1) and (2). 

12 (b) ELIGIBLE RECIPIENTS.—For purposes of this 

13 section, an eligible recipient of a grant or loan guarantee 

14 under subsection (a) is any person or entity selected by 

15 the Secretary in accordance with such procedures as the 

16 Secretary shall establish. 

17 (c) UNDERSERVED RURAL AREAS.—The Secretary 

18 shall identify the areas that constitute underserved rural 

19 areas for purposes of this section. 

20 (d) EMPHASIS ON PARTICULAR CAPABILITIES.—In 

21 selecting a person or entity as an eligible recipient of a 

22 grant or loan guarantee under subsection (a), the Sec23 retary shall give particular emphasis to persons or entities 

24 that propose to use the grant or the proceeds of the loan 
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1 guaranteed, as the case may be, to leverage non-Federal 

2 resources to do one or more of the following: 

3 (1) Provide underserved rural areas with access 

4 to Internet service by local telephone. 

5 (2) Demonstrate new models or emerging tech6 nologies to bring broadband telecommunications 

7 services to underserved rural areas on a cost-effec8 tive basis. 

9 (3) Use broadband telecommunications services 

10 to stimulate economic development, such as pro11 viding connections between and among industrial 

12 parks located in such areas and providing high-speed 

13 telecommunications service links to small business 

14 incubators. 

15 (e) CONSULTATION.—The Secretary may consult 

16 with the Federal Communications Commission in carrying 

17 out activities under this section. 

18 (f) LIMITATION ON AMOUNT.—The amount of any 

19 grants made under this section, and the cost (as defined 

20 in section 502(5) of the Federal Credit Reform Act of 

21 1990 (2 U.S.C. 661a(5)) of any loans guaranteed under 

22 this section, may not, in the aggregate, exceed 

23 $100,000,000. 

24 (g) AUTHORIZATION OF APPROPRIATIONS.—There is 

25 authorized to be appropriated for the Department of Com-
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1 merce for purposes of grants and loan guarantees under 

2 this section $100,000,000 for fiscal year 2003, and such 

3 sums as are necessary for each fiscal year thereafter. 

4 SEC. 3. RESEARCH ON ENHANCEMENT OF BROADBAND 

5 TELECOMMUNICATIONS SERVICES. 

6 (a) IN GENERAL.—The Director of the National 

7 Science Foundation (in this section, referred to as the 

8 ‘‘Director’’) shall carry out research on the following: 

9 (1) Means of enhancing or facilitating the avail10 ability of broadband telecommunications services in 

11 rural areas and other remote areas. 

12 (2) Means of facilitating or enhancing access to 

13 the Internet through broadband telecommunications 

14 services. 

15 (b) SCOPE OF AUTHORITY.—The Director may carry 

16 out research under subsection (a) within the National 

17 Science Foundation or pursuant to such grants, agree18 ments, or other arrangements as the Director considers 

19 appropriate. 

20 (c) RESULTS OF RESEARCH.—The Director shall 

21 make available to the public, in such manner as the Direc22 tor considers appropriate, the results of any research car23 ried out under this section. 

24 (d) AUTHORIZATION OF APPROPRIATIONS.—There is 

25 authorized to be appropriated for the National Science 
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1 Foundation for purposes of activities under this section 

2 $25,000,000 for fiscal year 2003, and such sums as are 

3 necessary for each fiscal year thereafter. 

4 SEC. 4. TAX CREDIT TO HOLDERS OF QUALIFIED TECH5 NOLOGY BONDS. 

6 (a) IN GENERAL.—Part IV of subchapter A of chap7 ter 1 of the Internal Revenue Code of 1986 (relating to 

8 credits against tax) is amended by adding at the end the 

9 following new subpart: 

10 ‘‘Subpart H—Nonrefundable Credit for Holders of 

11 Qualified Technology Bonds

‘‘Sec. 54. Credit to holders of qualified technology bonds.

12 ‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED TECH13 NOLOGY BONDS. 

14 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax15 payer who holds a qualified technology bond on a credit 

16 allowance date of such bond which occurs during the tax17 able year, there shall be allowed as a credit against the 

18 tax imposed by this chapter for such taxable year the 

19 amount determined under subsection (b). 

20 ‘‘(b) AMOUNT OF CREDIT.—

21 ‘‘(1) IN GENERAL.—The amount of the credit 

22 determined under this subsection with respect to any 

23 qualified technology bond is the amount equal to the 

24 product of—
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1 ‘‘(A) the credit rate determined by the Sec2 retary under paragraph (2) for the month in 

3 which such bond was issued, multiplied by 

4 ‘‘(B) the face amount of the bond held by 

5 the taxpayer on the credit allowance date. 

6 ‘‘(2) DETERMINATION.—During each calendar 

7 month, the Secretary shall determine a credit rate 

8 which shall apply to bonds issued during the fol9 lowing calendar month. The credit rate for any 

10 month is the percentage which the Secretary esti11 mates will permit the issuance of qualified tech12 nology bonds without discount and without interest 

13 cost to the issuer. 

14 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 

15 credit allowed under subsection (a) for any taxable year 

16 shall not exceed the excess of—

17 ‘‘(1) the sum of the regular tax liability (as de18 fined in section 26(b)) plus the tax imposed by sec19 tion 55, over 

20 ‘‘(2) the sum of the credits allowable under this 

21 part (other than this subpart and subpart C). 

22 ‘‘(d) QUALIFIED TECHNOLOGY BOND.—For pur23 poses of this part—
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1 ‘‘(1) IN GENERAL.—The term ‘qualified tech2 nology bond’ means any bond issued as part of an 

3 issue if—

4 ‘‘(A) 95 percent of more of the proceeds of 

5 such issue are to be used for any (or a series 

6 of) qualified projects, 

7 ‘‘(B) the bond is issued by a State or local 

8 government within the jurisdiction of which 

9 such project is located, 

10 ‘‘(C) the issuer designates such bond for 

11 purposes of this section, 

12 ‘‘(D) the issuer certifies that it has ob13 tained the written approval of the Secretary of 

14 Commerce for such project, and 

15 ‘‘(E) the term of each bond which is part 

16 of such issue does not exceed 15 years. 

17 ‘‘(2) QUALIFIED PROJECT.—

18 ‘‘(A) IN GENERAL.—The term ‘qualified 

19 project’ means a project—

20 ‘‘(i) to expand broadband tele21 communications services in an area within 

22 the jurisdiction of a State or local govern23 ment, 
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1 ‘‘(ii) which is nominated by such State 

2 or local government for a designation as a 

3 qualified project, and 

4 ‘‘(iii) which the Secretary of Com5 merce, after consultation with the Sec6 retary of Housing and Urban Develop7 ment, designates as a qualified project or 

8 a series of qualified projects. 

9 ‘‘(B) DESIGNATION PREFERENCES.—With 

10 respect to designations under this section, pref11 erences shall be given to—

12 ‘‘(i) nominations of projects involving 

13 underserved urban or rural areas lacking 

14 access to high-speed Internet connections, 

15 and

16 ‘‘(ii) nominations reflecting partner17 ships and comprehensive planning between 

18 State and local governments and the pri19 vate sector. 

20 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES21 IGNATED.—

22 ‘‘(1) NATIONAL LIMITATION.—There is a na23 tional technology bond limitation for each calendar 

24 year. Such limitation is $100,000,000 for 2003, 
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1 2004, 2005, 2006, and 2007, and, except as pro2 vided in paragraph (4), zero thereafter. 

3 ‘‘(2) ALLOCATION OF LIMITATION.—The na4 tional technology bond limitation for a calendar year 

5 shall be allocated by the Secretary among the quali6 fied projects designated for such year. 

7 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

8 AMOUNT.—The maximum aggregate face amount of 

9 bonds issued during any calendar year which may be 

10 designated under subsection (d)(1) with respect to 

11 any qualified project shall not exceed the limitation 

12 amount allocated to such project under paragraph 

13 (2) for such calendar year. 

14 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 

15 for any calendar year—

16 ‘‘(A) the national technology limitation 

17 amount, exceeds 

18 ‘‘(B) the amount of bonds issued during 

19 such year which are designated under sub20 section (d)(1) with respect to qualified projects, 

21 the national technology limitation amount for the 

22 following calendar year shall be increased by the 

23 amount of such excess. 

24 ‘‘(f) OTHER DEFINITIONS.—For purposes of this 

25 subpart—
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1 ‘‘(1) BOND.—The term ‘bond’ includes any ob2 ligation. 

3 ‘‘(2) CREDIT ALLOWANCE DATE.—The term 

4 ‘credit allowance date’ means, with respect to any 

5 issue, the last day of the 1-year period beginning on 

6 the date of issuance of such issue and the last day 

7 of each successive 1-year period thereafter. 

8 ‘‘(3) STATE.—The term ‘State’ means the sev9 eral States and the District of Columbia. 

10 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

11 income includes the amount of the credit allowed to the 

12 taxpayer under this section (determined without regard to 

13 subsection (c)) and the amount so included shall be treat14 ed as interest income. 

15 ‘‘(h) OTHER SPECIAL RULES.—

16 ‘‘(1) PARTNERSHIP; S CORPORATION; AND

17 OTHER PASS-THRU ENTITIES.—Under regulations 

18 prescribed by the Secretary, in the case of a partner19 ship, trust, S corporation, or other pass-thru entity, 

20 rules similar to the rules of section 41(g) shall apply 

21 with respect to the credit allowable under subsection 

22 (a). 

23 ‘‘(2) BONDS HELD BY REGULATED INVEST24 MENT COMPANIES.—If any qualified technology bond 

25 is held by a regulated investment company, the cred-
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1 it determined under subsection (a) shall be allowed 

2 to shareholders of such company under procedures 

3 prescribed by the Secretary. 

4 ‘‘(3) TREATMENT FOR ESTIMATED TAX PUR5 POSES.—Solely for purposes of sections 6654 and 

6 6655, the credit allowed by this section to a tax7 payer by reason of holding a qualified technology 

8 bond on a credit allowance date shall be treated as 

9 if it were a payment of estimated tax made by the 

10 taxpayer on such date. 

11 ‘‘(4) REPORTING.—Issuers of qualified tech12 nology bonds shall submit reports similar to the re13 ports required under section 149(e).’’. 

14 (b) REPORTING.—Subsection (d) of section 6049 of 

15 the Internal Revenue Code of 1986 (relating to returns 

16 regarding payments of interest) is amended by adding at 

17 the end the following new paragraph: 

18 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

19 TECHNOLOGY BONDS.—

20 ‘‘(A) IN GENERAL.—For purposes of sub21 section (a), the term ‘interest’ includes amounts 

22 includible in gross income under section 54(g) 

23 and such amounts shall be treated as paid on 

24 the credit allowance date (as defined in section 

25 54(f)(2)).
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1 ‘‘(B) REPORTING TO CORPORATIONS, 

2 ETC.—Except as otherwise provided in regula3 tions, in the case of any interest described in 

4 subparagraph (A) of this paragraph, subsection 

5 (b)(4) of this section shall be applied without 

6 regard to subparagraphs (A), (H), (I), (J), (K), 

7 and (L)(i). 

8 ‘‘(C) REGULATORY AUTHORITY.—The Sec9 retary may prescribe such regulations as are 

10 necessary or appropriate to carry out the pur11 poses of this paragraph, including regulations 

12 which require more frequent or more detailed 

13 reporting.’’. 

14 (c) CLERICAL AMENDMENTS.—

15 (1) The table of subparts for part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code 

17 of 1986 is amended by adding at the end the fol18 lowing new item:

‘‘Subpart H. Nonrefundable Credit for Holders of Qualified Technology 

Bonds.’’.

19 (2) Section 6401(b)(1) of such Code is amend20 ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 

21 (d) EFFECTIVE DATE.—The amendments made by 

22 this section shall apply to obligations issued after Decem23 ber 31, 2002. 
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1 SEC. 5. GRANTS FOR TECHNOLOGY EXTENSION. 

2 (a) PURPOSE.—It is the purpose of this section—

3 (1) to encourage meaningful use of the most 

4 advanced available technologies by small businesses 

5 and medium-sized businesses to the maximum extent 

6 possible to improve the productivity of those busi7 nesses and thereby to promote economic growth; and 

8 (2) to promote regional partnerships between 

9 educational institutions and businesses to develop 

10 such technologies and products in the surrounding 

11 areas. 

12 (b) GRANT PROGRAM.—To achieve the purpose of 

13 this section, the Secretary of Commerce (in this section, 

14 referred to as the ‘‘Secretary’’) shall carry out a program 

15 to provide, through grants, financial assistance for the es16 tablishment and support of regional centers for the com17 mercial use of advanced technologies by small businesses 

18 and medium-sized businesses. 

19 (c) ELIGIBILITY.—An entity is eligible to receive a 

20 grant as a regional center under this section if the enti21 ty—

22 (1) is affiliated with a United States-based in23 stitution or organization that is operated on a not24 for-profit basis, or any combination of two or more 

25 of such institutions or organizations; 
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1 (2) offers to enter into an agreement with the 

2 Secretary to function as a regional center for the 

3 commercial use of advanced technologies for the pur4 pose of this section within a region determined ap5 propriate by the Secretary; and 

6 (3) demonstrates that it has the capabilities 

7 necessary to achieve the purpose of this section 

8 through its operations as a center within that re9 gion. 

10 (d) SELECTION OF APPLICANTS.—

11 (1) COMPETITIVE PROCESS.—The Secretary 

12 shall use a competitive process for the awarding of 

13 grants under this section and, under that process, 

14 select recipients of the grants on the basis of merit, 

15 with priority given to underserved areas. 

16 (2) APPLICATIONS FOR GRANTS.—The Sec17 retary shall prescribe the form and content of appli18 cations required for grants under this section. 

19 (e) SPECIFIC ACTIVITIES OF REGIONAL CENTERS.—

20 A regional center may use the proceeds of a grant under 

21 this section for any activity that carries out the purpose 

22 of this section, including such activities as the following: 

23 (1) Assist small businesses and medium-sized 

24 businesses to address their most critical needs for
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1 the application of the latest technology, improvement 

2 of infrastructure, and use of best business practices. 

3 (2) In conjunction with institutions of higher 

4 education and laboratories located in the region, 

5 transfer technologies to small businesses and me6 dium-sized businesses located in such region to cre7 ate jobs and increase production in surrounding 

8 areas. 

9 (f) ADDITIONAL ADMINISTRATIVE AUTHORITIES.—

10 (1) COST-SHARING.—The Secretary may re11 quire the recipient of a grant to defray, out of funds 

12 available from sources other than the Federal Gov13 ernment, a specific level of the operating expenses of 

14 the regional center for which the grant is made. 

15 (2) ADDITIONAL TERMS AND CONDITIONS.—

16 The Secretary, in awarding a grant, may impose any 

17 other terms and conditions for the use of the pro18 ceeds of the grant that the Secretary determines ap19 propriate for carrying out the purposes of this sec20 tion and to protect the interests of the United 

21 States. 

22 (g) DEFINITIONS OF SMALL BUSINESS AND ME23 DIUM-SIZED BUSINESS.—

24 (1) SECRETARY TO PRESCRIBE.—The Secretary 

25 shall prescribe the definitions of the terms ‘‘small 
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1 business’’ and ‘‘medium-sized business’’ for the pur2 pose of this section. 

3 (2) SMALL BUSINESS STANDARDS.—In defining 

4 the term ‘‘small business’’, the Secretary shall apply 

5 the standards applicable for the definition of the 

6 term ‘‘small-business concern’’ under section 3 of 

7 the Small Business Act (15 U.S.C. 632). 

8 (h) REGULATIONS.—The Secretary shall prescribe 

9 regulations for the grant program administered under this 

10 section. 

11 (i) AUTHORIZATION OF APPROPRIATIONS.—There is 

12 authorized to be appropriated for the Department of Com13 merce for carrying out this section $125,000,000 for fiscal 

14 year 2003, and such sums as are necessary for each fiscal 

15 year thereafter.

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