I

104TH CONGRESS

1ST SESSION H. R. 1913

To reform and improve the rural electrification loan programs under the

Rural Electrification Act of 1936.

IN THE HOUSE OF REPRESENTATIVES

JUNE 22, 1995

Mr. BAKER of Louisiana introduced the following bill; which was referred to

the Committee on Agriculture

A BILL

To reform and improve the rural electrification loan

programs under the Rural Electrification Act of 1936.

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 Electrification

5 Loan Reform Act of 1995’’.

6 SEC. 2. FINDINGS.

7 Congress finds that—

8 (1) the Rural Electrification Administration

9 was created to facilitate the electrification of rural

10 America by providing low-interest loans to electric
2

HR 1913 IH

1 cooperative associations and other entities for the

2 purpose of constructing and improving rural electric

3 systems;

4 (2) more than 99 percent of the residents in

5 rural areas of the United States now have affordable

6 and reliable electric service;

7 (3) a large volume of loans, at subsidized inter8 est rates, continue to be made under the Rural Elec9 trification Act of 1936 to electric cooperative bor10 rowers who could obtain financing at reasonable

11 rates and terms from a source other than the Fed12 eral Government and these borrowers have become

13 significant and successful participants in an increas14 ingly competitive electric utility industry; and

15 (4) the Federal Government should make elec16 tric utility loans only to entities that cannot other17 wise obtain credit at reasonable rates and terms

18 from commercial lenders, as it does with Federal

19 loan programs to farmers and small businesses.
3

HR 1913 IH

1 TITLE I—IMPROVEMENTS TO THE RURAL

2 ELECTRIFICATION LOANS PROGRAMS

3 SEC. 101. REFERENCES TO THE RURAL ELECTRIFICATION

4 ACT OF 1936.

5 As used in this title, the term ‘‘the Act’’ shall mean

6 the ‘‘Rural Electrification Act of 1936’’ (7 U.S.C. 901 et

7 seq.).

8 SEC. 102. CONFORMING AMENDMENT.

9 The Act is amended by striking ‘‘TITLE I—RURAL

10 ELECTRIFICATION’’ immediately prior to section 1 (7

11 U.S.C. 901).

12 SEC. 103. OBJECTIVE OF THE ACT; INVESTIGATIONS AND

13 REPORTS.

14 Effective October 1, 1995, section 2 of the Act (7

15 U.S.C. 902) is amended to read as follows:

16 ‘‘OBJECTIVE OF THE ACT; INVESTIGATIONS AND REPORTS

17 ‘‘SEC. 2. (a) The objective of this Act is to authorize

18 and empower the Secretary to make loans for the purposes

19 of—

20 ‘‘(1) furnishing and improving electric energy

21 services in rural areas of the several States and Ter22 ritories of the United States,

23 ‘‘(2) assisting rural electric borrowers to imple24 ment demand side management practices, energy

25 conservation programs, and on-grid and off-grid re26 newable energy systems, and
4

HR 1913 IH

1 ‘‘(3) furnishing and improving telephone service

2 in such areas.

3 ‘‘(b) The Secretary may make, or cause to be made,

4 studies, investigations, and reports concerning the avail5 ability of adequate electric and telephone services in rural

6 areas of the United States and its Territories and to pub7 lish and disseminate information with respect thereto.’’.

8 SEC. 104. APPLICATION OF STATE LAWS OR ORDINANCES

9 CONCERNING ELECTRIC SERVICE.

10 The Act is amended by adding, after section 2 (7

11 U.S.C. 902), the following new sections:

12 ‘‘STATE REGULATION OF ELECTRIC UTILITY SERVICE

13 ‘‘SEC. 2A. Nothing contained in this Act shall be con14 strued to deprive any State commission, board, or other

15 agency of jurisdiction, under any State law, now or here16 after effective to regulate electric service.

17 ‘‘APPLICATION OF STATE LAW

18 ‘‘SEC. 2B. (a) Nothing in this Act is intended to pre19 vent a State or political subdivision thereof from enacting

20 and enforcing a law or ordinance concerning the curtail21 ment, limitation, or geographic area of service provided

22 by an electric borrower under this Act if such law or ordi23 nance provides for the just compensation of the borrower

24 for any condemnation, forfeiture, or involuntary sale of a

25 facility, property, right, or franchise of the borrower that

26 secures a loan made under this Act. Any such condemna-
5

HR 1913 IH

1 tion, forfeiture, or involuntary sale shall not be construed

2 as interfering with the purposes of this Act.

3 ‘‘(b)(1) Not later than 30 days after a borrower re4 ceives such compensation, the Secretary shall require the

5 borrower to use the proceeds of such compensation to pre6 pay, without penalty, all or any portion of the outstanding

7 balance on any loan that was made or guaranteed under

8 this Act for which the Secretary holds a mortgage to, or

9 other security interest in, the facility, property, right, or

10 franchise for which the compensation was provided.

11 ‘‘(2) The Secretary shall also permit the borrower to

12 use any proceeds of such compensation, in excess of the

13 amount needed to prepay a loan under paragraph (1), to

14 prepay, without penalty, all or any portion of any other

15 loan of the borrower made under this Act.’’.

16 SEC. 105. REPEAL OF AUTHORITY FOR TREASURY LOANS.

17 Section 103 of the Act (7 U.S.C. 903) is repealed.

18 SEC. 106. REPEAL OF AUTHORIZATION FOR 2 PERCENT IN19 TEREST RATE ELECTRIC LOANS.

20 Section 4 of the Act (7 U.S.C. 904) is repealed.

21 SEC. 107. REPEAL OF AUTHORIZATION FOR 2 PERCENT

22 ELECTRICAL AND PLUMBING EQUIPMENT

23 LOANS.

24 Section 5 of the Act (7 U.S.C. 905) is repealed.
6

HR 1913 IH

1 SEC. 108. AUTHORIZATION FOR APPROPRIATIONS; REPEAL

2 OF REQUIREMENT FOR TESTIMONY; FEES

3 FOR NON-FINANCIAL ASSISTANCE AND SERV4 ICES.

5 Section 6 of the Act (7 U.S.C 906) is amended to

6 read as follows:

7 ‘‘AUTHORIZATION OF APPROPRIATIONS: USER FEES FOR

8 NON-FINANCIAL ASSISTANCE AND SERVICES

9 ‘‘SEC. 6. (a)(1) Except as provided for in paragraph

10 (2), there are hereby authorized to be appropriated, out

11 of any money in the Treasury not otherwise appropriated,

12 such funds as necessary for the purpose of administering

13 this Act and for the purpose of making the studies, inves14 tigations, publications, and reports provided for in section

15 2.

16 ‘‘(2) For each of the fiscal years 1996 through 2000,

17 the amount authorized to be appropriated under para18 graph (1), or otherwise made available pursuant to this

19 Act, for the purpose of administering the rural electric

20 program, shall not exceed $15,000,000.

21 ‘‘(b)(1) Effective October 1, 1995, the Secretary shall

22 establish a schedule of fees to charged for non-financial

23 assistance and services provided by the Secretary to loan

24 applicants, borrowers, and others pursuant to this Act.

25 Such assistance and services shall include, but not be lim26 ited to, those relating to accounting, personnel training,
7

HR 1913 IH

1 engineering, management auditing, data process the infor2 mation system of other Federal laws or State laws.

3 ‘‘(2) In establishing the schedule of fees under para4 graph (1), the Secretary shall ensure that the amount of

5 each fee shall be sufficient to cover the reasonable cost

6 of the assistance or service provided, as determined by the

7 Secretary.

8 ‘‘(3) The recipient of any non-financial service or as9 sistance provided by the Secretary shall pay to the Sec10 retary the amount of the fee as established in the fee

11 schedule for such service or assistance at such time as the

12 Secretary may require. All fees paid to the Secretary pur13 suant to this subsection shall be deposited in the Treasury

14 and shall be available to the Secretary, without fiscal year

15 limitation, to pay the cost of providing such non-financial

16 assistance and services pursuant to this Act.’’.

17 SEC. 109. CONFORMING AMENDMENTS.

18 Section 7 of this Act (7 U.S.C. 907) is amended by:

19 (a) In the first sentence, striking out ‘‘from the

20 sums authorized in section 3 of this Act’’, and in21 serting in lieu thereof ‘‘from funds made available

22 for the purposes of this Act’’.

23 (b) In the second sentence, by striking out ‘‘No

24 borrower of funds under sections 4 or 201’’ and in25 serting in lieu thereof ‘‘No borrower liable for the
8

HR 1913 IH

1 repayment of any telephone loan made under section

2 201, and, except as otherwise provided for in section

3 2B or any other provision of this Act, no borrower

4 who is liable on any rural electric loan made under

5 this Act.’’.

6 SEC. 110. REPEALED OF OBSOLETE PROVISION RELATING

7 TO TRANSFER OF CERTAIN FUNCTIONS.

8 (a) Section 8 of the Act (7 U.S.C. 908) is repealed.

9 (b) Any action made pursuant to section 8 prior to

10 its repeal by subsection (a) shall remain valid and in effect

11 unless otherwise revoked.

12 SEC. 111. EXPENDITURES FOR PERSONAL SERVICES, SUP13 PLIES, AND EQUIPMENT.

14 Section 11 of the Act (7 U.S.C. 911) is amended by

15 adding after ‘‘from sums appropriated pursuant to section

16 6’’ the following: ‘‘or from funds otherwise made available

17 for the purposes of administering this Act’’.

18 SEC. 112. PAYMENT DEFERRAL AUTHORITY.

19 Section 12 of the Act (7 U.S.C. 912) is amended to

20 read as follows:

21 ‘‘EXTENSION OF TIME FOR REPAYMENT OF LOANS

22 ‘‘SEC. 12. The Secretary may extend the payment of

23 interest or principal of any loan made under this Act if

24 the Secretary determines that the borrower is experiencing

25 a financial hardship. No payment of interest or principal

26 shall be extended for more than 5 years after the date
9

HR 1913 IH

1 on which such payment was originally due, and interest

2 shall accrue on the amount of any such payment at the

3 rate of interest on the underlying loan, which interest shall

4 become due and payable at the same time as the payment

5 for which the extension was made.’’.

6 SEC. 113. DEFINITION OF RURAL AREA.

7 Section 13 of the Act (7 U.S.C. 913) is amended by

8 adding at the end thereof the following: ‘‘Any determina9 tion with respect to whether an area is a rural area, under

10 the preceding sentence, shall be made at the time the ap11 plication is filed, and, any previous determination that the

12 area was rural for the purposes of this Act shall not be

13 used to make such determination.’’.

14 SEC. 114. GENERAL PROHIBITIONS; ORIGINATION FEES;

15 USE OF CONSULTANTS.

16 Section 18 of the Act (7 U.S.C. 918) is amended—

17 (a) In subsection (a), striking out ‘‘reduce any

18 loan or loan advance’’ and inserting in lieu thereof

19 ‘‘reduce any rural telephone loan or loan advance’’;

20 (b) In subsection (b), after ‘‘connection with

21 any’’, inserting ‘‘telephone’’; and

22 (c) Striking out subsection (c).
10

HR 1913 IH

1 SEC. 115. AUTHORIZATION OF LOANS TO RURAL ELECTRIC

2 PROVIDERS.

3 Effective October 1, 1995, the Act is amended by

4 adding after section 18 (7 U.S.C. 918) a new title I as

5 follows:

6 ‘‘TITLE I—RURAL ELECTRIFICATION LOANS

7 ‘‘LIMITATION ON AUTHORITY TO MAKE, INSURE, AND

8 GUARANTEE ELECTRIC LOANS

9 ‘‘SEC. 101. No electric loan shall be made, insured,

10 or guaranteed, under this Act after September 30, 1995,

11 except as authorized in sections 102 and 103.

12 ‘‘DIRECT ELECTRIC LOANS

13 ‘‘SEC. 102. (a) The Secretary is authorized and em14 powered to make loans to corporations, States, Territories,

15 and subdivisions and agencies thereof, municipalities, peo16 ple’s utility districts, and cooperative, nonprofit, or lim17 ited-dividend associations, organized under the laws of any

18 State or Territory of the United States, for the purpose

19 of financing the construction and operation of generating

20 plants, electric transmission and distribution lines or sys21 tems for the furnishing of electric energy to persons in

22 rural areas, including assisting electric borrowers to imple23 ment demand side management, energy conservation pro24 grams, and on-grid and off-grid renewable energy systems.

25 ‘‘(b) Loans made under this section shall be on such

26 terms and conditions relating to the expenditure of the
11

HR 1913 IH

1 money loaned and the security therefore as the Secretary

2 shall determine.

3 ‘‘(c)(1) The Secretary shall prioritize the making of

4 loans authorized by this section to ensure that eligible ap5 plicants with the greatest need for Federal assistance shall

6 have the highest priority for available loan funds.

7 ‘‘(2) In establishing such priorities, the Secretary

8 shall consider the following indicators of need:

9 ‘‘(A) The net income before interest of the ap10 plicant.

11 ‘‘(B) The weighted average of per capita per12 sonal income for the area served or to be served by

13 the applicant.

14 ‘‘(C) The weighted average unemployment rate

15 of the area served or to be served by the applicant.

16 ‘‘(D) An average annual rate of growth in the

17 total kilowatt hour sales of the applicant during the

18 five year period preceding the date on which the ap19 plication was made.

20 ‘‘(E) The rate of disparity, measured as the dif21 ference between the residential rate of the applicant

22 and the average residential rate in the State for all

23 electric utilities, including utilities that are not bor24 rowers under this Act.
12

HR 1913 IH

1 ‘‘(F) The rate level, measured by the average

2 revenue per kilowatt hour that is sold by the appli3 cant to residential and farm consumers.

4 ‘‘(G) The cost of power per kilowatt hour pur5 chased or generated by the applicant.

6 ‘‘(H) The total kilowatt hour sales per mile of

7 distribution and transmission line, excluding large

8 commercial and industrial consumers and sales for

9 resale.

10 ‘‘(I) The value of distribution and transmission

11 plants in service per kilowatt hours of electricity

12 sold.

13 ‘‘(d)(1)(A) The Secretary shall not make any loan

14 under this section if the Secretary determines that the ap15 plicant is capable of producing net income before interest

16 of more than 500 percent of the interest requirements on

17 all of the outstanding and proposed loans of the applicant

18 for which the final maturity is greater than one year.

19 ‘‘(B) If the Secretary determines that the applicant

20 is capable of producing net income before interest of more

21 than 200 percent of the interest requirement of all of the

22 outstanding and proposed loans of the applicant for which

23 the final maturity is greater than one year, the Secretary

24 shall require the applicant to secure at least 10 percent

25 of the total financing required for the proposed project
13

HR 1913 IH

1 with a loan from a commercial, cooperative, or other le2 gally organized non-governmental lending institution,

3 which loan may not be guaranteed under section 103.

4 ‘‘(2) The Secretary shall not make a loan under this

5 section unless the Secretary determines that the applicant

6 is capable of producing income sufficient to repay the loan

7 in accordance to its terms within the agreed time, pay in8 terest on the loan as it becomes due, and repay all other

9 outstanding and proposed indebtedness of the applicant,

10 together with any interest thereon, as payments become

11 due.

12 ‘‘(3)(A) The Secretary shall not make any loan under

13 this section unless the Secretary determines that the appli14 cant is unable to obtain all or any part of the funds needed

15 by the applicant elsewhere, including from—

16 ‘‘(i) general funds of the applicant that are in

17 excess of an amount needed for a reasonable reserve,

18 or

19 ‘‘(ii) loans (with or without a guarantee under

20 section 103) from commercial, cooperative, or other

21 legally organized lending institutions at reasonable

22 rates and terms for loans for similar purposes and

23 periods of time.

24 ‘‘(B) The Secretary shall require the applicant to cer25 tify in writing that the applicant is unable to obtain suffi-
14

HR 1913 IH

1 cient credit elsewhere to finance all or any part of the ac2 tual needs of the applicant at reasonable rates and terms,

3 taking into consideration prevailing rates for loans and ob4 ligations for similar purposes and periods of time.

5 ‘‘(4) The Secretary shall not make any loan under

6 this section unless the Secretary determines that the secu7 rity for the loan will be adequate to ensure full payment

8 of the loan.

9 ‘‘(5) The Secretary shall not make any loan under

10 this section unless the applicant has agreed to comply with

11 the requirements of the graduation program established

12 under section 105.

13 ‘‘(6) The Secretary shall not make any loan under

14 this section unless all additional requirements of section

15 104 have been met.

16 ‘‘(e) The term of each loan made under this section

17 shall be determined by the Secretary and shall not exceed

18 35 years, or the expected useful life of the assets being

19 financed, whichever is less.

20 ‘‘(f)(1) Except as provided for in paragraph (2), the

21 rate of interest on loans under this section shall be equal

22 to the then current cost of money to the Government of

23 the United States for obligations of comparable maturity.

24 ‘‘(2)(A) If the Secretary determines that the appli25 cant is not capable of producing net income before interest
15

HR 1913 IH

1 of more than 200 percent of the interest requirements on

2 all of the outstanding and proposed loans of the applicant

3 for which the final maturity is greater than one year, the

4 rate of interest on the loan shall be the rate established

5 under paragraph (1) but not more than 5 percent per

6 year, except as provided under subparagraph (B).

7 ‘‘(B) For any loan whose term is 10 years or more

8 and whose interest rate is limited to 5 percent per year

9 under subparagraph (A), the Secretary shall review the

10 financial status of the borrower every 2 years, and, if the

11 Secretary determines that the borrower is capable of pro12 ducing net income before interest of more than 200 per13 cent of the interest requirements on all of the outstanding

14 and proposed loans of the applicant for which the final

15 maturity is greater than one year, the 5 percent limitation

16 shall no longer apply to the loan and the rate for the re17 maining term of the loan shall be the original rate estab18 lished under paragraph (1).

19 ‘‘(g) The Secretary shall charge a loan origination fee

20 of 1 percent of the amount of the loan if the Secretary

21 determines that the applicant is capable of producing net

22 income before interest of more than 200 percent of the

23 interest requirements on all of the outstanding and pro24 posed loans of the applicant for which the final maturity

25 is greater than one year.
16

HR 1913 IH

1 ‘‘(h) The Secretary may provide a borrower the right

2 to make payment in full on a loan made under this section

3 in advance of final maturity on terms consistent with those

4 provided for commercial loans for similar purposes and

5 maturities.

6 ‘‘GUARANTEES OF ELECTRIC LOANS FROM NON-GOVERN7 MENTAL SOURCES OF CREDIT; LIEN ACCOMMODA8 TIONS

9 ‘‘SEC. 103. (a)(1) To the extent set out in paragraph

10 (2), the Secretary is authorized and empowered to guaran11 tee loans that are made by commercial, cooperative, or

12 other legally-organized non-governmental lending institu13 tions to any entity for any purpose described in section

14 102(a).

15 ‘‘(2) The Secretary shall guarantee only the payment

16 of that portion of the principal of the loan, and that por17 tion of the interest thereon, that the lender requires as

18 a condition for making the loan. The amount of any such

19 guarantee shall not exceed 90 percent of the principal of

20 the loan and the interest thereon.

21 ‘‘(3) The Secretary shall not guarantee any loan to

22 an entity that the Secretary determines is capable of pro23 ducing income before interest of more than 600 percent

24 of the interest requirements on all of the outstanding and

25 proposed loans of the entity for which the final maturity

26 is greater than one year.
17

HR 1913 IH

1 ‘‘(4) The Secretary shall impose such fees and

2 charges to cover the administrative expense related to any

3 guarantee made under this section as the Secretary deter4 mines reasonable.

5 ‘‘(5) Any contract of guarantee executed by the Sec6 retary under this section shall be an obligation supported

7 by the full faith and credit of the United States and incon8 testable except for fraud or misrepresentation of which the

9 holder of the guarantee had actual knowledge at the time

10 it became a holder.

11 ‘‘(b) In order to encourage non-governmental lenders

12 to make loans to eligible entities, or to provide a greater

13 portion of the credit needs of an applicant for a loan under

14 section 102, the Secretary is authorized to share the Gov15 ernment’s lien on the loan applicant’s or borrower’s assets

16 or to subordinate the Government’s lien on the property

17 to be financed by the lender. The Secretary shall not offer

18 such accommodation or subordination unless the Secretary

19 determines that the security for all loans made or guaran20 teed under this Act, the payment of which the borrower

21 is liable, will remain reasonably adequate.

22 ‘‘ADDITIONAL REQUIREMENTS AND PROVISIONS

23 RELATING TO LOANS AND GUARANTEES

24 ‘‘SEC. 104. (a) The Secretary shall not make any loan

25 under section 102 or guarantee any loan under section

26 103—
18

HR 1913 IH

1 ‘‘(1) if the applicant or borrower has not agreed

2 to follow generally accepted accounting procedures

3 and management practices; and

4 ‘‘(2) if the applicant or borrower fails to agree

5 to provide to the Secretary a complete and current

6 set of all residential, commercial, or industrial tariffs

7 or rate schedules, power sale agreements, and trans8 mission agreements, and any subsequent changes

9 made thereto, and any additional power sale and

10 transmission agreements entered into by the bor11 rower, during the term of the loan; any such tariffs,

12 schedules, and agreements provided to the Secretary

13 shall be deemed public information and shall be

14 made available within 10 working days of receipt of

15 a verbal, written, or electronically transmitted re16 quest reasonably describing the information sought.

17 ‘‘(b) The Secretary shall ensure that funds shall not

18 be advanced under any loan made under section 102 or

19 guaranteed under section 103 unless the approval of any

20 State or Federal agency required with respect to the

21 project to be financed by the loan, or its financing, has

22 been obtained and remains in effect.

23 ‘‘(c) If the Secretary determines that the level of gen24 eral funds of an applicant or borrower is in excess of that
19

HR 1913 IH

1 needed for a reasonable reserve, the Secretary shall re2 duce—

3 ‘‘(A) the amount of the loan request in the case

4 of an applicant under section 102,

5 ‘‘(B) the amount of any advance on a loan

6 made under section 102, or

7 ‘‘(C) the amount of any guarantee under sec8 tion 103.

9 ‘‘(d) Loans may be made under section 102 or guar10 anteed only to the extent that electrical service to consum11 ers in rural areas will be provided or improved by the facil12 ity being financed.

13 ‘‘GRADUATION PROGRAM

14 ‘‘SEC. 105. (a) The Secretary shall establish a pro15 gram under which at least once every 2 years each loan

16 made under section 102 shall be reviewed to determine

17 whether the borrower—

18 ‘‘(1) is able to repay all or any part of the loan

19 with general funds in excess of that needed for a

20 reasonable reserve, or

21 ‘‘(2) may be able to obtain credit from a com22 mercial, cooperative, or other legally organized non23 governmental lending institution in an amount suffi24 cient to meet all or any part of the credit needs of

25 the borrower at reasonable rates and terms, taking
20

HR 1913 IH

1 into consideration prevailing rates for loans and obli2 gations for similar purposes and periods of time.

3 ‘‘(b)(1) To the extent that the Secretary determines

4 that the borrower is able to repay all or any part of the

5 loan from general funds, the borrower shall make payment

6 in full or in part on the loan, without penalty, prior to

7 the final maturity date of the loan.

8 ‘‘(2) If the Secretary determines that the borrower

9 may be able to meet all or any part of its credit needs

10 for other lenders, with or without a loan guarantee under

11 section 103, the borrower will be required to—

12 ‘‘(A) apply for and accept credit from such

13 lenders, and purchase any stock necessary in connec14 tion with the loan if the source is a cooperative lend15 ing institution; and

16 ‘‘(B) use the proceeds of such credit to make

17 payment, in full or in part, without penalty, on any

18 loan made to the borrower under section 102 prior

19 to the full maturity date of such loan.

20 ‘‘FAILURE TO COMPLY WITH THE ACT

21 ‘‘SEC. 106. If a borrower of a loan made under sec22 tion 102 fails to comply with any provision of this Act,

23 or any agreement between the borrower and the Secretary

24 made pursuant thereto, including, but not limited to, the

25 provisions of section 104(a)(6) and section 105, the

26 amount outstanding on the loan shall become due and pay-
21

HR 1913 IH

1 able upon receipt of a written notice of such failure issued

2 by the Secretary to the borrower. Such notice shall be

3 given to the borrower as soon as possible after such failure

4 to comply with the Act occurs.

5 ‘‘LIMITATION ON AUTHORIZATION FOR APPROPRIATIONS

6 ‘‘SEC. 107. In the case of each fiscal year 1996

7 through 2000, there are authorized to be appropriated to

8 the Secretary for the cost, as defined in section 502 of

9 the Congressional Budget Act of 1974, of loans made and

10 guaranteed under this title, $25,000,000.’’.

11 SEC. 116. CONFORMING AMENDMENT.

12 Section 201 of the Act (7 U.S.C. 922) is amended,

13 in the first sentence, by—

14 (a) striking out ‘‘section 3 of’’; and

15 (b) striking out ‘‘as are provided in section 4 of

16 this Act’’ and inserting ‘‘as was provided in section

17 4 of this Act prior to its repeal.’’.

18 SEC. 117. RURAL ELECTRIFICATION AND TELEPHONE RE19 VOLVING FUND.

20 Section 301 of the Act (7 U.S.C. 931) is amended

21 by—

22 (a) redesignating subsection (a) as subsection

23 (b);

24 (b) adding a new subsection (a) as follows:
22

HR 1913 IH

1 ‘‘(a) The provisions of this title shall be applicable

2 only to rural electric loans made prior to October 1, 1995,

3 and to rural telephone loans.’’; and

4 (c) in subsection (b), as redesignated,—

5 (1) in paragraph (1), striking out ‘‘under

6 sections 4, 5, and 201 of this Act’’ and insert7 ing in lieu thereof ‘‘under sections 4 and 5,

8 prior to their repeal, and section 201 of this

9 Act’’;

10 (2) in paragraph (2), striking out ‘‘under

11 sections 4, 5, and 201’’ and inserting in lieu

12 thereof ‘‘under sections 4 and 5, prior to their

13 repeal, and section 201 of this Act’’; and

14 (3) in paragraph (3)—

15 (A) striking out ‘‘notwithstanding sec16 tion 3(a) of title I’’; and

17 (B) striking out ‘‘held under titles I

18 and II of this Act’’ and inserting in lieu

19 thereof ‘‘held under sections 2 through 18

20 of this Act, prior to the amendments made

21 thereto by the ‘‘Rural Electrification Loan

22 Reform Act of 1995, and title II of this

23 Act’’.
23

HR 1913 IH

1 SEC. 118. CONFORMING AMENDMENTS.

2 Section 302 of the Act (7 U.S.C. 932) is amended

3 by—

4 (a) in subsection (a), striking out ‘‘under sec5 tions 4, 5, and 201 of this Act’’ and inserting in lieu

6 thereof ‘‘under sections 4 and 5, prior to their re7 peal, and section 201 of this Act’’; and

8 (b) in subsection (b)—

9 (1) in paragraph (1), striking out ‘‘under

10 sections 4, 5, and 201 of this Act’’ and insert11 ing in lieu thereof ‘‘under sections 4 and 5,

12 prior to their repeal, and section 201 of this

13 Act’’; and

14 (2) in paragraph (2), adding after ‘‘pursu15 ant to section 3(a) of this Act’’ the following:

16 ‘‘prior to its repeal’’.

17 SEC. 119. COST OF MONEY RATES FOR CERTAIN ELECTRIC

18 BORROWERS.

19 Section 305(c)(2) of the Act (7 U.S.C. 935(c)(2)) is

20 amended to read as follows:

21 ‘‘(2) COST OF MONEY LOANS.—The Secretary

22 shall make insured electric loans, to the extent of

23 qualifying applications, to eligible applicants that do

24 not meet the requirements for hardship loans under

25 paragraph (1) at the rate of interest equal to the
24

HR 1913 IH

1 then current cost of money to the Government of the

2 United States for loans of similar maturity.’’.

3 SEC. 120. LIMITATION ON TERM OF LOANS.

4 Section 305(c) of the Act (7 U.S.C. 935(c)) is amend5 ed by adding at the end thereof a new paragraph (4) as

6 follows:

7 ‘‘(4) LIMITATION ON TERMS OF LOANS.—The

8 term of any loan made under this subsection may

9 not exceed the expected useful life of the assets

10 being financed or 35 years, whichever is less.’’.

11 SEC. 121. ACCOMMODATION AND SUBORDINATION OF

12 LIENS TO ASSIST CERTAIN BORROWERS IN

13 ACQUIRING CREDIT AFTER OCTOBER 1, 1995.

14 Effective October 1, 1995, section 306 of the Act (7

15 U.S.C. 936) is amended by—

16 (a) adding ‘‘(a)’’ before the first sentence; and

17 (b) adding at the end thereof a new subsection

18 (b) as follows:

19 ‘‘(b) In order to assist borrowers with outstanding

20 electric loans made under this Act prior to October 1,

21 1995, who are not eligible for loans under section 102 to

22 meet their further credit needs from commercial, coopera23 tive, or other legally organized lending institutions, the

24 Secretary is authorized to share the Government’s lien on

25 the borrower’s assets or to subordinate the Government’s
25

HR 1913 IH

1 lien on the property to be financed by the lender to the

2 extent that the Secretary determines that the security for

3 all loans of the borrower made or guaranteed under this

4 Act will remain reasonably adequate.’’.

5 SEC. 122. REPEAL OF AUTHORIZATION TO REFINANCE FED6 ERAL FINANCING BANK LOANS.

7 Section 306C of the Act (7 U.S.C. 936c) is repealed.

8 SEC. 123. REPEAL OF REQUIREMENT FOR SPECIAL TREAT9 MENT OF CERTAIN ELECTRIC BORROWERS.

10 Section 306E of the Act (7 U.S.C. 936e) is repealed.

11 SEC. 124. REPEAL OF 30 PERCENT LIMITATION ON RE12 QUIRED FINANCING FROM OTHER SOURCES.

13 Section 307 of the Act (7 U.S.C. 937) is amended

14 by striking the last sentence thereof.

15 SEC. 125. REPEAL OF AUTHORIZATION TO REFINANCE CER16 TAIN RURAL DEVELOPMENT LOANS.

17 Section 310 of the Act (7 U.S.C. 940) is repealed.

18 SEC. 126. USE OF FUNDS.

19 Section 312 of the Act (7 U.S.C. 940b) is repealed.

20 SEC. 127. REPEAL OF CUSHION OF CREDIT PAYMENTS.

21 Section 313 of the Act (7 U.S.C. 940c) is repealed.

22 SEC. 128. REPEAL OF CERTAIN AUTHORIZATIONS FOR

23 APPROPRIATIONS.

24 Section 314 of the Act (7 U.S.C. 940d) is amended

25 in subsection (b) by—
26

HR 1913 IH

1 (a) striking out paragraphs (1) and (2); and

2 (b) renumbering paragraphs (3) and (4) as

3 paragraphs (1) and (2), respectively.

4 TITLE II—PRESERVATION OF EXCLUSIVE

5 STATE JURISDICTION OVER RETAIL

6 ELECTRIC SERVICE TERRITORIES

7 SEC. 201. AMENDMENT TO THE FEDERAL POWER ACT OF

8 1935.

9 Section 201 of the Federal Power Act of 1935 (16

10 U.S.C. 824) is amended by adding at the end thereof the

11 following new subsection:

12 ‘‘(h) EXCLUSIVE STATE JURISDICTION OVER ALLO13 CATION OF RETAIL ELECTRIC SERVICE TERRITORIES.—

14 Notwithstanding any other provision of law, the regulation

15 and allocation of service territories or service areas to pro16 viders of electric service shall be subject only to State law

17 and shall not be subject to the requirements of this Act,

18 or any other provision of Federal law. No Executive agen19 cy (as defined in section 105 of title 5, United States

20 Code) shall have authority to preempt or interfere with

21 the operation of any law of a State or a political subdivi22 sion of a State relating to a service territory or service

23 area allocation to providers of electric service.’’.

Æ

HR 1913 IH——2