103D CONGRESS

1ST SESSION H. R. 3123

AN ACT

To improve the electric and telephone loans proAct of 1936, and for other purposes. grams carried out under the Rural Electrification
103D CONGRESS

1ST SESSION H. R. 3123

AN ACT

To improve the electric and telephone loan programs carried

out under the Rural Electrification Act of 1936, and

for other purposes.

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 Restructuring Act of 1993’’.
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1 SEC. 2. ELECTRIC AND TELEPHONE LOAN PROGRAMS.

2 (a) INSURED ELECTRIC AND TELEPHONE LOANS.—

3 (1) IN GENERAL.—Section 305 of the Rural

4 Electrification Act of 1936 (7 U.S.C. 935) is amend5 ed—

6 (A) by striking subsections (b) and (d);

7 (B) by redesignating subsection (c) as sub8 section (b); and

9 (C) by inserting after subsection (b) (as so

10 redesignated) the following new subsections:

11 ‘‘(c) INSURED ELECTRIC LOANS.—

12 ‘‘(1) HARDSHIP LOANS.—

13 ‘‘(A) IN GENERAL.—The Administrator

14 shall make insured electric loans, to the extent

15 of qualifying applications for the loans, at an

16 interest rate of 5 percent per year to any appli17 cant for a loan who meets each of the following

18 requirements:

19 ‘‘(i) The average revenue per kilowatt20 hour sold by the applicant is not less than

21 120 percent of the average revenue per kil22 owatt-hour sold by all utilities in the State

23 in which the applicant provides service.

24 ‘‘(ii) The average residential revenue

25 per kilowatt-hour sold by the applicant is

26 not less than 120 percent of the average
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1 residential revenue per kilowatt-hour sold

2 by all utilities in the State in which the ap3 plicant provides service.

4 ‘‘(iii) The average per capita income

5 of the residents receiving electric service

6 from the applicant is less than the average

7 per capita income of the residents of the

8 State in which the applicant provides serv9 ice, or the median household income of the

10 households receiving electric service from

11 the applicant is less than the median

12 household income of the households in the

13 State.

14 ‘‘(B) SEVERE HARDSHIP LOANS.—In addi15 tion to hardship loans that are made under sub16 paragraph (A), the Administrator may make an

17 insured electric loan at an interest rate of 5

18 percent per year to an applicant for a loan if,

19 in the sole discretion of the Administrator, the

20 applicant has experienced a severe hardship.

21 ‘‘(C) LIMITATION.—Except as provided in

22 subparagraph (D), the Administrator may not

23 make a loan under this paragraph to an appli24 cant for the purpose of furnishing or improving

25 electric service to a consumer located in an
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1 urban area (as defined by the Bureau of the

2 Census) if the average number of consumers

3 per mile of line of the total electric system of

4 the applicant exceeds 17.

5 ‘‘(D) EXTREMELY HIGH RATES.—In addi6 tion to hardship loans that are made under sub7 paragraphs (A) and (B), the Administrator

8 shall make insured electric loans, to the extent

9 of qualifying applications for the loans, at an

10 interest rate of 5 percent per year to any appli11 cant for a loan whose residential revenue ex12 ceeds 15.0 cents per kilowatt-hour sold. A

13 qualifying application from such an applicant

14 for the purpose of furnishing or improving elec15 tric service to a consumer located outside of an

16 urban area shall not be subject to the condi17 tions or limitation of subparagraph (A) or

18 (C).’’.

19 ‘‘(2) MUNICIPAL RATE LOANS.—

20 ‘‘(A) IN GENERAL.—The Administrator

21 shall make insured electric loans, to the extent

22 of qualifying applications for the loans, at the

23 interest rate described in subparagraph (B) for

24 the term or terms selected by the applicant pur25 suant to subparagraph (C).
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1 ‘‘(B) INTEREST RATE.—

2 ‘‘(i) IN GENERAL.—Subject to clause

3 (ii), the interest rate described in this sub4 paragraph on a loan to a qualifying appli5 cant shall be—

6 ‘‘(I) the interest rate determined

7 by the Administrator to be equal to

8 the current market yield on outstand9 ing municipal obligations with remain10 ing periods to maturity similar to the

11 term selected by the applicant pursu12 ant to subparagraph (C), but not

13 greater than the rate determined

14 under section 307(a)(3)(A) of the

15 Consolidated Farm and Rural Devel16 opment Act (7 U.S.C. 1927(a)(3)(A))

17 that is based on the current market

18 yield on outstanding municipal obliga19 tions; plus

20 ‘‘(II) if the applicant for the loan

21 makes an election pursuant to sub22 paragraph (D) to include in the loan

23 agreement the right of the applicant

24 to prepay the loan, a rate equal to the

25 amount by which—
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1 ‘‘(aa) the interest rate on

2 commercial loans for a similar

3 period that afford the borrower

4 such a right; exceeds

5 ‘‘(bb) the interest rate on

6 commercial loans for the period

7 that do not afford the borrower

8 such a right.

9 ‘‘(ii) MAXIMUM RATE.—The interest

10 rate described in this subparagraph on a

11 loan to an applicant for the loan shall not

12 exceed 7 percent if—

13 ‘‘(I) the average number of con14 sumers per mile of line of the total

15 electric system of the applicant is less

16 than 5.50; or

17 ‘‘(II)(aa) the average revenue per

18 kilowatt-hour sold by the applicant is

19 more than the average revenue per

20 kilowatt-hour sold by all utilities in

21 the State in which the applicant pro22 vides service; and

23 ‘‘(bb) the average per capita in24 come of the residents receiving electric

25 service from the applicant is less than
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1 the average per capita income of the

2 residents of the State in which the ap3 plicant provides service, or the median

4 household income of the households

5 receiving electric service from the ap6 plicant is less than the median house7 hold income of the households in the

8 State.

9 ‘‘(iii) EXCEPTION.—Clause (ii) shall

10 not apply to a loan to be made to an appli11 cant for the purpose of furnishing or im12 proving electric service to consumers lo13 cated in an urban area (as defined by the

14 Bureau of the Census) if the average num15 ber of consumers per mile of line of the

16 total electric system of the applicant ex17 ceeds 17.

18 ‘‘(C) LOAN TERM.—

19 ‘‘(i) IN GENERAL.—Subject to clause

20 (ii), the applicant for a loan under this

21 paragraph may select the term for which

22 an interest rate shall be determined pursu23 ant to subparagraph (B), and, at the end

24 of the term (and any succeeding term se25 lected by the applicant under this subpara-
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1 graph), may renew the loan for another

2 term selected by the applicant.

3 ‘‘(ii) MAXIMUM TERM.—

4 ‘‘(I) APPLICANT.—The applicant

5 may not select a term that ends more

6 than 35 years after the beginning of

7 the first term the applicant selects

8 under clause (i).

9 ‘‘(II) ADMINISTRATOR.—The Ad10 ministrator may prohibit an applicant

11 from selecting a term that would re12 sult in the total term of the loan being

13 greater than the expected useful life

14 of the assets being financed.

15 ‘‘(D) CALL PROVISION.—The Adminis16 trator shall offer any applicant for a loan under

17 this paragraph the option to include in the loan

18 agreement the right of the applicant to prepay

19 the loan on terms consistent with similar provi20 sions of commercial loans.

21 ‘‘(3) OTHER SOURCE OF CREDIT NOT RE22 QUIRED IN CERTAIN CASES.—The Administrator

23 may not require any applicant for a loan made

24 under this subsection who is eligible for a loan under

25 paragraph (1) to obtain a loan from another source
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1 as a condition of approving the application for the

2 loan or advancing any amount under the loan.

3 ‘‘(d) INSURED TELEPHONE LOANS.—

4 ‘‘(1) HARDSHIP LOANS.—

5 ‘‘(A) IN GENERAL.—The Administrator

6 shall make insured telephone loans, to the ex7 tent of qualifying applications for the loans, at

8 an interest rate of 5 percent per year, to any

9 applicant who meets each of the following re10 quirements:

11 ‘‘(i) The average number of subscrib12 ers per mile of line in the service area of

13 the applicant is not more than 4.

14 ‘‘(ii) The applicant is capable of pro15 ducing net income or margins before inter16 est of not less than 100 percent (but not

17 more than 300 percent) of the interest re18 quirements on all of the outstanding and

19 proposed loans of the applicant.

20 ‘‘(iii) The Administrator has approved

21 a telecommunications modernization plan

22 for the State under paragraph (3) and, if

23 the plan was developed by telephone bor24 rowers under this title, the applicant is a

25 participant in the plan.
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1 ‘‘(iv) The average number of subscrib2 ers per mile of line in the area included in

3 the proposed loan is not more than 17.

4 ‘‘(B) AUTHORITY TO WAIVE TIER RE5 QUIREMENT.—The Administrator may waive

6 the requirement of subparagraph (A)(ii) in any

7 case in which the Administrator determines

8 (and sets forth the reasons for the waiver in

9 writing) that the requirement would prevent

10 emergency restoration of the telephone system

11 of the applicant or result in severe hardship to

12 the applicant.

13 ‘‘(C) EFFECT OF LACK OF FUNDS.—On re14 quest of any applicant who is eligible for a loan

15 under this paragraph for which funds are not

16 available, the applicant shall be considered to

17 have applied for a loan under title IV.

18 ‘‘(2) COST-OF-MONEY LOANS.—

19 ‘‘(A) IN GENERAL.—The Administrator

20 may make insured telephone loans for the ac21 quisition, purchase, and installation of tele22 phone lines, systems, and facilities (other than

23 buildings used primarily for administrative pur24 poses, vehicles not used primarily in construc25 tion, and customer premise equipment) related
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1 to the furnishing, improvement, or extension of

2 rural telecommunications service, at an interest

3 rate equal to the then current cost of money to

4 the Government of the United States for loans

5 of similar maturity, but not more than 7 per6 cent per year, to any applicant for a loan who

7 meets the following requirements:

8 ‘‘(i) The average number of subscrib9 ers per mile of line in the service area of

10 the applicant is not more than 15, or the

11 applicant is capable of producing net in12 come or margins before interest of not less

13 than 100 percent (but not more than 500

14 percent) of the interest requirements on all

15 of the outstanding and proposed loans of

16 the applicant.

17 ‘‘(ii) The Administrator has approved

18 a telecommunications modernization plan

19 for the State under paragraph (3) and, if

20 the plan was developed by telephone bor21 rowers under this title, the applicant is a

22 participant in the plan.

23 ‘‘(B) CONCURRENT LOAN AUTHORITY.—

24 On request of any applicant for a loan under
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1 this paragraph during any fiscal year, the Ad2 ministrator shall—

3 ‘‘(i) consider the application to be for

4 a loan under this paragraph and a loan

5 under section 408; and

6 ‘‘(ii) if the applicant is eligible for a

7 loan, make a loan to the applicant under

8 this paragraph in an amount equal to the

9 amount that bears the same ratio to the

10 total amount of loans for which the appli11 cant is eligible under this paragraph and

12 under section 408, as the amount made

13 available for loans under this paragraph

14 for the fiscal year bears to the total

15 amount made available for loans under this

16 paragraph and under section 408 for the

17 fiscal year.

18 ‘‘(C) EFFECT OF LACK OF FUNDS.—On re19 quest of any applicant who is eligible for a loan

20 under this paragraph for which funds are not

21 available, the applicant shall be considered to

22 have applied for a loan guarantee under section

23 306.

24 ‘‘(3) STATE TELECOMMUNICATIONS MOD25 ERNIZATION PLANS.—
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1 ‘‘(A) APPROVAL.—If, not later than 1 year

2 after final regulations are promulgated to carry

3 out this paragraph, any State, either by statute

4 or through the public utility commission of the

5 State, develops a telecommunications mod6 ernization plan that meets the requirements of

7 subparagraph (B), the Administrator shall ap8 prove the plan for the State. If a State does not

9 develop a plan in accordance with the require10 ments of the preceding sentence, the Adminis11 trator shall approve any telecommunications

12 modernization plan for the State that meets the

13 requirements that is developed by a majority of

14 the borrowers of telephone loans made under

15 this title who are located in the State.

16 ‘‘(B) REQUIREMENTS.—For purposes of

17 subparagraph (A), a telecommunications mod18 ernization plan must, at a minimum, meet the

19 following objectives:

20 ‘‘(i) The plan must provide for the

21 elimination of party line service.

22 ‘‘(ii) The plan must provide for the

23 availability of telecommunications services

24 for improved business, educational, and

25 medical services.
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1 ‘‘(iii) The plan must encourage and

2 improve computer networks and informa3 tion highways for subscribers in rural

4 areas.

5 ‘‘(iv) The plan must provide for—

6 ‘‘(I) subscribers in rural areas to

7 be able to receive through telephone

8 lines—

9 ‘‘(aa) conference calling;

10 ‘‘(bb) video images; and

11 ‘‘(cc) data at a rate of at

12 least 1,000,000 bits of informa13 tion per second; and

14 ‘‘(II) the proper routing of infor15 mation to subscribers.

16 ‘‘(v) The plan must provide for uni17 form deployment schedules to ensure that

18 advanced services are deployed at the same

19 time in rural and nonrural areas.

20 ‘‘(vi) The plan must provide for such

21 additional requirements for service stand22 ards as may be required by the Adminis23 trator.

24 ‘‘(C) FINALITY OF APPROVAL.—A tele25 communications modernization plan approved
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1 under subparagraph (A) may not subsequently

2 be disapproved. Notwithstanding paragraphs

3 (1)(A)(iii) and (2)(A)(iii), and section

4 408(b)(4)(C), the Administrator and the Gov5 ernor of the telephone bank may make a loan

6 to a borrower serving a State that does not

7 have a telecommunication modernization plan

8 approved by the Administrator if the loan is

9 made less than 1 year after the Administrator

10 has adopted final regulations implementing this

11 paragraph.’’.

12 (2) RURAL TELEPHONE BANK LOAN PRO13 GRAM.—Section 408 of such Act (7 U.S.C. 948) is

14 amended—

15 (A) in subsection (a), by striking ‘‘, (2)’’

16 and all that follows through ‘‘408 of this Act,’’

17 and inserting ‘‘, (2) for the acquisition, pur18 chase, and installation of telephone lines, sys19 tems, and facilities (other than buildings used

20 primarily for administrative purposes, vehicles

21 not used primarily in construction, and cus22 tomer premise equipment) related to the fur23 nishing, improvement, or extension of rural tele24 communications service,’’;

25 (B) in subsection (b)—
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1 (i) by striking paragraph (4) and in2 serting the following new paragraph:

3 ‘‘(4) The Governor of the telephone bank may

4 make a loan under this section only to an applicant

5 for the loan who meets the following requirements:

6 ‘‘(A) The average number of subscribers

7 per mile of line in the service area of the appli8 cant is not more than 15, or the applicant is ca9 pable of producing net income or margins be10 fore interest of not less than 100 percent (but

11 not more than 500 percent) of the interest re12 quirements on all of the outstanding and pro13 posed loans of the applicant.

14 ‘‘(B) The Administrator has approved,

15 under section 305(d)(3), a telecommunications

16 modernization plan for the State in which the

17 applicant is located and, if the plan was devel18 oped by telephone borrowers under title III, the

19 applicant is a participant in the plan.’’;

20 (ii) in paragraph (8)—

21 (I) by inserting ‘‘(A)’’ after

22 ‘‘(8)’’;

23 (II) by striking ‘‘if such prepay24 ment is not made later than Septem25 ber 30, 1988’’ and inserting ‘‘except
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1 for any prepayment penalty provided

2 for in a loan agreement entered into

3 before the date of enactment of the

4 Rural Electrification Loan Restruc5 turing Act of 1993’’; and

6 (III) by adding at the end the

7 following new subparagraph:

8 ‘‘(B) If a borrower prepays part or all of a loan

9 made under this section, then, notwithstanding sec10 tion 407(b), the Governor of the telephone bank

11 shall—

12 ‘‘(i) use the full amount of the prepayment

13 to repay obligations of the telephone bank is14 sued pursuant to section 407(b) before October

15 1, 1991, to the extent any such obligations are

16 outstanding; and

17 ‘‘(ii) in repaying the obligations, first repay

18 the advances bearing the greatest rate of inter19 est.’’; and

20 (iii) by adding at the end the follow21 ing new paragraphs:

22 ‘‘(9) On request of any applicant for a loan

23 under this section during any fiscal year, the Gov24 ernor of the telephone bank shall—
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1 ‘‘(A) consider the application to be for a

2 loan under this section and a loan under section

3 305(d)(2); and

4 ‘‘(B) if the applicant is eligible for a loan,

5 make a loan to the applicant under this section

6 in an amount equal to the amount that bears

7 the same ratio to the total amount of loans for

8 which the applicant is eligible under this section

9 and under section 305(d)(2), as the amount

10 made available for loans under this section for

11 the fiscal year bears to the total amount made

12 available for loans under this section and under

13 section 305(d)(2) for the fiscal year.

14 ‘‘(10) On request of any applicant who is eligi15 ble for a loan under this section for which funds are

16 not available, the applicant shall be considered to

17 have applied for a loan under section 305(d)(2).’’;

18 and

19 (C) by adding at the end the following new

20 subsection:

21 ‘‘(e) Loans and advances made under this section on

22 or after November 5, 1990, shall bear interest at a rate

23 determined under this section, taking into account all as24 sets and liabilities of the telephone bank. This subsection

25 shall not apply to loans obligated before the date of enact-
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1 ment of this subsection. Funds are not authorized to be

2 appropriated to carry out this subsection until the funds

3 are appropriated in advance to carry out this subsection.’’.

4 (b) FUNDING.—

5 (1) LIMITATIONS ON AUTHORIZATION OF AP6 PROPRIATIONS.—Section 314 of such Act (7 U.S.C.

7 940d) is amended to read as follows:

8 ‘‘SEC. 314. LIMITATIONS ON AUTHORIZATION OF APPRO9 PRIATIONS.

10 ‘‘(a) DEFINITION OF ADJUSTMENT PERCENTAGE.—

11 As used in this section, the term ‘adjustment percentage’

12 means, with respect to a fiscal year, the percentage (if

13 any) by which—

14 ‘‘(1) the average of the Consumer Price Index

15 (as defined in section 1(f)(5) of the Internal Reve16 nue Code of 1986) for the 1-year period ending on

17 July 31 of the immediately preceding fiscal year;

18 exceeds

19 ‘‘(2) the average of the Consumer Price Index

20 (as so defined) for the 1-year period ending on July

21 31, 1993.

22 ‘‘(b) FISCAL YEARS 1994 THROUGH 1998.—In the

23 case of each of fiscal years 1994 through 1998, there are

24 authorized to be appropriated to the Administrator such
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1 sums as may be necessary for the cost of loans in the

2 following amounts, for the following purposes:

3 ‘‘(1) ELECTRIC HARDSHIP LOANS.—For loans

4 under section 305(c)(1)—

5 ‘‘(A) for fiscal year 1994, $125,000,000;

6 and

7 ‘‘(B) for each of fiscal years 1995 through

8 1998, $125,000,000, increased by the adjust9 ment percentage for the fiscal year.

10 ‘‘(2) ELECTRIC MUNICIPAL RATE LOANS.—For

11 loans under section 305(c)(2)—

12 ‘‘(A) for fiscal year 1994, $600,000,000;

13 and

14 ‘‘(B) for each of fiscal years 1995 through

15 1998, $600,000,000, increased by the adjust16 ment percentage for the fiscal year.

17 ‘‘(3) TELEPHONE HARDSHIP LOANS.—For

18 loans under section 305(d)(1)—

19 ‘‘(A) for fiscal year 1994, $125,000,000;

20 and

21 ‘‘(B) for each of fiscal years 1995 through

22 1998, $125,000,000, increased by the adjust23 ment percentage for the fiscal year.

24 ‘‘(4) TELEPHONE COST-OF-MONEY LOANS.—

25 For loans under section 305(d)(2)—
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1 ‘‘(A) for fiscal year 1994, $198,000,000;

2 and

3 ‘‘(B) for each of fiscal years 1995 through

4 1998, $198,000,000, increased by the adjust5 ment percentage for the fiscal year.

6 ‘‘(c) FUNDING LEVELS.—The Administrator shall

7 make insured loans under this title for the purposes, in

8 the amounts, and for the periods of time specified in sub9 section (b), as provided in advance in appropriations Acts.

10 ‘‘(d) AVAILABILITY OF FUNDS FOR INSURED

11 LOANS.—Amounts made available for loans under section

12 305 are authorized to remain available until expended.’’.

13 (2) RULE OF INTERPRETATION.—Section

14 309(a) of such Act (7 U.S.C. 939(a)) is amended by

15 adding at the end the following new sentence: ‘‘The

16 preceding sentence shall not be construed to make

17 section 408(b)(2) or 412 applicable to this title.’’.

18 (c) MISCELLANEOUS AMENDMENTS.—

19 (1) LOANS FOR RURAL ELECTRIFICATION.—

20 Section 2 of such Act (7 U.S.C. 902) is amended—

21 (A) by inserting ‘‘(a)’’ before ‘‘The Admin22 istrator’’;

23 (B) by striking ‘‘telephone service in rural

24 areas, as hereinafter provided;’’ and inserting

25 ‘‘electric and telephone service in rural areas, as
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1 provided in this Act, and for the purpose of as2 sisting electric borrowers to implement demand

3 side management, energy conservation pro4 grams, and on-grid and off-grid renewable en5 ergy systems;’’; and

6 (C) by adding at the end the following new

7 subsection:

8 ‘‘(b) By January 1, 1994, the Administrator shall

9 issue interim regulations to implement the authority con10 tained in subsection (a) to make loans for the purpose of

11 assisting electric borrowers to implement demand side

12 management, energy conservation programs, and on-grid

13 and off-grid renewable energy systems. If the regulations

14 are not issued by January 1, 1994, the Administrator

15 shall consider any demand side management, energy con16 servation, or renewable energy program, system, or activ17 ity that is approved by a State agency to be eligible for

18 the loans.’’.

19 (2) LOANS FOR ELECTRICAL PLANTS AND

20 TRANSMISSION LINES.—Section 4 of such Act (7

21 U.S.C. 904) is amended by inserting after ‘‘central

22 station service’’ the following: ‘‘and for the furnish23 ing and improving of electric service to persons in

24 rural areas, including by assisting electric borrowers

25 to implement demand side management, energy con-
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1 servation programs, and on-grid and off-grid renew2 able energy systems’’.

3 (3) DEFINITIONS.—Section 13 of such Act (7

4 U.S.C. 913) is amended—

5 (A) by inserting ‘‘, except as provided in

6 section 203(b),’’ before ‘‘shall be deemed to

7 mean any area’’; and

8 (B) by striking ‘‘city, village, or borough

9 having a population in excess of fifteen hundred

10 inhabitants’’ and inserting ‘‘urban area, as de11 fined by the Bureau of the Census’’.

12 (4) GENERAL PROHIBITIONS.—Section 18 of

13 such Act (7 U.S.C. 918) is amended—

14 (A) by inserting ‘‘(a) NO CONSIDERATION

15 OF BORROWER’S LEVEL OF GENERAL

16 FUNDS.—’’ before ‘‘The Administrator’’; and

17 (B) by adding at the end the following new

18 subsections:

19 ‘‘(b) LOAN ORIGINATION FEES.—The Administrator

20 and the Governor of the telephone bank may not charge

21 any fee or charge not expressly provided in this Act in

22 connection with any loan made or guaranteed under this

23 Act.

24 ‘‘(c) CONSULTANTS.—
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1 ‘‘(1) IN GENERAL.—To facilitate timely action

2 on applications by borrowers for financial assistance

3 under this Act and for approvals required of the

4 Rural Electrification Administration pursuant to the

5 terms of outstanding loan or security instruments or

6 otherwise, the Administrator may use consultants

7 funded by the borrower, paid for out of the general

8 funds of the borrower, for financial, legal, engineer9 ing, and other technical advice and services in con10 nection with the review of the application by the

11 Rural Electrification Administration.

12 ‘‘(2) CONFLICTS OF INTEREST.—The Adminis13 trator shall establish procedures for the selection

14 and the provision of technical services by consultants

15 to ensure that the consultants have no financial or

16 other conflicts of interest in the outcome of the ap17 plication of the borrower.

18 ‘‘(3) PAYMENT OF COSTS.—The Administrator

19 may not, without the consent of the borrower, re20 quire, as a condition of processing an application for

21 approval, that the borrower agree to pay the costs,

22 fees, and expenses of consultants hired to provide

23 technical or advisory services to the Administrator.

24 ‘‘(4) CONTRACTS, GRANTS, AND AGREE25 MENTS.—The Administrator may enter into such
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1 contracts, grants, or cooperative agreements as are

2 necessary to carry out this section.

3 ‘‘(5) USE OF CONSULTANTS.—Nothing in this

4 subsection shall limit the authority of the Adminis5 trator to retain the services of consultants from

6 funds made available to the Administrator or other7 wise.’’.

8 (5) DEFINITION OF RURAL AREA.—Section

9 203(b) of such Act (7 U.S.C. 924(b)) is amended by

10 striking ‘‘one thousand five hundred’’ and inserting

11 ‘‘5,000’’.

12 (6) INSURED LOANS.—Section 305 of such Act

13 (7 U.S.C. 935) (as amended by subsection (a)(1)) is

14 further amended—

15 (A) by striking ‘‘SEC. 305. INSURED

16 LOANS; INTEREST RATES AND LENDING LEV17 ELS.—(a) The’’ and inserting the following:

18 ‘‘SEC. 305. INSURED LOANS; INTEREST RATES AND LEND19 ING LEVELS.

20 ‘‘(a) IN GENERAL.—The’’; and

21 (B) in subsection (b), by striking ‘‘(b)

22 Loans’’ and inserting ‘‘(b) INSURED LOANS.—

23 Loans’’.

24 (7) ELIGIBILITY OF DISTRIBUTION BORROW25 ERS; ADMINISTRATIVE PROHIBITIONS.—Title III of
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1 such Act is amended by inserting after section 306B

2 (7 U.S.C. 936b) the following new sections:

3 ‘‘SEC. 306D. ELIGIBILITY OF DISTRIBUTION BORROWERS

4 FOR LOANS, LOAN GUARANTEES, AND LIEN

5 ACCOMMODATIONS.

6 ‘‘For the purpose of determining the eligibility of a

7 distribution borrower not in default on the repayment of

8 a loan made or guaranteed under this Act for a loan, loan

9 guarantee, or lien accommodation under this title, a de10 fault by a borrower from which the distribution borrower

11 purchases wholesale power shall not—

12 ‘‘(1) be considered a default by the distribution

13 borrower;

14 ‘‘(2) reduce the eligibility of the distribution

15 borrower for assistance under this Act; or

16 ‘‘(3) be the cause, directly or indirectly, of im17 posing any requirement or restriction on the bor18 rower as a condition of the assistance, except such

19 requirements or restrictions as are necessary to im20 plement a debt restructuring agreed on by the power

21 supply borrower and the Government.

22 ‘‘SEC. 306E. ADMINISTRATIVE PROHIBITIONS APPLICABLE

23 TO ELECTRIC BORROWERS.

24 ‘‘The Administrator may not require prior approval

25 of, impose any requirement, restriction, or prohibition with
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1 respect to the operations of, or deny or delay the granting

2 of a lien accommodation to, any electric borrower under

3 this Act whose net worth exceeds 110 percent of the out4 standing principal balance on all loans made or guaran5 teed to the borrower by the Administrator.’’.

6 (8) LOANS FROM OTHER CREDIT SOURCES.—

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

8 by adding at the end the following new sentence:

9 ‘‘The Administrator may not request any applicant

10 for an electric loan under this Act to apply for and

11 accept a loan in an amount exceeding 30 percent of

12 the credit needs of the applicant.’’.

13 (9) CAPITALIZATION.—Section 406 of such Act

14 (7 U.S.C. 946) is amended by adding at the end the

15 following new subsection:

16 ‘‘(i) The Governor of the telephone bank may invest

17 in obligations of the United States the amounts in the ac18 count in the Treasury of the United States numbered

19 12X8139 (known as the ‘RTB Equity Fund’).’’.

20 (10) REFINANCING OF FFB LOANS.—Section

21 306C of such Act is amended by—

22 (A) inserting before the period at the end

23 of subsection (c)(2) the following: ‘‘, except that

24 such rate shall not be greater than 7 percent

25 per year, subject to subsection (d)’’; and
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1 (B) adding at the end the following new

2 subsection:

3 ‘‘(d) MAXIMUM RATE OPTION.—

4 ‘‘(1) IN GENERAL.—Except as provided in para5 graphs (2), (3), and (4), a borrower of a loan or

6 loan advance, or any portion of the loan or advance,

7 that is refinanced under this section shall have the

8 option of ensuring that the interest rate on such

9 loan, loan advance, or portion thereof does not ex10 ceed 7 percent per year.

11 ‘‘(2) LIMITATION.—A borrower may not exer12 cise the option under paragraph (1) in the case of

13 a loan or loan advance, or portion thereof, if the

14 total amount of such loans for which such option

15 would be exercised exceeds 50 percent of the out16 standing principal balance of the loans made to such

17 borrower and guaranteed under section 306.

18 ‘‘(3) FEE.—A borrower that exercises the maxi19 mum rate option under paragraph (1) shall, at the

20 time of exercising such option, pay a fee equal to 1

21 percent of the outstanding principal balance of such

22 loan or loan advance, or portion thereof, for which

23 such option is exercised. Such fee shall be in addi24 tion to the penalties and other payments required

25 under subsection (b).
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1 ‘‘(4) SUNSET.—The option provided under

2 paragraph (1) shall not be available in the case of

3 any loan or loan advance, or portion thereof, unless

4 a written request to exercise such option is sent to

5 the Administrator not later than 1 year after the ef6 fective date of regulations issued to carry out the

7 Rural Electrification Loan Restructuring Act of

8 1993.’’.

9 SEC. 3. EXPANDED ELIGIBILITY FOR LOANS FOR WATER

10 AND WASTE DISPOSAL FACILITIES.

11 Section 306(a)(1) of the Consolidated Farm and

12 Rural Development Act (7 U.S.C. 1926(a)(1)) is amended

13 by inserting after the first sentence the following new sen14 tence: ‘‘The Secretary may also make loans to any bor15 rower to whom a loan has been made under the Rural

16 Electrification Act of 1936 (7 U.S.C. 901 et seq.), for the

17 conservation, development, use, and control of water, and

18 the installation of drainage or waste disposal facilities, pri19 marily serving farmers, ranchers, farm tenants, farm la20 borers, rural businesses, and other rural residents.’’.

21 SEC. 4. RURAL ECONOMIC DEVELOPMENT.

22 Section 364 of the Consolidated Farm and Rural De23 velopment Act (7 U.S.C. 2006f) is amended by adding at

24 the end the following new subsection:

25 ‘‘(g) RURAL ECONOMIC DEVELOPMENT.—
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1 ‘‘(1) IN GENERAL.—A borrower of a loan or

2 loan guarantee under the Rural Electrification Act

3 of 1936 (7 U.S.C. 901 et seq.) shall be eligible for

4 assistance under all programs administered by the

5 Rural Development Administration.

6 ‘‘(2) PARTICIPATION.—The Administrator of

7 the Rural Development Administration shall encour8 age and facilitate the full and equal participation of

9 all entities to participate in programs administered

10 by the Rural Development Administration.’’.

11 SEC. 5. PROHIBITION UNDER RURAL DEVELOPMENT PRO12 GRAMS.

13 The Consolidated Farm and Rural Development Act

14 (7 U.S.C. 1921 et seq.) is amended by adding at the end

15 thereof the following new section:

16 ‘‘SEC. 370. PROHIBITION UNDER RURAL DEVELOPMENT

17 PROGRAMS.

18 ‘‘(a) PROHIBITION.—Assistance under any rural de19 velopment program administered by the Rural Develop20 ment Administration, the Farmers Home Administration,

21 the Rural Electrification Administration, or any other

22 agency of the Department of Agriculture shall not be con23 ditioned on any requirement that the recipient of such as24 sistance accept or receive electric service from any particu25 lar utility, supplier, or cooperative.
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1 ‘‘(b) ENSURING COMPLIANCE.—The Secretary shall

2 establish, by regulation, adequate safeguards to ensure

3 that assistance under such rural development programs is

4 not subject to such a condition. Such safeguards shall in5 clude periodic certifications and audits, and appropriate

6 measures and sanctions against any person violating, or

7 attempting to violate, the prohibition in subsection (a).

8 ‘‘(c) REGULATIONS.—Not later than 6 months after

9 the enactment of this section, the Secretary shall issue in10 terim final regulations to ensure compliance with sub11 section (a).’’.

12 SEC. 6. REGULATIONS.

13 Except as provided in section 2(b) of the Rural Elec14 trification Act of 1936 and section 370 of the Consolidated

15 Farm and Rural Development Act, as added by sections

16 2(c)(1)(C) and 5 of this Act, not later than 45 days after

17 the date of enactment of this Act, interim final rules shall

18 be issued by—

19 (1) the Administrator of the Rural Electrifica20 tion Administration to carry out amendments made

21 by this Act to programs administered by the Admin22 istrator;

23 (2) the Administrator of the Rural Development

24 Administration to carry out amendments made by
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1 this Act to programs administered by the Adminis2 trator; and

3 (3) the Secretary of Agriculture to carry out

4 amendments made by this Act to programs adminis5 tered by the Farmers Home Administration.

Passed the House of Representatives September 28,

1993.

Attest:

Clerk.

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