H. R. 3123

One Hundred Third Congress

of the

United States of America

AT THE FIRST SESSION

Begun and held at the City of Washington on Tuesday,

the fifth day of January, one thousand nine hundred and ninety-three

An Act

To improve the electric and telephone loan programs carried out under the Rural

Electrification Act of 1936, and for other purposes.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Rural Electrification Loan

Restructuring Act of 1993’’.

SEC. 2. ELECTRIC AND TELEPHONE LOAN PROGRAMS.

(a) INSURED ELECTRIC AND TELEPHONE LOANS.—

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

Act of 1936 (7 U.S.C. 935) is amended—

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

(B) by redesignating subsection (c) as subsection (b);

and

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

the following new subsections: ‘‘(c) INSURED ELECTRIC LOANS.— ‘‘(1) HARDSHIP LOANS.— ‘‘(A) IN GENERAL.—The Administrator shall make

insured electric loans, to the extent of qualifying applications for the loans, at an interest rate of 5 percent per

year to any applicant for a loan who meets each of the

following requirements: ‘‘(i) The average revenue per kilowatt-hour sold

by the applicant is not less than 120 percent of the

average revenue per kilowatt-hour sold by all utilities

in the State in which the applicant provides service.

‘‘(ii) The average residential revenue per kilowatthour sold by the applicant is not less than 120 percent

of the average residential revenue per kilowatt-hour

sold by all utilities in the State in which the applicant

provides service.

‘‘(iii) The average per capita income of the residents receiving electric service from the applicant is

less than the average per capita income of the residents

of the State in which the applicant provides service,

or the median household income of the households

receiving electric service from the applicant is less

than the median household income of the households

in the State.

‘‘(B) SEVERE HARDSHIP LOANS.—In addition to hardship

loans that are made under subparagraph (A), the Adminis-
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trator may make an insured electric loan at an interest

rate of 5 percent per year to an applicant for a loan if,

in the sole discretion of the Administrator, the applicant

has experienced a severe hardship.

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

(D), the Administrator may not make a loan under this

paragraph to an applicant for the purpose of furnishing

or improving electric service to a consumer located in an

urban area (as defined by the Bureau of the Census) if

the average number of consumers per mile of line of the

total electric system of the applicant exceeds 17.

‘‘(D) EXTREMELY HIGH RATES.—In addition to hardship

loans that are made under subparagraphs (A) and (B),

the Administrator shall make insured electric loans, to

the extent of qualifying applications for the loans, at an

interest rate of 5 percent per year to any applicant for

a loan whose residential revenue exceeds 15.0 cents per

kilowatt-hour sold. A qualifying application from such an

applicant for the purpose of furnishing or improving electric

service to a consumer located outside of an urbanized area

shall not be subject to the conditions or limitation of

subparagraph (A) or (C).

‘‘(2) MUNICIPAL RATE LOANS.—

‘‘(A) IN GENERAL.—The Administrator shall make

insured electric loans, to the extent of qualifying applications for the loans, at the interest rate described in

subparagraph (B) for the term or terms selected by the

applicant pursuant to subparagraph (C). ‘‘(B) INTEREST RATE.— ‘‘(i) IN GENERAL.—Subject to clause (ii), the interest

rate described in this subparagraph on a loan to a

qualifying applicant shall be— ‘‘(I) the interest rate determined by the

Administrator to be equal to the current market

yield on outstanding municipal obligations with

remaining periods to maturity similar to the

term selected by the applicant pursuant to

subparagraph (C), but not greater than the rate

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

Consolidated Farm and Rural Development Act

(7 U.S.C. 1927(a)(3)(A)) that is based on the current market yield on outstanding municipal obligations; plus

‘‘(II) if the applicant for the loan makes an

election pursuant to subparagraph (D) to include

in the loan agreement the right of the applicant

to prepay the loan, a rate equal to the amount

by which—

‘‘(aa) the interest rate on commercial loans

for a similar period that afford the borrower

such a right; exceeds

‘‘(bb) the interest rate on commercial loans

for the period that do not afford the borrower

such a right.

‘‘(ii) MAXIMUM RATE.—The interest rate described

in this subparagraph on a loan to an applicant for

the loan shall not exceed 7 percent if—
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‘‘(I) the average number of consumers per mile

of line of the total electric system of the applicant

is less than 5.50; or

‘‘(II)(aa) the average revenue per kilowatt-hour

sold by the applicant is more than the average

revenue per kilowatt-hour sold by all utilities in

the State in which the applicant provides service;

and

‘‘(bb) the average per capita income of the

residents receiving electric service from the

applicant is less than the average per capita

income of the residents of the State in which the

applicant provides service, or the median household income of the households receiving electric

service from the applicant is less than the median

household income of the households in the State.

‘‘(iii) EXCEPTION.—Clause (ii) shall not apply to

a loan to be made to an applicant for the purpose

of furnishing or improving electric service to consumers

located in an urban area (as defined by the Bureau

of the Census) if the average number of consumers

per mile of line of the total electric system of the

applicant exceeds 17.

‘‘(C) LOAN TERM.—

‘‘(i) IN GENERAL.—Subject to clause (ii), the

applicant for a loan under this paragraph may select

the term for which an interest rate shall be determined

pursuant to subparagraph (B), and, at the end of the

term (and any succeeding term selected by the

applicant under this subparagraph), may renew the

loan for another term selected by the applicant. ‘‘(ii) MAXIMUM TERM.— ‘‘(I) APPLICANT.—The applicant may not select

a term that ends more than 35 years after the

beginning of the first term the applicant selects

under clause (i).

‘‘(II) ADMINISTRATOR.—The Administrator may

prohibit an applicant from selecting a term that

would result in the total term of the loan being

greater than the expected useful life of the assets

being financed. ‘‘(D) CALL PROVISION.—The Administrator shall offer

any applicant for a loan under this paragraph the option

to include in the loan agreement the right of the applicant

to prepay the loan on terms consistent with similar provisions of commercial loans.

‘‘(3) OTHER SOURCE OF CREDIT NOT REQUIRED IN CERTAIN

CASES.—The Administrator may not require any applicant for

a loan made under this subsection who is eligible for a loan

under paragraph (1) to obtain a loan from another source

as a condition of approving the application for the loan or

advancing any amount under the loan.

‘‘(d) INSURED TELEPHONE LOANS.—

‘‘(1) HARDSHIP LOANS.—

‘‘(A) IN GENERAL.—The Administrator shall make

insured telephone loans, to the extent of qualifying applications for the loans, at an interest rate of 5 percent per
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year, to any applicant who meets each of the following

requirements:

‘‘(i) The average number of subscribers per mile

of line in the service area of the applicant is not

more than 4.

‘‘(ii) The applicant is capable of producing net

income or margins before interest of not less than

100 percent (but not more than 300 percent) of the

interest requirements on all of the outstanding and

proposed loans of the applicant.

‘‘(iii) The Administrator has approved a telecommunications modernization plan for the State

under paragraph (3) and, if the plan was developed

by telephone borrowers under this title, the applicant

is a participant in the plan.

‘‘(iv) The average number of subscribers per mile

of line in the area included in the proposed loan is

not more than 17.

‘‘(B) AUTHORITY TO WAIVE TIER REQUIREMENT.—The

Administrator may waive the requirement of subparagraph

(A)(ii) in any case in which the Administrator determines

(and sets forth the reasons for the waiver in writing) that

the requirement would prevent emergency restoration of

the telephone system of the applicant or result in severe

hardship to the applicant.

‘‘(C) EFFECT OF LACK OF FUNDS.—On request of any

applicant who is eligible for a loan under this paragraph

for which funds are not available, the applicant shall be

considered to have applied for a loan under title IV.

‘‘(2) COST-OF-MONEY LOANS.—

‘‘(A) IN GENERAL.—The Administrator may make

insured telephone loans for the acquisition, purchase, and

installation of telephone lines, systems, and facilities (other

than buildings used primarily for administrative purposes,

vehicles not used primarily in construction, and customer

premise equipment) related to the furnishing, improvement, or extension of rural telecommunications service,

at an interest rate equal to the then current cost of money

to the Government of the United States for loans of similar

maturity, but not more than 7 percent per year, to any

applicant for a loan who meets the following requirements:

‘‘(i) The average number of subscribers per mile

of line in the service area of the applicant is not

more than 15, or the applicant is capable of producing

net income or margins before interest of not less than

100 percent (but not more than 500 percent) of the

interest requirements on all of the outstanding and

proposed loans of the applicant.

‘‘(ii) The Administrator has approved a telecommunications modernization plan for the State

under paragraph (3) and, if the plan was developed

by telephone borrowers under this title, the applicant

is a participant in the plan.

‘‘(B) CONCURRENT LOAN AUTHORITY.—On request of any

applicant for a loan under this paragraph during any fiscal

year, the Administrator shall—
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‘‘(i) consider the application to be for a loan under

this paragraph and a loan under section 408; and

‘‘(ii) if the applicant is eligible for a loan, make

a loan to the applicant under this paragraph in an

amount equal to the amount that bears the same ratio

to the total amount of loans for which the applicant

is eligible under this paragraph and under section

408, as the amount made available for loans under

this paragraph for the fiscal year bears to the total

amount made available for loans under this paragraph

and under section 408 for the fiscal year.

‘‘(C) EFFECT OF LACK OF FUNDS.—On request of any

applicant who is eligible for a loan under this paragraph

for which funds are not available, the applicant shall be

considered to have applied for a loan guarantee under

section 306.

‘‘(3) STATE TELECOMMUNICATIONS MODERNIZATION PLANS.—

‘‘(A) APPROVAL.—If, not later than 1 year after final

regulations are promulgated to carry out this paragraph,

any State, either by statute or through the public utility

commission of the State, develops a telecommunications

modernization plan that meets the requirements of

subparagraph (B), the Administrator shall approve the plan

for the State. If a State does not develop a plan in accordance with the requirements of the preceding sentence, the

Administrator shall approve any telecommunications modernization plan for the State that meets the requirements

that is developed by a majority of the borrowers of telephone loans made under this title who are located in the

State.

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

(A), a telecommunications modernization plan must, at a

minimum, meet the following objectives:

‘‘(i) The plan must provide for the elimination of

party line service.

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

of telecommunications services for improved business,

educational, and medical services.

‘‘(iii) The plan must encourage and improve computer networks and information highways for subscribers in rural areas.

‘‘(iv) The plan must provide for—

‘‘(I) subscribers in rural areas to be able to

receive through telephone lines—

‘‘(aa) conference calling;

‘‘(bb) video images; and

‘‘(cc) data at a rate of at least 1,000,000

bits of information per second; and

‘‘(II) the proper routing of information to

subscribers.

‘‘(v) The plan must provide for uniform deployment

schedules to ensure that advanced services are

deployed at the same time in rural and nonrural areas.

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

requirements for service standards as may be required

by the Administrator.
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‘‘(C) FINALITY OF APPROVAL.—A telecommunications

modernization plan approved under subparagraph (A) may

not subsequently be disapproved. Notwithstanding paragraphs (1)(A)(iii) and (2)(A)(iii), and section 408(b)(4)(C),

the Administrator and the Governor of the telephone bank

may make a loan to a borrower serving a State that does

not have a telecommunication modernization plan approved

by the Administrator if the loan is made less than 1 year

after the Administrator has adopted final regulations

implementing this paragraph.’’.

(2) RURAL TELEPHONE BANK LOAN PROGRAM.—Section 408

of such Act (7 U.S.C. 948) is amended—

(A) in subsection (a), by striking ‘‘, (2)’’ and all that

follows through ‘‘408 of this Act,’’ and inserting ‘‘, (2) for

the acquisition, purchase, and installation of telephone

lines, systems, and facilities (other than buildings used

primarily for administrative purposes, vehicles not used

primarily in construction, and customer premise equipment) related to the furnishing, improvement, or extension

of rural telecommunications service,’’;

(B) in subsection (b)—

(i) by striking paragraph (4) and inserting the

following new paragraph:

‘‘(4) The Governor of the telephone bank may make a

loan under this section only to an applicant for the loan who

meets the following requirements:

‘‘(A) The average number of subscribers per mile of

line in the service area of the applicant is not more than

15, or the applicant is capable of producing net income

or margins before interest of not less than 100 percent

(but not more than 500 percent) of the interest requirements on all of the outstanding and proposed loans of

the applicant.

‘‘(B) The Administrator has approved, under section

305(d)(3), a telecommunications modernization plan for the

State in which the applicant is located and, if the plan

was developed by telephone borrowers under title III, the

applicant is a participant in the plan.’’;

(ii) in paragraph (8)— (I) by inserting ‘‘(A)’’ after ‘‘(8)’’;

(II) by striking ‘‘if such prepayment is not

made later than September 30, 1988’’ and inserting

‘‘except for any prepayment penalty provided for

in a loan agreement entered into before the date

of enactment of the Rural Electrification Loan

Restructuring Act of 1993’’; and

(III) by adding at the end the following new

subparagraph:

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

under this section, then, notwithstanding section 407(b), the

Governor of the telephone bank shall—

‘‘(i) use the full amount of the prepayment to repay

obligations of the telephone bank issued pursuant to section

407(b) before October 1, 1991, to the extent any such obligations are outstanding; and

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

advances bearing the greatest rate of interest.’’; and
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(iii) by adding at the end the following new paragraphs:

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

section during any fiscal year, the Governor of the telephone

bank shall—

‘‘(A) consider the application to be for a loan under

this section and a loan under section 305(d)(2); and

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

loan to the applicant under this section in an amount

equal to the amount that bears the same ratio to the

total amount of loans for which the applicant is eligible

under this section and under section 305(d)(2), as the

amount made available for loans under this section for

the fiscal year bears to the total amount made available

for loans under this section and under section 305(d)(2)

for the fiscal year.

‘‘(10) On request of any applicant who is eligible for a

loan under this section for which funds are not available, the

applicant shall be considered to have applied for a loan under

section 305(d)(2).’’; and

(C) by adding at the end the following new subsection:

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

November 5, 1990, shall bear interest at a rate determined under

this section, taking into account all assets and liabilities of the

telephone bank. This subsection shall not apply to loans obligated

before the date of enactment of this subsection. Funds are not

authorized to be appropriated to carry out this subsection until

the funds are appropriated in advance to carry out this subsection.’’. (b) FUNDING.— (1) LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS.— Section 314 of such Act (7 U.S.C. 940d) is amended to read

as follows:

‘‘SEC. 314. LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS.

‘‘(a) DEFINITION OF ADJUSTMENT PERCENTAGE.—As used in this

section, the term ‘adjustment percentage’ means, with respect to

a fiscal year, the percentage (if any) by which— ‘‘(1) the average of the Consumer Price Index (as defined in section 1(f)(5) of the Internal Revenue Code of 1986) for

the 1-year period ending on July 31 of the immediately preceding fiscal year; exceeds ‘‘(2) the average of the Consumer Price Index (as so defined)

for the 1-year period ending on July 31, 1993.

‘‘(b) FISCAL YEARS 1994 THROUGH 1998.—In the case of each

of fiscal years 1994 through 1998, there are authorized to be appropriated to the Administrator such sums as may be necessary for

the cost of loans in the following amounts, for the following

purposes:

‘‘(1) ELECTRIC HARDSHIP LOANS.—For loans under section

305(c)(1)—

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

‘‘(B) for each of fiscal years 1995 through 1998,

$125,000,000, increased by the adjustment percentage for

the fiscal year.

‘‘(2) ELECTRIC MUNICIPAL RATE LOANS.—For loans under

section 305(c)(2)—

‘‘(A) for fiscal year 1994, $600,000,000; and
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‘‘(B) for each of fiscal years 1995 through 1998,

$600,000,000, increased by the adjustment percentage for

the fiscal year.

‘‘(3) TELEPHONE HARDSHIP LOANS.—For loans under section

305(d)(1)—

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

‘‘(B) for each of fiscal years 1995 through 1998,

$125,000,000, increased by the adjustment percentage for

the fiscal year.

‘‘(4) TELEPHONE COST-OF-MONEY LOANS.—For loans under

section 305(d)(2)—

‘‘(A) for fiscal year 1994, $198,000,000; and

‘‘(B) for each of fiscal years 1995 through 1998,

$198,000,000, increased by the adjustment percentage for

the fiscal year.

‘‘(c) FUNDING LEVELS.—The Administrator shall make insured

loans under this title for the purposes, in the amounts, and for

the periods of time specified in subsection (b), as provided in

advance in appropriations Acts.

‘‘(d) AVAILABILITY OF FUNDS FOR INSURED LOANS.—Amounts

made available for loans under section 305 are authorized to remain

available until expended.’’.

(2) RULE OF INTERPRETATION.—Section 309(a) of such Act

(7 U.S.C. 939(a)) is amended by adding at the end the following

new sentence: ‘‘The preceding sentence shall not be construed

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

(c) MISCELLANEOUS AMENDMENTS.—

(1) LOANS FOR RURAL ELECTRIFICATION.—Section 2 of such

Act (7 U.S.C. 902) is amended—

(A) by inserting ‘‘(a)’’ before ‘‘The Administrator’’;

(B) by striking ‘‘telephone service in rural areas, as

hereinafter provided;’’ and inserting ‘‘electric and telephone

service in rural areas, as provided in this Act, and for

the purpose of assisting electric borrowers to implement

demand side management, energy conservation programs,

and on-grid and off-grid renewable energy systems;’’; and (C) by adding at the end the following new subsection: ‘‘(b) By January 1, 1994, the Administrator shall issue interim

regulations to implement the authority contained in subsection

(a) to make loans for the purpose of assisting electric borrowers

to implement demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems. If the

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

shall consider any demand side management, energy conservation,

or renewable energy program, system, or activity that is approved

by a State agency to be eligible for the loans.’’.

(2) LOANS FOR ELECTRICAL PLANTS AND TRANSMISSION

LINES.—Section 4 of such Act (7 U.S.C. 904) is amended by

inserting after ‘‘central station service’’ the following: ‘‘and for

the furnishing and improving of electric service to persons

in rural areas, including by assisting electric borrowers to

implement demand side management, energy conservation programs, and on-grid and off-grid renewable energy systems’’.

(3) DEFINITIONS.—Section 13 of such Act (7 U.S.C. 913)

is amended—

(A) by inserting ‘‘, except as provided in section 203(b),’’

before ‘‘shall be deemed to mean any area’’; and
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(B) by striking ‘‘city, village, or borough having a population in excess of fifteen hundred inhabitants’’ and inserting ‘‘urban area, as defined by the Bureau of the Census’’.

(4) GENERAL PROHIBITIONS.—Section 18 of such Act (7

U.S.C. 918) is amended—

(A) by inserting ‘‘(a) NO CONSIDERATION OF BORROWER’S LEVEL OF GENERAL FUNDS.—’’ before ‘‘The Administrator’’; and

(B) by adding at the end the following new subsections:

‘‘(b) LOAN ORIGINATION FEES.—The Administrator and the Governor of the telephone bank may not charge any fee or charge

not expressly provided in this Act in connection with any loan

made or guaranteed under this Act.

‘‘(c) CONSULTANTS.—

‘‘(1) IN GENERAL.—To facilitate timely action on applications

by borrowers for financial assistance under this Act and for

approvals required of the Rural Electrification Administration

pursuant to the terms of outstanding loan or security

instruments or otherwise, the Administrator may use consultants funded by the borrower, paid for out of the general funds

of the borrower, for financial, legal, engineering, and other

technical advice and services in connection with the review

of the application by the Rural Electrification Administration.

‘‘(2) CONFLICTS OF INTEREST.—The Administrator shall

establish procedures for the selection and the provision of technical services by consultants to ensure that the consultants

have no financial or other conflicts of interest in the outcome

of the application of the borrower.

‘‘(3) PAYMENT OF COSTS.—The Administrator may not, without the consent of the borrower, require, as a condition of

processing an application for approval, that the borrower agree

to pay the costs, fees, and expenses of consultants hired to

provide technical or advisory services to the Administrator. ‘‘(4) CONTRACTS, GRANTS, AND AGREEMENTS.—The Administrator may enter into such contracts, grants, or cooperative

agreements as are necessary to carry out this section. ‘‘(5) USE OF CONSULTANTS.—Nothing in this subsection

shall limit the authority of the Administrator to retain the

services of consultants from funds made available to the

Administrator or otherwise.’’.

(5) DEFINITION OF RURAL AREA.—Section 203(b) of such

Act (7 U.S.C. 924(b)) is amended by striking ‘‘one thousand

five hundred’’ and inserting ‘‘5,000’’. (6) INSURED LOANS.—Section 305 of such Act (7 U.S.C.

935) (as amended by subsection (a)(1)) is further amended—

(A) by striking ‘‘SEC. 305. INSURED LOANS; INTEREST

RATES AND LENDING LEVELS.—(a) The’’ and inserting the

following:

‘‘SEC. 305. INSURED LOANS; INTEREST RATES AND LENDING LEVELS.

‘‘(a) IN GENERAL.—The’’; and

(B) in subsection (b), by striking ‘‘(b) Loans’’ and inserting ‘‘(b) INSURED LOANS.—Loans’’.

(7) ELIGIBILITY OF DISTRIBUTION BORROWERS; ADMINISTRATIVE PROHIBITIONS.—Title III of such Act is amended by inserting after section 306B (7 U.S.C. 936b) the following new

sections:
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‘‘SEC. 306D. ELIGIBILITY OF DISTRIBUTION BORROWERS FOR LOANS,

LOAN GUARANTEES, AND LIEN ACCOMMODATIONS.

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

borrower not in default on the repayment of a loan made or guaranteed under this Act for a loan, loan guarantee, or lien accommodation under this title, a default by a borrower from which the

distribution borrower purchases wholesale power shall not—

‘‘(1) be considered a default by the distribution borrower;

‘‘(2) reduce the eligibility of the distribution borrower for

assistance under this Act; or

‘‘(3) be the cause, directly or indirectly, of imposing any

requirement or restriction on the borrower as a condition of

the assistance, except such requirements or restrictions as are

necessary to implement a debt restructuring agreed on by the

power supply borrower and the Government.

‘‘SEC. 306E. ADMINISTRATIVE PROHIBITIONS APPLICABLE TO ELECTRIC BORROWERS.

‘‘The Administrator may not require prior approval of, impose

any requirement, restriction, or prohibition with respect to the

operations of, or deny or delay the granting of a lien accommodation

to, any electric borrower under this Act whose net worth exceeds

110 percent of the outstanding principal balance on all loans made

or guaranteed to the borrower by the Administrator.’’.

(8) LOANS FROM OTHER CREDIT SOURCES.—Section 307 of

such Act (7 U.S.C. 937) is amended by adding at the end

the following new sentence: ‘‘The Administrator may not

request any applicant for an electric loan under this Act to

apply for and accept a loan in an amount exceeding 30 percent

of the credit needs of the applicant.’’.

(9) CAPITALIZATION.—Section 406 of such Act (7 U.S.C.

946) is amended by adding at the end the following new subsection:

‘‘(i) The Governor of the telephone bank may invest in obligations of the United States the amounts in the account in the

Treasury of the United States numbered 12X8139 (known as the

‘RTB Equity Fund’).’’. (10) REFINANCING OF FFB LOANS.—Section 306C of such

Act is amended by— (A) inserting before the period at the end of subsection (c)(2) the following: ‘‘, except that such rate shall not be

greater than 7 percent per year, subject to subsection (d)’’;

and

(B) adding at the end the following new subsection: ‘‘(d) MAXIMUM RATE OPTION.—

‘‘(1) IN GENERAL.—Except as provided in paragraphs (2),

(3), and (4), a borrower of a loan or loan advance, or any

portion of the loan or advance, that is refinanced under this

section shall have the option of ensuring that the interest

rate on such loan, loan advance, or portion thereof does not

exceed 7 percent per year.

‘‘(2) LIMITATION.—A borrower may not exercise the option

under paragraph (1) in the case of a loan or loan advance,

or portion thereof, if the total amount of such loans for which

such option would be exercised exceeds 50 percent of the

outstanding principal balance of the loans made to such borrower and guaranteed under section 306.
H. R. 3123—11

‘‘(3) FEE.—A borrower that exercises the maximum rate

option under paragraph (1) shall, at the time of exercising

such option, pay a fee equal to 1 percent of the outstanding

principal balance of such loan or loan advance, or portion

thereof, for which such option is exercised. Such fee shall be

in addition to the penalties and other payments required under

subsection (b).

‘‘(4) SUNSET.—The option provided under paragraph (1)

shall not be available in the case of any loan or loan advance,

or portion thereof, unless a written request to exercise such

option is sent to the Administrator not later than 1 year after

the effective date of regulations issued to carry out the Rural

Electrification Loan Restructuring Act of 1993.’’.

SEC. 3. EXPANDED ELIGIBILITY FOR LOANS FOR WATER AND WASTE

DISPOSAL FACILITIES.

Section 306(a)(1) of the Consolidated Farm and Rural Development Act (7 U.S.C. 1926(a)(1)) is amended by inserting after the

first sentence the following new sentence: ‘‘The Secretary may also

make loans to any borrower to whom a loan has been made under

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

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

installation of drainage or waste disposal facilities, primarily serving farmers, ranchers, farm tenants, farm laborers, rural businesses,

and other rural residents.’’.

SEC. 4. RURAL ECONOMIC DEVELOPMENT.

Section 364 of the Consolidated Farm and Rural Development

Act (7 U.S.C. 2006f) is amended by adding at the end the following

new subsection:

‘‘(g) RURAL ECONOMIC DEVELOPMENT.— ‘‘(1) IN GENERAL.—A borrower of a loan or loan guarantee under the Rural Electrification Act of 1936 (7 U.S.C. 901 et

seq.) shall be eligible for assistance under all programs administered by the Rural Development Administration. ‘‘(2) PARTICIPATION.—The Administrator of the Rural Development Administration shall encourage and facilitate the full

and equal participation of all entities to participate in programs

administered by the Rural Development Administration.’’.

SEC. 5. PROHIBITION UNDER RURAL DEVELOPMENT PROGRAMS.

The Consolidated Farm and Rural Development Act (7 U.S.C.

1921 et seq.) is amended by adding at the end thereof the following

new section:

‘‘SEC. 370. PROHIBITION UNDER RURAL DEVELOPMENT PROGRAMS.

‘‘(a) PROHIBITION.—Assistance under any rural development

program administered by the Rural Development Administration,

the Farmers Home Administration, the Rural Electrification

Administration, or any other agency of the Department of Agriculture shall not be conditioned on any requirement that the recipient of such assistance accept or receive electric service from any

particular utility, supplier, or cooperative.

‘‘(b) ENSURING COMPLIANCE.—The Secretary shall establish, by

regulation, adequate safeguards to ensure that assistance under

such rural development programs is not subject to such a condition.

Such safeguards shall include periodic certifications and audits,
H. R. 3123—12

and appropriate measures and sanctions against any person violating, or attempting to violate, the prohibition in subsection (a).

‘‘(c) REGULATIONS.—Not later than 6 months after the enactment of this section, the Secretary shall issue interim final regulations to ensure compliance with subsection (a).’’.

SEC. 6. REGULATIONS.

Except as provided in section 2(b) of the Rural Electrification

Act of 1936 and section 370 of the Consolidated Farm and Rural

Development Act, as added by sections 2(c)(1)(C) and 5 of this

Act, not later than 45 days after the date of enactment of this

Act, interim final regulations shall be issued by—

(1) the Administrator of the Rural Electrification Administration to carry out the amendments made by this Act to

programs administered by the Administrator;

(2) the Administrator of the Rural Development Administration to carry out the amendments made by this Act to

programs administered by the Administrator; and

(3) the Secretary of Agriculture to carry out the amendments made by this Act to programs administered by the Farmers Home Administration.

Speaker of the House of Representatives.

Vice President of the United States and

President of the Senate.