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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 1980 Introduced in Senate (IS)]

106th CONGRESS
  1st Session
                                S. 1980

   To amend the Rural Electrification Act of 1936 to ensure improved 
  access to the signals of local television stations by multichannel 
video providers to all households which desire such service in unserved 
           and underserved rural areas by December 31, 2006.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                           November 19, 1999

   Mr. Baucus (for himself, Mr. Harkin, Mr. Daschle, Mr. Kerrey, Mr. 
 Durbin, Mr. Johnson, Mr. Wellstone, Mr. Conrad, Mr. Rockefeller, Mr. 
Bryan, Mr. Reid, Mr. Leahy, Mr. Wyden, and Mrs. Murray) introduced the 
 following bill; which was read twice and referred to the Committee on 
                  Agriculture, Nutrition, and Forestry

_______________________________________________________________________

                                 A BILL

 
   To amend the Rural Electrification Act of 1936 to ensure improved 
  access to the signals of local television stations by multichannel 
video providers to all households which desire such service in unserved 
           and underserved rural areas by December 31, 2006.

    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 ``21st Century Rural Utility Service 
Rural Development Enhancement Through Local Information Act''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) In 1936, most of the rural United States did not have 
        access to electrical service enjoyed by the rest of the United 
        States, and this lack of electrical service inhibited economic 
        development in the rural areas of the United States.
            (2) In response to this lack of service, Congress enacted 
        the Rural Electrification Act of 1936 (also known as the 
        Norris-Rayburn Rural Electrification Act) which established the 
        Rural Electric Administration to ensure that all Americans have 
        access to electrical service and to promote rural development.
            (3) The program under the Rural Electrification Act of 1936 
        has successfully brought electricity to all parts of the rural 
        United States and has stimulated rural development throughout 
        the United States.
            (4) In 1949, most of the rural United States did not have 
        access to telephone service enjoyed by the rest of the United 
        States, and this lack of electrical service inhibited economic 
        development in the rural areas of the United States.
            (5) In response to this lack of service, Congress amended 
        the Rural Electrification Act of 1936 to assure that the rural 
        United States has access to telecommunications services, 
        including telephone services, distance learning, and 
        telemedicine in order to promote rural development.
            (6) The programs under these amendments have successfully 
        brought telecommunications to all parts of the United States 
        and has stimulated rural development throughout the United 
        States.
            (7) Public Law 93-32 amended the Rural Electrification Act 
        of 1936 to establish a revolving fund for insured and 
        guaranteed loans.
            (8) The reorganization of the Department of Agriculture by 
        Public Law 103-354 created the Rural Utilities Service (RUS) 
        within the Department of Agriculture and assigned it the 
        responsibility for administering programs of federally-
        guaranteed loans.
            (9) The Rural Utilities Service now manages a portfolio of 
        federally-guaranteed loans in excess of $42,000,000,000.
            (10) The Rural Utilities Service has granted loans for the 
        purpose of telecommunications services to more than 800 
        borrowers, including telephone and electricity cooperatives, in 
        all States of the United States.
            (11) Senate Rule XXV provides that the Committee on 
        Agriculture, Nutrition, and Forestry of the Senate shall have 
        jurisdiction over all legislation relating primarily to ``Rural 
        development, rural electrification, and watersheds''.
            (12) Consistent with Senate Rule XXV, all legislation 
        establishing, modifying, and extending rural infrastructure 
        loan programs has originated in or been reported by the 
        Committee on Agriculture, Nutrition, and Forestry of the 
        Senate.
            (13) Local television coverage is vitally important for 
        rural development efforts.
            (14) Local television programming broadcasts crop reports, 
        local news, weather reports, public service announcements, and 
        advertisements by local businesses, all of which are important 
        for rural development.
            (15) In today's age of modern communications, rural 
        communities often receive the majority of their information 
        from satellite platforms.
            (16) Today, the top 67 television markets in the United 
        States are capable of receiving local television signals 
        directly from satellites.
            (17) The rest of the United States, including most of the 
        rural United States, is not able to receive local television 
        signals via satellite.
            (18) Without access to local television signals, the 
        development of the rural United States is greatly inhibited.
            (19) Just as important public purposes were served by 
        bringing electricity to the rural United States and then by 
        bringing telephone service to the rural United States, so the 
        United States would be served by ensuring that the rural United 
        States can receive local television signals via satellite.
            (20) It is in the public interest that the Rural Utilities 
        Service of the Department of Agriculture utilize existing and 
        new loan guarantee programs to promote rural development by 
        ensuring that the rural United States has access to the signals 
        of local television stations by multichannel video providers.

SEC. 3. RURAL LOCAL TELEVISION SIGNALS.

    The Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) is 
amended by adding at the end the following:

               ``TITLE VI--RURAL LOCAL TELEVISION SIGNALS

``SEC. 501. DEFINITIONS.

    ``In this title:
            ``(1) Administrator.--The term `Administrator' means the 
        Administrator of the Rural Utilities Service.
            ``(2) Affiliate.--The term `affiliate' means any person or 
        entity that controls, or is controlled by, or is under common 
        control with, another person or entity.
            ``(3) Borrower.--The term `borrower' means any person or 
        entity receiving a loan guarantee under this title.
            ``(4) Cost.--
                    ``(A) In general.--The term `cost' means the 
                estimated long-term cost to the Government of a loan 
                guarantee or modification thereof, calculated on a net 
                present value basis, excluding administrative costs and 
                any incidental effects on governmental receipts or 
                outlays.
                    ``(B) Loan guarantees.--For purposes of this 
                paragraph the cost of a loan guarantee--
                            ``(i) shall be the net present value, at 
                        the time when the guaranteed loan is disbursed, 
                        of the estimated cash flows of--
                                    ``(I) payments by the Government to 
                                cover defaults and delinquencies, 
                                interest subsidies, or other payments; 
                                and
                                    ``(II) payments to the Government, 
                                including origination and other fees, 
                                penalties, and recoveries; and
                            ``(ii) shall include the effects of changes 
                        in loan terms resulting from the exercise by 
                        the guaranteed lender of an option included in 
                        the loan guarantee contract, or by the borrower 
                        of an option included in the guaranteed loan 
                        contract.
                    ``(C) Cost of modification.--The cost of the 
                modification shall be the difference between the 
                current estimate of the net present value of the 
                remaining cash flows under the terms of a loan 
                guarantee contract, and the current estimate of the net 
                present value of the remaining cash flows under the 
                terms of the contract, as modified.
                    ``(D) Discount rate.--In estimating net present 
                value, the discount rate shall be the average interest 
                rate on marketable Treasury securities of similar 
                maturity to the cash flows of the guarantee for which 
                the estimate is being made.
                    ``(E) Fiscal year assumptions.--When funds of a 
                loan guarantee under this title are obligated, the 
                estimated cost shall be based on the current 
                assumptions, adjusted to incorporate the terms of the 
                loan contract, for the fiscal year in which the funds 
                are obligated.
            ``(5) Current.--The term `current' has the meaning given 
        that term in section 250(c)(9) of the Balanced Budget and 
        Emergency Deficit Control Act of 1985.
            ``(6) Designated market area.--The term `designated market 
        area' has the meaning given that term in section 122(j) of 
        title 17, United States Code.
            ``(7) Loan guarantee.--The term `loan guarantee' means any 
        guarantee, insurance, or other pledge with respect to the 
        payment of all or part of the principal or interest on any debt 
        obligation of a non-Federal borrower to the Federal Financing 
        Bank or a non-Federal lender, but does not include the 
        insurance of deposits, shares, or other withdrawable accounts 
        in financial institutions.
            ``(8) Modification.--The term `modification' means any 
        Government action that alters the estimated cost of an 
        outstanding loan guarantee (or loan guarantee commitment) from 
        the current estimate of cash flows, including the sale of loan 
        assets, with or without recourse, and the purchase of 
        guaranteed loans.
            ``(9) Common terms.--Except as provided in paragraphs (1) 
        through (9), any term used in this title that is defined in the 
        Communications Act of 1934 (47 U.S.C. 151 et seq.) has the 
        meaning given the term in that Act.

``SEC. 502. LOAN GUARANTEES.

    ``(a) Purpose.--The purpose of this title is to enable the 
Administrator to provide such loan guarantees as are necessary to 
ensure improved access to the signals of local television stations by 
multichannel video providers to all households which desire such 
service in unserved and underserved rural areas by December 31, 2006.
    ``(b) Assistance to Borrowers.--Subject to the appropriations 
limitation under subsection (c)(2), the Administrator may provide loan 
guarantees to borrowers to finance projects to provide local television 
broadcast signals by providers of multichannel video services including 
direct broadcast satellite licensees and licensees of multichannel 
multipoint distribution systems, to areas that do not receive local 
television broadcast signals over commercial for-profit direct-to-home 
satellite distribution systems. A borrower that receives a loan 
guarantee under this title may not transfer any part of the proceeds of 
the monies from the loans guaranteed under this program to an affiliate 
of the borrower.
    ``(c) Underwriting Criteria; Prerequisites.--
            ``(1) In general.--The Administrator shall administer the 
        underwriting criteria developed under subsection (f)(1) to 
        determine which loans are eligible for a guarantee under this 
        title.
            ``(2) Authority to make loan guarantees.--The Administrator 
        shall be authorized to guarantee loans under this title only to 
        the extent provided for in advance by appropriations Acts.
            ``(3) Prerequisites.--In addition to meeting the 
        underwriting criteria under paragraph (1), a loan is not 
        eligible for a loan guarantee under this title unless--
                    ``(A) the loan is made to finance the acquisition, 
                improvement, enhancement, construction, deployment, 
                launch, or rehabilitation of the means by which local 
                television broadcast signals will be delivered to an 
                area not receiving such signals over commercial for-
                profit direct-to-home satellite distribution systems;
                    ``(B) the proceeds of the loan will not be used for 
                operating expenses;
                    ``(C) the total amount of all such loans may not 
                exceed in the aggregate $1,250,000,000;
                    ``(D) the loan does not exceed $100,000,000, except 
                that 1 loan under this title may exceed $100,000,000, 
                but shall not exceed $625,000,000;
                    ``(E) the loan bears interest and penalties which, 
                in the Administrator's judgment, are not unreasonable, 
                taking into consideration the prevailing interest rates 
                and customary fees incurred under similar obligations 
                in the private capital market; and
                    ``(F) the Administrator determines that taking into 
                account the practices of the private capital markets 
                with respect to the financing of similar projects, the 
                security of the loan is adequate.
            ``(4) Additional criteria.--In addition to the requirements 
        of paragraphs (1), (2), and (3), a loan for which a guarantee 
        is sought under this title shall meet any additional criteria 
        promulgated under subsection (f)(1).
    ``(d) Additional Requirements.--The Administrator may not make a 
loan guarantee under this title unless--
            ``(1) repayment of the obligation is required to be made 
        within a term of the lesser of--
                    ``(A) 25 years from the date of its execution; or
                    ``(B) the useful life of the primary assets used in 
                the delivery of relevant signals;
            ``(2) the Administrator has been given the assurances and 
        documentation necessary to review and approve the guaranteed 
        loans; and
            ``(3) the Administrator makes a determination in writing 
        that--
                    ``(A) the applicant has given reasonable assurances 
                that the assets, facilities, or equipment will be 
                utilized economically and efficiently;
                    ``(B) necessary and sufficient regulatory 
                approvals, spectrum rights, and delivery permissions 
                have been received by project participants to assure 
                the project's ability to repay obligations under this 
                title; and
                    ``(C) repayment of the obligation can reasonably be 
                expected, including the use of an appropriate 
                combination of credit risk premiums and collateral 
                offered by the applicant to protect the Federal 
                Government.
    ``(e) Approval of NTIA Required.--
            ``(1) In general.--The Administrator may not issue a loan 
        guarantee under this title unless the National 
        Telecommunications and Information Administration consults with 
        the Administrator and certifies that--
                    ``(A) the issuance of the loan guarantee is 
                consistent with subsection (a); and
                    ``(B) consistent with subsection (b), the project 
                to be financed by a loan guaranteed under this section 
                is not likely to have a substantial adverse impact on 
                competition between multichannel video programming 
                distributors that outweighs the benefits of improving 
                access to the signals of a local television station by 
                a multichannel video provider.
            ``(2) Certification.--The Administrator shall provide the 
        appropriate information on each loan guarantee application 
        recommended by the Administrator to the National 
        Telecommunications and Information Administration for 
        certification. The National Telecommunications and Information 
        Administration shall make the determination required under this 
        subsection within 90 days, without regard to the provision of 
        chapter 5 of title 5, United States Code, and sections 10 and 
        11 of the Federal Advisory Committee Act (5 U.S.C. App.).
    ``(f) Requirements.--
            ``(1) In general.--Not later than 180 days after the date 
        of enactment of this title, the Administrator shall consult 
        with the Office of Management and Budget and an independent 
        public accounting firm to develop underwriting criteria 
        relating to the issuance of loan guarantees, appropriate 
        collateral and cash flow levels for the types of loan 
        guarantees that might be issued under this title, and such 
        other matters as the Administrator determines appropriate.
            ``(2) Authority of administrator.--In lieu of or in 
        combination with appropriations of budget authority to cover 
        the costs of loan guarantees as required under section 
        504(b)(1) of the Federal Credit Reform Act of 1990, the 
        Administrator may accept on behalf of an applicant for 
        assistance under this title a commitment from a non-Federal 
        source to fund in whole or in part the credit risk premiums 
        with respect to the applicant's loan. The aggregate of 
        appropriations of budget authority and credit risk premiums 
        described in this paragraph with respect to a loan guarantee 
        may not be less than the cost of that loan guarantee.
            ``(3) Credit risk premium amount.--The Administrator shall 
        determine the amount required for credit risk premiums under 
        this subsection on the basis of--
                    ``(A) the circumstances of the applicant, including 
                the amount of collateral offered;
                    ``(B) the proposed schedule of loan disbursements;
                    ``(C) the borrower's business plans for providing 
                service;
                    ``(D) financial commitment from the broadcast 
                signal provider;
                    ``(E) approval of the Office of Management and 
                Budget; and
                    ``(F) any other factors the Administrator considers 
                relevant.
            ``(4) Payment of premiums.--Credit risk premiums under this 
        subsection shall be paid to an account established in the 
        Treasury which shall accrue interest and such interest shall be 
        retained by the account, subject to paragraph (5).
            ``(5) Cohorts of loans.--In order to maintain sufficient 
        balances of credit risk premiums to adequately protect the 
        Federal Government from risk of default, while minimizing the 
        length of time the Government retains possession of those 
        balances, the Administrator in consultation with the Office of 
        Management and Budget shall establish cohorts of loans. When 
        all obligations attached to a cohort of loans have been 
        satisfied, credit risk premiums paid for the cohort, and 
        interest accrued thereon, which were not used to mitigate 
        losses shall be returned to the original source on a pro rata 
        basis.
    ``(g) Conditions of Assistance.--A borrower shall agree to such 
terms and conditions as are sufficient, in the judgment of the 
Administrator to ensure that, as long as any principal or interest is 
due and payable on such obligation, the borrower--
            ``(1) will maintain assets, equipment, facilities, and 
        operations on a continuing basis;
            ``(2) will not make any discretionary dividend payments 
        that reduce the ability to repay obligations incurred under 
        this section; and
            ``(3) will remain sufficiently capitalized.
    ``(h) Lien on Interests in Assets.--Upon providing a loan guarantee 
to a borrower under this title, the Administrator shall have liens 
which shall be superior to all other liens on assets of the borrower 
equal to the unpaid balance of the loan subject to such guarantee.
    ``(i) Perfected Interest.--The Administrator and the lender shall 
have a perfected security interest in those assets of the borrower 
fully sufficient to protect the Administrator and the lender.
    ``(j) Insurance Policies.--In accordance with practices of private 
lenders, as determined by the Administrator, the borrower shall obtain, 
at its expense, insurance sufficient to protect the interests of the 
Federal Government, as determined by the Administrator.
    ``(k) Special Provision for Satellite Carriers.--No satellite 
carrier that provided television broadcast signals to subscribers on 
October 1, 1999, and no company that is an affiliate of any such 
carrier, shall be eligible for a loan guarantee under this section if 
either the carrier or its affiliate holds a license for unused spectrum 
that would be suitable for delivering local television signals into 
unserved and underserved markets.
    ``(l) Authorization of Appropriations.--For the additional costs of 
the loans guaranteed under this title, including the cost of modifying 
the loans as defined in section 502 of the Congressional Budget Act of 
1974 (2 U.S.C. 661(a)), there are authorized to be appropriated for 
fiscal years 2000 through 2006, such amounts as may be necessary. In 
addition there are authorized to be appropriated such sums as may be 
necessary to administer this title. Any amounts appropriated under this 
subsection shall remain available until expended.

``SEC. 503. ADMINISTRATION OF LOAN GUARANTEES.

    ``(a) Applications.--The Administrator shall prescribe the form and 
contents for an application for a loan guarantee under section 502.
    ``(b) Assignment of Loan Guarantees.--The holder of a loan 
guaranteed under this title may assign the loan guarantee in whole or 
in part, subject to such requirements as the Administrator may 
prescribe.
    ``(c) Modifications.--The Administrator may approve the 
modification of any term or condition of a loan guarantee including the 
rate of interest, time of payment of interest or principal, or security 
requirements, if the Administrator finds in writing that--
            ``(1) the modification is equitable and is in the overall 
        best interests of the United States;
            ``(2) consent has been obtained from the borrower and the 
        lender;
            ``(3) the modification is consistent with the objective 
        underwriting criteria developed in consultation with the Office 
        of Management and Budget and an independent public accounting 
        firm under section 502(f);
            ``(4) the modification does not adversely affect the 
        Federal Government's interest in the entity's assets or loan 
        collateral;
            ``(5) the modification does not adversely affect the 
        entity's ability to repay the loan; and
            ``(6) the National Telecommunications and Information 
        Administration does not object to the modification on the 
        ground that it is inconsistent with the certification under 
        section 502(e).
    ``(d) Priority Markets.--
            ``(1) In general.--To the maximum extent practicable, the 
        Administrator shall give priority to projects which serve the 
        most underserved rural markets, as determined by the 
        Administrator. In making prioritization determinations, the 
        Administrator shall consider prevailing market conditions, 
        feasibility of providing service, population, terrain, and 
        other factors the Administrator determines appropriate.
            ``(2) Priority relating to consumer costs and separate tier 
        of signals.--The Administrator shall give priority to projects 
        that--
                    ``(A) offer a separate tier of local broadcast 
                signals; and
                    ``(B) provide lower projected costs to consumers of 
                such separate tier.
            ``(3) Performance schedules.--Applicants for priority 
        projects under this section shall enter into stipulated 
        performance schedules with the Administrator.
            ``(4) Penalty.--The Administrator may assess a borrower a 
        penalty not to exceed 3 times the interest due on the 
        guaranteed loan, if the borrower fails to meet its stipulated 
        performance schedule. The penalty shall be paid to the account 
        established by the Treasury under section 502.
            ``(5) Limitation on consideration of most populated 
        areas.--The Administrator shall not provide a loan guarantee 
        for a project that is primarily designed to serve the 40 most 
        populated designated market areas and shall take into 
        consideration the importance of serving rural markets that are 
        not likely to be otherwise offered service under section 122 of 
        title 17, United States Code, except through the loan guarantee 
        program under this title.
    ``(e) Compliance.--The Administrator shall enforce compliance by an 
applicant and any other party to the loan guarantee for whose benefit 
assistance is intended, with the provisions of this title, regulations 
issued hereunder, and the terms and conditions of the loan guarantee, 
including through regular periodic inspections and audits.
    ``(f) Commercial Validity.--For purposes of claims by any party 
other than the Administrator, a loan guarantee or loan guarantee 
commitment shall be conclusive evidence that the underlying obligation 
is in compliance with the provisions of the title, and that such 
obligation has been approved and is legal as to principal, interest, 
and other terms. Such a guarantee or commitment shall be valid and 
incontestable in the hands of a holder thereof, including the original 
lender or any other holder, as of the date when the Administrator 
granted the application therefore, except as to fraud or material 
misrepresentation by such holder.
    ``(g) Defaults.--The Administrator shall prescribe regulations 
governing a default on a loan guaranteed under this title.
    ``(h) Rights of the Administrator.--
            ``(1) Subrogation.--If the Administrator authorizes payment 
        to a holder, or a holder's agent, under subsection (g) in 
        connection with a loan guarantee made under section 502, the 
        Administrator shall be subrogated to all of the rights of the 
        holder with respect to the obligor under the loan.
            ``(2) Disposition of property.--The Administrator may 
        complete, recondition, reconstruct, renovate, repair, maintain, 
        operate, rent, sell, or otherwise dispose of any property or 
        other interests obtained under this section in a manner that 
        maximizes taxpayer return and is consistent with the public 
        convenience and necessity.
            ``(3) Warrants.--To ensure that the United States 
        Government is compensated for the risk in making guarantees 
        under this title, the Administrator shall enter into contracts 
        under which the Government, contingent on the financial success 
        of the borrower, would participate in a percentage of the gains 
        of any for profit borrower or its security holders in 
        connection with the project funded by loans so guaranteed.
    ``(i) Action Against Obligor.--The Administrator may bring a civil 
action in an appropriate district court of the United States in the 
name of the United States or of the holder of the obligation in the 
event of a default on a loan guaranteed under this title. The holder of 
a guarantee shall make available to the Administrator all records and 
evidence necessary to prosecute the civil action. The Administrator may 
accept property in full or partial satisfaction of any sums owed as a 
result of default. If the Administrator receives, through the sale or 
other disposition of such property, an amount greater than the 
aggregate of--
            ``(1) the amount paid to the holder of a guarantee under 
        subsection (g); and
            ``(2) any other cost to the United States of remedying the 
        default, the Administrator shall pay such excess to the 
        obligor.
    ``(j) Breach of Conditions.--The Attorney General shall commence a 
civil action in a court of appropriate jurisdiction to enjoin any 
activity which the Administrator finds is in violation of this title, 
regulations issued hereunder, or any conditions which were duly agreed 
to, and to secure any other appropriate relief, including relief 
against any affiliate of the borrower.
    ``(k) Attachment.--No attachment or execution may be issued against 
the Administrator or any property in the control of the Administrator 
prior to the entry of final judgment to such effect in any State, 
Federal, or other court.
    ``(l) Investigation Charge and Fees.--
            ``(1) Appraisal fee.--The Administrator may charge and 
        collect from an applicant a reasonable fee for appraisal for 
        the value of the equipment or facilities for which the loan 
        guarantee is sought, and for making necessary determinations 
        and findings. The fee may not, in the aggregate, be more than 
        one-half of one percent of the principal amount of the 
        obligation. The fee imposed under this paragraph shall be used 
        to offset the administrative costs of the program.
            ``(2) Loan origination fee.--The Administrator may charge a 
        loan origination fee.
    ``(m) Annual Audit.--The Comptroller General of the United States 
shall annually audit the administration of this title and report the 
results of the audit to the Committee on Agriculture, Nutrition, and 
Forestry of the Senate and the Committee on Agriculture of the House of 
Representatives.
    ``(n) Indemnification.--An affiliate of the borrower shall 
indemnify the Government for any losses it incurs as a result of--
            ``(1) a judgment against the borrower;
            ``(2) any breach by the borrower of its obligations under 
        the loan guarantee agreement;
            ``(3) any violation of the provisions of this title by the 
        borrower;
            ``(4) any penalties incurred by the borrower for any 
        reason, including the violation of the stipulated performance; 
        and
            ``(5) any other circumstances that the Administrator 
        determines to be appropriate.
    ``(o) Sunset.--The Administrator may not approve a loan guarantee 
under this title after December 31, 2006.

``SEC. 504. RETRANSMISSION OF LOCAL TELEVISION BROADCAST STATIONS.

    ``A borrower shall be subject to applicable rights, obligations, 
and limitations of title 17, United States Code. If a local broadcast 
station requests carriage of its signal and is located in a market not 
served by a satellite carrier providing service under a statutory 
license under section 122 of title 17, United States Code, the borrower 
shall carry the signal of that station without charge and shall be 
subject to the applicable rights, obligations, and limitations of 
sections 338, 614, and 615 of the Communications Act of 1934.''.
                                 <all>
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