II
103D CONGRESS
1ST SESSION
H. R. 3123
IN THE SENATE OF THE UNITED STATES
SEPTEMBER 29 (legislative day, SEPTEMBER 27), 1993
Received
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 Representa-
tives 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’’.
HR 3123 RDS
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 amend-
ed—
(A) by striking subsections (b) and (d);
(B) by redesignating subsection (c) as sub-
section (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 appli-
cant 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 kil-
owatt-hour sold by all utilities in the State
in which the applicant provides service.
‘‘(ii) The average residential revenue
per kilowatt-hour sold by the applicant is
not less than 120 percent of the average
HR 3123 RDS
residential revenue per kilowatt-hour sold
by all utilities in the State in which the ap-
plicant 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 serv-
ice, 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 addi-
tion to hardship loans that are made under sub-
paragraph (A), the Administrator 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 appli-
cant for the purpose of furnishing or improving
electric service to a consumer located in an
HR 3123 RDS
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 addi-
tion to hardship loans that are made under sub-
paragraphs (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 appli-
cant for a loan whose residential revenue ex-
ceeds 15.0 cents per kilowatt-hour sold. A
qualifying application from such an applicant
for the purpose of furnishing or improving elec-
tric service to a consumer located outside of an
urban area shall not be subject to the condi-
tions 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 pur-
suant to subparagraph (C).
HR 3123 RDS
‘‘(B) INTEREST RATE.—
‘‘(i) IN GENERAL.—Subject to clause
(ii), the interest rate described in this sub-
paragraph on a loan to a qualifying appli-
cant shall be—
‘‘(I) the interest rate determined
by the Administrator to be equal to
the current market yield on outstand-
ing municipal obligations with remain-
ing periods to maturity similar to the
term selected by the applicant pursu-
ant to subparagraph (C), but not
greater than the rate determined
under section 307(a)(3)(A) of the
Consolidated Farm and Rural Devel-
opment Act (7 U.S.C. 1927(a)(3)(A))
that is based on the current market
yield on outstanding municipal obliga-
tions; plus
‘‘(II) if the applicant for the loan
makes an election pursuant to sub-
paragraph (D) to include in the loan
agreement the right of the applicant
to prepay the loan, a rate equal to the
amount by which—
HR 3123 RDS
‘‘(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—
‘‘(I) the average number of con-
sumers 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 pro-
vides service; and
‘‘(bb) the average per capita in-
come of the residents receiving electric
service from the applicant is less than
HR 3123 RDS
the average per capita income of the
residents of the State in which the ap-
plicant provides service, or the median
household income of the households
receiving electric service from the ap-
plicant is less than the median house-
hold income of the households in the
State.
‘‘(iii) EXCEPTION.—Clause (ii) shall
not apply to a loan to be made to an appli-
cant for the purpose of furnishing or im-
proving electric service to consumers lo-
cated in an urban area (as defined by the
Bureau of the Census) if the average num-
ber of consumers per mile of line of the
total electric system of the applicant ex-
ceeds 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 pursu-
ant to subparagraph (B), and, at the end
of the term (and any succeeding term se-
lected by the applicant under this subpara-
HR 3123 RDS
graph), 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 Ad-
ministrator may prohibit an applicant
from selecting a term that would re-
sult in the total term of the loan being
greater than the expected useful life
of the assets being financed.
‘‘(D) CALL
PROVISION.—The Adminis-
trator 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 provi-
sions of commercial loans.
‘‘(3) OTHER
SOURCE
OF
CREDIT
NOT
RE-
QUIRED
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
HR 3123 RDS
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 ex-
tent of qualifying applications for the loans, at
an interest rate of 5 percent per year, to any
applicant who meets each of the following re-
quirements:
‘‘(i) The average number of subscrib-
ers per mile of line in the service area of
the applicant is not more than 4.
‘‘(ii) The applicant is capable of pro-
ducing net income or margins before inter-
est of not less than 100 percent (but not
more than 300 percent) of the interest re-
quirements 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 bor-
rowers under this title, the applicant is a
participant in the plan.
HR 3123 RDS
‘‘(iv) The average number of subscrib-
ers per mile of line in the area included in
the proposed loan is not more than 17.
‘‘(B) AUTHORITY
TO
WAIVE
TIER
RE-
QUIREMENT.—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 re-
quest 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 ac-
quisition, purchase, and installation of tele-
phone lines, systems, and facilities (other than
buildings used primarily for administrative pur-
poses, vehicles not used primarily in construc-
tion, and customer premise equipment) related
HR 3123 RDS
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 per-
cent per year, to any applicant for a loan who
meets the following requirements:
‘‘(i) The average number of subscrib-
ers per mile of line in the service area of
the applicant is not more than 15, or the
applicant is capable of producing net in-
come 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 bor-
rowers under this title, the applicant is a
participant in the plan.
‘‘(B) CONCURRENT
LOAN
AUTHORITY.—
On request of any applicant for a loan under