I 
108TH CONGRESS 
1ST SESSION 
H. R. 138
To bridge the digital divide in rural areas. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 7, 2003
Mr. MCHUGH introduced the following bill; which was referred to the Com-
mittee on Energy and Commerce, and in addition to the Committees on 
Ways and Means, and Science, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To bridge the digital divide in rural areas.
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 America Digital 
Accessibility Act’’. 
SEC. 
2. 
GRANTS 
TO 
FACILITATE 
DEPLOYMENT 
OF 
BROADBAND TELECOMMUNICATIONS CAPA-
BILITIES TO UNDERSERVED RURAL AREAS. 
(a) IN GENERAL.—In order to facilitate the deploy-
ment by the private sector of broadband telecommuni-
cations networks and capabilities (including wireless and 
satellite networks and capabilities) to underserved rural 
areas, the Secretary of Commerce (in this section, referred 
to as the ‘‘Secretary’’) may— 
(1) make grants to eligible recipients for that 
purpose; 
(2) guarantee loans, either whole or in part, of 
eligible recipients the proceeds of which are to be 
used for that purpose; or 
(3) carry out activities under both paragraphs 
(1) and (2). 
(b) ELIGIBLE RECIPIENTS.—For purposes of this 
section, an eligible recipient of a grant or loan guarantee 
under subsection (a) is any person or entity selected by 
the Secretary in accordance with such procedures as the 
Secretary shall establish. 
(c) UNDERSERVED RURAL AREAS.—The Secretary 
shall identify the areas that constitute underserved rural 
areas for purposes of this section. 
(d) EMPHASIS ON PARTICULAR CAPABILITIES.—In 
selecting a person or entity as an eligible recipient of a 
grant or loan guarantee under subsection (a), the Sec-
retary shall give particular emphasis to persons or entities 
that propose to use the grant or the proceeds of the loan
guaranteed, as the case may be, to leverage non-Federal 
resources to do one or more of the following: 
(1) Provide underserved rural areas with access 
to Internet service by local telephone. 
(2) Demonstrate new models or emerging tech-
nologies to bring broadband telecommunications 
services to underserved rural areas on a cost-effec-
tive basis. 
(3) Use broadband telecommunications services 
to stimulate economic development, such as pro-
viding connections between and among industrial 
parks located in such areas and providing high-speed 
telecommunications service links to small business 
incubators. 
(e) CONSULTATION.—The Secretary may consult 
with the Federal Communications Commission in carrying 
out activities under this section. 
(f) LIMITATION ON AMOUNT.—The amount of any 
grants made under this section, and the cost (as defined 
in section 502(5) of the Federal Credit Reform Act of 
1990 (2 U.S.C. 661a(5)) of any loans guaranteed under 
this section, may not, in the aggregate, exceed 
$100,000,000. 
(g) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated for the Department of Com-
merce for purposes of grants and loan guarantees under 
this section $100,000,000 for fiscal year 2003, and such 
sums as are necessary for each fiscal year thereafter. 
SEC. 3. RESEARCH ON ENHANCEMENT OF BROADBAND 
TELECOMMUNICATIONS SERVICES. 
(a) IN GENERAL.—The Director of the National 
Science Foundation (in this section, referred to as the 
‘‘Director’’) shall carry out research on the following: 
(1) Means of enhancing or facilitating the avail-
ability of broadband telecommunications services in 
rural areas and other remote areas. 
(2) Means of facilitating or enhancing access to 
the Internet through broadband telecommunications 
services. 
(b) SCOPE OF AUTHORITY.—The Director may carry 
out research under subsection (a) within the National 
Science Foundation or pursuant to such grants, agree-
ments, or other arrangements as the Director considers 
appropriate. 
(c) RESULTS
OF RESEARCH.—The Director shall 
make available to the public, in such manner as the Direc-
tor considers appropriate, the results of any research car-
ried out under this section. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated for the National Science
Foundation for purposes of activities under this section 
$25,000,000 for fiscal year 2003, and such sums as are 
necessary for each fiscal year thereafter. 
SEC. 4. TAX CREDIT TO HOLDERS OF QUALIFIED TECH-
NOLOGY BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 (relating to 
credits against tax) is amended by adding at the end the 
following new subpart: 
‘‘Subpart H—Nonrefundable Credit for Holders of 
Qualified Technology Bonds
‘‘Sec. 54. Credit to holders of qualified technology bonds.
‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED TECH-
NOLOGY BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a qualified technology bond on a credit 
allowance date of such bond which occurs during the tax-
able year, there shall be allowed as a credit against the 
tax imposed by this chapter for such taxable year the 
amount determined under subsection (b). 
‘‘(b) AMOUNT OF CREDIT.—
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
qualified technology bond is the amount equal to the 
product of—
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (2) for the month in 
which such bond was issued, multiplied by 
‘‘(B) the face amount of the bond held by 
the taxpayer on the credit allowance date. 
‘‘(2) DETERMINATION.—During each calendar 
month, the Secretary shall determine a credit rate 
which shall apply to bonds issued during the fol-
lowing calendar month. The credit rate for any 
month is the percentage which the Secretary esti-
mates will permit the issuance of qualified tech-
nology bonds without discount and without interest 
cost to the issuer. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—The 
credit allowed under subsection (a) for any taxable year 
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under this 
part (other than this subpart and subpart C). 
‘‘(d) QUALIFIED TECHNOLOGY BOND.—For pur-
poses of this part—
‘‘(1) IN GENERAL.—The term ‘qualified tech-
nology bond’ means any bond issued as part of an 
issue if—
‘‘(A) 95 percent of more of the proceeds of 
such issue are to be used for any (or a series 
of) qualified projects, 
‘‘(B) the bond is issued by a State or local 
government within the jurisdiction of which 
such project is located, 
‘‘(C) the issuer designates such bond for 
purposes of this section, 
‘‘(D) the issuer certifies that it has ob-
tained the written approval of the Secretary of 
Commerce for such project, and 
‘‘(E) the term of each bond which is part 
of such issue does not exceed 15 years. 
‘‘(2) QUALIFIED PROJECT.—
‘‘(A) IN
GENERAL.—The term ‘qualified 
project’ means a project—
‘‘(i) 
to 
expand 
broadband 
tele-
communications services in an area within 
the jurisdiction of a State or local govern-
ment,
‘‘(ii) which is nominated by such State 
or local government for a designation as a 
qualified project, and 
‘‘(iii) which the Secretary of Com-
merce, after consultation with the Sec-
retary of Housing and Urban Develop-
ment, designates as a qualified project or 
a series of qualified projects. 
‘‘(B) DESIGNATION PREFERENCES.—With 
respect to designations under this section, pref-
erences shall be given to—
‘‘(i) nominations of projects involving 
underserved urban or rural areas lacking 
access to high-speed Internet connections, 
and
‘‘(ii) nominations reflecting partner-
ships and comprehensive planning between 
State and local governments and the pri-
vate sector. 
‘‘(e) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) NATIONAL LIMITATION.—There is a na-
tional technology bond limitation for each calendar 
year. Such limitation is $100,000,000 for 2003,
2004, 2005, 2006, and 2007, and, except as pro-
vided in paragraph (4), zero thereafter. 
‘‘(2) ALLOCATION
OF
LIMITATION.—The na-
tional technology bond limitation for a calendar year 
shall be allocated by the Secretary among the quali-
fied projects designated for such year. 
‘‘(3) DESIGNATION
SUBJECT
TO
LIMITATION 
AMOUNT.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be 
designated under subsection (d)(1) with respect to 
any qualified project shall not exceed the limitation 
amount allocated to such project under paragraph 
(2) for such calendar year. 
‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If 
for any calendar year—
‘‘(A) the national technology limitation 
amount, exceeds 
‘‘(B) the amount of bonds issued during 
such year which are designated under sub-
section (d)(1) with respect to qualified projects, 
the national technology limitation amount for the 
following calendar year shall be increased by the 
amount of such excess. 
‘‘(f) OTHER DEFINITIONS.—For purposes of this 
subpart—
‘‘(1) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(2) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means, with respect to any 
issue, the last day of the 1-year period beginning on 
the date of issuance of such issue and the last day 
of each successive 1-year period thereafter. 
‘‘(3) STATE.—The term ‘State’ means the sev-
eral States and the District of Columbia. 
‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 
income includes the amount of the credit allowed to the 
taxpayer under this section (determined without regard to 
subsection (c)) and the amount so included shall be treat-
ed as interest income. 
‘‘(h) OTHER SPECIAL RULES.—
‘‘(1) PARTNERSHIP; 
S
CORPORATION; 
AND 
OTHER
PASS-THRU
ENTITIES.—Under regulations 
prescribed by the Secretary, in the case of a partner-
ship, trust, S corporation, or other pass-thru entity, 
rules similar to the rules of section 41(g) shall apply 
with respect to the credit allowable under subsection 
(a). 
‘‘(2) BONDS
HELD
BY
REGULATED
INVEST-
MENT COMPANIES.—If any qualified technology bond 
is held by a regulated investment company, the cred-
it determined under subsection (a) shall be allowed 
to shareholders of such company under procedures 
prescribed by the Secretary. 
‘‘(3) TREATMENT FOR ESTIMATED TAX PUR-
POSES.—Solely for purposes of sections 6654 and 
6655, the credit allowed by this section to a tax-
payer by reason of holding a qualified technology 
bond on a credit allowance date shall be treated as 
if it were a payment of estimated tax made by the 
taxpayer on such date. 
‘‘(4) REPORTING.—Issuers of qualified tech-
nology bonds shall submit reports similar to the re-
ports required under section 149(e).’’. 
(b) REPORTING.—Subsection (d) of section 6049 of 
the Internal Revenue Code of 1986 (relating to returns 
regarding payments of interest) is amended by adding at 
the end the following new paragraph: 
‘‘(8) REPORTING
OF
CREDIT
ON
QUALIFIED 
TECHNOLOGY BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts 
includible in gross income under section 54(g) 
and such amounts shall be treated as paid on 
the credit allowance date (as defined in section 
54(f)(2)).
‘‘(B) 
REPORTING
TO
CORPORATIONS, 
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in 
subparagraph (A) of this paragraph, subsection 
(b)(4) of this section shall be applied without 
regard to subparagraphs (A), (H), (I), (J), (K), 
and (L)(i). 
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are 
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations 
which require more frequent or more detailed 
reporting.’’. 
(c) CLERICAL AMENDMENTS.—
(1) The table of subparts for part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code 
of 1986 is amended by adding at the end the fol-
lowing new item:
‘‘Subpart H. Nonrefundable Credit for Holders of Qualified Technology 
Bonds.’’.
(2) Section 6401(b)(1) of such Code is amend-
ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after Decem-
ber 31, 2002.
SEC. 5. GRANTS FOR TECHNOLOGY EXTENSION. 
(a) PURPOSE.—It is the purpose of this section—
(1) to encourage meaningful use of the most 
advanced available technologies by small businesses 
and medium-sized businesses to the maximum extent 
possible to improve the productivity of those busi-
nesses and thereby to promote economic growth; and 
(2) to promote regional partnerships between 
educational institutions and businesses to develop 
such technologies and products in the surrounding 
areas. 
(b) GRANT PROGRAM.—To achieve the purpose of 
this section, the Secretary of Commerce (in this section, 
referred to as the ‘‘Secretary’’) shall carry out a program 
to provide, through grants, financial assistance for the es-
tablishment and support of regional centers for the com-
mercial use of advanced technologies by small businesses 
and medium-sized businesses. 
(c) ELIGIBILITY.—An entity is eligible to receive a 
grant as a regional center under this section if the enti-
ty—
(1) is affiliated with a United States-based in-
stitution or organization that is operated on a not-
for-profit basis, or any combination of two or more 
of such institutions or organizations;
(2) offers to enter into an agreement with the 
Secretary to function as a regional center for the 
commercial use of advanced technologies for the pur-
pose of this section within a region determined ap-
propriate by the Secretary; and 
(3) demonstrates that it has the capabilities 
necessary to achieve the purpose of this section 
through its operations as a center within that re-
gion. 
(d) SELECTION OF APPLICANTS.—
(1) COMPETITIVE
PROCESS.—The Secretary 
shall use a competitive process for the awarding of 
grants under this section and, under that process, 
select recipients of the grants on the basis of merit, 
with priority given to underserved areas. 
(2) APPLICATIONS
FOR
GRANTS.—The Sec-
retary shall prescribe the form and content of appli-
cations required for grants under this section. 
(e) SPECIFIC ACTIVITIES OF REGIONAL CENTERS.—
A regional center may use the proceeds of a grant under 
this section for any activity that carries out the purpose 
of this section, including such activities as the following: 
(1) Assist small businesses and medium-sized 
businesses to address their most critical needs for
the application of the latest technology, improvement 
of infrastructure, and use of best business practices. 
(2) In conjunction with institutions of higher 
education and laboratories located in the region, 
transfer technologies to small businesses and me-
dium-sized businesses located in such region to cre-
ate jobs and increase production in surrounding 
areas. 
(f) ADDITIONAL ADMINISTRATIVE AUTHORITIES.—
(1) COST-SHARING.—The Secretary may re-
quire the recipient of a grant to defray, out of funds 
available from sources other than the Federal Gov-
ernment, a specific level of the operating expenses of 
the regional center for which the grant is made. 
(2) ADDITIONAL
TERMS
AND
CONDITIONS.—
The Secretary, in awarding a grant, may impose any 
other terms and conditions for the use of the pro-
ceeds of the grant that the Secretary determines ap-
propriate for carrying out the purposes of this sec-
tion and to protect the interests of the United 
States. 
(g) DEFINITIONS
OF SMALL BUSINESS
AND ME-
DIUM-SIZED BUSINESS.—
(1) SECRETARY TO PRESCRIBE.—The Secretary 
shall prescribe the definitions of the terms ‘‘small
business’’ and ‘‘medium-sized business’’ for the pur-
pose of this section. 
(2) SMALL BUSINESS STANDARDS.—In defining 
the term ‘‘small business’’, the Secretary shall apply 
the standards applicable for the definition of the 
term ‘‘small-business concern’’ under section 3 of 
the Small Business Act (15 U.S.C. 632). 
(h) REGULATIONS.—The Secretary shall prescribe 
regulations for the grant program administered under this 
section. 
(i) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated for the Department of Com-
merce for carrying out this section $125,000,000 for fiscal 
year 2003, and such sums as are necessary for each fiscal 
year thereafter.
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