7 U.S.C. § 948 (AGRICULTURE)
§ 948. Lending power
(a) Loans for prescribed purposes; requisite conditions
The Governor of the telephone bank shall make loans on behalf of the telephone bank, to the extent that there are qualifying applications therefor, subject only to limitations as to amounts authorized for loans and advances as may be imposed by law enacted by the Congress of the United States for loans to be made in any one year, and in conformance with policies approved by the Telephone Bank Board, to corporations and public bodies which have received a loan or loan commitment pursuant to section 922 of this title, or which have been certified by the Secretary to be eligible for such a loan or loan commitment, (1) for the same purposes and under the same limitations for which loans may be made under section 922 of this title, (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, and (3) for the purchase of class B stock required to be purchased under section 946(d) of this title but not for the purchase of class C stock, subject, as to the purposes set forth in (2) hereof, to the following provisos: That in the case of any such loan for the acquisition of telephone lines, facilities, or systems, the acquisition shall be approved by the Secretary, the location and character thereof shall be such as to improve the efficiency, effectiveness, or financial stability of the telephone system of the borrower, and in respect of exchange facilities for local services, the size of each acquisition shall not be greater than the borrower’s existing system at the time it receives its first loan from the telephone bank, taking into account the number of subscribers served, miles of line, and plant investment. Loans and advances made under this section shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States.
(b) Terms and conditions of loans; restrictions on loans
Loans under this section shall be on such terms and conditions as the Governor of the telephone bank shall determine, subject, however, to the following restrictions:
(1) Amortization period
All loans made under this section shall be fully amortized over a period not to exceed fifty years.
(2) Preference in loans; election of loans for telephone system with certain subscriber density per mile
Funds to be loaned under this chapter to any borrower shall be loaned under this section in preference to section 922 of this title if the borrower is eligible for such a loan and funds are available therefor. Notwithstanding the foregoing or any other provision of law, all loans made pursuant to this chapter for facilities for telephone systems with an average subscriber density of three or fewer per mile shall be made under section 922 of this title; but this provision shall not preclude the making of such loans from the telephone bank at the election of the borrower.
(3) Interest rate
(A) Loans under this section shall bear interest at the “cost of money rate”. The cost of money rate is defined as the average cost of moneys to the telephone bank as determined by the Governor, but not less than 5 per centum per annum.
(B) On and after December 22, 1987, advances made on or after December 22, 1987, under loan commitments made on or after October 1, 1987, shall bear interest at the rate determined under subparagraph (C), but in no event at a rate that is less than 5 percent per annum.
(C) The rate determined under this subparagraph shall be—
(i) for the period beginning on the date the advance is made and ending at the close of the fiscal year in which the advance is made, the average yield (on the date of the advance) on outstanding marketable obligations of the United States having a final maturity comparable to the final maturity of the advance; and
(ii) after the fiscal year in which the advance is made, the cost of money rate for such fiscal year, as determined under subparagraph (D).
(D) Within 30 days after the end of each fiscal year, the Governor shall determine to the nearest 0.01 percent the cost of money rate for the fiscal year, by calculating the sum of the results of the following calculations:
(i) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class A stock, multiplied by the rate of return payable by the telephone bank during the fiscal year, as specified in section 946(c) of this title, to holders of class A stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
(ii) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class B stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, as specified in section 946(d) of this title, to holders of class B stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year. For purposes of the calculation under this subparagraph, such rate shall be zero.
(iii) The aggregate of all amounts received by the telephone bank during the fiscal year from the issuance of class C stock, multiplied by the rate at which dividends are payable by the telephone bank during the fiscal year, under section 946(e) of this title, to holders of class C stock, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
(iv)
(I) The sum of the results of the calculations described in subclause (II).
(II) The amounts received by the telephone bank during the fiscal year from each issue of telephone debentures and other obligations of the telephone bank, multiplied, respectively, by the rates at which interest is payable during the fiscal year by the telephone bank to holders of each issue, each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
(v)
(I) The amount by which the aggregate of the amounts advanced by the telephone bank during the fiscal year exceeds the aggregate of the amounts received by the telephone bank from the issuance of class A stock, class B stock, class C stock, and telephone debentures and other obligations of the telephone bank during the fiscal year, multiplied by the historic cost of money rate as of the close of the fiscal year immediately preceding the fiscal year, which product is divided by the aggregate of the amounts advanced by the telephone bank during the fiscal year.
(II) For purposes of this clause, the term “historic cost of money rate”, with respect to the close of a preceding fiscal year, means the sum of the results of the following calculations: The amounts advanced by the telephone bank in each fiscal year during the period beginning with fiscal year 1974 and ending with the preceding fiscal year, multiplied, respectively, by the cost of money rate for the fiscal year (as set forth in the table in subparagraph (E)) for fiscal years 1974 through 1987, and as determined by the Governor under this subparagraph for fiscal years after fiscal year 1987), each of which products is divided, respectively, by the aggregate of the amounts advanced by the telephone bank during the period.
(E) For purposes of subparagraph (D)(II), the cost of money rate for the fiscal years in which each advance was made shall be as set forth in the following table:
For advances made in—
The cost of money rate shall be—
Fiscal year 1974
5.01 percent
Fiscal year 1975
5.85 percent
Fiscal year 1976
5.33 percent
Fiscal year 1977
5.00 percent
Fiscal year 1978
5.87 percent
Fiscal year 1979
5.93 percent
Fiscal year 1980
8.10 percent
Fiscal year 1981
9.46 percent
Fiscal year 1982
8.39 percent
Fiscal year 1983
6.99 percent
Fiscal year 1984
6.55 percent
Fiscal year 1985
5.00 percent
Fiscal year 1986
5.00 percent
Fiscal year 1987
5.00 percent.
For purposes of this paragraph, the term “fiscal year” means the 12-month period ending on September 30 of the designated year.
(F)
(i) Notwithstanding subparagraph (B), if a borrower holds a commitment for a loan under this section made on or after October 1, 1987, and before December 22, 1987, part or all of the proceeds of which have not been advanced as of December 22, 1987, the borrower may, until the later of the date the next advance under the loan commitment is made or 90 days after December 22, 1987, elect to have the interest rate specified in the loan commitment apply to the unadvanced portion of the loan in lieu of the rate which (but for this clause) would apply to the unadvanced portion under this paragraph. If any borrower makes an election under this clause with respect to a loan, the Governor shall adjust the interest rate which applies to the unadvanced portion of the loan accordingly.
(ii)
(I) If the telephone bank, pursuant to section 947(b) of this title, issues telephone debentures on any date to refinance telephone debentures or other obligations of the telephone bank, the telephone bank shall, in addition to any interest rate reduction required by any other provision of this paragraph, for the period applicable to the advance, reduce the interest rate charged on each advance made under this section during the fiscal year in which the refinanced debentures or other obligations were originally issued by the amount applicable to the advance.
(II) For purposes of subclause (I), the term “the period applicable to the advance” means the period beginning on the issue date described in subclause (I) and ending on the earlier of the date the advance matures or is completely prepaid.
(III) For purposes of subclause (I), the term “the amount applicable to the advance” means an amount which fully reflects that percentage of the funds saved by the telephone bank as a result of the refinancing which is equal to the percentage representation of the advance in all advances described in subclause (I).
(IV) Within 60 days after any issue date described in subclause (I), the Governor shall amend the loan documentation for each advance described in subclause (I), as necessary, to reflect any interest rate reduction applicable to the advance by reason of this clause, and shall notify each affected borrower of the reduction.
(G) Within 30 days after the publication of any determination made under subparagraph (D), any affected borrower may obtain review of the determination, or any other equitable relief as may be determined appropriate, by the United States court of appeals for the judicial circuit in which the borrower does business by filing a written petition requesting the court to set aside or modify such determination. On receipt of such a petition, the clerk of the court shall transmit a copy of the petition to the Governor. On receipt of a copy of such a petition from the clerk of the court, the Governor shall file with the court the record on which the determination is based. The court shall have jurisdiction to affirm, set aside, or modify the determination.
(H) Within 5 days after determining the cost of money rate for a fiscal year, the Governor shall—
(i) cause the determination to be published in the Federal Register in accordance with section 552 of title 5; and
(ii) furnish a copy of the determination to the Comptroller General of the United States.
(I) The telephone bank shall not sell or otherwise dispose of any loan made under this section, except as provided in this paragraph.
(4) Required qualifications of applicants
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 Secretary has approved, under section 935(d)(3) of this title, a telecommunications modernization plan for the State in which the applicant is located and, if the plan was developed by telephone borrowers under subchapter III, the applicant is a participant in the plan.
(5) Certificate of convenience and necessity required from State regulatory agency or statement of telephone bank’s Governor of nonduplication of lines, facilities, or systems
No loan shall be made in any State which now has or may hereafter have a State regulatory body having authority to regulate telephone service and to require certificates of convenience and necessity to the applicant unless such certificate from such agency is first obtained. In a State in which there is no such agency or regulatory body legally authorized to issue such certificates to the applicant, no loan shall be made under this section unless the Governor of the telephone bank shall determine (and set forth his reasons therefor in writing) that no duplication of lines, facilities, or systems, providing reasonably adequate services will result therefrom.
(6) Definitions: telephone service; telephone lines, facilities, or systems
As used in this section, the term telephone service shall have the meaning prescribed for this term in section 924(a) of this title, and the term telephone lines, facilities, or systems shall mean lines, facilities, or systems used in the rendition of such telephone service.
(7) Sale or disposal of property, rights, or franchises prior to repayment of loan
No borrower of funds under this section shall, without approval of the Governor of the telephone bank under rules established by the Telephone Bank Board, sell or dispose of its property, rights, or franchises, acquired under the provisions of this chapter, until any loan obtained from the telephone bank, including all interest and charges, shall have been repaid.
(8) Prepayment without penalty
(A) A borrower with a loan from the Rural Telephone Bank may prepay such loan (or any part thereof) by paying the face amount thereof without being required to pay the prepayment penalty set forth in the note covering such loan, except for any prepayment penalty provided for in a loan agreement entered into before November 1, 1993.
(B) If a borrower prepays part or all of a loan made under this section, then, notwithstanding section 947(b) of this title, 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 947(b) of this title 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.
(9) Applications considered under this section and section 935(d)(2)
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 935(d)(2) of this title; 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 935(d)(2) of this title, 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 935(d)(2) of this title for the fiscal year.
(10) Applications considered under section 935(d)(2)
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 935(d)(2) of this title.
(c) Payment schedule; adjustment; loan period
The Governor of the telephone bank is authorized under rules established by the Telephone Bank Board to adjust, on an amortized basis, the schedule of payments of interest or principal of loans made under this section upon his determination that with such readjustment there is reasonable assurance of repayment: Provided, however, That no adjustment shall extend the period of such loans beyond fifty years.
(d) Borrowers to determine amortization period for rural telephone bank loans
(1) Except as provided in paragraph (2), the term of any loan made under this subchapter shall be determined by the borrower at the time the application for the loan is submitted.
(2) The term of any loan made under this subchapter shall not exceed the maximum term for which a loan may be made under section 904 of this title.
(e) Interest on loans and advances
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 November 1, 1993. Funds are not authorized to be appropriated to carry out this subsection until the funds are appropriated in advance to carry out this subsection.
(May 20, 1936, ch. 432, title IV, § 408, as added Pub. L. 92–12, § 2, May 7, 1971, 85 Stat. 35; amended Pub. L. 93–32, §§ 8, 9, May 11, 1973, 87 Stat. 70, 71; Pub. L. 100–203, title I, §§ 1411(b)(1), (c), 1412, Dec. 22, 1987, 101 Stat. 1330–22, 1330–23, 1330–26; Pub. L. 101–624, title XXIII, §§ 2365, 2366, 2367(b), Nov. 28, 1990, 104 Stat. 4044; Pub. L. 103–129, § 2(a)(2), Nov. 1, 1993, 107 Stat. 1361; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 104–66, title I, § 1011(y), Dec. 21, 1995, 109 Stat. 711.)
heading: Amendments
text: 1995—Subsec. (b)(3)(I), (J). Pub. L. 104–66 redesignated subpar. (J) as (I) and struck out former subpar. (I) which read as follows: “The Comptroller General shall review, on an expedited basis, each determination a copy of which is received from the Governor and, within 15 days after the date of such receipt, furnish Congress a report on the accuracy of the determination.”
1994—Subsecs. (a), (b)(4)(B). Pub. L. 103–354 substituted “Secretary” for “Administrator”.
1993—Subsec. (a)(2). Pub. L. 103–129, § 2(a)(2)(A), substituted “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” for “purposes of financing, or refinancing, the construction, improvement, expansion, acquisition, and operation of telephone lines, facilities, or systems, in order to improve the efficiency, effectiveness, or financial stability of borrowers financed under section 922 of this title and this section”.
Subsec. (b)(4). Pub. L. 103–129, § 2(a)(2)(B)(i), added par. (4) and struck out former par. (4) which related to adequacy of security and capacity for repayment of loans made under this section.
Subsec. (b)(8)(A). Pub. L. 103–129, § 2(a)(2)(B)(ii), designated existing provisions as subpar. (A), substituted “except for any prepayment penalty provided for in a loan agreement entered into before November 1, 1993” for “if such prepayment is not made later than September 30, 1988”, and added subpar. (B).
Subsec. (b)(9), (10). Pub. L. 103–129, § 2(a)(2)(B)(iii), added pars. (9) and (10).
Subsec. (e). Pub. L. 103–129, § 2(a)(2)(C), added subsec. (e).
1990—Subsec. (a). Pub. L. 101–624, § 2365, substituted “shall make loans on behalf of the telephone bank, to the extent that there are qualifying applications therefor, subject only to limitations as to amounts authorized for loans and advances as may be imposed by law enacted by the Congress of the United States for loans to be made in any one year, and” for “is authorized on behalf of the telephone bank to make loans,”.
Subsec. (b)(3)(B). Pub. L. 101–624, § 2367(b)(1), substituted “the date of enactment of this subparagraph” for “the date of enactment of this paragraph” in the original text before “advances”, which was translated as “December 22, 1987”, requiring no change in text.
Subsec. (b)(3)(D)(ii). Pub. L. 101–624, § 2367(b)(2), inserted “For purposes of the calculation under this subparagraph, such rate shall be zero.”
Subsec. (b)(3)(E). Pub. L. 101–624, § 2367(b)(3), substituted “paragraph” for “subparagraph” after “of this”.
Subsec. (d). Pub. L. 101–624, § 2366, added subsec. (d).
1987—Subsec. (b)(3). Pub. L. 100–203, § 1411(c), designated existing provisions as subpar. (A) and added subpars. (B) to (J).
Subsec. (b)(4). Pub. L. 100–203, § 1412, inserted at end “For purposes of determining the creditworthiness of a borrower for a loan under this paragraph, the Governor shall assume that the loan, if made, would bear interest at a rate equal to the average yield (on the date of the determination) on outstanding marketable obligations of the United States having a final maturity comparable to the final maturity of the loan.”
Subsec. (b)(8). Pub. L. 100–203, § 1411(b)(1), added par. (8).
1973—Subsec. (a). Pub. L. 93–32, § 8, inserted “or which have been certified by the Administrator to be eligible for such a loan or loan commitments,” preceding cl. (1) and inserted provision that loans and advances not be included in the totals of the budget of the United States Government and that such loans and advances be exempt from any general limitation imposed by statute expenditures and net lending (budget outlays) of the United States.
Subsec. (b)(3). Pub. L. 93–32, § 9, substituted provisions for a “cost of money rate” of interest with a “not less than 5 per centum per annum” limit on such rate, for provisions for interest “at the highest rate which meets the requirements set forth in paragraph (4), consistent with the borrower’s ability to pay such interest rate and with achievement of the objectives of this chapter” with a “not less than 4 per centum per annum” limit on such rate.
heading: Effective Date of 1990 Amendment
text: Amendment by section 2367(b) of Pub. L. 101–624 effective as if included in chapter 2 [§§ 1411–1414] of subtitle D of title I of the Omnibus Budget Reconciliation Act of 1987, Pub. L. 100–203, see section 2368(b) of Pub. L. 101–624, set out as a note under section 946 of this title.
heading: Effective Date of 1973 Amendment
text: Amendment by Pub. L. 93–32 effective May 11, 1973, see section 12 of Pub. L. 93–32, set out as an Effective Date note under section 930 of this title.
heading: Effective Date
text: Section effective May 7, 1971, see section 7 of Pub. L. 92–12, set out as a note under section 921a of this title.
heading: Congressional Findings Covering Interest Rates and Loan Prepayments
text: Pub. L. 100–203, title I, § 1411(a), Dec. 22, 1987, 101 Stat. 1330–22, provided that:
“Congress finds that—
“(1) overcharging of Rural Telephone Bank borrowers has resulted in $179,000,000 in excess profits and has imperiled borrowers by raising costs to ratepayers;
“(2) borrowers will be able to seek redress under section 408(b)(3)(G) of the Rural Electrification Act of 1936 [subsec. (b)(3)(G) of this section], as added by subsection (c), or may leave the Rural Telephone Bank, but in no case may the Governor of the Bank issue regulations requiring any penalty from borrowers seeking to retire debt prior to maturity; and
“(3) any reduction in Federal Government expenditures in the operation of the Rural Telephone Bank, from borrowers’ conduct resulting from the implementation of the amendments made by subsections (b) and (c) [amending this section], should be included in all calculations of the budget of the United States Government, authorized under the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 [title I of Pub. L. 100–119, see Short Title of 1987 Amendment note set out under section 900 of Title 2, The Congress].”
heading: Prepayment Regulations
text: Pub. L. 100–203, title I, § 1411(b)(2), Dec. 22, 1987, 101 Stat. 1330–23, provided that: “The Governor of the Rural Telephone Bank shall issue regulations to carry out the amendment made by paragraph (1) [amending this section] within 30 days after the date of enactment of this Act [Dec. 22, 1987]. Such regulations shall implement the amendment made by paragraph (1) without the addition of any restrictions not set forth in such amendment.”