Rural Electrification Administration Improvement Act of 1992
PL 102-428 (H.R.5237), enacted 10/21/1992

PUBLIC LAW 102-428—OCT. 21, 1992 
106 STAT. 2183 
Public Law 102-428 
102d Congress 
An Act 
To amend the Rural Electrification Act of 1936 to improve the provision of electric 
and telephone service in rural areas, 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 'Hural Electrification Administra-
tion Improvement Act of 1992". 
SEC. 2. DISCOUNTED LOAN PREPAYMENT. 
(a) IN GENERAL.—Subsection (a) of section 306B of the Rural 
Electrification Act of 1936 (7 U.S.C. 936b(a)) is amended to read 
as follows: 
"(a) DISCOUNTED PREPAYMENT BY BORROWERS OF ELECTRIC 
LOANS.— 
"(1) IN GENERAL.—^Except as provided in paragraph (2), 
a direct or insured loan made under this Act shall not be 
sold or prepaid at a value that is less theui the outstanding 
principal balance on the loan. 
"(2) EXCEPTION.—On request of the borrower, an electric 
loan made under this Act, or a portion of such a loan, that 
was advanced before May 1, 1992, or has been advanced for 
not less than 2 years, shall be sold to or prepaid by the borrower 
at the lesser o
f
— 
"(A) the outstanding principal balance on the loan; 
or 
''(B) the present value of the loan discounted from 
the face value at maturity at the rate established by the 
Administrator. 
"(3) DISCOUNT RATE.—^The discoimt rate applicable to the 
prepayment imder this subsection of a loan or loan advance 
shall be the then current cost of funds to the Department 
of the Treasury for obligations of comparable maturity to the 
remaining term of the loan. 
"(4) TAX EXEMPT FINANCING.—If a borrower prepays a loan 
under this subsection using tax exempt financing, the discount 
shall be adjusted to ensure that the borrower receives a benefit 
that is equal to the benefit the borrower would receive if the 
borrower used fully taxable financing. The borrower shall certify 
in writing whether the financing will be tax exempt and shall 
comply with such other terms and conditions as the Adminis-
trator may establish that are reasonable and necessary to carry 
out this subsection. 
"(5) ELIGIBILITY.— 
"(A) IN GENERAL.—A borrower that has prepaid an 
insured or direct loan shall remain eligible for assistance 
Oct. 21, 1992 
[H.R. 5237] 
Rural 
Electrification 
Administration 
Improvement 
Act of 1992. 
7 use 901 note. 
106 STAT. 2184 
PUBLIC LAW 102-428—OCT. 21, 1992 
under this Act in the same manner as other borrowers, 
except that— 
"(i) a borrower that has prepaid a loan, either 
before or after the date of enactment of this subsection, 
at a discount rate as provided by paragraph (3), shall 
not be eligible, except at the discretion of the Adminis-
trator, to apply for or receive direct or insured loans 
under this Act during the 120-month period beginning 
on the date of the prepayment; and 
"(ii) a borrower that prepaid a loan before the 
date of enactment of this subsection at a discount 
rate greater than that provided by paragraph (3), shall 
not be eligible— 
"(I) except at the discretion of the Adminis-
trator, to apply for or receive direct or insured 
loans described in clause (i) during the 180-month 
period beginning on the date of the prepayment; 
or 
"(11) to apply for or receive direct or insured 
loans described in clause (i) until the borrower 
has repaid to the Federal Government the sum 
o
f
— 
"(aa) the amount (if any) by which the 
discount the borrower received by reason of 
the prepayment exceeds the discount the bor-
rower would have received had the discount 
been based on the cost of funds to the Depart-
ment of the Treasury at the time of the prepay-
ment; and 
"(bb) interest on the amoimt described in 
item (aa), for the period beginning on the date 
of the prepayment and ending on the date 
of the repa3mient, at a rate equal to the aver-
age annual cost of borrowing by the Depart-
ment of the Treasury. 
"(B) EFFECT ON EXISTING AGREEMENTS.—If a borrower 
and the Administrator have entered into an agreement 
with respect to a prepayment occurring before the date 
of enactment of this subsection, this paragraph shall super-
sede any provision in the agreement relating to the restora-
tion of eligibility for loans imder this Act. 
"(C) DISTRIBUTION BORROWERS.—A distribution bor-
rower not in default on the repayment of loans made or 
insured under this Act shall be eligible for discounted 
prepayment as provided in this subsection. For the purpose 
of determining eligibility for discounted prepajmient under 
this subsection or eligibility for assistance under this Act, 
a default by a borrower from which a distribution borrower 
purchases wholesale power shall not be considered a default 
by the distribution borrower. 
"(6) DEFINITIONS.—^As used in this subsection: 
"(A) DIRECT LOAN.—^The term 'direct loan' means a 
loan made imder section 4. 
"(B) INSURED LOAN.—^The term 'insured loan' means 
a loan made under section 305.". 
PUBLIC LAW 102-428—OCT. 21, 1992 
106 STAT. 2185 
(b) CONFORMING AMENDMENT.—Section 306B(b) of such Act 
(7 U.S.C. 936b(b)) is amended by striking "(b) Notwithstanding" 
and inserting the following: 
"(b) MERGERS OF ELECTRIC BORROWERS.—Notwithstanding". 
Approved October 21, 1992. 
LEGISLATIVE HISTORY—H.R. 5237 (See S. 1709): 
H O U S E REPORTS: No. 102-782 (Comm. on Agriculture). 
CONGRESSIONAL RECORD, Vol. 138 (1992): 
Aug. 4, 5, considered and passed House. 
Oct. 5, considered and passed Senate, amended. House concurred in Senate 
amendment.