CHAPTER 31 - RURAL ELECTRIFICATION AND TELEPHONE SERVICE
Title 7 > CHAPTER 31
Sections (75)
§ 901 Short title
This chapter may be cited as the “Rural Electrification Act of 1936”. ( May 20, 1936, ch. 432 , title I, § 1, 49 Stat. 1363 ; 1939 Reorg. Plan No. II, § 5, eff. July 1, 1939 , 4 F.R. 2732, 53 Stat. 1434 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 ; Pub. L. 103–354, title II, § 235(a)(1) , Oct. 13, 1994 , 108 Stat. 3220 .)
§ 902 General authority of Secretary of Agriculture
(a) Loans The Secretary of Agriculture (referred to in this chapter as the “Secretary”) is authorized and empowered to make loans, or refinance loans made or guaranteed by the Secretary under this chapter, in the several States and Territories of the United States for rural electrification and for the purpose of furnishing and improving electric and telephone service in rural areas, as provided in this chapter, and for the purpose of assisting electric borrowers to implement demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems.
(b) Investigations and reports The Secretary may make, or cause to be made, studies, investigations, and reports regarding matters, including financial, technological, and regulatory matters, affecting the condition and progress of electric, telecommunications, and economic development in rural areas, and publish and disseminate information with respect to the matters.
(c) Technical assistance Not later than 180 days after December 20, 2018 , the Secretary shall enter into a memorandum of understanding with the Secretary of Energy under which the Secretary of Energy shall provide technical assistance to the Rural Utilities Service on loans to be made under subsection (a) of this section and section 904(a) of this title .
§ 903 Authorization of appropriations
There are authorized to be appropriated such sums as are necessary to carry out this chapter. ( May 20, 1936, ch. 432 , title I, § 3, 49 Stat. 1364 ; June 21, 1938, ch. 554 , title IV, § 401, 52 Stat. 818 ; Sept. 21, 1944, ch. 412 , title V, §§ 501, 503, 504, 58 Stat. 739 , 740; July 30, 1947, ch. 356 , title I, § 1, 61 Stat. 546 ; Oct. 28, 1949, ch. 776 , §§ 2, 4(a)–(d), 63 Stat. 948 ; June 15, 1955, ch. 139, § 1 , 69 Stat. 131 ; Pub. L. 92–12, § 3(a) , May 7, 1971 , 85 Stat. 37 ; Pub. L. 93–32, § 3 , May 11, 1973 , 87 Stat. 70 ; Pub. L. 103–354, title II, § 235(a)(3) , (13), Oct. 13, 1994 , 108 Stat. 3220 , 3221; Pub. L. 104–127, title VII, § 772(a) , Apr. 4, 1996 , 110 Stat. 1149 .)
§ 904 Loans for electrical plants and transmission lines
(a) In general The Secretary is authorized and empowered, from the sums hereinbefore authorized, to make loans for rural electrification to persons, corporations, States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts and cooperative, nonprofit, or limited-dividend associations, organized under the laws of any State or Territory of the United States, for the purpose of financing the construction and operation of generating plants, electric transmission and distribution lines or systems for the furnishing and improving of electric service to persons in rural areas, including by assisting electric borrowers to implement demand side management, energy efficiency and conservation programs, and on-grid and off-grid renewable energy systems, and loans, from funds available under section 903 of this title , to cooperative associations and municipalities for the purpose of enabling said cooperative associations, and municipalities to the extent that such indebtedness was incurred with respect to electric transmission and distribution lines or systems or portions thereof serving persons in rural areas, to discharge or refinance long-term debts owed by them to the Tennessee Valley Authority on account of loans made or credit extended under the terms of the Tennessee Valley Authority Act of 1933, as amended [ 16 U.S.C. 831 et seq.]: Provided , That the Secretary, in making such loans, shall give preference to States, Territories, and subdivisions and agencies thereof, municipalities, peoples’ utility districts, and cooperative, nonprofit, or limited-dividend associations, the projects of which comply with the requirements of this chapter.
(b) Terms and conditions Such loans shall be on such terms and conditions relating to the expenditure of the moneys loaned and the security therefor as the Secretary shall determine and may be made payable in whole or in part out of the income, except that no loan for the construction, operation, or enlargement of any generating plant shall be made unless the consent of the State authority having jurisdiction in the premises is first obtained.
(c) Direct loans Direct hardship loans under this section shall be for the same purposes and on the same terms and conditions as hardship loans made under section 935(c)(1) of this title . All other direct loans under this section shall bear interest at a rate equal to the then current cost of money to the Government of the United States for loans of similar maturity, plus ⅛ of 1 percent.
(d) Certification Loans under this section shall not be made unless the Secretary finds and certifies that in his judgment the security therefor is reasonably adequate and such loan will be repaid within the time agreed.
§ 905 Fees for certain loan guarantees
(a) In general For electrification baseload generation loan guarantees, the Secretary shall, at the request of the borrower, charge an upfront fee to cover the costs of the loan guarantee.
(b) Fee The fee described in subsection (a) for a loan guarantee shall be equal to the costs of the loan guarantee (within the meaning of section 661a(5)(C) of title 2 ).
(c) Limitation Funds received from a borrower to pay the fee described in this section shall not be derived from a loan or other debt obligation that is made or guaranteed by the Federal Government.
§ 906 Funding for administrative expenses
For the purpose of administering this chapter and for the purpose of making the studies, investigations, publications, and reports herein provided for, there is authorized to be appropriated, out of any money in the Treasury not otherwise appropriated, such sums as shall be necessary. ( May 20, 1936, ch. 432 , title I, § 6, 49 Stat. 1365 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 ; Pub. L. 94–124, § 3 , Nov. 4, 1975 , 89 Stat. 677 ; Pub. L. 103–437, § 4(a)(3) , Nov. 2, 1994 , 108 Stat. 4581 ; Pub. L. 104–127, title VII, § 775 , Apr. 4, 1996 , 110 Stat. 1150 .)
§ 906a Use of funds outside the United States or its territories prohibited
No funds provided under the Rural Electrification Act of 1936, as amended [ 7 U.S.C. 901 et seq.], shall be used outside the United States or any of its territories. ( Pub. L. 93–32, § 10 , May 11, 1973 , 87 Stat. 71 .)
§ 907 Acquisition of property pledged for loans; disposition; sale of pledged property by borrower
The Secretary is authorized and empowered to bid for and purchase at any foreclosure or other sale, or otherwise to acquire, property pledged or mortgaged to secure any loan made pursuant to this chapter; to pay the purchase price and any costs and expenses incurred in connection therewith from the sums authorized in section 903 of this title ; to accept title to any property so purchased or acquired in the name of the United States of America; to operate or lease such property for such period as may be deemed necessary or advisable to protect the investment therein, but not to exceed five years after the acquisition thereof; and to sell such property so purchased or acquired, upon such terms and for such consideration as the Secretary shall determine to be reasonable. No borrower of funds under sections 904 or 922 of this title shall, without the approval of the Secretary, sell or dispose of its property, rights, or franchises, acquired under the provisions of this chapter, until any loan obtained from the Rural Electrification Administration, including all interest and charges, shall have been repaid. ( May 20, 1936, ch. 432 , title I, § 7, 49 Stat. 1365 ; Oct. 28, 1949, ch. 776 , §§ 2, 4(f), 63 Stat. 948 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 908 Limitations on use of assistance
(a) Subject to subsections (b) and (c) of this section, the Secretary may allow a recipient of a grant, loan, or loan guarantee under this subchapter to set aside not more than 10 percent of the amount so received to provide retail broadband service.
(b) A recipient who sets aside funds under subsection (a) of this section may use the funds only in an area that is not being provided with the minimum acceptable level of broadband service established under section 950bb(e) of this title , unless the recipient meets the requirements of section 950bb(d) of this title .
(c) Nothing in this section shall be construed to limit the ability of any borrower to finance or deploy services authorized under this chapter.
(d) The Secretary shall not provide funding under subsection (a) if the funding would result in competitive harm to any grant, loan, or loan guarantee referred to in subsection (a).
§ 909 Administration on nonpolitical basis; dismissal of officers or employees for violating provision
This chapter shall be administered entirely on a nonpartisan basis, and in the appointment of officials, the selection of employees, and in the promotion of any such officials or employees, no political test or qualification shall be permitted or given consideration, but all such appointments and promotions shall be given and made on the basis of merit and efficiency. If the Secretary herein provided for is found by the President of the United States to be guilty of a violation of this section, he shall be removed from office by the President, and any appointee or selection of officials or employees made by the Secretary who is found guilty of a violation of this chapter shall be removed by the Secretary. ( May 20, 1936, ch. 432 , title I, § 9, 49 Stat. 1366 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 910 Repealed. Pub. L. 104–127, title VII, § 777, Apr. 4, 1996, 110 Stat. 1150
§ 911 Acceptance of services of Federal or State officers; application of civil service laws; expenditures for supplies and equipment
In order to carry out the provisions of this chapter the Secretary may accept and utilize such voluntary and uncompensated services of Federal, State, and local officers and employees as are available, and he may appoint and fix the compensation of attorneys, engineers, and experts and he may, subject to the civil-service laws, appoint such other officers and employees as he may find necessary and prescribe their duties. The Secretary is authorized, from sums appropriated pursuant to section 906 of this title , to make such expenditures (including expenditures for personal services; supplies and equipment; lawbooks and books of reference; directories and periodicals; travel expenses; rental at the seat of government and elsewhere; the purchase, operation, or maintenance of passenger-carrying vehicles; and printing and binding) as are appropriate and necessary to carry out the provisions of this chapter. ( May 20, 1936, ch. 432 , title I, § 11, 49 Stat. 1366 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 911a Repealed. Pub. L. 103–354, title II, § 235(a)(5), Oct. 13, 1994, 108 Stat. 3221
§ 912 Extension of time for repayment of loans
(a) In general The Secretary is authorized and empowered to extend the time of payment of interest or principal of any loans made by the Secretary pursuant to this chapter, except that, with respect to any loan made under section 904 or 922 of this title, the payment of interest or principal shall not be extended more than five years after such payment shall have become due.
(b) Terms of deferment Subject to limitations established in appropriations Acts, the Secretary shall permit any borrower to defer the payment of principal and interest on any insured or direct loan made under this chapter under circumstances described in this subsection, notwithstanding any limitation contained in subsection (a), except that such deferment shall not be permitted based on the determination of the Secretary of the financial hardship of the borrower. In the case of deferments made to enable the borrower to provide financing to local businesses, the deferment shall be repaid in equal installments, without the accrual of interest, over the 60-month period beginning on the date of the deferment, and the total amount of such payments shall be equal to the amount of the payment deferred. In the case of deferments made to enable the borrower to provide community development assistance, technical assistance to businesses, and for other community, business, or economic development projects not included under subparagraph (A), the deferment shall be repaid in equal installments, without the accrual of interest, over the 120-month period beginning on the date of the deferment, and the total amount of such payments shall be equal to the amount of the payment deferred. A borrower may defer its debt service payments only in an amount equal to an investment made by such borrower as described in paragraph (2). The amount of the deferment shall not exceed 50 percent of the total cost of a community or economic development project for which a deferment is provided under this subsection. The total amount of deferments under this subsection during each of the fiscal years 1990 through 1993 shall not exceed 3 percent of the total payments due during such fiscal year from all borrowers on direct and insured loans made under this chapter and shall not exceed 5 percent of such total payments due in each subsequent fiscal year. At the time of a deferment, the borrower shall make a payment to a cushion of credit account established and maintained pursuant to section 940c of this title in an amount equal to the amount of the payment deferred. The balance of such account shall not be reduced by the borrower below the level of the unpaid balance of the payment deferred. Subject to limitations established in annual appropriations Acts, such cushion of credit amounts and any other cushion of credit and advance payments of any borrower shall be included in the interest differential calculation under section 940c(b)(2) of this title . The Secretary shall undertake all reasonable efforts to permit the full amount of deferments authorized by this subsection during each fiscal year.
(c) Deferment of payments on loans The Secretary shall allow borrowers to defer payment of principal and interest on any direct loan made under this chapter to enable the borrower to make loans to residential, commercial, and industrial consumers— to conduct energy efficiency and use audits; and to install energy efficient measures or devices that reduce the demand on electric systems. The total amount of a deferment under this subsection shall not exceed the sum of the principal and interest on the loans made to a customer of the borrower, as determined by the Secretary. The term of a deferment under this subsection shall not exceed 60 months.
§ 912a Rescheduling and refinancing of loans
In addition to the loan extension authority provided in section 912 of this title , the Secretary of Agriculture is authorized to adjust and readjust the schedules for payment of principal and interest on loans to borrowers under programs administered by the Secretary under the Rural Electrification Act of 1936 ( 7 U.S.C. 901 et seq.), and to extend the maturity date of any such loan to a date not beyond forty years from the date of such loan where he determines such action is necessary because of the impairment of the economic feasibility of the system, or the loss, destruction, or damage of the property of such borrowers as a result of a major disaster. ( Pub. L. 91–606, title II, § 236(a) , Dec. 31, 1970 , 84 Stat. 1754 ; Pub. L. 103–354, title II, § 235(b)(1) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 913 Definitions
In this chapter: The term “farm” means a farm, as defined by the Bureau of the Census. The term “Indian tribe” has the meaning given the term in section 5304 of title 25 . Except as provided otherwise in this chapter, the term “rural area” means the farm and nonfarm population of— any area described in section 1991(a)(13)(C) of this title ; and any area within a service area of a borrower for which a borrower has an outstanding loan made under subchapters I through V as of the date of enactment of this paragraph. The term “territory” includes any insular possession of the United States. The term “Secretary” means the Secretary of Agriculture. ( May 20, 1936, ch. 432 , title I, § 13, 49 Stat. 1367 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 ; Pub. L. 103–129, § 2(c)(3) , Nov. 1, 1993 , 107 Stat. 1363 ; Pub. L. 103–354, title II, § 235(a)(6) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 110–234, title VI, § 6104 , May 22, 2008 , 122 Stat. 1195 ; Pub. L. 110–246, § 4(a) , title VI, § 6104, June 18, 2008 , 122 Stat. 1664 , 1957.)
§ 914 Separability
If any provision of this chapter, or the application thereof to any person or circumstances, is held invalid, the remainder of the chapter and the application of such provision to other persons or circumstances shall not be affected thereby. ( May 20, 1936, ch. 432 , title I, § 14, 49 Stat. 1367 ; Oct. 28, 1949, ch. 776, § 2 , 63 Stat. 948 .)
§ 915 Purchase of financial and credit reports
The Secretary of Agriculture is authorized to purchase such financial and credit reports as may be necessary to carry out the Secretary’s authorized work: Provided , That purchases under this authority shall not be made unless provision is made therefor in the applicable appropriation and the cost thereof is not in excess of limitations prescribed therein. ( Sept. 21, 1944, ch. 412 , title V, § 505, 58 Stat. 740 ; Pub. L. 103–354, title II, § 235(b)(2) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 916 Criteria for loans
In order to insure coordination of electric generation and transmission financing under this chapter with the national energy policy, the Secretary in making or guaranteeing loans for the construction, operation, or enlargement of generating plants or electric transmission lines or systems, shall consider such general criteria consistent with the provisions of this chapter as may be published by the Secretary of Energy. ( May 20, 1936, ch. 432 , title I, § 16, as added Pub. L. 95–91, title VII, § 709(f) , Aug. 4, 1977 , 91 Stat. 608 ; amended Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 917 Prohibition on restricting water and waste facility services to electric customers
(a) Prohibition Assistance under any rural development program administered by the Secretary or any agency of the Department of Agriculture shall not be conditioned on any requirement that the recipient of the assistance accept or receive electric service from any particular utility, supplier, or cooperative.
(b) Ensuring compliance The Secretary shall establish, by regulation, adequate safeguards to ensure that assistance under any rural development program is not subject to such a condition. The safeguards shall include periodic certifications and audits, and appropriate measures and sanctions against any person violating, or attempting to violate subsection (a).
(c) “Rural development programs” defined In this section, the term “rural development program” means the following: Sections 304(b), 306, 306A, 306C, 306D, 310B, and 375 1 and subtitle E [ 7 U.S.C. 2009 et seq.] of the Consolidated Farm and Rural Development Act ( 7 U.S.C. 1924(b) , 1926, 1926a, 1926c, 1926d, and 1932). Subtitle G 1 of title XVI and sections 2281 [ 42 U.S.C. 5177a ], 2333, and 2381 [ 7 U.S.C. 950aaa–2 , 3125b] of the Food, Agriculture, Conservation, and Trade Act of 1990. Subtitle C of title IX of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 ( Public Law 102–237 ; 7 U.S.C. 5930 note). Section 1323(b) of the Food Security Act of 1985 ( Public Law 99–198 ; 7 U.S.C. 1932 note). Title V [ 7 U.S.C. 2661 et seq.] and section 603(c) [ 7 U.S.C. 2204a ] of the Rural Development Act of 1972. Sections 905 and 940a 1 of this title and subchapter IV of this chapter.
(d) Regulations Not later than 60 days after April 4, 1996 , the Secretary shall issue final regulations to ensure compliance with subsection (a).
§ 918 General prohibitions
(a) No consideration of borrower’s level of general funds The Secretary shall not deny or reduce any loan or loan advance under this chapter based on a borrower’s level of general funds.
(b) Loan origination fees The Secretary may not charge any fee or charge not expressly provided in this chapter in connection with any loan made or guaranteed under this chapter.
(c) Consultants To facilitate timely action on applications by borrowers for financial assistance under this chapter and for approvals required of the Rural Electrification Administration pursuant to the terms of outstanding loan or security instruments or otherwise, the Secretary may use consultants funded by the borrower, paid for out of the general funds of the borrower, for financial, legal, engineering, and other technical advice and services in connection with the review of the application by the Rural Electrification Administration. The Secretary shall establish procedures for the selection and the provision of technical services by consultants to ensure that the consultants have no financial or other conflicts of interest in the outcome of the application of the borrower. The Secretary may not, without the consent of the borrower, require, as a condition of processing an application for approval, that the borrower agree to pay the costs, fees, and expenses of consultants hired to provide technical or advisory services to the Secretary. The Secretary may enter into such contracts, grants, or cooperative agreements as are necessary to carry out this section. Nothing in this subsection shall limit the authority of the Secretary to retain the services of consultants from funds made available to the Secretary or otherwise.
§ 918a Energy generation, transmission, and distribution facilities efficiency grants and loans in rural communities with extremely high energy costs
(a) In general The Secretary, acting through the Rural Utilities Service, may— in coordination with State rural development initiatives, make grants and loans to persons, States, political subdivisions of States, and other entities organized under the laws of States to acquire, construct, extend, upgrade, and otherwise improve energy generation, transmission, or distribution facilities serving communities in which the average residential expenditure for home energy is at least 275 percent of the national average residential expenditure for home energy (as determined by the Energy Information Agency using the most recent data available); make grants and loans to the Denali Commission established by the Denali Commission Act of 1998 ( 42 U.S.C. 3121 note; Public Law 105–277 ) to acquire, construct, extend, upgrade, and otherwise improve energy generation, transmission, or distribution facilities serving communities described in paragraph (1); and make grants to State entities, in existence as of November 9, 2000 , to establish and support a revolving fund to provide a more cost-effective means of purchasing fuel where the fuel cannot be shipped by means of surface transportation.
(b) Authorization of appropriations There are authorized to be appropriated to carry out this section $50,000,000 for fiscal year 2001 and such sums as are necessary for each subsequent fiscal year. Not more than 4 percent of the amounts made available under paragraph (1) may be used for planning and administrative expenses.
§ 918b Acquisition of existing systems in rural communities with high energy costs
On and after November 28, 2001 , notwithstanding any other provision of law, the Secretary of Agriculture, acting through the Administrator of the Rural Utilities Service 1 shall use the authorities provided in the Rural Electrification Act of 1936 [ 7 U.S.C. 901 et seq.] to finance the acquisition of existing generation, transmission and distribution systems and facilities serving high cost, predominantly rural areas by entities capable of and dedicated to providing or improving service in such areas in an efficient and cost effective manner. ( Pub. L. 107–76, title VII, § 748 , Nov. 28, 2001 , 115 Stat. 738 ; Pub. L. 115–334, title XII, § 12408(b) , Dec. 20, 2018 , 132 Stat. 4977 .)
§ 918c Rural and remote communities electrification grants
(a) Definitions In this section: The term “eligible grantee” means a local government or municipality, peoples’ utility district, irrigation district, and cooperative, nonprofit, or limited-dividend association in a rural area. The term “incremental hydropower” means additional generation achieved from increased efficiency after January 1, 2005 , at a hydroelectric dam that was placed in service before January 1, 2005 . The term “renewable energy” means electricity generated from— a renewable energy source; or hydrogen, other than hydrogen produced from a fossil fuel, that is produced from a renewable energy source. The term “renewable energy source” means— wind; ocean waves; biomass; solar; landfill gas; incremental hydropower; livestock methane; or geothermal energy. The term “rural area” means a city, town, or unincorporated area that has a population of not more than 10,000 inhabitants.
(b) Grants The Secretary, in consultation with the Secretary of Agriculture and the Secretary of the Interior, may provide grants under this section to eligible grantees for the purpose of— increasing energy efficiency, siting or upgrading transmission and distribution lines serving rural areas; or providing or modernizing electric generation facilities that serve rural areas.
(c) Grant administration The Secretary shall make grants under this section based on a determination of cost-effectiveness and the most effective use of the funds to achieve the purposes described in subsection (b). For each fiscal year, the Secretary shall allocate grant funds under this section equally between the purposes described in paragraphs (1) and (2) of subsection (b). In making grants for the purposes described in subsection (b)(2), the Secretary shall give preference to renewable energy facilities.
(d) Authorization of appropriations There is authorized to be appropriated to the Secretary to carry out this section $20,000,000 for each of fiscal years 2006 through 2012.
§ 921 Congressional declaration of policy
It is declared to be the policy of the Congress that adequate telephone service be made generally available in rural areas through the improvement and expansion of existing telephone facilities and the construction and operation of such additional facilities as are required to assure the availability of adequate telephone service to the widest practicable number of rural users of such service. ( Oct. 28, 1949, ch. 776, § 1 , 63 Stat. 948 .)
§§ 921a, 921b Repealed. Pub. L. 115–334, title VI, § 6602(b)(13), (14), Dec. 20, 2018, 132 Stat. 4777
§ 922 Loans for telephone service
From such sums as are from time to time made available by the Congress to the Secretary for such purpose, pursuant to section 903 of this title , the Secretary is authorized and empowered to make loans to persons now providing or who may hereafter provide telephone service in rural areas, to public bodies now providing telephone service in rural areas and to cooperative, nonprofit, limited dividend, or mutual associations. Except as otherwise provided by this subchapter, such loans shall be made under the same terms and conditions as are provided in section 904 of this title , for the purpose of financing the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems to furnish and improve telephone service in rural areas: Provided, however , That the Secretary, in making such loans, shall give preference to persons providing telephone service in rural areas, to public bodies now providing telephone service in rural areas, and to cooperative, nonprofit, limited dividend, or mutual associations. The Secretary in making such loans shall, insofar as possible, obtain assurance that the telephone service to be furnished or improved thereby will be made available to the widest practical number of rural users. When it is determined by the Secretary to be necessary in order to furnish or improve telephone service in rural areas, such loans may be made for the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems without regard to their geographical location. The Secretary is further authorized and empowered to make loans for the purpose of refinancing outstanding indebtedness of persons furnishing telephone service in rural areas, including indebtedness of recipients on another telecommunications loan made under this chapter. Loans under this section shall not be made unless the Secretary finds and certifies that in his judgment the security therefor is reasonably adequate and such loan will be repaid within the time agreed and that no duplication of lines, facilities, or systems, providing reasonably adequate services will result therefrom. ( May 20, 1936, ch. 432 , title II, § 201, as added Oct. 28, 1949, ch. 776, § 5 , 63 Stat. 948 ; amended Pub. L. 92–12, § 3(b) , May 7, 1971 , 85 Stat. 37 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 115–334, title VI , §§ 6211, 6502, 6702, Dec. 20, 2018 , 132 Stat. 4744 , 4772, 4779.)
§ 923 State regulation of telephone service
Nothing contained in this chapter shall be construed to deprive any State commission, board, or other agency of jurisdiction, under any State law, now or hereafter effective, to regulate telephone service which is not subject to regulation by the Federal Communications Commission, under the Communications Act of 1934 [ 47 U.S.C. 151 et seq.], including the rates for such service. ( May 20, 1936, ch. 432 , title II, § 202, as added Oct. 28, 1949, ch. 776, § 5 , 63 Stat. 948 .)
§ 924 Definition of telephone service and rural area
(a) As used in this subchapter, the term “telephone service” shall be deemed to mean any communication service for the transmission or reception of voice, data, sounds, signals, pictures, writing, or signs of all kinds by wire, fiber, radio, light, or other visual or electromagnetic means, and shall include all telephone lines, facilities, or systems used in the rendition of such service; but shall not be deemed to mean message telegram service or community antenna television system services or facilities other than those intended exclusively for educational purposes, or radio broadcasting services or facilities within the meaning of section 153( o ) 1 of title 47.
(b) As used in this subchapter, the term “rural area” shall be deemed to mean any area of the United States not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of 5,000 inhabitants.
§ 925 Loan feasibility
The Secretary may not, as a condition of making a telephone loan to an applicant therefor, require the applicant to— increase the rates charged to the applicant’s customers or subscribers; or increase the applicant’s ratio of— net income or margins before interest; to the interest requirements on all of the applicant’s outstanding and proposed loans. ( May 20, 1936, ch. 432 , title II, § 204, as added Pub. L. 101–624, title XXIII, § 2355 , Nov. 28, 1990 , 104 Stat. 4039 ; amended Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 115–334, title VI, § 6602(b)(2) , Dec. 20, 2018 , 132 Stat. 4776 .)
§ 926 Certain rural development investments by qualified telephone borrowers not treated as dividends or distributions
(a) In general The Secretary shall not— treat any amount invested by any qualified telephone borrower for any purpose described in section 2204b(c)(2) of this title (including any investment in, or extension of credit, guarantee, or advance made to, an affiliated company of the borrower, that is used by such company for such a purpose) as a dividend or distribution of capital to the extent that, immediately after such investment, the aggregate of such investments does not exceed ⅓ of the net worth of the borrower; or require a qualified telephone borrower to obtain the approval of the Secretary in order to make an investment described in paragraph (1).
(b) “Qualified telephone borrower” defined As used in subsection (a), the term “qualified telephone borrower” means a person— to whom a telephone loan has been made or guaranteed under this chapter; and whose net worth is at least 20 percent of the total assets of such person.
§ 927 General duties and prohibitions
(a) Duties The Secretary shall— in evaluating the feasibility of a telephone loan to be made to a borrower for telephone services, use— with respect to items for which the regulatory authority with jurisdiction over the provision of such services has approved the depreciation rates used by the borrower, such approved rates; and with respect to other items, the average of the depreciation rates used by borrowers of telephone loans made under this chapter; annually determine and publish the average described in paragraph (2)(B); and make loans for all purposes for which telephone loans are authorized under section 922 of this title , to the extent of qualifying applications therefor.
(b) Prohibitions The Secretary shall not— rescind an insured telephone loan made under this chapter without the consent of the borrower, unless all of the purposes for which telephone loans have been made to the borrower under this chapter have been accomplished with funds provided under this chapter; regulate the order or sequence of advances of funds under telephone loans made under this chapter to any borrower who has received any combination of telephone loans from the Secretary or the Federal Financing Bank; or deny a loan or advance to, or take any other adverse action against, an applicant for, or a borrower of, a telephone loan under this chapter for any reason that is not based on a rule, regulation, bulletin, or other written policy standard that has not been published pursuant to section 553 of title 5 .
§ 928 Prompt processing of telephone loans
Within ten days after the end of the second and fourth calendar quarters of each year, the Secretary shall submit to the Committee on Agriculture and the Committee on Appropriations of the House of Representatives, and to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Appropriations of the Senate, a report— identifying each completed application for a telephone loan under section 935 of this title or a guarantee of a telephone loan under section 936 of this title that has not been finally acted upon within ninety days after the date the completed application is submitted; and stating the reasons for the failure to finally act upon the completed applications within such ninety-day period. ( May 20, 1936, ch. 432 , title II, § 207, as added Pub. L. 101–624, title XXIII, § 2358 , Nov. 28, 1990 , 104 Stat. 4041 ; amended Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 115–334, title VI, § 6602(b)(6) , Dec. 20, 2018 , 132 Stat. 4776 .)
§ 930 Congressional declaration of policy
It is hereby declared to be the policy of the Congress that adequate funds should be made available to rural electric and telephone systems through direct, insured and guaranteed loans at interest rates which will allow them to achieve the objectives of the Rural Electrification Act of 1936, as amended [ 7 U.S.C. 901 et seq.], and that such rural electric and telephone systems should be encouraged and assisted to develop their resources and ability to achieve the financial strength needed to enable them to satisfy their credit needs from their own financial organizations and other sources at reasonable rates and terms consistent with the loan applicant’s ability to pay and achievement of the Act’s objectives. ( Pub. L. 93–32, § 1 , May 11, 1973 , 87 Stat. 65 .)
§ 931 Rural Electrification and Telephone Revolving Fund
There is hereby established in the Treasury of the United States a fund, to be known as the Rural Electrification and Telephone Revolving Fund (hereinafter referred to as the “fund”), consisting of: all notes, bonds, obligations, liens, mortgages, and property delivered or assigned to the Secretary pursuant to loans heretofore or hereafter made under sections 904, 905, 1 and 922 of this title and under this subchapter, as of May 11, 1973 , and all proceeds from the sales hereunder of such notes, bonds, obligations, liens, mortgages, and property, which shall be transferred to and be assets of the funds; undisbursed balances of electric and telephone loans made under sections 904, 905, 1 and 922 of this title, which as of May 11, 1973 , shall be transferred to and be assets of the fund; all collections of principal and interest received on and after July 1, 1972 , on notes, bonds, judgments, or other obligations made or held under subchapters I and II of this chapter and under this subchapter, which shall be paid into and be assets of the fund; all appropriations for interest subsidies and losses required under this subchapter which may hereafter be made by the Congress and the unobligated balances of any funds made available for loans under the item “Rural Electrification Administration” in the Department of Agriculture and Agriculture-Environmental and Consumer Protection Appropriations Acts; or moneys borrowed from the Secretary of the Treasury pursuant to section 934(a) of this title . ( May 20, 1936, ch. 432 , title III, § 301, as added Pub. L. 92–12, § 2 , May 7, 1971 , 85 Stat. 29 ; amended Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 66 ; Pub. L. 94–570, § 2 , Oct. 20, 1976 , 90 Stat. 2701 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 104–127, title VII, § 772(b)(1) , Apr. 4, 1996 , 110 Stat. 1149 ; Pub. L. 115–334, title VI, § 6602(b)(7) , Dec. 20, 2018 , 132 Stat. 4776 .)
§ 931a Level of loan programs under Rural Electrification and Telephone Revolving Fund
On and after October 28, 1991 , no funds in this Act or any other Act shall be available to carry out loan programs under the Rural Electrification and Telephone Revolving Fund at levels other than those provided for in advance in appropriations Acts. ( Pub. L. 102–142, title III , Oct. 28, 1991 , 105 Stat. 903 .)
§ 932 Liabilities and uses of Rural Electrification and Telephone Revolving Fund
(a) Liabilities and obligations of fund The notes of the Secretary to the Secretary of the Treasury to obtain funds for loans under sections 904, 905, 1 and 922 of this title, and all other liabilities against the appropriations or assets in the fund in connection with electrification and telephone loan operations shall be liabilities of the fund, and all other obligations against such appropriations or assets in the fund arising out of electrification and telephone loan operations shall be obligations of the fund.
(b) Uses of fund assets The assets of the fund shall be available only for the following purposes: loans which could be insured under this subchapter, and for advances in connection with such loans and loans previously made, as of May 11, 1973 , under sections 904, 905, 1 and 922 of this title; payment of principal when due (without interest) on outstanding loans to the Secretary from the Secretary of the Treasury for electrification and telephone purposes and payment of principal and interest when due on loans to the Secretary from the Secretary of the Treasury pursuant to section 934(a) of this title ; payment of amounts to which the holder of notes is entitled on insured loans: Provided , That payments other than final payments need not be remitted to the holder until due or until the next agreed annual, semiannual, or quarterly remittance date; payment to the holder of insured notes of any defaulted installment or, upon assignment of the note to the Secretary at his request, the entire balance due on the note; purchase of notes in accordance with contracts of insurance entered into by the Secretary; payment in compliance with contracts of guarantee; payment of taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application, and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, expenses for necessary services, including construction inspections, commercial appraisals, loan servicing, consulting business advisory or other commercial and technical services, and other program services, and other expenses and advances authorized in section 907 of this title in connection with insured loans. Such items may be paid in connection with guaranteed loans after or in connection with the acquisition of such loans or security thereof after default, to the extent determined to be necessary to protect the interest of the Government, or in connection with any other activity authorized in this chapter; payment of the purchase price and any costs and expenses incurred in connection with the purchase, acquisition, or operation of property pursuant to section 907 of this title .
(c) Separate electric and telephone accounts The Secretary shall maintain two separate accounts within the fund, which shall be known as the electric account and the telephone account, respectively. The Secretary shall account for the assets, liabilities, income, expenses, and equity of the fund attributable to electrification loan operations in the electric account. The Secretary shall account for the assets, liabilities, income, expenses, and equity of the fund attributable to telephone loan operations in the telephone account. The assets accounted for in the electric account shall be available solely for electrification loan operations under this chapter. The assets accounted for in the telephone account shall be available solely for telephone loan operations under this chapter (other than under subchapter IV).
§ 933 Moneys in the Rural Electrification and Telephone Revolving Fund
Moneys in the fund shall remain on deposit in the Treasury of the United States until disbursed. ( May 20, 1936, ch. 432 , title III, § 303, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 67 .)
§ 934 Authorized financial transactions; interim notes; purchase of obligations for resale; sale of notes and certificates; liens
(a) The Secretary is authorized to make and issue interim notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations of the fund and for making loans, advances and authorized expenditures out of the fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be agreed upon by the Secretary and the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this section. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States: Provided, however , That such interim notes to the Secretary of the Treasury 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) The Secretary of the Treasury is authorized and directed to purchase for resale obligations insured through the fund when offered by the Secretary. Such resales shall be upon such terms and conditions as the Secretary of the Treasury shall determine. Purchases and resales by the Secretary of the Treasury hereunder 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 not lending (budget outlays) of the United States.
(c) The Secretary may, on an insured basis or otherwise, sell and assign any notes in the fund or sell certificates of beneficial ownership therein to the Secretary of the Treasury or in the private market. Any sale by the Secretary of notes individually or in blocks shall be treated as a sale of assets for the purposes of chapter 11 of title 31, notwithstanding the fact that the Secretary, under an agreement with the purchaser or purchasers, holds the debt instruments evidencing the loans and holds or reinvests payments thereon as trustee and custodian for the purchaser or purchasers of the individual note or of the certificate of beneficial ownership in a number of such notes. Security instruments taken by the Secretary in connection with any notes in the fund may constitute liens running to the United States notwithstanding the fact that such notes may be thereafter held by purchasers thereof.
§ 935 Insured loans; interest rates and lending levels
(a) In general The Secretary is authorized to make insured loans under this subchapter and at the interest rates hereinafter provided to the full extent of the assets available in the fund, subject only to limitations as to amounts authorized for loans and advances as may be from time to time imposed by the Congress of the United States for loans to be made in any one year, which amounts shall remain available until expended: Provided , That the Congress in the annual appropriation Act may also authorize the transfer of any excess cash in the fund for deposit into the Treasury as miscellaneous receipts: And provided further , That any such loans and advances 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) Insured loans Loans made under this section shall be insured by the Secretary when purchased by a lender. As used in this chapter, an insured loan is one which is made, held, and serviced by the Secretary, and sold and insured by the Secretary hereunder; such loans shall be sold and insured by the Secretary without undue delay.
(c) Insured electric loans The Secretary 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 applicant for a loan who meets each of the following requirements: The average revenue per kilowatt-hour sold by the applicant is not less than 120 percent of the average revenue per kilowatt-hour sold by all utilities in the State in which the applicant provides service. The average residential revenue per kilowatt-hour sold by the applicant is not less than 120 percent of the average residential revenue per kilowatt-hour sold by all utilities in the State in which the applicant provides service. 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 service, 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. In addition to hardship loans that are made under subparagraph (A), the Secretary 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 Secretary, the applicant has experienced a severe hardship. Except as provided in subparagraph (D), the Secretary may not make a loan under this paragraph to an applicant for the purpose of furnishing or improving electric service to a consumer located in an 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. In addition to hardship loans that are made under subparagraphs (A) and (B), the Secretary 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 applicant for a loan whose residential revenue exceeds 15.0 cents per kilowatt-hour sold. A qualifying application from such an applicant for the purpose of furnishing or improving electric service to a consumer located outside of an urbanized area shall not be subject to the conditions or limitation of subparagraph (A) or (C). The Secretary 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 pursuant to subparagraph (C). Subject to clause (ii), the interest rate described in this subparagraph on a loan to a qualifying applicant shall be— the interest rate determined by the Secretary to be equal to the current market yield on outstanding municipal obligations with remaining periods to maturity similar to the term selected by the applicant pursuant to subparagraph (C), but not greater than the rate determined under section 1927(a)(3)(A) of this title that is based on the current market yield on outstanding municipal obligations; plus if the applicant for the loan makes an election pursuant to subparagraph (D) to include in the loan agreement the right of the applicant to prepay the loan, a rate equal to the amount by which— the interest rate on commercial loans for a similar period that afford the borrower such a right; exceeds the interest rate on commercial loans for the period that do not afford the borrower such a right. The interest rate described in this subparagraph on a loan to an applicant for the loan shall not exceed 7 percent if— the average number of consumers per mile of line of the total electric system of the applicant is less than 5.50; or 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 provides service; and 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 service, 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. Clause (ii) shall not apply to a loan to be made to an applicant for the purpose of furnishing or improving electric service to consumers located in an 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. Subject to clause (ii), the applicant for a loan under this paragraph may select the term for which an interest rate shall be determined pursuant to subparagraph (B), and, at the end of the term (and any succeeding term selected by the applicant under this subparagraph), may renew the loan for another term selected by the 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). The Secretary may prohibit an applicant from selecting a term that would result in the total term of the loan being greater than the expected useful life of the assets being financed. The Secretary 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 provisions of commercial loans. The Secretary 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 as a condition of approving the application for the loan or advancing any amount under the loan.
(d) Insured telephone loans The Secretary shall make insured telephone loans, to the extent of qualifying applications for the loans, at an interest rate of 5 percent per year, to any applicant who meets each of the following requirements: The average number of subscribers per mile of line in the service area of the applicant is not more than 4. The applicant is capable of producing net income or margins before interest of not less than 100 percent (but not more than 300 percent) of the interest requirements on all of the outstanding and proposed loans of the applicant. The Secretary has approved a telecommunications modernization plan for the State under paragraph (3) and, if the plan was developed by telephone borrowers under this subchapter, the applicant is a participant in the plan. The average number of subscribers per mile of line in the area included in the proposed loan is not more than 17. The Secretary may waive the requirement of subparagraph (A)(ii) in any case in which the Secretary 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. On request 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 subchapter IV. The Secretary may make insured telephone loans 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, 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 percent per year, to any applicant for a loan who meets the following requirements: 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. The Secretary has approved a telecommunications modernization plan for the State under paragraph (3) and, if the plan was developed by telephone borrowers under this subchapter, the applicant is a participant in the plan. On request of any applicant for a loan under this paragraph during any fiscal year, the Secretary shall— consider the application to be for a loan under this paragraph; and if the applicant is eligible for a loan, make a loan to the applicant under this paragraph 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 paragraph, as the amount made available for loans under this paragraph for the fiscal year bears to the total amount made available for loans under this paragraph for the fiscal year. On request 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 guarantee under section 936 of this title . If, not later than 1 year after final regulations are promulgated to carry out this paragraph, any State, either by statute or through the public utility commission of the State, develops a telecommunications modernization plan that meets the requirements of subparagraph (B), the Secretary shall approve the plan for the State. If a State does not develop a plan in accordance with the requirements of the preceding sentence, the Secretary shall approve any telecommunications modernization plan for the State that meets the requirements that is developed by a majority of the borrowers of telephone loans made under this subchapter who are located in the State. For purposes of subparagraph (A), a telecommunications modernization plan must, at a minimum, meet the following objectives: The plan must provide for the elimination of party line service. The plan must provide for the availability of telecommunications services for improved business, educational, and medical services. The plan must encourage and improve computer networks and information highways for subscribers in rural areas. The plan must provide for— subscribers in rural areas to be able to receive through telephone lines— conference calling; video images; and data at a rate of at least 1,000,000 bits of information per second; and the proper routing of information to subscribers. The plan must provide for uniform deployment schedules to ensure that advanced services are deployed at the same time in rural and nonrural areas. The plan must provide for such additional requirements for service standards as may be required by the Secretary. A telecommunications modernization plan approved under subparagraph (A) may not subsequently be disapproved. Notwithstanding paragraphs (1)(A)(iii) and (2)(A)(iii), 1 and the Secretary may make a loan to a borrower serving a State that does not have a telecommunication modernization plan approved by the Secretary if the loan is made less than 1 year after the Secretary has adopted final regulations implementing this paragraph.
§ 936 Guaranteed loans; accommodations and subordination of liens; interest rates; assignability of guaranteed loans and related guarantees
The Secretary may provide financial assistance to borrowers for purposes provided in this chapter by guaranteeing loans, in the full amount thereof, made by the National Rural Utilities Cooperative Finance Corporation and any other legally organized lending agency, or by accommodating or subordinating liens or mortgages in the fund held by the Secretary as owner or as trustee or custodian for purchases of notes from the fund, or by any combination of such guarantee, accommodation, or subordination. The Secretary shall not provide such assistance to any borrower of a telephone loan under this chapter unless the borrower specifically applies for such assistance. No fees or charges shall be assessed for any such accommodation or subordination. Guaranteed loans shall bear interest at the rate agreed upon by the borrower and the lender. Guaranteed loans, and accommodation and subordination of liens or mortgages, may be made concurrently with an insured loan. The amount of guaranteed loans shall be subject only to such limitations as to amounts as may be authorized from time to time by the Congress of the United States: Provided , That any amounts guaranteed hereunder 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. As used in this subchapter a guaranteed loan is one which is initially made, held, and serviced by a legally organized lending agency and which is guaranteed by the Secretary hereunder. A guaranteed loan, including the related guarantee, may be assigned to the extent provided in the contract of guarantee executed by the Secretary under this subchapter; the assignability of such loan and guarantee shall be governed exclusively by said contract of guarantee. ( May 20, 1936, ch. 432 , title III, § 306, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 69 ; amended Pub. L. 94–124, § 1 , Nov. 4, 1975 , 89 Stat. 677 ; Pub. L. 97–35, title I, § 165(b) , Aug. 13, 1981 , 95 Stat. 379 ; Pub. L. 101–624, title XXIII, § 2362 , Nov. 28, 1990 , 104 Stat. 4042 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 110–234, title VI, § 6102(b) , May 22, 2008 , 122 Stat. 1195 ; Pub. L. 110–246, § 4(a) , title VI, § 6102(b), June 18, 2008 , 122 Stat. 1664 , 1956; Pub. L. 115–334, title VI, § 6602(b)(10) , Dec. 20, 2018 , 132 Stat. 4777 .)
§ 936a Prepayment of loans
(a) Conditions for prepayment Except as provided in subsection (c), a borrower of a loan made by the Federal Financing Bank and guaranteed under section 936 of this title may prepay such loan (or any loan advance thereunder) by paying the outstanding principal balance due on the loan (or advance), if— the loan is outstanding on July 2, 1986 ; private capital, with the existing loan guarantee, is used to replace the loan; and the borrower certifies that any savings from such prepayment will be passed on to its customers or used to improve the financial strength of the borrower in cases of financial hardship.
(b) Charges on prepayment prohibited No sums in addition to the payment of the outstanding principal balance due on the loan may be charged as the result of such prepayment against the borrower, the fund, or the Secretary.
(c) Disqualification for prepayment on finding of adverse affect on Federal Financing Bank A borrower will not qualify for prepayment under this section if, in the opinion of the Secretary of the Treasury, to prepay in such borrower’s case would adversely affect the operation of the Federal Financing Bank. Paragraph (1) shall be effective in fiscal year 1987 only for any loan the prepayment of the principal amount of which will cause the cumulative amount of net proceeds from all such prepayments made during such year to exceed $2,017,500,000.
(d) Amount of permissible prepayments; establishment of eligibility criteria The Secretary shall permit, subject to subsection (a), prepayments of principal on loans in fiscal year 1987 under this section or Public Law 99–349 in such amounts as to realize net proceeds from all such prepayments in fiscal year 1987 in an amount not less than $2,017,500,000. The Secretary shall establish— eligibility criteria to ensure that any loan prepayment activity required to be carried out under this subsection will be directed to those cooperative borrowers in greatest need of the benefits associated with prepayment, as determined by the Secretary; and such other eligibility criteria as the Secretary determines are necessary to carry out this subsection.
(e) Assignability and transferability of guarantees of loans Any guarantee of a loan prepaid under this section shall be fully assignable under the provisions of section 936 of this title and transferable. However, the Secretary may require that any such guarantee, if transfered 1 or assigned, be transferred or assigned to a loan or security that, if sold, will be grouped with nonguaranteed loans or securities and sold in a manner to ensure that such sale will not unreasonably compete with the marketing of obligations of the United States.
§ 936b Sale or prepayment of direct or insured loans
(a) Discounted prepayment by borrowers of electric loans Except as provided in paragraph (2), a direct or insured loan made under this chapter shall not be sold or prepaid at a value that is less than the outstanding principal balance on the loan. On request of the borrower, an electric loan made under this chapter, 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 of— the outstanding principal balance on the loan; or the present value of the loan discounted from the face value at maturity at the rate established by the Secretary. The discount rate applicable to the prepayment under 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. 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 Secretary may establish that are reasonable and necessary to carry out this subsection. A borrower that has prepaid an insured or direct loan shall remain eligible for assistance under this chapter in the same manner as other borrowers, except that— a borrower that has prepaid a loan, either before or after October 21, 1992 , at a discount rate as provided by paragraph (3), shall not be eligible, except at the discretion of the Secretary, to apply for or receive direct or insured loans under this chapter during the 120-month period beginning on the date of the prepayment; and a borrower that prepaid a loan before October 21, 1992 , at a discount rate greater than that provided by paragraph (3), shall not be eligible— except at the discretion of the Secretary, 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 to apply for or receive direct or insured loans described in clause (i) until the borrower has repaid to the Federal Government the sum of— the amount (if any) by which the discount the borrower received by reason of the prepayment exceeds the discount the borrower would have received had the discount been based on the cost of funds to the Department of the Treasury at the time of the prepayment; and interest on the amount described in item (aa), for the period beginning on the date of the prepayment and ending on the date of the repayment, at a rate equal to the average annual cost of borrowing by the Department of the Treasury. If a borrower and the Secretary have entered into an agreement with respect to a prepayment occurring before October 21, 1992 , this paragraph shall supersede any provision in the agreement relating to the restoration of eligibility for loans under this chapter. A distribution borrower not in default on the repayment of loans made or insured under this chapter shall be eligible for discounted prepayment as provided in this subsection. For the purpose of determining eligibility for discounted prepayment under this subsection or eligibility for assistance under this chapter, a default by a borrower from which a distribution borrower purchases wholesale power shall not be considered a default by the distribution borrower. As used in this subsection: The term “direct loan” means a loan made under section 904 of this title . The term “insured loan” means a loan made under section 935 of this title .
(b) Mergers of electric borrowers Notwithstanding subsection (a), a direct or insured loan may be prepaid by an electric borrower at the lesser of the outstanding principal balance due thereon or the present value thereof discounted from the face value at maturity at the rate set by the Secretary if the borrower is an electrical organization which resulted from a merger or consolidation between a borrower and an organization which, prior to October 1, 1987 , prepaid its direct or insured loans pursuant to this section. Prepayments by a borrower hereunder shall be made not later than one year after the effective date of the merger, consolidation, or other transaction. The discount rate to be set by the Secretary for direct or insured loans prepayments hereunder shall be based on the current cost of funds to the Department of the Treasury for obligations of comparable maturity to those being prepaid. If a borrower prepays using tax exempt financing, the discount shall be adjusted to make the discount equivalent to 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 Secretary may establish which are reasonable and necessary to implement this provision. As used in this section, the term “direct loan” means a loan made under section 904 of this title .
§ 936c Refinancing and prepayment of FFB loans
(a) In general A borrower of a loan made by the Federal Financing Bank and guaranteed under section 936 of this title may, at the option of the borrower, refinance or prepay the loan or an advance on the loan, or any portion of the loan or advance.
(b) Penalty A penalty shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. Except as provided in paragraph (2), the penalty shall be equal to the lesser of— the difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid; 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that— the number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to the number of quarterly payment dates between the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and the present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus for the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between— each payment scheduled for the interval on the loan amount being refinanced or prepaid; and the payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid. Except as provided in subparagraph (B), the penalty provided by paragraph (1)(A) shall be required for refinancing or prepayment under this section. In the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the penalty required by paragraph (1)(A), pay a penalty as provided by— paragraph (1)(B), if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or paragraph (1)(C), if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment. In the case of a refinancing under this section, a borrower may, at the option of the borrower, meet the penalty requirements of paragraph (1) by— making a payment in the amount of the required penalty at the time of the refinancing; or increasing the outstanding principal balance of the loan advance guaranteed by the Secretary that is being refinanced under this section by the amount of the penalty. If a borrower meets the penalty requirements of paragraph (1) by increasing the outstanding principal balance of the loan advance that is being refinanced, the borrower shall make a payment at the time of the refinancing equal to 2.5 percent of the amount of the penalty that is added to the outstanding principal balance of the loan.
(c) Loan terms and conditions after refinancing On the payment of a penalty as provided by subsection (b), the loan or loan advance, or any portion of the loan or advance, shall be refinanced at the interest rate described in paragraph (2) for a term selected by the borrower pursuant to paragraph (3), except that this paragraph shall not apply if the loan advance, or any portion of the advance, is prepaid by the borrower. The interest rate on a loan refinanced under this section shall be determined to be equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to a term selected by the borrower pursuant to paragraph (3), except that such rate shall not be greater than 7 percent per year, subject to subsection (d). Subject to paragraph (4), the borrower of a loan that is refinanced under this section— shall select the term for which an interest rate shall be determined pursuant to paragraph (2); and at the end of the term (and any succeeding term selected by the borrower under this paragraph), may renew the loan for another term selected by the borrower. The borrower may not select a term pursuant to paragraph (3) that ends after the maturity date set for the loan before the refinancing of the loan under this section. In the case of the refinancing of a loan of a borrower pursuant to this section and the inclusion of a penalty in the outstanding principal balance of the refinanced loan pursuant to subsection (b)(3)— the refinancing and inclusion of the penalty shall not be subject to appropriations or limited by the amount provided during a fiscal year for new loans, loan guarantees, or other credit activity; the request of the borrower for the refinancing under this section may not be denied or delayed; and the borrower may not be limited in the selection of any refinancing or prepayment option provided by this section to the borrower.
(d) Maximum rate option Except as provided in paragraphs (2), (3), and (4), a borrower of a loan or loan advance, or any portion of the loan or advance, that is refinanced under this section shall have the option of ensuring that the interest rate on such loan, loan advance, or portion thereof does not exceed 7 percent per year. A borrower may not exercise the option under paragraph (1) in the case of a loan or loan advance, or portion thereof, if the total amount of such loans for which such option would be exercised exceeds 50 percent of the outstanding principal balance of the loans made to such borrower and guaranteed under section 936 of this title . A borrower that exercises the maximum rate option under paragraph (1) shall, at the time of exercising such option, pay a fee equal to 1 percent of the outstanding principal balance of such loan or loan advance, or portion thereof, for which such option is exercised. Such fee shall be in addition to the penalties and other payments required under subsection (b). The option provided under paragraph (1) shall not be available in the case of any loan or loan advance, or portion thereof, unless a written request to exercise such option is sent to the Secretary not later than 1 year after the effective date of regulations issued to carry out the Rural Electrification Loan Restructuring Act of 1993.
§ 936d Eligibility of distribution borrowers for loans, loan guarantees, and lien accommodations
For the purpose of determining the eligibility of a distribution borrower not in default on the repayment of a loan made or guaranteed under this chapter for a loan, loan guarantee, or lien accommodation under this subchapter, a default by a borrower from which the distribution borrower purchases wholesale power shall not— be considered a default by the distribution borrower; reduce the eligibility of the distribution borrower for assistance under this chapter; or be the cause, directly or indirectly, of imposing any requirement or restriction on the borrower as a condition of the assistance, except such requirements or restrictions as are necessary to implement a debt restructuring agreed on by the power supply borrower and the Government. ( May 20, 1936, ch. 432 , title III, § 306D, as added Pub. L. 103–129, § 2(c)(7) , Nov. 1, 1993 , 107 Stat. 1364 .)
§ 936e Administrative prohibitions applicable to certain electric borrowers
(a) In general For the purpose of relieving borrowers of unnecessary and burdensome requirements, the Secretary, guided by the practices of private lenders with respect to similar credit risks, shall issue regulations, applicable to any electric borrower under this chapter whose net worth exceeds 110 percent of the outstanding principal balance on all loans made or guaranteed to the borrower by the Secretary, to minimize those approval rights, requirements, restrictions, and prohibitions that the Secretary otherwise may establish with respect to the operations of such a borrower.
(b) Subordination or sharing of liens At the request of a private lender providing financing to such a borrower for a capital investment, the Secretary shall, expeditiously, either offer to share the government’s lien on the borrower’s system or offer to subordinate the government’s lien on that property financed by the private lender.
(c) Issuance of regulations In issuing regulations implementing this section, the Secretary may establish requirements, guided by the practices of private lenders, to ensure that the security for any loan made or guaranteed under this chapter is reasonably adequate.
(d) Authority of Secretary Nothing in this section limits the authority of the Secretary to establish terms and conditions with respect to the use by borrowers of the proceeds of loans made or guaranteed under this chapter or to take any other action specifically authorized by law.
§ 936f Substantially underserved trust areas
(a) Definitions In this section: The term “eligible program” means a program administered by the Rural Utilities Service and authorized in— this chapter; or paragraph (1), (2), (14), (22), or (24) of section 1926(a) of this title or section 1926a, 1926c, 1926d, or 1926e of this title. The term “substantially underserved trust area” means a community in “trust land” (as defined in section 3765 of title 38 ) with respect to which the Secretary determines has a high need for the benefits of an eligible program.
(b) Initiative The Secretary, in consultation with local governments and Federal agencies, may implement an initiative to identify and improve the availability of eligible programs in communities in substantially underserved trust areas.
(c) Authority of Secretary In carrying out subsection (b), the Secretary— may make available from loan or loan guarantee programs administered by the Rural Utilities Service to qualified utilities or applicants financing with an interest rate as low as 2 percent, and with extended repayment terms; may waive nonduplication restrictions, matching fund requirements, or credit support requirements from any loan or grant program administered by the Rural Utilities Service to facilitate the construction, acquisition, or improvement of infrastructure; may give the highest funding priority to designated projects in substantially underserved trust areas; and shall only make loans or loan guarantees that are found to be financially feasible and that provide eligible program benefits to substantially underserved trust areas.
(d) Report Not later than 1 year after the date of enactment of this section and annually thereafter, the Secretary shall submit to Congress a report that describes— the progress of the initiative implemented under subsection (b); and recommendations for any regulatory or legislative changes that would be appropriate to improve services to substantially underserved trust areas.
§ 937 Loans from other credit sources
When it appears to the Secretary that the loan applicant is able to obtain a loan for part of his credit needs from a responsible cooperative or other credit source at reasonable rates and terms consistent with the loan applicant’s ability to pay and the achievement of this chapter’s objectives, he may request the loan applicant to apply for and accept such a loan concurrently with an insured loan, subject, however, to full use being made by the Secretary of the funds made available hereunder for such insured loans under this subchapter. The Secretary may not request any applicant for an electric loan under this chapter to apply for and accept a loan in an amount exceeding 30 percent of the credit needs of the applicant. ( May 20, 1936, ch. 432 , title III, § 307, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 70 ; amended Pub. L. 97–35, title I, § 165(c) , Aug. 13, 1981 , 95 Stat. 379 ; Pub. L. 103–129, § 2(c)(8) , Nov. 1, 1993 , 107 Stat. 1365 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 938 Full faith and credit of the United States
Any contract of insurance or guarantee executed by the Secretary under this subchapter shall be an obligation supported by the full faith and credit of the United States and incontestable except for fraud or misrepresentation of which the holder had actual knowledge at the time it became a holder. ( May 20, 1936, ch. 432 , title III, § 308, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 70 ; amended Pub. L. 94–124, § 2 , Nov. 4, 1975 , 89 Stat. 677 ; Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 939 Loan terms and conditions
Loans made from or insured through the fund shall be for the same purposes and on the same terms and conditions as are provided for loans in subchapters I and II of this chapter except as otherwise provided in sections 933 to 938 inclusive. ( May 20, 1936, ch. 432 , title III, § 309, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 70 ; amended Pub. L. 101–624, title XXIII, § 2360 , Nov. 28, 1990 , 104 Stat. 4042 ; Pub. L. 103–129, § 2(b)(2) , Nov. 1, 1993 , 107 Stat. 1363 ; Pub. L. 104–127, title VII, § 779 , Apr. 4, 1996 , 110 Stat. 1151 ; Pub. L. 115–334, title VI, § 6602(b)(11) , Dec. 20, 2018 , 132 Stat. 4777 .)
§ 940 Refinancing of rural development loans
At the request of the borrower, the Secretary is authorized and directed to refinance with loans which will be insured under this chapter at the interest rates provided in section 935 of this title any loans made for rural electric and telephone facilities under any provision of the Consolidated Farm and Rural Development Act [ 7 U.S.C. 1921 et seq.]. ( May 20, 1936, ch. 432 , title III, § 310, as added Pub. L. 93–32, § 2 , May 11, 1973 , 87 Stat. 70 ; amended Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 940a Repealed. Pub. L. 104–127, title VII, § 780, Apr. 4, 1996, 110 Stat. 1151
§ 940b Use of funds
A borrower of an insured or guaranteed electric loan under this chapter may, without restriction or prior approval of the Secretary, invest its own funds or make loans or guarantees, not in excess of 15 percent of its total utility plant. ( May 20, 1936, ch. 432 , title III, § 312, as added Pub. L. 100–203, title I, § 1402 , Dec. 22, 1987 , 101 Stat. 1330–21 ; amended Pub. L. 103–354, title II, § 235(a)(13) , Oct. 13, 1994 , 108 Stat. 3221 .)
§ 940c Cushion of credit payments program
(a) Establishment The Secretary shall develop and promote a program to encourage borrowers to voluntarily make deposits into cushion of credit accounts established within the Rural Electrification and Telephone Revolving Fund. Effective on December 20, 2018 , no deposits may be made under subparagraph (A). Amounts in each cushion of credit account shall accrue interest to the borrower at a rate of 5 percent per annum. Notwithstanding subparagraph (A), amounts in each cushion of credit account shall accrue interest to the borrower at a rate equal to— 4 percent per annum in fiscal year 2021; and the then applicable 1-year Treasury rate thereafter. A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guaranteed under this chapter. Notwithstanding subparagraph (A) and subject to subparagraph (C), beginning on December 20, 2018 , and ending with September 30, 2020 , a borrower may, at the sole discretion of the borrower, reduce the balance of its cushion of credit account if the amount obtained from the reduction is used to prepay loans made or guaranteed under this chapter. Notwithstanding any other provision of this chapter, no prepayment premium shall be imposed or collected with respect to that portion of a loan that is prepaid by a borrower in accordance with subparagraph (B). Notwithstanding section 661c of title 2 , out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall make available such sums as necessary to cover any loan modification costs as defined in section 661a of title 2 .
(b) Uses of cushion of credit payments Cushion of credit payments shall be held in the Rural Electrification and Telephone Revolving Fund as a cash balance in the cushion of credit accounts of borrowers. All cash balance amounts (obtained from cushion of credit payments, loan payments, and other sources) held by the Fund shall bear interest to the Fund at a rate equal to the weighted average rate on outstanding certificates of beneficial ownership issued by the Fund. The amount of interest accrued on the cash balances shall be credited to the Fund as an offsetting reduction to the amount of interest paid by the Fund on its certificates of beneficial ownership. The Secretary shall maintain a subaccount within the Rural Electrification and Telephone Revolving Fund to which shall be credited, on a monthly basis, a sum determined by multiplying the outstanding cushion of credit payments made after October 1, 1987 , by the difference (converted to a monthly basis) between the average weighted interest rate paid on outstanding certificates of beneficial ownership issued by the Fund and 5 percent.
§ 940c–1 Guarantees for bonds and notes issued for electrification or telephone purposes
(a) In general Subject to subsection (b), the Secretary shall guarantee payments on bonds or notes issued by cooperative or other lenders organized on a not-for-profit basis, if the proceeds of the bonds or notes are used to make utility infrastructure loans, or refinance bonds or notes issued for those purposes, to a borrower that has at any time received, or is eligible to receive, a loan under this chapter. A bond or note guaranteed under this section shall, by agreement between the Secretary and the borrower— be for a term of 30 years (or another term of years that the Secretary determines is appropriate); and be repaid by the borrower— in periodic installments of principal and interest; in periodic installments of interest and, at the end of the term of the bond or note, as applicable, by the repayment of the outstanding principal; or through a combination of the methods described in clauses (i) and (ii).
(b) Limitations A lender shall not receive a guarantee under this section for a bond or note if, at the time of the guarantee, the total principal amount of such guaranteed bonds or notes outstanding of the lender would exceed the principal amount of outstanding loans of the lender for eligible purposes described in subsection (a)(1). The Secretary may deny the request of a lender for the guarantee of a bond or note under this section if the Secretary determines that— the lender does not have appropriate expertise or experience or is otherwise not qualified to make loans for eligible purposes described in subsection (a)(1); the bond or note issued by the lender would not be investment grade quality without a guarantee; or the lender has not provided to the Secretary a list of loan amounts approved by the lender that the lender certifies are for eligible purposes described in subsection (a)(1). The total amount of guarantees provided by the Secretary under this section during a fiscal year shall not exceed $1,000,000,000, subject to the availability of funds under subsection (e).
(c) Fees A lender that receives a guarantee issued under this section on a bond or note shall pay a fee to the Secretary. The amount of the annual fee paid for the guarantee of a bond or note under this section shall be equal to 30 basis points of the amount of the unpaid principal of the bond or note guaranteed under this section. Except as otherwise provided in this subsection and subsection (e)(2), no other fees shall be assessed. A lender shall pay the fees required under this subsection on a semiannual basis. The Secretary shall, with the consent of the lender, structure the schedule for payment of the fee to ensure that sufficient funds are available to pay the subsidy costs for note or bond guarantees as provided for in subsection (e)(2). Subject to subsection (e)(2), fees collected under this subsection shall be— deposited into the rural economic development subaccount that shall be maintained as required by sections 940c(b)(2) and 940c–2(f) of this title, to remain available until expended; and used for the purposes described in section 940c(b)(2) of this title .
(d) Guarantees A guarantee issued under this section shall— be for the full amount of a bond or note, including the amount of principal, interest, and call premiums; be fully assignable and transferable; and represent the full faith and credit of the United States. To ensure that the Secretary has the resources necessary to properly examine the proposed guarantees, the Secretary may limit the number of guarantees issued under this section to 5 per year. On the timely request of a lender, the General Counsel of the Department of Agriculture shall provide the Secretary with an opinion regarding the validity and authority of a guarantee issued to the lender under this section.
(e) Authorization of appropriations There are authorized to be appropriated such sums as are necessary to carry out this section. To the extent that the amount of funds appropriated for a fiscal year under paragraph (1) are not sufficient to carry out this section, the Secretary may use up to ⅓ of the fees collected under subsection (c) for the cost of providing guarantees of bonds and notes under this section before depositing the remainder of the fees into the rural economic development subaccount required to be maintained by sections 940c(b)(2) and 940c–2(f) of this title.
(f) Termination The authority provided under this section shall terminate on September 30, 2023 .
§ 940c–2 Rural development loans and grants
(a) In general The Secretary shall provide grants or zero interest loans to borrowers under this chapter for the purpose of promoting rural economic development and job creation projects, including funding for project feasibility studies, start-up costs, incubator projects, and other reasonable expenses for the purpose of fostering rural development. 1
(b) Repayments In the case of zero interest loans, the Secretary shall establish such reasonable repayment terms as will encourage borrower participation.
(c) Proceeds All proceeds from the repayment of such loans made under this section shall be returned to the subaccount that the Secretary shall maintain in accordance with sections 940c(b)(2) and 940c–2(f) of this title.
(d) Number of grants Loans and grants required under this section shall be made to the full extent of the amounts made available under subsection (e).
(e) Funding In addition to other funds that are available to carry out this section, there is authorized to be appropriated not more than 5,000,000 for each of fiscal years 2022 through 2024, to remain available until expended. In addition to the funds described in paragraphs (1) and (2), the Secretary shall use, without fiscal year limitation, to provide grants and loans under this section— the interest differential sums credited to the subaccount described in subsection (c); and subject to section 940c–1(e)(2) of this title , the fees described in subsection (c)(4) of such section.
(f) Maintenance of account The Secretary shall maintain the subaccount described in section 940c(b)(2) of this title , as in effect in fiscal year 2017, for purposes of carrying out this section.
§ 940d Repealed. Pub. L. 115–334, title VI, § 6601(b), Dec. 20, 2018, 132 Stat. 4776
§ 940e Expansion of 911 access
(a) In general Subject to subsection (c) and such terms and conditions as the Secretary may prescribe, the Secretary may make loans under this subchapter to entities eligible to borrow from the Rural Utilities Service, State or local governments, Indian tribes (as defined in section 5304 of title 25 ), or other public entities for facilities and equipment to expand or improve in rural areas— 911 access; integrated interoperable emergency communications, including multiuse networks that provide critical transportation-related information services in addition to emergency communications services; homeland security communications; transportation safety communications; or location technologies used outside an urbanized area.
(b) Loan security Government-imposed fees related to emergency communications (including State or local 911 fees) may be considered to be security for a loan under this section.
(c) Emergency communications equipment providers The Secretary may make a loan under this section to an emergency communication equipment provider to expand or improve 911 access or other communications or technologies described in subsection (a) if the local government that has jurisdiction over the project is not allowed to acquire the debt resulting from the loan.
(d) Authorization of appropriations The Secretary shall use to make loans under this section any funds otherwise made available for telephone loans for each of fiscal years 2008 through 2023.
§ 940f Extension of period of existing guarantee
(a) In general Subject to the limitations in this section and the provisions of the Federal Credit Reform Act of 1990 [ 2 U.S.C. 661 et seq.], as amended, a borrower of a loan made by the Federal Financing Bank and guaranteed under this chapter may request an extension of the final maturity of the outstanding principal balance of such loan or any loan advance thereunder. If the Secretary and the Federal Financing Bank approve such an extension, then the period of the existing guarantee shall also be considered extended.
(b) Limitations Extensions under this section shall not be made unless the Secretary first finds and certifies that, after giving effect to the extension, in his judgment the security for all loans to the borrower made or guaranteed under this chapter is reasonably adequate and that all such loans will be repaid within the time agreed. Extensions under this section shall not be granted unless the borrower first submits with its request either— evidence satisfactory to the Secretary that a Federal or State agency with jurisdiction and expertise has made an official determination, such as through a licensing proceeding, extending the useful life of a generating plant or transmission line pledged as collateral to or beyond the new final maturity date being requested by the borrower, or a certificate from an independent licensed engineer concluding, on the basis of a thorough engineering analysis satisfactory to the Secretary, that the useful life of the generating plant or transmission line pledged as collateral extends to or beyond the new final maturity date being requested by the borrower. Extensions under this section shall not be granted if the principal balance extended exceeds the appraised value of the generating plant or transmission line referred to in subsection paragraph (2). Extensions under this section shall in no case result in a final maturity greater than 55 years from the time of original disbursement and shall in no case result in a final maturity greater than the useful life of the plant. Extensions under this section shall not be granted more than once per loan advance.
(c) Fees A borrower that receives an extension under this section shall pay a fee to the Secretary which shall be credited to the Rural Electrification and Telecommunications Loans Program account. Such fees shall remain available without fiscal year limitation to pay the modification costs for extensions. The amount of the fee paid shall be equal to the modification cost, calculated in accordance with section 502 of the Federal Credit Reform Act of 1990 [ 2 U.S.C. 661a ], as amended, of such extension. The borrower shall pay the fee required under this section at the time the existing guarantee is extended by making a payment in the amount of the required fee.
§ 940g Electric loans for renewable energy
(a) Definition of renewable energy source In this section, the term “renewable energy source” means an energy conversion system fueled from a solar, wind, hydropower, biomass, or geothermal source of energy.
(b) Loans In addition to any other funds or authorities otherwise made available under this chapter, the Secretary may make electric loans under this subchapter for electric generation from renewable energy resources for resale to rural and nonrural residents.
(c) Rate The rate of a loan under this section shall be equal to the average tax-exempt municipal bond rate of similar maturities.
§ 940h Bonding requirements
The Secretary shall review the bonding requirements for all programs administered by the Rural Utilities Service under this chapter to ensure that bonds are not required if— the interests of the Secretary are adequately protected by product warranties; or the costs or conditions associated with a bond exceed the benefit of the bond. ( May 20, 1936, ch. 432 , title III, § 318, as added Pub. L. 110–234, title VI, § 6109 , May 22, 2008 , 122 Stat. 1198 , and Pub. L. 110–246, § 4(a) , title VI, § 6109, June 18, 2008 , 122 Stat. 1664 , 1960.)
§ 940i Cybersecurity and grid security improvements
(a) Definition of cybersecurity and grid security improvements In this section, the term “cybersecurity and grid security improvements” means investment in the development, expansion, and modernization of rural utility infrastructure that addresses known cybersecurity and grid security risks.
(b) Loans and loan guarantees The Secretary may make or guarantee loans under this subchapter and subchapter I for cybersecurity and grid security improvements.
§§ 941 to 950b Repealed. Pub. L. 115–334, title VI, § 6602(a), (b)(15), Dec. 20, 2018, 132 Stat. 4776, 4777
§ 950aa Additional powers and duties
The Secretary shall— provide advice and guidance to electric borrowers under this chapter concerning the effective and prudent use by such borrowers of the investment authority under section 940b of this title to promote rural development; provide technical advice, troubleshooting, and guidance concerning the operation of programs or systems that receive assistance under this chapter; establish and administer various pilot projects through electric and telephone borrowers that the Secretary determines are useful or necessary, and recommend specific rural development projects for rural areas; act as an information clearinghouse and conduit to provide information to electric and telephone borrowers under this chapter concerning useful and effective rural development efforts that such borrowers may wish to apply in their areas of operation and concerning State, regional, or local plans for long-term rural economic development; provide information to electric and telephone borrowers under this chapter concerning the eligibility of such borrowers to apply for financial assistance, loans, or grants from other Federal agencies and non-Federal sources to enable such borrowers to expand their rural development efforts; and promote local partnerships and other coordination between borrowers under this chapter and community organizations, States, counties, or other entities, to improve rural development. ( May 20, 1936, ch. 432 , title V, § 501, as added Pub. L. 101–624, title XXIII, § 2345 , Nov. 28, 1990 , 104 Stat. 4029 ; amended Pub. L. 102–237, title VII, § 703(c) , Dec. 13, 1991 , 105 Stat. 1881 ; Pub. L. 103–354, title II, § 235(a)(12) , (13), Oct. 13, 1994 , 108 Stat. 3221 ; Pub. L. 104–127, title VII, § 781(b) , Apr. 4, 1996 , 110 Stat. 1151 .)
§ 950aa–1 Repealed. Pub. L. 104–127, title VII, § 781(a), Apr. 4, 1996, 110 Stat. 1151
§ 950bb Access to broadband telecommunications services in rural areas
(a) Purpose The purpose of this section is to provide grants, provide loans, and provide loan guarantees to provide funds for the costs of the construction, improvement, and acquisition of facilities and equipment for broadband service in rural areas.
(b) Definitions In this section: The term “broadband service” means any technology identified by the Secretary as having the capacity to transmit data to enable a subscriber to the service to originate and receive high-quality voice, data, graphics, and video. The term “incumbent service provider”, with respect to an application submitted under this section, means an entity that, as of the date of submission of the application, is providing broadband service to not less than 5 percent of the households in the service territory proposed in the application. The term “rural area” means any area other than— an area described in clause (i) or (ii) of section 1991(a)(13)(A) of this title ; and in the case of a grant or direct loan, a city, town, or incorporated area that has a population of greater than 20,000 inhabitants. The Secretary may, by regulation only, consider an area described in section 1991(a)(13)(F)(i)(I) of this title to not be a rural area for purposes of this section. Such term does not include any population described in subparagraph (H) or (I) of section 1991(a)(13) of this title .
(c) Grants, loans, and loan guarantees The Secretary shall make grants, shall make loans, and shall guarantee loans to eligible entities described in subsection (d) to provide funds for the construction, improvement, or acquisition of facilities and equipment for the provision of broadband service in rural areas. In making grants, making loans, and guaranteeing loans under paragraph (1), the Secretary shall— give the highest priority to applications for projects to provide broadband service to unserved rural communities that do not have any residential broadband service of at least— a 10-Mbps downstream transmission capacity; and a 1-Mbps upstream transmission capacity; give priority to applications for projects to provide the maximum level of broadband service to the greatest proportion of rural households in the proposed service area identified in the application; provide equal consideration to all eligible entities, including those that have not previously received grants, loans, or loan guarantees under paragraph (1); and with respect to 2 or more applications that are given the same priority under clause (i), give priority to an application that requests less grant funding than loan funding. After giving priority to the applications described in clauses (i) and (ii) of subparagraph (A), the Secretary shall then give priority to applications— for projects to provide broadband service to rural communities— with a population of less than 10,000 permanent residents; that are experiencing outmigration and have adopted a strategic community investment plan under section 2008v(d) of this title that includes considerations for improving and expanding broadband service; with a high percentage of low income families or persons (as defined in section 1471(b) of title 42 ); that are isolated from other significant population centers; or that provide rapid and expanded deployment of fixed and mobile broadband on cropland and ranchland within a service territory for use in various applications of precision agriculture; and that were developed with the participation of, and will receive a substantial portion of the funding for the project from, 2 or more stakeholders, including— State, local, and tribal governments; nonprofit institutions; community anchor institutions, such as— public libraries; elementary schools and secondary schools (as defined in section 7801 of title 20 ); institutions of higher education; and health care facilities; private entities; philanthropic organizations; and cooperatives. In this paragraph, the term “development costs” means costs of— construction, including labor and materials; project applications; and other development activities, as determined by the Secretary. To be eligible for a grant under this section, in addition to the requirements of subsection (d), the project that is the subject of the grant shall— be carried out in a proposed service territory in which not less than 90 percent of the households are unserved; and not concurrently receive any other broadband grant administered by the Rural Utilities Service. Except as provided in subparagraph (D), the amount of any grant made under this section shall not exceed— 75 percent of the total project cost with respect to an area with a density of fewer than 7 people per square mile; 50 percent of the total project cost with respect to an area with a density of 7 or more and fewer than 12 people per square mile; and 25 percent of the total project cost with respect to an area with a density of 12 or more and 20 or fewer people per square mile. The Secretary may— make grants of up to 75 percent of the development costs of the project for which the grant is provided to an eligible entity if the Secretary determines that the project serves— an area of rural households described in paragraph (2)(A)(i); or a rural community described in any of subclauses (I) through (IV) of paragraph (2)(B)(i); and make modifications of the density thresholds described in subparagraph (C), in order to ensure that funds provided under this section are best utilized to provide broadband service in communities that are the most rural in character. The Secretary shall establish an application process for grants under this section that— permits a single application for a grant and a loan under subchapter I, II, or this subchapter that is associated with such grant; and provides a single decision to award such grant and such loan. When determining population density under this section, the Secretary shall prescribe a calculation method which— utilizes publicly available data; and includes only those areas in which the applicant is able to meet the service requirements under this section, as determined by the Secretary. In the case of loan guarantees issued or modified under this section, the Secretary shall charge and collect from the lender fees in such amounts as to bring down the costs of subsidies for guaranteed loans, except that such fees shall not act as a bar to participation in the programs nor be inconsistent with current practices in the marketplace.
(d) Eligibility To be eligible to obtain a grant, loan, or loan guarantee under this section, an entity shall— demonstrate the ability to furnish or improve service in order to meet the broadband buildout requirements established under subsection (e)(4) in all or part of an unserved or underserved rural area; submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require; and agree to complete buildout of the broadband infrastructure described in the application by not later than 5 years after the initial date on which assistance under this section is made available. An eligible entity that provides telecommunications or broadband service to at least 20 percent of the households in the United States may not receive an amount of funds under this section for a fiscal year in excess of 15 percent of the funds authorized and appropriated under subsection (j) for the fiscal year. Except as provided in subparagraphs (B) and (C), assistance under this section may be used to carry out a project in a proposed service territory only if, as of the date on which the application of the eligible entity is submitted— not less than 50 percent (in the case of loans or loan guarantees provided in accordance with subsection (g)(1)(A)) of the households in the proposed service territory are unserved or have service levels below the minimum acceptable level of fixed broadband service, whether terrestrial or wireless, established under subsection (e); and broadband service is not provided in any part of the proposed service territory by 3 or more incumbent service providers. Subparagraph (A)(i) shall not apply to the proposed service territory of a project if a loan or loan guarantee has been made under this section to the applicant to provide broadband service in the proposed service territory. Except as provided in clause (ii), subparagraph (A)(ii) shall not apply to an incumbent service provider in the portion of a proposed service territory in which the provider is upgrading broadband service to meet the minimum acceptable level of broadband service established under subsection (e) for the existing territory of the incumbent service provider. Clause (i) shall not apply if the applicant is eligible for funding under another subchapter of this chapter. The Secretary may require an entity to provide a cost share in an amount not to exceed 10 percent of the amount of the grant, loan, or loan guarantee requested in the application of the entity, unless the Secretary determines that a higher percentage is required for financial feasibility. The Secretary may require an entity that proposes to have a subscriber projection of more than 20 percent of the broadband service market in a rural area to submit to the Secretary a market survey. The Secretary may not require an entity that proposes to have a subscriber projection of less than 20 percent of the broadband service market in a rural area to submit to the Secretary a market survey. Information submitted under this subparagraph shall be— certified by the affected community, city, county, or designee; or demonstrated on— the broadband map of the affected State if the map contains address-level data; or the National Broadband Map if address-level data is unavailable. Subject to paragraph (1), a State or local government (including any agency, subdivision, or instrumentality thereof (including consortia thereof)) and an Indian tribe shall be eligible for assistance under this section to provide broadband services to a rural area. The Secretary may provide to eligible entities described in paragraph (1) that are applying for assistance under this section for a project described in subsection (c)(2)(A)(i) technical assistance and training— to prepare reports and surveys necessary to request grants, loans, and loan guarantees under this section for broadband deployment; to improve management, including financial management, relating to the proposed broadband deployment; to prepare applications for grants, loans, and loan guarantees under this section; or to assist with other areas of need identified by the Secretary. Not less than 3 percent and not more than 5 percent of amounts appropriated to carry out this section for a fiscal year shall be used for technical assistance and training under this paragraph.
(e) Broadband service Subject to paragraph (2), for purposes of this section, the minimum acceptable level of broadband service for a rural area shall be at least— a 25-Mbps downstream transmission capacity; and a 3-Mbps upstream transmission capacity. At least once every 2 years, the Secretary shall review, and may adjust through notice published in the Federal Register, the minimum acceptable level of broadband service established under paragraph (1) and broadband buildout requirements under paragraph (4) to ensure that high quality, cost-effective broadband service is provided to rural areas over time. The Secretary shall not establish requirements for bandwidth or speed that have the effect of precluding the use of evolving technologies appropriate for rural areas. The term “broadband buildout requirement” means the level of internet service an applicant receiving assistance under this section must agree, at the time the application is finalized, to provide for the duration of any project-related agreement between the applicant and the Department. Subject to subparagraph (C), the Secretary shall establish broadband buildout requirements for projects with agreement lengths of— 5 to 10 years; 11 to 15 years; 16 to 20 years; and more than 20 years. In establishing the broadband buildout requirements under subparagraph (B), the Secretary shall— utilize the same metrics used to define the minimum acceptable level of broadband service under paragraph (1); 1 establish such requirements to reasonably ensure— the repayment of all loans and loan guarantees; and the financed network is technically capable of providing broadband service for the lifetime of any project-related agreement. If an applicant shows that it would be cost prohibitive to meet the broadband buildout requirements established under this paragraph for the entirety of a proposed service territory due to the unique characteristics of the proposed service territory, the Secretary and the applicant may agree to utilize substitute standards for any unserved portion of the project. Any substitute service standards should continue to consider the best technology available to meet the needs of the residents in the unserved area.
(f) Technological neutrality For purposes of determining whether to provide assistance for a project under this section, the Secretary shall use criteria that are technologically neutral.
(g) Terms and conditions for loans and loan guarantees Notwithstanding any other provision of law, a loan or loan guarantee under this section shall— bear interest at an annual rate of, as determined by the Secretary— in the case of a direct loan, a rate equivalent to— the cost of borrowing to the Department of the Treasury for obligations of comparable maturity; or 4 percent; and in the case of a guaranteed loan, the current applicable market rate for a loan of comparable maturity; and have a term of such length, not exceeding 35 years, as the borrower may request, if the Secretary determines that the loan is adequately secured. The Secretary shall consider the existing recurring revenues of the entity at the time of application in determining an adequate level of credit support.
(h) Adequacy of security The Secretary shall ensure that the type and amount of, and method of security used to secure, any loan or loan guarantee under this section is commensurate to the risk involved with the loan or loan guarantee, particularly in any case in which the loan or loan guarantee is issued to a financially strong and stable entity, as determined by the Secretary. In determining the amount of, and method of security used to secure, a loan or loan guarantee under this section, the Secretary shall consider reducing the security in a rural area that does not have broadband service.
(i) Payment assistance for certain loan and grant recipients The Secretary may use the funds appropriated for a grant under this subchapter for the cost (as defined by section 661a of title 2 ) of providing assistance under paragraph (2). When providing a grant under this subchapter, the Secretary, at the sole discretion of the Secretary, may make— a subsidized loan, which shall bear a reduced interest rate at such a rate as the Secretary determines appropriate to meet the objectives of the program; or a payment assistance loan, which shall— require no interest and principal payments while the borrower is— in material compliance with the loan agreement; and meeting the milestones and objectives of the project agreed to under paragraph (3); and require such nominal periodic payments as the Secretary determines to be appropriate. With respect to payment assistance provided under paragraph (2), before entering into the agreement under which the payment assistance will be provided, the applicant and the Secretary shall agree to milestones and objectives of the project. The Secretary and the applicant may jointly agree to amend the milestones and objectives agreed to under paragraph (3). When deciding to utilize the payment assistance authority under paragraph (2) the Secretary shall consider whether or not the payment assistance will— improve the compliance of the grantee with any commitments made through the grant agreement; promote the completion of the broadband project; protect taxpayer resources; and support the integrity of the broadband programs administered by the Secretary. The Secretary may not make a payment assistance loan under paragraph (2)(B) to an entity receiving a grant under this section that is also the recipient of a loan under subchapter I or II that is associated with such grant.
(j) Funding There is authorized to be appropriated to the Secretary to carry out this section $350,000,000 for each of fiscal years 2019 through 2023, to remain available until expended. From amounts made available for each fiscal year under this subsection, the Secretary shall— establish a national reserve for loans and loan guarantees to eligible entities in States under this section; and allocate amounts in the reserve to each State for each fiscal year for loans and loan guarantees to eligible entities in the State. The amount of an allocation made to a State for a fiscal year under subparagraph (A) shall bear the same ratio to the amount of allocations made for all States for the fiscal year as— the number of communities with a population of 2,500 inhabitants or less in the State; bears to the number of communities with a population of 2,500 inhabitants or less in all States. Any amounts in the reserve established for a State for a fiscal year under subparagraph (B) that are not obligated by April 1 of the fiscal year shall be available to the Secretary to make loans and loan guarantees under this section to eligible entities in any State, as determined by the Secretary.
(k) Termination of authority No grant, or loan, or loan guarantee may be made under this section after September 30, 2023 .
§ 950bb–1 Expansion of middle mile infrastructure into rural areas
(a) Purpose The purpose of this section is to encourage the expansion and extension of middle mile broadband infrastructure to connect underserved rural areas to the backbone of the Internet.
(b) Middle mile infrastructure For the purposes of this section, the term “middle mile infrastructure” means any broadband infrastructure that does not connect directly to end-user locations (including anchor institutions) and may include interoffice transport, backhaul, Internet connectivity, data centers, or special access transport to rural areas.
(c) Grants, loans, and loan guarantees The Secretary shall make grants, loans, and loan guarantees to eligible applicants described in subsection (d) to provide funds for the construction, improvement, or acquisition of middle mile infrastructure to serve rural areas.
(d) Eligibility To be eligible to obtain assistance under this section, an eligible entity shall— submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require; agree to complete build-out of the middle mile infrastructure described in the application by not later than 5 years after the initial date on which proceeds from the assistance provided under this section are made available; and submit to the Secretary a plan to ensure the viability of the project by— connecting, assisting with connecting, or enabling the connection of retail broadband systems that serve rural areas within the proposed service territory to the middle mile infrastructure project in an affordable and economically competitive manner; leasing or selling sufficient capacity prior to project approval; and complying with any other requirements imposed by the Secretary. Entities that receive assistance to construct, improve, or acquire middle mile infrastructure under this section shall be eligible to apply for additional funds under this subchapter to provide for retail broadband service to end users. The proceeds of assistance provided under this section may be used to carry out a project in a proposed service territory only if, as of the date the application for assistance under this section is submitted, there is not adequate middle mile infrastructure available to support broadband service for eligible rural communities that would be provided access to the middle mile infrastructure. A project shall be eligible for assistance under this section if at the time of the application— at least 75 percent of the interconnection points serve such eligible rural areas; and the Secretary determines that the proposed middle mile network will be capable of supporting retail broadband service meeting the maximum broadband buildout requirement established under section 950bb(e)(4) of this title for the residents within the proposed service territory.
(e) Limitation on grants In making grants under this section, the Secretary shall— not provide any grant in excess of 20 percent of the total project cost; and provide grants only to those projects which serve rural areas where population density or geographic characteristics make it infeasible to construct middle mile broadband systems without grant assistance.
(f) Terms, conditions, and adequacy of security All loans and loan guarantees provided under this section shall be made subject to such terms, conditions, and adequacy of security requirements as may be imposed by the Secretary. If the middle mile infrastructure would not provide adequate security due to long-term leasing arrangements, the Secretary shall require substitute security in such form and substance as are acceptable to the Secretary.
(g) Authorization of appropriations There is authorized to be appropriated to carry out this section $10,000,000 for each of fiscal years 2018 through 2023.
§ 950bb–2 Innovative Broadband Advancement Program
(a) In general The Secretary shall establish a program to be known as the “Innovative Broadband Advancement Program”, under which the Secretary may provide a grant, a loan, or both to an eligible entity for the purpose of demonstrating innovative broadband technologies or methods of broadband deployment that significantly decrease the cost of broadband deployment, and provide substantially faster broadband speeds than are available, in a rural area.
(b) Rural area In this section, the term “rural area” has the meaning provided in section 950bb(b)(3) of this title .
(c) Eligibility To be eligible to obtain assistance under this section for a project, an entity shall— submit to the Secretary an application— that describes a project designed to decrease the cost of broadband deployment, and substantially increase broadband speed to not less than the maximum 1 broadband buildout requirements established under section 950bb(e)(4) of this title , in a rural area to be served by the project; and at such time, in such manner, and containing such other information as the Secretary may require; demonstrate that the entity is able to carry out the project; and agree to complete the project build-out within 5 years after the date the assistance is first provided for the project.
(d) Prioritization In awarding assistance under this section, the Secretary shall give priority to proposals for projects that— involve partnerships between or among multiple entities; would provide broadband service to the greatest number of rural entities at or above the broadband requirements referred to in subsection (c)(1)(A); and the Secretary determines could be replicated in rural areas described in paragraph (2).
(e) Authorization of appropriations There is authorized to be appropriated to carry out this section $10,000,000 for each of fiscal years 2019 through 2023.
§ 950bb–3 Community Connect Grant Program
(a) Definitions In this section: The term “eligible broadband service” means broadband service that has the capability to transmit data at a speed specified by the Secretary, which may not be less than the applicable minimum download and upload speeds established by the Federal Communications Commission in defining the term “advanced telecommunications capability” for purposes of section 1302 of title 47 . The term “eligible service area” means an area in which broadband service capacity is less than— a 10-Mbps downstream transmission capacity; and a 1-Mbps upstream transmission capacity. The term “eligible entity” means a legally organized entity that— is— an incorporated organization; an Indian Tribe or Tribal organization; a State; a unit of local government; or any other legal entity, including a cooperative, a private corporation, or a limited liability company, that is organized on a for-profit or a not-for-profit basis; and has the legal capacity and authority to enter into a contract, to comply with applicable Federal laws, and to own and operate broadband facilities, as proposed in the application submitted by the entity for a grant under the Program. The term “eligible entity” does not include— an individual; or a partnership. The term “rural area” has the meaning given the term in section 950bb(b)(3)(A) of this title .
(b) Establishment The Secretary shall establish a program, to be known as the “Community Connect Grant Program”, to provide grants to eligible entities to finance broadband transmission in rural areas.
(c) Eligible projects An eligible entity that receives a grant under the Program shall use the grant to carry out a project that— provides eligible broadband service to, within the proposed eligible service area described in the application submitted by the eligible entity— each essential community facility as defined pursuant to section 1926(a) of this title ; and any required facilities necessary to offer that eligible broadband service to each residential and business customer within such proposed eligible service area; and for not less than 2 years— furnishes free eligible broadband service to a community center described in subsection (d)(1)(B); provides not fewer than 2 computer access points for that free eligible broadband service; and covers the cost of bandwidth to provide free eligible broadband service to each essential community facility that requests broadband services within the proposed eligible service area described in the application submitted by the eligible entity.
(d) Uses of grant funds An eligible entity that receives a grant under the Program may use the grant for— the construction, acquisition, or leasing of facilities (including spectrum), land, or buildings to deploy eligible broadband service; and the improvement, expansion, construction, or acquisition of a community center within the proposed eligible service area described in the application submitted by the eligible entity. An eligible entity that receives a grant under the Program shall not use the grant for— the duplication of any existing eligible broadband service provided by another entity in the eligible service area; or operating expenses, except as provided in— subsection (c)(2)(C) with respect to free eligible broadband service; and paragraph (1)(A) with respect to spectrum. Of the amounts provided to an eligible entity under a grant under the Program, the eligible entity shall use to carry out paragraph (1)(B) not greater than the lesser of— 10 percent; and $150,000.
(e) Matching funds An eligible entity that receives a grant under the Program shall provide a cash contribution in an amount that is not less than 15 percent of the amount of the grant. A cash contribution described in paragraph (1)— shall be used solely for the project for which the eligible entity receives a grant under the Program; and shall not include any Federal funds, unless a Federal statute specifically provides that those Federal funds may be considered to be from a non-Federal source.
(f) Applications To be eligible to receive a grant under the Program, an eligible entity shall submit to the Secretary an application at such time, in such manner, and containing such information as the Secretary may require. An application submitted by an eligible entity under paragraph (1) shall include documentation sufficient to demonstrate the availability of funds to satisfy the requirement of subsection (e).
(g) Authorization of appropriations There is authorized to be appropriated to carry out this section $50,000,000 for each of fiscal years 2019 through 2023.
§ 950bb–4 Outdated broadband systems
(a) In general Except as provided in subsection (b), the Secretary shall consider any portion of a service territory that is subject to an outstanding grant agreement between the Secretary and a broadband provider to be unserved for the purposes of all broadband assistance programs under this chapter, if the broadband service in that portion of a service territory is less than 10 Mbps downstream transmission capacity or less than 1 Mbps upstream transmission capacity.
(b) Exception The Secretary shall not consider a portion of a service territory described in subsection (a) to be unserved if the broadband service provider has constructed or begun to construct broadband facilities that meet the minimum acceptable level of service established under section 950bb(e) of this title , in that portion of the service territory.
§ 950bb–5 Default and deobligation; deferral
(a) Default and deobligation In addition to other authority under applicable law, the Secretary shall establish written procedures for all broadband programs so that, to the maximum extent practicable, the programs are administered to— recover funds from loan and grant defaults; deobligate any awards, less allowable costs that demonstrate an insufficient level of performance (including metrics determined by the Secretary) or fraudulent spending, to the extent funds with respect to the award are available in the account relating to the program established by this subchapter; award those funds, on a competitive basis, to new or existing applicants consistent with this subchapter; and minimize overlap among the programs.
(b) Deferral period In determining the terms and conditions of assistance provided under this subchapter, the Secretary may establish a deferral period of not shorter than the buildout period established for the project involved in order to support the financial feasibility and long-term sustainability of the project.
§ 950bb–6 Federal broadband program coordination
(a) Consultation between USDA and NTIA The Secretary shall consult with the Assistant Secretary to assist in the verification of eligibility of the broadband loan and grant programs of the Department of Agriculture. In providing assistance under the preceding sentence, the Assistant Secretary shall make available the broadband assessment and mapping capabilities of the National Telecommunications and Information Administration.
(b) Consultation between USDA and FCC The Secretary shall consult with the Commission before providing broadband assistance for a project to serve an area with respect to which another entity is receiving Connect America Fund or Mobility Fund support under the Federal universal service support mechanisms established under section 254 of title 47 . The Commission shall consult with the Secretary before offering or providing Connect America Fund or Mobility Fund support under the Federal universal service support mechanisms established under section 254 of title 47 to serve an area with respect to which another entity has received broadband assistance under a loan or grant program of the Department of Agriculture.
(c) Report to Congress Not later than 1 year after December 20, 2018 , the Secretary, the Commission, and the Assistant Secretary shall submit to the Committee on Agriculture and the Committee on Energy and Commerce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry and the Committee on Commerce, Science, and Transportation of the Senate a report on how best to coordinate federally supported broadband programs and activities in order to achieve the following objectives: Promote high-quality broadband service that meets the long-term needs of rural residents and businesses, by evaluating the broadband service needs in rural areas for each decade through 2050. Support the long-term viability, sustainability, and utility of federally supported rural broadband infrastructure, by analyzing the technical capabilities of the technologies currently available and reasonably expected to be available by 2035 to meet the broadband service needs of rural residents identified under paragraph (1), including by analyzing the following: The real-world performance of such technologies, including data rates, latency, data usage restrictions, and other aspects of service quality, as defined by the Commission. The suitability of each such technology for residential, agricultural, educational, healthcare, commercial, and industrial purposes in rural areas. The cost to deploy and support such technologies in several rural geographies. The costs associated with online platforms, specifically the resulting constraints on rural network bandwidth. Identify and quantify the availability of broadband service and ongoing broadband deployment in rural areas, including ways to do the following: Harmonize broadband notification and reporting requirements and develop common verification procedures across all federally supported broadband programs. Consolidate and utilize the existing broadband service data. Collect and share data on those projects in rural areas where Federal programs are currently supporting broadband deployment, including areas with respect to which an entity is receiving— support under a broadband assistance program of the Department of Agriculture; or Connect America Fund or Mobility Fund support under the Federal universal service support mechanisms established under section 254 of title 47 . Leverage support technologies and services from online platforms for providers of broadband service in rural areas.
(d) Definitions In this section: The term “Assistant Secretary” means the Assistant Secretary of Commerce for Communications and Information. The term “Commission” means the Federal Communications Commission. The term “rural area” has the meaning given the term in section 950bb(b)(3) of this title .
§ 950cc Public notice, assessments, and reporting requirements
(a) Notice requirements The Secretary shall promptly make available to the public, 1 a fully searchable database on the website of the Rural Utilities Service that contains information on all retail broadband projects provided assistance or for which assistance is sought that are administered by the Secretary, including, at a minimum— notice of each application for assistance describing the application, including— the identity of the applicant; a description of each application, including— a map of the proposed service area of the applicant; and the amount and type of support requested by each applicant; the status of each application; and the estimated number and proportion of service points in the proposed service territory without fixed broadband service, whether terrestrial or wireless; notice of each entity receiving assistance administered by the Secretary, including— the name of the entity; the type of assistance being received; the purpose for which the entity is receiving the assistance; and each annual report submitted under subsection (c) (redacted to protect any proprietary information in the report); and such other information as is sufficient to allow the public to understand assistance provided.
(b) Service area assessment The Secretary shall, with respect to a retail broadband application for assistance, which is outside an area in which the applicant receives Federal universal service support— after giving notice required by subsection (a)(1), afford service providers not less than 45 days to voluntarily submit information required by the Secretary onto the agency’s online mapping tool with respect to areas that are coterminous with the proposed service area of the application (or any parts thereof), such that the Secretary may assess whether the application submitted meets the eligibility requirements under this subchapter; and if no broadband service provider submits information under paragraph (1), consider the number of providers in the proposed service area to be established by using any other data regarding the availability of broadband service that the Secretary may collect or obtain through reasonable efforts. In the case of an application given the highest priority under section 950bb(c)(2)(A)(i) of this title , the Secretary shall confirm that each unserved rural community identified in the application is eligible for funding by— conferring with, and obtaining data from, the Chair of the Federal Communications Commission and the Administrator of the National Telecommunications and Information Administration with respect to the service level in the service area proposed in the application; reviewing any other source that is relevant to service data validation, as determined by the Secretary; and performing site-specific testing to verify the unavailability of any retail broadband service. For purposes of section 552 of title 5 , information received by the Secretary pursuant to paragraph (1)(A) of this subsection shall be exempt from disclosure pursuant to subsection (b)(2)(B) of such section 552.
(c) Reporting broadband improvements to USDA The Secretary shall require any entity receiving assistance for a project which provides retail broadband service to submit an annual report for 3 years after completion of the project, in a format specified by the Secretary, that describes— the use by the entity of the assistance, including new equipment and capacity enhancements that support high-speed broadband access for educational institutions, health care providers, and public safety service providers (including the estimated number of end users who are currently using or forecasted to use the new or upgraded infrastructure); and the progress towards fulfilling the objectives for which the assistance was granted, including— the number of service points that will receive new broadband service, existing network service improvements, and facility upgrades resulting from the Federal assistance; the speed of broadband service; the average price of the most subscribed tier of broadband service in a proposed service area; new subscribers generated from the project; and any metrics the Secretary determines to be appropriate. As a condition of receiving assistance under section 950bb of this title , a recipient of assistance shall provide to the Secretary complete, reliable, and precise geolocation information that indicates the location of new broadband service that is being provided or upgraded within the service territory supported by the grant, loan, or loan guarantee not later than 30 days after the earlier of— the date of completion of any project milestone established by the Secretary; or the date of completion of the project. The Secretary shall require any entity receiving assistance under section 950bb–1 of this title to submit a semiannual report for 5 years after completion of the project, in a format specified by the Secretary, that describes— the use by the entity of the assistance to construct, improve, or acquire middle mile infrastructure; the progress towards meeting the end-user connection plan submitted under section 950bb–1(d)(1)(A)(iii) of this title ; and any additional metrics the Secretary determines to be appropriate. The Secretary may require any additional reporting and information by any recipient of any broadband assistance under this chapter so as to ensure compliance with this section.
(d) Annual report on broadband projects and service to Congress Each year, the Secretary shall submit to the Congress a report that describes the extent of participation in the broadband assistance programs administered by the Secretary for the preceding fiscal year, including a description of— the number of applications received and accepted, including any special loan terms or conditions for which the Secretary provided additional assistance to unserved areas; the communities proposed to be served in each application submitted for the fiscal year; and the communities served by projects funded by broadband assistance programs; the period of time required to approve each loan application under broadband programs; any outreach activities carried out by the Secretary to encourage entities in rural areas without broadband service to submit applications under this chapter; the method by which the Secretary determines that a service enables a subscriber to originate and receive high-quality voice, data, graphics, and video for purposes of providing broadband service under this chapter; each broadband service, including the type and speed of broadband service, for which assistance was sought, and each broadband service for which assistance was provided, under this chapter; and the overall progress towards fulfilling the goal of improving the quality of rural life by expanding rural broadband access, as demonstrated by metrics, including— the number of residences and businesses receiving new broadband services; network improvements, including facility upgrades and equipment purchases; average broadband speeds and prices on a local and statewide basis; any changes in broadband adoption rates; and any specific activities that increased high speed broadband access for educational institutions, health care providers, and public safety service providers.
(e) Limitations on reservation of funds Not less than 3 but not more than 5 percent of program level amounts available pursuant to amounts appropriated to carry out subchapter VI shall be set aside to be used for— conducting oversight under such subchapter; implementing accountability measures and related activities authorized under such subchapter; and carrying out this section.
§ 950cc–1 Environmental reviews
The Secretary may obligate, but not disperse, funds under this chapter before the completion of otherwise required environmental, historical, or other types of reviews if the Secretary determines that a subsequent site-specific review shall be adequate and easily accomplished for the location of towers, poles, or other broadband facilities in the service area of the borrower without compromising the project or the required reviews. ( May 20, 1936, ch. 432 , title VII, § 702, as added Pub. L. 115–334, title VI, § 6208 , Dec. 20, 2018 , 132 Stat. 4743 .)
§ 950cc–2 Use of loan proceeds to refinance loans for deployment of broadband service
Notwithstanding any other provision of this chapter, the proceeds of any loan made or guaranteed by the Secretary under this chapter may be used by the recipient of the loan for the purpose of refinancing an outstanding obligation of the recipient on another telecommunications loan made under this chapter, or on any other loan if that loan would have been for an eligible telecommunications purpose under this chapter. ( May 20, 1936, ch. 432 , title VII, § 703, as added Pub. L. 115–334, title VI, § 6209 , Dec. 20, 2018 , 132 Stat. 4743 .)