S 1980 IS

To amend the Rural Electrification Act of 1936 to ensure improved access to the signals of local television stations by multichannel video providers to all households which desire such service in unserved and underserved rural areas by December 31, 2006.

To amend the Rural Electrification Act of 1936 to ensure improved access to the signals of local television stations by multichannel video providers to all households which desire such service in unserved and underserved rural areas by December 31, 2006.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `21st Century Rural Utility Service Rural Development Enhancement Through Local Information Act'.

SEC. 2. FINDINGS.

Congress makes the following findings:

(1) In 1936, most of the rural United States did not have access to electrical service enjoyed by the rest of the United States, and this lack of electrical service inhibited economic development in the rural areas of the United States.

(2) In response to this lack of service, Congress enacted the Rural Electrification Act of 1936 (also known as the Norris-Rayburn Rural Electrification Act) which established the Rural Electric Administration to ensure that all Americans have access to electrical service and to promote rural development.

(3) The program under the Rural Electrification Act of 1936 has successfully brought electricity to all parts of the rural United States and has stimulated rural development throughout the United States.

(4) In 1949, most of the rural United States did not have access to telephone service enjoyed by the rest of the United States, and this lack of electrical service inhibited economic development in the rural areas of the United States.

(5) In response to this lack of service, Congress amended the Rural Electrification Act of 1936 to assure that the rural United States has access to telecommunications services, including telephone services, distance learning, and telemedicine in order to promote rural development.

(6) The programs under these amendments have successfully brought telecommunications to all parts of the United States and has stimulated rural development throughout the United States.

(7) Public Law 93-32 amended the Rural Electrification Act of 1936 to establish a revolving fund for insured and guaranteed loans.

(8) The reorganization of the Department of Agriculture by Public Law 103-354 created the Rural Utilities Service (RUS) within the Department of Agriculture and assigned it the responsibility for administering programs of federally-guaranteed loans.

(9) The Rural Utilities Service now manages a portfolio of federally-guaranteed loans in excess of $42,000,000,000.

(10) The Rural Utilities Service has granted loans for the purpose of telecommunications services to more than 800 borrowers, including telephone and electricity cooperatives, in all States of the United States.

(11) Senate Rule XXV provides that the Committee on Agriculture, Nutrition, and Forestry of the Senate shall have jurisdiction over all legislation relating primarily to `Rural development, rural electrification, and watersheds'.

(12) Consistent with Senate Rule XXV, all legislation establishing, modifying, and extending rural infrastructure loan programs has originated in or been reported by the Committee on Agriculture, Nutrition, and Forestry of the Senate.

(13) Local television coverage is vitally important for rural development efforts.

(14) Local television programming broadcasts crop reports, local news, weather reports, public service announcements, and advertisements by local businesses, all of which are important for rural development.

(15) In today's age of modern communications, rural communities often receive the majority of their information from satellite platforms.

(16) Today, the top 67 television markets in the United States are capable of receiving local television signals directly from satellites.

(17) The rest of the United States, including most of the rural United States, is not able to receive local television signals via satellite.

(18) Without access to local television signals, the development of the rural United States is greatly inhibited.

(19) Just as important public purposes were served by bringing electricity to the rural United States and then by bringing telephone service to the rural United States, so the United States would be served by ensuring that the rural United States can receive local television signals via satellite.

(20) It is in the public interest that the Rural Utilities Service of the Department of Agriculture utilize existing and new loan guarantee programs to promote rural development by ensuring that the rural United States has access to the signals of local television stations by multichannel video providers.

SEC. 3. RURAL LOCAL TELEVISION SIGNALS.

The Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) is amended by adding at the end the following:

`SEC. 501. DEFINITIONS.

`In this title:

`(1) ADMINISTRATOR- The term `Administrator' means the Administrator of the Rural Utilities Service.

`(2) AFFILIATE- The term `affiliate' means any person or entity that controls, or is controlled by, or is under common control with, another person or entity.

`(3) BORROWER- The term `borrower' means any person or entity receiving a loan guarantee under this title.

`(4) Cost-

`(A) IN GENERAL- The term `cost' means the estimated long-term cost to the Government of a loan guarantee or modification thereof, calculated on a net present value basis, excluding administrative costs and any incidental effects on governmental receipts or outlays.

`(B) LOAN GUARANTEES- For purposes of this paragraph the cost of a loan guarantee--

`(i) shall be the net present value, at the time when the guaranteed loan is disbursed, of the estimated cash flows of--

`(I) payments by the Government to cover defaults and delinquencies, interest subsidies, or other payments; and

`(II) payments to the Government, including origination and other fees, penalties, and recoveries; and

`(ii) shall include the effects of changes in loan terms resulting from the exercise by the guaranteed lender of an option included in the loan guarantee contract, or by the borrower of an option included in the guaranteed loan contract.

`(C) COST OF MODIFICATION- The cost of the modification shall be the difference between the current estimate of the net present value of the remaining cash flows under the terms of a loan guarantee contract, and the current estimate of the net present value of the remaining cash flows under the terms of the contract, as modified.

`(D) DISCOUNT RATE- In estimating net present value, the discount rate shall be the average interest rate on marketable Treasury securities of similar maturity to the cash flows of the guarantee for which the estimate is being made.

`(E) FISCAL YEAR ASSUMPTIONS- When funds of a loan guarantee under this title are obligated, the estimated cost shall be based on the current assumptions, adjusted to incorporate the terms of the loan contract, for the fiscal year in which the funds are obligated.

`(5) CURRENT- The term `current' has the meaning given that term in section 250(c)(9) of the Balanced Budget and Emergency Deficit Control Act of 1985.

`(6) DESIGNATED MARKET AREA- The term `designated market area' has the meaning given that term in section 122(j) of title 17, United States Code.

`(7) LOAN GUARANTEE- The term `loan guarantee' means any guarantee, insurance, or other pledge with respect to the payment of all or part of the principal or interest on any debt obligation of a non-Federal borrower to the Federal Financing Bank or a non-Federal lender, but does not include the insurance of deposits, shares, or other withdrawable accounts in financial institutions.

`(8) MODIFICATION- The term `modification' means any Government action that alters the estimated cost of an outstanding loan guarantee (or loan guarantee commitment) from the current estimate of cash flows, including the sale of loan assets, with or without recourse, and the purchase of guaranteed loans.

`(9) COMMON TERMS- Except as provided in paragraphs (1) through (9), any term used in this title that is defined in the Communications Act of 1934 (47 U.S.C. 151 et seq.) has the meaning given the term in that Act.

`SEC. 502. LOAN GUARANTEES.

`(a) PURPOSE- The purpose of this title is to enable the Administrator to provide such loan guarantees as are necessary to ensure improved access to the signals of local television stations by multichannel video providers to all households which desire such service in unserved and underserved rural areas by December 31, 2006.

`(b) ASSISTANCE TO BORROWERS- Subject to the appropriations limitation under subsection (c)(2), the Administrator may provide loan guarantees to borrowers to finance projects to provide local television broadcast signals by providers of multichannel video services including direct broadcast satellite licensees and licensees of multichannel multipoint distribution systems, to areas that do not receive local television broadcast signals over commercial for-profit direct-to-home satellite distribution systems. A borrower that receives a loan guarantee under this title may not transfer any part of the proceeds of the monies from the loans guaranteed under this program to an affiliate of the borrower.

`(c) UNDERWRITING CRITERIA; PREREQUISITES-

`(1) IN GENERAL- The Administrator shall administer the underwriting criteria developed under subsection (f)(1) to determine which loans are eligible for a guarantee under this title.

`(2) AUTHORITY TO MAKE LOAN GUARANTEES- The Administrator shall be authorized to guarantee loans under this title only to the extent provided for in advance by appropriations Acts.

`(3) PREREQUISITES- In addition to meeting the underwriting criteria under paragraph (1), a loan is not eligible for a loan guarantee under this title unless--

`(A) the loan is made to finance the acquisition, improvement, enhancement, construction, deployment, launch, or rehabilitation of the means by which local television broadcast signals will be delivered to an area not receiving such signals over commercial for-profit direct-to-home satellite distribution systems;

`(B) the proceeds of the loan will not be used for operating expenses;

`(C) the total amount of all such loans may not exceed in the aggregate $1,250,000,000;

`(D) the loan does not exceed $100,000,000, except that 1 loan under this title may exceed $100,000,000, but shall not exceed $625,000,000;

`(E) the loan bears interest and penalties which, in the Administrator's judgment, are not unreasonable, taking into consideration the prevailing interest rates and customary fees incurred under similar obligations in the private capital market; and

`(F) the Administrator determines that taking into account the practices of the private capital markets with respect to the financing of similar projects, the security of the loan is adequate.

`(4) ADDITIONAL CRITERIA- In addition to the requirements of paragraphs (1), (2), and (3), a loan for which a guarantee is sought under this title shall meet any additional criteria promulgated under subsection (f)(1).

`(d) ADDITIONAL REQUIREMENTS- The Administrator may not make a loan guarantee under this title unless--

`(1) repayment of the obligation is required to be made within a term of the lesser of--

`(A) 25 years from the date of its execution; or

`(B) the useful life of the primary assets used in the delivery of relevant signals;

`(2) the Administrator has been given the assurances and documentation necessary to review and approve the guaranteed loans; and

`(3) the Administrator makes a determination in writing that--

`(A) the applicant has given reasonable assurances that the assets, facilities, or equipment will be utilized economically and efficiently;

`(B) necessary and sufficient regulatory approvals, spectrum rights, and delivery permissions have been received by project participants to assure the project's ability to repay obligations under this title; and

`(C) repayment of the obligation can reasonably be expected, including the use of an appropriate combination of credit risk premiums and collateral offered by the applicant to protect the Federal Government.

`(e) Approval of NTIA Required-

`(1) IN GENERAL- The Administrator may not issue a loan guarantee under this title unless the National Telecommunications and Information Administration consults with the Administrator and certifies that--

`(A) the issuance of the loan guarantee is consistent with subsection (a); and

`(B) consistent with subsection (b), the project to be financed by a loan guaranteed under this section is not likely to have a substantial adverse impact on competition between multichannel video programming distributors that outweighs the benefits of improving access to the signals of a local television station by a multichannel video provider.

`(2) CERTIFICATION- The Administrator shall provide the appropriate information on each loan guarantee application recommended by the Administrator to the National Telecommunications and Information Administration for certification. The National Telecommunications and Information Administration shall make the determination required under this subsection within 90 days, without regard to the provision of chapter 5 of title 5, United States Code, and sections 10 and 11 of the Federal Advisory Committee Act (5 U.S.C. App.).

`(f) REQUIREMENTS-

`(1) IN GENERAL- Not later than 180 days after the date of enactment of this title, the Administrator shall consult with the Office of Management and Budget and an independent public accounting firm to develop underwriting criteria relating to the issuance of loan guarantees, appropriate collateral and cash flow levels for the types of loan guarantees that might be issued under this title, and such other matters as the Administrator determines appropriate.

`(2) AUTHORITY OF ADMINISTRATOR- In lieu of or in combination with appropriations of budget authority to cover the costs of loan guarantees as required under section 504(b)(1) of the Federal Credit Reform Act of 1990, the Administrator may accept on behalf of an applicant for assistance under this title a commitment from a non-Federal source to fund in whole or in part the credit risk premiums with respect to the applicant's loan. The aggregate of appropriations of budget authority and credit risk premiums described in this paragraph with respect to a loan guarantee may not be less than the cost of that loan guarantee.

`(3) CREDIT RISK PREMIUM AMOUNT- The Administrator shall determine the amount required for credit risk premiums under this subsection on the basis of--

`(A) the circumstances of the applicant, including the amount of collateral offered;

`(B) the proposed schedule of loan disbursements;

`(C) the borrower's business plans for providing service;

`(D) financial commitment from the broadcast signal provider;

`(E) approval of the Office of Management and Budget; and

`(F) any other factors the Administrator considers relevant.

`(4) PAYMENT OF PREMIUMS- Credit risk premiums under this subsection shall be paid to an account established in the Treasury which shall accrue interest and such interest shall be retained by the account, subject to paragraph (5).

`(5) COHORTS OF LOANS- In order to maintain sufficient balances of credit risk premiums to adequately protect the Federal Government from risk of default, while minimizing the length of time the Government retains possession of those balances, the Administrator in consultation with the Office of Management and Budget shall establish cohorts of loans. When all obligations attached to a cohort of loans have been satisfied, credit risk premiums paid for the cohort, and interest accrued thereon, which were not used to mitigate losses shall be returned to the original source on a pro rata basis.

`(g) CONDITIONS OF ASSISTANCE- A borrower shall agree to such terms and conditions as are sufficient, in the judgment of the Administrator to ensure that, as long as any principal or interest is due and payable on such obligation, the borrower--

`(1) will maintain assets, equipment, facilities, and operations on a continuing basis;

`(2) will not make any discretionary dividend payments that reduce the ability to repay obligations incurred under this section; and

`(3) will remain sufficiently capitalized.

`(h) LIEN ON INTERESTS IN ASSETS- Upon providing a loan guarantee to a borrower under this title, the Administrator shall have liens which shall be superior to all other liens on assets of the borrower equal to the unpaid balance of the loan subject to such guarantee.

`(i) PERFECTED INTEREST- The Administrator and the lender shall have a perfected security interest in those assets of the borrower fully sufficient to protect the Administrator and the lender.

`(j) INSURANCE POLICIES- In accordance with practices of private lenders, as determined by the Administrator, the borrower shall obtain, at its expense, insurance sufficient to protect the interests of the Federal Government, as determined by the Administrator.

`(k) SPECIAL PROVISION FOR SATELLITE CARRIERS- No satellite carrier that provided television broadcast signals to subscribers on October 1, 1999, and no company that is an affiliate of any such carrier, shall be eligible for a loan guarantee under this section if either the carrier or its affiliate holds a license for unused spectrum that would be suitable for delivering local television signals into unserved and underserved markets.

`(l) AUTHORIZATION OF APPROPRIATIONS- For the additional costs of the loans guaranteed under this title, including the cost of modifying the loans as defined in section 502 of the Congressional Budget Act of 1974 (2 U.S.C. 661(a)), there are authorized to be appropriated for fiscal years 2000 through 2006, such amounts as may be necessary. In addition there are authorized to be appropriated such sums as may be necessary to administer this title. Any amounts appropriated under this subsection shall remain available until expended.

`SEC. 503. ADMINISTRATION OF LOAN GUARANTEES.

`(a) APPLICATIONS- The Administrator shall prescribe the form and contents for an application for a loan guarantee under section 502.

`(b) ASSIGNMENT OF LOAN GUARANTEES- The holder of a loan guaranteed under this title may assign the loan guarantee in whole or in part, subject to such requirements as the Administrator may prescribe.

`(c) MODIFICATIONS- The Administrator may approve the modification of any term or condition of a loan guarantee including the rate of interest, time of payment of interest or principal, or security requirements, if the Administrator finds in writing that--

`(1) the modification is equitable and is in the overall best interests of the United States;

`(2) consent has been obtained from the borrower and the lender;

`(3) the modification is consistent with the objective underwriting criteria developed in consultation with the Office of Management and Budget and an independent public accounting firm under section 502(f);

`(4) the modification does not adversely affect the Federal Government's interest in the entity's assets or loan collateral;

`(5) the modification does not adversely affect the entity's ability to repay the loan; and

`(6) the National Telecommunications and Information Administration does not object to the modification on the ground that it is inconsistent with the certification under section 502(e).

`(d) PRIORITY MARKETS-

`(1) IN GENERAL- To the maximum extent practicable, the Administrator shall give priority to projects which serve the most underserved rural markets, as determined by the Administrator. In making prioritization determinations, the Administrator shall consider prevailing market conditions, feasibility of providing service, population, terrain, and other factors the Administrator determines appropriate.

`(2) PRIORITY RELATING TO CONSUMER COSTS AND SEPARATE TIER OF SIGNALS- The Administrator shall give priority to projects that--

`(A) offer a separate tier of local broadcast signals; and

`(B) provide lower projected costs to consumers of such separate tier.

`(3) PERFORMANCE SCHEDULES- Applicants for priority projects under this section shall enter into stipulated performance schedules with the Administrator.

`(4) PENALTY- The Administrator may assess a borrower a penalty not to exceed 3 times the interest due on the guaranteed loan, if the borrower fails to meet its stipulated performance schedule. The penalty shall be paid to the account established by the Treasury under section 502.

`(5) LIMITATION ON CONSIDERATION OF MOST POPULATED AREAS- The Administrator shall not provide a loan guarantee for a project that is primarily designed to serve the 40 most populated designated market areas and shall take into consideration the importance of serving rural markets that are not likely to be otherwise offered service under section 122 of title 17, United States Code, except through the loan guarantee program under this title.

`(e) COMPLIANCE- The Administrator shall enforce compliance by an applicant and any other party to the loan guarantee for whose benefit assistance is intended, with the provisions of this title, regulations issued hereunder, and the terms and conditions of the loan guarantee, including through regular periodic inspections and audits.

`(f) COMMERCIAL VALIDITY- For purposes of claims by any party other than the Administrator, a loan guarantee or loan guarantee commitment shall be conclusive evidence that the underlying obligation is in compliance with the provisions of the title, and that such obligation has been approved and is legal as to principal, interest, and other terms. Such a guarantee or commitment shall be valid and incontestable in the hands of a holder thereof, including the original lender or any other holder, as of the date when the Administrator granted the application therefore, except as to fraud or material misrepresentation by such holder.

`(g) DEFAULTS- The Administrator shall prescribe regulations governing a default on a loan guaranteed under this title.

`(h) RIGHTS OF THE ADMINISTRATOR-

`(1) SUBROGATION- If the Administrator authorizes payment to a holder, or a holder's agent, under subsection (g) in connection with a loan guarantee made under section 502, the Administrator shall be subrogated to all of the rights of the holder with respect to the obligor under the loan.

`(2) DISPOSITION OF PROPERTY- The Administrator may complete, recondition, reconstruct, renovate, repair, maintain, operate, rent, sell, or otherwise dispose of any property or other interests obtained under this section in a manner that maximizes taxpayer return and is consistent with the public convenience and necessity.

`(3) WARRANTS- To ensure that the United States Government is compensated for the risk in making guarantees under this title, the Administrator shall enter into contracts under which the Government, contingent on the financial success of the borrower, would participate in a percentage of the gains of any for profit borrower or its security holders in connection with the project funded by loans so guaranteed.

`(i) ACTION AGAINST OBLIGOR- The Administrator may bring a civil action in an appropriate district court of the United States in the name of the United States or of the holder of the obligation in the event of a default on a loan guaranteed under this title. The holder of a guarantee shall make available to the Administrator all records and evidence necessary to prosecute the civil action. The Administrator may accept property in full or partial satisfaction of any sums owed as a result of default. If the Administrator receives, through the sale or other disposition of such property, an amount greater than the aggregate of--

`(1) the amount paid to the holder of a guarantee under subsection (g); and

`(2) any other cost to the United States of remedying the default, the Administrator shall pay such excess to the obligor.

`(j) BREACH OF CONDITIONS- The Attorney General shall commence a civil action in a court of appropriate jurisdiction to enjoin any activity which the Administrator finds is in violation of this title, regulations issued hereunder, or any conditions which were duly agreed to, and to secure any other appropriate relief, including relief against any affiliate of the borrower.

`(k) ATTACHMENT- No attachment or execution may be issued against the Administrator or any property in the control of the Administrator prior to the entry of final judgment to such effect in any State, Federal, or other court.

`(l) INVESTIGATION CHARGE AND FEES-

`(1) APPRAISAL FEE- The Administrator may charge and collect from an applicant a reasonable fee for appraisal for the value of the equipment or facilities for which the loan guarantee is sought, and for making necessary determinations and findings. The fee may not, in the aggregate, be more than one-half of one percent of the principal amount of the obligation. The fee imposed under this paragraph shall be used to offset the administrative costs of the program.

`(2) LOAN ORIGINATION FEE- The Administrator may charge a loan origination fee.

`(m) ANNUAL AUDIT- The Comptroller General of the United States shall annually audit the administration of this title and report the results of the audit to the Committee on Agriculture, Nutrition, and Forestry of the Senate and the Committee on Agriculture of the House of Representatives.

`(n) INDEMNIFICATION- An affiliate of the borrower shall indemnify the Government for any losses it incurs as a result of--

`(1) a judgment against the borrower;

`(2) any breach by the borrower of its obligations under the loan guarantee agreement;

`(3) any violation of the provisions of this title by the borrower;

`(4) any penalties incurred by the borrower for any reason, including the violation of the stipulated performance; and

`(5) any other circumstances that the Administrator determines to be appropriate.

`(o) SUNSET- The Administrator may not approve a loan guarantee under this title after December 31, 2006.

`SEC. 504. RETRANSMISSION OF LOCAL TELEVISION BROADCAST STATIONS.

`A borrower shall be subject to applicable rights, obligations, and limitations of title 17, United States Code. If a local broadcast station requests carriage of its signal and is located in a market not served by a satellite carrier providing service under a statutory license under section 122 of title 17, United States Code, the borrower shall carry the signal of that station without charge and shall be subject to the applicable rights, obligations, and limitations of sections 338, 614, and 615 of the Communications Act of 1934.'.