[House Report 106-508]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-508
HOUSE OF REPRESENTATIVES
2d Session Part 1
=======================================================================
RURAL LOCAL BROADCAST SIGNAL ACT
_______
March 1, 2000.--Ordered to be printed
_______
Mr. Combest, from the Committee on Agriculture, submitted the following
R E P O R T
[To accompany H.R. 3615]
[Including cost estimate of the Congressional Budget Office]
The Committee on Agriculture, to whom was referred the bill
(H.R. 3615) 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, having considered the same, report
favorably thereon with an amendment and recommend that the bill
as amended do pass.
The amendment is as follows:
Strike out all after the enacting clause and insert in lieu
thereof the following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Rural Local Broadcast Signal 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
Electrification 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 telephone 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 under the Rural
Electrification Act of 1936.
(9) The Rural Utilities Service now manages a portfolio of
federally-guaranteed and direct 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) Local television coverage is vitally important for rural
development efforts.
(12) 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.
(13) In today's age of modern communications, rural
communities often receive the majority of their information
from satellite platforms.
(14) The rest of the United States, including most of the
rural United States, is not able to receive local television
signals via satellite.
(15) Without access to local television signals, the
development of the rural United States is greatly inhibited.
(16) 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.
(17) 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:
``TITLE VI--RURAL LOCAL TELEVISION SIGNALS
``SEC. 601. 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. 602. 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 markets 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, including
spectrum rights, 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 loan 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 or will be obtained by project participants to
assure the financial feasibility of the project; and
``(C) repayment of the loan 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 the issuance of the loan
guarantee is consistent with subsection (a).
``(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. If the National Telecommunications and
Information Administration fails to make the required
determination within 90 days after receiving the information
from the Administrator with respect to a particular loan
guarantee application, the certification shall be deemed to
have been granted.
``(f) Requirements.--
``(1) In general.--Not later than 180 days after the date of
enactment of this title, the Administrator shall consult with
an appropriate independent consultant, including a 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; and
``(E) 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. In addition, the Administrator may
accept credit risk premiums in the form of letters of credit or
other forms of non-cash instruments, which shall not accrue
interest. As obligations attached to a cohort of loans
established under paragraph (5) are being satisfied, credit
risk premiums for the cohort, and interest accrued thereon,
which are not required to mitigate losses shall be returned to
the original source on a pro rata basis.
``(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.
``(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) Subordination or Sharing of Liens.--Notwithstanding subsection
(h), at the request of a private lender providing financing to the
borrower for the purposes set forth in subsection (a), the
Administrator may offer--
``(1) to share the Government's lien on the borrower's
assets; or
``(2) to subordinate the Government's lien on the borrower's
assets.
``(j) 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.
``(k) 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.
``(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. 603. ADMINISTRATION OF LOAN GUARANTEES.
``(a) Applications.--The Administrator shall prescribe the form and
contents for an application for a loan guarantee under section 602.
``(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--
``(1) the Administrator finds in writing that--
``(A) the modification is equitable and is in the
overall best interests of the United States;
``(B) consent has been obtained from the borrower and
the lender;
``(C) the modification is consistent with the
objective underwriting criteria developed in
consultation with an appropriate independent
consultant, including a public accounting firm, under
section 602(f);
``(D) the modification does not adversely affect the
Federal Government's interest in the entity's assets or
loan collateral; and
``(E) the modification does not adversely affect the
entity's ability to repay the loan; and
``(2) the National Telecommunications and Information
Administration does not object to the modification on the
ground that it is inconsistent with the certification under
section 602(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 under this section
shall enter into stipulated performance schedules with the
Administrator.
``(4) Penalty.--In addition to any other authority of the
Administrator, 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 under section 602.
``(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 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 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 602, 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 title in a manner that
maximizes taxpayer return and is consistent with the public
convenience and necessity.
``(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.
``(2) Loan origination fee.--The Administrator may charge a
loan origination fee.
``(3) Use of fees.--Fees collected pursuant to this
subsection shall be credited to the account which administers
the loan guarantee program under this title. Such fees shall be
made available to the Administrator without further
appropriation and shall remain available until expended.
``(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. 604. 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.''.
brief explanation
H.R. 3615, the Rural Local Broadcast Signal Act amends the
Rural Electrification Act of 1936 to authorize the
Administrator of the Rural Utilities Service to make loan
guarantees to providers of multichannel video services,
including direct broadcast satellite licensees, to improve
access to local television broadcasting to all households
desiring such service in unserved and underserved rural areas.
Requires certification of loan guarantee applications by
the National Telecommunications and Information Administration,
and authorizes appropriations for such purposes.
purpose and need
H.R. 3615 is not the first legislation to address the issue
of rural local television signal transmission over satellite.
The Committee notes that H.R. 3615 is very similar to Title II
of H.R. 1554, the Intellectual Property and Communications
Omnibus Reform Act of 1999, as ordered reported by the House of
Representatives (see House Report 106-464, November 9, 1999).
Unfortunately, Title II of H.R. 1554 was not ultimately adopted
by the Congress, which instead only adopted provisions
regarding the study of rural local satellite signals that were
part of the Senate version of the Intellectual Property and
Communications Omnibus Reform Act of 1999 (S. 1948). The Senate
version, S. 1948, was ultimately passed by both Houses and
signed by the President as part of Public Law 106-113 on
November 29, 1999.
The Committee finds that it is very important that rural
Americans receive the benefits of this Act along with urban
residents. There are concerns that without this legislation,
many rural Americans would not receive local broadcast signals.
It is the Committee's intent that this legislation provide
farmers, ranchers and others in rural areas up-to-the-minute
information about weather forecasts and disaster warnings. The
ability of rural Americans to receive their local television
broadcast signals is essential to protect the lives of rural
Americans.
The Committee understands that major satellite carriers
intend to provide local broadcast TV stations via satellite
only in the largest markets rather than in more rural areas.
These satellite providers have stated that is it not
economically feasible to provide such service in rural areas at
the present time. Many rural areas of the United States are not
served by broadcast television or cable service.
H.R. 3615 authorizes the Administrator of the Rural Utility
Service, United States Department of Agriculture, to guarantee
loans not exceeding $1.25 billion for providing local broadcast
TV signals in rural areas. In addition, providers can offer
other services, such as data service, should excess capacity
permit. No single loan can exceed $625 million to any one
provider and the rest of the loans may not exceed $100 million
face value.
No loan shall be guaranteed unless: (1) approved in advance
by an appropriations Act; (2) the National Telecommunications
and Information Administration certifies that the loan
guarantee is consistent with the purposes of improving rural
access to local television signals via satellites; (3) USDA has
security that is adequate to protect the government's
interests; (4) USDA can reasonably expect repayment ``using an
appropriate combination of credit risk premiums and collateral
offered by the applicant to protect the Federal Government;''
and, (5) the borrower has insurance sufficient to protect the
interests of the Federal Government.
The provisions are technology neutral in that the borrower
can use any delivery mechanism to provide local television
signals that otherwise meets the requirements of this title.
The language of H.R. 3615 is similar to the Railroad
Rehabilitation and Improvement Financing Act which provided up
to $3.5 billion in federal loan guarantees to help shortline
railroads serve rural America. The underwriting criteria for
the USDA loan guarantee--such as cash flow levels and
appropriate collateral--will be developed in consultation with
an appropriate independent consultant and are modeled after the
Railroad Act language.
section-by-section
Section 1. Short title
This Act may be cited as the ``Rural Local Broadcast Signal
Act.''
Sec. 2 Findings
The Congress makes several findings regarding the
historical role of the Department of Agriculture and the Rural
Utilities Service in furthering economic and technological
development in rural areas.
Sec. 3. Rural local television signals
This section amends the Rural Electrification Act to add a
new Title VI, called Rural Local Television Signals.
Sec. 601. Definitions
The new Title VI includes definitions for the following
terms: ``Administrator,'' ``Affiliate,'' ``Borrower,''
``Cost,'' ``Cost of Loan Guarantees,'' ``Cost of
Modification,'' ``Discount Rate,'' ``Fiscal Year Assumptions,''
``current,'' ``Designated Market Area,'' ``Loan Guarantee,''
``Modification,'' and ``Common Terms.''
Sec. 602. Loan guarantees
Purpose--The purpose of the Title is to authorize the
Administrator of the Rural Utilities Service, with the
certification of the National Telecommunications and
Information Administration, to guarantee loans not exceeding
$1.25 billion for the purpose of providing local broadcast TV
signals in rural areas.
Assistance to Borrowers--Subject to appropriations Acts,
the Secretary of Agriculture is authorized to establish a
program of loan guarantees to fund projects which finance the
acquisition, improvement, enhancement, deployment, launch, or
rehabilitation of the means, including spectrum rights, by
which local television broadcast signals will be delivered to
areas not receiving such signals over commercial for-profit
direct-to-home satellite distribution systems. Borrowers who
receive loan guarantees may not transfer any part of the
proceeds from the loans guaranteed to an affiliate of the
borrower.
Underwriting Criteria--No single guaranteed loan can exceed
$625 million to any one provider and none of the remaining
loans may exceed $100 million in face value. Strict
requirements for insurance, collateral, assurances of
repayments to the Administrator, perfected interests of the
Administrator, liens on assets, and lien subordination
authority, and strong security provisions are set forth in the
law. All of these provisions are designed to protect the
interests of the taxpayers.
Approval of NTIA Required--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 the issuance of the loan
guarantee is consistent with the above criteria.
Underwriting Requirements--In developing underwriting
standards relating to the issuance of loan guarantees,
appropriate collateral and cash flow levels, the Administrator
is required to consult with an appropriate independent
counsultant. In addition, the Secretary may accept on behalf of
an applicant a commitment from a non-Federal source to fund in
whole or in part the credit risk premiums with respect to the
loan. The Administrator shall also establish cohorts of loans
to minimize risk.
Conditions of Assistance, Liens, and Insurance Policies--A
borrower shall agree to such terms and conditions that ensure
that the borrower will maintain assets, equipment, facilities,
and operations on a continuing basis, will not reduce the
ability of the borrower to repay obligations through
discretionary dividend payments, and will remain sufficiently
capitalized. The Administrator will also have liens which shall
be superior to all other liens on assets of the borrower equal
to the unpaid balance of the loan. The Administrator has
discretion, upon the request of the borrower, to share or
subordinate the lien. The borrower will also obtain, at its
expense, insurance to protect the interests of the Federal
Government, as determined by the Administrator.
Authorization of Appropriations--Such amounts as may be
necessary are authorized for the costs of the loans guaranteed
and for the administration of the loan guarantees.
Sec. 603. Administration of loan guarantees
Priority Markets--In deciding which loan guarantees to
approve, the Administrator, to the maximum extent practicable
shall give priority to projects which serve the most unserved
and underserved rural markets, taking into account such factors
as feasibility, population, terrain, prevailing market
conditions, and projected costs to consumers. These applicants
for priority projects shall agree to performance schedules
which if missed make the borrower potentially subject to stiff
penalties. Detailed subrogation, disposition of property,
default, breach of agreement, attachment, and audit provisions
are designed to protect the interests of the taxpayers.
Indemnification--The Administrator may require an affiliate
of the borrower to indemnify the Government for any losses it
incurs as a result of a judgment against the borrower, and
breach of the borrower's obligations, or any violation of the
provisions of the Act.
Sunset Clause--The sunset clause provides that the
Secretary may not approve a loan guarantee under this title
after December 31, 2006.
Sec. 604. Retransmission of local television broadcast stations
Application of Must-Carry Requirements--Borrowers shall
have the same authority and other rights to transmit the
signals of local television broadcast stations as provided in
title 17 of the U.S. Code and shall carry the signals of local
stations in accordance with the Communications Act of 1934.
COMMITTEE CONSIDERATION
I. Hearings
On February 9, 2000, the Subcommittee on Department
Operations, Oversight, Nutrition and Forestry held a public
hearing on rural local satellite access. Testimony was taken
from Members of Congress, the Administration, and various
television station and trade association representatives. The
purpose of the hearing was to review proposed legislation to
establish a loan guarantee program to promote the delivery of
direct-to-home satellite services in rural America. The
predominate issue discussed was how the legislation would allow
satellite providers to become more effective competitors with
cable operators. Furthermore, the Subcommittee examined the
prospects of enabling rural America to benefit from local news
coverage, weather reports, information related to natural
disasters or community emergencies, local sports, politics, and
other information that is vital to the integrity of communities
across the country.
II. Full committee
The Committee on Agriculture met, pursuant to notice, with
a quorum present, on February 16, 2000, to consider H.R. 3615,
the Rural Local Broadcast Signal Act, and other pending
business.
Chairman Combest called the meeting to order and noted that
the bill would be open for amendment at any point.
Counsel was recognized to give a brief explanation of the
bill. The Chairman and Ranking Minority Member of the
Subcommittee on Department Operations, Oversight, Nutrition,
and Forestry, Mr. Goodlatte and Mrs. Clayton, were recognized
for statements in support of the bill, as was Mr. Stenholm,
Full Committee Ranking Minority Member.
Mr. Stenholm pointed out that the Congressional Budget
Office (CBO) had estimated that a loan guarantee program of
this nature would have a subsidy rate. Mr. Goodlatte indicated
his desire to work with Mr. Stenholm and other Members, CBO and
the Budget Committee on this issue.
Chairman Combest noted that H.R. 3615 was reintroduced by
Mr. Goodlatte in order to give the Committee on Agriculture
primary jurisdiction and to establish the time frame for
consideration of the bill.
Mr. Goodlatte was then recognized to offer and explain an
en bloc amendment. However, he noted that many of the changes
were technical.
Mr. Ose was recognized and expressed his concern over the
circumstances under which the Administrator of the Rural
Utilities Service would subordinate liens on borrowers' assets.
Mr. Goodlatte indicated that he would work with Mr. Ose before
the bill would be taken to the House Floor to address his
concerns and to clarify what would be the role of the Rural
Utilities Service in subordinating liens and under what
specific circumstances.
By voice vote and in the presence of a quorum, the
Goodlatte en bloc amendment was adopted.
Mr. Stenholm moved that the bill H.R. 3615, as amended, be
reported favorably to the House. By a voice vote, the Stenholm
motion was adopted.
Mr. Goodlatte requested a recorded vote, and by a vote of
41 yeas, 0 nays, and 9 not voting, H.R. 3615 was adopted, as
amended, and ordered reported favorably to the House. (See
Rollcall Vote No. 1.)
All Members were given permission to submit additional
statements for the record.
Mr. Stenholm moved that the Committee authorize the
Chairman to offer such motions as may be necessary in the House
to go to conference with the Senate on the bill, H.R. 3615, or
any similar Senate bill. By a voice vote, the motion was
adopted.
Chairman Combest announced that Members would be given two
working days to file minority, supplemental, or other views.
Without objection, the usual instructions were given to
staff to make any necessary technical, clarifying, or
conforming changes as were appropriate without changing the
substance of the legislation.
The meeting was then adjourned subject to the call of the
Chair.
REPORTING THE BILL--ROLLCALL VOTES
In compliance with clause 3(b) of Rule XIII of the House of
Representatives, the Committee sets forth the record of the
following rollcall votes taken with respect to H.R. 3615.
Rollcall Vote No. 1
Summary: Final passage.
Requested By: Mr. Goodlatte.
Results: 41 yeas, 0 nays, 9 not voting.
Yeas--Mr. Combest, Mr. Barrett, Mr. Ewing, Mr. Goodlatte,
Mr. Pombo, Mr. Smith, Mr. Everett, Mr. Lucas of Oklahoma, Mr.
Chambliss, Mr. LaHood, Mr. Moran, Mr. Thune, Mr. Jenkins, Mr.
Calvert, Mr. Gutknecht, Mr. Riley, Mr. Walden, Mr. Simpson, Mr.
Ose, Mr. Fletcher, Mr. Stenholm, Mr. Condit, Mr. Peterson, Mr.
Dooley, Mrs. Clayton, Mr. Minge, Mr. Hilliard, Mr. Pomeroy, Mr.
Holden, Mr. Thompson of Mississippi, Mr. Berry, Mr. McIntyre,
Ms. Stabenow, Mr. Etheridge, Mr. John, Mr. Boswell, Mr. Phelps,
Mr. Lucas of Kentucky, Mr. Thompson of California, Mr. Hill,
and Mr. Baca.
Not voting--Mr. Boehner, Mr. Canady, Mrs. Chenoweth-Hage,
Mr. Hostettler, Mr. Schaffer, Mr. Cooksey, Mr. Hayes, Mr.
Bishop, and Mr. Baldacci.
BUDGET ACT COMPLIANCE (SECTIONS 308, 402, AND 423)
The provisions of clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives and section 308(a)(1) of the
Congressional Budget Act of 1974 (relating to estimates of new
budget authority, new spending authority, new credit authority,
or increased or decreased revenues or tax expenditures) are not
considered applicable. The estimate and comparison required to
be prepared by the Director of the Congressional Budget Office
under clause 3(c)(3) of rule XIII of the Rules of the House of
Representatives and sections 402 and 423 of the Congressional
Budget Act of 1974 submitted to the Committee prior to the
filing of this report are as follows:
U.S. Congress,
Congressional Budget Office,
Washington, DC, March 1, 2000.
Hon. Larry Combest,
Chairman, Committee on Agriculture,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3615, the Rural
Local Broadcast Signal Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark Hadley.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
H.R. 3615--Rural Local Broadcast Signal Act
Summary: H.R. 3615 would establish a loan guarantee program
for certain companies to provide local television service to
areas of the country that do not receive local television
stations from satellite companies. The bill would authorize the
Administrator of the Rural Utilities Service (RUS) at the
Department of Agriculture to guarantee loans to qualified
borrowers, totaling up to $1.25 billion. The bill would
authorize the appropriation of amounts necessary for the costs
of the loan guarantees and associated administrative expenses.
Under the bill, one guaranteed loan could be as much as
$625 million, but all other loans would have to be $100 million
or less. Qualifying loans would be payable in full within the
lesser of 25 years or the useful life of the assets purchased.
H.R. 3615 would allow the government's guarantee to be
subordinate to any private-sector financing and would give RUS
broad authority to modify the terms and conditions of loans.
The authority to guarantee loans would be contingent upon
future appropriation action and would expire on December 31,
2006.
CBO estimates that implementing H.R. 3615 would cost about
$365 million for loan subsidy and administrative costs over the
2000-2005 period, assuming appropriation of the necessary
amounts. H.R. 3615 would not affect direct spending or
receipts; therefore, pay-as-you-go procedures would not apply.
H.R. 3615 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: For the purpose
of this estimate, CBO assumes that H.R. 3615 and related
supplemental appropriations will be enacted in fiscal year
2000. The estimated budgetary impact ofH.R. 3615 is shown in
the following table. The costs of this legislation fall within budget
function 370 (commerce and housing credit).
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------
2000 2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
Estimated authorization level............................. 5 352 2 2 2 2
Estimated outlays......................................... 2 233 124 2 2 2
----------------------------------------------------------------------------------------------------------------
Basis of estimate: Under procedures established by the
Federal Credit Reform Act of 1990, the subsidy cost of a loan
guarantee is the estimated long-term cost to the government,
calculated on a net present value basis (excluding
administrative costs). We estimate that the loan guarantees
provided under the bill would cost about 28 percent of the
total amount guaranteed--or $350 million, subject to the
availability of appropriated funds. In addition, CBO estimates
that administering the program would cost about $5 million in
2000 and about $2 million in each subsequent year. The bill
would authorize the Secretary of Agriculture to charge fees,
which could offset some of the subsidy or administrative costs,
but this estimate assumes no fees would be charged.
To prepare this estimate, CBO consulted with industry
experts and investment analysis and examined the credit ratings
of firms in the satellite television and related industries.
The information on credit ratings is useful because different
credit ratings reflect analysts' expectations of defaults.
Based on this information, we assume that the rural television
loans likely to be guaranteed under this bill would have a
credit risk comparable to debt rated as ``B'' or ``CCC,'' which
typically have default rates ranging from about 30 percent to
45 percent, respectively. We also estimate that provisions in
H.R. 3615 allowing the government's guarantee to be subordinate
to private-sector financing would increase the subsidy cost of
such guarantees. Subordination would reduce the incentive for
lenders to assess the riskiness of the loan and increase the
likelihood that if a default occurred, the government's loss
would be significant. Recoveries from subordinated debt have
been lower than recoveries from senior debt in both federal
credit programs and the private debt market.
Pay-as-you-go considerations: None.
Intergovernmental and private-sector impact: H.R. 3615
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Mark Hadley.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
COMMITTEE COST ESTIMATE
Pursuant to clause 3(d)(2) of rule XIII of the Rules of the
House of Representatives, the Committee report incorporates the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to sections 402 and 423 of the
Congressional Budget Act of 1974.
CONSTITUTIONAL AUTHORITY STATEMENT
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds the
Constitutional authority for this legislation in Article I,
clause 8, section 18, that grants Congress the power to make
all laws necessary and proper for carrying out the powers
vested by Congress in the Constitution of the United States or
in any department or officer thereof.
OVERSIGHT STATEMENT
No summary of oversight findings and recommendations made
by the Committee on Government Reform, as provided for in
clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives, was available to the Committee with reference
to the subject matter specifically addressed by H.R. 3615.
COMMITTEE OVERSIGHT FINDINGS
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee on Agriculture's
oversight findings and recommendations are reflected in the
body of this report.
ADVISORY COMMITTEE STATEMENT
No advisory committee within the meaning of section 5(b) of
the Federal Advisory Committee Act was created by this
legislation.
APPLICABILITY TO THE LEGISLATIVE BRANCH
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act (Public Law
104-1).
FEDERAL MANDATES STATEMENT
The Committee adopted as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act (Public Law 104-4).
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
RURAL ELECTRIFICATION ACT OF 1936
* * * * * * *
TITLE VI--RURAL LOCAL TELEVISION SIGNALS
SEC. 601. 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. 602. 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
markets 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, including spectrum
rights, 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 loan 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 or will be
obtained by project participants to assure the
financial feasibility of the project; and
(C) repayment of the loan 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 the
issuance of the loan guarantee is consistent with
subsection (a).
(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. If the National
Telecommunications and Information Administration fails
to make the required determination within 90 days after
receiving the information from the Administrator with
respect to a particular loan guarantee application, the
certification shall be deemed to have been granted.
(f) Requirements.--
(1) In general.--Not later than 180 days after the
date of enactment of this title, the Administrator
shall consult with an appropriate independent
consultant, including a 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; and
(E) 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. In addition,
the Administrator may accept credit risk premiums in
the form of letters of credit or other forms of non-
cash instruments, which shall not accrue interest.As
obligations attached to a cohort of loans established under paragraph
(5) are being satisfied, credit risk premiums for the cohort, and
interest accrued thereon, which are not required to mitigate losses
shall be returned to the original source on a pro rata basis.
(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.
(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) Subordination or Sharing of Liens.--Notwithstanding
subsection (h), at the request of a private lender providing
financing to the borrower for the purposes set forth in
subsection (a), the Administrator may offer--
(1) to share the Government's lien on the borrower's
assets; or
(2) to subordinate the Government's lien on the
borrower's assets.
(j) 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.
(k) 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.
(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. 603. ADMINISTRATION OF LOAN GUARANTEES.
(a) Applications.--The Administrator shall prescribe the form
and contents for an application for a loan guarantee under
section 602.
(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--
(1) the Administrator finds in writing that--
(A) the modification is equitable and is in
the overall best interests of the United
States;
(B) consent has been obtained from the
borrower and the lender;
(C) the modification is consistent with the
objective underwriting criteria developed in
consultation with an appropriate independent
consultant, including a public accounting firm,
under section 602(f);
(D) the modification does not adversely
affect the Federal Government's interest in the
entity's assets or loan collateral; and
(E) the modification does not adversely
affect the entity's ability to repay the loan;
and
(2) the National Telecommunications and Information
Administration does not object to the modification on
the ground that it is inconsistent with the
certification under section 602(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 under this
section shall enter into stipulated performance
schedules with the Administrator.
(4) Penalty.--In addition to any other authority of
the Administrator, 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 under section
602.
(5) Limitation on consideration of most populated
areas.--The Administrator shall not provide a loan
guaranteefor 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 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 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 602, 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
title in a manner that maximizes taxpayer return and is
consistent with the public convenience and necessity.
(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.
(2) Loan origination fee.--The Administrator may
charge a loan origination fee.
(3) Use of fees.--Fees collected pursuant to this
subsection shall be credited to the account which
administers the loan guarantee program under this
title. Such fees shall be made available to the
Administrator without further appropriation and shall
remain available until expended.
(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. 604. 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.