Sec. II - Rural Telephone Service

TITLE II-Rural Telephone Service

SEC. 201. LOANS FOR RURAL TELEPHONE SERVICE.--From such sums as are from time to time made available by the Congress to the Secretary for such purpose, pursuant to section 3 of this Act, the Secretary is authorized and empowered to make loans to persons now providing or who may hereafter provide telephone service in rural areas, to public bodies now providing telephone service in rural areas and to cooperative, nonprofit, limited dividend, or mutual associations. Except as otherwise provided by this title, such loans shall be made under the same terms and conditions as are provided in section 4 of this Act, for the purpose of financing the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities or systems to furnish and improve telephone service in rural areas: Provided, however, That the Secretary, in making such loans, shall give preference to persons providing telephone service in rural areas, to public bodies now providing telephone service in rural areas and to cooperative, nonprofit, limited dividend, or mutual associations: And, That for a period of one year from and after the effective date of this title applications for loans received by the Secretary from persons who on the effective date of this title are engaged in the operation of existing telephone service in rural areas shall be considered and acted upon before action is taken upon any application received from any other person for any loan to finance the furnishing or improvement of telephone service to substantially the same subscribers. The Secretary in making such loans shall, insofar as possible, obtain assurance that the telephone service to be furnished or improved thereby will be made available to the widest practical number of rural users. When it is determined by the Secretary to be necessary in order to furnish or improve telephone service in rural areas, such loans may be made for the improvement, expansion, construction, acquisition, and operation of telephone lines, facilities, or systems without regard to their geographical location. The Secretary is further authorized and empowered to make loans for the purpose of refinancing outstanding indebtedness of persons furnishing telephone service in rural areas: Provided, That such refinancing shall be determined by the Secretary to be necessary in order to furnish and improve telephone service in rural areas: And provided further, That such refinancing shall constitute not more than 40 per centum of any loan made under this title. Loans under this section shall not be made unless the Secretary finds and certifies that in his judgement the security therefore is reasonably adequate and such loan will be repaid within the time agreed, nor shall such loan be made in any State which now has or may hereafter have a State regulatory body having authority to regulate telephone service and to require certificates of convenience and necessity to the applicant unless such certificate from such agency is first obtained. In a State in which there is no such agency or regulatory body legally authorized to issue such certificates to the applicant, no loan shall be made under this section unless the Secretary shall determine (and set forth his reasons therefore in writing) that no duplication of lines, facilities, or systems, providing reasonably adequate services will result therefrom.

[Oct. 28, 1949, ch. 776, �5, 63 Stat. 948; May 7, 1971, Public Law 92-12, �3(b), 85 Stat. 37; Oct. 13, 1994, Public Law 103-354, Title II, Subtitle C, �235(a)(13), 108 Stat. 3221; 7 U.S.C. 922.]

 

SEC. 202. STATE REGULATION OF TELEPHONE SERVICE.--Nothing contained in this Act shall be construed to deprive any State commission, board, or other agency of jurisdiction, under any State law, now or hereafter effective, to regulate telephone service which is not subject to regulation by the Federal Communications Commission, under the Communications Act of 1934, including the rates for such service.

[Oct. 28, 1949, ch. 776, �5, 63 Stat. 948; 7 U.S.C. 923.]

 

SEC. 203. DEFINITION OF TELEPHONE SERVICE AND RURAL AREA.--

(a) As used in this title, the term "telephone service" shall be deemed to mean any communication service for the transmission or reception of voice, data, sounds, signals, pictures, writing, or signs of all kinds by wire, fiber, radio, light, or other visual or electromagnetic means, and shall include all telephone lines, facilities, or systems used in the rendition of such service; but shall not be deemed to mean message telegram service or community antenna television system services or facilities other than those intended exclusively for educational purposes, or radio broadcasting services or facilities within the meaning of section 3(o) of the Communications Act of 1934, as amended.

(b) As used in this title, the term "rural area" shall be deemed to mean any area of the United States not included within the boundaries of any incorporated or unincorporated city, village, or borough having a population in excess of 5000 inhabitants.

[Oct. 28, 1949, ch. 776, �5, 63 Stat. 948; Oct. 23, 1962, Public Law 87-862, 76 Stat. 1140; Nov. 28, 1990, Public Law 101-624, Title XXIII, Subtitle F, ch. 2, �2354, 104 Stat. 4039; Nov. 1, 1993, Public Law 103-129, �2(c)(5), 107 Stat. 1364; 7 U.S.C. 924.]

 

SEC. 204. LOAN FEASIBILITY.--The Secretary and the Governor of the telephone bank may not, as a condition of making a telephone loan to an applicant therefor, require the applicant to

(1) increase the rates charged to the applicant's customers or subscribers; or

(2) increase the applicant's ratio of

(A) net income or margins before interest; to

(B) the interest requirements on all of the applicant's outstanding and proposed loans.

[Nov. 28, 1990, Public Law 101-624, Title XXIII, Subtitle F, ch. 2, �2355, 104 Stat. 4039; Oct. 13, 1994, Public Law 103-354, Title II, �235(a)(13), 108 Stat. 3221; 7 U.S.C. 925.]

 

SEC. 205. CERTAIN RURAL DEVELOPMENT INVESTMENTS BY QUALIFIED TELEPHONE BORROWERS NOT TREATED AS DIVIDENDS OR DISTRIBUTIONS.

(a) IN GENERAL.--The Secretary and the Governor of the telephone bank shall not

(1) treat any amount invested by any qualified telephone borrower for any purpose described in section 607(c)(2) of the Rural Development Act of 1972 (including any investment in, or extension of credit, guarantee, or advance made to, an affiliated company of the borrower, that is used by such company for such a purpose) as a dividend or distribution of capital to the extent that, immediately after such investment, the aggregate of such investments does not exceed 1/3 of the net worth of the borrower, or

(2) require a qualified telephone borrower to obtain the approval of the Secretary or the Governor of the telephone bank in order to make an investment described in paragraph (1).

(b) QUALIFIED TELEPHONE BORROWER DEFINED.--As used in subsection (a), the term "qualified telephone borrower" means a person

(1) to whom a telephone loan has been made or guaranteed under this Act; and

(2) whose net worth is at least 20 percent of the total assets of such person.

[Nov. 28, 1990, Public Law 101-624, Title XXIII, Subtitle F, ch. 2, �2356, 104 Stat. 4039; Oct. 13, 1994, Public Law 103-354, Title II, Subtitle C, �235(a)(13), 108 Stat. 3221; 7 U.S.C. 926.]

 

SEC. 206. GENERAL DUTIES AND PROHIBITIONS.--

(a) DUTIES.--The Secretary and the Governor of the telephone bank shall--

(1) notwithstanding section 553(a)(2) of title 5, United States Code, cause to be published in the Federal Register, in accordance with subsections (b) through (e) of section 553 of such title, all rules, regulations, bulletins, and other written policy standards governing the operations of the telephone loan and loan guarantee programs administered under this Act other than those relating to agency management and personnel;

(2) In evaluating the feasibility of a telephone loan to be made to a borrower for telephone services, use--

(A) with respect to items for which the regulatory authority with jurisdiction over the provision of such services has approved the depreciation rates used by the borrower, such approved rates; and

(B) with respect to other items, the average of the depreciation rates used by borrowers of telephone loans made under this Act;

(3) annually determine and publish the average described in paragraph (2)(B); and

(4) make loans for all purposes for which telephone loans are authorized under section 201 or 408, to the extent of qualifying applications therefor.

(b) PROHIBITIONS.--The Secretary and the Governor of the telephone bank shall not--

(1) rescind an insured telephone loan, or a Rural Telephone Bank loan, made under this Act without the consent of the borrower, unless all of the purposes for which telephone loans have been made to the borrower under this Act have been accomplished with funds provided under this Act;

(2) regulate the order or sequence of advances of funds under telephone loans made under this Act to any borrower who has received any combination of telephone loans from the Rural Electrification Administration, the Rural Telephone Bank, or the Federal Financing Bank; or

(3) deny a loan or advance to, or take any other adverse action against, an applicant for, or a borrower of, a telephone loan under this Act for any reason that is not based on a rule, regulation, bulletin, or other written policy standard that has not been published pursuant to section 553 of title 5, United States Code.

[Nov. 28, 1990, Public Law 101-624, Title XXIII, Subtitle F, ch. 2, �2357, 104 Stat. 4040; Oct. 13, 1994, Public Law 103-354, Title II, Subtitle C, �235(a)(7), (13), 108 Stat. 3221; 7 U.S.C. 927.]

 

SEC. 207. PROMPT PROCESSING OF TELEPHONE LOANS.--Within ten days after the end of the second and fourth calendar quarters of each year, the Secretary shall submit to the Committee on Agriculture and the Committee on Appropriations of the House of Representatives, and to the Committee on Agriculture, Nutrition, and Forestry and the Committee on Appropriations of the Senate, a report--

(1) identifying each completed application for a telephone loan under section 305, a guarantee of a telephone loan under section 306, or a loan under section 408, that has not been finally acted upon within ninety days after the date the completed application is submitted; and

(2) stating the reasons for the failure to finally act upon the completed application within such ninety-day period.

[Nov. 28, 1990, Public Law 101-624, Title XXIII, Subtitle F, ch. 2, �2358, 104 Stat. 4041; Oct. 13, 1994, Public Law 103-354, Title II, Subtitle C, �235(a)(13), 108 Stat. 3221; 7 U.S.C. 928.]