[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3123 Enrolled Bill (ENR)]

        H.R.3123
                       One Hundred Third Congress

                                 of the

                        United States of America


                          AT THE FIRST SESSION

          Begun and held at the City of Washington on Tuesday,
  the fifth day of January, one thousand nine hundred and ninety-three


                                 An Act

  
 
  To improve the electric and telephone loan programs carried out under 
the Rural

          Electrification Act of 1936, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Rural Electrification Loan 
Restructuring Act of 1993''.

SEC. 2. ELECTRIC AND TELEPHONE LOAN PROGRAMS.

    (a) Insured Electric and Telephone Loans.--
        (1) In general.--Section 305 of the Rural Electrification Act of 
    1936 (7 U.S.C. 935) is amended--
            (A) by striking subsections (b) and (d);
            (B) by redesignating subsection (c) as subsection (b); and
            (C) by inserting after subsection (b) (as so redesignated) 
        the following new subsections:
    ``(c) Insured Electric Loans.--
        ``(1) Hardship loans.--
            ``(A) In general.--The Administrator shall make insured 
        electric loans, to the extent of qualifying applications for the 
        loans, at an interest rate of 5 percent per year to any 
        applicant for a loan who meets each of the following 
        requirements:
                ``(i) The average revenue per kilowatt-hour sold by the 
            applicant is not less than 120 percent of the average 
            revenue per kilowatt-hour sold by all utilities in the State 
            in which the applicant provides service.
                ``(ii) The average residential revenue per kilowatt-hour 
            sold by the applicant is not less than 120 percent of the 
            average residential revenue per kilowatt-hour sold by all 
            utilities in the State in which the applicant provides 
            service.
                ``(iii) The average per capita income of the residents 
            receiving electric service from the applicant is less than 
            the average per capita income of the residents of the State 
            in which the applicant provides service, or the median 
            household income of the households receiving electric 
            service from the applicant is less than the median household 
            income of the households in the State.
            ``(B) Severe hardship loans.--In addition to hardship loans 
        that are made under subparagraph (A), the Administrator may make 
        an insured electric loan at an interest rate of 5 percent per 
        year to an applicant for a loan if, in the sole discretion of 
        the Administrator, the applicant has experienced a severe 
        hardship.
            ``(C) Limitation.--Except as provided in subparagraph (D), 
        the Administrator may not make a loan under this paragraph to an 
        applicant for the purpose of furnishing or improving electric 
        service to a consumer located in an urban area (as defined by 
        the Bureau of the Census) if the average number of consumers per 
        mile of line of the total electric system of the applicant 
        exceeds 17.
            ``(D) Extremely high rates.--In addition to hardship loans 
        that are made under subparagraphs (A) and (B), the Administrator 
        shall make insured electric loans, to the extent of qualifying 
        applications for the loans, at an interest rate of 5 percent per 
        year to any applicant for a loan whose residential revenue 
        exceeds 15.0 cents per kilowatt-hour sold. A qualifying 
        application from such an applicant for the purpose of furnishing 
        or improving electric service to a consumer located outside of 
        an urbanized area shall not be subject to the conditions or 
        limitation of subparagraph (A) or (C).
        ``(2) Municipal rate loans.--
            ``(A) In general.--The Administrator shall make insured 
        electric loans, to the extent of qualifying applications for the 
        loans, at the interest rate described in subparagraph (B) for 
        the term or terms selected by the applicant pursuant to 
        subparagraph (C).
            ``(B) Interest rate.--
                ``(i) In general.--Subject to clause (ii), the interest 
            rate described in this subparagraph on a loan to a 
            qualifying applicant shall be--

                    ``(I) the interest rate determined by the 
                Administrator to be equal to the current market yield on 
                outstanding municipal obligations with remaining periods 
                to maturity similar to the term selected by the 
                applicant pursuant to subparagraph (C), but not greater 
                than the rate determined under section 307(a)(3)(A) of 
                the Consolidated Farm and Rural Development Act (7 
                U.S.C. 1927(a)(3)(A)) that is based on the current 
                market yield on outstanding municipal obligations; plus
                    ``(II) if the applicant for the loan makes an 
                election pursuant to subparagraph (D) to include in the 
                loan agreement the right of the applicant to prepay the 
                loan, a rate equal to the amount by which--

                        ``(aa) the interest rate on commercial loans for 
                    a similar period that afford the borrower such a 
                    right; exceeds
                        ``(bb) the interest rate on commercial loans for 
                    the period that do not afford the borrower such a 
                    right.
                ``(ii) Maximum rate.--The interest rate described in 
            this subparagraph on a loan to an applicant for the loan 
            shall not exceed 7 percent if--

                    ``(I) the average number of consumers per mile of 
                line of the total electric system of the applicant is 
                less than 5.50; or
                    ``(II)(aa) the average revenue per kilowatt-hour 
                sold by the applicant is more than the average revenue 
                per kilowatt-hour sold by all utilities in the State in 
                which the applicant provides service; and
                    ``(bb) the average per capita income of the 
                residents receiving electric service from the applicant 
                is less than the average per capita income of the 
                residents of the State in which the applicant provides 
                service, or the median household income of the 
                households receiving electric service from the applicant 
                is less than the median household income of the 
                households in the State.

                ``(iii) Exception.--Clause (ii) shall not apply to a 
            loan to be made to an applicant for the purpose of 
            furnishing or improving electric service to consumers 
            located in an urban area (as defined by the Bureau of the 
            Census) if the average number of consumers per mile of line 
            of the total electric system of the applicant exceeds 17.
            ``(C) Loan term.--
                ``(i) In general.--Subject to clause (ii), the applicant 
            for a loan under this paragraph may select the term for 
            which an interest rate shall be determined pursuant to 
            subparagraph (B), and, at the end of the term (and any 
            succeeding term selected by the applicant under this 
            subparagraph), may renew the loan for another term selected 
            by the applicant.
                ``(ii) Maximum term.--

                    ``(I) Applicant.--The applicant may not select a 
                term that ends more than 35 years after the beginning of 
                the first term the applicant selects under clause (i).
                    ``(II) Administrator.--The Administrator may 
                prohibit an applicant from selecting a term that would 
                result in the total term of the loan being greater than 
                the expected useful life of the assets being financed.

            ``(D) Call provision.--The Administrator shall offer any 
        applicant for a loan under this paragraph the option to include 
        in the loan agreement the right of the applicant to prepay the 
        loan on terms consistent with similar provisions of commercial 
        loans.
        ``(3) Other source of credit not required in certain cases.--The 
    Administrator may not require any applicant for a loan made under 
    this subsection who is eligible for a loan under paragraph (1) to 
    obtain a loan from another source as a condition of approving the 
    application for the loan or advancing any amount under the loan.
    ``(d) Insured Telephone Loans.--
        ``(1) Hardship loans.--
            ``(A) In general.--The Administrator shall make insured 
        telephone loans, to the extent of qualifying applications for 
        the loans, at an interest rate of 5 percent per year, to any 
        applicant who meets each of the following requirements:
                ``(i) The average number of subscribers per mile of line 
            in the service area of the applicant is not more than 4.
                ``(ii) The applicant is capable of producing net income 
            or margins before interest of not less than 100 percent (but 
            not more than 300 percent) of the interest requirements on 
            all of the outstanding and proposed loans of the applicant.
                ``(iii) The Administrator has approved a 
            telecommunications modernization plan for the State under 
            paragraph (3) and, if the plan was developed by telephone 
            borrowers under this title, the applicant is a participant 
            in the plan.
                ``(iv) The average number of subscribers per mile of 
            line in the area included in the proposed loan is not more 
            than 17.
            ``(B) Authority to waive tier requirement.--The 
        Administrator may waive the requirement of subparagraph (A)(ii) 
        in any case in which the Administrator determines (and sets 
        forth the reasons for the waiver in writing) that the 
        requirement would prevent emergency restoration of the telephone 
        system of the applicant or result in severe hardship to the 
        applicant.
            ``(C) Effect of lack of funds.--On request of any applicant 
        who is eligible for a loan under this paragraph for which funds 
        are not available, the applicant shall be considered to have 
        applied for a loan under title IV.
        ``(2) Cost-of-money loans.--
            ``(A) In general.--The Administrator may make insured 
        telephone loans for the acquisition, purchase, and installation 
        of telephone lines, systems, and facilities (other than 
        buildings used primarily for administrative purposes, vehicles 
        not used primarily in construction, and customer premise 
        equipment) related to the furnishing, improvement, or extension 
        of rural telecommunications service, at an interest rate equal 
        to the then current cost of money to the Government of the 
        United States for loans of similar maturity, but not more than 7 
        percent per year, to any applicant for a loan who meets the 
        following requirements:
                ``(i) The average number of subscribers per mile of line 
            in the service area of the applicant is not more than 15, or 
            the applicant is capable of producing net income or margins 
            before interest of not less than 100 percent (but not more 
            than 500 percent) of the interest requirements on all of the 
            outstanding and proposed loans of the applicant.
                ``(ii) The Administrator has approved a 
            telecommunications modernization plan for the State under 
            paragraph (3) and, if the plan was developed by telephone 
            borrowers under this title, the applicant is a participant 
            in the plan.
            ``(B) Concurrent loan authority.--On request of any 
        applicant for a loan under this paragraph during any fiscal 
        year, the Administrator shall--
                ``(i) consider the application to be for a loan under 
            this paragraph and a loan under section 408; and
                ``(ii) if the applicant is eligible for a loan, make a 
            loan to the applicant under this paragraph in an amount 
            equal to the amount that bears the same ratio to the total 
            amount of loans for which the applicant is eligible under 
            this paragraph and under section 408, as the amount made 
            available for loans under this paragraph for the fiscal year 
            bears to the total amount made available for loans under 
            this paragraph and under section 408 for the fiscal year.
            ``(C) Effect of lack of funds.--On request of any applicant 
        who is eligible for a loan under this paragraph for which funds 
        are not available, the applicant shall be considered to have 
        applied for a loan guarantee under section 306.
        ``(3) State telecommunications modernization plans.--
            ``(A) Approval.--If, not later than 1 year after final 
        regulations are promulgated to carry out this paragraph, any 
        State, either by statute or through the public utility 
        commission of the State, develops a telecommunications 
        modernization plan that meets the requirements of subparagraph 
        (B), the Administrator shall approve the plan for the State. If 
        a State does not develop a plan in accordance with the 
        requirements of the preceding sentence, the Administrator shall 
        approve any telecommunications modernization plan for the State 
        that meets the requirements that is developed by a majority of 
        the borrowers of telephone loans made under this title who are 
        located in the State.
            ``(B) Requirements.--For purposes of subparagraph (A), a 
        telecommunications modernization plan must, at a minimum, meet 
        the following objectives:
                ``(i) The plan must provide for the elimination of party 
            line service.
                ``(ii) The plan must provide for the availability of 
            telecommunications services for improved business, 
            educational, and medical services.
                ``(iii) The plan must encourage and improve computer 
            networks and information highways for subscribers in rural 
            areas.
                ``(iv) The plan must provide for--

                    ``(I) subscribers in rural areas to be able to 
                receive through telephone lines--

                        ``(aa) conference calling;
                        ``(bb) video images; and
                        ``(cc) data at a rate of at least 1,000,000 bits 
                    of information per second; and

                    ``(II) the proper routing of information to 
                subscribers.

                ``(v) The plan must provide for uniform deployment 
            schedules to ensure that advanced services are deployed at 
            the same time in rural and nonrural areas.
                ``(vi) The plan must provide for such additional 
            requirements for service standards as may be required by the 
            Administrator.
            ``(C) Finality of approval.--A telecommunications 
        modernization plan approved under subparagraph (A) may not 
        subsequently be disapproved. Notwithstanding paragraphs 
        (1)(A)(iii) and (2)(A)(iii), and section 408(b)(4)(C), the 
        Administrator and the Governor of the telephone bank may make a 
        loan to a borrower serving a State that does not have a 
        telecommunication modernization plan approved by the 
        Administrator if the loan is made less than 1 year after the 
        Administrator has adopted final regulations implementing this 
        paragraph.''.
        (2) Rural telephone bank loan program.--Section 408 of such Act 
    (7 U.S.C. 948) is amended--
            (A) in subsection (a), by striking ``, (2)'' and all that 
        follows through ``408 of this Act,'' and inserting ``, (2) for 
        the acquisition, purchase, and installation of telephone lines, 
        systems, and facilities (other than buildings used primarily for 
        administrative purposes, vehicles not used primarily in 
        construction, and customer premise equipment) related to the 
        furnishing, improvement, or extension of rural 
        telecommunications service,'';
            (B) in subsection (b)--
                (i) by striking paragraph (4) and inserting the 
            following new paragraph:
        ``(4) The Governor of the telephone bank may make a loan under 
    this section only to an applicant for the loan who meets the 
    following requirements:
            ``(A) The average number of subscribers per mile of line in 
        the service area of the applicant is not more than 15, or the 
        applicant is capable of producing net income or margins before 
        interest of not less than 100 percent (but not more than 500 
        percent) of the interest requirements on all of the outstanding 
        and proposed loans of the applicant.
            ``(B) The Administrator has approved, under section 
        305(d)(3), a telecommunications modernization plan for the State 
        in which the applicant is located and, if the plan was developed 
        by telephone borrowers under title III, the applicant is a 
        participant in the plan.'';
                (ii) in paragraph (8)--

                    (I) by inserting ``(A)'' after ``(8)'';
                    (II) by striking ``if such prepayment is not made 
                later than September 30, 1988'' and inserting ``except 
                for any prepayment penalty provided for in a loan 
                agreement entered into before the date of enactment of 
                the Rural Electrification Loan Restructuring Act of 
                1993''; and
                    (III) by adding at the end the following new 
                subparagraph:

        ``(B) If a borrower prepays part or all of a loan made under 
    this section, then, notwithstanding section 407(b), the Governor of 
    the telephone bank shall--
            ``(i) use the full amount of the prepayment to repay 
        obligations of the telephone bank issued pursuant to section 
        407(b) before October 1, 1991, to the extent any such 
        obligations are outstanding; and
            ``(ii) in repaying the obligations, first repay the advances 
        bearing the greatest rate of interest.''; and
                (iii) by adding at the end the following new paragraphs:
        ``(9) On request of any applicant for a loan under this section 
    during any fiscal year, the Governor of the telephone bank shall--
            ``(A) consider the application to be for a loan under this 
        section and a loan under section 305(d)(2); and
            ``(B) if the applicant is eligible for a loan, make a loan 
        to the applicant under this section in an amount equal to the 
        amount that bears the same ratio to the total amount of loans 
        for which the applicant is eligible under this section and under 
        section 305(d)(2), as the amount made available for loans under 
        this section for the fiscal year bears to the total amount made 
        available for loans under this section and under section 
        305(d)(2) for the fiscal year.
        ``(10) On request of any applicant who is eligible for a loan 
    under this section for which funds are not available, the applicant 
    shall be considered to have applied for a loan under section 
    305(d)(2).''; and
            (C) by adding at the end the following new subsection:
    ``(e) Loans and advances made under this section on or after 
November 5, 1990, shall bear interest at a rate determined under this 
section, taking into account all assets and liabilities of the telephone 
bank. This subsection shall not apply to loans obligated before the date 
of enactment of this subsection. Funds are not authorized to be 
appropriated to carry out this subsection until the funds are 
appropriated in advance to carry out this subsection.''.
    (b) Funding.--
        (1) Limitations on authorization of appropriations.--Section 314 
    of such Act (7 U.S.C. 940d) is amended to read as follows:

``SEC. 314. LIMITATIONS ON AUTHORIZATION OF APPROPRIATIONS.

    ``(a) Definition of Adjustment Percentage.--As used in this section, 
the term `adjustment percentage' means, with respect to a fiscal year, 
the percentage (if any) by which--
        ``(1) the average of the Consumer Price Index (as defined in 
    section 1(f)(5) of the Internal Revenue Code of 1986) for the 1-year 
    period ending on July 31 of the immediately preceding fiscal year; 
    exceeds
        ``(2) the average of the Consumer Price Index (as so defined) 
    for the 1-year period ending on July 31, 1993.
    ``(b) Fiscal Years 1994 Through 1998.--In the case of each of fiscal 
years 1994 through 1998, there are authorized to be appropriated to the 
Administrator such sums as may be necessary for the cost of loans in the 
following amounts, for the following purposes:
        ``(1) Electric hardship loans.--For loans under section 
    305(c)(1)--
            ``(A) for fiscal year 1994, $125,000,000; and
            ``(B) for each of fiscal years 1995 through 1998, 
        $125,000,000, increased by the adjustment percentage for the 
        fiscal year.
        ``(2) Electric municipal rate loans.--For loans under section 
    305(c)(2)--
            ``(A) for fiscal year 1994, $600,000,000; and
            ``(B) for each of fiscal years 1995 through 1998, 
        $600,000,000, increased by the adjustment percentage for the 
        fiscal year.
        ``(3) Telephone hardship loans.--For loans under section 
    305(d)(1)--
            ``(A) for fiscal year 1994, $125,000,000; and
            ``(B) for each of fiscal years 1995 through 1998, 
        $125,000,000, increased by the adjustment percentage for the 
        fiscal year.
        ``(4) Telephone cost-of-money loans.--For loans under section 
    305(d)(2)--
            ``(A) for fiscal year 1994, $198,000,000; and
            ``(B) for each of fiscal years 1995 through 1998, 
        $198,000,000, increased by the adjustment percentage for the 
        fiscal year.
    ``(c) Funding Levels.--The Administrator shall make insured loans 
under this title for the purposes, in the amounts, and for the periods 
of time specified in subsection (b), as provided in advance in 
appropriations Acts.
    ``(d) Availability of Funds for Insured Loans.--Amounts made 
available for loans under section 305 are authorized to remain available 
until expended.''.
        (2) Rule of interpretation.--Section 309(a) of such Act (7 
    U.S.C. 939(a)) is amended by adding at the end the following new 
    sentence: ``The preceding sentence shall not be construed to make 
    section 408(b)(2) or 412 applicable to this title.''.
    (c) Miscellaneous Amendments.--
        (1) Loans for rural electrification.--Section 2 of such Act (7 
    U.S.C. 902) is amended--
            (A) by inserting ``(a)'' before ``The Administrator'';
            (B) by striking ``telephone service in rural areas, as 
        hereinafter provided;'' and inserting ``electric and telephone 
        service in rural areas, as provided in this Act, and for the 
        purpose of assisting electric borrowers to implement demand side 
        management, energy conservation programs, and on-grid and off-
        grid renewable energy systems;''; and
            (C) by adding at the end the following new subsection:
    ``(b) By January 1, 1994, the Administrator shall issue interim 
regulations to implement the authority contained in subsection (a) to 
make loans for the purpose of assisting electric borrowers to implement 
demand side management, energy conservation programs, and on-grid and 
off-grid renewable energy systems. If the regulations are not issued by 
January 1, 1994, the Administrator shall consider any demand side 
management, energy conservation, or renewable energy program, system, or 
activity that is approved by a State agency to be eligible for the 
loans.''.
        (2) Loans for electrical plants and transmission lines.--Section 
    4 of such Act (7 U.S.C. 904) is amended by inserting after ``central 
    station service'' the following: ``and for the furnishing and 
    improving of electric service to persons in rural areas, including 
    by assisting electric borrowers to implement demand side management, 
    energy conservation programs, and on-grid and off-grid renewable 
    energy systems''.
        (3) Definitions.--Section 13 of such Act (7 U.S.C. 913) is 
    amended--
            (A) by inserting ``, except as provided in section 203(b),'' 
        before ``shall be deemed to mean any area''; and
            (B) by striking ``city, village, or borough having a 
        population in excess of fifteen hundred inhabitants'' and 
        inserting ``urban area, as defined by the Bureau of the 
        Census''.
        (4) General prohibitions.--Section 18 of such Act (7 U.S.C. 918) 
    is amended--
            (A) by inserting ``(a) No Consideration of Borrower's Level 
        of General Funds.--'' before ``The Administrator''; and
            (B) by adding at the end the following new subsections:
    ``(b) Loan Origination Fees.--The Administrator and the Governor of 
the telephone bank may not charge any fee or charge not expressly 
provided in this Act in connection with any loan made or guaranteed 
under this Act.
    ``(c) Consultants.--
        ``(1) In general.--To facilitate timely action on applications 
    by borrowers for financial assistance under this Act and for 
    approvals required of the Rural Electrification Administration 
    pursuant to the terms of outstanding loan or security instruments or 
    otherwise, the Administrator may use consultants funded by the 
    borrower, paid for out of the general funds of the borrower, for 
    financial, legal, engineering, and other technical advice and 
    services in connection with the review of the application by the 
    Rural Electrification Administration.
        ``(2) Conflicts of interest.--The Administrator shall establish 
    procedures for the selection and the provision of technical services 
    by consultants to ensure that the consultants have no financial or 
    other conflicts of interest in the outcome of the application of the 
    borrower.
        ``(3) Payment of costs.--The Administrator may not, without the 
    consent of the borrower, require, as a condition of processing an 
    application for approval, that the borrower agree to pay the costs, 
    fees, and expenses of consultants hired to provide technical or 
    advisory services to the Administrator.
        ``(4) Contracts, grants, and agreements.--The Administrator may 
    enter into such contracts, grants, or cooperative agreements as are 
    necessary to carry out this section.
        ``(5) Use of consultants.--Nothing in this subsection shall 
    limit the authority of the Administrator to retain the services of 
    consultants from funds made available to the Administrator or 
    otherwise.''.
        (5) Definition of rural area.--Section 203(b) of such Act (7 
    U.S.C. 924(b)) is amended by striking ``one thousand five hundred'' 
    and inserting ``5,000''.
        (6) Insured loans.--Section 305 of such Act (7 U.S.C. 935) (as 
    amended by subsection (a)(1)) is further amended--
            (A) by striking ``Sec. 305. Insured Loans; Interest Rates 
        and Lending Levels.--(a) The'' and inserting the following:

``SEC. 305. INSURED LOANS; INTEREST RATES AND LENDING LEVELS.

    ``(a) In General.--The''; and
            (B) in subsection (b), by striking ``(b) Loans'' and 
        inserting ``(b) Insured Loans.--Loans''.
        (7) Eligibility of distribution borrowers; administrative 
    prohibitions.--Title III of such Act is amended by inserting after 
    section 306B (7 U.S.C. 936b) the following new sections:
``SEC. 306D. ELIGIBILITY OF DISTRIBUTION BORROWERS FOR LOANS, LOAN 
GUARANTEES, AND LIEN ACCOMMODATIONS.
    ``For the purpose of determining the eligibility of a distribution 
borrower not in default on the repayment of a loan made or guaranteed 
under this Act for a loan, loan guarantee, or lien accommodation under 
this title, a default by a borrower from which the distribution borrower 
purchases wholesale power shall not--
        ``(1) be considered a default by the distribution borrower;
        ``(2) reduce the eligibility of the distribution borrower for 
    assistance under this Act; or
        ``(3) be the cause, directly or indirectly, of imposing any 
    requirement or restriction on the borrower as a condition of the 
    assistance, except such requirements or restrictions as are 
    necessary to implement a debt restructuring agreed on by the power 
    supply borrower and the Government.
``SEC. 306E. ADMINISTRATIVE PROHIBITIONS APPLICABLE TO ELECTRIC 
BORROWERS.
    ``The Administrator may not require prior approval of, impose any 
requirement, restriction, or prohibition with respect to the operations 
of, or deny or delay the granting of a lien accommodation to, any 
electric borrower under this Act whose net worth exceeds 110 percent of 
the outstanding principal balance on all loans made or guaranteed to the 
borrower by the Administrator.''.
        (8) Loans from other credit sources.--Section 307 of such Act (7 
    U.S.C. 937) is amended by adding at the end the following new 
    sentence: ``The Administrator may not request any applicant for an 
    electric loan under this Act to apply for and accept a loan in an 
    amount exceeding 30 percent of the credit needs of the applicant.''.
        (9) Capitalization.--Section 406 of such Act (7 U.S.C. 946) is 
    amended by adding at the end the following new subsection:
    ``(i) The Governor of the telephone bank may invest in obligations 
of the United States the amounts in the account in the Treasury of the 
United States numbered 12X8139 (known as the `RTB Equity Fund').''.
        (10) Refinancing of ffb loans.--Section 306C of such Act is 
    amended by--
            (A) inserting before the period at the end of subsection 
        (c)(2) the following: ``, except that such rate shall not be 
        greater than 7 percent per year, subject to subsection (d)''; 
        and
            (B) adding at the end the following new subsection:
    ``(d) Maximum Rate Option.--
        ``(1) In general.--Except as provided in paragraphs (2), (3), 
    and (4), a borrower of a loan or loan advance, or any portion of the 
    loan or advance, that is refinanced under this section shall have 
    the option of ensuring that the interest rate on such loan, loan 
    advance, or portion thereof does not exceed 7 percent per year.
        ``(2) Limitation.--A borrower may not exercise the option under 
    paragraph (1) in the case of a loan or loan advance, or portion 
    thereof, if the total amount of such loans for which such option 
    would be exercised exceeds 50 percent of the outstanding principal 
    balance of the loans made to such borrower and guaranteed under 
    section 306.
        ``(3) Fee.--A borrower that exercises the maximum rate option 
    under paragraph (1) shall, at the time of exercising such option, 
    pay a fee equal to 1 percent of the outstanding principal balance of 
    such loan or loan advance, or portion thereof, for which such option 
    is exercised. Such fee shall be in addition to the penalties and 
    other payments required under subsection (b).
        ``(4) Sunset.--The option provided under paragraph (1) shall not 
    be available in the case of any loan or loan advance, or portion 
    thereof, unless a written request to exercise such option is sent to 
    the Administrator not later than 1 year after the effective date of 
    regulations issued to carry out the Rural Electrification Loan 
    Restructuring Act of 1993.''.
SEC. 3. EXPANDED ELIGIBILITY FOR LOANS FOR WATER AND WASTE DISPOSAL 
FACILITIES.
    Section 306(a)(1) of the Consolidated Farm and Rural Development Act 
(7 U.S.C. 1926(a)(1)) is amended by inserting after the first sentence 
the following new sentence: ``The Secretary may also make loans to any 
borrower to whom a loan has been made under the Rural Electrification 
Act of 1936 (7 U.S.C. 901 et seq.), for the conservation, development, 
use, and control of water, and the installation of drainage or waste 
disposal facilities, primarily serving farmers, ranchers, farm tenants, 
farm laborers, rural businesses, and other rural residents.''.

SEC. 4. RURAL ECONOMIC DEVELOPMENT.

    Section 364 of the Consolidated Farm and Rural Development Act (7 
U.S.C. 2006f) is amended by adding at the end the following new 
subsection:
    ``(g) Rural Economic Development.--
        ``(1) In general.--A borrower of a loan or loan guarantee under 
    the Rural Electrification Act of 1936 (7 U.S.C. 901 et seq.) shall 
    be eligible for assistance under all programs administered by the 
    Rural Development Administration.
        ``(2) Participation.--The Administrator of the Rural Development 
    Administration shall encourage and facilitate the full and equal 
    participation of all entities to participate in programs 
    administered by the Rural Development Administration.''.

SEC. 5. PROHIBITION UNDER RURAL DEVELOPMENT PROGRAMS.

    The Consolidated Farm and Rural Development Act (7 U.S.C. 1921 et 
seq.) is amended by adding at the end thereof the following new section:

``SEC. 370. PROHIBITION UNDER RURAL DEVELOPMENT PROGRAMS.

    ``(a) Prohibition.--Assistance under any rural development program 
administered by the Rural Development Administration, the Farmers Home 
Administration, the Rural Electrification Administration, or any other 
agency of the Department of Agriculture shall not be conditioned on any 
requirement that the recipient of such assistance accept or receive 
electric service from any particular utility, supplier, or cooperative.
    ``(b) Ensuring Compliance.--The Secretary shall establish, by 
regulation, adequate safeguards to ensure that assistance under such 
rural development programs is not subject to such a condition. Such 
safeguards shall include periodic certifications and audits, and 
appropriate measures and sanctions against any person violating, or 
attempting to violate, the prohibition in subsection (a).
    ``(c) Regulations.--Not later than 6 months after the enactment of 
this section, the Secretary shall issue interim final regulations to 
ensure compliance with subsection (a).''.

SEC. 6. REGULATIONS.

    Except as provided in section 2(b) of the Rural Electrification Act 
of 1936 and section 370 of the Consolidated Farm and Rural Development 
Act, as added by sections 2(c)(1)(C) and 5 of this Act, not later than 
45 days after the date of enactment of this Act, interim final 
regulations shall be issued by--
        (1) the Administrator of the Rural Electrification 
    Administration to carry out the amendments made by this Act to 
    programs administered by the Administrator;
        (2) the Administrator of the Rural Development Administration to 
    carry out the amendments made by this Act to programs administered 
    by the Administrator; and
        (3) the Secretary of Agriculture to carry out the amendments 
    made by this Act to programs administered by the Farmers Home 
    Administration.







                                Speaker of the House of Representatives.







                             Vice President of the United States and    
                                                President of the Senate.