[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1913 Introduced in House (IH)]







104th CONGRESS
  1st Session
                                H. R. 1913

To reform and improve the rural electrification loan programs under the 
                   Rural Electrification Act of 1936.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 22, 1995

    Mr. Baker of Louisiana introduced the following bill; which was 
                referred to the Committee on Agriculture

_______________________________________________________________________

                                 A BILL


 
To reform and improve the rural electrification loan programs under the 
                   Rural Electrification Act of 1936.
    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 Reform 
Act of 1995''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the Rural Electrification Administration was created to 
        facilitate the electrification of rural America by providing 
        low-interest loans to electric cooperative associations and 
        other entities for the purpose of constructing and improving 
        rural electric systems;
            (2) more than 99 percent of the residents in rural areas of 
        the United States now have affordable and reliable electric 
        service;
            (3) a large volume of loans, at subsidized interest rates, 
        continue to be made under the Rural Electrification Act of 1936 
        to electric cooperative borrowers who could obtain financing at 
        reasonable rates and terms from a source other than the Federal 
        Government and these borrowers have become significant and 
        successful participants in an increasingly competitive electric 
        utility industry; and
            (4) the Federal Government should make electric utility 
        loans only to entities that cannot otherwise obtain credit at 
        reasonable rates and terms from commercial lenders, as it does 
        with Federal loan programs to farmers and small businesses.

   TITLE I--IMPROVEMENTS TO THE RURAL ELECTRIFICATION LOANS PROGRAMS

SEC. 101. REFERENCES TO THE RURAL ELECTRIFICATION ACT OF 1936.

    As used in this title, the term ``the Act'' shall mean the ``Rural 
Electrification Act of 1936'' (7 U.S.C. 901 et seq.).

SEC. 102. CONFORMING AMENDMENT.

    The Act is amended by striking ``TITLE I--RURAL ELECTRIFICATION'' 
immediately prior to section 1 (7 U.S.C. 901).

SEC. 103. OBJECTIVE OF THE ACT; INVESTIGATIONS AND REPORTS.

    Effective October 1, 1995, section 2 of the Act (7 U.S.C. 902) is 
amended to read as follows:

           ``objective of the act; investigations and reports

    ``Sec. 2. (a) The objective of this Act is to authorize and empower 
the Secretary to make loans for the purposes of--
            ``(1) furnishing and improving electric energy services in 
        rural areas of the several States and Territories of the United 
        States,
            ``(2) assisting rural electric borrowers to implement 
        demand side management practices, energy conservation programs, 
        and on-grid and off-grid renewable energy systems, and
            ``(3) furnishing and improving telephone service in such 
        areas.
    ``(b) The Secretary may make, or cause to be made, studies, 
investigations, and reports concerning the availability of adequate 
electric and telephone services in rural areas of the United States and 
its Territories and to publish and disseminate information with respect 
thereto.''.

SEC. 104. APPLICATION OF STATE LAWS OR ORDINANCES CONCERNING ELECTRIC 
              SERVICE.

    The Act is amended by adding, after section 2 (7 U.S.C. 902), the 
following new sections:

             ``state regulation of electric utility service

    ``Sec. 2A. 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 electric 
service.

                       ``application of state law

    ``Sec. 2B. (a) Nothing in this Act is intended to prevent a State 
or political subdivision thereof from enacting and enforcing a law or 
ordinance concerning the curtailment, limitation, or geographic area of 
service provided by an electric borrower under this Act if such law or 
ordinance provides for the just compensation of the borrower for
 any condemnation, forfeiture, or involuntary sale of a facility, 
property, right, or franchise of the borrower that secures a loan made 
under this Act. Any such condemnation, forfeiture, or involuntary sale 
shall not be construed as interfering with the purposes of this Act.
    ``(b)(1) Not later than 30 days after a borrower receives such 
compensation, the Secretary shall require the borrower to use the 
proceeds of such compensation to prepay, without penalty, all or any 
portion of the outstanding balance on any loan that was made or 
guaranteed under this Act for which the Secretary holds a mortgage to, 
or other security interest in, the facility, property, right, or 
franchise for which the compensation was provided.
    ``(2) The Secretary shall also permit the borrower to use any 
proceeds of such compensation, in excess of the amount needed to prepay 
a loan under paragraph (1), to prepay, without penalty, all or any 
portion of any other loan of the borrower made under this Act.''.

SEC. 105. REPEAL OF AUTHORITY FOR TREASURY LOANS.

    Section 103 of the Act (7 U.S.C. 903) is repealed.

SEC. 106. REPEAL OF AUTHORIZATION FOR 2 PERCENT INTEREST RATE ELECTRIC 
              LOANS.

    Section 4 of the Act (7 U.S.C. 904) is repealed.

SEC. 107. REPEAL OF AUTHORIZATION FOR 2 PERCENT ELECTRICAL AND PLUMBING 
              EQUIPMENT LOANS.

    Section 5 of the Act (7 U.S.C. 905) is repealed.

SEC. 108. AUTHORIZATION FOR APPROPRIATIONS; REPEAL OF REQUIREMENT FOR 
              TESTIMONY; FEES FOR NON-FINANCIAL ASSISTANCE AND 
              SERVICES.

    Section 6 of the Act (7 U.S.C 906) is amended to read as follows:

    ``authorization of appropriations: user fees for non-financial 
                        assistance and services

    ``Sec. 6. (a)(1) Except as provided for in paragraph (2), there are 
hereby authorized to be appropriated, out of any money in the Treasury 
not otherwise appropriated, such funds as necessary for the purpose of 
administering this Act and for the purpose of making the studies, 
investigations, publications, and reports provided for in section 2.
    ``(2) For each of the fiscal years 1996 through 2000, the amount 
authorized to be appropriated under paragraph (1), or otherwise made 
available pursuant to this Act, for the purpose of administering the 
rural electric program, shall not exceed $15,000,000.
    ``(b)(1) Effective October 1, 1995, the Secretary shall establish a 
schedule of fees to charged for non-financial assistance and services 
provided by the Secretary to loan applicants, borrowers, and others 
pursuant to this Act. Such assistance and services shall include, but 
not be limited to, those relating to accounting, personnel training, 
engineering, management auditing, data process the information system 
of other Federal laws or State laws.
    ``(2) In establishing the schedule of fees under paragraph (1), the 
Secretary shall ensure that the amount of each fee shall be sufficient 
to cover the reasonable cost of the assistance or service provided, as 
determined by the Secretary.
    ``(3) The recipient of any non-financial service or assistance 
provided by the Secretary shall pay to the Secretary the amount of the 
fee as established in the fee schedule for such service or assistance 
at such time as the Secretary may require. All fees paid to the 
Secretary pursuant to this subsection shall be deposited in the 
Treasury and shall be available to the Secretary, without fiscal year 
limitation, to pay the cost of providing such non-financial assistance 
and services pursuant to this Act.''.

SEC. 109. CONFORMING AMENDMENTS.

    Section 7 of this Act (7 U.S.C. 907) is amended by:
            (a) In the first sentence, striking out ``from the sums 
        authorized in section 3 of this Act'', and inserting in lieu 
        thereof ``from funds made available for the purposes of this 
        Act''.
            (b) In the second sentence, by striking out ``No borrower 
        of funds under sections 4 or 201'' and inserting in lieu 
        thereof ``No borrower liable for the repayment of any telephone 
        loan made under section 201, and, except as otherwise provided 
        for in section 2B or any other provision of this Act, no 
        borrower who is liable on any rural electric loan made under 
        this Act.''.

SEC. 110. REPEALED OF OBSOLETE PROVISION RELATING TO TRANSFER OF 
              CERTAIN FUNCTIONS.

    (a) Section 8 of the Act (7 U.S.C. 908) is repealed.
    (b) Any action made pursuant to section 8 prior to its repeal by 
subsection (a) shall remain valid and in effect unless otherwise 
revoked.

SEC. 111. EXPENDITURES FOR PERSONAL SERVICES, SUPPLIES, AND EQUIPMENT.

    Section 11 of the Act (7 U.S.C. 911) is amended by adding after 
``from sums appropriated pursuant to section 6'' the following: ``or 
from funds otherwise made available for the purposes of administering 
this Act''.

SEC. 112. PAYMENT DEFERRAL AUTHORITY.

    Section 12 of the Act (7 U.S.C. 912) is amended to read as follows:

               ``extension of time for repayment of loans

    ``Sec. 12. The Secretary may extend the payment of interest or 
principal of any loan made under this Act if the Secretary determines 
that the borrower is experiencing a financial hardship. No payment of 
interest or principal shall be extended for more than 5 years after the 
date on which such payment was originally due, and interest shall 
accrue on the amount of any such payment at the rate of interest on the 
underlying loan, which interest shall become due and payable at the 
same time as the payment for which the
 extension was made.''.

SEC. 113. DEFINITION OF RURAL AREA.

    Section 13 of the Act (7 U.S.C. 913) is amended by adding at the 
end thereof the following: ``Any determination with respect to whether 
an area is a rural area, under the preceding sentence, shall be made at 
the time the application is filed, and, any previous determination that 
the area was rural for the purposes of this Act shall not be used to 
make such determination.''.

SEC. 114. GENERAL PROHIBITIONS; ORIGINATION FEES; USE OF CONSULTANTS.

    Section 18 of the Act (7 U.S.C. 918) is amended--
            (a) In subsection (a), striking out ``reduce any loan or 
        loan advance'' and inserting in lieu thereof ``reduce any rural 
        telephone loan or loan advance'';
            (b) In subsection (b), after ``connection with any'', 
        inserting ``telephone''; and
            (c) Striking out subsection (c).

SEC. 115. AUTHORIZATION OF LOANS TO RURAL ELECTRIC PROVIDERS.

    Effective October 1, 1995, the Act is amended by adding after 
section 18 (7 U.S.C. 918) a new title I as follows:

                 ``TITLE I--RURAL ELECTRIFICATION LOANS

``limitation on authority to make, insure, and guarantee electric loans

    ``Sec. 101. No electric loan shall be made, insured, or guaranteed, 
under this Act after September 30, 1995, except as authorized in 
sections 102 and 103.

                        ``direct electric loans

    ``Sec. 102. (a) The Secretary is authorized and empowered to make 
loans to corporations, States, Territories, and subdivisions and 
agencies thereof, municipalities, people's utility districts, and 
cooperative, nonprofit, or limited-dividend associations, organized 
under the laws of any State or Territory of the United States, for the 
purpose of financing the construction and operation of generating 
plants, electric transmission and distribution lines or systems for the 
furnishing of electric energy to persons in rural areas, including 
assisting electric borrowers to implement demand side management, 
energy conservation programs, and on-grid and off-grid renewable energy 
systems.
    ``(b) Loans made under this section shall be on such terms and 
conditions relating to the expenditure of the money loaned and the 
security therefore as the Secretary shall determine.
    ``(c)(1) The Secretary shall prioritize the making of loans 
authorized by this section to ensure that eligible applicants with the 
greatest need for Federal assistance shall have the highest priority 
for available loan funds.
    ``(2) In establishing such priorities, the Secretary shall consider 
the following indicators of need:
            ``(A) The net income before interest of the applicant.
            ``(B) The weighted average of per capita personal income 
        for the area served or to be served by the applicant.
            ``(C) The weighted average unemployment rate of the area 
        served or to be served by the applicant.
            ``(D) An average annual rate of growth in the total 
        kilowatt hour sales of the applicant during the five year 
        period preceding the date on which the application was made.
            ``(E) The rate of disparity, measured as the difference 
        between the residential rate of the applicant and the average 
        residential rate in the State for all electric utilities, 
        including utilities that are not borrowers under this Act.
            ``(F) The rate level, measured by the average revenue per 
        kilowatt hour that is sold by the applicant to residential and 
        farm consumers.
            ``(G) The cost of power per kilowatt hour purchased or 
        generated by the applicant.
            ``(H) The total kilowatt hour sales per mile of 
        distribution and transmission line, excluding large commercial 
        and industrial consumers and sales for resale.
            ``(I) The value of distribution and transmission plants in 
        service per kilowatt hours of electricity sold.
    ``(d)(1)(A) The Secretary shall not make any loan under this 
section if the Secretary determines that the applicant is capable of 
producing net income before interest of more than 500 percent of the 
interest requirements on all of the outstanding and proposed loans of 
the applicant for which the final maturity is greater than one year.
    ``(B) If the Secretary determines that the applicant is capable of 
producing net income before interest of more than 200 percent of the 
interest requirement of all of the outstanding and proposed loans of 
the applicant for which the final maturity is greater than one year, 
the Secretary shall require the applicant to secure at least 10 percent 
of the total financing required for the proposed project with a loan 
from a commercial, cooperative, or other legally organized non-
governmental lending institution, which loan may not be guaranteed 
under section 103.
    ``(2) The Secretary shall not make a loan under this section unless 
the Secretary determines that the applicant is capable of producing 
income sufficient to repay the loan in accordance to its terms within 
the agreed time, pay interest on the loan as it becomes due, and repay 
all other outstanding and proposed indebtedness of the applicant, 
together with any interest thereon, as payments become due.
    ``(3)(A) The Secretary shall not make any loan under this section 
unless the
 Secretary determines that the applicant is unable to obtain all or any 
part of the funds needed by the applicant elsewhere, including from--
            ``(i) general funds of the applicant that are in excess of 
        an amount needed for a reasonable reserve, or
            ``(ii) loans (with or without a guarantee under section 
        103) from commercial, cooperative, or other legally organized 
        lending institutions at reasonable rates and terms for loans 
        for similar purposes and periods of time.
    ``(B) The Secretary shall require the applicant to certify in 
writing that the applicant is unable to obtain sufficient credit 
elsewhere to finance all or any part of the actual needs of the 
applicant at reasonable rates and terms, taking into consideration 
prevailing rates for loans and obligations for similar purposes and 
periods of time.
    ``(4) The Secretary shall not make any loan under this section 
unless the Secretary determines that the security for the loan will be 
adequate to ensure full payment of the loan.
    ``(5) The Secretary shall not make any loan under this section 
unless the applicant has agreed to comply with the requirements of the 
graduation program established under section 105.
    ``(6) The Secretary shall not make any loan under this section 
unless all additional requirements of section 104 have been met.
    ``(e) The term of each loan made under this section shall be 
determined by the Secretary and shall not exceed 35 years, or the 
expected useful life of the assets being financed, whichever is less.
    ``(f)(1) Except as provided for in paragraph (2), the rate of 
interest on loans under this section shall be equal to the then current 
cost of money to the Government of the United States for obligations of 
comparable maturity.
    ``(2)(A) If the Secretary determines that the applicant is not 
capable of producing net income before interest of more than 200 
percent of the interest requirements on all of the outstanding and 
proposed loans of the applicant for which the final maturity is greater 
than one year, the rate of interest on the loan shall be the rate 
established under paragraph (1) but not more than 5 percent per year, 
except as provided under subparagraph (B).
    ``(B) For any loan whose term is 10 years or more and whose 
interest rate is limited to 5 percent per year under subparagraph (A), 
the Secretary shall review the financial status of the borrower every 2 
years, and, if the Secretary determines that the borrower is capable of 
producing net income before interest of more than 200 percent of the 
interest requirements on all of the outstanding and proposed loans of 
the applicant for which the final maturity is greater than one year, 
the 5 percent limitation shall no longer apply to the loan and the rate 
for the remaining term of the loan shall be the original rate 
established under paragraph (1).
    ``(g) The Secretary shall charge a loan origination fee of 1 
percent of the amount of the loan if the Secretary determines that the 
applicant is capable of producing net income before interest of more 
than 200 percent of the interest requirements on all of the outstanding 
and proposed loans of the applicant for which the final maturity is 
greater than one year.
    ``(h) The Secretary may provide a borrower the right to make 
payment in full on a loan made under this section in advance of final 
maturity on terms consistent with those provided for commercial loans 
for similar purposes and maturities.

``guarantees of electric loans from non-governmental sources of credit; 
                          lien accommodations

    ``Sec. 103. (a)(1) To the extent set out in paragraph (2), the 
Secretary is authorized and empowered to guarantee loans that are made 
by commercial, cooperative, or other legally-organized non-governmental 
lending institutions to any entity for any purpose
 described in section 102(a).
    ``(2) The Secretary shall guarantee only the payment of that 
portion of the principal of the loan, and that portion of the interest 
thereon, that the lender requires as a condition for making the loan. 
The amount of any such guarantee shall not exceed 90 percent of the 
principal of the loan and the interest thereon.
    ``(3) The Secretary shall not guarantee any loan to an entity that 
the Secretary determines is capable of producing income before interest 
of more than 600 percent of the interest requirements on all of the 
outstanding and proposed loans of the entity for which the final 
maturity is greater than one year.
    ``(4) The Secretary shall impose such fees and charges to cover the 
administrative expense related to any guarantee made under this section 
as the Secretary determines reasonable.
    ``(5) Any contract of guarantee executed by the Secretary under 
this section shall be an obligation supported by the full faith and 
credit of the United States and incontestable except for fraud or 
misrepresentation of which the holder of the guarantee had actual 
knowledge at the time it became a holder.
    ``(b) In order to encourage non-governmental lenders to make loans 
to eligible entities, or to provide a greater portion of the credit 
needs of an applicant for a loan under section 102, the Secretary is 
authorized to share the Government's lien on the loan applicant's or 
borrower's assets or to subordinate the Government's lien on the 
property to be financed by the lender. The Secretary shall not offer 
such accommodation or subordination unless the Secretary determines 
that the security for all loans made or guaranteed under this Act, the 
payment of which the borrower is liable, will remain reasonably 
adequate.

    ``additional requirements and provisions relating to loans and 
                               guarantees

    ``Sec. 104. (a) The Secretary shall not make any loan under section 
102 or guarantee any loan under section 103--
            ``(1) if the applicant or borrower has not agreed to follow 
        generally accepted accounting procedures and management 
        practices; and
            ``(2) if the applicant or borrower fails to agree to 
        provide to the Secretary a complete and current set of all 
        residential, commercial, or industrial tariffs or rate 
        schedules, power sale agreements, and transmission agreements, 
        and any subsequent changes made thereto, and any additional 
        power sale and transmission agreements entered into by the 
        borrower, during the term of the loan; any such tariffs, 
        schedules, and agreements provided to the Secretary shall be 
        deemed public information and shall be made available within 10 
        working days of receipt of a verbal, written, or electronically 
        transmitted request reasonably describing the information 
        sought.
    ``(b) The Secretary shall ensure that funds shall not be advanced 
under any loan made under section 102 or guaranteed under section 103 
unless the approval of any State or Federal agency required with 
respect to the project to be financed by the loan, or its financing, 
has been obtained and remains in effect.
    ``(c) If the Secretary determines that the level of general funds 
of an applicant or borrower is in excess of that needed for a 
reasonable reserve, the Secretary shall reduce--
            ``(A) the amount of the loan request in the case of an 
        applicant under section 102,
            ``(B) the amount of any advance on a loan made under 
        section 102, or
            ``(C) the amount of any guarantee under section 103.
    ``(d) Loans may be made under section 102 or guaranteed only to the 
extent that electrical service to consumers in rural areas will be 
provided or improved by the facility being financed.

                          ``graduation program

    ``Sec. 105. (a) The Secretary shall establish a program under which 
at least once every 2 years each loan made under section 102 shall be 
reviewed to determine whether the borrower--
            ``(1) is able to repay all or any part of the loan with 
        general funds in excess of that needed for a reasonable 
        reserve, or
            ``(2) may be able to obtain credit from a commercial, 
        cooperative, or other legally organized non-governmental 
        lending institution in an amount sufficient to meet all or any 
        part of the credit needs of the borrower at reasonable rates 
        and terms, taking into consideration prevailing rates for loans 
        and obligations for similar purposes and periods of time.
    ``(b)(1) To the extent that the Secretary determines that the 
borrower is able to repay all or any part of the loan from general 
funds, the borrower shall make payment in full or in part on the loan, 
without penalty, prior to the final maturity date of the loan.
    ``(2) If the Secretary determines that the borrower may be able to 
meet all or any part of its credit needs for other lenders, with or 
without a loan guarantee under section 103, the borrower will be 
required to--
            ``(A) apply for and accept credit from such lenders, and 
        purchase any stock necessary in connection with the loan if the 
        source is a cooperative lending institution; and
            ``(B) use the proceeds of such credit to make payment, in 
        full or in part, without penalty, on any loan made to the 
        borrower under section 102 prior to the full maturity date of 
        such loan.

                    ``failure to comply with the act

    ``Sec. 106. If a borrower of a loan made under section 102 fails to 
comply with any provision of this Act, or any agreement between the 
borrower and the Secretary made pursuant thereto, including, but not 
limited to, the provisions of section 104(a)(6) and section 105, the 
amount outstanding on the loan shall become due and payable upon 
receipt of a written notice of such failure issued by the Secretary to 
the
 borrower. Such notice shall be given to the borrower as soon as 
possible after such failure to comply with the Act occurs.

            ``limitation on authorization for appropriations

    ``Sec. 107. In the case of each fiscal year 1996 through 2000, 
there are authorized to be appropriated to the Secretary for the cost, 
as defined in section 502 of the Congressional Budget Act of 1974, of 
loans made and guaranteed under this title, $25,000,000.''.

SEC. 116. CONFORMING AMENDMENT.

    Section 201 of the Act (7 U.S.C. 922) is amended, in the first 
sentence, by--
            (a) striking out ``section 3 of''; and
            (b) striking out ``as are provided in section 4 of this 
        Act'' and inserting ``as was provided in section 4 of this Act 
        prior to its repeal.''.

SEC. 117. RURAL ELECTRIFICATION AND TELEPHONE REVOLVING FUND.

    Section 301 of the Act (7 U.S.C. 931) is amended by--
            (a) redesignating subsection (a) as subsection (b);
            (b) adding a new subsection (a) as follows:
    ``(a) The provisions of this title shall be applicable only to 
rural electric loans made prior to October 1, 1995, and to rural 
telephone loans.''; and
            (c) in subsection (b), as redesignated,--
                    (1) in paragraph (1), striking out ``under sections 
                4, 5, and 201 of this Act'' and inserting in lieu 
                thereof ``under sections 4 and 5, prior to their 
                repeal, and section 201 of this Act'';
                    (2) in paragraph (2), striking out ``under sections 
                4, 5, and 201'' and inserting in lieu thereof ``under 
                sections 4 and 5, prior to their repeal, and section 
                201 of this Act''; and
                    (3) in paragraph (3)--
                            (A) striking out ``notwithstanding section 
                        3(a) of title I''; and
                            (B) striking out ``held under titles I and 
                        II of this Act'' and inserting in lieu thereof 
                        ``held under sections 2 through 18 of this Act, 
                        prior to the amendments made thereto by the 
                        ``Rural Electrification Loan Reform Act of 
                        1995, and title II of this Act''.

SEC. 118. CONFORMING AMENDMENTS.

    Section 302 of the Act (7 U.S.C. 932) is amended by--
            (a) in subsection (a), striking out ``under sections 4, 5, 
        and 201 of this Act'' and inserting in lieu thereof ``under 
        sections 4 and 5, prior to their repeal, and section 201 of 
        this Act''; and
            (b) in subsection (b)--
                    (1) in paragraph (1), striking out ``under sections 
                4, 5, and 201 of this Act'' and inserting in lieu 
                thereof ``under sections 4 and 5, prior to their 
                repeal, and section 201 of this Act''; and
                    (2) in paragraph (2), adding after ``pursuant to 
                section 3(a) of this Act'' the following: ``prior to 
                its repeal''.

SEC. 119. COST OF MONEY RATES FOR CERTAIN ELECTRIC BORROWERS.

    Section 305(c)(2) of the Act (7 U.S.C. 935(c)(2)) is amended to 
read as follows:
            ``(2) Cost of money loans.--The Secretary shall make 
        insured electric loans, to the extent of qualifying 
        applications, to eligible applicants that do not meet the 
        requirements for hardship loans under paragraph (1) at the rate 
        of interest equal to the then current cost of money to the 
        Government of the United States for loans of similar 
        maturity.''.

SEC. 120. LIMITATION ON TERM OF LOANS.

    Section 305(c) of the Act (7 U.S.C. 935(c)) is amended by adding at 
the end thereof
 a new paragraph (4) as follows:
            ``(4) Limitation on terms of loans.--The term of any loan 
        made under this subsection may not exceed the expected useful 
        life of the assets being financed or 35 years, whichever is 
        less.''.

SEC. 121. ACCOMMODATION AND SUBORDINATION OF LIENS TO ASSIST CERTAIN 
              BORROWERS IN ACQUIRING CREDIT AFTER OCTOBER 1, 1995.

    Effective October 1, 1995, section 306 of the Act (7 U.S.C. 936) is 
amended by--
            (a) adding ``(a)'' before the first sentence; and
            (b) adding at the end thereof a new subsection (b) as 
        follows:
    ``(b) In order to assist borrowers with outstanding electric loans 
made under this Act prior to October 1, 1995, who are not eligible for 
loans under section 102 to meet their further credit needs from 
commercial, cooperative, or other legally organized lending 
institutions, the Secretary is authorized to share the Government's 
lien on the borrower's assets or to subordinate the Government's lien 
on the property to be financed by the lender to the extent that the 
Secretary determines that the security for all loans of the borrower 
made or guaranteed under this Act will remain reasonably adequate.''.

SEC. 122. REPEAL OF AUTHORIZATION TO REFINANCE FEDERAL FINANCING BANK 
              LOANS.

    Section 306C of the Act (7 U.S.C. 936c) is repealed.

SEC. 123. REPEAL OF REQUIREMENT FOR SPECIAL TREATMENT OF CERTAIN 
              ELECTRIC BORROWERS.

    Section 306E of the Act (7 U.S.C. 936e) is repealed.

SEC. 124. REPEAL OF 30 PERCENT LIMITATION ON REQUIRED FINANCING FROM 
              OTHER SOURCES.

    Section 307 of the Act (7 U.S.C. 937) is amended by striking the 
last sentence thereof.

SEC. 125. REPEAL OF AUTHORIZATION TO REFINANCE CERTAIN RURAL 
              DEVELOPMENT LOANS.

    Section 310 of the Act (7 U.S.C. 940) is repealed.

SEC. 126. USE OF FUNDS.

    Section 312 of the Act (7 U.S.C. 940b) is repealed.

SEC. 127. REPEAL OF CUSHION OF CREDIT PAYMENTS.

    Section 313 of the Act (7 U.S.C. 940c) is repealed.

SEC. 128. REPEAL OF CERTAIN AUTHORIZATIONS FOR APPROPRIATIONS.

    Section 314 of the Act (7 U.S.C. 940d) is amended in subsection (b) 
by--
            (a) striking out paragraphs (1) and (2); and
            (b) renumbering paragraphs (3) and (4) as paragraphs (1) 
        and (2), respectively.

  TITLE II--PRESERVATION OF EXCLUSIVE STATE JURISDICTION OVER RETAIL 
                      ELECTRIC SERVICE TERRITORIES

SEC. 201. AMENDMENT TO THE FEDERAL POWER ACT OF 1935.

    Section 201 of the Federal Power Act of 1935 (16 U.S.C. 824) is 
amended by adding at the end thereof the following new subsection:
    ``(h) Exclusive State Jurisdiction Over Allocation of Retail 
Electric Service Territories.--Notwithstanding any other provision of 
law, the regulation and allocation of service territories or service 
areas to providers of electric service shall be subject only to State 
law and shall not be subject to the requirements of this Act, or any 
other provision of Federal law. No Executive agency (as defined in 
section 105 of title 5, United States Code) shall have authority to 
preempt or interfere with the operation of any law of a State or a 
political subdivision of a State relating to a service territory or 
service area allocation to providers of electric service.''.
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