[Senate Report 106-243]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 461
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-243
_______________________________________________________________________




 
   LAUNCHING OUR COMMUNITIES' ACCESS TO LOCAL TELEVISION ACT OF 2000

                               __________

                              R E P O R T

                                 OF THE

                     COMMITTEE ON BANKING, HOUSING,

                           AND URBAN AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                S. 2097

                             together with

                            ADDITIONAL VIEWS




                 March 15, 2000.--Ordered to be printed

   Filed under authority of the order of the Senate of March 9, 2000

                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
70-010                     WASHINGTON : 2000

            COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS

                      PHIL GRAMM, Texas, Chairman

RICHARD C. SHELBY, Alabama           PAUL S. SARBANES, Maryland
CONNIE MACK, Florida                 CHRISTOPHER J. DODD, Connecticut
ROBERT F. BENNETT, Utah              JOHN F. KERRY, Massachusetts
ROD GRAMS, Minnesota                 RICHARD H. BRYAN, Nevada
WAYNE ALLARD, Colorado               TIM JOHNSON, South Dakota
MICHAEL B. ENZI, Wyoming             JACK REED, Rhode Island
CHUCK HAGEL, Nebraska                CHARLES E. SCHUMER, New York
RICK SANTORUM, Pennsylvania          EVAN BAYH, Indiana
JIM BUNNING, Kentucky                JOHN EDWARDS, North Carolina
MIKE CRAPO, Idaho

                   Wayne A. Abernathy, Staff Director
     Steven B. Harris, Democratic Staff Director and Chief Counsel
                      Linda L. Lord, Chief Counsel
                  Wayne A. Leighton, Senior Economist
                Stephen S. McMillin, Financial Economist
         Jonathan Miller, Democratic Professional Staff Member

                            C O N T E N T S

                              ----------                              
                                                                   Page
Introduction.....................................................     1
History of the Legislation.......................................     2
Purpose and Scope of the Legislation.............................     3
Section-by-Section Analysis:
    Section 1. Short Title.......................................     5
    Section 2. Purpose...........................................     5
    Section 3. LOCAL Television Loan Guarantee Board.............     5
    Section 4. Approval of Loan Guarantees.......................     5
    Section 5. Administration of Loan Guarantees.................     5
    Section 6. Annual Audit......................................     5
    Section 7. Sunset............................................     7
    Section 8. Retransmission of Local Television Broadcast 
      Stations...................................................     7
    Section 9. Definitions.......................................     7
    Section 10. Authorization of Appropriations..................     8
Regulatory Impact Statement......................................     8
Changes in Existing Laws.........................................     8
Cost of Legislation..............................................     8
Additional views of Senators Sarbanes, Johnson, Dodd, Kerry, 
  Bryan, Reed, Schumer, Bayh, and Edwards........................    11

                                                       Calendar No. 461
106th Congress                                                   Report
                                 SENATE
 2d Session                                                     106-243

======================================================================




   LAUNCHING OUR COMMUNITIES' ACCESS TO LOCAL TELEVISION ACT OF 2000

                                _______
                                

                 March 15, 2000.--Ordered to be printed

   Filed under authority of the order of the Senate of March 9, 2000

                                _______
                                

 Mr. Gramm, from the Committee on Banking, Housing, and Urban Affairs, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 2097]

                              INTRODUCTION

    On March 8, 2000, the Senate Committee on Banking, Housing, 
and Urban Affairs met in legislative session and marked up and 
ordered to be reported S. 2097, the Launching Our Communities 
Access to Local Television Act of 2000 (LOCAL TV Act of 2000), 
a bill to authorize loan guarantees in order to facilitate 
access to local television broadcast signals in unserved and 
underserved areas, and for other purposes, with a 
recommendation that the bill do pass. The Committee's action 
was taken by a 19-0 roll call vote, Senator Mack recusing 
himself from voting.
    The full Committee conducted two hearings to consider S. 
2097. The first hearing was on February 1, 2000, and included 
testimony from: Steven J. Cox, Senior Vice President, DIRECTV, 
Inc.; David K. Moskowitz, Senior Vice President, ECHOSTAR 
Communications Corporation; B. Robert Phillips, Chief Executive 
Officer, National Rural Telecommunications Cooperative; Richard 
Sjoberg, President, Sjoberg's Incorporated; K. James Yager, 
President and Chief Operating Officer, Benedek Broadcasting; 
Dale N. Hatfield, Chief, Office of Engineering and Technology, 
Federal Communications Commission (FCC); William Roberts, 
Senior Attorney, U.S. Copyright Office; Greg L. Rohde, 
Assistant Secretary for Communications and Information, 
National Telecommunications and Information Administration 
(NTIA), U.S. Department of Commerce; and Christopher McLean, 
Acting Administrator, Rural Utilities Service (RUS), U.S. 
Department of Agriculture. The second hearing was on February 
9, 2000, and included testimony from Senators Burns, 
Hutchinson, Thomas, and Lincoln, and from Dan L. Crippen, 
Director, Congressional Budget Office.

                       HISTORY OF THE LEGISLATION

    The Launching Our Communities Access to Local Television 
Act of 2000, S. 2097, was introduced on February 24, 2000, by 
Senators Burns, Gramm, Lott, Stevens, Crapo, Hutchinson, 
Allard, Bunning, Snowe, Collins, and Grassley. Senators Enzi, 
Thomas, Hagel, Lugar, and Cochran became additional cosponsors.
    On March 8, 2000, the LOCAL TV Act of 2000 was passed by 
unanimous vote (19-0) by the Senate Committee on Banking, 
Housing, and Urban Affairs. The Act was created in an attempt 
to accomplish the same purpose as that set forth by the Rural 
Viewer Amendment to the Satellite Home Viewer Improvement Act 
of 1999 (SHVIA), but to do so in a manner more protective of 
the taxpayer while enhancing the likelihood of successful 
delivery of local television broadcasts in unserved and 
underserved areas. The SHVIA was incorporated into an amendment 
to the FY 2000 Consolidated Appropriations Act (P.L. 106-113), 
but the Rural Viewer Amendment was not included in this 
legislation.
    The SHVIA legislation modified copyright and communications 
law related to the transmission of broadcast television signals 
by for-profit satellite providers. Particularly relevant to the 
pending legislation were the modifications to copyright law 
that allow a satellite provider to retransmit within a local 
community the signal of that community's local broadcast 
stations. During the conference for this legislation, several 
conferees noted that, despite the changes in copyright law, 
many local broadcast stations nonetheless may not be 
retransmitted via satellite for the indefinite future. This 
result seemed contrary to what was expected to be an important 
benefit of the SHVIA legislation: the transmission via 
satellite of local television signals to areas of the country 
with no access to local television signals by any means. The 
Rural Viewer Amendment was added in conference to the SHVIA 
legislation in an attempt to correct this problem and promote 
the transmission of local broadcast signals in areas that 
otherwise would not receive such signals.
    The Rural Viewer Amendment proposed to establish a federal 
loan guarantee program to promote the delivery of local 
television signals to unserved and underserved areas. However, 
the amendment was introduced in conference and, therefore, was 
not considered on the floor of the House or Senate. In 
addition, the Congressional Budget Office (CBO) estimated the 
proposed loan guarantee program would cost U.S. taxpayers 
approximately $350 million. Following concerns over the lack of 
time for consideration and the potential cost, the amendment 
was removed from the final version of the SHVIA, and a 
unanimous consent agreement in the Senate provided for 
expedited consideration of a stand-alone bill addressing this 
issue. The LOCAL TV Act of 2000 represents this new proposal 
for a loan guarantee program.

                           PURPOSE AND SCOPE

    The provision of local television signals to households 
that do not have access to such signals by any means--including 
over-the-air transmission, cable or satellite systems, or other 
technologies--increasingly has become an important issue in 
rural development. The two main satellite television providers 
carry the local stations of approximately the 25 largest 
markets, which include about half of the U.S. population,\1\ 
but the remaining 185 media markets do not receive local 
television signals via satellite.\2\ In addition, while 
estimates vary, the Federal Communications Commission reports 
that about 3 million households do not have access to cable 
television, which is required by law to carry local television 
stations.\3\ Since most of these 3 million households are in 
rural areas, the reception of an over-the-air local television 
signal may be difficult or impossible. As a result, a small but 
significant portion of the U.S. population cannot receive local 
television signals from any means, while as much as half of the 
population cannot receive such signals via satellite.
---------------------------------------------------------------------------
    \1\ Nielsen Media Research, Local Market Universe Estimates for the 
1999-2000 Broadcast Season.
    \2\ Testimony of Steven J. Cox, Senior Vice President, DIRECTV, 
Inc., and David K. Moskowitz, Senior Vice President, ECHOSTAR 
Communications Corporation, Hearing on the provision of local 
television signals in rural areas: Senate Committee on Banking, 
Housing, and Urban Affairs, February 1, 2000, at 1 and 1-2.
    \3\ In the Matter of Annual Assessment of the Status of Competition 
in Markets for the Delivery of Video Programming, Sixth Annual Report, 
CS Docket No. 99-230 (Jan. 14, 2000).
---------------------------------------------------------------------------
    The lack of local television signals in many rural areas is 
a product of both economics and public policy. Allocating the 
spectrum used by a satellite to carry a local station, building 
translators or repeaters to boost a local station's over-the-
air signal, or extending the lines of a cable television 
provider frequently are uneconomical ventures in areas with low 
population density and thus few potential viewers. Similarly, 
costs are imposed by regulations such as the ``must carry'' 
provision, which requires that a satellite provider that 
transmits the signal of one local broadcast television station 
in a market must offer to transmit the signal of all stations 
in that market. The major satellite television providers have 
testified that the must-carry requirement severely limits their 
ability to extend their offering of local television signals to 
additional markets.\4\ This limitation exists because of the 
finite amount of spectrum available for such service, and 
because the most common satellite television technology, direct 
broadcast satellite, was not designed with the intention of 
providing many local stations.\5\ Since existing satellites 
transmit over most or all of the country, using such technology 
to transmit a local signal that serves only a relatively small 
geographic area results in considerable use of spectrum that 
could be used to serve other markets.
---------------------------------------------------------------------------
    \4\ Supra note 2, at 2-3 and 4-6.
    \5\ Testimony of Dale N. Hatfield, Chief, Office of Engineering and 
Technology, Federal Communications Commission, Hearing on the provision 
of local television signals in rural areas: Senate Committee on 
Banking, Housing, and Urban Affairs, February 1, 2000, at 5.
---------------------------------------------------------------------------
    These economic and policy conditions make it costly to 
provide the signals of local television stations in many rural 
areas, and thus make projects to provide such service 
financially risky investments.\6\ Nonetheless, several 
technologies exist that can be used to provide such service in 
many rural areas, though generally at high cost.\7\ In 
addition, new technologies are under development that offer 
promise for serving these areas at considerably lower cost.\8\ 
The challenge at present is to provide appropriate public 
policy incentives to help promote the transmission of local 
television signals in those areas that remain costly to serve.
---------------------------------------------------------------------------
    \6\ Testimony of Dan L. Crippen, Director, Congressional Budget 
Office, Hearing on the provision of local television signals in rural 
areas: Senate Committee on Banking, Housing, and Urban Affairs, 
February 9, 2000, at 1.
    \7\ Supra note 3, at 5, and testimony of Bill Roberts, Senior 
Attorney, U.S. Copyright Office, Hearing on the provision of local 
television signals in rural areas: Senate Committee on Banking, 
Housing, and Urban Affairs, February 1, 2000, at 4-5.
    \8\ Supra note 3, at 9.
---------------------------------------------------------------------------
    The LOCAL TV Act of 2000 addresses this challenge by 
developing a loan guarantee program that is guided by three 
principles. First, the Act places its highest priority on 
promoting service to the greatest number of households in 
unserved areas--those that receive no local signals--while also 
recognizing that a solution which serves other households as 
well (including those in underserved areas) may be an effective 
way to accomplish this goal. This prioritization is designed to 
maximize the number of households that benefit from this Act, 
especially those households that currently receive no local 
television signals.\9\ Second, the Act is technologically 
neutral, meaning that it does not favor a particular 
technology, industry, or means by which local television 
signals may be delivered. This principle is especially 
important given the rapid change in technologies that can 
provide such service and the possibility that the most 
economically efficient delivery mechanisms in use today may be 
obsolete in the near future.\10\ Third, the Act develops a loan 
guarantee program that is fiscally responsible. This quality is 
critical to ensuring that the American taxpayer does not have 
to pay for economically inefficient projects and that projects 
are supported by this program that are likely to provide 
service now and into the future. All of these principles are 
consistent with those advanced by the Administration.\11\
---------------------------------------------------------------------------
    \9\ Testimony of Christopher McLean, Acting Administrator, Rural 
Utilities Service (RUS), U.S. Department of Agriculture, Hearing on the 
provision of local television signals in rural areas: Senate Committee 
on Banking, Housing, and Urban Affairs, February 1, 2000, at 3-4.
    \10\ Supra note 5, at 9.
    \11\ Testimony of Greg L. Rohde, Assistant Secretary for 
Communications and Information, National Telecommunications and 
Information Administration (NTIA), U.S. Department of Commerce, Hearing 
on the provision of local television signals in rural areas: Senate 
Committee on Banking, Housing, and Urban Affairs, February 1, 2000, at 
2-3.
---------------------------------------------------------------------------
    Properly implemented, the LOCAL TV Act of 2000 (the 
``Act'') will provide incentives for loans for investment in 
projects that promote access to local television signals while 
at the same time establishing appropriate incentives for 
private entities participating in the program to focus only on 
economically feasible projects. These provisions are equally 
important. Loans that are not made and loans that are not 
repaid represent unsuccessful projects--either projects that 
were never initiatedor that ultimately failed--and in both 
cases result in no service for unserved and underserved areas. By 
establishing incentives for economically viable projects, the 
likelihood that the purpose of the Act will be accomplished increases 
significantly.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    Section 1 provides that the bill may be cited as the 
``Launching Our Communities Access to Local Television Act of 
2000'' (``LOCAL TV Act of 2000'').

Section 2. Purpose

    The purpose of the Act is to facilitate on a 
technologically neutral basis access to signals of local 
television stations in unserved and underserved areas.

Section 3. Local Broadcast Signal Loan Guarantee Board

    Section 3 establishes and describes the responsibilities of 
the LOCAL TV Loan Guarantee Board (the Board). The Board is 
made up of three members: the Secretary of the Treasury, the 
Chairman of the Board of the Federal Reserve System, and the 
Secretary of Agriculture. Each of these members may appoint a 
designee. A designee must be an officer of the United States 
who has been appointed by the President with the advice and 
consent of the Senate.
    The Board is responsible for determining which entities 
will receive loan guarantees under the Act. The Board must 
consult with such departments and agencies of the Federal 
Government as it considers appropriate to carry out its 
responsibilities under the Act, and these departments and 
agencies are required to assist the Board. Loan guarantees may 
be made with approval of a majority of the Board.

Section 4. Approval of loan guarantees

    Section 4 authorizes the Board to approve loan guarantees. 
The Administrator (defined in Section 5) will prescribe 
regulations to implement the Act under the direction of and for 
approval by the Board. The regulations will include provisions 
for the time period to review applications, safeguards against 
evasion of the provisions of the Act, the description of who 
will be considered an applicant, and requirements for the 
submission of documents and other information necessary for the 
administration of the provisions of the Act.
    The Board is authorized to approve loan guarantees only to 
the extent that funds for this purpose are provided for in 
advance in appropriations acts. The Board may delegate to the 
Administrator the authority to approve loan guarantees not 
exceeding $20 million, provided that the Administrator complies 
with the terms and conditions of the Act.
    This section also stipulates the requirements that must be 
met in order for a loan guarantee to be approved: The loan to 
be guaranteed must be used to finance the means by which local 
television signals will be delivered to viewers in an unserved 
or underserved area, and such loan may not be used for 
operating expenses. In addition, the loan must be provided by a 
depository institution that is insured by the Federal Deposit 
Insurance Corporation and that is acceptable to the Board. The 
loan may not be for a term longer than 25 years or the 
economically useful life of the asset, whichever is less.
    Other requirements for approval of a loan guarantee include 
a written determination that the collateral is sufficient to 
protect U.S. financial interests. To this end, the Board must 
determine that the collateral is equal to the unpaid balance of 
the loan amount covered by the loan guarantee. If such 
collateral is of a lower amount, then the collateral of an 
affiliate of the applicant must be added to the existing 
collateral. If necessary to meet requirements for sufficient 
collateral under the Act, the assets of the applicant and all 
assets from any affiliate can be required. Finally, the Board 
must determine in writing that all necessary and required 
regulatory approvals have been received for the loan and the 
project that is associated with the loan, that the loan would 
not have been available on reasonable terms and conditions 
without the guarantee provided under this Act, and that there 
is a reasonable expectation by the Board that the loan will be 
repaid.
    The Board will prioritize applicants for loan guarantees 
using the following criteria. The first priority will be for 
projects that serve the greatest number of households in 
unserved areas. The second priority will be for projects that 
serve the greatest number of households in underserved areas. 
The Board must consider the cost per household served for the 
proposed projects of all applicants.
    The Board may guarantee up to 80 percent of that portion of 
a loan that will be used to provide local television signals 
and that otherwise meets the requirements established by the 
Board and this Act. The aggregate value of all loans for which 
loan guarantees may be issued under this Act cannot exceed 
$1.25 billion, but otherwise there is no minimum or maximum 
value required for a loan guarantee.
    The 80 percent loan guarantee may take one of two forms. 
The guarantee may represent up to 80 percent of a loan that 
comprises all (100 percent) of the debt associated with a 
project meeting the purposes of this Act. Alternatively, the 
guarantee may represent a full guarantee (100 percent) of a 
loan that comprises up to 80 percent of the debt associated 
with a project. Under this second scenario, the same lender 
must provide all of the financing for the project, including 
both the guaranteed and the unguaranteed portions.
    The Board also is authorized to establish and accept credit 
risk premiums with respect to loan guarantees under this Act. 
To the extent appropriations of budget authority are not 
sufficient to cover the cost of loan guarantees under this Act, 
the Board must require credit risk premiums from applicants to 
cover this shortfall. Credit risk premiums will be paid into an 
account established in the Treasury and shall accrue interest. 
The Board shall use the proceeds of this account to cover any 
shortfall between a guaranteed amount paid pursuant to this Act 
and the net proceeds earned upon liquidation of all assets used 
as collateral for the loan. When all loans guaranteed by this 
Act have been repaid or otherwise satisfied, the Board will 
refund any remainder in the account to those borrowers who did 
not default or who cured any default, on a pro rata basis.

Section 5. Administration of loan guarantees

    Section 5 provides that the Administrator of the Rural 
Utilities Service (Administrator) will be responsible for 
administering loan guarantees issued pursuant to this Act. The 
Administrator will enforce the terms and conditions specified 
by the Board and monitor the performance of loans guaranteed by 
the Board.
    The Administrator will have superior status to all other 
lienholders on assets used to securea loan guaranteed under 
this Act and a perfected security interest in such assets. In the event 
of default, all property or related interests must be sold or disposed 
of in an orderly and efficient manner so as to maximize return to the 
taxpayer. The Administrator is authorized to accept property as payment 
of amounts owed to the United States, but only to the extent that the 
obligation is not fully satisfied by cash.
    The Administrator may approve the modification of a loan 
guarantee under this Act only if such modification meets 
certain requirements: Consent must be obtained from parties to 
the loan agreement. The modification must be consistent with 
the underwriting criteria developed pursuant to this Act. There 
must be no negative impact on the ability of the applicant to 
repay the loan, and the National Telecommunications Information 
Administration must be consulted. Finally the modification must 
not adversely affect the Federal Government's interest in the 
assets or collateral of the applicant and must be consistent 
with the financial interests of the United States.
    Notwithstanding any other provision of law, if any person 
or entity indebted to the United States as a result of this Act 
files for bankruptcy protection, the person's or entity's debts 
due to the United States must be satisfied first. A discharge 
in bankruptcy will not release a person or entity from 
obligations under this Act.

Section 6. Annual audit

    Section 6 requires the General Accounting Office (GAO) to 
conduct an annual audit of the loan guarantee program developed 
pursuant to this Act. The GAO report is to be submitted to the 
Senate Committee on Banking, Housing, and Urban Affairs and the 
House Committee on Banking and Financial Services.

Section 7. Sunset

    Section 7 prohibits the guarantee of any loan under this 
Act made after December 31, 2006.

Section 8. Retransmission of local television broadcast stations

    Section 8 requires that if a local broadcast station 
requests carriage of its signal and is located in a market not 
served by a satellite carrier, the applicant shall carry the 
signal of that station without charge and be subject to the 
applicable rights, obligations, and limitations of sections 
338, 614, and 615 of the Communications Act of 1934.

Section 9. Definitions

    Section 9 defines the terms ``affiliate,'' ``unserved 
area,'' ``underserved area,'' and common terms used in this 
Act.

Section 10. Authorization of appropriations

    Section 10 authorizes funds to be appropriated as necessary 
to carry out the Act.

                      REGULATORY IMPACT STATEMENT

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
statement regarding the regulatory impact of the bill.
    S. 2097 imposes a modest burden on the Administrator of the 
Rural Utilities Service to administer the provisions of this 
Act. This requirement is similar to other responsibilities of 
the Rural Utilities Service. In addition, a modest burden will 
be imposed on the Secretary of the Treasury, the Secretary of 
Agriculture, and the Chairman of the Board of the Federal 
Reserve System, or their designees. Also, to the extent Federal 
agencies or departments are consulted by the Board or the 
Administrator so as to comply with the requirements of this 
Act, these agencies or departments may face additional 
operational costs. No new regulatory burden is anticipated to 
be imposed by this legislation on the private sector since 
participation in the loan guarantee program is elective, purely 
voluntary.

                        CHANGES IN EXISTING LAWS

    In the opinion of the Committee, it is necessary to 
dispense with the requirements of paragraph 12 of rule XXVI of 
the Standing Rules of the Senate in order to expedite the 
business of the Senate.

                          COST OF LEGISLATION

    Senate rule XXVI, section 11(b) of the Standing Rules of 
the Senate, and section 403 of the Congressional Budget 
Impoundment and Control Act, require that each committee report 
on a bill containing a statement estimating the cost of the 
proposed legislation, which has been prepared by the 
Congressional Budget Office. The estimate is as follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 15, 2000.
Hon. Phil Gramm,
Chairman, Committee on Banking, Housing, and Urban Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclose cost estimate for S. 2097, the Launching 
Our Communities' Access to Local Television Act of 2000.
    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.

S. 2097--Launching Our Communities' Access to Local Television Act of 
        2000

    Summary: S. 2097 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 up to 80 percent of 
private loans authorized to be made to qualified borrowers. The 
bill would authorize the appropriation of amounts necessary for 
the costs of the loan guarantees for up to $1.25 billion of 
private borrowing, and associated administrative expenses. 
Qualifying loans would be payable in full within the lesser of 
25 years or the useful life of the assets purchased. The 
authority to guarantee loans would be contingent upon future 
appropriation action and would expire on December 31, 2006.
    CBO estimates that implementing S. 2097 would cost about 
$265 million for loan subsidy and administrative costs over the 
2000-2005 period, assuming appropriation of the necessary 
amounts. S. 2097 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply. S. 2097 
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 S. 2097 will be enacted in 
fiscal year 2000 and that funds will be provided for its 
implementation each year. The estimated budgetary impact of S. 
2097 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     252       2       2       2       2
Estimated Outlays...............................................       2     167      90       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 20 percent of the 
total amount borrowed--or $250 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 analysts 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.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: S. 2097 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Previous CBO estimate: On March 1, 2000, CBO transmitted a 
cost estimate for H.R. 3615, the Rural Local Broadcast Signal 
Act, as ordered reported by the House Committee on Agriculture 
on February 16, 2000. That bill would authorize the RUS to 
guarantee 100 percent of the value of loans made for this 
purpose--up to $1.25 billion in private borrowing. It also 
would allow the government's guarantee to be subordinate to 
third-party financing. CBO estimated that implementing H.R. 
3615 would cost $365 million over the 2000-2005 period, subject 
to the availability of appropriated funds. The lower estimated 
cost for S. 2097 reflects the lower federal risk associated 
with an 80-percent guarantee level and the fact that the 
government's guarantee would not be subordinate.
    Estimate prepared by: Mark Hadley.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                            ADDITIONAL VIEWS

    We strongly support the goal of the ``Launching Our 
Communities' Access to Local Television Act of 2000.'' The 
Committee heard testimony outlining how very important access 
to local television is in unserved and underserved communities.
    In order to promote the success of the effort to provide 
this service through the loan guarantee program included in the 
legislation, we believe that Section 4 of the legislation 
should not include the requirement that the program be financed 
only through depository institutions that are insured by the 
Federal Deposit Insurance Corporation.
    Our view is that the lender should be any qualified lender 
that is acceptable to the Board, which includes membership with 
broad and deep knowledge of financial markets and lending 
institutions. In addition to the qualified lenders specified in 
S. 2097, the final legislation should also allow other 
qualified entities including venture capital firms, investment 
banks, or cooperative banks that provide specialized financing 
products that might not be available through FDIC-insured 
institutions. This would allow borrowers expanded access to 
capital, thus providing them with the experience of entities 
who are regularly involved in the private capital markets.

                                   John Edwards.
                                   Chris Dodd.
                                   Charles Schumer.
                                   Tim Johnson.
                                   Richard H. Bryan.
                                   Paul S. Sarbanes.
                                   John F. Kerry.
                                   Jack Reed.
                                   Evan Bayh.

                                  
