- § 930. Congressional declaration of policy
- § 931. Rural Electrification and Telephone Revolving Fund
- § 931a. Level of loan programs under Rural Electrification and Telephone Revolving Fund
- § 932. Liabilities and uses of Rural Electrification and Telephone Revolving Fund
- § 933. Moneys in the Rural Electrification and Telephone Revolving Fund
- § 934. Authorized financial transactions; interim notes; purchase of obligations for resale; sale of notes and certificates; liens
- § 935. Insured loans; interest rates and lending levels
- § 936. Guaranteed loans; accommodations and subordination of liens; interest rates; assignability of guaranteed loans and related guarantees
- § 936a. Prepayment of loans
- § 936b. Sale or prepayment of direct or insured loans
- § 936c. Refinancing and prepayment of FFB loans
- § 936d. Eligibility of distribution borrowers for loans, loan guarantees, and lien accommodations
- § 936e. Administrative prohibitions applicable to certain electric borrowers
- § 936f. Substantially underserved trust areas
- § 937. Loans from other credit sources
- § 938. Full faith and credit of the United States
- § 939. Loan terms and conditions
- § 940. Refinancing of rural development loans
- § 940a. Repealed.
- § 940b. Use of funds
- § 940c. Cushion of credit payments program
- § 940c-1. Guarantees for bonds and notes issued for electrification or telephone purposes
- § 940c-2. Rural development loans and grants
- § 940d. Repealed.
- § 940e. Expansion of 911 access
- § 940f. Extension of period of existing guarantee
- § 940g. Electric loans for renewable energy
- § 940h. Bonding requirements
- § 940i. Cybersecurity and grid security improvements
§ 930. Congressional declaration of policy
It is hereby declared to be the policy of the Congress that adequate funds should be made available to rural electric and telephone systems through direct, insured and guaranteed loans at interest rates which will allow them to achieve the objectives of the Rural Electrification Act of 1936, as amended [7 U.S.C. 901 et seq.], and that such rural electric and telephone systems should be encouraged and assisted to develop their resources and ability to achieve the financial strength needed to enable them to satisfy their credit needs from their own financial organizations and other sources at reasonable rates and terms consistent with the loan applicant’s ability to pay and achievement of the Act’s objectives.
(Pub. L. 93–32, § 1, May 11, 1973, 87 Stat. 65.)
§ 931. Rural Electrification and Telephone Revolving Fund
There is hereby established in the Treasury of the United States a fund, to be known as the Rural Electrification and Telephone Revolving Fund (hereinafter referred to as the “fund”), consisting of:
(1) all notes, bonds, obligations, liens, mortgages, and property delivered or assigned to the Secretary pursuant to loans heretofore or hereafter made under sections 904, 905,1
1 See References in Text note below.
and 922 of this title and under this subchapter, as of May 11, 1973, and all proceeds from the sales hereunder of such notes, bonds, obligations, liens, mortgages, and property, which shall be transferred to and be assets of the funds;(2) undisbursed balances of electric and telephone loans made under sections 904, 905,1 and 922 of this title, which as of May 11, 1973, shall be transferred to and be assets of the fund;
(3) all collections of principal and interest received on and after July 1, 1972, on notes, bonds, judgments, or other obligations made or held under subchapters I and II of this chapter and under this subchapter, which shall be paid into and be assets of the fund;
(4) all appropriations for interest subsidies and losses required under this subchapter which may hereafter be made by the Congress and the unobligated balances of any funds made available for loans under the item “Rural Electrification Administration” in the Department of Agriculture and Agriculture-Environmental and Consumer Protection Appropriations Acts; or
(5) moneys borrowed from the Secretary of the Treasury pursuant to section 934(a) of this title.
(May 20, 1936, ch. 432, title III, § 301, as added Pub. L. 92–12, § 2, May 7, 1971, 85 Stat. 29; amended Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 66; Pub. L. 94–570, § 2, Oct. 20, 1976, 90 Stat. 2701; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 104–127, title VII, § 772(b)(1), Apr. 4, 1996, 110 Stat. 1149; Pub. L. 115–334, title VI, § 6602(b)(7), Dec. 20, 2018, 132 Stat. 4776.)
§ 931a. Level of loan programs under Rural Electrification and Telephone Revolving Fund
On and after October 28, 1991, no funds in this Act or any other Act shall be available to carry out loan programs under the Rural Electrification and Telephone Revolving Fund at levels other than those provided for in advance in appropriations Acts.
(Pub. L. 102–142, title III, Oct. 28, 1991, 105 Stat. 903.)
§ 932. Liabilities and uses of Rural Electrification and Telephone Revolving Fund
(a) Liabilities and obligations of fund
(b) Uses of fund assets
The assets of the fund shall be available only for the following purposes:
(1) loans which could be insured under this subchapter, and for advances in connection with such loans and loans previously made, as of May 11, 1973, under sections 904, 905,1 and 922 of this title;
(2) payment of principal when due (without interest) on outstanding loans to the Secretary from the Secretary of the Treasury for electrification and telephone purposes and payment of principal and interest when due on loans to the Secretary from the Secretary of the Treasury pursuant to section 934(a) of this title;
(3) payment of amounts to which the holder of notes is entitled on insured loans: Provided, That payments other than final payments need not be remitted to the holder until due or until the next agreed annual, semiannual, or quarterly remittance date;
(4) payment to the holder of insured notes of any defaulted installment or, upon assignment of the note to the Secretary at his request, the entire balance due on the note;
(5) purchase of notes in accordance with contracts of insurance entered into by the Secretary;
(6) payment in compliance with contracts of guarantee;
(7) payment of taxes, insurance, prior liens, expenses necessary to make fiscal adjustments in connection with the application, and transmittal of collections or necessary to obtain credit reports on applicants or borrowers, expenses for necessary services, including construction inspections, commercial appraisals, loan servicing, consulting business advisory or other commercial and technical services, and other program services, and other expenses and advances authorized in section 907 of this title in connection with insured loans. Such items may be paid in connection with guaranteed loans after or in connection with the acquisition of such loans or security thereof after default, to the extent determined to be necessary to protect the interest of the Government, or in connection with any other activity authorized in this chapter;
(8) payment of the purchase price and any costs and expenses incurred in connection with the purchase, acquisition, or operation of property pursuant to section 907 of this title.
(c) Separate electric and telephone accounts
(1) The Secretary shall maintain two separate accounts within the fund, which shall be known as the electric account and the telephone account, respectively.
(2)
(A) The Secretary shall account for the assets, liabilities, income, expenses, and equity of the fund attributable to electrification loan operations in the electric account.
(B) The Secretary shall account for the assets, liabilities, income, expenses, and equity of the fund attributable to telephone loan operations in the telephone account.
(3)
(A) The assets accounted for in the electric account shall be available solely for electrification loan operations under this chapter.
(B) The assets accounted for in the telephone account shall be available solely for telephone loan operations under this chapter (other than under subchapter IV).
(May 20, 1936, ch. 432, title III, § 302, as added Pub. L. 92–12, § 2, May 7, 1971, 85 Stat. 30; amended Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 66; Pub. L. 101–624, title XXIII, § 2359, Nov. 28, 1990, 104 Stat. 4041; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 104–127, title VII, § 772(b)(2), Apr. 4, 1996, 110 Stat. 1149.)
§ 933. Moneys in the Rural Electrification and Telephone Revolving Fund
Moneys in the fund shall remain on deposit in the Treasury of the United States until disbursed.
(May 20, 1936, ch. 432, title III, § 303, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 67.)
§ 934. Authorized financial transactions; interim notes; purchase of obligations for resale; sale of notes and certificates; liens
(a) The Secretary is authorized to make and issue interim notes to the Secretary of the Treasury for the purpose of obtaining funds necessary for discharging obligations of the fund and for making loans, advances and authorized expenditures out of the fund. Such notes shall be in such form and denominations and have such maturities and be subject to such terms and conditions as may be agreed upon by the Secretary and the Secretary of the Treasury. Such notes shall bear interest at a rate fixed by the Secretary of the Treasury, taking into consideration the current average market yield of outstanding marketable obligations of the United States having maturities comparable to the notes issued by the Secretary under this section. The Secretary of the Treasury is authorized and directed to purchase any notes of the Secretary issued hereunder, and, for that purpose, the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under chapter 31 of title 31, and the purposes for which such securities may be issued under such chapter are extended to include the purchase of notes issued by the Secretary. All redemptions, purchases, and sales by the Secretary of the Treasury of such notes shall be treated as public debt transactions of the United States: Provided, however, That such interim notes to the Secretary of the Treasury shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States.
(b) The Secretary of the Treasury is authorized and directed to purchase for resale obligations insured through the fund when offered by the Secretary. Such resales shall be upon such terms and conditions as the Secretary of the Treasury shall determine. Purchases and resales by the Secretary of the Treasury hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and not lending (budget outlays) of the United States.
(c) The Secretary may, on an insured basis or otherwise, sell and assign any notes in the fund or sell certificates of beneficial ownership therein to the Secretary of the Treasury or in the private market. Any sale by the Secretary of notes individually or in blocks shall be treated as a sale of assets for the purposes of chapter 11 of title 31, notwithstanding the fact that the Secretary, under an agreement with the purchaser or purchasers, holds the debt instruments evidencing the loans and holds or reinvests payments thereon as trustee and custodian for the purchaser or purchasers of the individual note or of the certificate of beneficial ownership in a number of such notes. Security instruments taken by the Secretary in connection with any notes in the fund may constitute liens running to the United States notwithstanding the fact that such notes may be thereafter held by purchasers thereof.
(May 20, 1936, ch. 432, title III, § 304, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 67; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 935. Insured loans; interest rates and lending levels
(a) In general
(b) Insured loans
(c) Insured electric loans
(1) Hardship loans
(A) In generalThe Secretary 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
(C) Limitation
(D) Extremely high rates
(2) Municipal rate loans
(A) In general
(B) Interest rate
(i) In generalSubject 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 Secretary 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 1927(a)(3)(A) of this title 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 rateThe 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
(C) Loan term
(i) In general
(ii) Maximum term(I) Applicant(II) Secretary
(D) Call provision
(3) Other source of credit not required in certain cases
(d) Insured telephone loans
(1) Hardship loans
(A) In generalThe Secretary 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 Secretary has approved a telecommunications modernization plan for the State under paragraph (3) and, if the plan was developed by telephone borrowers under this subchapter, 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
(C) Effect of lack of funds
(2) Cost-of-money loans
(A) In generalThe Secretary 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 Secretary has approved a telecommunications modernization plan for the State under paragraph (3) and, if the plan was developed by telephone borrowers under this subchapter, the applicant is a participant in the plan.
(B) Concurrent loan authorityOn request of any applicant for a loan under this paragraph during any fiscal year, the Secretary shall—
(i) consider the application to be for a loan under this paragraph; 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, 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 for the fiscal year.
(C) Effect of lack of funds
(3) State telecommunications modernization plans
(A) Approval
(B) RequirementsFor 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 Secretary.
(C) Finality of approval
(May 20, 1936, ch. 432, title III, § 305, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 68; amended Pub. L. 94–570, § 3, Oct. 20, 1976, 90 Stat. 2701; Pub. L. 97–35, title I, § 165(a), Aug. 13, 1981, 95 Stat. 379; Pub. L. 101–624, title XXIII, § 2361, Nov. 28, 1990, 104 Stat. 4042; Pub. L. 103–129, § 2(a)(1), (c)(6), Nov. 1, 1993, 107 Stat. 1356, 1364; Pub. L. 103–354, title II, § 235(a)(8), (13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 115–334, title VI, § 6602(b)(8), (9), Dec. 20, 2018, 132 Stat. 4776, 4777.)
§ 936. Guaranteed loans; accommodations and subordination of liens; interest rates; assignability of guaranteed loans and related guarantees
The Secretary may provide financial assistance to borrowers for purposes provided in this chapter by guaranteeing loans, in the full amount thereof, made by the National Rural Utilities Cooperative Finance Corporation and any other legally organized lending agency, or by accommodating or subordinating liens or mortgages in the fund held by the Secretary as owner or as trustee or custodian for purchases of notes from the fund, or by any combination of such guarantee, accommodation, or subordination. The Secretary shall not provide such assistance to any borrower of a telephone loan under this chapter unless the borrower specifically applies for such assistance. No fees or charges shall be assessed for any such accommodation or subordination. Guaranteed loans shall bear interest at the rate agreed upon by the borrower and the lender. Guaranteed loans, and accommodation and subordination of liens or mortgages, may be made concurrently with an insured loan. The amount of guaranteed loans shall be subject only to such limitations as to amounts as may be authorized from time to time by the Congress of the United States: Provided, That any amounts guaranteed hereunder shall not be included in the totals of the budget of the United States Government and shall be exempt from any general limitation imposed by statute on expenditures and net lending (budget outlays) of the United States. As used in this subchapter a guaranteed loan is one which is initially made, held, and serviced by a legally organized lending agency and which is guaranteed by the Secretary hereunder. A guaranteed loan, including the related guarantee, may be assigned to the extent provided in the contract of guarantee executed by the Secretary under this subchapter; the assignability of such loan and guarantee shall be governed exclusively by said contract of guarantee.
(May 20, 1936, ch. 432, title III, § 306, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 69; amended Pub. L. 94–124, § 1, Nov. 4, 1975, 89 Stat. 677; Pub. L. 97–35, title I, § 165(b), Aug. 13, 1981, 95 Stat. 379; Pub. L. 101–624, title XXIII, § 2362, Nov. 28, 1990, 104 Stat. 4042; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 110–234, title VI, § 6102(b), May 22, 2008, 122 Stat. 1195; Pub. L. 110–246, § 4(a), title VI, § 6102(b), June 18, 2008, 122 Stat. 1664, 1956; Pub. L. 115–334, title VI, § 6602(b)(10), Dec. 20, 2018, 132 Stat. 4777.)
§ 936a. Prepayment of loans
(a) Conditions for prepaymentExcept as provided in subsection (c), a borrower of a loan made by the Federal Financing Bank and guaranteed under section 936 of this title may prepay such loan (or any loan advance thereunder) by paying the outstanding principal balance due on the loan (or advance), if—
(1) the loan is outstanding on July 2, 1986;
(2) private capital, with the existing loan guarantee, is used to replace the loan; and
(3) the borrower certifies that any savings from such prepayment will be passed on to its customers or used to improve the financial strength of the borrower in cases of financial hardship.
(b) Charges on prepayment prohibited
(c) Disqualification for prepayment on finding of adverse affect on Federal Financing Bank
(1) A borrower will not qualify for prepayment under this section if, in the opinion of the Secretary of the Treasury, to prepay in such borrower’s case would adversely affect the operation of the Federal Financing Bank.
(2) Paragraph (1) shall be effective in fiscal year 1987 only for any loan the prepayment of the principal amount of which will cause the cumulative amount of net proceeds from all such prepayments made during such year to exceed $2,017,500,000.
(d) Amount of permissible prepayments; establishment of eligibility criteria
(1) The Secretary shall permit, subject to subsection (a), prepayments of principal on loans in fiscal year 1987 under this section or Public Law 99–349 in such amounts as to realize net proceeds from all such prepayments in fiscal year 1987 in an amount not less than $2,017,500,000.
(2) The Secretary shall establish—
(A) eligibility criteria to ensure that any loan prepayment activity required to be carried out under this subsection will be directed to those cooperative borrowers in greatest need of the benefits associated with prepayment, as determined by the Secretary; and
(B) such other eligibility criteria as the Secretary determines are necessary to carry out this subsection.
(e) Assignability and transferability of guarantees of loans
(May 20, 1936, ch. 432, title III, § 306A, as added Pub. L. 99–509, title I, § 1011(a), Oct. 21, 1986, 100 Stat. 1875; amended Pub. L. 103–354, title II, § 235(a)(7), (13), Oct. 13, 1994, 108 Stat. 3221.)
§ 936b. Sale or prepayment of direct or insured loans
(a) Discounted prepayment by borrowers of electric loans
(1) In general
(2) Exception
(A) the outstanding principal balance on the loan; or
(B) the present value of the loan discounted from the face value at maturity at the rate established by the Secretary.
(3) Discount rate
(4) Tax exempt financing
(5) Eligibility
(A) In generalA borrower that has prepaid an insured or direct loan shall remain eligible for assistance under this chapter in the same manner as other borrowers, except that—
(i) a borrower that has prepaid a loan, either before or after October 21, 1992, at a discount rate as provided by paragraph (3), shall not be eligible, except at the discretion of the Secretary, to apply for or receive direct or insured loans under this chapter during the 120-month period beginning on the date of the prepayment; and
(ii) a borrower that prepaid a loan before October 21, 1992, at a discount rate greater than that provided by paragraph (3), shall not be eligible—(I) except at the discretion of the Secretary, to apply for or receive direct or insured loans described in clause (i) during the 180-month period beginning on the date of the prepayment; or(II) to apply for or receive direct or insured loans described in clause (i) until the borrower has repaid to the Federal Government the sum of—(aa) the amount (if any) by which the discount the borrower received by reason of the prepayment exceeds the discount the borrower would have received had the discount been based on the cost of funds to the Department of the Treasury at the time of the prepayment; and(bb) interest on the amount described in item (aa), for the period beginning on the date of the prepayment and ending on the date of the repayment, at a rate equal to the average annual cost of borrowing by the Department of the Treasury.
(B) Effect on existing agreements
(C) Distribution borrowers
(6) DefinitionsAs used in this subsection:
(A) Direct loan
(B) Insured loan
(b) Mergers of electric borrowers
(May 20, 1936, ch. 432, title III, § 306B, as added Pub. L. 99–509, title I, § 1011(a), Oct. 21, 1986, 100 Stat. 1876; amended Pub. L. 101–624, title XXIII, § 2387, Nov. 28, 1990, 104 Stat. 4051; Pub. L. 102–428, § 2, Oct. 21, 1992, 106 Stat. 2183; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 936c. Refinancing and prepayment of FFB loans
(a) In general
(b) Penalty
(1) Determination of penaltyA penalty shall be assessed against a borrower that refinances or prepays a loan or loan advance, or any portion of a loan or advance, under this section. Except as provided in paragraph (2), the penalty shall be equal to the lesser of—
(A) the difference between the outstanding principal balance of the loan being refinanced and the present value of the loan discounted at a rate equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid;
(B) 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced, multiplied by the ratio that—
(i) the number of quarterly payment dates between the date of the refinancing or prepayment and the maturity date for the loan advance; bears to
(ii) the number of quarterly payment dates between the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced was advanced and the maturity date of the loan advance; and
(C)
(i) the present value of 100 percent of the amount of interest for 1 year on the outstanding principal balance of the loan or loan advance, or any portion of the loan or advance, being refinanced or prepaid; plus
(ii) for the interval between the date of the refinancing or prepayment and the first quarterly payment date that occurs 12 years after the end of the year in which the amount being refinanced or prepaid was advanced, the present value of the difference between—(I) each payment scheduled for the interval on the loan amount being refinanced or prepaid; and(II) the payment amounts that would be required during the interval on the amounts being refinanced or prepaid if the interest rate on the loan were equal to the then current cost of funds to the Department of the Treasury for obligations of comparable maturity to the loan being refinanced or prepaid.
(2) Limitation
(A) In general
(B) ExceptionIn the case of a loan advanced under an agreement that permits the refinancing or prepayment of the loan advance based on the payment of 1 year of interest on the outstanding principal balance of the loan advance, a borrower may, in lieu of the penalty required by paragraph (1)(A), pay a penalty as provided by—
(i) paragraph (1)(B), if the loan advance has reached the 12-year maturity required under the loan agreement for the refinancing or prepayment; or
(ii) paragraph (1)(C), if the loan advance has not reached the 12-year maturity required under the loan agreement for the refinancing or prepayment.
(3) Financing of penalty
(A) In generalIn the case of a refinancing under this section, a borrower may, at the option of the borrower, meet the penalty requirements of paragraph (1) by—
(i) making a payment in the amount of the required penalty at the time of the refinancing; or
(ii) increasing the outstanding principal balance of the loan advance guaranteed by the Secretary that is being refinanced under this section by the amount of the penalty.
(B) Increased principal
(c) Loan terms and conditions after refinancing
(1) In general
(2) Interest rate
(3) Loan termSubject to paragraph (4), the borrower of a loan that is refinanced under this section—
(A) shall select the term for which an interest rate shall be determined pursuant to paragraph (2); and
(B) at the end of the term (and any succeeding term selected by the borrower under this paragraph), may renew the loan for another term selected by the borrower.
(4) Maximum term
(5) Existing loansIn the case of the refinancing of a loan of a borrower pursuant to this section and the inclusion of a penalty in the outstanding principal balance of the refinanced loan pursuant to subsection (b)(3)—
(A) the refinancing and inclusion of the penalty shall not be subject to appropriations or limited by the amount provided during a fiscal year for new loans, loan guarantees, or other credit activity;
(B) the request of the borrower for the refinancing under this section may not be denied or delayed; and
(C) the borrower may not be limited in the selection of any refinancing or prepayment option provided by this section to the borrower.
(d) Maximum rate option
(1) In general
(2) Limitation
(3) Fee
(4) Sunset
(May 20, 1936, ch. 432, title III, § 306C, as added Pub. L. 103–66, title I, § 1201(a), Aug. 10, 1993, 107 Stat. 327; amended Pub. L. 103–129, § 2(c)(10), Nov. 1, 1993, 107 Stat. 1365; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 936d. 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 chapter for a loan, loan guarantee, or lien accommodation under this subchapter, 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 chapter; 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.
(May 20, 1936, ch. 432, title III, § 306D, as added Pub. L. 103–129, § 2(c)(7), Nov. 1, 1993, 107 Stat. 1364.)
§ 936e. Administrative prohibitions applicable to certain electric borrowers
(a) In general
(b) Subordination or sharing of liens
(c) Issuance of regulations
(d) Authority of Secretary
(May 20, 1936, ch. 432, title III, § 306E, as added Pub. L. 103–129, § 2(c)(7), Nov. 1, 1993, 107 Stat. 1365; amended Pub. L. 103–201, § 1, Dec. 17, 1993, 107 Stat. 2342; Pub. L. 103–354, title II, § 235(a)(8), (13), Oct. 13, 1994, 108 Stat. 3221.)
§ 936f. Substantially underserved trust areas
(a) Definitions
In this section:
(1) Eligible program
The term “eligible program” means a program administered by the Rural Utilities Service and authorized in—
(A) this chapter; or
(B) paragraph (1), (2), (14), (22), or (24) of section 1926(a) of this title or section 1926a, 1926c, 1926d, or 1926e of this title.
(2) Substantially underserved trust area
(b) Initiative
(c) Authority of Secretary
In carrying out subsection (b), the Secretary—
(1) may make available from loan or loan guarantee programs administered by the Rural Utilities Service to qualified utilities or applicants financing with an interest rate as low as 2 percent, and with extended repayment terms;
(2) may waive nonduplication restrictions, matching fund requirements, or credit support requirements from any loan or grant program administered by the Rural Utilities Service to facilitate the construction, acquisition, or improvement of infrastructure;
(3) may give the highest funding priority to designated projects in substantially underserved trust areas; and
(4) shall only make loans or loan guarantees that are found to be financially feasible and that provide eligible program benefits to substantially underserved trust areas.
(d) Report
Not later than 1 year after the date of enactment of this section and annually thereafter, the Secretary shall submit to Congress a report that describes—
(1) the progress of the initiative implemented under subsection (b); and
(2) recommendations for any regulatory or legislative changes that would be appropriate to improve services to substantially underserved trust areas.
(May 20, 1936, ch. 432, title III, § 306F, as added Pub. L. 110–234, title VI, § 6105, May 22, 2008, 122 Stat. 1196, and Pub. L. 110–246, § 4(a), title VI, § 6105, June 18, 2008, 122 Stat. 1664, 1957.)
§ 937. Loans from other credit sources
When it appears to the Secretary that the loan applicant is able to obtain a loan for part of his credit needs from a responsible cooperative or other credit source at reasonable rates and terms consistent with the loan applicant’s ability to pay and the achievement of this chapter’s objectives, he may request the loan applicant to apply for and accept such a loan concurrently with an insured loan, subject, however, to full use being made by the Secretary of the funds made available hereunder for such insured loans under this subchapter. The Secretary may not request any applicant for an electric loan under this chapter to apply for and accept a loan in an amount exceeding 30 percent of the credit needs of the applicant.
(May 20, 1936, ch. 432, title III, § 307, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70; amended Pub. L. 97–35, title I, § 165(c), Aug. 13, 1981, 95 Stat. 379; Pub. L. 103–129, § 2(c)(8), Nov. 1, 1993, 107 Stat. 1365; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 938. Full faith and credit of the United States
Any contract of insurance or guarantee executed by the Secretary under this subchapter 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 had actual knowledge at the time it became a holder.
(May 20, 1936, ch. 432, title III, § 308, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70; amended Pub. L. 94–124, § 2, Nov. 4, 1975, 89 Stat. 677; Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 939. Loan terms and conditions
Loans made from or insured through the fund shall be for the same purposes and on the same terms and conditions as are provided for loans in subchapters I and II of this chapter except as otherwise provided in sections 933 to 938 inclusive.
(May 20, 1936, ch. 432, title III, § 309, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70; amended Pub. L. 101–624, title XXIII, § 2360, Nov. 28, 1990, 104 Stat. 4042; Pub. L. 103–129, § 2(b)(2), Nov. 1, 1993, 107 Stat. 1363; Pub. L. 104–127, title VII, § 779, Apr. 4, 1996, 110 Stat. 1151; Pub. L. 115–334, title VI, § 6602(b)(11), Dec. 20, 2018, 132 Stat. 4777.)
§ 940. Refinancing of rural development loans
At the request of the borrower, the Secretary is authorized and directed to refinance with loans which will be insured under this chapter at the interest rates provided in section 935 of this title any loans made for rural electric and telephone facilities under any provision of the Consolidated Farm and Rural Development Act [7 U.S.C. 1921 et seq.].
(May 20, 1936, ch. 432, title III, § 310, as added Pub. L. 93–32, § 2, May 11, 1973, 87 Stat. 70; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 940a. Repealed. Pub. L. 104–127, title VII, § 780, Apr. 4, 1996, 110 Stat. 1151
§ 940b. Use of funds
A borrower of an insured or guaranteed electric loan under this chapter may, without restriction or prior approval of the Secretary, invest its own funds or make loans or guarantees, not in excess of 15 percent of its total utility plant.
(May 20, 1936, ch. 432, title III, § 312, as added Pub. L. 100–203, title I, § 1402, Dec. 22, 1987, 101 Stat. 1330–21; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.)
§ 940c. Cushion of credit payments program
(a) Establishment
(1) In general
(A) Development and promotion of program
(B) Termination
(2) Interest
(A) In general
(B) Reduction
Notwithstanding subparagraph (A), amounts in each cushion of credit account shall accrue interest to the borrower at a rate equal to—
(i) 4 percent per annum in fiscal year 2021; and
(ii) the then applicable 1-year Treasury rate thereafter.
(3) Balance
(A) In general
(B) Prepayment
(C) No prepayment premium
(D) Mandatory funding
(b) Uses of cushion of credit payments
(1) In general
(A) Cash balance
(B) Interest
(C) Credits
(2) Rural economic development subaccount
(May 20, 1936, ch. 432, title III, § 313, as added Pub. L. 100–203, title I, § 1403, Dec. 22, 1987, 101 Stat. 1330–21; amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221; Pub. L. 115–334, title VI, §§ 6503, 6504(b), Dec. 20, 2018, 132 Stat. 4772, 4773.)
§ 940c–1. Guarantees for bonds and notes issued for electrification or telephone purposes
(a) In general
(1) Guarantees
(2) TermsA bond or note guaranteed under this section shall, by agreement between the Secretary and the borrower—
(A) be for a term of 30 years (or another term of years that the Secretary determines is appropriate); and
(B) be repaid by the borrower—
(i) in periodic installments of principal and interest;
(ii) in periodic installments of interest and, at the end of the term of the bond or note, as applicable, by the repayment of the outstanding principal; or
(iii) through a combination of the methods described in clauses (i) and (ii).
(b) Limitations
(1) Outstanding loans
(2) QualificationsThe Secretary may deny the request of a lender for the guarantee of a bond or note under this section if the Secretary determines that—
(A) the lender does not have appropriate expertise or experience or is otherwise not qualified to make loans for eligible purposes described in subsection (a)(1);
(B) the bond or note issued by the lender would not be investment grade quality without a guarantee; or
(C) the lender has not provided to the Secretary a list of loan amounts approved by the lender that the lender certifies are for eligible purposes described in subsection (a)(1).
(3) Annual amount
(c) Fees
(1) In general
(2) Amount
(A) In general
(B) Prohibition
(3) Payment
(A) In general
(B) Structured schedule
(4) Rural economic development subaccountSubject to subsection (e)(2), fees collected under this subsection shall be—
(A) deposited into the rural economic development subaccount that shall be maintained as required by sections 940c(b)(2) and 940c–2(f) of this title, to remain available until expended; and
(B) used for the purposes described in section 940c(b)(2) of this title.
(d) Guarantees
(1) In generalA guarantee issued under this section shall—
(A) be for the full amount of a bond or note, including the amount of principal, interest, and call premiums;
(B) be fully assignable and transferable; and
(C) represent the full faith and credit of the United States.
(2) Limitation
(3) Department opinion
(e) Authorization of appropriations
(1) In general
(2) Fees
(f) Termination
(May 20, 1936, ch. 432, title III, § 313A, as added Pub. L. 107–171, title VI, § 6101(a), May 13, 2002, 116 Stat. 413; amended Pub. L. 110–234, title VI, § 6106(a), May 22, 2008, 122 Stat. 1197; Pub. L. 110–246, § 4(a), title VI, § 6106(a), June 18, 2008, 122 Stat. 1664, 1958; Pub. L. 113–79, title VI, § 6102, Feb. 7, 2014, 128 Stat. 851; Pub. L. 115–334, title VI, §§ 6504(d), 6505(a), Dec. 20, 2018, 132 Stat. 4774.)
§ 940c–2. Rural development loans and grants
(a) In general
(b) Repayments
(c) Proceeds
(d) Number of grants
(e) Funding
(1) Discretionary funding
(2) Mandatory funding
(3) Other funds
In addition to the funds described in paragraphs (1) and (2), the Secretary shall use, without fiscal year limitation, to provide grants and loans under this section—
(A) the interest differential sums credited to the subaccount described in subsection (c); and
(B) subject to section 940c–1(e)(2) of this title, the fees described in subsection (c)(4) of such section.
(f) Maintenance of account
(May 20, 1936, ch. 432, title III, § 313B, as added Pub. L. 115–334, title VI, § 6504(c), Dec. 20, 2018, 132 Stat. 4773; amended Pub. L. 118–22, div. B, title I, § 102(d)(4), Nov. 17, 2023, 137 Stat. 116.)
§ 940d. Repealed. Pub. L. 115–334, title VI, § 6601(b), Dec. 20, 2018, 132 Stat. 4776
§ 940e. Expansion of 911 access
(a) In general
Subject to subsection (c) and such terms and conditions as the Secretary may prescribe, the Secretary may make loans under this subchapter to entities eligible to borrow from the Rural Utilities Service, State or local governments, Indian tribes (as defined in section 5304 of title 25), or other public entities for facilities and equipment to expand or improve in rural areas—
(1) 911 access;
(2) integrated interoperable emergency communications, including multiuse networks that provide critical transportation-related information services in addition to emergency communications services;
(3) homeland security communications;
(4) transportation safety communications; or
(5) location technologies used outside an urbanized area.
(b) Loan security
(c) Emergency communications equipment providers
(d) Authorization of appropriations
(May 20, 1936, ch. 432, title III, § 315, as added Pub. L. 107–171, title VI, § 6102, May 13, 2002, 116 Stat. 415; amended Pub. L. 110–234, title VI, § 6107, May 22, 2008, 122 Stat. 1198; Pub. L. 110–246, § 4(a), title VI, § 6107, June 18, 2008, 122 Stat. 1664, 1959; Pub. L. 113–79, title VI, § 6103, Feb. 7, 2014, 128 Stat. 851; Pub. L. 115–334, title VI, § 6506, Dec. 20, 2018, 132 Stat. 4775.)
§ 940f. Extension of period of existing guarantee
(a) In general
(b) Limitations
(1) Feasibility and security
(2) Extension of useful life or collateral
Extensions under this section shall not be granted unless the borrower first submits with its request either—
(A) evidence satisfactory to the Secretary that a Federal or State agency with jurisdiction and expertise has made an official determination, such as through a licensing proceeding, extending the useful life of a generating plant or transmission line pledged as collateral to or beyond the new final maturity date being requested by the borrower, or
(B) a certificate from an independent licensed engineer concluding, on the basis of a thorough engineering analysis satisfactory to the Secretary, that the useful life of the generating plant or transmission line pledged as collateral extends to or beyond the new final maturity date being requested by the borrower.
(3) Amount eligible for extension
(4) Period of extension
(5) Number of extensions
(c) Fees
(1) In general
(2) Amount
(3) Payment
(May 20, 1936, ch. 432, title III, § 316, as added Pub. L. 109–97, title VII, § 774, Nov. 10, 2005, 119 Stat. 2160.)
§ 940g. Electric loans for renewable energy
(a)
(b) Loans
(c) Rate
(May 20, 1936, ch. 432, title III, § 317, as added Pub. L. 110–234, title VI, § 6108, May 22, 2008, 122 Stat. 1198, and Pub. L. 110–246, § 4(a), title VI, § 6108, June 18, 2008, 122 Stat. 1664, 1959.)
§ 940h. Bonding requirements
The Secretary shall review the bonding requirements for all programs administered by the Rural Utilities Service under this chapter to ensure that bonds are not required if—
(1) the interests of the Secretary are adequately protected by product warranties; or
(2) the costs or conditions associated with a bond exceed the benefit of the bond.
(May 20, 1936, ch. 432, title III, § 318, as added Pub. L. 110–234, title VI, § 6109, May 22, 2008, 122 Stat. 1198, and Pub. L. 110–246, § 4(a), title VI, § 6109, June 18, 2008, 122 Stat. 1664, 1960.)
§ 940i. Cybersecurity and grid security improvements
(a) Definition of cybersecurity and grid security improvements
(b) Loans and loan guarantees
(May 20, 1936, ch. 432, title III, § 319, as added Pub. L. 115–334, title VI, § 6507, Dec. 20, 2018, 132 Stat. 4775.)