IN THE SENATE OF THE UNITED STATES
Mr. Burns (for himself, Mr. Gramm, Mr. Lott, Mr. Stevens, Mr. Crapo, Mr. Hutchinson, Mr. Allard,
Mr. Bunning, Ms. Snowe, Ms. Collins, and Mr. Grassley) introduced the following bill;
which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs
To authorize loan guarantees in order to facilitate access to local television broadcast signals in unserved and underserved areas, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Launching Our Communities' Access to Local Television Act of 2000".
SEC. 2. PURPOSE.
The purpose of this Act is to facilitate access, on a technologically neutral basis and by December 31, 2006, to signals of local television stations in unserved areas and underserved areas for the households located in such areas that seek access to such signals.
SEC. 3. LOCAL TELEVISION LOAN GUARANTEE BOARD.
(a) Establishment._There is established the LOCAL Television Loan Guarantee Board (in this Act referred to as the "Board").
(1) In General._Subject to paragraph (2), the Board shall consist of the following members:
(A) The Secretary of the Treasury, or the designee of the Secretary.
(B) The Chairman of the Board of Governors of the Federal Reserve System, or the designee of the Chairman.
(C) The Secretary of Agriculture, or the designee of the Secretary.
(2) Requirement as to Designees._An individual may not be designated a member of the Board under paragraph (1) unless the individual is an officer of the United States pursuant to an appointment by the President, by and with the advice and consent of the Senate.
(c) Functions of the Board._
(1) In General._The Board shall determine whether or not to approve loan guarantees under this Act. The Board shall make such determinations consistent with the purpose of this Act and in accordance with this subsection and section 4.
(2) Consultation Authorized._
(A) In General._In carrying out its functions under this Act, the Board shall consult with such departments and agencies of the Federal Government as the Board considers appropriate, including the Department of Commerce, the Department of Agriculture, the Department of the Treasury, the Department of Justice, the Department of the Interior, the Board of Governors of the Federal Reserve System, the Federal Communications Commission, the Federal Trade Commission, and the National Aeronautics and Space Administration.
(B) Response._A department or agency consulted by the Board under subparagraph (A) shall provide the Board such expertise and assistance as the Board requires to carry out its functions under this Act.
(3) Approval by Majority Vote._The determination of the Board to approve a loan guarantee under this Act shall be by a vote of a majority of the Board.
SEC. 4. APPROVAL OF LOAN GUARANTEES.
(a) Authority To Approve Loan Guarantees._Subject to the provisions of this section and consistent with the purpose of this Act, the Board may approve loan guarantees under this Act.
(1) Requirements._The Board shall prescribe regulations to implement the provisions of this Act.
(2) Elements._The regulations prescribed under paragraph (1) shall_
(A) set forth the form of any application to be submitted to the Board under this Act;
(B) set forth time periods for the review and consideration by the Board of applications to be submitted to the Board under this Act, and for any other action to be taken by the Board with respect to such applications;
(C) provide appropriate safeguards against the evasion of the provisions of this Act;
(D) set forth the circumstances in which an applicant, together with any affiliate of an applicant, shall be treated as an applicant for a loan guarantee under this Act;
(E) include requirements that appropriate parties submit to the Board any documents and assurances that are required for the administration of the provisions of this Act; and
(F) include such other provisions consistent with the purpose of this Act as the Board considers appropriate.
(3) Construction._ (A) Nothing in this Act shall be construed to prohibit the Board from requiring, to the extent and under circumstances considered appropriate by the Board, that affiliates of an applicant be subject to certain obligations of the applicant as a condition to the approval or maintenance of a loan guarantee under this Act.
(B) If any provision of this Act or the application of such provision to any person or entity or circumstance is held to be invalid by a court of competent jurisdiction, the remainder of this Act, or the application of such provision to such person or entity or circumstance other than those as to which it is held invalid, shall not be affected thereby.
(c) Authority Limited By Appropriations Acts._The Board may approve loan guarantees under this Act only to the extent provided for in advance in appropriations Acts.
(d) Requirements and Criteria Applicable to Approval._
(1) In General._The Board shall utilize the underwriting criteria developed under subsection (g), and any relevant information provided by the departments and agencies with which the Board consults under section 3, to determine which loans may be eligible for a loan guarantee under this Act.
(2) Prerequisites._In addition to meeting the underwriting criteria under paragraph (1), a loan may not be guaranteed under this Act unless_
(A) the loan is made to finance the acquisition, improvement, enhancement, construction, deployment, launch, or rehabilitation of the means by which local television broadcast signals will be delivered to an unserved area or underserved area;
(B) the proceeds of the loan will not be used for operating expenses;
(C) the proposed project, as determined by the Board in consultation with the National Telecommunications and Information Administration, is not likely to have a substantial adverse impact on competition that outweighs the benefits of improving access to the signals of a local television station in an unserved area or underserved area;
(D) the loan is provided by an insured depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act) that is acceptable to the Board, and has terms, in the judgment of the Board, that are consistent in material respects with the terms of similar obligations in the private capital market;
(E) repayment of the loan is required to be made within a term of the lesser of_
(i) 25 years from the date of the execution of the loan; or
(ii) the economically useful life, as determined by the Board, of the primary assets to be used in the delivery of the signals concerned; and
(F) the loan meets any additional criteria developed under subsection (g).
(3) Protection of United States Financial Interests._The Board may not approve the guarantee of a loan under this Act unless_
(A) the Board has been given documentation, assurances, and access to information and persons necessary, as determined by the Board, to address issues relevant to the review of the loan by the Board for purposes of this Act; and
(B) the Board makes a determination in writing that_
(i) the assets, facilities, or equipment covered by the loan will be utilized economically and efficiently;
(ii) the terms, conditions, security, and schedule and amount of repayments of principal and the payment of interest with respect to the loan protect the financial interests of the United States and are reasonable;
(iii) all necessary and required regulatory and other approvals, spectrum rights, and delivery permissions have been received for the loan and the project under the loan;
(iv) the loan would not be available on reasonable terms and conditions without a loan guarantee under this Act; and
(v) repayment of the loan can reasonably be expected.
(e) Priority Considerations._
(1) Type of Market._
(A) Priority Consideration to Unserved Areas._To the maximum extent practicable, the Board shall give priority in the approval of loan guarantees under this Act for projects that will serve unserved areas.
(B) Prohibition._The Board may not approve a loan guarantee under this Act for a project that is designed primarily to serve one or more of the 40 most populated designated market areas (as that term is defined in section 122(j) of title 17, United States Code).
(2) Projects That Would Reduce Consumer Costs._To the maximum extent practicable, the Board shall also give priority in the approval of loan guarantees under this Act to projects that would_
(A) offer a separate tier of local broadcast signals, but for applicable Federal, State, or local laws or regulations;
(B) provide lower projected costs to consumers of such separate tier; and
(C) enable the delivery of local broadcast signals consistent with the purpose of this Act by a means reasonably compatible with existing systems or devices predominantly in use.
(f) Guarantee Limits._
(1) Limitation on Aggregate Value of Loans._The aggregate value of all loans for which loan guarantees are issued under this Act may not exceed $1,250,000,000.
(2) Guarantee Level._A loan guarantee issued under this Act may not exceed an amount equal to 70 percent of a loan meeting in its entirety the requirements of subsection (d)(2)(A). If only a portion of a loan meets the requirements of that subsection, the Board shall determine that percentage of the loan meeting such requirements (the "applicable portion") and may issue a loan guarantee in an amount not exceeding 70 percent of the applicable portion.
(g) Underwriting Criteria._Not later than 180 days after the date of the enactment of this Act, the Board shall, in consultation with the Director of the Office of Management and Budget and an independent public accounting firm, develop underwriting criteria relating to the guarantee of loans that are consistent with the purpose of this Act, including appropriate collateral and cash flow levels for loans guaranteed under this Act, and such other matters as the Board considers appropriate.
(h) Credit Risk Premiums._
(1) Establishment and Acceptance._
(A) Authority._The Board may establish and approve the acceptance of credit risk premiums with respect to a loan guarantee under this Act in order to cover the cost, as determined under section 504(b)(1) of the Federal Credit Reform Act of 1990, of the loan guarantee. To the extent that appropriations of budget authority are insufficient to cover the cost, as so determined, of a loan guarantee under this Act, credit risk premiums shall be accepted from a non-Federal source under this subsection on behalf of the applicant for the loan guarantee.
(2) Credit Risk Premium Amount._
(A) In general._The Board shall determine the amount of any credit risk premium to be accepted with respect to a loan guarantee under this Act on the basis of_
(i) the financial and economic circumstances of the applicant for the loan guarantee, including the amount of collateral offered;
(ii) the proposed schedule of loan disbursements;
(iii) the business plans of the applicant for providing service;
(iv) any financial commitment from a broadcast signal provider; and
(v) the concurrence of the Director of the Office of Management and Budget as to the amount of the credit risk premium.
(B) Proportionality._To the extent that appropriations of budget authority are sufficient to cover the cost, as determined under section 504(b)(1) of the Federal Credit Reform Act of 1990, of loan guarantees under this Act, the credit risk premium with respect to each loan guarantee shall be reduced proportionately.
(i) Judicial Review._The decision of the Board to approve or disapprove the making of a loan guarantee under this Act shall not be subject to judicial review.
SEC. 5. ADMINISTRATION OF LOAN GUARANTEES.
(a) In General._The Administrator of the Rural Utilities Service (in this Act referred to as the ``Administrator'') shall issue and otherwise administer loan guarantees that have been approved by the Board in accordance with sections 3 and 4 of this Act.
(b) Security for Protection of United States Financial Interests._
(1) Terms and Conditions._An applicant shall agree to such terms and conditions as are satisfactory, in the judgment of the Board, to ensure that, as long as any principal or interest is due and payable on a loan guaranteed under this Act, the applicant_
(A) shall maintain assets, equipment, facilities, and operations on a continuing basis;
(B) shall not make any discretionary dividend payments that impair its ability to repay obligations guaranteed under this Act; and
(C) shall remain sufficiently capitalized.
(A) Existence of Adequate Collateral._An applicant shall provide the Board such documentation as is necessary, in the judgment of the Board, to provide satisfactory evidence that appropriate and adequate collateral secures a loan guaranteed under this Act.
(B) Form of Collateral._Collateral required by subparagraph (A) shall consist solely of assets of the applicant, any affiliate of the applicant, or both (whichever the Board considers appropriate), including primary assets to be used in the delivery of signals for which the loan is guaranteed.
(C) Review of Valuation._The value of collateral securing a loan guaranteed under this Act may be reviewed by the Board, and may be adjusted downward by the Board if the Board reasonably believes such adjustment is appropriate.
(3) Lien on Interests in Assets._Upon the Board's approval of a loan guarantee under this Act, the Administrator shall have liens on assets securing the loan, which shall be superior to all other liens on such assets, and the value of the assets (based on a determination satisfactory to the Board) subject to the liens shall be at least equal to the unpaid balance of the loan amount covered by the loan guarantee.
(4) Perfected Security Interest._With respect to a loan guaranteed under this Act, the Administrator and the lender shall have a perfected security interest in assets securing the loan that are fully sufficient to protect the financial interests of the United States and the lender.
(5) Insurance._In accordance with practices in the private capital market, as determined by the Board, the applicant for a loan guarantee under this Act shall obtain, at its expense, insurance sufficient to protect the financial interests of the United States, as determined by the Board.
(c) Assignment of Loan Guarantees._The holder of a loan guarantee under this Act may assign the loan guaranteed under this Act in whole or in part, subject to such requirements as the Board may prescribe.
(d) Modification._The Board may approve the modification of any term or condition of a loan guarantee under this Act, including the rate of interest, time of payment of principal or interest, or security requirements only if_
(1) the modification is consistent with the financial interests of the United States;
(2) consent has been obtained from the parties to the loan agreement;
(3) the modification is consistent with the underwriting criteria developed under section 4(g);
(4) the modification does not adversely affect the interest of the Federal Government in the assets or collateral of the applicant;
(5) the modification does not adversely affect the ability of the applicant to repay the loan; and
(6) the National Telecommunications and Information Administration has been consulted by the Board regarding the modification.
(e) Performance Schedules._
(1) Performance Schedules._An applicant for a loan guarantee under this Act for a project covered by section 4(e)(1) shall enter into stipulated performance schedules with the Administrator with respect to the signals to be provided through the project.
(2) Penalty._The Administrator may assess against and collect from an applicant described in paragraph (1) a penalty not to exceed 3 times the interest due on the guaranteed loan of the applicant under this Act if the applicant fails to meet its stipulated performance schedule under that paragraph.
(f) Compliance._The Administrator, in cooperation with the Board and as the regulations of the Board may provide, shall enforce compliance by an applicant, and any other party to a loan guarantee for whose benefit assistance under this Act is intended, with the provisions of this Act, any regulations under this Act, and the terms and conditions of the loan guarantee, including through the submittal of such reports and documents as the Board may require in regulations prescribed by the Board and through regular periodic inspections and audits.
(g) Commercial Validity._A loan guarantee under this Act shall be incontestable_
(1) in the hands of an applicant on whose behalf the loan guarantee is made, unless the applicant engaged in fraud or misrepresentation in securing the loan guarantee; and
(2) as to any person or entity (or their respective successor in interest) who makes or contracts to make a loan to the applicant for the loan guarantee in reliance thereon, unless such person or entity (or their respective successor in interest) engaged in fraud or misrepresentation in making or contracting to make such loan.
(h) Defaults._The Board shall prescribe regulations governing defaults on loans guaranteed under this Act, including the administration of the payment of guaranteed amounts upon default.
(i) Recovery of Payments._
(1) In General._The Administrator shall be entitled to recover from an applicant for a loan guarantee under this Act the amount of any payment made to the holder of the guarantee with respect to the loan.
(2) Subrogation._Upon making a payment described in paragraph (1), the Administrator shall be subrogated to all rights of the party to whom the payment is made with respect to the guarantee which was the basis for the payment.
(3) Disposition of Property._
(A) Sale or Disposal._The Administrator shall, in an orderly and efficient manner, sell or otherwise dispose of any property or other interests obtained under this Act in a manner that maximizes taxpayer return and is consistent with the financial interests of the United States.
(B) Maintenance._The Administrator shall maintain in a cost-effective and reasonable manner any property pending sale or disposal of such property under subparagraph (A).
(j) Action Against Obligor._
(1) Authority to Bring Civil Action._The Administrator may bring a civil action in an appropriate district court of the United States in the name of the United States or of the holder of the obligation in the event of a default on a loan guaranteed under this Act. The holder of a loan guarantee shall make available to the Administrator all records and evidence necessary to prosecute the civil action.
(2) Fully Satisfying Obligations Owed the United States._The Administrator may accept property in satisfaction of any sums owed the United States as a result of a default on a loan guaranteed under this Act, but only to the extent that any cash accepted by the Administrator is not sufficient to satisfy fully the sums owed as a result of the default.
(k) Breach of Conditions._The Administrator shall commence a civil action in a court of appropriate jurisdiction to enjoin any activity which the Board finds is in violation of this Act, the regulations under this Act, or any conditions which were duly agreed to, and to secure any other appropriate relief, including relief against any affiliate of the applicant.
(l) Attachment._No attachment or execution may be issued against the Administrator or any property in the control of the Administrator pursuant to this Act before the entry of a final judgment (as to which all rights of appeal have expired) by a State, Federal, or other court of competent jurisdiction against the Administrator in a proceeding for such action.
(1) Application Fee._The Board may charge and collect from an applicant for a loan guarantee under this Act a fee to cover the cost of the Board in making necessary determinations and findings with respect to the loan guarantee application under this Act. The amount of the fee shall be reasonable.
(2) Loan Guarantee Origination Fee._The Board may charge, and the Administrator may collect, a loan guarantee origination fee with respect to the issuance of a loan guarantee under this Act.
(3) Use of Fees Collected._Any fee collected under this subsection shall be used to offset administrative costs under this Act, including costs of the Board and of the Administrator.
(n) Requirements Relating to Affiliates._
(1) Indemnification._An affiliate of an applicant for a loan guarantee under this Act shall indemnify the United States for any losses that the United States incurs as a result of_
(A) a judgment against the applicant or any of its affiliates;
(B) any breach by the applicant or any of its affiliates of their obligations under the loan guarantee agreement;
(C) any violation of the provisions of this Act, and the regulations prescribed under this Act, by the applicant or any of its affiliates;
(D) any penalties incurred by the applicant or any of its affiliates for any reason, including violation of a stipulated performance schedule under subsection (e); and
(E) any other circumstances that the Board considers appropriate.
(2) Limitation on Transfer of Loan Proceeds._An applicant for a loan guarantee under this Act may not transfer any part of the proceeds of the loan to an affiliate.
(o) Effect of Bankruptcy._(1) Notwithstanding any other provision of law, whenever any person or entity is indebted to the United States as a result of any loan guarantee issued under this Act and such person or entity is insolvent or is a debtor in a case under title 11, United States Code, the debts due to the United States shall be satisfied first.
(2) A discharge in bankruptcy under title 11, United States Code, shall not release a person or entity from an obligation to the United States in connection with a loan guarantee under this Act.
SEC. 6. ANNUAL AUDIT.
(a) Requirement._The Comptroller General of the United States shall conduct on an annual basis an audit of the administration of the provisions of this Act.
(b) Report._The Comptroller General shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Banking and Financial Services of the House of Representatives a report on each audit conducted under subsection (a).
SEC. 7. SUNSET.
No loan guarantee may be approved under this Act after December 31, 2006.
SEC. 8. RETRANSMISSION OF LOCAL TELEVISION BROADCAST STATIONS.
An applicant shall be subject to applicable rights, obligations, and limitations of title 17, United States Code. If a local broadcast station requests carriage of its signal and is located in a market not served by a satellite carrier providing service under a statutory license under section 122 of title 17, United States Code, the applicant shall carry the signal of that station without charge, and shall be subject to the applicable rights, obligations, and limitations of sections 338, 614, and 615 of the Communications Act of 1934.
SEC. 9. DEFINITIONS.
In this Act:
(1) Affiliate._The term "affiliate"_
(A) means any person or entity that controls, or is controlled by, or is under common control with, another person or entity; and
(B) may include any individual who is a director or senior management officer of an affiliate, a shareholder controlling more than 25 percent of the voting securities of an affiliate, or more than 25 percent of the ownership interest in an affiliate not organized in stock form.
(2) Unserved Area._The term "unserved area" means any area (as determined using standards employed by the Federal Communications Commission) that_
(A) is outside the grade B contour of the local television broadcast signals serving a particular dominant market area; and
(B) does not have access to such signals by other widely marketed means.
(3) Underserved Area._The term "underserved area" means any area that does not receive local television broadcast signals over a commercial for-profit direct-to-home satellite distribution system.
(4) Common terms._Except as provided in paragraphs (1) through (3), any term used in this Act that is defined in the Communications Act of 1934 (47 U.S.C. 151 et seq.) has the meaning given that term in the Communications Act of 1934.
SEC. 10. AUTHORIZATIONS OF APPROPRIATIONS.
(a) Cost of Loan Guarantees._For the cost of the loans guaranteed under this Act, including the cost of modifying the loans, as defined in section 502 of the Congressional Budget Act of 1974 (2 U.S.C. 661(a)), there are authorized to be appropriated for fiscal years 2001 through 2006, such amounts as may be necessary.
(b) Cost of Administration._There is hereby authorized to be appropriated such sums as may be necessary to carry out the provisions of this Act, other than to cover costs under subsection (a).
(c) Availability._Any amounts appropriated pursuant to the authorizations of appropriations in subsections (a) and (b) shall remain available until expended.