§ 1104. — Administration of loan guarantees.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 47USC1104]
TITLE 47--TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS
CHAPTER 10--LOCAL TV
Sec. 1104. Administration of loan guarantees
(a) In general
The Administrator of the Rural Utilities Service (in this chapter
referred to as the ``Administrator'') shall issue and otherwise
administer loan guarantees that have been approved by the Board in
accordance with sections 1102 and 1103 of this title.
(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 chapter, 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
chapter;
(C) shall remain sufficiently capitalized; and
(D) shall submit to, and cooperate fully with, any audit of
the applicant under section 1105(a)(2) of this title.
(2) Collateral
(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 chapter.
(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 chapter 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
chapter, 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, or
that value approved by the Board under section 1103(d)(3)(B)(iii) of
this title.
(4) Perfected security interest
With respect to a loan guaranteed under this chapter, 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 chapter 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 chapter may assign the
loan guaranteed under this chapter in whole or in part, subject to such
requirements as the Board may prescribe.
(d) Expiration of loan guarantee upon stripping
Notwithstanding subsections (c), (e), and (h) of this section, a
loan guarantee under this chapter shall have no force or effect if any
part of the guaranteed portion of the loan is transferred separate and
apart from the unguaranteed portion of the loan.
(e) Adjustment
The Board may approve the adjustment of any term or condition of a
loan guarantee or a loan guaranteed under this chapter, including the
rate of interest, time of payment of principal or interest, or security
requirements only if--
(1) the adjustment is consistent with the financial interests of
the United States;
(2) consent has been obtained from the parties to the loan
agreement;
(3) the adjustment is consistent with the underwriting criteria
developed under section 1103(g) of this title;
(4) the adjustment does not adversely affect the interest of the
Federal Government in the assets or collateral of the applicant;
(5) the adjustment 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
adjustment.
(f) Performance schedules
(1) Performance schedules
An applicant for a loan guarantee under this chapter for a
project covered by section 1103(e)(1) \1\ of this title shall enter
into stipulated performance schedules with the Administrator with
respect to the signals to be provided through the project.
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\1\ See References in Text note below.
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(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
chapter if the applicant fails to meet its stipulated performance
schedule under that paragraph.
(g) 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 chapter is intended, with the provisions of this
chapter, any regulations under this chapter, 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.
(h) Commercial validity
A loan guarantee under this chapter 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 respective successor in interest) engaged in fraud or
misrepresentation in making or contracting to make such loan.
(i) Defaults
The Board shall prescribe regulations governing defaults on loans
guaranteed under this chapter, including the administration of the
payment of guaranteed amounts upon default.
(j) Recovery of payments
(1) In general
The Administrator shall be entitled to recover from an applicant
for a loan guarantee under this chapter 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 chapter 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 or other interests pending sale
or disposal of such property or other interests under
subparagraph (A).
(k) 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 chapter. 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 chapter, 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.
(l) 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 chapter, the regulations under this chapter, or any
conditions which were duly agreed to, and to secure any other
appropriate relief, including relief against any affiliate of the
applicant.
(m) Attachment
No attachment or execution may be issued against the Administrator
or any property in the control of the Administrator pursuant to this
chapter before the entry of a final judgment (as to which all rights of
appeal have expired) by a Federal, State, or other court of competent
jurisdiction against the Administrator in a proceeding for such action.
(n) Fees
(1) Application fee
The Board shall charge and collect from an applicant for a loan
guarantee under this chapter a fee to cover the cost of the Board in
making necessary determinations and findings with respect to the
loan guarantee application under this chapter. The amount of the fee
shall be reasonable.
(2) Loan guarantee origination fee
The Board shall charge, and the Administrator may collect, a
loan guarantee origination fee with respect to the issuance of a
loan guarantee under this chapter.
(3) Use of fees collected
(A) In general
Any fee collected under this subsection shall be used,
subject to subparagraph (B), to offset administrative costs
under this chapter, including costs of the Board and of the
Administrator.
(B) Subject to appropriations
The authority provided by this subsection shall be effective
only to such extent or in such amounts as are provided in
advance in appropriations Acts.
(C) Limitation on fees
The aggregate amount of fees imposed by this subsection
shall not exceed the actual amount of administrative costs under
this chapter.
(o) Requirements relating to affiliates
(1) Indemnification
The United States shall be indemnified by any affiliate
(acceptable to the Board) of an applicant for a loan guarantee under
this chapter 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 chapter, and the
regulations prescribed under this chapter, 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 (f) of this section; 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 chapter may not
transfer any part of the proceeds of the loan to an affiliate.
(p) 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 chapter and such person or entity is
insolvent or is a debtor in a case under title 11, the debts due to the
United States shall be satisfied first.
(2) A discharge in bankruptcy under title 11 shall not release a
person or entity from an obligation to the United States in connection
with a loan guarantee under this chapter.
(Pub. L. 106-553, Sec. 1(a)(2) [title X, Sec. 1005], Dec. 21, 2000, 114
Stat. 2762, 2762A-134; Pub. L. 107-171, title VI, Sec. 6404(b)(2), May
13, 2002, 116 Stat. 430.)
References in Text
This chapter, referred to in text, was in the original ``this Act'',
and was translated as reading ``this title''. See References in Text
note set out under section 1101 of this title.
Section 1103(e)(1) of this title, referred to in subsec. (f)(1), was
in the original a reference to section 4(e)(1), and was translated as
referring to section 1004(e)(1) of title X of H.R. 5548, as enacted by
Pub. L. 106-553, Sec. 1(a)(2), to reflect the probable intent of
Congress. Pub. L. 106-553 does not contain a section 4 and section 1004
relates to projects to be given priority for loan guarantees.
Amendments
2002--Subsec. (a). Pub. L. 107-171, Sec. 6404(b)(2)(A), made
technical amendments to references in original Act which appear in text
as references to sections 1102 and 1103 of this title.
Subsec. (b)(1)(D). Pub. L. 107-171, Sec. 6404(b)(2)(B)(i), made
technical amendment to reference in original Act which appears in text
as a reference to section 1105(a)(2) of this title.
Subsec. (b)(3). Pub. L. 107-171, Sec. 6404(b)(2)(B)(ii), made
technical amendment to reference in original Act which appears in text
as a reference to section 1103(d)(3)(B)(iii) of this title.
Subsec. (e)(3). Pub. L. 107-171, Sec. 6404(b)(2)(C), made technical
amendment to reference in original Act which appears in text as a
reference to section 1103(g) of this title.
Section Referred to in Other Sections
This section is referred to in sections 1103, 1109 of this title.
