§ 1103. — Approval 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: 47USC1103]
TITLE 47--TELEGRAPHS, TELEPHONES, AND RADIOTELEGRAPHS
CHAPTER 10--LOCAL TV
Sec. 1103. Approval of loan guarantees
(a) Authority to approve loan guarantees
Subject to the provisions of this section and consistent with the
purpose of this chapter, the Board may approve loan guarantees under
this chapter.
(b) Regulations
(1) Requirements
The Administrator (as defined in section 1104 of this title),
under the direction of and for approval by the Board, shall
prescribe regulations to implement the provisions of this chapter
and shall do so not later than 120 days after funds authorized to be
appropriated under section 1109 of this title have been appropriated
in a bill signed into law.
(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 chapter;
(B) set forth time periods for the review and consideration
by the Board of applications to be submitted to the Board under
this chapter, 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 chapter;
(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 chapter;
(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 chapter; and
(F) include such other provisions consistent with the
purpose of this chapter as the Board considers appropriate.
(3) Construction
(A) Nothing in this chapter 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 chapter.
(B) If any provision of this chapter 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
chapter, 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 chapter only to the
extent provided for in advance in appropriations Acts, and the Board may
accept credit risk premiums from a non-Federal source in order to cover
the cost of a loan guarantee under this chapter, to the extent that
appropriations of budget authority are insufficient to cover such costs.
(d) Requirements and criteria applicable to approval
(1) In general
The Board shall utilize the underwriting criteria developed
under subsection (g) of this section, and any relevant information
provided by the departments and agencies with which the Board
consults under section 1102 of this title, to determine which loans
may be eligible for a loan guarantee under this chapter.
(2) Prerequisites
In addition to meeting the underwriting criteria under paragraph
(1), a loan may not be guaranteed under this chapter 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 a nonserved area or underserved
area;
(B) the proceeds of the loan will not be used for operating,
advertising, or promotion expenses, or for the acquisition of
licenses for the use of spectrum in any competitive bidding
under section 309(j) of this title;
(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
a nonserved area or underserved area and is commercially viable;
(D)(i) the loan--
(I) is provided by any entity engaged in the business of
commercial lending--
(aa) if the loan is made in accordance with loan-to-
one-borrower and affiliate transaction restrictions to
which the entity is subject under applicable law; or
(bb) if item (aa) does not apply, the loan is made
only to a borrower that is not an affiliate of the
entity and only if the amount of the loan and all
outstanding loans by that entity to that borrower and
any of its affiliates does not exceed 10 percent of the
net equity of the entity; or
(II) is provided by a nonprofit corporation, including
the National Rural Utilities Cooperative Finance
Corporation, engaged primarily in commercial lending, if the
Board determines that such nonprofit corporation has one or
more issues of outstanding long-term debt that is rated
within the highest 3 rating categories of a nationally
recognized statistical rating organization;
(ii) if the loan is provided by a lender described in clause
(i)(II) and the Board determines that the making of the loan by
such lender will cause a decline in such lender's debt rating as
described in that clause, the Board at its discretion may
disapprove the loan guarantee on this basis;
(iii) no loan may be made for purposes of this chapter by a
governmental entity or affiliate thereof, or by the Federal
Agricultural Mortgage Corporation, or any institution supervised
by the Office of Federal Housing Enterprise Oversight, the
Federal Housing Finance Board, or any affiliate of such
entities;
(iv) any loan must have terms, in the judgment of the Board,
that are consistent in material respects with the terms of
similar obligations in the private capital market;
(v) for purposes of clause (i)(I)(bb), the term ``net
equity'' means the value of the total assets of the entity, less
the total liabilities of the entity, as recorded under generally
accepted accounting principles for the fiscal quarter ended
immediately prior to the date on which the subject loan is
approved;
(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 or in consultation with persons or entities deemed
appropriate 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) of this section.
(3) Protection of United States financial interests
The Board may not approve the guarantee of a loan under this
chapter unless--
(A) the Board has been given documentation, assurances, and
access to information, persons, and entities necessary, as
determined by the Board, to address issues relevant to the
review of the loan by the Board for purposes of this chapter;
and
(B) the Board makes a determination in writing that--
(i) to the best of its knowledge upon due inquiry, 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) the value of collateral provided by an applicant
is at least equal to the unpaid balance of the loan amount
covered by the loan guarantee (the ``Amount'' for purposes
of this clause); and if the value of collateral provided by
an applicant is less than the Amount, the additional
required collateral is provided by any affiliate of the
applicant;
(iv) all necessary and required regulatory and other
approvals, spectrum licenses, and delivery permissions have
been received for the loan and the project under the loan;
(v) the loan would not be available on reasonable terms
and conditions without a loan guarantee under this chapter;
and
(vi) repayment of the loan can reasonably be expected.
(e) Considerations
(1) Type of market
(A) Priority considerations
To the maximum extent practicable, the Board shall give
priority in the approval of loan guarantees under this chapter
in the following order:
(i) First, to projects that will serve households in
nonserved areas. In considering such projects, the Board
shall balance projects that will serve the largest number of
households with projects that will serve remote, isolated
communities (including noncontiguous States) in areas that
are unlikely to be served through market mechanisms.
(ii) Second, to projects that will serve households in
underserved areas. In considering such projects, the Board
shall balance projects that will serve the largest number of
households with projects that will serve remote, isolated
communities (including noncontiguous States) in areas that
are unlikely to be served through market mechanisms.
Within each category, the Board shall consider the project's
estimated cost per household and shall give priority to those
projects that provide the highest quality service at the lowest
cost per household.
(B) Additional consideration
The Board should give additional consideration to projects
that also provide high-speed Internet service.
(C) Prohibitions
The Board may not approve a loan guarantee under this
chapter for a project that--
(i) is designed primarily to serve 1 or more of the top
40 designated market areas (as that term is defined in
section 122(j) of title 17); or
(ii) would alter or remove National Weather Service
warnings from local broadcast signals.
(2) Other considerations
The Board shall consider other factors, which shall include
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 chapter by a means
reasonably compatible with existing systems or devices
predominantly in use.
(3) Further consideration
In implementing this chapter, the Board shall support the use of
loan guarantees for projects that would serve households not likely
to be served in the absence of loan guarantees under this chapter.
(f) Guarantee limits
(1) Limitation on aggregate value of loans
The aggregate value of all loans for which loan guarantees are
issued under this chapter (including the unguaranteed portion of
such loans) may not exceed $1,250,000,000.
(2) Guarantee level
A loan guarantee issued under this chapter may not exceed an
amount equal to 80 percent of a loan meeting in its entirety the
requirements of subsection (d)(2)(A) of this section. 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 80 percent of the applicable
portion.
(g) Underwriting criteria
Within the period provided for under subsection (b)(1) of this
section, 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 chapter, including
appropriate collateral and cash flow levels for loans guaranteed under
this chapter, and such other matters as the Board considers appropriate.
(h) Credit risk premiums
(1) Establishment and acceptance
(A) In general
The Board may establish and approve the acceptance of credit
risk premiums with respect to a loan guarantee under this
chapter in order to cover the cost, as defined in section
661a(5) of title 2, 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 chapter,
credit risk premiums shall be accepted from a non-Federal source
under this subsection on behalf of the applicant for the loan
guarantee.
(B) Authority limited by appropriations Acts
Credit risk premiums under this subsection shall be imposed
only to the extent provided for in advance in appropriations
Acts.
(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 chapter 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
661a(5) of title 2, of loan guarantees under this chapter, the
credit risk premium with respect to each loan guarantee shall be
reduced proportionately.
(C) Payment of premiums
Credit risk premiums under this subsection shall be paid to
an account (the ``Escrow Account'') established in the Treasury
which shall accrue interest and such interest shall be retained
by the account, subject to subparagraph (D).
(D) Deductions from Escrow Account
If a default occurs with respect to any loan guaranteed
under this chapter and the default is not cured in accordance
with the terms of the underlying loan or loan guarantee
agreement, the Administrator, in accordance with subsections (i)
and (j) of section 1104 of this title, shall liquidate, or shall
cause to be liquidated, all assets collateralizing such loan as
to which it has a lien or security interest. Any shortfall
between the proceeds of the liquidation net of costs and
expenses relating to the liquidation, and the guarantee amount
paid pursuant to this chapter shall be deducted from funds in
the Escrow Account and credited to the Administrator for payment
of such shortfall. At such time as determined under subsection
(d)(2)(E) of this section when all loans guaranteed under this
chapter have been repaid or otherwise satisfied in accordance
with this chapter and the regulations promulgated hereunder,
remaining funds in the Escrow Account, if any, shall be
refunded, on a pro rata basis, to applicants whose loans
guaranteed under this chapter were not in default, or where any
default was cured in accordance with the terms of the underlying
loan or loan guarantee agreement.
(i) Limitations on guarantees for certain cable operators
Notwithstanding any other provision of this chapter, no loan
guarantee under this chapter may be granted or used to provide funds for
a project that extends, upgrades, or enhances the services provided over
any cable system to an area that, as of December 21, 2000, is covered by
a cable franchise agreement that expressly obligates a cable system
operator to serve such area.
(j) Judicial review
The decision of the Board to approve or disapprove the making of a
loan guarantee under this chapter shall not be subject to judicial
review.
(k) Applicability of APA
Except as otherwise provided in subsection (j) of this section, the
provisions of subchapter II of chapter 5 and chapter 7 of title 5
(commonly referred to as the Administrative Procedure Act), shall apply
to actions taken under this chapter.
(Pub. L. 106-553, Sec. 1(a)(2) [title X, Sec. 1004], Dec. 21, 2000, 114
Stat. 2762, 2762A-129; Pub. L. 107-171, title VI, Sec. 6404(b)(1), 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.
Amendments
2002--Subsec. (b)(1). Pub. L. 107-171, Sec. 6404(b)(1)(A), made
technical amendments to references in original Act which appear in text
as references to sections 1104 and 1109 of this title.
Subsec. (d)(1). Pub. L. 107-171, Sec. 6404(b)(1)(B), made technical
amendment to reference in original Act which appears in text as a
reference to section 1102 of this title.
Subsec. (h)(2)(D). Pub. L. 107-171, Sec. 6404(b)(1)(C), made
technical amendment to reference in original Act which appears in text
as a reference to section 1104 of this title.
Section Referred to in Other Sections
This section is referred to in sections 1102, 1104, 1109 of this
title.
