§ 946. — Capitalization.
[Laws in effect as of January 7, 2003]
[Document not affected by Public Laws enacted between
January 7, 2003 and December 19, 2003]
[CITE: 7USC946]
TITLE 7--AGRICULTURE
CHAPTER 31--RURAL ELECTRIFICATION AND TELEPHONE SERVICE
SUBCHAPTER IV--RURAL TELEPHONE BANK
Sec. 946. Capitalization
(a) Federal and borrower subscriptions; Federal limitation; report to
President, transmittal to Congress; net collection proceeds
The telephone bank's capital shall consist of capital subscribed by
the United States, by borrowers from the telephone bank, by corporations
and public bodies eligible to become borrowers from the telephone bank,
and by organizations controlled by such borrowers, corporations, and
public bodies. Beginning with the fiscal year 1971 and for each fiscal
year thereafter but not later than fiscal year 1991, the United States
shall furnish capital for the purchase of class A stock and there are
hereby authorized to be appropriated such amounts, not to exceed
$30,000,000 annually, for such purchase until such class A stock shall
equal $600,000,000: Provided, That on or before July 1, 1975, the
Secretary shall make a report to the President for transmittal to the
Congress on the status of capitalization of the telephone bank by the
United States with appropriate recommendations. As used in this section
and section 931 of this title, the term ``net collection proceeds''
shall be deemed to mean payments from and after July 1, 1969, of
principal and interest on loans heretofore or hereafter made under
section 922 of this title, less an amount representing interest payable
to the Secretary of the Treasury on loans to the Secretary for telephone
purposes.
(b) Stock classification; voting stock; one vote rule
The capital stock of the telephone bank shall consist of three
classes, class A, class B, and class C, the rights, powers, privileges,
and preferences of the separate classes to be as specified, not
inconsistent with law, in the bylaws of the telephone bank. Class B and
class C stock shall be voting stock, but no holder of said stock shall
be entitled to more than one vote, nor shall class B and class C
stockholders, regardless of their number, which are owned or controlled
by the same person, group of persons, firm, association, or corporation,
be entitled in any event to more than one vote.
(c) Class A stock; issuance to Secretary of Agriculture and redemption;
cumulative return
Class A stock shall be issued only to the Secretary on behalf of the
United States in exchange for capital furnished to the telephone bank
pursuant to subsection (a) of this section, and such class A stock shall
be redeemed and retired by the telephone bank as soon as practicable
after September 30, 1995, but not to the extent that the Telephone Bank
Board determines that such retirement will impair the operations of the
telephone bank: Provided, That the minimum amount of class A stock that
shall be retired each year after said date shall equal the amount of
class B stock sold by the telephone bank during such year. Class A stock
shall be entitled to a return, payable from income, at the rate of 2 per
centum per annum on the amounts of said class A stock actually paid into
the telephone bank. Such return shall be cumulative and shall be payable
annually into miscellaneous receipts of the Treasury.
(d) Class B stock; borrowers as holders; dividend prohibition; patronage
refunds
Class B stock shall be held only by recipients of loans under
section 948 of this title. Borrowers receiving loan funds pursuant to
section 948(a)(1) or (2) of this title shall be required to invest in
class B stock 5 per centum of the amount of loan funds so provided, by
paying an amount equal to 5 per centum of the amount of each loan
advance, at the time of such advance. No dividends shall be payable on
class B stock. All holders of class B shall be entitled to patronage
refunds in class B stock under terms and conditions to be specified in
the bylaws of the telephone bank.
(e) Class C stock; borrowers as purchasers; dividends
Class C stock shall be available for purchase and shall be held only
by borrowers, or by corporations and public bodies eligible to borrow
under section 948 of this title, or by organizations controlled by such
borrowers, corporations and public bodies, and shall be entitled to
dividends in the manner specified in the bylaws of the telephone bank.
Such dividends shall be payable only from income and, until all class A
stock is retired, shall not exceed the current average rate payable on
its telephone debentures.
(f) Special fund equivalents
If a firm, association, corporation, or public body is not
authorized under the laws of the jurisdiction in which it is organized
to acquire stock of the telephone bank, the telephone bank shall, in
lieu thereof, permit such organization to pay into a special fund of the
telephone bank a sum equivalent to the amount of stock to be purchased.
Each reference in this subchapter to capital stock, or to class B, or
class C stock, shall include also the special fund equivalents of such
stock, and to the extent permitted under the laws of the jurisdiction in
which such organization is organized, a holder of special fund
equivalents of class B, or class C stock, shall have the same rights and
status as a holder of class B or class C stock, respectively. The rights
and obligations of the telephone bank in respect of such special fund
equivalent shall be identical to its rights and obligations in respect
of class B or class C stock, respectively.
(g) Patronage refunds from remaining earnings after provision for
operating expenses, reserves for losses, payments in lieu of
taxes, and returns on class A and C stock
After payment of all operating expenses of the telephone bank,
including interest on its telephone debentures, setting aside
appropriate funds for the reserve for loan losses, and making payments
in lieu of taxes, and returns on class A stock as provided in subsection
(c) of this section, and on class C stock, the Telephone Bank Board
shall annually set aside the remaining earnings of the telephone bank
for patronage refunds in accordance with the bylaws of the telephone
bank. The telephone bank may not establish any reserve other than the
reserves referred to in this subsection and in subsection (h) of this
section.
(h) Reserve for losses due to interest rate fluctuations
There is hereby established in the telephone bank a reserve for
losses due to interest rate fluctuations. Within 30 days after December
22, 1987, the Governor of the telephone bank shall transfer to the
reserve for losses due to interest rate fluctuations all amounts in the
reserve for contingencies as of December 22, 1987. All amounts so
transferred shall not be transferred, directly or indirectly, to the
reserve for contingencies. Amounts in the reserve for interest rate
fluctuations may be expended only to cover operating losses of the
telephone bank (other than losses attributable to loan defaults) and
only after taking into consideration any recommendations made by the
General Accounting Office under section 1413(b) of the Omnibus Budget
Reconciliation Act of 1987.
(i) Investment of RTB Equity Fund
The Governor of the telephone bank may invest in obligations of the
United States the amounts in the account in the Treasury of the United
States numbered 12X8139 (known as the ``RTB Equity Fund'').
(May 20, 1936, ch. 432, title IV, Sec. 406, as added Pub. L. 92-12,
Sec. 2, May 7, 1971, 85 Stat. 33; amended Pub. L. 93-32, Sec. 5, May 11,
1973, 87 Stat. 70; Pub. L. 94-273, Sec. 2(2), Apr. 21, 1976, 90 Stat.
375; Pub. L. 97-98, title XVI, Sec. 1607, Dec. 22, 1981, 95 Stat. 1347;
Pub. L. 100-203, title I, Sec. 1413(a), (c), Dec. 22, 1987, 101 Stat.
1330-26; Pub. L. 101-624, title XXIII, Secs. 2364, 2367(a), Nov. 28,
1990, 104 Stat. 4044; Pub. L. 103-129, Sec. 2(c)(9), Nov. 1, 1993, 107
Stat. 1365; Pub. L. 103-354, title II, Sec. 235(a)(11), (13), Oct. 13,
1994, 108 Stat. 3221; Pub. L. 104-127, title VII, Sec. 772(b)(3), Apr.
4, 1996, 110 Stat. 1149.)
References in Text
Section 1413(b) of the Omnibus Budget Reconciliation Act of 1987,
referred to in subsec. (h), is section 1413(b) of Pub. L. 100-203, title
I, Dec. 22, 1987, 101 Stat. 1330-26, which is not classified to the
Code, and which mandated a study by the General Accounting Office of the
operations of the telephone bank and directed that GAO report
recommendations to Congress within 180 days of Dec. 22, 1987.
Amendments
1996--Subsec. (a). Pub. L. 104-127 struck out ``pursuant to section
903(a) of this title'' after ``telephone purposes'' in last sentence.
1994--Pub. L. 103-354 substituted ``Secretary'' for
``Administrator'' in last sentence of subsec. (a) and ``Secretary'' for
``Administrator of the Rural Electrification Administration'' in subsec.
(c).
1993--Subsec. (i). Pub. L. 103-129 added subsec. (i).
1990--Subsec. (d). Pub. L. 101-624, Sec. 2364, inserted before
period at end of second sentence ``, by paying an amount equal to 5 per
centum of the amount of each loan advance, at the time of such
advance''.
Subsec. (h). Pub. L. 101-624, Sec. 2367(a), inserted after second
sentence ``All amounts so transferred shall not be transferred, directly
or indirectly, to the reserve for contingencies.'' and substituted
``Omnibus Budget Reconciliation'' for ``Rural Telephone Bank Borrowers
Fairness''.
1987--Subsec. (g). Pub. L. 100-203, Sec. 1413(c), substituted ``the
reserve for loan losses'' for ``reserves for losses'', and inserted at
end ``The telephone bank may not establish any reserve other than the
reserves referred to in this subsection and in subsection (h) of this
section.''
Subsec. (h). Pub. L. 100-203, Sec. 1413(a), added subsec. (h).
1981--Subsec (a). Pub. L. 97-98, Sec. 1607(1), inserted ``but not
later than fiscal year 1991'' after ``thereafter,'' and substituted
``$600,000'' for ``$300,000''.
Subsec. (c). Pub. L. 97-98, Sec. 1607(2), substituted ``September
30, 1995'' for ``September 30, 1985'', and struck out ``and after the
amount of class A and class B stock totals $400,000,000'' after ``said
date''.
1976--Subsec. (c). Pub. L. 94-273 substituted ``September'' for
``June''.
1973--Subsec. (a). Pub. L. 93-92 struck out ``from net collection
proceeds in the rural telephone account created under subchapter III of
this chapter'' after ``appropriated''.
Effective Date of 1990 Amendment
Section 2368 of Pub. L. 101-624 provided that:
``(a) In General.--Except as provided in subsection (b), this
subtitle and the amendments made by this subtitle [subtitle F
(Secs. 2351-2368) of title XXIII of Pub. L. 101-624, enacting sections
918 and 925 to 928 of this title, amending this section and sections
924, 932, 935, 936, 939, 945, 948, and 950 of this title and enacting
provisions set out as notes under section 901 of this title] shall take
effect on the date of enactment of this Act [Nov. 28, 1990].
``(b) Technical Amendments.--The amendments made by section 2367
[amending this section and section 948 of this title] shall take effect
as if such amendments had been included in chapter 2 [Secs. 1411-1414]
of subtitle D of title I of the Omnibus Budget Reconciliation Act of
1987 [Pub. L. 100-203] on the date of enactment of such chapter [Dec.
22, 1987].''
Effective Date of 1981 Amendment
Amendment by Pub. L. 97-98 effective Dec. 22, 1981, see section 1801
of Pub. L. 97-98, set out as an Effective Date note under section 4301
of this title.
Effective Date of 1973 Amendment
Amendment by Pub. L. 93-32 effective May 11, 1973, see section 12 of
Pub. L. 93-32, set out as an Effective Date note under section 930 of
this title.
Effective Date
Section effective May 7, 1971, see section 7 of Pub. L. 92-12, set
out as a note under section 921a of this title.
Section Referred to in Other Sections
This section is referred to in sections 931, 948, 950 of this title.
