7 U.S.C. § 940c — Cushion of credit payments program

Page 546 TITLE 7—AGRICULTURE § 940a amended Pub. L. 103–354, title II, § 235(a)(13), Oct. 13, 1994, 108 Stat. 3221.) Editorial Notes REFERENCES IN TEXT The Consolidated Farm and Rural Development Act, referred to in text, is title III of Pub. L. 87–128, Aug. 8, 1961, 75 Stat. 307, which is classified principally to chap- ter 50 (§ 1921 et seq.) of this title. For complete classi- fication of the Act to the Code, see Short Title note set out under section 1921 of this title and Tables. AMENDMENTS 1994—Pub. L. 103–354 substituted ‘‘Secretary’’ for ‘‘Ad- ministrator’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective May 11, 1973, see section 12 of Pub. L. 93–32, set out as a note under section 930 of this title. § 940a. Repealed. Pub. L. 104–127, title VII, § 780, Apr. 4, 1996, 110 Stat. 1151 Section, act May 20, 1936, ch. 432, title III, § 311, as added Oct. 18, 1986, Pub. L. 99–500, § 101(m) [title VI, § 623], 100 Stat. 1783–308, 1783–333, and Oct. 30, 1986, Pub. L. 99–591, § 101(m) [title VI, § 623], 100 Stat. 3341–308, 3341–333; amended Oct. 13, 1994, Pub. L. 103–354, title II, § 235(a)(7), (13), 108 Stat. 3221, related to privatization demonstration program. § 940b. Use of funds A borrower of an insured or guaranteed elec- tric loan under this chapter may, without re- striction or prior approval of the Secretary, in- vest 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.) Editorial Notes AMENDMENTS 1994—Pub. L. 103–354 substituted ‘‘Secretary’’ for ‘‘Ad- ministrator’’. § 940c. Cushion of credit payments program (a) Establishment (1) In general (A) Development and promotion of program The Secretary shall develop and promote a program to encourage borrowers to volun- tarily make deposits into cushion of credit accounts established within the Rural Elec- trification and Telephone Revolving Fund. (B) Termination Effective on December 20, 2018, no deposits may be made under subparagraph (A). (2) Interest (A) In general Amounts in each cushion of credit account shall accrue interest to the borrower at a rate of 5 percent per annum. (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 A borrower may reduce the balance of its cushion of credit account only if the amount obtained from the reduction is used to make scheduled payments on loans made or guar- anteed under this chapter. (B) Prepayment Notwithstanding subparagraph (A) and subject to subparagraph (C), beginning on December 20, 2018, and ending with Sep- tember 30, 2020, a borrower may, at the sole discretion of the borrower, reduce the bal- ance of its cushion of credit account if the amount obtained from the reduction is used to prepay loans made or guaranteed under this chapter. (C) No prepayment premium Notwithstanding any other provision of this chapter, no prepayment premium shall be imposed or collected with respect to that portion of a loan that is prepaid by a bor- rower in accordance with subparagraph (B). (D) Mandatory funding Notwithstanding section 661c of title 2, out of any funds in the Treasury not otherwise appropriated, the Secretary of the Treasury shall make available such sums as necessary to cover any loan modification costs as de- fined in section 661a of title 2. (b) Uses of cushion of credit payments (1) In general (A) Cash balance Cushion of credit payments shall be held in the Rural Electrification and Telephone Revolving Fund as a cash balance in the cushion of credit accounts of borrowers. (B) Interest All cash balance amounts (obtained from cushion of credit payments, loan payments, and other sources) held by the Fund shall bear interest to the Fund at a rate equal to the weighted average rate on outstanding certificates of beneficial ownership issued by the Fund. (C) Credits The amount of interest accrued on the cash balances shall be credited to the Fund as an offsetting reduction to the amount of interest paid by the Fund on its certificates of beneficial ownership. (2) Rural economic development subaccount The Secretary shall maintain a subaccount within the Rural Electrification and Tele- phone Revolving Fund to which shall be cred- ited, on a monthly basis, a sum determined by multiplying the outstanding cushion of credit payments made after October 1, 1987, by the difference (converted to a monthly basis) be- Page 547 TITLE 7—AGRICULTURE § 940c–1 tween the average weighted interest rate paid on outstanding certificates of beneficial own- ership issued by the Fund and 5 percent. (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.) Editorial Notes AMENDMENTS 2018—Subsec. (a)(1). Pub. L. 115–334, § 6503(1), des- ignated existing provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (a)(2). Pub. L. 115–334, § 6503(2), designated ex- isting provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (a)(3). Pub. L. 115–334, § 6503(3), designated ex- isting provisions as subpar. (A), inserted heading, and added subpar. (B). Subsec. (b)(2). Pub. L. 115–334, § 6504(b), struck out subpar. (A) designation and heading before ‘‘The Sec- retary shall’’, substituted ‘‘5 percent.’’ for ‘‘the 5 per- cent rate of interest provided to borrowers on cushion of credit payments.’’, and struck out subpars. (B) to (E) which related to grants, repayments, proceeds, and number of grants, respectively. 1994—Subsecs. (a)(1), (b)(2)(A) to (C). Pub. L. 103–354 substituted ‘‘Secretary’’ for ‘‘Administrator’’. § 940c–1. Guarantees for bonds and notes issued for electrification or telephone purposes (a) In general (1) Guarantees Subject to subsection (b), the Secretary shall guarantee payments on bonds or notes issued by cooperative or other lenders orga- nized on a not-for-profit basis, if the proceeds of the bonds or notes are used to make utility infrastructure loans, or refinance bonds or notes issued for those purposes, to a borrower that has at any time received, or is eligible to receive, a loan under this chapter. (2) Terms A bond or note guaranteed under this sec- tion shall, by agreement between the Sec- retary 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 meth- ods described in clauses (i) and (ii). (b) Limitations (1) Outstanding loans A lender shall not receive a guarantee under this section for a bond or note if, at the time of the guarantee, the total principal amount of such guaranteed bonds or notes outstanding of the lender would exceed the principal amount of outstanding loans of the lender for eligible purposes described in subsection (a)(1). (2) Qualifications The 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 with- out a guarantee; or (C) the lender has not provided to the Sec- retary 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 The total amount of guarantees provided by the Secretary under this section during a fis- cal year shall not exceed $1,000,000,000, subject to the availability of funds under subsection (e). (c) Fees (1) In general A lender that receives a guarantee issued under this section on a bond or note shall pay a fee to the Secretary. (2) Amount (A) In general The amount of the annual fee paid for the guarantee of a bond or note under this sec- tion shall be equal to 30 basis points of the amount of the unpaid principal of the bond or note guaranteed under this section. (B) Prohibition Except as otherwise provided in this sub- section and subsection (e)(2), no other fees shall be assessed. (3) Payment (A) In general A lender shall pay the fees required under this subsection on a semiannual basis. (B) Structured schedule The Secretary shall, with the consent of the lender, structure the schedule for pay- ment of the fee to ensure that sufficient funds are available to pay the subsidy costs for note or bond guarantees as provided for in subsection (e)(2). (4) Rural economic development subaccount Subject to subsection (e)(2), fees collected under this subsection shall be— (A) deposited into the rural economic de- velopment subaccount that shall be main- tained 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 sec- tion 940c(b)(2) of this title. (d) Guarantees (1) In general A guarantee issued under this section shall— (A) be for the full amount of a bond or note, including the amount of principal, in- terest, and call premiums;