GUARANTEES FOR BONDS AND NOTES ISSUED FOR ELECTRIFICATION OR TELEPHONE PURPOSES.

SEC. 6101. GUARANTEES FOR BONDS AND NOTES ISSUED FOR ELECTRIFICATION OR TELEPHONE PURPOSES. (a) In General.—The Rural Electrification Act of 1936 is amended by inserting after section 313 (7 U.S.C. 940c) the following: “SEC. 313A. GUARANTEES FOR BONDS AND NOTES ISSUED FOR ELECTRIFICATION OR TELEPHONE PURPOSES. “(a) In General.—Subject to subsection (b), the Secretary shall guarantee payments on bonds or notes issued by cooperative or other lenders organized on a not-for-profit basis if the proceeds of the bonds or notes are used to make loans for any electrification or telephone purpose eligible for assistance under this Act, including section 4 or 201 or to refinance bonds or notes issued for such purposes. “(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 electrification or telephone purposes that have been made concurrently with loans approved for such purposes under this Act. “(2) Generation of electricity.—The Secretary shall not guarantee payment on a bond or note issued by a lender, the proceeds of which are used for the generation of electricity. “(3) 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— 116 STAT. 414 “(A) the lender does not have appropriate expertise or experience or is otherwise not qualified to make loans for electrification or telephone purposes; “(B) the bond or note issued by the lender would not be investment grade quality without a guarantee; or “(C) the lender has not provided to the Secretary a list of loan amounts approved by the lender that the lender certifies are for eligible purposes described in subsection (a). “(4) Interest rate reduction.— “(A) In general.—Except as provided in subparagraph (B), a lender may not use any amount obtained from the reduction in funding costs as a result of the guarantee of a bond or note under this section to reduce the interest rate on a new or outstanding loan. “(B) Concurrent loans.—A lender may use any amount described in subparagraph (A) to reduce the interest rate on a loan if the loan is— “(i) made by the lender for electrification or telephone projects that are eligible for assistance under this Act; and “(ii) made concurrently with a loan approved by the Secretary under this Act for such a project, as provided in section 307. “(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.—The amount of an annual fee paid for the guarantee of a bond or note under this section shall be equal to 30 basis points of the amount of the unpaid principal of the bond or note guaranteed under this section. “(3) Payment.—A lender shall pay the fees required under this subsection on a semiannual basis. “(4) Rural economic development subaccount.—Subject to subsection (e)(2), fees collected under this subsection shall be— “(A) deposited into the rural economic development subaccount maintained under section 313(b)(2)(A), to remain available until expended; and “(B) used for the purposes described in section 313(b)(2)(B). “(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, interest, and call premiums; “(B) be fully assignable and transferable; and “(C) represent the full faith and credit of the United States. “(2) Limitation.—To ensure that the Secretary has the resources necessary to properly examine the proposed guarantees, the Secretary may limit the number of guarantees issued under this section to 5 per year. “(3) Department opinion.—On the timely request of a lender, the General Counsel of the Department of Agriculture shall provide the Secretary with an opinion regarding the116 STAT. 415 validity and authority of a guarantee issued to the lender under this section. “(e) Authorization of Appropriations.— “(1) In general.—There are authorized to be appropriated such sums as are necessary to carry out this section. “(2) Fees.—To the extent that the amount of funds appropriated for a fiscal year under paragraph (1) are not sufficient to carry out this section, the Secretary may use up to Va of the fees collected under subsection (c) for the cost of providing guarantees of bonds and notes under this section before depositing the remainder of the fees into the rural economic development subaccount maintained under section 313(b)(2)(A). “(f) Termination.—The authority provided under this section shall terminate on September 30, 2007.”. (b) Administration.— (1) Regulations.—Not later than 180 days after the date of enactment of this Act, the Secretary of Agriculture shall promulgate regulations to carry out the amendments made by this section. (2) Implementation.—Not later than 240 days after the date of enactment of this Act, the Secretary shall implement the amendment made by this section.