Morgan County Rural Electric Membership Corp.. Nishnabotna Valley Rural Electric Cooperative_- RURAL ELECTRIC AND RURAL TELEPHONE SUPPLEMENTAL FINANCING TUESDAY, MARCH 21, 1967 HOUSE OF REPRESENTATIVES, The committee met, pursuant to call, at 10:05 a.m., in room 1301, Longworth House Office Building, Washington, D.C., Hon. W. R. Poage (chairman) presiding. Present: Representatives Poage, Gathings, McMillan, Abernethy, Abbitt, Stubblefield, Purcell, O'Neal, Foley, Vigorito, Jones of North Carolina, Dow, Nichols, Montgomery, Brasco, Stuckey, Rarick, Belcher, Teague, Mrs. May, Dole, Hansen, Wampler, Goodling, Miller, Burke, Mathias, Mayne, Zwach, Kleppe, Price, and Myers. Also present: Christine S. Gallagher, clerk; Hyde H. Murray, assistant counsel; Fowler C. West, assistant staff consultant; and Francis LeMay, consultant. The CHAIRMAN. The committee will please come to order. All of those who want to crowd in and stand are welcome to do so. We will be glad to have you do that. Our time is very limited. I see our former colleague Mr. Cliff McIntire. Will you please come up here, Mr. McIntire? He was one of our outstanding Members for many years. We are delighted to have you with us. It is my understanding that we have another former colleague here who has not made himself conspicuous. I understand that Mr. Stalbaum is here. He was another distinguished member of our committee. We are glad to have you with us, Mr. Stalbaum. There is another one of our very fine former members with us, Mr. Callan. We will be glad to have you up here. Are there any other former members of the committee present? Mr. Dole said that there were a number of prospective future members. All future prospective members of the committee will please take back seat. [Laughter.] The committee will please be in order. We have met this morning for consideration of H.R. 1400, H.R. 1401, H.R. 1402, H.R. 3121, H.R. 3314, H.R. 6026, and H.R. 7306, which I understand are probably identical bills all relating to supplemental financing for electric and telephone rural systems. H.R. 1400 and related bills, together with the Department report, will be made a part of the record at this point. 1 (H.R. 1400 by Mr. Poage, H.R. 1401 by Mr. Walker, H.R. 1402 by Mr. Resnick, H.R. 3121 by Mr. Anderson of Tennessee, H.R. 3314 by Mr. Hathaway, H.R. 6026 by Mr. O'Konski, and H.R. 7306 by Mr. Shipley are similar bills; the text of H.R. 1400 follows:) [H.R. 1400, 90th Cong., first sess.] A BILL To amend the Rural Electrification Act of 1936, as amended, to provide additional sources of financing for the rural electrification and rural telephone programs, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is hereby declared to be the policy of the Congress that the growing capital needs of the rural electric and telephone systems require the establishment of a rural electric bank and a rural telephone bank which will furnish assured and viable sources of supplementary financing, with the objective that said banks will become entirely privately owned, operated, and financed corporations. The Congress further finds that many rural electric and telephone systems require financing under the terms and conditions provided in titles I and II of the Rural Electrification Act of 1936, as amended, and declares that nothing in this Act shall be construed to change the loan purposes, terms, and conditions authorized in titles I and II. In order to effectuate this policy, the Rural Electrification Act of 1936, as amended (7 U.S.C. 901-924), is amended as hereinafter provided. SEC. 2. The Rural Electrification Act of 1936, as amended, is amended by adding the following four new titles: "TITLE III "SEC. 301. RURAL ELECTRIFICATION ACCOUNT.-There is hereby established in the Treasury of the United States an account, to be known as the rural electrification account, consisting of: "(1) all notes, bonds, obligations, and property delivered or assigned to the Administrator pursuant to loans heretofore or hereafter made under sections 4 and 5 of this Act, including notes, bonds, obligations, and property held in trust by him on behalf of the Secretary of the Treasury, as of the effective date of this title, which shall be transferred to and be assets of the rural electrification account; "(2) undisbursed balances of electrification loans made under sections 4 and 5, which as of the effective date of this title, shall be transferred to and be assets of the rural electrification account; "(3) all collections of principal and interest received on and after July 1. 1966, on notes, bonds, judgments, or other obligations made or held under title I of this Act, which shall be paid into and be assets of the rural electrification account; "(4) all appropriations for electrification loans made under the authority of section 3 of this Act and funds obtained in accordance therewith and the unexpended balances of any funds available on the effective date of this title for electrification loans under sections 4 and 5 of this Act, including any funds made available for electrification loans under the item 'Rural Electrification Administration,' in the Department of Agriculture Appropriation Acts current on the date of enactment of this title, and said appropriations, balances and funds shall be assets of the rural electrification accounts; and "(5) shares of the capital stock of the Rural Electric Bank acquired by investment of the rural electrification account pursuant to section 302 (b) (3) of this title, and moneys received from said bank upon retirement of said shares of stock in accordance with the provisions of title IV of this Act, which said shares, and moneys shall be assets of the rural electrification account. "SEC. 302. LIABILITIES AND USES OF ACCOUNT.-(a) The notes of the Administrator issued to the Secretary of the Treasury to obtain funds for loans under sections 4 and 5 of this Act, and all other liabilities against the appropriations or assets in the rural electrification account in connection with electrification loan operations shall be liabilities of the rural electrification account, and all other obligations against such appropriations or assets arising out of electri、 fication loan operations shall be obligations of the rural electrification account. 3. "(b) The assets of the rural electrification account shall be available for the. following purposes: "(1) loans under section 4 and 5 of this Act and for advances in connection therewith, except that no such loans shall be made in any year in excess of the amounts previously authorized therefor in appropriation Acts for such year or avaliable pursuant to section 3 of this Act; the amounts so authorized for loans and advances shall remain avaliable until expended; "(2) payment of interest as it accrues on loans to the Administrator from the Secretary of the Treasury for electrification purposes pursuant to section 3(a) of this Act; "(3) investment in the capital stock of the Rural Electric Bank in accordance with hection 406 (a) of this Act: Provided, That such investment shall be deemed paid in capital of the said bank notwithstanding that funds representing the proceeds from the purchase of such stock shall remain in the rural electrification account until requided for actual disbursement in cash by the said bank; and "(4) payment of principal when due on loans to the Administrator from the Secretary of the Treasury for electrification purposes pursuant to section 3(a) of this Act. SEC. 303. DEPOSIT OF ACCOUNT MONEYS.-Moneys in the rural electrification account shall remain on deposit in the Treasury of the United States until disbursed. "TITLE IV "SEC. 401. ESTABLISHMENT, GENERAL PURPOSES, AND STATUS OF THE ELECTRIC BANK.-There is hereby established a body corporate to be known as the Rural Electric Bank (hereinafter called the electric bank). "(b) The general purposes of the electric bank shall be to obtain an adequate supply of supplemental funds to the extent feasible from non-Federal sources, to utilize said funds in the making of loans under section 408 of this title, and to consider its operations to the extent practicable on a self-sustaining basis. "(c) The electric bank shall be deemed to be an instrumentality of the United States, and shall, for purposes of jurisdiction and venue, be deemed a citizen and The electric bank is authorized to make resident of the District of Columbia. payments to State, territorial, and local governments in lieu of property taxes upon real property and tangible personal property which was subject to State, territorial, and local taxation before acquisition by the electric bank. Such payment may be in the amounts, at the times, and upon such terms as the electric bank deems appropirate, but the electric bank shall be guided by the policy of making payments not in excess of the taxes which would have been payable upon such property in the condition in which it was acquired. "SEC. 402. GENERAL POWERS.-To carry out the specific powers herein authorized, the electric bank shall have power to (a) adopt, alter, and use a corporate seal; (b) sue and be sued in its corporate nane; (c) make contracts, leases, and cooperative agreements, or enter into other transactions as may be necessary in the conduct of its business, and on such terms as it may deem appropriate; (d) acquire, in any lawful manner, hold, maintain, use, and dispose of property; (e) accept gifts or donations of services, or of property in aid of any of the purposes herein authorized; (f) appoint such officers, attorneys, agents, and employees, vest them with such powers and duties, fix and pay such compensation to them for their services as the electric bank may determine; (g) determine the character of and the necessity for its obligations and expenditures, and the manner in which they shall be incurred, allowed, and paid; (h) execute, in accordance with its bylaws, all instruments necessary or appropriate in the exercise of any of its powers; (i) collect or compromise all obligations assigned to or held by it and all legal or equitable rights accruing to it in connection with the payment of such obligations until such time as such obligation may be referred to the Attorney General for suit or collection; and (j) exercise all such other powers as shall be necessary or incidental to carrying out its functions under this title. "SEC. 403. SPECIAL PROVISIONS GOVERNING ELECTRIC BANK AS AN AGENCY OF THE UNITED STATES UNTIL CONVERSION OF OWNERSHIP, CONTROL, AND OPERATION.-Until the ownership, control, and operation of the electric bank is converted as provided in section 410 (a) of this title and not thereafter "(a) the electric bank shall be an agency of the United States and shall be subject to the supervision and direction of the Secretary of Agriculture (hereinafter called the Secretary); 78-690-67 "(b) in order to perform its responsibilities under this title, the electric bank may utilize the facilities and the services of employees of the Rural Electrification Administration or of any other agency of the Department of Agriculture, without cost to the electric bank, except to the extent that administrative expenses are recovered by the electric bank under section 408(b) (2) of this title; "(c) notwithstanding the provisions of the second sentence of subsection (d) of section 303 of the Government Corporation Control Act, as amended (31 U.S.C. 868), all electric debentures issued by the electric bank shall be issued at such times, bear interest at such rates, and contain such other terms and conditions as have been or may be approved by the Secretary of the Treasury; "(d) the electric bank when designated for that purpose by the Secretary of the Treasury shall act as fiscal or other agent of the United States and when acting as such shall perform such duties as shall be prescribed by the Secretary of the Treasury; "(e) the electric bank shall have power to obtain services as authorized by section 15 of the Act of August 2, 1946 (5 U.S.C. 55a); to use the United States mails in the same manner and under the same conditions as the executive departments of the Federal Government; and shall have, in the payment of debts out of bankrupt, insolvent, and decedents' estates, the priority of the United States, except where such priority is waived by the electric bank; "(f) the electric bank shall be subject to the provisions of sections 507 (b) and 2679 of title 28, United States Code, and section 367 of the Revised Statutes (5 U.S.C. 316); and "(g) the total loans heretofore and hereafter made for electric generating facilities under title I and title IV shall not result in financing more than 5 per centum of the total electric generating capacity in the United States in service at any one time. "SEC. 404. GOVERNOR.-Subject to the provisions of section 410, the Administrator of the Rural Electrification Administration shall serve as the chief executive officer of the electric bank (herein called the Governor of the electric bank). Except as to matters specifically reserved to the Electric Bank Board in this title, the Governor of the electric bank shall exercise and perform all functions, powers, and duties of the electric bank. "SEC. 405. BOARD OF DIRECTORS.-(a) The management of the electric bank, within the limitations prescribed by law, shall be vested in a board of directors (herein called the 'Electric Bank Board') consisting of thirteen members. "(b) The Administrator of the Rural Electrification Administration and the Governor of the Farm Credit Administration shall be members of the Electric Bank Board. Five other members of the Electric Bank Board shall be designated by the President to serve at his pleasure, three of whom shall be officers or employees of the Department of Agriculture but not officers or employees of the Rural Electrification Administration, and two of whom shall be from the general public and not officers or employees of the Federal Government. The Administrator and other officers and employees of the Department of Agriculture and the Governor of the Farm Credit Administration shall serve as members without additional compensation. (c) As soon as practicable after the enactment of this title, the President of the United States shall appoint six additional members of the initial Electric Bank Board, to be selected from the directors, managers, and employees of any entities eligible to borrow from the electric bank and of organizations controlled by such entities, with due regard to fair representation of the rural electric systems of the Nation. The six members thus appointed shall serve until their successors have been elected in accordance with subsection (d). "(d) Within twelve months following the appointment of members of the initial Electric Bank Board pursuant to subsection (c), the Governor of the electric bank shall call a meeting of all entities then eligible to borrow from the electric bank and organizations controlled by such entities for the purpose of electing members of the Electric Bank Board. Each such entity and organization shall be entitled to notice of and shall have one noncumulative vote at said meeting and may vote by proxy. Five members of the Electric Bank Board shall be elected for a two-year term, one each from among the directors, managers, and employees of entities and organizations eligible to vote which have their principal office in each of five geographical areas to be established pursuant to the bylaws |