
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[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.
