PUBLIC LAW 104-127—APR. 4, 1996 110 STAT. 1145 "SEC. 381H. GUARANTEE AND COMMITMENT TO GUARANTEE LOANS. 7 USC 2009g. "(a) DEFINITION OF ELIGIBLE PUBLIC ENTITY. —In this section, the term 'eligible public entity* means any unit of general local government. "(b) GUARANTEE AND COMMITMENT.— The Secretary, on such terms and conditions as the Secretary may prescribe, may guarantee and make commitments to guarantee notes or other obligations issued by eligible public entities, or by public agencies designated by the eligible public entities, for the purposes of financing rural development activities authorized and funded under section 38IG. "(c) LIMITATION.—The Secretary may not make a guarantee or commitment to guarantee with respect to a note or other obligation if the total amount of outstanding notes or obligations guaranteed under this section (excluding any amount repaid under the contract entered into under subsection (e)(1)(A)) for issuers in the State would exceed an amount equal to 5 times the sum of the total amount of grants made to the State under section 381G. "(d) PAYMENT OF PRINCIPAL, INTEREST, AND COSTS. — Notwithstanding any other provision of this subtitle, a State to which a grant is made under section 381G may use the grant (including program income derived from the grant) to pay principal and interest due (including such servicing, underwriting, or other costs as may be specified in regulations of the Secretary) on any note or other obligation guaranteed under this section. " (e) REPAYMENT CONTRACT; SECURITY.— "(1) IN GENERAL. —To ensure the repayment of notes or other obligations and charges incurred under this section and as a condition for receiving the guarantees, the Secretary shall require the issuer to— "(A) enter into a contract, in a form acceptable to the Secretary, for repayment of notes or other obligations guaranteed under this section; "(B) pledge any grant for which the issuer may become eligible under this subtitle; and "(C) furnish, at the discretion of the Secretary, such other security as may be considered appropriate by the Secretary in making the guarantees. "(2) SECURITY.—To assist in ensuring the repayment of notes or other obligations and charges incurred under this section, a State shall pledge any grant for which the State may become eligible under this subtitle as security for notes or other obligations and charges issued under this section by any eligible public entity in the State. " (f) PLEDGED GRANTS FOR REPAYMENTS.—Notwithstanding any other provision of this subtitle, the Secretary may apply grants pledged pursuant to paragraphs (1)(B) and (2) of subsection (e) to any repa3nnents due the United States as a result of the guarantees. "(g) OUTSTANDING OBLIGATIONS. —The total amount of outstanding obligations guaranteed on a cumulative basis by the Secretary pursuant to subsection (b) shall not at any time exceed such amount as may be authorized to be appropriated for such purpose for any fiscal year. " (h) PURCHASE OF GUARANTEED OBLIGATIONS BY FEDERAL FINANCING BANK. —Notes or other obligations guaranteed under this section may not be purchased by the Federal Financing Bank.
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