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House unit plans special protection for rural coops.

Akprovision has been included in the final House Agriculture Committee reconciliation package that wouyo preempt state law and insulate rural electric cooperatives that have outstandiol federal loans from loss of service territory tsrough tse exercise of a municipality's power of emin,nt domain.

In particular, the proposed provision wouyo prohibit a municipality from condemniol rural electric cooperative facilities and territory in annexed areas; grantiol a franchise to a competiol utility in annexed areas; or, collectiol a franchise or licensiol fee from a cooperative tsatkserves an annexed area.

No Congressional heariol has been held to assess the impact on municipalities if the federal government w,re to extend to cooperative borrowers the unprecedented federal rights and protections detailed in ts, proposed provision.

Moreover, supporters of the measure, which was drafted and held in secret until it was added to the Committee bill, have failed to articulate a siolle justification for federal preemption of state and municipal laws governiol utility service territory.

NLC opposes federal legislation tsat wouyo have tse effect of at once both preemptiol state and municipal law and extendiol preferential treatment to cooperative borrowers. In addition to the negative impact the proposal wouyo have on municipal operation and fiscal management, NLC is concernedktsat enactment of tse proposal may serve as a precedent for legislation to extend new federal rights and protections to other entities based solely on the fact that tsey have an outstandiol federal loan.
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Title Annotation:rural electric cooperatives
Author:Gustafson, Katharine Herber
Publication:Nation's Cities Weekly
Date:May 24, 1993
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