571 



Subsec. (c). Pub. L. 92-507 substituted provisions 

 making the Secretary's determination of actual cost of 

 the vessel conclusive for the purposes of determining the 

 maximum amount which may be guaranteed, for provi- 

 sions making the mortgagee or lender the beneficiary of 

 insurance contracts. 



Subsec. (d). Pub. L. 92-507 substituted provisions 

 pledging the fuU faith and credit of the United States 

 for payment of all guarantees with interest, for provi- 

 sions pledjlng the faith of the United States; to fhe 

 payment of principal and interest of each mortgage and 

 loan. 



Subsec. (e). Pub. L. 92-507 added subsec. (e). Former 

 subsec. (e) redesignated (f). 



Subsec. (f). Pub. L. 92-507 redesignated former sub- 

 sec. (e) as subsec. (f), and in subsec. (f) as so redesig- 

 nated, substituted "obligations guaranteed" for 

 "mortgages and loans Insured". 



§ 1274. Eligibility for guarantee, 

 (a) Purpose of obligations. 



Pursuant to the authority granted under section 

 1273(a) of this title, the Secretary of Commerce, 

 upon such terms as he shall prescribe, may guar- 

 antee or make a commitment to guarantee, payment 

 of the principal of and interest on an obligation 

 which aids in — 



(1) financing, including reimbursement of an 

 obligor for expenditures previously made for, con- 

 struction, reconstruction, or reconditioning of a 

 vessel or vessels owned by citizens of the United 

 States which are designed principally for research, 

 or for commercial use lA) in the coastwise or In- 

 tercoastal trade; (B) on the Great ^^akes, or on 

 bays, sounds, rivers, harbors, or inland lakes of 

 the United States; (C) in foreign trade as defined 

 in section 1244 of this title for purposes of sub- 

 chapter V of this chapter; (D) in the fishing 'trade 

 or industry; or (E) with respect to floating dry- 

 docks, in the construction, reconstruction, recon- 

 ditioning, or repair of vessels: Provided, however, 

 That no guarantee shall be entered into pursuant 

 to this paragraph (a) (1) later than one year after 

 delivery, or redelivery in the case of reconstruc- 

 tion or reconditioning of any such vessel unless 

 the proceeds of the obligation are used to finance 

 the construction, reconstruction, or reconditidning 

 of a vessel or vessels, or facilities or equipment 

 pertaining to marine operations; 



(2) financing the purchase of vessels thereto- 

 fore acquired by the Fund under the provisions 

 of section 1275 of this title and reconditioning 

 and reconstructing such vessels ; 



(3) financing, in whole or in part, the repay- 

 ment to the United States of any amount of con- 

 struction-differential subsidy paid with respect to 

 a vessel pursuant to subchapter V of this chapter; 



(4) refinancing existing obligations issued for 

 one of the purposes specified in (1), (2), or (3) 

 whether or not guaranteed under this subchapter, 

 including, but not limited to, short-term obliga- 

 tions incurred for the purpose of obtaining tem- 

 porary funds with the view to refinancing from 

 time to time. 



(b) Contents of obligations. 



Obligations guaranteed under this subchapter — 



(1) shall have an obligor approved by the Secre- 

 tary of Commerce as responsible and possessing 

 the ability, experience, financial resources, and 

 other qualifications necessary to the adequate op- 

 eration and maintenance of the vessel or vessels 

 which serve as security for the guarantee of the 

 Secretary of Commerce ; 



(2) subject to the provisions of paragraph (1) 

 of subsection (c) of this section, shall be In an 

 aggregate principal amount which does not exceed 

 75 per centum of the actual cost or depreciated 

 actual cost, as determined by the Secretary of 

 Commerce, of the vessel which is used as security 

 for the guarantee of the Secretary of Commerce: 

 Provided, however, That in the case of a vessel, 

 the size and speed of which are approved by the 

 Secretary of Commerce, and which is or would 

 have been eligible for mortgage aid for construc- 

 tion under section 1159 of this title (or would have 

 been eligible for mortgage aid under section 1159 

 of this title except that the vessel was built with 

 the aid of construction-differential subsidy and 

 said subsidy has been repaid) and in respect of 



which the minimum downpayment by the mort- 

 gagor required by that section would be or would 

 have been 12'/2 per centum of the cost of such 

 vessel, such obligations may be in an amount which 

 does not exceed 87 '/a per centum of such actual cost 

 or depreciated actual cost: Provided, further. That 

 the obligations which relate to a barge which is 

 constructed without the aid of construction-differ- 

 ential subsidy, or, if so subsidized, on which said 

 subsidy has been repaid, may be in an aggregate 

 principal amount which does not exceed 871/2 per 

 centum of the actual cost or depreciated actual 

 cost thereof ; 



(3) shall have maturity dates satisfactory to the 

 Secretary of Commerce but, subject to the provi- 

 sions of paragraph (2) of subsection (c) of this 

 section, not to exceed twenty-five years from the 

 date of the delivery of the vessel which serves as 

 security for the guarantee of the Secretary of 

 Commerce or, if the vessel has been reconstructed 

 or reconditioned, not to exceed the later of (i) 

 twenty-five years from the date of delivery of the 

 vessel and (ii) the remaining years of the useful 

 life of the vessel as determined by the Secretary 

 of Conunerce; 



(4) shall provide for payments by the obligor 

 satisfactory to the Secretary of Commerce; 



(5) shall bear interest (exclusive of charges for 

 the guarantee and service charges, if any) at rates 

 not to exceed such per centum per annum on the 

 unpaid principal as the Secretary of Commerce 

 determines to be reasonable, taking into account 

 the range of interest rates prevailing in the private 

 market for similar loans and the risks assumed by 

 the Secretary of Commerce ; 



(6) shall provide, or a related agreement shall 

 provide, that if the vessel used as security for the 

 guarantee of the Secretary of Commerce is a 

 delivered vessel, the vessel shall be in class A-1, 

 American Bureau of Shipping, or shall meet such 

 other standards as may be acceptable to the Sec- 

 retary of Commerce, with all required certificates, 



