157 
‘‘(1) IN GENERAL.—If a payment has not become due under the 
guarantee before the termination of the escrow agreement, the balance 
of the escrow fund at the time of termination shall be disbursed to— 
‘‘(A) prepay the excess of— 
‘‘(i) the principal amount of all obligations whose proceeds 
are to be used to finance the construction, reconstruction, or 
reconditioning of the vessel used or to be used as security for 
the guarantee; over 
‘‘(ii) 75 percent or 87.5 percent, whichever is applicable 
under section 53709(b) of this title, of the actual cost of the 
vessel to the extent paid; and 
‘‘(B) pay interest on that prepaid amount of principal. 
‘‘(2) REMAINING BALANCE.—Any remaining balance of the escrow 
fund shall be paid to the obligor. 
‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any part of 
an escrow fund in obligations of the United States Government with matu-
rities such that the escrow fund will be available as required for purposes 
of the escrow agreement. Investment income shall be paid to the obligor 
when received. 
‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement shall 
contain other terms the Secretary considers necessary to protect fully the 
interests of the Government. 
‘‘§ 53716. Deposit fund 
‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury for purposes 
of this section. The Secretary, in accordance with an agreement under sub-
section (b), may deposit into and hold in the fund cash belonging to an obli-
gor to serve as collateral for a guarantee made under this chapter with re-
spect to the obligor. 
‘‘(b) AGREEMENT.—The Secretary and an obligor shall make a reserve 
fund or other collateral account agreement to govern the deposit, with-
drawal, retention, use, and reinvestment of cash of the obligor held in the 
fund. The agreement shall contain— 
‘‘(1) terms and conditions required by this section; 
‘‘(2) terms that grant to the United States Government a security 
interest in all amounts deposited into the fund; and 
‘‘(3) any additional terms considered by the Secretary to be nec-
essary to protect fully the interests of the Government. 
‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any part of 
the amounts in the fund in obligations of the Government with maturities 
such that amounts in the fund will be available as required for purposes 
of the agreement under subsection (b). Cash balances in the fund in excess 
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of current requirements shall be maintained in a form of uninvested funds, 
and the Secretary of the Treasury shall pay interest on these funds. 
‘‘(d) WITHDRAWALS.— 
‘‘(1) IN GENERAL.—Cash deposited into the fund may not be with-
drawn without the consent of the Secretary. 
‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may 
pay any income earned on cash of an obligor deposited into the fund 
in accordance with the agreement with the obligor under subsection (b). 
‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may retain and 
offset any or all of the cash of an obligor in the fund, and any income 
realized thereon, as part of the Secretary’s recovery against the obligor 
in case of a default by the obligor on an obligation. 
‘‘§ 53717. Management of funds in the Treasury 
‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). 
‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.— 
‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Transpor-
tation shall account for payments and disbursements involving obliga-
tions guaranteed under this chapter and not subject to FCRA in an 
account in the Treasury entitled the Federal Ship Financing Fund Liq-
uidating Account (a liquidating account as defined in FCRA). 
‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation 
shall account for payments and disbursements involving obligations 
guaranteed under this chapter and subject to FCRA in a separate ac-
count in the Treasury entitled the Federal Ship Financing Guaranteed 
Loan Financing Account (a financing account as defined in FCRA). 
‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.— 
‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce 
shall account for payments and disbursements involving obligations 
guaranteed under this chapter and not subject to FCRA in a separate 
account in the Treasury established for this purpose. 
‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce shall 
account for payments and disbursements involving obligations guaran-
teed under this chapter and subject to FCRA in a separate account in 
the Treasury established for this purpose. 
‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of 
Commerce shall account for payments and disbursements involving direct 
loans made under this chapter in a separate account in the Treasury estab-
lished for this purpose. 
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‘‘§ 53718. Annual report to Congress 
‘‘The Secretary of Transportation shall report to Congress annually on 
the loan guarantee program under this chapter. Each report shall include— 
‘‘(1) the size, in dollars, of the portfolio of loans guaranteed; 
‘‘(2) the size, in dollars, of projects in the portfolio facing financial 
difficulties; 
‘‘(3) the number and type of projects covered; 
‘‘(4) a profile of pending loan applications; 
‘‘(5) the amount of appropriations available for new guarantees; 
‘‘(6) a profile of each project approved since the last report; and 
‘‘(7) a profile of any defaults since the last report. 
‘‘SUBCHAPTER II—DEFAULT PROVISIONS 
‘‘§ 53721. Rights of obligee 
‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection (c), if 
an obligor has continued in default for 30 days in the payment of principal 
or interest on an obligation guaranteed under this chapter, the obligee or 
the obligee’s agent may demand that the Secretary pay the unpaid principal 
amount of the obligation and the unpaid interest on the obligation to the 
date of payment. The demand must be made within the earlier of— 
‘‘(1) a period that may be specified in the guarantee or a related 
agreement; or 
‘‘(2) 90 days from the date of the default. 
‘‘(b) PAYMENTS BY SECRETARY.— 
‘‘(1) IN GENERAL.—If a demand is made under subsection (a), the 
Secretary shall pay to the obligee or the obligee’s agent the unpaid 
principal amount of the obligation and the unpaid interest on the obli-
gation to the date of payment. Payment shall be made within the ear-
lier of— 
‘‘(A) a period that may be specified in the guarantee or a re-
lated agreement; or 
‘‘(B) 30 days from the date of the demand. 
‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not required to 
make payment under this subsection if, within the appropriate period 
under paragraph (1), the Secretary finds that the obligor was not in 
default or that the default was remedied before the demand. 
‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE DEMAND.—An 
obligee or the obligee’s agent may not demand payment under this section 
if the Secretary, before the demand and on terms that may be provided in 
the obligation or a related agreement, has assumed the obligor’s rights and 
duties under the obligation and any related agreement and made any pay-
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ment in default. However, the guarantee of the obligation remains in effect 
after the Secretary’s assumption. 
‘‘§ 53722. Actions by Secretary 
‘‘(a) GENERAL AUTHORITY.—On default under an obligation or related 
agreement between the Secretary and the obligor, the Secretary, on terms 
that may be provided in the obligation or agreement, may— 
‘‘(1) assume the obligor’s rights and duties under the obligation or 
agreement, make any payment in default, and notify the obligee or the 
obligee’s agent of the default and the Secretary’s assumption; or 
‘‘(2) notify the obligee or the obligee’s agent of the default. 
‘‘(b) DEMANDS BY OBLIGEES.— 
‘‘(1) DEMAND.—If the Secretary proceeds under subsection (a)(2), 
the obligee or the obligee’s agent may demand that the Secretary pay 
the unpaid principal amount of the obligation and the unpaid interest 
on the obligation. The demand must be made within the earlier of— 
‘‘(A) a period that may be specified in the guarantee or a re-
lated agreement; or 
‘‘(B) 60 days from the date of the Secretary’s notice. 
‘‘(2) PAYMENT.—If a demand is made under paragraph (1), the Sec-
retary shall pay to the obligee or the obligee’s agent the unpaid prin-
cipal amount of the obligation and the unpaid interest on the obligation 
to the date of payment. Payment shall be made within the earlier of— 
‘‘(A) a period that may be specified in the guarantee or a re-
lated agreement; or 
‘‘(B) 30 days from the date of the demand. 
‘‘(c) CONTINUED EFFECT OF GUARANTEE.—A guarantee of an obligation 
remains in effect after an assumption of the obligation by the Secretary. 
‘‘(d) ADDITIONAL RESPONSES.—If there is a default on an obligation, the 
Secretary shall conduct operations under this chapter in a manner that— 
‘‘(1) maximizes the net present value return from the sale or disposi-
tion of assets associated with the obligation, including prompt referral 
to the Attorney General for collection as appropriate; 
‘‘(2) minimizes the amount of any loss realized in the resolution of 
the guarantee; 
‘‘(3) ensures adequate competition and fair and consistent treatment 
of offerors; and 
‘‘(4) requires appraisal of assets by an independent appraiser. 
‘‘§ 53723. Payments by Secretary and issuance of obligations 
‘‘(a) CASH PAYMENT.—Amounts required to be paid by the Secretary 
under section 53721 or 53722 of this title shall be paid in cash. 
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‘‘(b) ISSUANCE OF OBLIGATIONS.—If amounts in the appropriate account 
under section 53717 of this title are not sufficient to make a payment re-
quired under section 53721 or 53722 of this title, the Secretary may issue 
obligations to the Secretary of the Treasury. The Secretary, with the ap-
proval of the Secretary of the Treasury, shall prescribe the form, denomina-
tion, maturity, and other terms (except the interest rate) of the obligations. 
The Secretary of the Treasury shall set the interest rate for the obligations, 
considering the current average market yield on outstanding marketable ob-
ligations of the United States Government of comparable maturities during 
the month before the obligations are issued. 
‘‘(c) PURCHASE OF OBLIGATIONS.—The Secretary of the Treasury shall 
purchase the obligations issued under this section. To purchase the obliga-
tions, the Secretary of the Treasury may use as a public debt transaction 
the proceeds from the sale of securities issued under chapter 31 of title 31. 
The purposes for which securities may be issued under that chapter are ex-
tended to include the purchase of obligations under this subsection. The 
Secretary of the Treasury may sell obligations purchased under this section. 
A redemption, purchase, or sale of the obligations by the Secretary of the 
Treasury is a public debt transaction of the Government. 
‘‘(d) DEPOSITS
AND
REDEMPTIONS.—The Secretary shall deposit 
amounts borrowed under this section in the appropriate account under sec-
tion 53717 of this title and make redemptions of the obligations from that 
account. 
‘‘§ 53724. Rights to secured property 
‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary makes a 
payment on, or assumes, an obligation under section 53721 or 53722 of this 
title, the Secretary acquires the rights under the security agreement with 
the obligor in the security held by the Secretary to guarantee the obligation. 
‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding 
any other law relating to the acquisition, handling, or disposal of property 
by the United States Government, the Secretary has the right, in the Sec-
retary’s discretion, to complete, reconstruct, recondition, renovate, repair, 
maintain, operate, charter, or sell any property acquired under a security 
agreement with an obligor, or to place a vessel so acquired in the National 
Defense Reserve Fleet. The terms of a sale under this subsection shall be 
as approved by the Secretary. 
‘‘§ 53725. Actions against obligor 
‘‘(a) IN GENERAL.—For a default under a guaranteed obligation or re-
lated agreement, the Secretary may take any action against the obligor or 
another liable party that the Secretary considers necessary to protect the 
interests of the United States Government. A civil action may be brought 
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in the name of the United States or the obligee. The obligee shall make 
available to the Government all records and evidence necessary to prosecute 
the action. 
‘‘(b) TITLE, POSSESSION, AND PURCHASE.— 
‘‘(1) IN GENERAL.—The Secretary may— 
‘‘(A) accept a conveyance of title to and possession of property 
from the obligor or another party liable to the Secretary; and 
‘‘(B) purchase the property for an amount not greater than the 
unpaid principal amount of the obligation and interest thereon. 
‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property, the 
Secretary receives an amount of cash greater than the unpaid principal 
amount of the obligation, the unpaid interest on the obligation, and the 
expenses of collecting those amounts, the Secretary shall pay the excess 
to the obligor. 
‘‘SUBCHAPTER III—PARTICULAR PROJECTS 
‘‘§ 53731. Commercial demonstration ocean thermal energy 
conversion facilities and plantships 
‘‘(a) IN GENERAL.—Under subchapter I of this chapter, the Secretary 
may guarantee or make a commitment to guarantee the payment of the 
principal of and interest on an obligation that aids in financing (including 
reimbursement of an obligor for expenditures previously made for) the con-
struction, reconstruction, or reconditioning of a commercial demonstration 
ocean thermal energy conversion facility or plantship. This section may be 
used to guarantee obligations for a total of not more than 5 separate facili-
ties and plantships or a demonstrated 400 megawatt capacity, whichever 
comes first. 
‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise pro-
vided in this section, a guarantee or commitment to guarantee under this 
section is subject to all the provisions applicable to a guarantee or commit-
ment to guarantee under subchapter I of this chapter. 
‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic 
soundness under section 53708 of this title applies to a guarantee or com-
mitment to guarantee for that portion of a facility or plantship not to be 
supported with appropriated Federal funds. 
‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment to guar-
antee may not be made under this section unless the Secretary of Energy, 
in consultation with the Secretary, certifies to the Secretary that, for the 
facility or plantship for which the guarantee or commitment to guarantee 
is sought, there is sufficient guarantee of performance and payment to lower 
the risk to the United States Government to a reasonable level. In deciding 
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whether to issue such a certification, the Secretary of Energy shall con-
sider— 
‘‘(1) the successful demonstration of the technology to be used in the 
facility at a scale sufficient to establish the likelihood of technical and 
economic viability in the proposed market; and 
‘‘(2) the need of the United States to develop new and renewable 
sources of energy and the benefits to be realized from the construction 
and successful operation of the facility or plantship. 
‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of an obliga-
tion guaranteed under this section may not exceed 87.5 percent of— 
‘‘(1) the actual cost or depreciated actual cost of the facility or 
plantship; or 
‘‘(2) if the facility or plantship is supported with appropriated Fed-
eral funds, the total principal amount of that portion of the actual cost 
or depreciated actual cost for which the obligor is obligated to secure 
financing under the agreement between the obligor and the Department 
of Energy or other Federal agency. 
‘‘(f) OTEC DEMONSTRATION FUND.— 
‘‘(1) IN GENERAL.—There is a special subaccount, known as the 
OTEC Demonstration Fund, in the account established under section 
53717(b)(1) of this title. 
‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund shall 
be used for obligation guarantees authorized under this section that do 
not qualify under subchapter I of this chapter. Except as otherwise 
provided in this section, the OTEC Demonstration Fund shall be oper-
ated in the same manner as the parent account. However— 
‘‘(A) amounts received by the Secretary under subchapter I of 
this chapter related to guarantees or commitments to guarantee 
made under this section shall be deposited only in the OTEC 
Demonstration Fund; and 
‘‘(B) when obligations issued by the Secretary under section 
53723 of this title related to the OTEC Demonstration Fund are 
outstanding, any amount received by the Secretary under sub-
chapter I of this chapter related to ocean thermal energy conver-
sion facilities or plantships shall be deposited in the OTEC Dem-
onstration Fund. 
‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund may 
be transferred to the parent account when and to the extent the bal-
ance in the OTEC Demonstration Fund exceeds the total guarantees 
or commitments to guarantee made under this section then out-
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standing, plus obligations issued by the Secretary under section 53723 
of this title related to the OTEC Demonstration Fund. 
‘‘(4) LIABILITY.—The parent account is not liable for a guarantee 
or commitment to guarantee made under this section. 
‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total unpaid prin-
cipal amount of the obligations guaranteed with the backing of the 
OTEC Demonstration Fund and outstanding at any one time may not 
exceed $1,650,000,000. 
‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723 of this 
title applies to the OTEC Demonstration Fund. However, obligations issued 
by the Secretary under that section related to the OTEC Demonstration 
Fund shall be payable only from proceeds realized by the OTEC Dem-
onstration Fund. 
‘‘(h) TAXATION
OF INTEREST.—Interest on an obligation guaranteed 
under this section shall be included in gross income under chapter 1 of the 
Internal Revenue Code of 1986 (26 U.S.C. ch. 1). 
‘‘§ 53732. Eligible export vessels 
‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an obligation 
for an eligible export vessel in accordance with— 
‘‘(1) the terms applicable under this chapter for vessels documented 
under the laws of the United States; or 
‘‘(2) other terms the Secretary determines are more favorable than 
those terms and compatible with export credit terms offered by foreign 
governments for the sale of vessels built in foreign shipyards. 
‘‘(b) INTERAGENCY COUNCIL.— 
‘‘(1) ESTABLISHMENT.—There is an interagency council to carry out 
this section. 
‘‘(2) COMPOSITION.—The council is composed of the following indi-
viduals or their designees: 
‘‘(A) The Secretary of Transportation, who is the chairman of 
the council. 
‘‘(B) The Secretary of the Treasury. 
‘‘(C) The Secretary of State. 
‘‘(D) The Assistant to the President for Economic Policy. 
‘‘(E) The United States Trade Representative. 
‘‘(F) The President and Chairman of the Export-Import Bank 
of the United States. 
‘‘(3) FUNCTIONS.—The council shall— 
‘‘(A) obtain information on shipbuilding loan guarantees, direct 
and indirect subsidies, and other favorable treatment of shipyards 
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provided by foreign governments to shipyards in competition with 
United States shipyards; 
‘‘(B) consult regularly with United States shipbuilders to obtain 
the essential information about international shipbuilding competi-
tion on which to set terms for loan guarantees under subsection 
(a)(2); and 
‘‘(C) provide guidance to the Secretary in establishing terms for 
loan guarantees under subsection (a)(2). 
‘‘(4) ANNUAL REPORT.—Not later than January 31 of each year, the 
Secretary shall submit to Congress a report on activities of the Sec-
retary under this section during the preceding year. The report shall 
include— 
‘‘(A) documentation of sources of information about assistance 
by governments of other countries to shipyards in those countries; 
and 
‘‘(B) a summary of recommendations made to the Secretary 
during the preceding year about applications submitted to the Sec-
retary during that year for loan guarantees to construct eligible 
export vessels. 
‘‘(c) REQUIRED FINDINGS.— 
‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary may 
not guarantee or make a commitment to guarantee an obligation for 
an eligible export vessel unless the Secretary finds that the construc-
tion, reconstruction, or reconditioning of the vessel will aid in the tran-
sition of United States shipyards to commercial activities or will pre-
serve shipbuilding assets that would be essential in time of war or na-
tional emergency. 
‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary may not 
make a commitment to guarantee an obligation for an eligible export 
vessel unless the Secretary determines that making the commitment 
will not result in denial of an economically sound application for a com-
mitment to guarantee an obligation for a vessel documented under the 
laws of the United States and operating in the domestic or foreign 
commerce of the United States. The Secretary has sole discretion in 
making the determination. In making the determination, the Secretary 
shall consider— 
‘‘(A) the status and economic soundness of pending applications 
for commitments to guarantee obligations for vessels documented 
under the laws of the United States that are operating or will be 
operating in the domestic or foreign commerce of the United 
States; and 
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