142 
guaranteed by the Secretary. A direct loan obligation under this sub-
section shall be treated in the same manner and to the same extent 
as an obligation guaranteed under this chapter except with respect to 
provisions of this chapter that by their nature can only be applied to 
obligations guaranteed under this chapter. 
‘‘(2) INTEREST RATE.—Notwithstanding any other provision of this 
chapter, the annual rate of interest an obligor shall pay on a direct 
loan obligation under this subsection is 2 percent plus the additional 
percent the Secretary must pay as interest to borrow from the Treas-
ury the funds to make the loan. 
‘‘§ 53703. Application procedures 
‘‘(a) TIME FOR DECISION.— 
‘‘(1) IN GENERAL.—The Secretary shall approve or deny an applica-
tion for a loan guarantee under this chapter within 270 days after the 
date on which the signed application is received by the Secretary. 
‘‘(2) EXTENSION.—On request by an applicant, the Secretary may 
extend the 270-day period in paragraph (1) to a date not later than 
2 years after the date on which the signed application was received by 
the Secretary. 
‘‘(b) CERTIFICATION OF REVIEW.—The Secretary may not guarantee or 
make a commitment to guarantee an obligation under this chapter unless 
the Secretary certifies that a full and fair consideration of all the regulatory 
requirements, including economic soundness and financial requirements ap-
plicable to the obligor and related parties, and a thorough assessment of the 
technical, economic, and financial aspects of the loan application, has been 
made. 
‘‘§ 53704. Funding limits 
‘‘(a) GENERAL LIMITATIONS.—The total unpaid principal amount of obli-
gations guaranteed under this chapter and outstanding at one time may not 
exceed $12,000,000,000. Of that amount— 
‘‘(1) $850,000,000 shall be limited to obligations related to fishing 
vessels and fishery facilities; and 
‘‘(2) $3,000,000,000 shall be limited to obligations related to eligible 
export vessels. 
‘‘(b) ADDITIONAL LIMITATIONS.—Additional limitations may not be im-
posed on new commitments to guarantee loans for any fiscal year, except 
in amounts established in advance by annual authorization laws. A vessel 
eligible for a guarantee under this chapter may not be denied eligibility be-
cause of its type. 
‘‘(c) LIMITS BASED ON RISK FACTORS.—
143 
‘‘(1) DEFINITION.—In this subsection, the term ‘cost’ has the mean-
ing given that term in section 502 of the Federal Credit Reform Act 
of 1990 (2 U.S.C. 661a). 
‘‘(2) SYSTEM OF RISK CATEGORIES.—The Secretary shall— 
‘‘(A) establish, and update annually, a system of risk categories 
for obligations guaranteed under this chapter that categorizes the 
relative risk of guarantees based on the risk factors set forth in 
paragraph (4); 
‘‘(B) determine annually for each risk category a subsidy rate 
equivalent to the cost of obligations in the category, expressed as 
a percentage of the amount guaranteed for obligations in the cat-
egory; and 
‘‘(C) ensure that each risk category is comprised of loans that 
are relatively homogeneous in cost and share characteristics pre-
dictive of defaults and other costs, given the facts known at the 
time of obligation or commitment, using a risk category system 
that is based on historical analysis of program data and statistical 
evidence concerning the likely costs of defaults or other costs that 
are expected to be associated with the loans in the category. 
‘‘(3) USE OF SYSTEM.— 
‘‘(A) PLACING OBLIGATION IN CATEGORY.—Before making a 
guarantee under this chapter for an obligation, and annually for 
projects subject to a guarantee, the Secretary shall apply the risk 
factors specified in paragraph (4) to place the obligation in a risk 
category established under paragraph (2). 
‘‘(B) REDUCTION OF AVAILABLE AMOUNT.—The Secretary shall 
consider the total amount available to the Secretary for making 
guarantees under this chapter to be reduced by the amount deter-
mined by multiplying— 
‘‘(i) the amount guaranteed under this chapter for an obli-
gation; by 
‘‘(ii) the subsidy rate for the category in which the obliga-
tion is placed under subparagraph (A). 
‘‘(C) ESTIMATED
COST.—The estimated cost to the United 
States Government of a guarantee under this chapter for an obli-
gation is deemed to be the amount determined under subpara-
graph (B) for the obligation. 
‘‘(D) RESTRICTION ON FURTHER GUARANTEES.—The Secretary 
may not guarantee obligations under this chapter after the total 
amount available to the Secretary under appropriations laws for
144 
the cost of loan guarantees is considered to be reduced to zero 
under subparagraph (B). 
‘‘(4) RISK FACTORS.—The risk factors referred to in this subsection 
are— 
‘‘(A) if applicable, the country risk for each eligible export vessel 
financed or to be financed by an obligation; 
‘‘(B) the period for which an obligation is guaranteed or to be 
guaranteed; 
‘‘(C) the amount of an obligation guaranteed or to be guaran-
teed in relation to the total cost of the project financed or to be 
financed by the obligation; 
‘‘(D) the financial condition of an obligor or applicant for a 
guarantee; 
‘‘(E) if applicable, other guarantees related to the project; 
‘‘(F) if applicable, the projected employment of each vessel or 
equipment to be financed with an obligation; 
‘‘(G) if applicable, the projected market that will be served by 
each vessel or equipment to be financed with an obligation; 
‘‘(H) the collateral provided for a guarantee for an obligation; 
‘‘(I) the management and operating experience of an obligor or 
applicant for a guarantee; 
‘‘(J) whether a guarantee under this chapter is or will be in ef-
fect during the construction period of the project; and 
‘‘(K) the concentration risk presented by an unduly large per-
centage of loans outstanding by any one borrower or group of af-
filiated borrowers. 
‘‘§ 53705. Pledge of United States Government 
‘‘(a) FULL FAITH AND CREDIT.—The full faith and credit of the United 
States Government is pledged to the payment of a guarantee made under 
this chapter, for both principal and interest, including interest (as may be 
provided for in the guarantee) accruing between the date of default under 
a guaranteed obligation and the date of payment in full of the guarantee. 
‘‘(b) INCONTESTABILITY.—A guarantee or commitment to guarantee 
made under this chapter is conclusive evidence of the eligibility of the obli-
gation for the guarantee. The validity of a guarantee or commitment to 
guarantee made under this chapter is incontestable. 
‘‘§ 53706. Eligible purposes of obligations 
‘‘(a) IN GENERAL.—To be eligible for a guarantee under this chapter, an 
obligation must aid in any of the following: 
‘‘(1)(A) Financing (including reimbursement of an obligor for ex-
penditures previously made for) the construction, reconstruction, or re-
145 
conditioning of a vessel (including an eligible export vessel) designed 
principally for research, or for commercial use— 
‘‘(i) in the coastwise or intercoastal trade; 
‘‘(ii) on the Great Lakes, or on bays, sounds, rivers, harbors, 
or inland lakes of the United States; 
‘‘(iii) in foreign trade as defined in section 109(b) of this title; 
‘‘(iv) as an ocean thermal energy conversion facility or 
plantship; 
‘‘(v) as a floating drydock in the construction, reconstruction, 
reconditioning, or repair of vessels; or 
‘‘(vi) as an eligible export vessel in worldwide trade. 
‘‘(B) A guarantee under subparagraph (A) may not be made more 
than one year after delivery of the vessel (or redelivery if the vessel was 
reconstructed or reconditioned) unless the proceeds of the obligation 
are used to finance the construction, reconstruction, or reconditioning 
of a vessel or of facilities or equipment related to marine operations. 
‘‘(2) Financing (including reimbursement of an obligor for expendi-
tures previously made for) the construction, reconstruction, recondi-
tioning, or purchase of a vessel owned by citizens of the United States 
and designed principally for research, or for commercial use in the fish-
ing industry. 
‘‘(3) Financing the purchase, reconstruction, or reconditioning of a 
vessel or fishery facility— 
‘‘(A) for which an obligation was guaranteed under this chapter; 
and 
‘‘(B) that, under subchapter II of this chapter— 
‘‘(i) is a vessel or fishery facility for which an obligation 
was accelerated and paid; 
‘‘(ii) was acquired by the Federal Ship Financing Fund or 
successor account under section 53717 of this title; or 
‘‘(iii) was sold at foreclosure begun by the Secretary. 
‘‘(4) Financing any part of the repayment to the United States Gov-
ernment of any amount of a construction-differential subsidy paid for 
a vessel. 
‘‘(5) Refinancing an existing obligation (regardless of whether guar-
anteed under this chapter) issued for a purpose described in para-
graphs (1)–(4), including a short-term obligation incurred to obtain 
temporary funds with the intention of refinancing. 
‘‘(6) Financing or refinancing (including reimbursement of an obli-
gor for expenditures previously made for) the construction, reconstruc-
tion, reconditioning, or purchase of a fishery facility.
146 
‘‘(7) Financing or refinancing (including reimbursement of an obli-
gor for expenditures previously made for) the purchase of an individual 
fishing quota in accordance with section 303(d)(4) of the Magnuson- 
Stevens Fishery Conservation and Management Act (16 U.S.C. 
1853(d)(4)). 
‘‘(b) NON-VESSELS TREATED AS VESSELS.—An obligation guaranteed 
under subsection (a)(6) or (7) shall be treated, for purposes of this chapter, 
in the same manner and to the same extent as an obligation that aids in 
financing the construction, reconstruction, reconditioning, or purchase of a 
vessel, except with respect to provisions that by their nature can only be 
applied to vessels. 
‘‘(c) PRIORITIES FOR CERTAIN VESSELS.—In guaranteeing or making a 
commitment to guarantee an obligation under this chapter, the Secretary 
shall give priority to— 
‘‘(1) a vessel that is otherwise eligible for a guarantee and is con-
structed with assistance under subtitle D of the Maritime Security Act 
of 2003 (46 U.S.C. 53101 note); and 
‘‘(2) after applying paragraph (1), a vessel that is otherwise eligible 
for a guarantee and that the Secretary of Defense determines— 
‘‘(A) is suitable for service as a naval auxiliary in time of war 
or national emergency; and 
‘‘(B) meets a shortfall in sealift capacity or capability. 
‘‘§ 53707. Findings related to obligors and operators 
‘‘(a) RESPONSIBLE OBLIGOR.—The Secretary may not guarantee or make 
a commitment to guarantee an obligation under this chapter unless the Sec-
retary finds that the obligor is responsible and has the ability, experience, 
financial resources, and other qualifications necessary for the adequate oper-
ation and maintenance of each vessel that will serve as security for the 
guarantee. 
‘‘(b) OPERATORS OF LINER VESSELS.—The Secretary of Transportation 
may not guarantee or make a commitment to guarantee a loan for the con-
struction, reconstruction, or reconditioning of a liner vessel under this chap-
ter unless the Chairman of the Federal Maritime Commission certifies that 
the operator of the vessel has not been found by the Commission to have 
committed, within the previous 5 years— 
‘‘(1) a violation of part A of subtitle IV of this title that involves 
unjust or unfair discriminatory treatment or undue or unreasonable 
prejudice or disadvantage with respect to a United States shipper, 
ocean transportation intermediary, ocean common carrier, or port; or 
‘‘(2) a violation of part B of subtitle IV of this title.
147 
‘‘(c) OPERATORS OF FISHING VESSELS.—The Secretary of Commerce 
may not guarantee or make a commitment to guarantee a loan for the con-
struction, reconstruction, or reconditioning of a fishing vessel under this 
chapter if the operator of the vessel has been— 
‘‘(1) held liable or liable in rem for a civil penalty under section 1858 
of title 16 and not paid the penalty; 
‘‘(2) found guilty of an offense under section 1859 of title 16 and 
not paid the assessed fine or served the assessed sentence; 
‘‘(3) held liable for a civil or criminal penalty under section 1375 of 
title 16 and not paid the assessed fine or served the assessed sentence; 
or 
‘‘(4) held liable for a civil penalty by the Coast Guard under this 
title or title 33 and not paid the assessed fine. 
‘‘(d) WAIVERS CONCERNING FINANCIAL CONDITION.—The Secretary 
shall prescribe regulations concerning circumstances under which waivers of, 
or exceptions to, otherwise applicable regulatory requirements concerning fi-
nancial condition can be made. The regulations shall require that— 
‘‘(1) the economic soundness requirements in section 53708(a) of 
this title are met after the waiver of the financial condition require-
ment; and 
‘‘(2) the waiver shall provide for the imposition of other requirements 
on the obligor designed to compensate for the increased risk associated 
with the obligor’s failure to meet regulatory requirements applicable to 
financial condition. 
‘‘§ 53708. Findings related to economic soundness 
‘‘(a) BY SECRETARY OF TRANSPORTATION.—The Secretary of Transpor-
tation may not guarantee or make a commitment to guarantee an obligation 
under this chapter unless the Secretary finds that the property or project 
for which the obligation will be executed will be economically sound. In mak-
ing that finding, the Secretary shall consider— 
‘‘(1) the need in the particular segment of the maritime industry for 
new or additional capacity, including any impact on existing equipment 
for which a guarantee under this chapter is in effect; 
‘‘(2) the market potential for employment of the vessel over the life 
of the guarantee; 
‘‘(3) projected revenues and expenses associated with employment of 
the vessel; 
‘‘(4) any charter, contract of affreightment, transportation agree-
ment, or similar agreement or undertaking relevant to the employment 
of the vessel; 
‘‘(5) other relevant criteria; and
148 
‘‘(6) for inland waterways, the need for technical improvements, in-
cluding increased fuel efficiency or improved safety. 
‘‘(b) BY SECRETARY OF COMMERCE.—The Secretary of Commerce may 
not guarantee or make a commitment to guarantee an obligation under this 
chapter unless the Secretary finds, at or prior to the time the commitment 
is made or the guarantee becomes effective, that— 
‘‘(1) the property or project for which the obligation will be executed 
will be economically sound; and 
‘‘(2) for a fishing vessel, the purpose of the financing or refinancing 
is consistent with— 
‘‘(A) the wise use of the fisheries resources and the develop-
ment, advancement, management, conservation, and protection of 
the fisheries resources; or 
‘‘(B) the need for technical improvements, including increased 
fuel efficiency or improved safety. 
‘‘(c) USED FISHING VESSELS AND FACILITIES.—The Secretary of Com-
merce may not guarantee or make a commitment to guarantee an obligation 
under this chapter for the purchase of a used fishing vessel or used fishery 
facility unless the vessel or facility will be— 
‘‘(1) reconstructed or reconditioned in the United States and will 
contribute to the development of the United States fishing industry; or 
‘‘(2) used— 
‘‘(A) in the harvesting of fish from an underused fishery; or 
‘‘(B) for a purpose described in the definition of ‘fishery facility’ 
in section 53701 of this title with respect to an underused fishery. 
‘‘(d) INDEPENDENT ANALYSIS.—The Secretary may make a determina-
tion that aspects of an application under this chapter require independent 
analysis to be conducted by third party experts due to risk factors associ-
ated with markets, technology, financial structures, or other risk factors 
identified by the Secretary. Any independent analysis conducted under this 
subsection shall be performed by a party chosen by the Secretary. 
‘‘(e) ADDITIONAL EQUITY BECAUSE OF INCREASED RISKS.—Notwith-
standing any other provision of this chapter, the Secretary may make a de-
termination that an application under this title requires additional equity 
because of increased risk factors associated with markets, technology, finan-
cial structures, or other risk factors identified by the Secretary. 
‘‘§ 53709. Amount of obligations 
‘‘(a) IN GENERAL.—The principal of an obligation may not be guaranteed 
in an amount greater than the amount determined by multiplying the per-
centage applicable under subsection (b) by—
149 
‘‘(1) the amount paid by or for the account of the obligor (as deter-
mined by the Secretary, which determination shall be conclusive) for 
the construction, reconstruction, or reconditioning of the vessel used as 
security for the guarantee; or 
‘‘(2) if the obligor creates an escrow fund under section 53715 of 
this title, the actual cost of the vessel. 
‘‘(b) LIMITATIONS ON AMOUNT BORROWED.— 
‘‘(1) IN
GENERAL.—Except as otherwise provided, the principal 
amount of an obligation guaranteed under this chapter may not exceed 
75 percent of the actual cost or depreciated actual cost, as determined 
by the Secretary, of the vessel used as security for the guarantee. 
‘‘(2) CERTAIN APPROVED VESSELS.—The principal amount may not 
exceed 87.5 percent of the actual cost or depreciated actual cost if— 
‘‘(A) the size and speed of the vessel are approved by the Sec-
retary; 
‘‘(B) the vessel is or would have been eligible for mortgage aid 
for construction under section 509 of the Merchant Marine Act, 
1936, or would have been eligible except that the vessel was built 
with a construction-differential subsidy and the subsidy has been 
repaid; and 
‘‘(C) the vessel is of a type described in that section for which 
the minimum down payment required by that section is 12.5 per-
cent of the cost of the vessel. 
‘‘(3) BARGES.—For a barge constructed without a construction-dif-
ferential subsidy or for which the subsidy has been repaid, the principal 
amount may not exceed 87.5 percent of the actual cost or depreciated 
actual cost. 
‘‘(4) FISHING VESSELS AND FISHERY FACILITIES.—For a fishing 
vessel or fishery facility, the principal amount may not exceed 80 per-
cent of the actual cost or depreciated actual cost. However, debt for 
the vessel or facility may not be placed through the Federal Financing 
Bank. 
‘‘(5) OTEC.—For an ocean thermal energy conversion facility or 
plantship constructed without a construction-differential subsidy, the 
principal amount may not exceed 87.5 percent of the actual cost or de-
preciated actual cost of the facility or plantship. 
‘‘(6) ELIGIBLE EXPORT VESSELS.—For an eligible export vessel, the 
principal amount may not exceed 87.5 percent of the actual cost or de-
preciated actual cost. 
‘‘(c) SECURITY INVOLVING MULTIPLE VESSELS.—The principal amount 
of an obligation having more than one vessel as security for the guarantee
150 
may not exceed the sum of the principal amounts allowable for all the ves-
sels. 
‘‘(d) PROHIBITION ON UNIFORM PERCENTAGE LIMITATIONS.—The Sec-
retary may not establish a percentage under any provision of subsection (b) 
that is to be applied uniformly to all guarantees or commitments to guar-
antee made under that provision. 
‘‘(e) PROHIBITION ON MINIMUM PRINCIPAL AMOUNT.—The Secretary 
may not establish, as a condition of eligibility for a guarantee under this 
chapter, a minimum principal amount for an obligation covering the recon-
struction or reconditioning of a fishing vessel or fishery facility. For pur-
poses of this chapter, the reconstruction or reconditioning of a fishing vessel 
or fishery facility does not include the routine minor repair or maintenance 
of the vessel or facility. 
‘‘§ 53710. Contents of obligations 
‘‘(a) IN GENERAL.—An obligation guaranteed under this chapter must— 
‘‘(1) provide for payments by the obligor satisfactory to the Sec-
retary; 
‘‘(2) provide for interest (exclusive of guarantee fees and other fees) 
at a rate not more than the annual rate on the unpaid principal that 
the Secretary determines is reasonable, considering the range of inter-
est rates prevailing in the private market for similar loans and the 
risks assumed by the Secretary; 
‘‘(3) have a maturity date satisfactory to the Secretary, but— 
‘‘(A) not more than 25 years after the date of delivery of the 
vessel used as security for the guarantee; or 
‘‘(B) if the vessel has been reconstructed or reconditioned, not 
more than the later of— 
‘‘(i) 25 years after the date of delivery of the vessel; or 
‘‘(ii) the remaining years of useful life of the vessel as de-
termined by the Secretary; and 
‘‘(4) provide, or a related agreement must provide, that if the vessel 
used as security for the guarantee is a delivered vessel, the vessel shall 
be— 
‘‘(A) in class A–1, American Bureau of Shipping, or meet other 
standards acceptable to the Secretary, with all required certifi-
cates, including marine inspection certificates of the Coast Guard 
or, in the case of an eligible export vessel, of the appropriate for-
eign authorities under a treaty, convention, or other international 
agreement to which the United States is a party, and with all out-
standing requirements and recommendations necessary for class
151 
retention accomplished, unless the Secretary permits a deferment 
of repairs necessary to meet these requirements; and 
‘‘(B) well equipped, in good repair, and in every respect sea-
worthy and fit for service. 
‘‘(b) PROVISIONS FOR CERTAIN PASSENGER VESSELS.— 
‘‘(1) IN GENERAL.—With the Secretary’s approval, if the vessel used 
as security for the guarantee is a passenger vessel having the tonnage, 
speed, passenger accommodations, and other characteristics described 
in section 503 of the Merchant Marine Act, 1936, an obligation guar-
anteed under this chapter or a related agreement may provide that— 
‘‘(A) the only recourse by the United States Government 
against the obligor for payments under the guarantee will be re-
possession of the vessel and assignment of insurance claims; and 
‘‘(B) the obligor’s liability for payments under the guarantee 
will be satisfied and discharged by the surrender of the vessel and 
all interest in the vessel to the Government in the condition de-
scribed in paragraph (2). 
‘‘(2) SURRENDER OF VESSEL.— 
‘‘(A) IN GENERAL.—On surrender, the vessel must be— 
‘‘(i) free and clear of all liens and encumbrances except the 
security interest conveyed to the Secretary under this chapter; 
‘‘(ii) in class; and 
‘‘(iii) in as good order and condition (ordinary wear and 
tear excepted) as when acquired by the obligor. 
‘‘(B) COVERING DEFICIENCIES BY INSURANCE.—To the extent 
covered by insurance, a deficiency related to a requirement in sub-
paragraph (A) may be satisfied by assignment of the obligor’s in-
surance claims to the Government. 
‘‘(c) OTHER PROVISIONS TO PROTECT SECURITY INTERESTS.—An obli-
gation guaranteed under this chapter and any related agreement must con-
tain other provisions for the protection of the security interests of the Gov-
ernment (including acceleration, assumption, and subrogation provisions and 
the issuance of notes by the obligor to the Secretary), liens and releases of 
liens, payment of taxes, and other matters that the Secretary may prescribe. 
‘‘§ 53711. Security interest 
‘‘(a) IN GENERAL.—The Secretary may guarantee an obligation under 
this chapter only if the obligor conveys or agrees to convey to the Secretary 
a security interest the Secretary considers necessary to protect the interest 
of the United States Government. 
‘‘(b) MULTIPLE VESSELS AND TYPES OF SECURITY.—The security inter-
est may relate to more than one vessel and may consist of more than one
152 
type of security. If the security interest relates to more than one vessel, the 
obligation may have the latest maturity date allowable under section 
53710(a)(3) of this title for any of the vessels used as security for the guar-
antee. However, the Secretary may require such payments of principal prior 
to maturity, with respect to all related obligations, as the Secretary con-
siders necessary to maintain adequate security for the guarantee. 
‘‘§ 53712. Monitoring financial condition and operations of 
obligor 
‘‘(a) IN GENERAL.—The Secretary shall monitor the financial condition 
and operations of the obligor on a regular basis during the term of the 
guarantee. The Secretary shall document the results of the monitoring on 
an annual or quarterly basis depending on the condition of the obligor. If 
the Secretary determines that the financial condition of the obligor warrants 
additional protections to the Secretary, the Secretary shall take appropriate 
action under subsection (b). If the Secretary determines that the financial 
condition of the obligor jeopardizes its continued ability to perform its re-
sponsibilities in connection with the guarantee of an obligation by the Sec-
retary, the Secretary shall make an immediate determination whether de-
fault should take place and whether further measures described in sub-
section (b) should be taken to protect the interests of the Secretary while 
ensuring that program objectives are met. 
‘‘(b) CONTRACT PROVISIONS TO PROTECT SECRETARY.—The Secretary 
shall include provisions in a loan agreement with an obligor that provides 
additional authority to the Secretary to take action to limit potential losses 
in connection with a defaulted loan or a loan that is in jeopardy due to the 
deteriorating financial condition of the obligor. These provisions include re-
quirements for additional collateral or greater equity contributions that are 
effective upon the occurrence of verifiable conditions relating to the obligor’s 
financial condition or the status of the vessel or shipyard project. 
‘‘§ 53713. Administrative fees 
‘‘(a) IN GENERAL.—The Secretary shall charge and collect from the obli-
gor fees the Secretary considers reasonable for— 
‘‘(1) investigating an application for a guarantee; 
‘‘(2) appraising property offered as security for a guarantee; 
‘‘(3) issuing a commitment; 
‘‘(4) providing services related to an escrow fund under section 
53715 of this title; and 
‘‘(5) inspecting property during construction, reconstruction, or re-
conditioning.
153 
‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection (a) may 
not exceed 0.5 percent of the original principal amount of the obligations 
to be guaranteed. 
‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may charge 
and collect fees to cover the costs of independent analysis under section 
53708(d) of this title. Notwithstanding section 3302 of title 31, any fee col-
lected under this subsection shall— 
‘‘(1) be credited as an offsetting collection to the account that fi-
nances the administration of the loan guarantee program; 
‘‘(2) be available for expenditure only to pay the costs of activities 
and services for which the fee is imposed; and 
‘‘(3) remain available until expended. 
‘‘§ 53714. Guarantee fees 
‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall prescribe 
regulations to assess a fee for guaranteeing an obligation under this chap-
ter. 
‘‘(b) COMPUTATION OF FEE.— 
‘‘(1) IN GENERAL.—The amount of the fee for a guarantee under 
this chapter shall be equal to the sum of the amounts determined under 
paragraph (2) for the years in which the guarantee is in effect. 
‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred to in 
paragraph (1) for a year in which the guarantee is in effect is the 
present value of the amount calculated under paragraph (3). To deter-
mine the present value, the Secretary shall apply a discount rate deter-
mined by the Secretary of the Treasury, considering current market 
yields on outstanding obligations of the United States Government hav-
ing periods to maturity comparable to the period to maturity for the 
guaranteed obligation. 
‘‘(3) CALCULATION OF AMOUNT.—The amount referred to in para-
graph (2) shall be calculated by multiplying— 
‘‘(A) the estimated average unpaid principal amount of the obli-
gation that will be outstanding during the year (excluding the av-
erage amount, other than interest, on deposit during the year in 
an escrow fund under section 53715 of this title); by 
‘‘(B) the fee rate set under paragraph (4). 
‘‘(4) SETTING FEE RATES.—To set the fee rate referred to in para-
graph (3)(B), the Secretary shall establish a formula that— 
‘‘(A) takes into account the security provided for the guaranteed 
obligation; and 
‘‘(B) is a sliding scale based on the creditworthiness of the obli-
gor, using—
154 
‘‘(i) the lowest allowable rate under paragraph (5) for the 
most creditworthy obligors; and 
‘‘(ii) the highest allowable rate under paragraph (5) for the 
least creditworthy obligors. 
‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under para-
graph (4) shall be— 
‘‘(A) for a delivered vessel or equipment, at least 0.5 percent 
and not more than 1 percent; and 
‘‘(B) for a vessel to be constructed, reconstructed, or recondi-
tioned or equipment to be delivered, at least 0.25 percent and not 
more than 0.5 percent. 
‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an obligation 
under this chapter shall be collected not later than the date on which an 
amount is first paid on the obligation. 
‘‘(d) FINANCING THE FEE.—A fee paid under this section is eligible to 
be financed under this chapter and shall be included in the actual cost of 
the obligation guaranteed. 
‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not refundable. 
However, an obligor shall receive credit for the amount paid for the remain-
ing term of the obligation if the obligation is refinanced and guaranteed 
under this chapter after the refinancing. 
‘‘§ 53715. Escrow fund 
‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed under 
this chapter are to be used to finance the construction, reconstruction, or 
reconditioning of a vessel that will serve as security for a guarantee under 
this chapter, the Secretary may accept and hold in escrow, under an escrow 
agreement with the obligor, a portion of the proceeds of all obligations guar-
anteed under this chapter whose proceeds are to be so used which is equal 
to— 
‘‘(1) the excess of— 
‘‘(A) the principal amount of all obligations whose proceeds are 
to be so used; over 
‘‘(B) 75 percent or 87.5 percent, whichever is applicable under 
section 53709(b) of this title, of the amount paid by or for the 
account of the obligor for the construction, reconstruction, or re-
conditioning of the vessel; plus 
‘‘(2) any interest the Secretary may require on the amount described 
in paragraph (1). 
‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VES-
SELS.—If the security for the guarantee of an obligation relates both to a 
vessel to be constructed, reconstructed, or reconditioned and to a delivered
155 
vessel, the principal amount of the obligation shall be prorated for purposes 
of subsection (a) under regulations prescribed by the Secretary. 
‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— 
‘‘(1) PURPOSES.—The Secretary shall disburse amounts in the es-
crow fund, as specified in the escrow agreement, to— 
‘‘(A) pay amounts the obligor is obligated to pay for— 
‘‘(i) the construction, reconstruction, or reconditioning of a 
vessel used as security for the guarantee; and 
‘‘(ii) interest on the obligations; 
‘‘(B) redeem the obligations under a refinancing guaranteed 
under this chapter; and 
‘‘(C) pay any excess interest deposits to the obligor at times 
provided for in the escrow agreement. 
‘‘(2) MANNER OF PAYMENT.—If a payment becomes due under the 
guarantee before the termination of the escrow agreement, the amount 
in the escrow fund at the time the payment becomes due, including re-
alized income not yet paid to the obligor, shall be paid into the appro-
priate account under section 53717 of this title. The amount shall be 
credited against amounts due or to become due from the obligor to the 
Secretary on the guaranteed obligations or, to the extent not so re-
quired, be paid to the obligor. 
‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— 
‘‘(1) IN GENERAL.—No disbursement shall be made under subsection 
(c) to any person until the total amount paid by or for the account 
of the obligor from sources other than the proceeds of the obligation 
equals at least 25 percent or 12.5 percent, whichever is applicable 
under section 53709(b) of this title, of the aggregate actual cost of the 
vessel, as previously approved by the Secretary. If the aggregate actual 
cost of the vessel has increased since the Secretary’s initial approval 
or if it increases after the first disbursement is permitted under this 
subsection, then no further disbursements shall be made under sub-
section (c) until the total amount paid by or for the account of the obli-
gor from sources other than the proceeds of the obligation equals at 
least 25 percent or 12.5 percent, as applicable, of the increase, as de-
termined by the Secretary, in the aggregate actual cost of the vessel. 
This paragraph does not require the Secretary to consent to finance 
any increase in actual cost unless the Secretary determines that such 
an increase in the obligation meets all the terms and conditions of this 
chapter or other applicable law. 
‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The Sec-
retary shall, by regulation, establish a transparent, independent, and
156 
risk-based process for verifying and documenting the progress of 
projects under construction before disbursing guaranteed loan funds. 
At a minimum, the process shall require documented proof of progress 
in connection with the construction, reconstruction, or reconditioning of 
a vessel or vessels before disbursements are made from the escrow 
fund. The Secretary may require that the obligor provide a certificate 
from an independent party certifying that the requisite progress in con-
struction, reconstruction, or reconditioning has taken place. 
‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.— 
‘‘(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—
157 
‘‘(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 
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.
158 
‘‘(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. 
‘‘§ 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
159 
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-
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;
160 
‘‘(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. 
‘‘(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
161 
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 
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.
162 
‘‘(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 
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-
163 
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-
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.
164 
‘‘(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 
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—
165 
‘‘(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 
‘‘(B) the amount of guarantee authority available. 
‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may not 
guarantee or make a commitment to guarantee an obligation for an eligible 
export vessel unless the owner of the vessel agrees with the Secretary that 
the vessel will not be transferred to a country designated by the Secretary 
of Defense as a country whose interests are hostile to the interests of the 
United States. 
‘‘(e) REVIEW BY SECRETARY OF DEFENSE.— 
‘‘(1) NOTIFICATION.—The Secretary shall promptly notify the Sec-
retary of Defense of the receipt of an application for a loan guarantee 
for an eligible export vessel. 
‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30 days after 
receiving the notice, may disapprove the guarantee based on an assess-
ment of the potential use of the vessel in a manner that may harm the 
national security interests of the United States. The Secretary may not 
disapprove a guarantee solely because of the type of vessel to be con-
structed. 
‘‘(3) DELEGATION.—The authority of the Secretary of Defense to 
disapprove a guarantee under this subsection may be delegated only to 
a civilian officer of the Department of Defense appointed by the Presi-
dent by and with the advice and consent of the Senate. 
‘‘(4) PROHIBITION.—The Secretary may not make a loan guarantee 
disapproved by the Secretary of Defense under this subsection. 
‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue a com-
mitment to guarantee an obligation for an eligible export vessel under this 
chapter after the last date on which such a commitment may be issued 
under any treaty or convention entered into after November 30, 1993, that 
prohibits guarantee of such an obligation. 
‘‘§ 53733. Shipyard modernization and improvement 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term ‘advanced 
shipbuilding technology’ includes— 
‘‘(A) numerically controlled machine tools, robots, automated 
process control equipment, computerized flexible manufacturing 
systems, associated computer software, and other technology for
166 
improving shipbuilding and related industrial production that ad-
vance the state-of-the-art; and 
‘‘(B) novel techniques and processes designed to improve ship-
building quality, productivity, and practice, and to promote sus-
tainable development, including engineering design, quality assur-
ance, concurrent engineering, continuous process production tech-
nology, 
energy 
efficiency, 
waste 
minimization, 
design 
for 
recyclability or parts reuse, inventory management, upgraded 
worker skills, and communications with customers and suppliers. 
‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard fa-
cility’ means— 
‘‘(A) for operations on land— 
‘‘(i) a structure or appurtenance thereto designed for the 
construction, reconstruction, repair, rehabilitation, or refur-
bishment of a vessel, including a graving dock, building way, 
ship lift, wharf, or pier crane; 
‘‘(ii) the land necessary for the structure or appurtenance; 
and 
‘‘(iii) equipment that is for use with the structure or ap-
purtenance and that is necessary for performing a function 
referred to in clause (i); and 
‘‘(B) for operations not on land, a vessel, floating drydock, or 
barge built in the United States and used for, equipped to be used 
for, or of a type normally used for, performing a function referred 
to in subparagraph (A)(i). 
‘‘(3) MODERN
SHIPBUILDING
TECHNOLOGY.—The term ‘modern 
shipbuilding technology’ means the best available proven technology, 
techniques, and processes appropriate to enhancing the productivity of 
shipyards. 
‘‘(b) GENERAL AUTHORITY.—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 for advanced shipbuilding 
technology and modern shipbuilding technology of a general shipyard facility 
in the United States. Only a private shipyard is eligible to receive a guar-
antee. 
‘‘(c) 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. 
‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an obligation 
guaranteed under this chapter may not exceed 87.5 percent of the actual
167 
cost of the advanced shipbuilding technology or modern shipbuilding tech-
nology. 
‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the transfer 
of amounts from a department, agency, or instrumentality of the United 
States Government and may use those amounts to cover the cost (as defined 
in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) 
of making guarantees or commitments to guarantee under this section. 
‘‘§ 53734. Replacement of vessels because of changes in oper-
ating standards 
‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this 
chapter, the Secretary, on terms the Secretary may prescribe, may guar-
antee or make a commitment to guarantee the payment of the principal of 
and interest on an obligation that aids in financing or refinancing (including 
reimbursement of an obligor for expenditures previously made for) a con-
tract for the construction or reconstruction of a vessel if— 
‘‘(1) the vessel is designed and to be used for commercial use in 
coastwise, intercoastal, or foreign trade; 
‘‘(2) the construction or reconstruction is necessary to replace a ves-
sel that cannot continue to be operated because of a change required 
by law in the standards for the operation of vessels, and the applicant 
for the guarantee or commitment would not otherwise legally be able 
to continue operating vessels in the trades in which the applicant oper-
ated vessels before the change; 
‘‘(3) the applicant is presently engaged in transporting cargoes in 
vessels of the type and class that will be constructed or reconstructed 
under this section and agrees to employ vessels constructed or recon-
structed under this section as replacements only for vessels made obso-
lete by the change in operating standards; 
‘‘(4) the capacity of the vessels to be constructed or reconstructed 
under this section will not increase the cargo carrying capacity of the 
vessels being replaced; 
‘‘(5) the Secretary has not determined that the market demand for 
the vessel over its useful life will diminish so as to make granting the 
guarantee fiduciarily imprudent; 
‘‘(6) the vessel, if to be reconstructed, will have a useful life of at 
least 15 years after the reconstruction; and 
‘‘(7) the Secretary has considered the criteria specified in section 
53708(a)(3)–(5) of this title. 
‘‘(b) TERM AND AMOUNT OF OBLIGATION.— 
‘‘(1) TERM.—The term of an obligation guaranteed under this sec-
tion may not exceed 25 years.
168 
‘‘(2) AMOUNT.—The amount of an obligation guaranteed under this 
section may not exceed 87.5 percent of the actual cost or depreciated 
actual cost to the applicant for the construction or reconstruction of 
the vessel. The Secretary may not establish a percentage under this 
paragraph that is to be applied uniformly to all guarantees or commit-
ments to guarantee made under this section. 
‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—A guarantee or commit-
ment to guarantee under this section is also subject to sections 53701, 
53702(a), 53704, 53705, 53707(a), 53708(d) and (e), 53709(a), 
53710(a)(1), (2), and (4) and (c), 53711(a), 53713, 53714, 53717, and 
53721–53725 of this title. 
‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by reg-
ulation that an applicant under this section provide adequate security 
against default. 
‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for the guar-
antee of an obligation under this section that is in addition to the fee estab-
lished under section 53714 of this title. The fee may be— 
‘‘(1) an annual fee of not more than an additional 1 percent added 
to the fee established under section 53714 of this title; or 
‘‘(2) a fee based on the amount of the obligation versus the percent-
age of the obligor’s fleet being replaced by vessels constructed or recon-
structed under this section. 
‘‘§ 53735. Fisheries financing and capacity reduction 
‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing 
capacity reduction program established under section 312 of the Magnuson- 
Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a). 
‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee the repay-
ment of debt obligations issued by entities under this section. Debt obliga-
tions to be guaranteed may be issued by any entity that has been approved 
by the Secretary and has agreed with the Secretary to conditions the Sec-
retary considers necessary for this section to achieve the objective of the 
program and to protect the interest of the United States. 
‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed 
under this section shall— 
‘‘(1) be treated in the same manner and to the same extent as other 
obligations guaranteed under this chapter, except with respect to provi-
sions of this chapter that by their nature cannot be applied to obliga-
tions guaranteed under this section; 
‘‘(2) have the fishing fees established under the program paid into 
a separate subaccount of the fishing capacity reduction fund estab-
lished under this section;
169 
‘‘(3) not exceed $100,000,000 in an unpaid principal amount out-
standing at any one time for a program; 
‘‘(4) have such maturity (not to exceed 20 years), take such form, 
and contain such conditions as the Secretary determines necessary for 
the program to which they relate; 
‘‘(5) have as the exclusive source of repayment (subject to the second 
sentence of subsection (d)(2)) and as the exclusive payment security, 
the fishing fees established under the program; and 
‘‘(6) at the discretion of the Secretary be issued in the public market 
or sold to the Federal Financing Bank. 
‘‘(d) FISHING CAPACITY REDUCTION FUND.— 
‘‘(1) IN GENERAL.—There is a separate account in the Treasury, 
known as the Fishing Capacity Reduction Fund. Within the Fund, at 
least one subaccount shall be established for each program into which 
shall be paid all fishing fees established under the program and other 
amounts authorized for the program. 
‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall be 
available, without appropriation or fiscal year limitation, to the Sec-
retary to pay the cost of the program, including payments to financial 
institutions to pay debt obligations incurred by entities under this sec-
tion. Funds available for this purpose from other amounts available for 
the program may also be used to pay those debt obligations. 
‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently 
needed for the purpose of this section shall be kept on deposit or in-
vested in obligations of the United States Government. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations the Sec-
retary considers necessary to carry out this section. 
‘‘CHAPTER 539—WAR RISK INSURANCE 
‘‘Sec. 
‘‘53901.
Definitions. 
‘‘53902.
Authority to provide insurance. 
‘‘53903.
Insurable interests. 
‘‘53904.
Liability insurance for persons involved in war or defense efforts. 
‘‘53905.
Agency insurance. 
‘‘53906.
Hull insurance valuation. 
‘‘53907.
Reinsurance. 
‘‘53908.
Additional insurance privately obtained. 
‘‘53909.
War risk insurance revolving fund. 
‘‘53910.
Administrative. 
‘‘53911.
Civil actions for losses. 
‘‘53912.
Expiration date. 
‘‘§ 53901. Definitions 
‘‘In this chapter: 
‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’ includes— 
‘‘(A) a documented vessel with a registry or coastwise endorse-
ment under chapter 121 of this title;
170 
‘‘(B) an undocumented vessel owned or chartered by or made 
available to the United States Government; and 
‘‘(C) a tug, barge, or other watercraft (whether or not docu-
mented) owned by a citizen of the United States and used in es-
sential water transportation or in the fisheries, except only for 
sport fishing. 
‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty container 
on a vessel. 
‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF THE 
UNITED STATES.—The term ‘transportation in the waterborne com-
merce of the United States’ includes the operation of a vessel in the 
fisheries, except only for sport fishing. 
‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the 
Secretary of Transportation determines— 
‘‘(A) any part of a loss excluded from marine insurance cov-
erage under a ‘free of capture or seizure’ clause or analogous 
clause; and 
‘‘(B) any other loss from a hostile act, including confiscation, 
expropriation, nationalization, or deprivation. 
‘‘§ 53902. Authority to provide insurance 
‘‘(a) IN GENERAL.—With the approval of the President, and after such 
consultation with interested agencies of United States Government as the 
President may require, the Secretary of Transportation may provide insur-
ance and reinsurance against loss or damage from war risks as provided by 
this chapter whenever it appears to the Secretary that insurance adequate 
for the needs of the waterborne commerce of the United States cannot be 
obtained on reasonable terms and conditions from companies authorized to 
do insurance business in a State of the United States. 
‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under this 
chapter shall be based, insofar as practicable, on consideration of the risk 
involved. 
‘‘(c) AVAILABILITY
OF VESSEL DURING WAR
OR NATIONAL EMER-
GENCY.—Insurance or reinsurance for a vessel may be provided under this 
chapter only on the condition that the vessel will be available to the Govern-
ment in time of war or national emergency. 
‘‘§ 53903. Insurable interests 
‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur-
ance and reinsurance under this chapter for— 
‘‘(1) an American vessel, including a vessel under construction; 
‘‘(2) a foreign vessel— 
‘‘(A) owned by a citizen of the United States; or
171 
‘‘(B) engaged in transportation in the waterborne commerce of 
the United States or in such other transportation by water or such 
other services as the Secretary considers to be in the interest of 
the national defense or national economy of the United States, 
when so engaged; 
‘‘(3) cargo— 
‘‘(A) shipped or to be shipped on a vessel insurable under this 
section, including by express or registered mail; 
‘‘(B) owned by a citizen or resident of the United States; 
‘‘(C) imported to or exported from the United States, or sold 
or purchased by a citizen or resident of the United States, under 
a contract of sale or purchase the terms of which provide that the 
risk of loss by war risks or the obligation to provide insurance 
against war risks is on a citizen or resident of the United States; 
or 
‘‘(D) shipped between ports in the United States; 
‘‘(4) disbursements, including advances to masters and general aver-
age disbursements, and freight and passage money of a vessel insurable 
under this section; 
‘‘(5) personal effects of an individual on a vessel insurable under this 
section; 
‘‘(6) loss of life, injury, or detention by an enemy of the United 
States after capture, with respect to an individual on a vessel insurable 
under this section; and 
‘‘(7) statutory or contractual obligations or other liabilities of a ves-
sel insurable under this section or of the owner or charterer of such 
a vessel, of a nature customarily covered by insurance. 
‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining whether 
to provide insurance or reinsurance for a foreign vessel, the Secretary shall 
consider the characteristics, employment, and general management of the 
vessel by the owner or charterer. 
‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection (a)(5)–(7), 
insofar as it involves a liability related to an individual on the vessel, may 
include risks other than war risks to the extent the Secretary considers ad-
visable. 
‘‘§ 53904. Liability insurance for persons involved in war or 
defense efforts 
‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur-
ance under this chapter against legal liability that a person may incur in 
providing services or facilities for a vessel if, in the opinion of the Secretary, 
the insurance—
172 
‘‘(1) is required in prosecuting a war or for national defense; and 
‘‘(2) cannot be obtained at reasonable rates or on reasonable terms 
and conditions from approved companies authorized to do insurance 
business in a State of the United States. 
‘‘(b) LIMITATIONS.—Employer liability insurance and worker compensa-
tion insurance against legal liability to employees may not be provided under 
this section. 
‘‘§ 53905. Agency insurance 
‘‘(a) IN GENERAL.—With the approval of the President, an agency of the 
United States Government may obtain insurance provided for by this chap-
ter from the Secretary of Transportation, except as provided in sections 
17302 and 17303 of title 40. 
‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec-
retary of Transportation may provide insurance under this chapter at the 
request of the Secretary of Defense and other agencies the President may 
prescribe, without payment of an insurance premium if the Secretary of De-
fense or agency agrees to indemnify the Secretary of Transportation against 
loss covered by the insurance. The Secretary of Defense and agencies may 
make such an indemnity agreement. 
‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President (or an 
official designated by the President) on the agreement shall be treated as 
the approval required by section 53902(a) of this title. 
‘‘§ 53906. Hull insurance valuation 
‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for 
actual or constructive total loss of the insured vessel shall be a stated valu-
ation determined by the Secretary of Transportation. The stated valu-
ation— 
‘‘(1) shall exclude national defense features paid for by the United 
States Government; and 
‘‘(2) may not exceed the amount that would be payable if the owner-
ship of the vessel had been requisitioned under chapter 563 of this title 
at the time the insurance attached under the policy. 
‘‘(b) REJECTING STATED VALUATION.—Within 60 days after the insur-
ance attaches under a policy referred to in subsection (a) or within 60 days 
after the Secretary determines the valuation, whichever is later, the insured 
may reject the valuation and pay, at the rate provided in the policy, pre-
miums based on the asserted valuation the insured specifies at the time of 
rejection. However, the asserted valuation is not binding on the Government 
in any subsequent action on the policy. 
‘‘(c) AMOUNT OF CLAIM.—If a vessel is actually or constructively totally 
lost and the insured under a policy referred to in subsection (a) has not
173 
rejected the stated valuation determined by the Secretary, the amount of a 
claim adjusted, compromised, settled, adjudged, or paid may not exceed the 
stated valuation. However, if the insured has rejected the valuation, the in-
sured— 
‘‘(1) shall be paid, as a tentative advance only, 75 percent of the 
stated valuation; and 
‘‘(2) may bring a civil action against the United States in a court 
having jurisdiction of the claim to recover a valuation equal to the just 
compensation the court determines would have been payable if the own-
ership of the vessel had been requisitioned under chapter 563 of this 
title at the time the insurance attached under the policy. 
‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination as pro-
vided under subsection (c)(2), premiums paid under the policy shall be ad-
justed based on the court’s determination and the rates provided for in the 
policy. 
‘‘§ 53907. Reinsurance 
‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is au-
thorized to provide insurance under this chapter, the Secretary may provide 
reinsurance to a company authorized to do insurance business in a State 
of the United States. The Secretary may obtain reinsurance from such a 
company for any insurance provided by the Secretary under this chapter. 
‘‘(b) RATES.—The Secretary may not provide reinsurance at rates less 
than, nor obtain reinsurance at rates more than, the rates established by 
the Secretary on the same or similar risks or the rates charged by the insur-
ance company for the insurance reinsured, whichever is more advantageous 
to the Secretary. However, the Secretary may provide an allowance to the 
insurance company for the costs of services and facilities the company pro-
vides, in an amount the Secretary considers reasonable according to good 
business practice. The allowance to the company may not include any 
amount for soliciting or stimulating insurance business. 
‘‘§ 53908. Additional insurance privately obtained 
‘‘With the approval of the Secretary of Transportation, a person having 
an insurable interest in a vessel may obtain insurance on the vessel with 
other underwriting agents in addition to the insurance with the Secretary. 
The Secretary is not entitled to the benefit of the additional insurance. 
‘‘§ 53909. War risk insurance revolving fund 
‘‘(a) IN GENERAL.—There is a war risk insurance revolving fund in the 
Treasury. 
‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts appro-
priated to carry out this chapter and amounts received in carrying out this 
chapter.
174 
‘‘(c) PAYMENTS.—There shall be paid from the fund amounts for return 
premiums, losses, settlements, judgments, and all liabilities incurred by the 
United States Government under this chapter. 
‘‘(d) INVESTMENT.—The Secretary of Transportation may request the 
Secretary of the Treasury to invest such portion of the fund as is not, in 
the judgment of the Secretary of Transportation, required to meet the cur-
rent needs of the fund. These investments shall be made by the Secretary 
of the Treasury in public debt securities of the Government, with maturities 
suitable to the needs of the fund, and bearing interest rates determined by 
the Secretary of the Treasury, taking into consideration current market 
yields on outstanding marketable obligations of the Government of com-
parable maturity. Interest and benefits from the securities shall be deposited 
in the fund. 
‘‘§ 53910. Administrative 
‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 
chapter, the Secretary of Transportation may act in accordance with com-
mercial practice in the marine insurance business. 
‘‘(b) REGULATIONS.—The Secretary may prescribe regulations the Sec-
retary considers appropriate to carry out this chapter. 
‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may pre-
scribe and change forms and policies, and fix and change the amounts in-
sured and rates of premium, under this chapter. 
‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an annual 
fee in an amount calculated to cover the expenses of processing applications 
for insurance, employing underwriting agents, and appointing experts under 
this chapter. 
‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may settle 
and pay claims, and pay judgments against the United States, related to 
insurance under this chapter. 
‘‘(f) UNDERWRITING AGENTS.— 
‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary 
finds it practical to do so shall, employ a domestic company or group 
of domestic companies, authorized to do marine insurance business in 
a State of the United States, to act as underwriting agent for the Sec-
retary. The services of an underwriting agent may be used in adjusting 
claims, but a claim may not be paid until approved by the Secretary. 
‘‘(2) COMPENSATION.—The Secretary may allow the company or 
group of companies reasonable compensation for services as the under-
writing agent. The compensation may include an allowance for expenses 
reasonably incurred by the agent, but may not include any amount for 
soliciting or stimulating business.
175 
‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in sub-
section (f)(2), the Secretary may not pay an insurance broker or other per-
son acting in a similar intermediary capacity a fee or other consideration 
for participating in arranging insurance when the Secretary directly insures 
any of the risk. 
‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, 
without regard to the laws and regulations on the employment of Federal 
employees, may appoint and prescribe the duties of experts in marine insur-
ance as the Secretary considers necessary to carry out this chapter. 
‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the consent of 
another agency of the United States Government, the Secretary may use in-
formation, services, facilities, officers, and employees of the agency in car-
rying out this chapter. 
‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by 
regulation vessel location reporting requirements for a vessel insured under 
this chapter. 
‘‘§ 53911. Civil actions for losses 
‘‘(a) IN GENERAL.—If there is a disagreement about a loss insured under 
this chapter, a civil action in admiralty may be brought against the United 
States in the district court of the United States for the district in which 
the plaintiff or the plaintiff’s agent resides. If the plaintiff has no residence 
in the United States, the action may be brought in the United States Dis-
trict Court for the District of Columbia or in the district court for any dis-
trict in which the Attorney General agrees to accept service. Any person 
who may have an interest in the insurance may be made a party, either ini-
tially or on the motion of either party. 
‘‘(b) EXCLUSIVE REMEDY.—A civil action against the United States 
under this section is exclusive of any other action by reason of the same 
subject matter against an officer, employee, or agent employed or retained 
by the Government under this chapter. 
‘‘(c) PROCEDURE.—A civil action under this section shall be heard and 
determined under chapter 309 of this title. 
‘‘(d) TOLLING OF LIMITATIONS PERIOD.—If a claim is filed with the Sec-
retary of Transportation, the running of the limitations period for bringing 
a civil action is suspended until the Secretary denies the claim, and for 60 
days thereafter. The Secretary is deemed to have denied the claim if the 
Secretary does not act on the claim within 6 months after the claim is filed, 
unless the Secretary for good cause shown agrees with the claimant on a 
different period for the Secretary to act on the claim. 
‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of 
the Government under the insurance and there is a dispute about the per-