153 
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. 
‘‘(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. 
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‘‘§ 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— 
‘‘(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. 
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‘‘(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 
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 
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‘‘(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 
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.— 
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