166 
‘‘(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 
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-
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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 
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 
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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. 
‘‘(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 
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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; 
‘‘(3) not exceed $100,000,000 in an unpaid principal amount out-
standing at any one time for a program; 
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