An Act to amend the Merchant Marine Act, 1936, as amended
PL 92-507 (H.R.9756), enacted 10/19/1972

41 Stat. 1000; 
49 Stat. 424. 
86 STAT. ] 
PUBLIC LAW 92-507-OCT. 19, 1972 
909 
Public Law 92-507 
A N A C T 
October 19, 1972 
ToamendtheMerchantMarineAct, 1986, asanieiuled. 
—[H. R. 9756]— 
Be It enacted hy the Senate and House of Representat'irea of the 
United States of A^nerica in Congress assembled. 
Financing A'CT o
f 
SECTION 1. Section 1101 of the Merchant Marine Act, 1986, as 1972. 
amended (46 U.S.C. 1271), is amended by striking out the entire sec- g/itat^Voa^s^^' 
tion and inserting the following: 
"SEC. 1101. AS used in this title— 
Definitions. 
"(a) The term 'mortgage' includes a preferred mortgage as defined 
in the Ship Mortgage Act, 1920, as amended, on any vessel of the 
_ 
_ 
United States (other than a towboat, barge, scow, lighter, car float, 46 use 922. 
canal boat, or tank vessel of less than twenty-five gross tons), and a 
mortgage on such a vessel which will become a preferred mortgage 
when recorded and endorsed as required by the Ship Mortgage Act, 
1920, as amended: 
"(b) The term 'vessel' includes all types, whether in existence or 
under construction, of passenger cargo and combination passenger-
cargo carrying vessels, tankers, tugs, towboats, barges and dredges 
which are or will be documented under the laws of the United States, 
fishing vessels whose ownership will meet the citizenship requirements 
for documenting vessels in the coastwise trade within the meaning of 
section 2 of the Shipping Act, 1916, as amended, floating drydocks 73'*sta!?597°°^' 
which have a capacity of thirty-five thousand or more lifting tons and 
46 use 802. 
a beam of one hundred and tw^enty-five feet or more between the wing 
walls and oceanographic research or instruction or pollution treatment, 
abatement or control vessels owned by citizens of the United States; 
"(c) The term 'obligation' shall mean any note, bond, debenture, or 
other evidence of indebtedness (exclusive of notes or other obligations 
•; 
. 
issued by the Secretary of Commerce pursuant to subsection (d) of 
section 1105 of this title and obligations eligible for investment of 
POS^ p. 914. 
funds under section 1102 and subsection (d) of section 1108 of this ^^Pyt. pp. 910, 
title), issued for one of the purposes specified in subsection (a) of 
section 1104 of this title; 
P°S'. P- 9IO. 
"(d) The term 'obligor' shall mean any party primarily liable for 
payment of the principal of or interest on any obligation; 
(e) The term 'obligee' shall mean the holder of an obligation; 
• ^'^^^'i 
"(f) The term 'actual cost' of a vessel as of any specified date means 
the aggregate, as determined by the Secretary of Commerce, of (i) all 
amounts paid by or for the account of the obligor on or before that 
date, and (ii) all amounts which the obligor is then obligated to pay 
from time to time thereafter, for the construction, reconstruction, or 
reconditioning of such vessel; 
"(g) The term 'depreciated actual cost' of a vessel means the actual 
cost of the vessel depreciated on a straightline basis over the useful 
life of the vessel as determined by the Secretary of Commerce, not to 
exceed twenty-five years from the date the vessel was delivered by the 
shipbuilder, or, if the vessel has been reconstructed or reconditioned, 
the actual cost of the vessel depreciated on a straightline basis from 
the date the vessel was delivered by the shipbuilder to the date of such 
reconstruction or reconditioning on the basis of the original useful life 
of the vessel and from the date of such reconstruction or recondition-
ing on a straightline basis and on the basis of a useful life of the vessel 
determined by the Secretary of Commerce, plus all amounts paid or 
obligated to be paid for the reconstruction or reconditioning depreci-
ated on a straightline basis and on the basis of a useful life of the vessel 
determined by the Secretary of Commerce; and 
910 
PUBLIC LAW 92-507-OCT. 19, 1972 
[86 STAT. 
68 Stat. 1268; 
73 Stat. 269. 
46 u s e 1276a. 
Obligations, 
guaranteed pay-
ment. 
Security inter-
est, conveyance. 
Limitation. 
Infra. 
Post, 
p. 916. 
Guarantee, 
validity. 
Limitation. 
Eligibility re-
quirements. 
Supra. 
"(h) The terms 'construction', 'reconstruction', or 'reconditioning' 
shall include, but shall not be limited to, designing, inspecting, out-
fitting, and equipping." 
SEC. 2. Section 1102 of the Merchant Marine Act, 1936 (46 U.S.C. 
1272) is amended as follows: 
(1) By striking from the first sentence thereof the words "Federal 
Ship Mortgage Insurance Fund (hereinafter referred to as the fund)" 
and inserting in lieu thereof the words "Federal Ship Financing Fund 
(hereinafter referred to as the Fund)". 
(2) By deleting the word "fund" immediately preceding the words 
"the sum of $1,000,000" and inserting in lieu thereof the w^ord 
"Fund". 
(3) By deleting the words "Section 1110 (46 U.S.C. 1279)" at the 
end of the first sentence thereof and inserting in lieu thereof "Section 
1107 (46 U.S.C. 
)". 
(4) By deleting the word "fund" from the last sentence thereof 
wherever it appears and inserting in lieu thereof the word "Fund". 
SEC. 3. Sections 1103 through 1109 of the Merchant Marine Act, 
1936 (46 U.S.C. 1273-1278) are amended by striking such sections 
entirely and inserting in lieu thereof the following: 
"SEC. 1103. (a) The Secretary of Commerce, upon application by 
a citizen of the L^nited States, is authorized to guarantee, and to 
enter into commitments to guarantee, the payment of the interest on, 
and the unpaid balance of the principal of, any obligation which is 
eligible to be guaranteed under this title. 
"(b) No obligation shall be guaranteed under this title unless the 
obligor conveys or agrees to convey to the Secretary of Commerce 
such security interest, which may include a mortgage or mortgages 
on a vessel or vessels^ as the Secretary of Commerce may reasonably 
require to protect the interests of the United States. 
"(c) The Secretary of Commerce shall not guarantee the princi-
pal of obligations in an amount in excess of 75 per centum, or 87VI 
per centum, whichever is applicable under section 1104 of this title, 
of the amount, as determined by the Secretary of Commerce w^hich 
determination shall be conclusive, paid hj or for the account of the 
obligor for the construction, reconstruction, or reconditioning of a 
vessel or vessels with respect to which a security interest has been 
conveyed to the Secretary of Commerce, unless the obligor creates an 
escrow fund as authorized by section 1108 of this title, in which case 
the Secretary of Commerce may guarantee 75 per centum or 871/1 
per centum, whichever is applicable under section 1104 of this title, 
of the actual cost of such vessel or vessels. 
"(d) The full faith and credit of the United States is pledged to the 
payment of all guarantees made under this title with respect to 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 payment in full of the guarantee. 
"(e) Any guarantee, or commitment to guarantee, made by the Sec-
retary of Commerce under this title shall be conclusive evidence of the 
eligibility of the obligations for such guarantee, and the validity of any 
guarantee, or commitment to guarantee, so made shall be incontestable. 
"(f) The aggregate unpaid principal amount of the obligations 
guaranteed under this section and outstanding at any one time shall 
not exceed $3,000,000,000. 
"SEC. 1104. (a) Pursuant to the authority granted under section 
1103(a), the Secretary of Commerce, upon such terms as he shall pre-
scribe, may guarantee or make a commitment to guarantee, payment 
of the principal of and interest on an obligation which aids in— 
86 STAT. ] 
PUBLIC LAW 92-507-OCT. 19, 1972 
911 
52 Stat. 964; 
84 Stat. 1034. 
46 u s e 1244 
1151. 
Limitation. 
Post, 
p. 914. 
"(1) financing, including reimbursement of an obligor for 
expenditures previously made for, construction, reconstruction, 
or reconditioning of a vessel or vessels owned by citizens of the 
United States which are designed principally for research, or for 
commercial use (A) in the coastwise or intercoastal trade; (B) 
on the Great Lakes, or on bays, sounds, rivers, hitrbors, or inland 
lakes of the United States; (C) in foreign trade as defined in 
section 905 of this Act for purposes of title V of this Act; (D) 
in the fishing trade or industry; or (E) with respect to floating 
drydocks, in the construction, reconstruction, reconditioning, or 
repair of vessels: Provided, 
hoioever. That no guarantee shall 
be entered into pursuant to this paragraph (a) (1) later than one 
year after delivery, or redelivery in the case of reconstruction or 
reconditioning of any such vessel unless the proceeds of the obli-
gation are used to finance the construction, reconstruction, or 
reconditioning of a vessel or vessels, or facilities or equipment 
pertaining to marine operations; 
"(2) financing the purchase of vessels theretofore acquired by 
the Fund under the provisions of section 1105 and reconditioning 
and reconstructing such vessels; 
"(3) financing, m whole or in part, the repayment to the United 
States of any amount of construction-differential subsidy paid 
with respect to a vessel pursuant to title V of this Act, as 
amended; or 
"(4) refinancing existing obligations issued for one of the pur-
poses specified in (1), (2), or (3) whether or not guaranteed 
under this title, including, but not limited to, short-term obliga-
tions incurred for the purpose of obtaining temporary funds with 
the view to refinancing from time to time. 
" (b) Obligations guaranteed under this title— 
"(1) shall have an obligor approved by the Secretary of Com-
merce as responsible and possessing the ability, experience, finan-
cial resources, and other qualifications necessary to the adequate 
operation and maintenance of the vessel or vessels which serve as 
security for the guarantee of the Secretary of Commerce; 
"(2) subject to the provisions of paragraph (1) of subsection 
(c) of this section, shall be in an aggregate principal amount 
which does not exceed 75 per centum of the actual cost or depreci-
ated actual cost, as determined by the Secretary of Commerce, of 
the vessel which is used as security for the guarantee of the Secre-
tary of Commerce: Provided, however, That in the case of a vessel, 
the size and speed of w^hich are approved by the Secretary of 
Commerce, and which is or would have been eligible for mort-
gage aid for construction under section 509 of this Act (or would 
^"'^' P- 528. 
have been eligible for mortgage aid under section 509 of this Act 
except that the vessel was built with the aid of construction-
differential subsidy and said subsidy has been repaid) and in 
respect of which t^he minimum downpayment by the mortgagor 
required by that section would be or would have been 121^ per 
centum of the cost of such vessel, such obligations may be in an 
amount which does not exceed 87y2 per centum of such actual cost 
or depreciated actual cost: Provided, further, That the obligations 
which relate to a barge which is constructed without the aid of 
construction-difTerential subsidy, or, if so subsidized, on which 
said subsidy has been repaid, may be in an aggregate principal 
amount which does not exceed 87i^ per centum of the actual cost 
or depreciated actual cost thereof; 
"(3) shall have maturity dates satisfactory to the Secretary 
of Commerce but, subject to the provisions of paragraph (2) of 
Limitations. 
Maturity dates. 
912 
PUBLIC LAW 92-507-OCT. 19, 1972 
[86 
STAT. 
Standards. 
46 u s e 1151. 
Security. 
subsection (c) of this section, not to exceed twenty-five years from 
the date of the delivery of the vessel which serves as security for 
the guarantee of the Secretary of Commerce or, if the vessel has 
been reconstructed or reconditioned, not to exceed the later of (i) 
twenty-five years from the date of delivery of the vessel and (ii) 
the remaining years of the useful life of the vessel as determined 
by the Secretary of Commerce; 
"(4) shall provide for payments by the obligor satisfactory to 
the Secretary of Commerce; 
"(5) shall bear interest (exclusive of charges for the guaran-
tee and service charges, if any) at rates not to exceed such per 
centum per annum on the unpaid principal as the Secretary of 
Commerce determines to be reasonable, taking into account the 
range of interest rates prevailing in the private market for simi-
lar loans and the risks assumed by the Secretary of Commerce; 
"(6) shall provide, or a related agreement shall provide, that 
if the vessel used as security for the guarantee of the Secretary of 
Commerce is a delivered vessel, the vessel shall be in class A-1, 
American Bureau of Shipping, or shall meet such other standards 
as may be acceptable to the Secretary of Commerce, with all 
required certificates, including but not limited to, marine inspec-
tion certificates of the United States Coast Guard, with all out-
standing requirements and recommendations necessary for reten-
tion of class accomplished, unless the Secretary of Commerce 
permits a deferment of such repairs, and shall be tight, stanch, 
strong, and well and sufficiently tackled, appareled, furnished, 
and equipped, and in every respect seaworthy and in good running 
condition and repair, and in all respects fit for service; and 
"(7) may provide, or a related agreement may provide, if the 
vessel used as security for the guarantee of the Secretary of Com-
merce is a passenger vessel having the tonnage, speed, passenger 
accommodations and other characteristics set forth in title V of 
this Act, as amended, and if the Secretary of Commerce approves, 
that the sole recourse against the obligor by the United States for 
any payments under the guarantee shall be limited to repossession 
of the vessel and the assignment of insurance claims and that the 
liability of the obligor for any payments of principal and interest 
under the guarantee shall be satisfied and discharged by the sur-
render of the vessel and all right, title, and interest therein to the 
United States: Provided^ That the vessel upon surrender shall 
be (i) free and clear of all liens and encumbrances whatsoever 
except the security interest conveyed to the Secretary of Com-
merce under this title, (ii) in class, and (iii) in as good order and 
condition, ordinary wear and tear excepted, as when acquired by 
the obligor, except that any deficiencies with respect to freedom 
from encumbrances, condition and class may, to the extent covered 
by valid policies of insurance, be satisfied by the assignment to the 
Secretary of Commerce of claims of the obligor under such 
policies. 
"(c) (1) The security for the guarantee of an obligation by the Sec-
retary of Commerce under this title may relate to more than one vessel 
and maj consist of any combination of types of security. The aggre-
gate principal amount of obligations which have more than one vessel 
as security for the guarantee of the Secretary of Commerce under this 
title may equal, but not exceed, the sum of the principal amount of 
obligations permissible with respect to each vessel. 
"(2) If the security for the guarantee of an obligation by the Sec-
86 STAT. ] 
PUBLIC LAW 92-507-OCT. 19, 1972 
913 
retary of Commerce under this title relates to more than one vessel, 
such obligation may have the latest maturity date permissible under 
subsection (b) of this section with respect to any of such vessels: 
Provided^ That the Secretary of Commerce may require such payments 
of principal, prior to maturity, with respect to all related obligations 
as he deems necessary in order to maintain adequate security for his 
guarantee. 
"(d) No commitment to guarantee an obligation shall be made by the 
Fishmg ves-
Secretary of Cormnerce unless he finds, at or prior to the time such *^^^" 
(Commitment is made, that the property or project with respect to 
which the obligation will be executed will be, in his opinion, economi- 
• 
• 
cally sound and in the case of fishing vessels, that the purpose of the 
financing or refinancing is consistent with the wise use of the fisheries 
resources and with the development, advancement, management, con-
servation, and protection of the fisheries resources, and no obligation, 
unless made pursuant to a prior commitment, shall be guaranteed 
unless the Secretary of Commerce finds, at or prior to the time the 
guarantee becomes effective, that the property or project with respect 
to which the obligation is executed will be, in his opinion, economically 
sound and in the case of fishing vessels, that the purpose of the 
financing or refinancing is consistent with the wise use of the fisheries 
resources and with the development, advancement, management, con-
servation, and protection of the fisheries resources. 
"(e) The Secretary of Commerce is authorized to fix a fee for the 
^^®' 
guarantee of an obligation under this title. If the security for the guar-
antee of an obligation under this title relates to a delivered vessel, such 
fee shall not be less than one-half of 1 per centum per annum nor more 
than 1 per centum per annum of the average principal amount of such 
obligation outstanding, excluding the average amount 
(except 
interest) on deposit in an escrow fund created under section 1108 of 
this Act. If the security for the guarantee of an obligation under this 
^°*'' P- 9i6. 
title relates to a vessel to be constructed, reconstructed, or recondi-
tioned, such fee shall not be less than one-quarter of 1 per centum per 
annum nor more than one-half of 1 per centum per annum of the aver-
age principal amount of such obligation outstanding, excluding the 
average amount (except interest) on deposit in an escrow fund created 
under section 1108 of this Act. For purposes of this subsection (e), if 
the security for the guarantee of an obligation under this title relates 
both to a delivered vessel or vessels and to a vessel or vessels to be con-
structed, reconstructed, or reconditioned, the principal amount of such 
obligation shall be prorated in accordance with regulations prescribed 
by the Secretary of Commerce. Fee payments shall be made by the 
r'. > d 
obligor to the Secretary of Commerce when moneys are first advanced 
under a guaranteed obligation and at least sixty days prior to each 
anniversary date thereafter. All fees shall be computed and shall be 
payable to the Secretary of Commerce under such regulations as the 
Secretan^ of Commerce may prescribe. 
"(f) The Secretary of Commerce shall charge and collect from the ^h"^apV'^^*'°"^' 
obligor such amounts as he may deem reasonable for the investigation 
of applications for a guarantee, for the appraisal of properties offered 
as security for a guarantee, for the issuance of commitments, for serv-
ices in connection with the escrow fund authorized by section 1108 and 
for the inspection of such properties during construction, reconstruc-
tion, or reconditioning: Provided. 
That such charges shall not 
aggregate more than one-half of 1 per centum of the original principal 
amount of the obligations to be guaranteed. 
charges. 
914 
PUBLIC LAW 92-507-OCT. 19, 1972 
[86 STAT. 
"(g) All moneys received by the Secretary of Commerce under the 
Ante. p. 909. 
provlslons of scctions 1101-1107 of this title shall be deposited in the 
Fund. 
"(h) Obligations guaranteed under this title and agreements 
relating thereto shall contain such other provisions with respect to the 
protection of the security interests of the United States (including 
acceleration and subrogation provisions and the issuance of notes by 
the obligor to the Secretary of Commerce), liens and releases of liens, 
payments of taxes, and such other matters as the Secretary of Com-
merce may, in his discretion, prescribe. 
°^^^""' 
"SEC. 1105. (a) In the event of a default, which has continued for 
thirty days, in any payment by the obligor of principal or interest 
due under an obligation guaranteed under this title, the obligee 
or his agent shall have the right to demand, at or before the expira-
tion of such period as may be specified in the guarantee or related 
agreements, but not later than ninety days from the date of such 
default, payment by the Secretary of Commerce of the unpaid prin-
cipal amount of said obligation and of the unpaid interest thereon 
to the date of payment. Within such period as may be specified in the 
guarantee or related agreements, but not later than thirty days from 
the date of such demand, the Secretary of Commerce shall promptly 
pay to the obligee or his agent the unpaid principal amount of said 
obligation and unpaid interest thereon to the date of payment: Pro-
vided, That the Secretary of Commerce shall not be required to make 
such payment if prior to the expiration of said period he shall find that 
there was no default by the obligor in the payment of principal or 
interest or that such default has been remedied prior to any such 
demand. 
"(b) In the event of a default under a mortgage, loan agreement, 
or other security agreement between the obligor and the Secretary of 
Commerce, the Secretary of Commerce may notify the obligee or his 
agent of such default and the obligee or his agent shall have the 
right to demand at or before the expiration of such period as may be 
specified in the guarantee or related agreements, but not later than 
sixty days from the date of such notice, payment by the Secretary of 
Commerce of the unpaid principal amount of said obligation and of 
the unpaid interest thereon. Within such period as may be specified 
in the guarantee or related agreements, but not later than thirty days 
from the date of such demand, the Secretary of Commerce shall 
promptly pay to the obligee or his agent the unpaid principal amount 
of said obligation and unpaid interest thereon to the date of payment. 
Security rights, 
"(^c) In the cveut of any payment by the Secretary of Commerce 
under subsection (a) or (b) of this section, the Secretary of Com-
merce shall have all rights in any security held by him relating to his 
guarantee of such obligations as are conferred upon him under any 
security agreement with the obligor. Notwithstanding any other pro-
vision of law relating to the acquisition, handling, or disposal of 
property by the United States, the Secretary of Commerce shall have 
the right, in his discretion, to complete, recondition, reconstruct, 
renovate, repair, maintain, operate, charter, or sell any property 
acquired by him pursuant to a security agreement with the obligor 
or may place a vessel in the national defense reserve. The terms of the 
sale shall be as approved by the Secretary of Commerce. 
Cash payments. 
"(d) Any amount required to be paid by the Secretary of Commerce 
pursuant to subsection (a) or (b) of this section, shall be paid in 
cash. If at any time the moneys in the Fund authorized by section 
>infe, p. 910. 
1102 of this Act are not sufficient to pay any amount the Secretary 
of Commerce is required to pay by subsection (a) or (b) of this sec-
tion, the Secretary of Commerce is authorized to issue to the Secretary 
86 STAT. ] 
PUBLIC LAW 92-507-OCT. 19, 1972 
915 
of the Treasury notes or other obligations in such forms and denomi-
nations, bearing such maturities, and subject to such terms and con-
ditions as may be prescribed by the Secretary of Commerce, with 
the approval of the Secretary of the Treasury. Such notes or other 
interest rate. 
obligations shall bear interest at a rate determined by the Secretary of 
the Treasury, taking into consideration the current average market 
yield on outstanding marketable obligations of the United States of 
comparable maturities during the month preceding the issuance of 
such notes or other obligations. The Secretary of the Treasury is 
authorized and directed to purchase any notes and other obligations to 
be issued hereunder and for such purpose he is authorized to use as a 
public debt transaction the proceeds from the sale of any securities 
issued under the Second Libertv Bond Act, as amended, and the pur- V^ fj^ic 774' 
poses for which securities may be issued under such Act, as amended, 
are extended to include any purchases of such notes and obligations. 
The Secretary of the Treasury may at any time sell any of the notes 
or other obligations acquired by him under this section. All redemp-
tions, purchases, and sales by the Secretary of the Treasury of such 
notes or other obligations shall be treated as public debt transactions 
of the United States. Funds borrowed under this section shall be 
deposited in the Fund and redemptions of such notes and obligations 
shall be made by the Secretary of Commerce from such Fund. 
"(e) In the event of a default under any guaranteed obligation or any 
related agreement, the Secretary of Commerce shall take such action 
against the obligor or any other parties liable thereunder that, in his 
discretion, may be required to protect the interests of the United States. 
Any suit may be brought in the name of the United States or in the 
name of the obligee and the obligee shall make available to the United 
States all records and evidence necessary to prosecute any such suit. 
The Secretary of Commerce shall have the right, in his discretion, to 
accept a conveyance of title to and possession of property from the 
obligor or other parties liable to the Secretary of Commerce, and may 
purchase the property for an amount not greater than the unpaid 
principal amount of such obligation and interest thereon. In the event 
the Secretary of Commerce shall receive through the sale of property 
an amount of cash in excess of any payment made to an obligee under 
subsection (a) or (b) and the expenses of collection of such amounts, 
he shall pay such excess to the obligor. 
"SEC. 1106. Whoever, for the purpose of obtaining any loan or 
offenses and 
advance of credit from any person, partnership, association, or corpo-
ration with the intent that an obligation relating to such loan or 
advance of credit shall be offered to or accepted by the Secretary of 
Commerce to be guaranteed, or for the purpose of obtaining any exten-
sion or renewal of any loan, advance of credit, or mortgage relating to 
an obligation guaranteed by the said Secretary of Commerce, or the 
acceptance, release, or substitution of any security on such a loan, 
advance of credit, or for the purpose of influencing in any way the 
action of said Secretary of Commerce under this title, makes, passes, 
utters, or publishes, or causes to be made, passed, uttered, or published 
any statement, knowing the same to be false, or alters, forges, or coun-
terfeits, or causes or procures to be altered, forged, or counterfeited, 
any instrument, paper, or document, or utters, publishes, or passes as 
true, or causes to be uttered, published, or passed as true, any instru-
ment, paper, or document, knowing it to have been altered, forged, or 
counterfeited, or willfully overvalues any security, asset, or income 
shall be guilty of a misdemeanor and punished as provided under the 
first paragraph of section 806 (b) of this Act." 
49 stat. 2014. 
'- 
'=' ^ 
^ ' 
46 u s e 1228. 
916 
PUBLIC LAW 92-507-OCT. 19, 1972 
[86 STAT. 
Appropriations 
68 Stat. 1276; 
73 Stat. 269. 
73 Stat. 272. 
81 Stat. 580. 
Escrow fund. 
Ante, 
p. 910. 
Ante, 
p. 910. 
SEC. 4. Section 1110 of the Merchant Marine Act, 1936 (46 U.S.C. 
1279), is redesignated "SEC. 1107." 
SEC. 5. Sections 1111 through 1112 of the Merchant Marine Act, 1936 
(46 U.S.C. 1279a; 1279b) are amended by striking such sections and 
inserting the following in lieu thereof: 
"SEC. 1108. (a) If the proceeds of an obligation guaranteed under 
this title are to be used to finance the construction, reconstruction, or 
reconditioning of a vessel or vessels which will serve as security for 
the guarantee of the Secretary of Commerce, the Secretary of Com-
merce is authorized to accept and hold, in escrow under an escrow 
agreement with the obligor, a portion of the proceeds of all obligations 
guaranteed under this title whose proceeds are to be so used which 
IS equal to: (i) the excess of the principal amount of all obligations 
whose proceeds are to be so used over 75 per centum, or 87i/^ per 
centum, whichever is applicable under section 1104 of this title, of the 
amount paid by or for the account of the obligor for the construction, 
reconstruction, or reconditioning of the vessel or vessels; (ii) with 
such interest thereon, if any, as the Secretary of Commerce may 
require: Provided^ That in the event the security for the guarantee of 
an obligation by the Secretary of Commerce relates both to a vessel 
or vessels to be constructed, reconstructed or reconditioned and to a 
delivered vessel or vessels, the principal amount of such obligation shall 
be prorated for purposes of this subsection (a) imder regulations 
prescribed by the Secretary of Commerce. 
"(b) The Secretary of Commerce shall, as specified in the escrow 
agreement, disburse the escrow fund to pay amounts the obligor is 
obligated to pay as interest on such obligations or for the construction, 
reconstruction, or reconditioning of the vessel or vessels used as security 
for the guarantee of the Secretary of Commerce under this title, to 
redeem such obligations in connection with a refinancing under para-
graph (4) of subsection (a) of section 1104 or to pay to the obligor 
at such times as may be provided for in the escrow agreement any 
excess interest deposits, except that if payments become due under the 
guarantee prior to the termination of the escrow agreement, all amounts 
m the escrow fund at the time such payments become due (including 
realized income which has not yet been paid to the obligor) shall be 
E
aid into the Fund and (i) be credited against any amounts due or to 
ecome due to the Secretar^jr of Commerce from the obligor with respect 
to the guaranteed obligations and (ii) to the extent not so required, 
be paid to the obligor. 
"(c) If payments under the guarantee have not become due prior to 
the termination of the escrow agreement, any balance of the escrow 
fund at the time of such termination shall be disbursed to prepay the 
excess of the principal of all obligations whose proceeds are to oe used 
to finance the construction, reconstruction, or reconditioning of the ves-
sel or vessels which serve or will serve as security for such guarantee 
over 75 per centum or 87V^ per centum, whichever is applicable under 
section 1104 of this title, of the actual cost of such vessel or vessels to 
the extent paid, and to pay interest on such prepaid amount of prin-
cij)al, and the remainder of such balance of the escrow fund shall be 
paid to the obligor. 
"(d) The Secretary of Commerce may invest and reinvest all or 
any part of the escrow fund in obligations of the United States with 
such maturities that the escrow fund will be available as required for 
purposes of the escrow agreement. 
"(e) Any income realized on the escrow fund shall, upon receipt, 
be paid to the obligor. 
.. 
. . , 
, ., 
86 STAT. ] 
PUBLIC LAW 92-509-OCT. 19, 1972 
917 
"(f) The escrow agreement shall contain such other terms as the 
Secretary of Commerce may consider necessary to protect fully the 
interests of the United States. 
"SEC. 1109. The Secretary of Commerce is authorized and directed i^f^^J,^/ ^""^ '^^"' 
to make such rules and regulations as may be deemed necessary or 
appropriate to carry out the purposes and provisions of this title." 
SEC. 6. Nothing in this Act shall limit or affect the right of an i^^^^^^^^^^^^l^''^ 
obligor who maintains a capital reserve fund under section 607 of the "" ' ^^°^' ^' 
Merchant Marine Act, 1936, to make deposits of the proceeds of J^ ^*|^-1^^^-
guaranteed obligations into such capital reserve fund as provided in 
subparagraph (c) of condition (6) of section 1107 of the Merchant 
Marine Act, 1936, as in effect prior to the effective date of this Act. yJl^ll^*-2i^^^'' 
SEC. 7. Any citizen of the United States to whom the Secretary of 
46 use uVea. 
(^ommerce issued an approval in principle of an application for loan 
or mortgage insurance or a commitment with respect to such insurance 
under the provisions of title X I of the Merchant Marine Act, 1936, '*^ ^^^ ^^^*-
prior to the effective date of this Act may elect, with respect to the 
vessels covered by such approval or commitment, to be bound either by 
the provisions of title X I of the Merchant Marine Act, 1936. as in 
effect prior to the effective date of this Act or by the provisions of this 
Act. 
SEC. 8. This Act may be cited as the "Federal Ship Financing Act 
^^°''^ *
^
*
^
^
-
of 1972." 
Approved October 19, 1972. 
• -
^ 
Public Law 92-508 
JOINT RESOLUTION 
October 19, 1972 
To authorize and request the President to proclaim the week beginning [s. j . Res. 236] 
October 15, 1972, as "National Drug Abuse Prevention Week". 
Resolved by the Senate and Hotcse of Representatives 
of the United 
States of America in Congress asserrwled^ That in order to heighten 
National omg 
the awareness of the people of the United States with regard to the J^"^^ Prevention 
national threat of drug abuse, and to provide an opportunity for a 
Designation 
period of special emphasis on this problem, the President is authorized authorization. 
and requested to issue a proclamation designating the week beginning 
October 15, 1972, as "National Drug Abuse Prevention Week", and 
/ 
calling uj)on the people of the United States and interested groups and 
orgamzations to observe such period with appropriate ceremonies and 
activities. 
Approved October 19, 1972. 
Public Law 92-509 
J O I N T RESOLUTION 
October 19, 1972 
To designate the week which begins on the first Sunday in March 1973 as [s. j . Res.2 i] 
"National Beta Club Week". 
Resoloed hy the Senate and Home of Representatives 
of the United 
States of America 
m Congress assenibled, That the President is 
National Beta 
authorized and requested to issue a proclamation designating the ^^pesTgni'tion 
week which begins on the first Sunday in March 1973 as "National authorization. 
Beta Club Week", to recognize the National Beta Club for its dedi-
cation to the positive accomplishments of American youth and to 
encourage the furthering of its goals to promote honesty, service, and 
leadership among tlie higli scliool students in America. 
Approved October 19, 1972.