46 U.S.C. § 53715 — Escrow fund

Page 451 TITLE 46—SHIPPING § 53715 § 3507(a)(1)(D), Jan. 6, 2006, 119 Stat. 3555; Pub. L. 110–181, div. C, title XXXV, § 3522(a)(10)(B), (b), Jan. 28, 2008, 122 Stat. 598.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53714(a) ...... 46 App.:1274(e)(1). June 29, 1936, ch. 858, title XI, § 1104A(e) [§ 1104A for- merly § 1104], as added June 23, 1938, ch. 600, § 46, 52 Stat. 970; Aug. 4, 1939, ch. 417, § 14, 53 Stat. 1187; Sept. 28, 1950, ch. 1093, § 4, 64 Stat. 1078; Aug. 15, 1953, ch. 513, § 2, 67 Stat. 626; Sept. 3, 1954, ch. 1265, § 4, 68 Stat. 1269; Pub. L. 86–123, §§ 1(3), 2, July 31, 1959, 73 Stat. 269, 271; Pub. L. 86–127, § 1(3), (4), July 31, 1959, 73 Stat. 273; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 86–685, §§ 2, 3, Sept. 2, 1960, 74 Stat. 733; Pub. L. 90–341, June 15, 1968, 82 Stat. 180; Pub. L. 91–469, §§ 31, 32, Oct. 21, 1970, 84 Stat. 1035; restated Pub. L. 92–507, § 3, Oct. 19, 1972, 86 Stat. 913; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; Pub. L. 98–595, § 1(12), Oct. 30, 1984, 98 Stat. 3131; § 1104 renumbered as § 1104A, Pub. L. 101–380, title IV, § 4115(f)(1), Aug. 18, 1990, 104 Stat. 521; Pub. L. 104–239, § 13(c), Oct. 8, 1996, 110 Stat. 3136. 53714(b) ...... 46 App.:1274(e)(2). 53714(c) ...... 46 App.:1274(e)(3). 53714(d) ...... 46 App.:1274(e)(5). 53714(e) ...... 46 App.:1274(e)(4). Editorial Notes AMENDMENTS 2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(D). See 2006 Amendment note below. Subsecs. (a), (b)(2), (4). Pub. L. 110–181, § 3522(a)(10)(B), incorporated the substance of the amendment by Pub. L. 109–163, § 3507(a)(1)(D), into this section by inserting ‘‘or Administrator’’ after ‘‘Secretary’’, except the sec- ond place appearing in subsec. (b)(2). See 2006 Amend- ment note below and section 18(a) of Pub. L. 109–304, set out as a Legislative Purpose and Construction note pre- ceding section 101 of this title. 2006—Pub. L. 109–163, § 3507(a)(1)(D), which directed the amendment of section 1274(e) of the former Appen- dix to this title from which this section was derived, was repealed by Pub. L. 110–181, § 3522(b). See 2008 Amendment note for subsecs. (a), (b)(2), (4) and Histor- ical and Revision notes above. § 53715. Escrow fund (a) IN GENERAL.—If the proceeds of an obliga- tion guaranteed under this chapter are to be used to finance the construction, reconstruc- tion, or reconditioning of a vessel that will serve as security for a guarantee under this chapter, the Secretary or Administrator may accept and hold in escrow, under an escrow agreement with the obligor, a portion of the proceeds of all obli- gations guaranteed 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, reconstruc- tion, or reconditioning of the vessel; plus (2) any interest the Secretary or Adminis- trator may require on the amount described in paragraph (1). (b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VESSELS.—If the security for the guarantee of an obligation relates both to a ves- sel to be constructed, reconstructed, or recondi- tioned and to a delivered vessel, the principal amount of the obligation shall be prorated for purposes of subsection (a) under regulations pre- scribed by the Secretary or Administrator. (c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— (1) PURPOSES.—The Secretary or Adminis- trator shall disburse amounts in the escrow 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 refi- nancing 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 be- comes due under the guarantee before the ter- mination of the escrow agreement, the amount in the escrow fund at the time the payment becomes due, including realized in- come not yet paid to the obligor, shall be paid into the appropriate account under section 53717 of this title. The amount shall be cred- ited against amounts due or to become due from the obligor to the Secretary or Adminis- trator on the guaranteed obligations or, to the extent not so required, be paid to the obligor. (d) PAYMENTS REQUIRED BEFORE DISBURSE- MENT.— (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 pro- ceeds of the obligation equals at least 25 per- cent or 12.5 percent, whichever is applicable under section 53709(b) of this title, of the ag- gregate actual cost of the vessel, as previously approved by the Secretary or Administrator. If the aggregate actual cost of the vessel has increased since the Secretary’s or Administra- tor’s initial approval or if it increases after the first disbursement is permitted under this subsection, then no further disbursements shall be made under subsection (c) 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, as applicable, of the increase, as determined by the Secretary or Adminis- trator, in the aggregate actual cost of the ves- sel. This paragraph does not require the Sec- retary or Administrator to consent to finance any increase in actual cost unless the Sec- retary or Administrator determines that such an increase in the obligation meets all the terms and conditions of this chapter or other applicable law. Page 452 TITLE 46—SHIPPING § 53716 (2) DOCUMENTED PROOF OF PROGRESS REQUIRE- MENT.—The Secretary or Administrator shall, by regulation, establish a transparent, inde- pendent, and risk-based process for verifying and documenting the progress of projects under construction before disbursing guaran- teed loan funds. At a minimum, the process shall require documented proof of progress in connection with the construction, reconstruc- tion, or reconditioning of a vessel or vessels before disbursements are made from the es- crow fund. The Secretary or Administrator may require that the obligor provide a certifi- cate from an independent party certifying that the requisite progress in construction, re- construction, or reconditioning has taken place. (e) DISBURSEMENT ON TERMINATION OF AGREE- MENT.— (1) IN GENERAL.—If a payment has not be- come due under the guarantee before the ter- mination 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 obliga- tions whose proceeds are to be used to fi- nance 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 bal- ance of the escrow fund shall be paid to the ob- ligor. (f) INVESTMENT.—The Secretary or Adminis- trator may invest and reinvest any part of an es- crow fund in obligations of the United States Government with maturities such that the es- crow fund will be available as required for pur- poses of the escrow agreement. Investment in- come shall be paid to the obligor when received. (g) TERMS TO PROTECT GOVERNMENT.—The es- crow agreement shall contain other terms the Secretary or Administrator considers necessary to protect fully the interests of the Government. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1614; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(H), (3), Jan. 6, 2006, 119 Stat. 3555; Pub. L. 110–181, div. C, title XXXV, § 3522(a)(10)(B), (11), (b), Jan. 28, 2008, 122 Stat. 598.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53715(a) ...... 46 App.:1279a(a) (less proviso). June 29, 1936, ch. 858, title XI, § 1108, formerly § 1111, as added Pub. L. 86–127, § 1(2), July 31, 1959, 73 Stat. 272; renumbered Pub. L. 92–507, § 5, Oct. 19, 1972, 86 Stat. 916; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; Pub. L. 108–136, title XXXV, § 3521(a), Nov. 24, 2003, 117 Stat. 1799. HISTORICAL AND REVISION NOTES—CONTINUED Revised Section Source (U.S. Code) Source (Statutes at Large) 53715(b) ...... 46 App.:1279a(a) (proviso). 53715(c) ...... 46 App.:1279a(b). 53715(d) ...... 46 App.:1279a(g). 53715(e) ...... 46 App.:1279a(c). 53715(f) ....... 46 App.:1279a(d), (e). 53715(g) ...... 46 App.:1279a(f). Editorial Notes AMENDMENTS 2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(H), (3). See 2006 Amendment note below. Pub. L. 110–181, § 3522(a)(10)(B), (11), incorporated the substance of the amendment by Pub. L. 109–163, § 3507(a)(1)(H), (3), into this section by inserting ‘‘or Ad- ministrator’’ after ‘‘Secretary’’ wherever appearing and ‘‘or Administrator’s’’ after ‘‘Secretary’s’’ in subsec. (d)(1). See 2006 Amendment note below and section 18(a) of Pub. L. 109–304, set out as a Legislative Purpose and Construction note preceding section 101 of this title. 2006—Pub. L. 109–163, § 3507(a)(1)(H), (3), which di- rected the amendment of section 1279a of the former Appendix to this title from which this section was de- rived, was repealed by Pub. L. 110–181, § 3522(b). See 2008 Amendment notes and Historical and Revision notes above. § 53716. Deposit fund (a) IN GENERAL.—There is a deposit fund in the Treasury for purposes of this section. The Sec- retary or Administrator, in accordance with an agreement under subsection (b), may deposit into and hold in the fund cash belonging to an obligor to serve as collateral for a guarantee made under this chapter with respect to the ob- ligor. (b) AGREEMENT.—The Secretary or Adminis- trator and an obligor shall make a reserve fund or other collateral account agreement to govern the deposit, withdrawal, retention, use, and re- investment of cash of the obligor held in the fund. The agreement shall contain— (1) terms and conditions required by this section; (2) terms that grant to the United States Government a security interest in all amounts deposited into the fund; and (3) any additional terms considered by the Secretary or Administrator to be necessary to protect fully the interests of the Government. (c) INVESTMENT.—The Secretary or Adminis- trator may invest and reinvest any part of the amounts in the fund in obligations of the Gov- ernment with maturities such that amounts in the fund will be available as required for pur- poses 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 withdrawn without the con- sent of the Secretary or Administrator. (2) USE OF INCOME.—Subject to paragraph (3), the Secretary or Administrator may pay any income earned on cash of an obligor deposited into the fund in accordance with the agree- ment with the obligor under subsection (b).