46 U.S.C. § 53706 — Eligible purposes of obligations

Page 441 TITLE 46—SHIPPING § 53706 § 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 expenditures previously made for) the construction, reconstruction, or re- conditioning of a 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; or (v) as a floating drydock in the construc- tion, reconstruction, reconditioning, or re- pair of vessels. (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 re- constructed or reconditioned) unless the pro- ceeds of the obligation are used to finance the construction, reconstruction, or recondi- tioning of a vessel or of facilities or equipment related to marine operations. (2) Financing (including reimbursement of an obligor for expenditures previously made for) the construction, reconstruction, recondi- tioning, or purchase of a vessel owned by citi- zens of the United States and designed prin- cipally for research, or for commercial use in the fishing industry. (3) Financing the purchase, reconstruction, or reconditioning of a vessel or fishery facil- ity— (A) for which an obligation was guaranteed under this chapter; and (B) that, under subchapter II of this chap- ter— (i) is a vessel or fishery facility for which an obligation was accelerated and paid; (ii) was acquired by the Federal Ship Fi- nancing Fund or successor account under section 53717 of this title; or (iii) was sold at foreclosure begun or in- tervened in by the Secretary or Adminis- trator. (4) Financing any part of the repayment to the United States Government of any amount of a construction-differential subsidy paid for a vessel. (5) Refinancing an existing obligation (re- gardless of whether guaranteed under this chapter) issued for a purpose described in paragraphs (1)–(4), including a short-term obli- gation incurred to obtain temporary funds with the intention of refinancing. (6) Financing or refinancing (including reim- bursement of an obligor for expenditures pre- viously made for) the construction, recon- struction, reconditioning, or purchase of a fishery facility. (7) Financing or refinancing— (A) the purchase of individual fishing quotas in accordance with section 303(d)(4) of the Magnuson-Stevens Fishery Conservation and Management Act (including the reim- bursement of obligors for expenditures pre- viously made for such a purchase); (B) activities that assist in the transition to reduced fishing capacity; or (C) technologies or upgrades designed to improve collection and reporting of fishery- dependent data, to reduce bycatch, to im- prove selectivity or reduce adverse impacts of fishing gear, or to improve safety. (8) Financing (including reimbursement of an obligor for expenditures previously made for) the reconstruction, reconditioning, retro- fitting, repair, reconfiguration, or similar work in a shipyard located in the United States. (b) NON-VESSELS TREATED AS VESSELS.—An ob- ligation 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 construc- tion, reconstruction, reconditioning, or pur- chase of a vessel, except with respect to provi- sions that by their nature can only be applied to vessels. (c) PRIORITIES FOR CERTAIN VESSELS.— (1) VESSELS.—In guaranteeing or making a commitment to guarantee an obligation under this chapter, the Administrator shall give pri- ority to— (A) a vessel that is otherwise eligible for a guarantee and is constructed with assistance under subtitle D of the Maritime Security Act of 2003 (46 U.S.C. 53101 note); (B) after applying subparagraph (A), a ves- sel that is otherwise eligible for a guarantee and that the Secretary of Defense deter- mines— (i) is suitable for service as a naval aux- iliary in time of war or national emer- gency; and (ii) meets a shortfall in sealift capacity or capability; and (C) after applying subparagraphs (A) and (B), Vessels of National Interest. (2) TIME FOR DETERMINATION.—The Secretary of Defense shall determine whether a vessel satisfies paragraph (1)(B) not later than 30 days after receipt of a request from the Ad- ministrator for such a determination. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1606; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(D), (2)(A), (B), (b)(2), Jan. 6, 2006, 119 Stat. 3555, 3556; Pub. L. 109–479, title II, § 209, Jan. 12, 2007, 120 Stat. 3617; Pub. L. 110–181, div. C, title XXXV, § 3522(a)(2), (10)(B), (b), Jan. 28, 2008, 122 Stat. 596, 598; Pub. L. 116–92, div. C, title XXXV, § 3506(e), Dec. 20, 2019, 133 Stat. 1972; Pub. L. 118–31, div. C, title XXXV, § 3536(a), Dec. 22, 2023, 137 Stat. 835.) Page 442 TITLE 46—SHIPPING § 53706 HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53706(a) ...... 46 App.:1274(a) (less last sentence). June 29, 1936, ch. 858, title XI, § 1104A(a) [§ 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. 910; Pub. L. 96–320, title II, § 202(b), Aug. 3, 1980, 94 Stat. 992; Pub. L. 96–561, title II, § 220(3)(A), Dec. 22, 1980, 94 Stat. 3292; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; Pub. L. 98–595, § 1(2)–(5), Oct. 30, 1984, 98 Stat. 3130; § 1104 renum- bered as § 1104A, Pub. L. 101–380, title IV, § 4115(f)(1), Aug. 18, 1990, 104 Stat. 521; Pub. L. 103–160, title XIII, § 1356(3)(A), Nov. 30, 1993, 107 Stat. 1813; Pub. L. 104–208, title I, § 101 [title II, § 211(b)], Sept. 30, 1996, 110 Stat. 3009–41; Pub. L. 104–297, title III, § 302(a)(1)–(4), Oct. 11, 1996, 110 Stat. 3615. 53706(b) ...... 46 App.:1274(a) (last sentence). 53706(c) ...... 46 App.:1273(i), (j). June 29, 1936, ch. 858, title XI, § 1103(i), (j), as added Pub. L. 108–136, title X, § 1014(a), title XXXV, § 3544, Nov. 24, 2003, 117 Stat. 1591, 1822. In subsection (a), before paragraph (1), the words ‘‘To be eligible for a guarantee under this chapter, an obli- gation must aid in any of the following’’ are sub- stituted for ‘‘Pursuant to the authority granted under section 1273(a) of this Appendix, the Secretary, upon such terms as he shall prescribe, may guarantee or make a commitment to guarantee, payment of the principal of and interest on an obligation which aids in’’ to eliminate unnecessary words. In subsection (a)(2), the words ‘‘citizens of the United States’’ are substituted for ‘‘citizens or nationals of the United States or citizens of the Northern Mariana Is- lands’’ because of the definition of ‘‘citizen of the United States’’ in chapter 1 of the revised title. Citi- zens of the Northern Mariana Islands became citizens or non-citizen nationals of the United States (either of which is a ‘‘citizen of the United States’’ as defined in chapter 1 of the revised title) when the Covenant estab- lishing the Commonwealth of the Northern Mariana Is- lands became effective November 4, 1986. Editorial Notes REFERENCES IN TEXT Section 303(d)(4) of the Magnuson-Stevens Fishery Conservation and Management Act, referred to in sub- sec. (a)(7)(A), is section 303(d)(4) of Pub. L. 94–265, which is classified to section 1853(d)(4) of Title 16, Conserva- tion. The Maritime Security Act of 2003, referred to in sub- sec. (c)(1)(A), is title XXXV of div. C of Pub. L. 108–136, Nov. 24, 2003, 117 Stat. 1788. Subtitle D of the Act amended section 1273 of the former Appendix to this title and enacted provisions set out as a note under sec- tion 53101 of this title. For complete classification of this Act to the Code, see Short Title of 2003 Amend- ment note set out under section 101 of this title and Ta- bles. AMENDMENTS 2023—Subsec. (a)(8). Pub. L. 118–31 added par. (8). 2019—Subsec. (a)(1)(A). Pub. L. 116–92, § 3506(e)(1)(A), struck out ‘‘(including an eligible export vessel)’’ after ‘‘reconditioning of a vessel’’ in introductory provisions. Subsec. (a)(1)(A)(vi). Pub. L. 116–92, § 3506(e)(1)(B)–(D), struck out cl. (vi) which read as follows: ‘‘as an eligible export vessel in worldwide trade.’’ Subsec. (c)(1)(C). Pub. L. 116–92, § 3506(e)(2), added sub- par. (C). 2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(D), (2)(A), (B), (b)(2). See 2006 Amend- ment note below. Subsec. (a)(3)(B)(iii). 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’’. 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. Subsec. (c). Pub. L. 110–181, § 3522(a)(2), incorporated the substance of the amendments by Pub. L. 109–163, § 3507(a)(2)(A), (B), (b)(2), by amending subsec. (c) gen- erally. Prior to amendment, subsec. (c) read as follows: ‘‘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 guar- antee and is constructed with assistance under sub- title 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 Sec- retary 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 capa- bility.’’ 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. 2007—Subsec. (a)(7). Pub. L. 109–479 amended par. (7) generally. Prior to amendment, par. (7) read as follows: ‘‘Financing or refinancing (including reimbursement of an obligor 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)).’’ 2006—Pub. L. 109–163, § 3507(a)(1)(D), (2)(A), (B), (b)(2), which directed the amendment of sections 1273(i), (j) and 1274(a) of the former Appendix to this title from which this section was derived, was repealed by Pub. L. 110–181, § 3522(b). See 2008 Amendment notes for subsecs. (a)(3)(B)(iii) and (c) and Historical and Revision notes above. Statutory Notes and Related Subsidiaries PROHIBITION OF NEW LOANS FOR CONSTRUCTION OF FISHING VESSELS UNDER CERTAIN CONDITIONS Pub. L. 104–297, title III, § 302(b)(2), Oct. 11, 1996, 110 Stat. 3615, as amended by Pub. L. 105–277, div. C, title II, § 212, Oct. 21, 1998, 112 Stat. 2681–635; Pub. L. 107–206, title I, § 1103, Aug. 2, 2002, 116 Stat. 884; Pub. L. 114–120, title III, § 302(b), Feb. 8, 2016, 130 Stat. 52, provided that: ‘‘No loans may be provided or guaranteed by the Fed- eral Government for the construction or rebuilding of a vessel intended for use as a fishing vessel (as defined in section 2101 of title 46, United States Code), if such vessel will be greater than 165 feet in registered length, of more than 750 gross registered tons (as measured under chapter 145 of title 46) or 1,900 gross registered Page 443 TITLE 46—SHIPPING § 53707 tons [(]as measured under chapter 143 of that title), or have an engine or engines capable of producing a total of more than 3,000 shaft horsepower, after such con- struction or rebuilding is completed. This prohibition shall not apply to vessels to be used in the menhaden fishery, in tuna purse seine fisheries outside the exclu- sive economic zone of the United States or the area of the South Pacific Regional Fisheries Treaty, in fish- eries that are under the jurisdiction of the North Pa- cific Fishery Management Council and managed under a fishery management plan issued under the Magnuson- Stevens Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.), or in the Pacific whiting fishery that is under the jurisdiction of the Pacific Fishery Management Council and managed under a fishery management plan issued under that Act. Any fishing vessel operated in fisheries under the jurisdiction of the North Pacific Fishery Management Council and managed under a fishery management plan issued under the Magnuson-Stevens Fishery Conservation and Management Act (16 U.S.C. 1801 et seq.), or in the Pa- cific whiting fishery under the jurisdiction of the Pa- cific Fishery Management Council and managed under a fishery management plan issued under that Act, and that is replaced by a vessel that is constructed or re- built with a loan or loan guarantee provided by the Federal Government may not be used to harvest fish in any fishery under the jurisdiction of any regional fish- ery management council, other than a fishery under the jurisdiction of the North Pacific Fishery Manage- ment Council or the Pacific Fishery Management Council.’’ [Pub. L. 107–206, title I, § 1103, Aug. 2, 2002, 116 Stat. 884, which directed the amendment of title II of divi- sion C of Public Law 105–277 by substituting ‘‘of more than 750 gross registered tons (as measured under chap- ter 145 of title 46) or 1,900 gross registered tons as meas- ured under chapter 143 of that title)’’ for ‘‘of more than 750 gross registered tons’’, was executed to section 302(b)(2) of Pub. L. 104–297, set out above, as amended by section 212 of Pub. L. 105–277, to reflect the probable in- tent of Congress.] § 53707. Findings related to obligors and opera- tors (a) RESPONSIBLE OBLIGOR.—The Secretary or Administrator may not guarantee or make a commitment to guarantee an obligation under this chapter unless the Secretary or Adminis- trator finds that the obligor is responsible and has the ability, experience, financial resources, and other qualifications necessary for the ade- quate operation and maintenance of each vessel that will serve as security for the guarantee. (b) OPERATORS OF LINER VESSELS.—The Ad- ministrator may not guarantee or make a com- mitment to guarantee a loan for the construc- tion, reconstruction, or reconditioning of a liner vessel under this chapter 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 discrimina- tory treatment or undue or unreasonable prej- udice or disadvantage with respect to a United States shipper, ocean transportation inter- mediary, ocean common carrier, or port; or (2) a violation of part B of subtitle IV of this title. (c) OPERATORS OF FISHING VESSELS.—The Sec- retary may not guarantee or make a commit- ment to guarantee a loan for the construction, reconstruction, or reconditioning of a fishing vessel under this chapter if the operator of the vessel has been— (1) held liable, or the vessel has been held liable in rem, for a civil penalty under section 308 of the Magnuson-Stevens Fishery Con- servation and Management Act (16 U.S.C. 1858) and the operator has not paid the penalty; (2) found guilty of an offense under section 309 of the Magnuson-Stevens Fishery Con- servation and Management Act (16 U.S.C. 1859) and not paid the assessed fine or served the as- sessed sentence; (3) held liable for a civil or criminal penalty under section 105 of the Marine Mammal Pro- tection Act of 1972 (16 U.S.C. 1375) and not paid the assessed fine or served the assessed sen- tence; 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 CONDI- TION.—The Secretary or Administrator shall pre- scribe regulations concerning circumstances under which waivers of, or exceptions to, other- wise applicable regulatory requirements con- cerning financial 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 requirement; and (2) if the Secretary or Administrator con- siders necessary, the waiver shall provide for the imposition of other requirements on the obligor designed to compensate for any signifi- cant increase in risk associated with the obli- gor’s failure to meet regulatory requirements applicable to financial condition. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1607; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(D), (b)(3)(B), (C), (c)(1), Jan. 6, 2006, 119 Stat. 3555, 3556; Pub. L. 110–181, div. C, title XXXV, § 3522(a)(3), (b), Jan. 28, 2008, 122 Stat. 597, 598.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53707(a) ...... 46 App.:1274(b)(1). June 29, 1936, ch. 858, title XI, § 1104A(b)(1) [§ 1104A formerly § 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. 911; Pub. L. 97–31, § 12(136), Aug. 6, 1981, 95 Stat. 166; § 1104 renumbered as § 1104A, Pub. L. 101–380, title IV, § 4115(f)(1), Aug. 18, 1990, 104 Stat. 521. 53707(b) ...... 46 App.:1273a(a). Pub. L. 105–258, title IV, § 401, Oct. 14, 1998, 112 Stat. 1916.