§53734 Replacement of vessels because of changes in operating standards

Summary

The Secretary or Administrator may guarantee loans that help pay to build or rebuild commercial ships used in coastwise, intercoastal, or foreign trade when the work replaces a vessel that can no longer be operated because a change in law changed required operating standards. The borrower must already run similar ships, must use the new ships only to replace those made obsolete, and the replacement ships cannot increase the cargo capacity of the vessels being replaced. The Secretary or Administrator must believe market demand will not fall so much that the guarantee would be unsafe, must follow certain criteria in section 53708(a)(3)–(5), and a rebuilt vessel must have at least 15 years of useful life after work is done. A guaranteed loan can last no more than 25 years and can cover up to 87.5% of the actual cost or depreciated actual cost of the new or rebuilt vessel. The official may not set one single percentage that applies to every guarantee. Applicants must give adequate security as required by rule. The guarantee is also subject to other program rules in this title, and the official may charge an extra fee — either up to 1% per year above the normal fee or a fee tied to the loan amount and the share of the fleet being replaced.