[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4682 Introduced in House (IH)]







106th CONGRESS
  2d Session
                                H. R. 4682

  To amend the Merchant Marine Act, 1936, to direct the Secretary of 
 Transportation to establish a simplified formula by which application 
may be made for Smaller Ship Shared-Risk Financing Guarantees, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 15, 2000

 Mr. Metcalf introduced the following bill; which was referred to the 
                      Committee on Armed Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Merchant Marine Act, 1936, to direct the Secretary of 
 Transportation to establish a simplified formula by which application 
may be made for Smaller Ship Shared-Risk Financing Guarantees, and for 
                            other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Title XI Mortgage Access and 
National Shipbuilding Initiative Extension Act''.

SEC. 2. FINDINGS AND LEGISLATIVE PURPOSE.

    Congress finds that--
            (1) the authority granted under sections 1103(a) and 1104A 
        of the Merchant Marine Act, 1936 (46 U.S.C. App. 1273(a) and 
        1274), as supplemented by the National Shipbuilding and 
        Shipyard Conversion Act of 1993, should be exercised to expand 
        the access of smaller vessel owners to ship mortgage financing 
        under title XI of the Merchant Marine Act, 1936; to reduce 
        uncertainty and unnecessary burden on all applicants for 
        financing or refinancing guarantees under that title so that 
        such financing better fulfills the policy objectives of the 
        National Shipbuilding and Shipyard Conversion Act of 1993; and 
        to continue and strengthen the title XI program and support 
        United States national waterborne transportation policy; and
            (2) that initiatives established by the National 
        Shipbuilding and Shipyard Conversion Act of 1993 to promote 
        United States shipbuilding and to protect the national defense 
        interests should be continued and potentially expanded in the 
        context of an articulated and congressionally endorsed United 
        States merchant shipbuilding policy.

SEC. 3. SMALLER SHIP SHARED-RISK FINANCING GUARANTEES.

    Title XI of the Merchant Marine Act, 1936 (46 U.S.C. App. 1271 et 
seq.), is amended by adding at the end the following:
    ``Sec. 1113. (a) The Secretary shall establish, after consultation 
with 1 or more Qualified Private Financial Institutions that are United 
States marine-specialist lenders, a simplified form by which 
application may be made for Smaller Ship Shared-Risk Financing 
Guarantees.
    ``(b)(1) The Secretary shall--
            ``(A) promptly forward each application submitted for a 
        Smaller Ship Shared-Risk Financing Guarantee to the Qualified 
        Private Financial Institution identified in the application;
            ``(B) remit one-half of the application fee to such 
        institution; and
            ``(C) in the case of an application for guarantee of an 
        obligation to finance an eligible export vessel, make the 
        notification required to the Secretary of Defense.
    ``(2) The Qualified Private Financial Institution shall make a 
decision under its applicable underwriting guidelines to offer or 
decline to extend the proposed financing at a proposed rate of 
interest, a proposed origination fee not exceeding 1 percent of the 
amount of finance extended inclusive of the one-half percent commitment 
fee payable to the Secretary, a proposed repayment term not exceeding 
15 years on a basis which may but need not allow repayment by equal 
payments on a fully-amortized basis, with or without proposed 
guarantees, and with or without collateral additional to a first 
preferred mortgage on the vessel.
    ``(3) If the applicant determines to accept financing terms 
proposed by a Qualified Private Financial Institution, such institution 
shall notify the Secretary of the applicant's determination and of such 
Institution's proposed terms and its analysis of the application under 
its applicable underwriting guidelines (including information 
sufficient for the Secretary to make the computations required under 
the Federal Credit Reform Act). Such analysis shall be exempt from 
disclosure under section 552 of title 5, United States Code, popularly 
known as the Freedom of Information Act.
    ``(4) On receipt of such notification and analysis from such 
Qualified Private Financial Institution, the Secretary shall review and 
approve or disapprove the application within 14 days after such 
receipt. The Secretary may within 14 days notify such Institution in 
writing if the Secretary determines the application does not satisfy 
the requirement of economic soundness, or in the case of an eligible 
export vessel if the Secretary of Defense has timely notified the 
Secretary of the disapproval of the application by the Secretary of 
Defense, or if for other lawful reasons the Secretary determines not to 
approve the application, in which event the application is deemed to be 
disapproved under this title. Absent such written notification of 
disapproval within such 14-day period, the application is deemed 
approved (except as provided in paragraph (6)) and the Secretary shall 
issue a commitment under this title to guarantee unconditionally the 
repayment of principal and interest for not more than half of the total 
finance proposed on the terms proposed by such Qualified Private 
Financial Institution and accepted by the applicant.
    ``(5) No applicant for a Smaller Ship Shared-Risk Financing 
Guarantee shall be required by the Secretary--
            ``(A) to enter into a Title XI Reserve Fund and Financial 
        Agreement under this title;
            ``(B) to restrict or impound the payment of dividends and 
        earnings beyond any extent required by applicable State law;
            ``(C) to prepare or submit audited or reviewed financial 
        statements if financial statements of the applicant have not 
        previously been reviewed or audited; or
            ``(D) to build or maintain a proposed United States-flag 
        vessel in class as a condition of acceptance of terms or as a 
        condition of the Secretary's approval.
    ``(6) In no event shall an application for a Smaller Ship Shared-
Risk Financing Guarantee be considered approved until the applicant has 
paid the commitment fee for the element of the finance under this title 
and unless there remains available unexpended appropriated funds for 
the Secretary to make the payment required under the Federal Credit 
Reform Act upon the commitment to guarantee relating to such 
application.
    ``(c) In the event of an uncured material default on an issued 
Smaller Ship Shared-Risk Financing Guarantee and demand for payment 
made to the Secretary--
            ``(1) the Secretary promptly shall pay according to the 
        terms of the Secretary's guarantee;
            ``(2) notwithstanding such payment, the Qualified Private 
        Financial Institution concerned--
                    ``(A) shall be entitled and responsible to enforce 
                the entire indebtedness unpaid by the shipowner against 
                all collateral, all guarantees, and the shipowner; and
                    ``(B) shall do so for the joint benefit of the 
                Secretary and such institution;
            ``(3) the United States district courts shall have subject 
        matter jurisdiction over any action to recover in the event of 
        any such default; and
            ``(4) funds recovered following any such default shall, 
        after first being applied to pay or repay the costs of 
        collection thereof, be equally apportioned between the 
        Secretary and the Qualified Private Financial Institution.
    ``(d) The Secretary may not require an applicant, as a condition to 
a commitment to guarantee pursuant to this section, to enter into loan 
or closing documentation supplemental to the usual and customary 
documentation of the Qualified Private Financial Institution concerned, 
but the Secretary may require an applicant to execute a short-form 
indemnity relating to the guarantee and the Secretary may enter into a 
simple form of intercreditor agreement with the Qualified Private 
Financial Institution if no terms thereof are inconsistent with the 
provisions of this section and the provisions of this section and the 
provisions of this Act.
    ``(e) In this section:
            ``(1) The term `Qualified Private Financial Institution' 
        means--
                    ``(A) any of the United States maritime-specialist 
                lenders Caterpillar Financial Services, Inc., Case 
                Credit Financial Services, Inc., or Safeco Credit, 
                Inc.; and
                    ``(B) any other State or federally chartered bank 
                or savings and loan association or other financial 
                lending institution, that the Secretary finds to have 
                reasonable maritime lending experience and underwriting 
                standards that are no less prudent than the standards 
                of the United States maritime-specialist lenders 
                referred to in subparagraph (A).
            ``(2) The term `Smaller Ship Shared-Risk Financing 
        Guarantees' means a guarantee under this title of an obligation 
        for which--
                    ``(A) the proposed repayment term does not exceed 
                15 years;
                    ``(B) the amount of financing for new building, 
                conversion, or refinance for any 1 vessel does not 
                exceed $5,000,000;
                    ``(C) the percentage of total actual cost to be 
                financed does not exceed 85 percent; and
                    ``(D) an amount at least equal to the amount of the 
                obligation proposed to be guaranteed would be financed 
                by 1 or more Qualified Private Financial Institutions 
                without a guarantee under this title.''.

SEC. 4. ELIGIBILITY FOR SMALLER SHIP SHARED-RISK FINANCING GUARANTEES.

    Title XI of the Merchant Marine Act, 1936, is further amended by 
adding at the end the following:
    ``Sec. 1114. (a) Any United States-flag vessel or each eligible 
export vessel, including any eligible facilities and equipment related 
to marine operations of such a vessel, shall be eligible for a Smaller 
Ship Shared-Risk Financing Guarantee if the vessel is--
            ``(1) self-propelled and primarily engaged in the carriage 
        of or afloat supply of goods or services to passengers for 
        remuneration (with or without freight or vehicles, or both), 
        irrespective of minimum service speed or installed horsepower; 
        and
            ``(2) primarily engaged in commercial trade, except a 
        fishing and fisheries vessel, whether self-propelled 
        (irrespective of minimum service speed or installed horsepower) 
        or nonself-propelled, and whether manned or unmanned and 
        whether surface or subsurface.
    ``(b) There shall be no minimum total actual cost for the vessel 
eligibility established by this Act. The eligibility established by 
this Act is additional to eligibilities for obligation guarantees under 
laws.''.

SEC. 5. RESTRICTIONS ON CONDITIONS FOR GUARANTEES.

    (a) In General.--Title XI of the Merchant Marine Act, 1936, is 
further amended by adding at the end the following:
    ``Sec. 1115. The Secretary may not--
            ``(1) require the payment of an application fee--
                    ``(A) greater than $2,500 on an application for a 
                financing or refinancing guarantee under this title not 
                exceeding $5,000,000;
                    ``(B) greater than $5,000 on an application for a 
                guarantee not exceeding $10,000,000; or
                    ``(C) greater than $10,000 on an application for a 
                guarantee under this title exceeding $10,000,000;
            ``(2) require any applicant seeking a financing or 
        refinancing guarantee under this title for a vessel the design 
        and engineering of which will be subject to approval before 
        documentation by the United States Coast Guard or, in the case 
        of an eligible export vessel, by a member society of the 
        International Association of Classification Societies acting 
        for or in addition to a foreign Administration, to submit 
        vessel plans, drawings, and engineering data for independent 
review by the Secretary, except that the Secretary--
                    ``(A) may condition the commitment to guarantee any 
                such obligation on receipt of proof of having obtained 
                such other regulatory or society approvals; and
                    ``(B) may require--
                            ``(i) submission of such data and drawings 
                        as are reasonably necessary to establish a 
                        vessel's capacities for and performance in her 
                        intended trade insofar as the same affect the 
                        determination of economic soundness in addition 
                        to general vessel data and information to the 
                        extent necessary to assess collateral and 
                        potential collateral resale values; and
                            ``(ii) submission of all such data for any 
                        proposed vessel that involves technology 
                        performance issues that should be assessed 
                        independently to determine the presence or 
                        absence of unacceptable ship technology risk;
            ``(3) require, except in the unusual case of an applicant 
        for which coastwise trade eligibility is uncertain and for 
        which such eligibility is germane to economic soundness, any 
        applicant for financing or refinancing guarantees of a vessel 
        to be documented under the laws of the United States to submit 
        as part of their application any proof of United States 
        citizenship for independent review by the Secretary as to 
        eligibility, except that the Secretary may condition the 
        commitment to guarantee any such obligation on receipt of proof 
        of having qualified for documentation under the laws of the 
        United States to the satisfaction of the United States Coast 
        Guard;
            ``(4) require any applicant to affirmatively make a claim 
        of exemption from section 552 of title 5, United States Code, 
        popularly known as the Freedom of Information Act, for so much 
        of the application as exceeds the application's summary of 
        information in part 1 of the application, and such balance of 
        application information is exempt from disclosure under that 
        section;
            ``(5) exclude foreign content from inclusion in actual 
        cost, if at least 51 percent of total cost is not foreign 
        content and the hull and superstructure are assembled entirely 
        in the United States, or exclude domestic sales tax or foreign 
        import duties or value-added tax from inclusion in actual cost 
        if the same normally would be required to be capitalized under 
        accepted accounting principles;
            ``(6) collect or provide by rule for the payment of 
        guarantee fees at the inception of the term for repayment, and 
        the Secretary shall instead require the payment annually of an 
        amount equal to one-half of 1 percent of the then-unpaid 
        principal obligation or portion thereof to which the title XI 
        guarantee applies; or
            ``(7) during the term for repayment of an obligation 
        guarantee of $10,000,000 or less for the financing or 
        refinancing of a vessel that is documented under the laws of 
        the United States, impose on a shipowner any requirements for 
        survey or inspection in excess of the requirements then imposed 
        by the United States Coast Guard under title 46 of the Code of 
        Federal Regulations.''.
    (b) Repeal of Requirement of Finding for Guarantee for Eligible 
Export Vessel.--Paragraph (1) of section 1103(g) of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1273(g)), is repealed.

SEC. 6. AUTHORITY.

    Title XI of the Merchant Marine Act, 1936, is further amended by 
adding at the end the following:
    ``Sec. 1116. The Secretary of Transportation, subject to the 
availability of appropriations--
            ``(1) may contract with disinterested and qualified private 
        sector specialists in ship technology and market sectors to 
        advice the Secretary on any application for a financing or 
        refinancing guarantee under this title for which the Secretary 
        lacks ship technology or market sector specialist expertise, 
        other than for an application for a Smaller Ship Shared-Risk 
        Financing Guarantee under section 1113, select disinterested 
        and qualified persons to provide the same advise on an 
        unadvertised basis and reimburse such selected specialists at a 
        fair and reasonable rate; and shall collect from the applicant 
        so much of the investigation and application fees payable in 
        connection with such application as is necessary to pay the 
        cost of such specialists; and
            ``(2) may authorize travel by persons employed or engaged 
        by the Secretary to review an application for any financing or 
        refinancing guarantee, to visit the situs of the applicant.''.

SEC. 7. REPORTS TO CONGRESS.

    (a) Report by Secretary of Defense.--The Secretary of Defense 
shall, in consultation with the Secretary of Transportation, before 
June 30, 2001, submit to the Congress a written report on--
            (1) the extent to which projects approved within the 
        Maritech and Maritech ASE programs under the National 
        Shipbuilding and Shipyard Conversion Act of 1993 have created 
        technologies and capabilities among both larger and smaller 
        United States shipbuilders that support national defense 
        preparedness interests; and
            (2) how such program may be continued to support national 
        defense interests, including the recommended level of resources 
        to continue such program.
    (b) Report by Secretary of Transportation.--The Secretary of 
Transportation shall, before June 30, 2001, submit to Congress a 
written report that--
            (1) proposes an articulated United States merchant 
        shipbuilding policy, identifies the extent to which United 
        States shipyards are competitive with measures to aid or retain 
        competitiveness, identifies the permanent levels of staffing 
        and resources necessary to administer title XI of the Merchant 
        Marine Act, 1936, and discusses the advisability of retaining 
        the program under that title under the United States Maritime 
        Administration or transferring its administration to a 
Government-owned corporation subject to recommended extent of continued 
congressional budgetary and other oversights and whether existing 
safeguards on title XI credit extension decisions are adequate;
            (2) recommends informational or other measures and the 
        associated level and cost of resources, that may be taken by 
        the Secretary, alone or in cooperation with the Overseas 
        Private Investment Corporation, to reduce basis-point-spread 
        market additions on title XI bonds by expanding the pool of 
        bond purchasers;
            (3) reports whether payments have been made into title XI 
        Reserve Funds to which the Government made effective resort as 
        collateral following default and that discusses any 
        justification, as against shipowner burden, of retaining the 
        title XI Reserve Fund and Financial Agreement loan feature; and
            (4) recommends any other measures, including extending 
        title XI obligation authority, that will strengthen the United 
        States merchant marine infrastructure and promote national 
        policy objectives.

SEC. 8. UNITED STATES PASSENGER VESSEL RESEARCH SUPPORT.

    The Secretary of Transportation, acting through the Coast Guard and 
subject to appropriations, may provide financial assistance for 
research projects proposed to and selected by the United States 
Passenger Vessel Association that--
            (1) foster business process or design technologies to avoid 
        or mitigate adverse environmental impacts from domestic 
        passenger vessel operations;
            (2) promote cost-effective solutions to passenger and crew 
        safety issues arising from operations and changing 
        technologies;
            (3) propose, promote, or assess the feasibility of 
        waterborne passenger transport (including effective intermodal 
        connections where applicable) in United States locales with 
        existing or foreseeable nonwaterborne transport congestion of 
        people or goods (or both); or
            (4) any combination of paragraphs (1) through (3).

SEC. 9. INITIATIVE AUTHORITY CONTINUED.

    The authority created under the National Shipbuilding and Shipyard 
Conversion Act of 1993 to extend the availability of title XI 
obligation guarantees to eligible export vessels and for United States 
shipyard modernization shall continue until terminated or otherwise 
modified by the Congress. Annual appropriations for program resources 
and Federal Credit Reform Act payments for the program under title XI 
of the Merchant Marine Act, 1936, shall be under the jurisdiction of 
the respective House of Representatives and Senate transportation 
appropriations subcommittees.
                                 <all>