46 U.S.C. § 53704 — Funding limits

submitted 20 years ago by Pub. L. 109-304 to r/title-46-SHIPPING · 654 words · no verdicts yet

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Total outstanding guaranteed obligations can't exceed $12 billion, with $850 million reserved for fishing vessels and facilities. No extra yearly limits apply beyond what Congress authorizes, and eligible vessels can't be excluded by type. The Secretary or Administrator must sort guarantees into risk categories using ten listed factors and stop new guarantees once appropriated funds run out.

(a) General Limitations. The total unpaid principal of all obligations guaranteed under this chapter, outstanding at once, can't exceed $12,000,000,000. Of that amount, $850,000,000 is set aside just for fishing vessels and fishery facilities. (b) Additional Limitations. No extra limits can be placed on new loan guarantee commitments in a fiscal year, except amounts Congress sets in advance through annual authorization laws. A vessel that's otherwise eligible for a guarantee can't be turned down just because of its type. (c) Limits Based on Risk Factors. (1) In this subsection, "cost" has the meaning given in section 502 of the Federal Credit Reform Act of 1990. (2) The Secretary or Administrator must: (A) set up, and update every year, a system of risk categories that groups guarantees by relative risk, using the risk factors in (4); (B) figure, each year, a subsidy rate for each category equal to that category's cost, as a percentage of the guaranteed amount; and (C) make sure each risk category groups loans that cost about the same and share traits that predict default and other costs, based on historical program data and statistical evidence. (3)(A) Before guaranteeing an obligation, and yearly after that for ongoing projects, the Secretary or Administrator must apply the risk factors to place the obligation in a risk category. (B) The total amount still available for guarantees is reduced by the guaranteed amount multiplied by that category's subsidy rate. (C) That reduced amount is treated as the estimated cost to the government of the guarantee. (D) The Secretary or Administrator can't guarantee any more obligations once the appropriated amount available for guarantee costs is reduced to zero this way. (4) The risk factors are: (A) how long the obligation is or will be guaranteed; (B) the guaranteed amount compared to the total project cost; (C) the obligor's or applicant's financial condition; (D) other guarantees tied to the project, if any; (E) the projected employment of the financed vessel or equipment, if applicable; (F) the projected market the financed vessel or equipment will serve, if applicable; (G) the collateral offered; (H) the obligor's or applicant's management and operating experience; (I) whether the guarantee is or will be in effect during the project's construction; and (J) the risk from one borrower or group of related borrowers holding an unusually large share of outstanding loans.

the actual law source: uscode.house.gov ↗public domain

(a)General Limitations.—

The total unpaid principal amount of obligations guaranteed under this chapter and outstanding at one time may not exceed $12,000,000,000. Of that amount, $850,000,000 shall be limited to obligations related to fishing vessels and fishery facilities.

(b)Additional Limitations.—

Additional limitations may not be imposed on new commitments to guarantee loans for any fiscal year, except in amounts established in advance by annual authorization laws. A vessel eligible for a guarantee under this chapter may not be denied eligibility because of its type.

(c)Limits Based on Risk Factors.—

(1)Definition.—

In this subsection, the term “cost” has the meaning given that term in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a).

(2)System of risk categories.—

The Secretary or Administrator shall—

(A)

establish, and update annually, a system of risk categories for obligations guaranteed under this chapter that categorizes the relative risk of guarantees based on the risk factors set forth in paragraph (4);

(B)

determine annually for each risk category a subsidy rate equivalent to the cost of obligations in the category, expressed as a percentage of the amount guaranteed for obligations in the category; and

(C)

ensure that each risk category is comprised of loans that are relatively homogeneous in cost and share characteristics predictive of defaults and other costs, given the facts known at the time of obligation or commitment, using a risk category system that is based on historical analysis of program data and statistical evidence concerning the likely costs of defaults or other costs that are expected to be associated with the loans in the category.

(3)Use of system.—

(A)Placing obligation in category.—

Before making a guarantee under this chapter for an obligation, and annually for projects subject to a guarantee, the Secretary or Administrator shall apply the risk factors specified in paragraph (4) to place the obligation in a risk category established under paragraph (2).

(B)Reduction of available amount.—

The Secretary or Administrator shall consider the total amount available to the Secretary or Administrator for making guarantees under this chapter to be reduced by the amount determined by multiplying—

(i)

the amount guaranteed under this chapter for an obligation; by

(ii)

the subsidy rate for the category in which the obligation is placed under subparagraph (A).

(C)Estimated cost.—

The estimated cost to the United States Government of a guarantee under this chapter for an obligation is deemed to be the amount determined under subparagraph (B) for the obligation.

(D)Restriction on further guarantees.—

The Secretary or Administrator may not guarantee obligations under this chapter after the total amount available to the Secretary or Administrator under appropriations laws for the cost of loan guarantees is considered to be reduced to zero under subparagraph (B).

(4)Risk factors.—

The risk factors referred to in this subsection are—

(A)

the period for which an obligation is guaranteed or to be guaranteed;

(B)

the amount of an obligation guaranteed or to be guaranteed in relation to the total cost of the project financed or to be financed by the obligation;

(C)

the financial condition of an obligor or applicant for a guarantee;

(D)

if applicable, other guarantees related to the project;

(E)

if applicable, the projected employment of each vessel or equipment to be financed with an obligation;

(F)

if applicable, the projected market that will be served by each vessel or equipment to be financed with an obligation;

(G)

the collateral provided for a guarantee for an obligation;

(H)

the management and operating experience of an obligor or applicant for a guarantee;

(I)

whether a guarantee under this chapter is or will be in effect during the construction period of the project; and

(J)

the concentration risk presented by an unduly large percentage of loans outstanding by any one borrower or group of affiliated borrowers.

Source credit: (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1604; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(C), 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; Pub. L. 116–92, div. C, title XXXV, § 3506(d), Dec. 20, 2019, 133 Stat. 1972.)

history & why it existsrecord from the source credit

2006Enacted · Pub. L. 109-304 · 120 Stat. 1604
2006Amended · Pub. L. 109-163 · 119 Stat. 3555
2008Amended · Pub. L. 110-181 · 122 Stat. 598
2019Amended · Pub. L. 116-92 · 133 Stat. 1972

A history note hasn’t been published yet. The record shows enactment by Pub. L. 109-304 on 2006-10-06.

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