6 USC 1159.

Maturity dates.

Agreement provisions.

73 Stat. 270.

or reconditioned before such mortgage is executed, 871⁄2 per centum of all amounts the mortgagor has paid or is obligated to pay for the construction (including designing, inspecting, outfitting, or equipping) of the vessel, depreciated at the rate of 5 per centum per annum from the date the vessel was delivered by the shipbuilder to the date such mortgage is executed, or (B) if the vessel has been reconstructed or reconditioned before such mortgage is executed, 872 per centum of all amounts the mortgagor has paid or is obligated to pay for the construction (including designing, inspecting, outfitting, and equipping) of the vessel, depreciated at the rate of 5 per centum per annum from the date the vessel was delivered by the shipbuilder to the date of such reconstruction or reconditioning, and depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straight-line basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, plus 872 per centum of all amounts the mortgagor has paid or is obligated to pay for the reconstruction or reconditioning of the vessel (if such reconstruction or reconditioning was done without aid of construction subsidy and the vessel complies with the requirements of section 509 of this Act; otherwise, 75 per centum of such amount), depreciated, from the date of such reconstruction or reconditioning to the date such mortgage is executed, on a straight-line basis and on the basis of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, and (b) if the vessel was built with the aid of construction-differential subsidy, or does not comply with the requirements of section 509 of this Act, exceed the amount computed under (a) above except that, where (a) above provides for 871⁄2 per centum of the construction cost of the vessel, the percentage shall be 75 per centum;

"(5) the mortgage has maturity dates which, if the vessel has not been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the mortgaged vessel of twenty years computed from the date the vessel was delivered by the shipbuilder or, if the vessel has been reconstructed or reconditioned, do not exceed the remaining years of a useful life of the vessel determined jointly by the Secretary of the Treasury and the Secretary of Commerce;

"(6) the loan agreement for the making of the loan secured by the mortgage, or the mortgage, provides that the underwriter or mortgagee will disburse the loan for one or more of the following purposes: (a) to pay one of the components of actual cost of the vessels to be constructed, reconstructed, or reconditioned and, if any such payment is to reimburse the operator for payments made from his capital reserve fund, to deposit such payment in his capital reserve fund, or (b) to pay part of the loan to discharge an existing mortgage which is insured by the Secretary of Commerce on the vessel that is subject to the mortgage which is to be insured, or (c) to deposit part or all of the loan in the operator's capital reserve fund, if he is a subsidized operator, and in a construction reserve fund, if he is an unsubsidized operator; if any deposit is made in a capital reserve fund, or construction reserve fund under (c) hereof, such deposit may be withdrawn only to pay one of the components of actual cost of the vessels that are to be constructed, reconstructed, or reconditioned, or if for any reason such payments do not exhaust the deposit, then to pay off the loan secured by the mortgage that is to be

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73 Stat. 271.

46 USC 1274. Requirements,

"(7) the mortgage complies with all of the requirements of 68 Stat. 1269. section 1104 (a) of this Act (which defines an eligible mortgage) except subdivision 2 thereof (which specifies the maximum principal amount of the mortgage), subdivision 3 thereof (which compliance. specifies the maximum duration of the mortgage), and subdivision 8 thereof (which specifies the purpose of the loan secured by the mortgage);

"(8) the mortgaged vessel shall be in class A-1, American Bureau of Shipping, with all required certificates, including but not limited to marine inspection certificates of the United States Coast Guard, with all outstanding requirements and recommendations necessary for retention of class accomplished, unless the Secretary of Commerce permits a deferment of such repairs, and shall be tight, stanch, strong and well and sufficiently tackled, appareled, furnished and equipped, and in every respect seaworthy and in good running condition and repair and in all respects fit for service."

SEC. 2. Section 1104(a)(2) of the Merchant Marine Act, 1936, as amended, is amended by striking out of the proviso the words: "That in the case of a vessel, the size and speed of which are approved by the Secretary of Commerce, which is eligible for mortgage aid" and inserting in lieu thereof the words: "That in the case of a vessel, the size and speed of which are approved by the Secretary of Commerce, and which is, or in the case of a vessel to be reconstructed or reconditioned would have been, eligible for mortgage aid for construction".

Approved July 31, 1959.

Class and certificates.

46 USC 1274.

86th Congress, S. 175

July 31, 1959

AN ACT

73 Stat. 272. To provide transportation on Canadian vessels between ports in southeastern Alaska, and between Hyder, Alaska, and other points in southeastern Alaska, and between Hyder, Alaska, and other points in the United States outside Alaska, either directly or via a foreign port, or for any part of the transportation.

Alaska.

Transportation on Canadian

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That, until June 30, 1960, notwithstanding the provisions of law of the United States restricting to vessels of the United States the transportation of passen- vessels. gers and merchandise directly or indirectly from any port in the United States to another port of the United States, passengers may be transported on Canadian vessels between ports in southeastern Alaska, and passengers and merchandise may be transported on Canadian vessels between Hyder, Alaska, and other points in southeastern Alaska, and between Hyder, Alaska, and other points in the United States outside Alaska, either directly or via a foreign port, or for any part of the transportation, unless the Secretary of Commerce determines that United States-flag service is available to provide such transportation. Approved July 31, 1959.

86th Congress, S. 2148

July 31, 1959

AN ACT

To amend title XI of the Merchant Marine Act, 1936, as amended, to provide for the deposit of funds in escrow with the Secretary of Commerce, to provide for the payment of insurance, in part, on the basis of such deposits, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That title XI of the Vessels. Merchant Marine Act, 1936, as amended (46 Ú.S.C. 1271-1279), is Esorow fund. amended as follows:

(1) By revising the proviso in section 1101 (f) to read as follows: 52 Stat. 969. "That in no event shall the Secretary of Commerce pay as insurance Insurance. under this title in respect of the unpaid balance of the principal of a Restriction. mortgage or loan an amount in excess of 75 per centum, or 872 per centum, as the case may be, of the amount paid by or for the account of the mortgagor or borrower for the construction, reconstruction, or reconditioning (including designing, inspecting, outfitting, and equipping) of such vessel, except that if the mortgagor or borrower creates an escrow fund as authorized by section 1111 of this Act, the amount that shall be paid as insurance is the interest on and the unpaid balance of the principal of such loan or mortgage."

(2) By inserting after section 1110 a new section 1111 to read as Ante, p. 269. follows:

"SEC. 1111. (a) CREATION OF THE ESCROW FUND.-In connection

with the insurance of loans and mortgages, which are financed by sale 73 Stat. 272. of bonds to the general public, the Secretary of Commerce is author- 73 Stat. 273. ized to accept a deposit in escrow in an amount which at the time of such deposit is equal to (i) the excess of the principal of such loan or mortgage over 75 per centum, or 872 per centum, as the case may be, of the amount paid by or for the account of the mortgagor or borrower for the construction, reconstruction, or reconditioning (including designing, inspection, outfitting, and equipping) of the vessel, (ii) with interest thereon for the period of the escrow agreement.

"(b) DISBURSEMENT PRIOR TO TERMINATION OF THE ESCROW AGREEMENT.-The Secretary of Commerce shall, as specified in the escrow agreement, disburse the escrow fund to pay amounts the mortgagor or borrower is obligated to pay as interest on such loan or mortgage or for the construction, reconstruction, or reconditioning (including designing, inspecting, outfitting, and equipping) of the vessel, except that if insurance becomes payable under the insurance contract prior to the termination of the escrow agreement, all amounts in the escrow fund at the time such insurance becomes payable (including realized income which has not yet been paid to the borrower or mortgagor) shall, subject in the case of insurance on a mortgage to the application of mortgage provisions contemplated by section 1104(a) (10) of this 46 Stat. 1274. Act, be paid into the Federal Ship Mortgage Insurance Fund and (i) be credited against any amounts due or to become due to the Secretary of Commerce from the borrower or mortgagor with respect to the insured loan or mortgage and (ii) to the extent not so required, be paid to the borrower or mortgagor.

"(c) DISBURSEMENT UPON TERMINATION OF THE ESCROW AGREEMENT.—If insurance has not become payable under the insurance contract prior to the termination of the escrow agreement, any balance of the escrow fund at the time of such termination shall be disbursed by the Secretary of Commerce to prepay the excess of the principal of the loan or mortgage over 75 per centum, or 872 per centum, as the case may be, of the actual cost of the vessel to the extent paid, and to

46 USC 1274.

46 USC 1274.

73 Stat. 273.

pay interest on such prepaid amount of principal, and the remainder of such balance of the escrow fund shall be paid to the borrower of mortgagor.

"(d) INVESTMENT OF THE ESCROW FUND.-The Secretary of Com merce may invest and reinvest all or any part of the escrow fund in obligations of the United States with such maturities that such fund will be available as required for purposes of the escrow agreement.

"(e) INCOME ON TILE ESCROW FUND.-Any income realized on the escrow fund shall, upon receipt by the Secretary of Commerce, be paid to the borrower or mortgagor.

"(f) OTHER TERMS.-The escrow agreement shall contain such other terms as the Secretary of Commerce may consider necessary to fully protect the interests of the United States."

(3) By inserting before the periods at the end of both the second and third sentences of section 1104(d) a comma and the following: "excluding the average amount (except interest) on deposit in an es crow fund created under section 1111 of this Act."

(4) By inserting in section 1104 (e), after the word "commitments," the words "for services in connection with the escrow fund authorized by section 1111."

Approved July 31, 1959.