---
kind: "section"
citation: "46 U.S.C. § 53734"
title: "46"
title_heading: "Shipping"
number: "53734"
heading: "Replacement of vessels because of changes in operating standards"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/46/53734"
units:
  - "Subtitle V — Merchant Marine"
  - "Part C — Financial Assistance Programs"
  - "Chapter 537 — Loans and Guarantees"
  - "Subchapter III — Particular Projects"
---

# §53734. Replacement of vessels because of changes in operating standards

- (a) **General Authority.—** Notwithstanding any other provision of this chapter, the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2), on terms the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may prescribe, may guarantee or make a commitment to guarantee the payment of the principal of and interest on an [obligation](/usc/46/53701.md?p=9) that aids in financing or refinancing (including reimbursement of an [obligor](/usc/46/53701.md?p=11) for expenditures previously made for) a contract for the [construction](/usc/46/53701.md?p=3) or [reconstruction](/usc/46/53701.md?p=3) of a [vessel](/usc/46/53501.md?p=9) if—
  - (1) the [vessel](/usc/46/53501.md?p=9) is designed and to be used for commercial use in coastwise, intercoastal, or foreign trade;
  - (2) the [construction](/usc/46/53701.md?p=3) or [reconstruction](/usc/46/53701.md?p=3) is necessary to replace a [vessel](/usc/46/53501.md?p=9) that cannot continue to be operated because of a change required by law in the standards for the operation of [vessels](/usc/46/53501.md?p=9), and the applicant for the guarantee or commitment would not otherwise legally be able to continue operating [vessels](/usc/46/53501.md?p=9) in the trades in which the applicant operated [vessels](/usc/46/53501.md?p=9) before the change;
  - (3) the applicant is presently engaged in transporting cargoes in [vessels](/usc/46/53501.md?p=9) of the type and class that will be constructed or reconstructed under this section and agrees to employ [vessels](/usc/46/53501.md?p=9) constructed or reconstructed under this section as replacements only for [vessels](/usc/46/53501.md?p=9) made obsolete by the change in operating standards;
  - (4) the capacity of the [vessels](/usc/46/53501.md?p=9) to be constructed or reconstructed under this section will not increase the [cargo](/usc/46/53901.md?p=2) carrying capacity of the [vessels](/usc/46/53501.md?p=9) being replaced;
  - (5) the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) has not determined that the market demand for the [vessel](/usc/46/53501.md?p=9) over its useful life will diminish so as to make granting the guarantee fiduciarily imprudent;
  - (6) the [vessel](/usc/46/53501.md?p=9), if to be reconstructed, will have a useful life of at least 15 years after the [reconstruction](/usc/46/53701.md?p=3); and
  - (7) the [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) has considered the criteria specified in [section 53708(a)(3)](/usc/46/53708.md?p=a-3)–(5) of this title.
- (b) **Term and Amount of Obligation.—**
  - (1) **Term.—** The term of an [obligation](/usc/46/53701.md?p=9) guaranteed under this section may not exceed 25 years.
  - (2) **Amount.—** The amount of an [obligation](/usc/46/53701.md?p=9) guaranteed under this section may not exceed 87.5 percent of the [actual cost](/usc/46/53701.md?p=1) or [depreciated actual cost](/usc/46/53701.md?p=4) to the applicant for the [construction](/usc/46/53701.md?p=3) or [reconstruction](/usc/46/53701.md?p=3) of the [vessel](/usc/46/53501.md?p=9). The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may not establish a percentage under this paragraph that is to be applied uniformly to all guarantees or commitments to guarantee made under this section.
- (c) **Applicability of Other Provisions.—** A guarantee or commitment to guarantee under this section is also subject to sections [53701](/usc/46/53701.md), [53702(a)](/usc/46/53702.md?p=a), [53704](/usc/46/53704.md), [53705](/usc/46/53705.md), [53707(a)](/usc/46/53707.md?p=a), [53708(d)](/usc/46/53708.md?p=d) and (e), 53709(a), 53710(a)(1), (2), and (4) and (c), 53711(a), 53713, 53714, 53717, and 53721–53725 of this title.
- (d) **Security Against Default.—** The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) shall require by regulation that an applicant under this section provide adequate security against default.
- (e) **Guarantee Fees.—** The [Secretary](/usc/46/53101.md?p=8) or [Administrator](/usc/46/53701.md?p=2) may establish a fee for the guarantee of an [obligation](/usc/46/53701.md?p=9) under this section that is in addition to the fee established under [section 53714 of this title](/usc/46/53714.md). The fee may be—
  - (1) an annual fee of not more than an additional 1 percent added to the fee established under [section 53714 of this title](/usc/46/53714.md); or
  - (2) a fee based on the amount of the [obligation](/usc/46/53701.md?p=9) versus the percentage of the [obligor](/usc/46/53701.md?p=11)’s [fleet](/usc/46/53101.md?p=3) being replaced by [vessels](/usc/46/53501.md?p=9) constructed or reconstructed under this section.

## Source credit

(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1624; Pub. L. 109–163, div. C, title XXXV, § 3507(a)(1)(E), 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.)

## Notes

| Historical and Revision Notes |  |  |
| --- | --- | --- |
| Revised<br>Section | Source (U.S. Code) | Source (Statutes at Large) |
| 53734(a) | 46 App.:1274a(a), (b)(3). | June 29, 1936, ch. 858, title XI, § 1104B, as added Pub. L. 101–380, title IV, § 4115(f)(2), Aug. 18, 1990, 104 Stat. 521; amended Pub. L. 102–587, title VI, § 6204, Nov. 4, 1992, 106 Stat. 5094; Pub. L. 103–160, div. A, title XIII, § 1356(4), Nov. 30, 1993, 107 Stat. 1814; Pub. L. 104–239, § 11(2), Oct. 8, 1996, 110 Stat. 3134. |
| 53734(b) | 46 App.:1274a(b) (less (3)). |  |
| 53734(c) | 46 App.:1274a(d). |  |
| 53734(d) | 46 App.:1274a(c)(1) (1st sentence). |  |
| 53734(e) | 46 App.:1274a(c)(1) (2d sentence), (2). |  |

In subsection (a), in paragraph (1), the words “as defined in section 1244 of this Appendix” are omitted because the definition of “foreign commerce or trade” in chapter 1 of the revised title applies without having to say so specifically. Paragraph (6) is substituted for 46 App. U.S.C. 1274a(b)(3) to improve the organization of the source provisions.

In subsection (b)(2), the words “by rule, regulation, or procedure” are omitted as unnecessary and for consistency with section 53709(d) of the revised title.

In subsections (c) and (e), the language concerning the Vessel Replacement Guarantee Fund and the Federal Ship Financing Fund is omitted as obsolete. See the explanation for section 53717.

### Editorial Notes

### Amendments

2008—Pub. L. 110–181, § 3522(b), repealed Pub. L. 109–163, § 3507(a)(1)(E). See 2006 Amendment note below.

Pub. L. 110–181, § 3522(a)(10)(B), incorporated the substance of the amendment by Pub. L. 109–163, § 3507(a)(1)(E), into this section by inserting “or Administrator” after “Secretary” wherever appearing. 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.

2006—Pub. L. 109–163, § 3507(a)(1)(E), which directed the amendment of section 1274a 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 and Historical and Revision notes above.