PART 250-FISHERIES LOAN FUND

These regulations implement the provisions of section 4 of the Fish and Wildlife Act of 1956, as amended. Section 4 creates a fisheries loan fund to be used as a revolving fund to make loans for financing or refinancing the cost of purchasing, constructing, equipping, maintaining, repairing, or operating new or used commercial fishing vessels or gear. The broad objective of the fund is to provide reasonable financial assistance not otherwise available to commercial fishermen to enable them to maintain, operate, or upgrade commercial fishing vessels and gear.

For the purposes of this part, the following terms shall be construed, respectively, to mean and to include:

(a) Secretary. The Secretary of Commerce or his authorized representative.

(b) Act. The Fish and Wildlife Act of 1956, as amended (16 U.S.C. 742(c)).

(c) Person. Individual, association, partnership or corporation, any one or all as the context requires.

(d) State. Any State, the territories and possessions of the United States, the Commonwealth of Puerto Rico, and the District of Columbia.

(e) Citizen of the United States.

(1) Any person who is a United States citizen by law, birth, or naturalization; (2) any State, any agency of a State, or a group of States; (3) any partnership or association organized under the laws of any State whose members are United States citizens; or (4) any corporation organized under the laws of any State which has as its president or other chief executive officer and as its chairman of the board of directors, or holder of a similar office, a person who is a United States citizen by law, birth, or naturalization, and which has at least seventy-five percent (75%) of the interest in the corporation owned by citizens of the United States. Seventy-five percent (75%) of the interest in the corporation shall not be deemed to be owned by citizens of the United States if:

(i) The title of seventy-five percent (75%) of its stock is not vested in such citizens free from any trust or fiduciary obligation in favor of any person not a citizen of the United States;

(ii) Seventy-five percent (75%) of the voting power in such corporation is not vested in citizens of the United States;

(iii) Through any contract or understanding it is so arranged that more than twenty-five percent (25%) of the voting power may be exercised, directly or indirectly, in behalf of any person who is not a citizen of the United States; or

(iv) By any other means whatsoever, control of any interest in the corporation in excess of twenty-five percent (25%) is conferred upon or permitted to be exercised by any person who is not a citizen of the United States.

(f) National of the United States. (1) Any person who is a United States national by law or birth; (2) any partnership or association organized under the laws of any State or American Samoa whose members are United States nationals or any corporation organized under the laws of any State or American Samoa:

(i) which has as its president or other chief executive officer and as its chairman of the board of directors a person who is a United States citizen or national, (ii) in which no more of its directors than a minority of the number necessary to constitute a quorum are non-nationals and noncitizens, and (iii) in which at least seventy-five percent (75%) of the interest therein is owned by nationals of the United States, citizens of the United States, or both. Seventy-five percent (75%) of the interest in a corporation shall not be deemed to be owned by nationals of the United States, citizens of the United States, or both, (A) if the title to seventy-five percent (75%) of its stock is not vested in such nationals or citizens free from any trust or fiduciary obligation in favor of any person not a national or citizen of the United States; or (B) if seventy-five percent (75%) of the voting power in such corporation is not vested in nationals of the United States, citizens of the United States, or both; or (C) if through any contract or understanding it is so arranged that more than twenty-five percent (25%) of the voting power may be exercised, directly or indirectly, on behalf of any person who is not a national or citizen of the United States; or (iv) if by any other means whatsoever control of any interest in the corporation in excess of 25 per centum is conferred upon or permitted to be exercised by any person who is not a national or citizen of the United States.

(g) Commercial fishing vessel. Any vessel, boat, ship, or other craft which is (1) documented under the laws of the United States or, if under five net

tons, registered under the laws of any State, and (2) used for, equipped to be used for, or of a type which is normally used for commercial purposes for the catching, taking, or harvesting of fish or the aiding or assisting at sea of any activity related to the catching, taking, or harvesting of fish, including, but not limited to, preparation, supply, storage, refrigeration, transportation or processing.

(h) Fishing gear. Any equipment used by a commercial fishing vessel, whether or not such equipment is attached to the vessel.

(i) Fund. The Fisheries Loan Fund established under 16 U.S.C. 742(c), as amended.

(j) Obligation. Any note, bond, debenture, or other evidence of indebted

ness.

(k) Obligor. Any owner or operator of a commercial fishing vessel who is primarily liable for payment of principal of or interest on any obligation.

(1) Fishery. A segment of the commercial fishing industry engaged in the catching of a single species or a group of species of fish or shellfish. Any species other than those comprising the fishery must be caught incidentally while fishing for and using gear designed for the capture of the species comprising the fishery.

or

§ 250.3 Loan authorizations and priority. (a) Loans may be made from the Fund for financing or refinancing the cost of purchasing, constructing, equipping, maintaining, repairing, or operating new used commercial fishing vessels or gear, except as limited by paragraph (b)(3) of this section, including, but not limited to loans to assist obligors to make installment payments on existing mortgages or obligations incurred in connection with the above purposes.

(b) The fund shall not be used to make loans for

(1) Any phase of a shore operation;

(2) Refinancing (i) existing loans that are not secured by a commercial fishing vessel or gear, or (ii) debts which are not maritime liens within the meaning of subsection P of the Ship Mortgage Act of 1920, as amended (46 U.S.C. 971);

(3) The purchase or construction of a new or used commercial fishing vessel which will not replace an existing commercial fishing vessel, except in those instances where the Secretary first determines that the applicant's contemplated operation of such vessel in a fishery will not cause economic hardship or injury to the efficient vessel operators already operating in that fishery. In making such determination, the Secretary shall take into consideration the condition of the fishery, the efficiency of the commercial fishing vessels and gear being operated in that fishery compared with that of the proposed commercial fishing vessel, the prospects of the market for the species comprising the fishery, and the degree and duration of any anticipated economic hardship;

(4) Repair or purchase of commercial fishing vessels or gear where such vessels or gear are not offered as collateral for the loan by the applicant;

or

(5) Financing a new business venture in which the controlling interest is owned by a person or persons who are not currently engaged in commercial fishing.

(c) Priority. A priority shall be granted to assist obligors to avoid default on obligations that were issued for the construction, reconstruction, reconditioning or purchase of fishing vessels and that were guaranteed by the United States under the Fishing Vessel Obligation Guarantee Program authorized by Title XI of the Merchant Marine Act, 1936 (46 U.S.C. 1271-1280, the "FVOG Program"). Due to the limited amount of fund lending capital, no loan applications shall presently be accepted from applicants whose vessel financing was not guaranteed by the United States under the FVOG Program.

Subpart B-Application

§ 250.4 Eligibility.

A loan applicant shall be eligible under this program if such applicant is a citizen or national of the United States (as defined in § 250.2 (e) or (f)) and:

(a) Resides in or conducts business in any state;

(b) Owns, operates, or will own a commercial fishing vessel or gear used, or to be used, directly in the conduct of commercial fishing operations;

(c) In the case of a fishery marketing cooperative, is engaged in marketing all catches of fish or shellfish by its members pursuant to contractual or other enforceable arrangements which empower the cooperative to exercise full control over the conditions of sale of all such catches and disburse the proceeds from all such sales; and

(d) Can demonstrate to the satisfaction of the Secretary that he has substantial experience and proven ability in the management and financing of fishing operations, the resources and other qualifications necessary for the operation and maintenance of a new or used commercial fishing vessel or gear in the intended fishery of operation, and that the loan is likely to result in the continued viability of the commercial fishing operation.

§ 250.5 Financial requirements.

To qualify for a loan, the applicant must submit at the time of application, and as subsequently required by the Secretary, financial information satisfactory to the Secretary that:

(a) The security or collateral for a loan is adequate to provide reasonable assurance of repayment. The security or collateral must be of such sufficiency, considering the integrity and ability of the applicant, and the applicant's past and prospective earnings, that repayment of the loan will be reasonably assured;

(b) The financial assistance applied for is not otherwise available at reasonable rates which permit continued operation. The financial assistance applied for shall be deemed to be otherwise available at reasonable rates which permit continued operation unless an applicant can show:

(1) Proof of refusal of the desired credit from the applicant's bank. Such proof of refusal must contain the date, amount, and term requested; and, if the loan applied for is in excess of the legal lending limit of the applicant's bank or in excess of the amount that such bank normally lends to any one borrower, then proof of refusal must

be obtained from a correspondent bank or other lending institution which has the lending capacity to cover the loan applied for; and

(2) That credit is otherwise unavailable on reasonable terms from sources other than such banks, as from (i) the disposal at a fair price of assets not required by the applicant in the conduct of his business or not reasonably necessary to its potential growth; or (ii) use of personal credit and/or resources of the owner, partners, management, affiliates or principal stockholders of the applicant; or (iii) from other known sources of credit.

Bank refusals to advance credit will not be considered the full test of unavailability of credit where there is knowledge or reason to believe that credit is otherwise available on reasonable terms from sources other than such banks. Provided that, in the case of an application by an obligor whose obligation is guaranteed under the FVOG Program, proof of the refusal of the obligor's bank to extend further credit on behalf of the obligor may constitute proof that the credit applied for is not otherwise available on reasonable terms;

(c) In making the aforementioned determinations, and any others associated with economic or financial considerations, the Secretary may consider, among other factors, current economic conditions within a fishery.

§ 250.6 Application processing and procedures.

(a) Forms. Applicants shall file an application furnished by the National Marine Fisheries Service with the Regional Branch of the National Marine Fisheries Service's Financial Service's Division in the region in which the applicant conducts his business. The respective Regional office addresses follow:

Northeast Region

(Maine, Massachusetts, Rhode Island, Connecticut, New Hampshire, New York, New Jersey, Delaware, Maryland, Virginia)

Financial Services Branch, National Marine Fisheries Service, Post Office Building, Box 1109, Glou

cester, Massachusetts 01930 (617) 281-3600

Southeast Region

(North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Louisiana, Texas, Puerto Rico, Virgin Islands)

Financial Services Branch, National Marine Fisheries Service, 9450 Koger Boulevard, Duval Building, St. Petersburg, Florida 33702 (813) 893-3271

Southwest Region

(California, Hawaii, American Samoa, Guam, Trust Territory of Pacific Islands)

Chief, Fisheries Development Division, National Marine Fisheries Service, 300 South Ferry Street, Terminal Island, California 90731 (213) 548-2575

Northwest Region

(Washington, Oregon, Alaska) Financial Services Branch, National Marine Fisheries Service, 1700 Westlake Avenue North, Seattle, Washington 98109 (206) 442-5532 (b) Processing of Applications. If the application is complete and in conformity with the Act and this Part 250, the Regional Financial Services office will then conduct an investigation of the applicant. Upon completion of the investigation, a decision will be made and the Regional Financial Services office will inform the applicant.

(c) Purchase or construction loans. When the Secretary determines that an application is eligible on its face for the purchase or construction of a new or used commercial fishing vessel that will not replace an existing commercial fishing vessel, a notice shall be published in the FEDERAL REGISTER that such application is being considered and all interested parties will be given a period of 30 days to submit evidence that the contemplated operation of such vessel will cause economic hardship or injury to efficient vessel operations already in that fishery. If such evidence is received, the Secretary shall evaluate it along with such other evidence as may be available to

(2) A foreign insurance company or club operating in the United States that has deposited funds in an amount and manner satisfactory to the Secretary in a bank chartered under the laws of a State or the United States of America, or in a trust fund satisfactory to the Secretary, which funds are solely for the payment of insurance claims on United States vessels or other insured assets.

(3) A reciprocal or interinsurance exchange licensed by an insurance regulatory agency of a State to write the required form of insurance.

(4) An insurance pool composed entirely of owners and operators of commercial fishing vessels.

(b) Any underwriter (including a company, club, or pool) writing insurance shall furnish such reasonable financial or operating data as the Secretary may require to determine the