For a Vessel Project to receive financing for Construction, Reconstruction, Reconditioning, or Repair the following criteria must be met:

(a) Vessel construction requirements. The Vessel must:

(1) Be assembled or repaired in a shipyard geographically located within the United States;

(2) Be U.S. flagged; and

(3) Meet all applicable United States Coast Guard requirements.

(b) Class, condition, and operation. The Vessel must be constructed, maintained, and operated to meet the highest classification, certification, rating, and inspection standards for Vessels of the same age and type imposed by:

(1) The American Bureau of Shipping (ABS) or another classification society that also meets the inspection standards of the United States Coast Guard with respect to the documentation of U.S.-flag Vessels; or

(2) If unclassed, built to ABS or other acceptable classification standards and subject to regular inspection and condition surveys conducted by marine surveyors acceptable to MARAD; and

(3) The Vessel must be in compliance with all applicable United States laws, rules, and regulations for operations in the intended trade.

(c) Documentation. The Vessel must be documented under the laws of the United States or the laws of any individual state.

(d) Reconstruction or reconditioning. Repairs necessary for the Vessel to meet the classification standards approved by MARAD or any regulatory body, or for previous inadequate maintenance and repair, will not constitute Reconstruction or Reconditioning within the meaning of this paragraph (d).

(e) Condition survey. If an Application involves a Reconstructed, Reconditioned, or Repaired Vessel, the Vessel must be available at a time and place acceptable to MARAD to conduct a condition survey. An Applicant must:

(1) Pay the cost of the condition survey;

(2) Ensure that the scope and extent of the condition survey will not be less effective than that required by the last classification society special survey completed (if the Vessel is classified), next due, or overdue, whichever date is nearest in accordance with the Vessel's age;

(3) Ensure that the Vessel meets the standard of the survey necessary for retention of class (if the Vessel is classified); and

(4) Ensure that the operating records of the Vessel reflect normal operation of the Vessel's main propulsion and other machinery and equipment, consistent with accepted commercial experience and practice.

(f) Metric usage. The preferred system of measurement and weights for Vessels is the metric system.

(g) Operator's qualifications. The bareboat charterer, or other person identified in the Application as the operator of the Vessel Project must possess the necessary experience, ability, and other qualifications to operate and maintain properly the Vessel(s) that serve as security for the financing. For newly formed entities, MARAD will evaluate the performance of affiliates and/or companies associated with the management or principals (where the management or principals have a significant degree of control) in determining the Applicant's operating ability.

(h) Vessel horsepower. If minimum horsepower of the main engine is a requirement for determining the maximum eligible percentage of financing of the Actual Cost, the standard for the horsepower will be continuously rated horsepower.