PUBLIC LAW 94-370—JULY 26, 1976
90 STAT. 1025
"(B) no guarantee shall be made unless the Secretary determines that such bonds or other evidences of indebtedness ^ will— "(i) be issued only to investors who meet the requirements prescribed by the Secretary, or, if an offering to the public is contemplated, be underwritten upon terms and conditions approved by the Secretary; "(ii) bear interest at a rate found not to be excessive by the Secretary; and "(iii) contain, or be subject to, repayment, maturitj^, and other provisions which are satisfactory to the Secretary; "(C) the approval of the Secretary of the Treasury shall be required with respect to any such guarantee, unless the Secretary of the Treasury waives such approval; and "(D) no guarantee shall be made after September 30, 1986. "(2) The full faith and credit of the United States is pledged to the payment, under paragraph (5), of any default on any indebtedness guaranteed under subsection (d)(2). Any such guarantee made by the Secretary shall be conclusive evidence of the eligibility of the obligation involved for such guarantee, and the validity of any such guarantee so made shall be incontestable in the hands of a holder of the guaranteed obligation, except for fraud oi- material misrepresentation on the part of the holder, or known to the holder at the time acquired. (3) The Secretary shall prescribe and collect fees in connection Fees, with guarantees made under subsection (d)(2). These fees may not exceed the amount which the Secretary estimates to be necessary to cover the administrative costs pertaining to such guarantees. "(4) The interest paid on any obligation which is guaranteed under subsection (d)(2) and which is received by the purchaser thereof (or the purchaser's successor in interest), shall be included in gross income for the purpose of chapter 1 of the Internal Revenue Code of 1954. 26 USC 1 et seq. The Secretary may pay out of the Fund to the coastal state or the unit of general purpose local government issuing such obligations not more than such portion of the interest on such obligations as exceeds the amount of interest that would be due at a comparable rate determined for loans made under subsection (d)(1). "(5)(A) Payments required to be made as a result of any guarantee made under subsection (d)(2) shall be made by the Secretary from sums appropriated to the Fund or from moneys obtained from the Secretary of the Treasury pursuant to paragraph (6). "(B) If there is a default by a coastal state or unit of general purpose local government in any payment of principal or interest due under a bond or other evidence of indebtedness guaranteed by the Secretary under subsection (d)(2), any holder of such bond or other evidence of indebtedness may demand payment by the Secretary of the unpaid interest on and the unpaid principal of such obligation as they become due. The Secretary, after investigating the facts presented by the holder, shall pay to the holder the amount which is due such holder, unless the Secretary finds that there was no default by such state or unit or that such default has been remedied. "(C) If the Secretary makes a payment to a holder under subparagraph (B), the Secretary shall— "(i) have all of the rights granted to the Secretary or the United States by law or by agreement with the obligor; and " (ii) be subrogated to all of the rights which were granted such holder, by law, assignment, or security agreement between such holder and the obligor.
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