11. Upon receipt of the decision of the Chairman of the Resources Board, the delegate agency will issue the appropriate certification to the Reconstruction Finance Corporation in accord with such decision.

12. Final arrangements for the loan will be carried out by the Reconstruction Finance Corporation working in direct contact with the applicant.

DPA CRITERIA FOR PROCESSING LOAN APPLICATIONS

SCHEDULE VII (2)

CRITERIA FOR PROCESSING APPLICATIONS FOR LOANS UNDER TITLE III (SEC. 302) OF THE DEFENSE PRODUCTION ACT OF 1950

I. Before an application for a loan (title III, sec. 302) will be approved, all the following criteria must be met:

1. That the funds will be used for

(a) expansion of capacity or

(b) development of technological processes, or

(c) production of essential materials (including the exploration, development, and mining of strategic and critical materials and minerals).

2. That such funds will be used:

(a) To expedite production and deliveries or services to aid in carrying out government contracts for the procurement of materials and the performance of services for the national defense.

3. That funds for the purposes for which application is made are not otherwise available on reasonable terms.

4. That the expansion of facilities or the development of technological process or the production of essential materials, as intended by the use of such funds, cannot be accomplished in another manner which will place less strain on such strategic factors as manpower, materials, transportation facilities, defense security, etc.

5. That the factors of production needed in order to make effective use of funds for which application is made are available and that the proposed project is feasible.

6. That multilabor shifts, idle facilities, existing unused capacity, or readily convertible facilities are not available and suitable for accomplishing the purpose for which the funds are intended.

7. That the management which will direct and control the use of such funds is competent of doing so in an efficient and responsible manner.

8. That the funds will be used in such manner as to relieve, at least in part, current or prospective shortages of materials or services essential for defense. 9. That the applicant must be a private business enterprise (including research corporations not organized for profit).

II. The following principles or guides must be employed to the maximum extent in arriving at a final determination upon a loan application (title III, sec. 302):

1. That the funds will be used in such manner as to promote competitive enterprise and to assist in the development and expansion of small business. 2. That the funds will not be used, directly or indirectly, to create or strengthen monopolies, injure small business, or otherwise promote undue concentration of economic power.

3. That the materials or services to be produced or the facilities which are to be expanded will be or will produce materials which are or are likely to become in critical supply as evidenced by the imposition of inventory controls, allocations, or priority controls.

4. That the use of such funds will not require diversion of materials and/or facilities from more important or equally important civilian or military use. 5. That the materials or services or facilities for which such funds are intended, will relieve existing or currently threatening bottlenecks in the production or distribution of materials or services needed for defense.

6. That the applicant is in fact performing under a defense contract or is negotiating for a defense contract, for which the funds will be used to permit completion or initiation of performance under such contract.

7. That the project for which such funds are intended is one which fits appropriately into essential programs for national defense.

82354-52-19

LOAN REGULATIONS UNDER THE DEFENSE PRODUCTION ACT

SCHEDULE VII (3)

TITLE 32A-NATIONAL DEFENSE, APPENDIX

Chapter VI-National Security Resources Board

PART 601-LOANS UNDER SECTION 302 OF THE DEFENSE PRODUCTION ACT OF 1950

The following regulation is hereby prescribed by the Chairman of the National Security Resources Board, with the approval of the President, pursuant to the authority contained in Executive Order 10161, dated September 9, 1950:

POWERS AND DUTIES OF DELEGATE AGENCIES AND THE RECONSTRUCTION FINANCE CORPORATION 601.10 601.11

Delegate agencies.

The Reconstruction Finance Corporation.

AUTHORITY: §§ 601.1 to 601.23 issued under sec. 704, Pub. Law 774, 81st Cong. Interpret or apply sec. 302, Pub. Law 774, 81st Cong., E. O. 10161, Sept. 9, 1950, 15 F. R. 6105.

DEFINITIONS

§ 601.1 Meaning of terms. As used in this part, unless the context otherwise requires, terms shall have the meaning ascribed in §§ 601.2 to 601.5.

§ 601.2 Borrower. "Borrower" means any private business enterprise (including research corporations not organized for profit) to whom a loan is made pursuant to section 302 of the Defense Production Act of 1950.

§ 601.3 Certificate. "Certificate" means a certificate issued by a delegate agency certifying that a loan upon the terms and conditions set forth therein is necessary to expedite production and deliveries or services to aid in carrying out Government contracts for the procurement of materials or the performances of services for the national defense.

§ 601.4 Deleate agency. "Delegate agency" means any government officer or agency designated by section 303 of Executive Order 10161 to issue certificates as to the necessity for loans authorized by section 302 of the Defense Production Act of 1950, or any government officer, agency or employee to whom the authority to issue certificates has been redelegated pursuant to section 902 (b) of said Executive order.

§ 601.5 Loans. "Loans" means loans authorized by section 302 of the Defense Production Act of 1950 and shall include participations in and guarantees of loans.

POWERS AND DUTIES OF DELEGATE AGENCIES AND THE RECONSTRUCTION FINANCE CORPORATION

§ 601.10 Delegate agencies. The delegate agencies are hereby authorized and directed to determine within the limitations of §§ 601.15 to 601.23 the terms and conditions upon which a loan may be made.

§ 601.11 The Reconstruction Finance Corporation. The Reconstruction Fnance Corporation is hereby authorized and directed upon the receipt of a cer tificate or certificates from any delegate agency and upon the allocation of the necessary funds to make a loan or loans to a borrower upon the terms and conditions set forth in such certificate or certificates.

TERMS AND CONDITIONS OF LOANS

§ 601.15 Term of loan. The term of a loan shall be for such period as the delegate agency having the certifying authority for such loan may determine but shall in no event exceed a period of twenty years from the date of the loan unless a longer period is authorized by the Chairman of the National Security Resources Board.

§ 601.16 Amount of loan. A loan shall be made for such amount as the delegate agency having the certifying authority for such loan may determine: Provided, however, That a certificate for a loan may be issued by a delegate agency only to the extent that the financial assistance to be extended to the borrower is not otherwise available to the borrower on reasonable terms from private financial institutions or Government agencies.

§ 601.17 Interest rates. The rate of interest to be paid by the borrower for any loan shall be the same as that charged at the time of making the loan by the Reconstruction Finance Corporation for loans made pursuant to the Reconstruction Finance Corporation Act: Provided, however, That a different rate may be authorized by the Chairman of the National Security Resources Board.

§ 601.18 Repayment. The time or times for and the method or methods of repayment by the borrower of a loan shall be determined by the delegate agency having certifying authority for the loan.

§ 601.19 Security. (a) Loans shall be secured by sufficient collateral: Provided, however, That in any case where the collateral is insufficient if the managerial ability of the borrower, the potentiality of the profits of the enterprise and other relevant factors bearing on the ability of the borrower to repay shall reasonably assure the repayment of the loan, the loan may be made on a partially secured or wholly unsecured basis.

(b) In order to secure the repayment of a loan the delegate agency having certifying authority for the loan may require the guarantee of the loan by a person, firm or corporation other than the borrower and may require the borrower to assign all of his right, title, and interest in and to all payments accrued and to accrue to the borrower on contracts with the United States Government or with any agency or instrumentality thereof.

(c) The delegate agency having certifying authority for the loan may require as a condition precedent to the loan that existing creditors of the borrower and secondary obligors on the claims of said creditors shall execute a standby agreement (1) to subordinate their claims and the liens held by them in whole or in part to the mortgage, lien, pledge, transfer, assignment or delivery made to the Reconstruction Finance Corporation as security for the loan; or (2) to take no action to assert, collect or enforce all or any part of their claims, except such amounts as the standby creditor is permitted to receive or retain pursuant to the certificate; or (3) to take no action to realize upon any collateral for their claims, except collateral specified in, and permitted to be realized. upon by the certificates. In the event any agency of the Government is a prior creditor of the borrower, no standby agreement effective against such agency may be required until after consultation between such agency and the delegate agency having certifying authority for the loan.

$601.20 Participation and guarantee.

(a) In the case of a participation in a loan made by a bank or other financial institution, the participation may be on either an immediate or deferred basis.

(b) In the case of a deferred participation the fee to be paid by the participating bank or other financial institution to the Reconstruction Finance Corporation until the agreed participation has been purchased by the Reconstruction Finance Corporation shall be the same as that charged at the time of making the loan by the Reconstruction Finance Corporation for deferred participations in loans made pursuant to the Reconstruction Finance Corporation Act: Provided. That a different fee may be authorized by the Chairman of the National Security Resources Board.

(c) In all cases of participation, (1) the participating bank or other financial institution shall not directly or indirectly charge or receive any bonus, fee, commission or expense in any form in connection with the making of the loan except charges and expenses for actual services (2) any and all security or guarantee of any nature which the participating bank or other financial institution shall hold or receive to secure the participating bank or other financial institution and the Reconstruction Finance Corporation shall secure the interests of both the participating bank or other financial institution and the

Reconstruction Finance Corporation in the loan; (3) neither the participating bank or other financial institution nor the Reconstruction Finance Corporation will assign, in whole or in part, its interest in the loan without prior written consent of the other party.

§ 601.21 Books, records, and reports. The borrower shall (a) keep proper books of account in a manner satisfactory to the Reconstruction Finance Corporation; (b) authorize the Reconstruction Finance Corporation to make or cause to be made inspections and audits of any books, records, and papers in the custody of the borrower or others relating to its financial or business condition, or of any of its assets; (c) furnish upon request to the Reconstruction Finance Corporation reports of the borrower's financial condition and operations and schedules of compensation being paid by it; and (d) authorize all constituted Federal, State, and municipal authorities (1) to furnish reports of examinations, records, and other information relating to the condition and affairs of borrower and (2) to permit representatives of the delegate agencies and the Reconstrue tion Finance Corporation to have full access to, and make copies of and extracts from, any and all reports and returns by or with respect to borrower, and all reports of examiners or other information concerning borrower contained in their files and records.

§ 601.22 Distribution and compensation. (a) A borrower, if a corporation joint stock company, or a Massachusetts trust, shall not, without the prior written consent of the Reconstruction Finance Corporation, declare or pay any dividend or make any distribution upon its capital stock, or purchase or retire any of its capital stock, or consolidate or merge with any other company, or make any advance, directly or indirectly, by way of loan, gift, bonus, commission. or otherwise, to any company directly or indirectly controlling or affiliated with or controlled by the borrower, or to any officer, director or employee of the bor rower, or of any such company.

(b) A borrower, if a partnership or individual, shall not, without the prior written consent of the Reconstruction Finance Corporation, make any distribution of assets of the business other than reasonable compensation for services, or make any advance, directly, or indirectly, by way of loan, gift, bonus, commission, or otherwise, to any partner or any of its employees, or to any com pany directly or indirectly controlling or affiliated with or controlled by the

borrower.

(c) A borrower shall not pay directly or indirectly to any officer, employee or person, except employees customarily paid on an hourly basis, any compen sation in excess of the amount authorized by the Reconstruction Finance Cor poration and shall not, without the prior written consent of the Reconstruction Finance Corporation, increase the compensation of any officer, employee or person or elect, appoint, engage or otherwise employ any person, except emplores who are customarily paid on an hourly basis, at a compensation at a rate in excess of $10,000.00 per annum.

§ 601.23 Fees and commissions. pay or agree to pay, or procure any person to pay or agree to pay (a) any bonus, fee, or commission in any form in connection with the application for or the obtaining of a loan; or (b) any charge or expense, in any form, in connection with such application or loan, for the services of appraisers, accountants, attorneys, or other persons whomsoever, whether for evidencing matters required to be presented with reference to said application or for services in any manner connected with such application, except as permitted by the Reconstruction Finance Corpoartion.

A borrower shall not, directly or indirectly,

Approved:

W. STUART SYMINGTON, Chairman, National Security Resources Board.

HARRY S. TRUMAN,

The White House.

[F. R. Doc. 50-10442; Filed, Nov. 21, 1950; 12: 26 p. m.]

DPA PROCEDURES FOR COORDINATING PROCUREMENT ACTIONS AND ENCOURAGEMENT OF EXPLORATION, DEVELOPMENT AND MINING OF CRITICAL AND STRATEGIC MINERALS AND METALS

SCHEDULE VIII (1)

NSRB Doc. 134.
DECEMBER 5, 1950.

EXECUTIVE OFFICE OF THE PRESIDENT

NATIONAL SECURITY RESOURCES BOARD

Board Secretariat

Subject: Defense procurement and encouragement.

Contents: Procedure under section 303 (a), (b), (c) of title III of the Defense Production Act of 1950, as prescribed by the Chairman of the National Security Resources Board.

Reference: For further information contact Business Expansion Office, National Security Resources Board.

Pursuant to Executive Order 10161, the following procedure is established for coordinated action under section 303 (a), (b), (c), of the Defense Production Act of 1950:

1. For the purpose of this procedure, the following is the division of responsibilities:

(a) For procurement actions (sec. 303 (a) (1)), the "certifying authorities" are the Department of Interior, Department of Agriculture, Department of Commerce, and the Defense Transport Administration. The "procuring authorities" are GSA for all commodities and the Department of Agriculture for agricultural commodities.

(b) For encouragement of exploration, development, and mining of critical and strategic minerals and metals (sec. 303 (a) (2), the "certifying” and “encouraging authority" is the Department of Interior.

2. Proposals for certification, with full justification in accordance with established criteria, will be prepared by the certifying agency, with the, assistance of other agencies as needed, particularly GSA as to amount, terms, and conditions. 3. Such certifying agency will docket the project concerning which the proposal is being prepared, assigning a docket number thereto, with the symbol 303 (a) (1) or (2) (agency identification) (number of application).

4. On the basis of all the necessary investigations and analyses, the certifying agencies will prepare their recommendations as to appropriate action on the projects. Such project, which the certifying agency concludes meet the criteria for favorable action, will be sent by it to the Resources Board with a “proposal for certification." This proposal will be specific as to amount, terms, and conditions and will indicate what other governmental assistance is considered necessary in order to carry out the project.

5. Although agencies may use their field offices for such other purposes as may be helpful, field offices may not make direct submissions to the Resources Board. 6. In evaluating the merits of a project, agencies with substantial interest therein may have conflicting views. In such event, the following is the procedure:

(a) When a noncertifying agency's position on a project differs from that of the certifying agency, an informal attempt should be made to reach an agreement with respect to the project.

(b) If such agreement is not forthcoming, the certifying agency should accompany its proposal for certification to the Resources Board with such dissenting recommendations as the noncertifying agencies have presented. (c) When a certifying agency makes a determination that a project is inappropriate, no proposal is made to the Resources Board unless another interested agency makes a formal request to that certifying agency to have the Resources Board give consideration to the former's position.

(d) If such formal request is made, the certifying agency will not take action on the project until both parties have had opportunity to present their views to the Resources Board.

7. Certifying agency's proposal for certification, with attendant documents, will be docketed (using the certifying agency's docket number), reviewed and analyzed by the Resources Board.