§1125. Acquisition of vessels

The Secretary of Transportation is authorized to acquire by purchase or otherwise such vessels constructed in the United States as he may deem necessary to establish, maintain, improve, or effect replacements upon any service, route, or line in the foreign commerce of the United States determined to be essential under section 1121 of this Appendix, and to pay for the same out of his construction fund: Provided, That the price paid therefor shall be based upon a fair and reasonable valuation, but it shall not exceed by more than 5 per centum the cost of such vessel to the owner (excluding any construction-differential subsidy and the cost of national defense features paid by the Secretary of Transportation) plus the actual cost previously expended thereon for reconditioning less depreciation based upon a twenty-five year life expectancy of the vessel. No such vessel shall be acquired by the Secretary of Transportation unless the Secretary of the Navy has certified to the Secretary of Transportation that such vessel is suitable for economical and speedy conversion into a naval or military auxiliary, or otherwise suitable for the use of the United States in time of war or national emergency. Every vessel acquired under authority of this section that is not documented under the laws of the United States at the time of its acquisition shall be so documented as soon as practicable.

(June 29, 1936, ch. 858, title II, §215, as added June 23, 1938, ch. 600, §4, 52 Stat. 954 ; amended Pub. L. 86–518, §1, June 12, 1960, 74 Stat. 216 ; Pub. L. 97–31, §12(73), Aug. 6, 1981, 95 Stat. 160 .)

Amendments

1981-Pub. L. 97–31 substituted "Secretary of Transportation" for "Commission" wherever appearing, "his" for "it", and "his" for "its" in first sentence. In first sentence after "United States as", "he" (rather than "his") was substituted for "it" as the probable intent of Congress. For prior transfers of functions of the Commission, meaning the United States Maritime Commission, see Transfer of Functions note below.

1960-Pub. L. 86–518 substituted "twenty-five year life expectancy" for "twenty-year life expectancy".

Effective Date of 1960 Amendment

Section 8(a) of Pub. L. 86–518 provided that: "The amendments made by this Act [amending this section, sections 1152, 1153, 1156, 1157, 1159, 1160, 1175, 1177, 1181, 1195, 1204, 1274, and 1276 of this Appendix, section 1276a of former Title 46, Shipping, and section 1737 of Title 50, Appendix, War and National Defense] shall apply only to vessels delivered by the shipbuilder on or after January 1, 1946, and with respect to such vessels shall become effective on January 1, 1960. With respect to vessels delivered by the shipbuilder before January 1, 1946, the provisions of the Merchant Marine Act, 1936 [this chapter], existing immediately before the date of enactment of this Act [June 12, 1960] shall continue in effect."

Transfer of Functions

For transfer of functions of United States Maritime Commission, see Reorg. Plan No. 6 of 1949 and Reorg. Plan No. 21 of 1950, set out under section 1111 of this Appendix.

Rate of Depreciation for Vessels Delivered by Shipbuilder on or After January 1, 1946, and Before January 1, 1960

Section 8(b) of Pub. L. 86–518 provided that with regard to vessels delivered by the shipbuilder on or after Jan. 1, 1946, and before Jan. 1, 1960, depreciation under this section and sections 1152(g), 1157, 1160(d), 1177(b), 1181(c), 1195, and 1204 of this Appendix and section 1276a(4) of former Title 46, Shipping, was generally to be taken for the period prior to Jan. 1, 1960, at the rate provided by this chapter, as it existed immediately prior to the amendments made by Pub. L. 86–518, and for the period after Jan. 1, 1960, such depreciation was generally to be taken on the basis of the remaining years of a useful life of twenty-five years unless the vessel was reconstructed or reconditioned in which event such depreciation, from the time of such reconstruction or reconditioning, was generally to be taken on the basis of the remaining years of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury.

Revision of Contracts, Commitments To Insure Mortgages, Mortgages, and Mortgage Insurance Contracts Entered Into Prior to June 12, 1960; Amendment of Contract Dealing With Vessels Having Extended Life

Section 8(c) of Pub. L. 86–518, as amended by Pub. L. 88–225, Dec. 23, 1963, 77 Stat. 469 , provided that any contract, commitment to insure a mortgage under subchapter XI of this chapter, or mortgage, between any person and the United States or any agency thereof, or any mortgage insurance contract under subchapter XI of this chapter, which was entered into prior to June 12, 1960 and which would have been affected if the provisions of the amendments made by Pub. L. 86–518 [see Effective Date of 1960 Amendment note above] were applicable thereto, could, at the request of such person agreed to by any third parties in interest, or at the request of the mortgagor agreed to by the mortgagee in the case of such a mortgage insurance contract, made within one hundred and eighty days after June 12, 1960 to the agency of the United States holding such contract, be revised to be in accordance with the law as amended by Pub. L. 86–518, with respect to such of the vessels covered thereby as were designated by the applicant, that any such revision was to provide with respect to the amendments to this section and sections 1152(g), 1157, 1160(d), 1177(b), 1181(c), 1195, and 1204 of this Appendix and section 1276a(4) of former Title 46, Shipping, that depreciation for the period prior to Jan. 1, 1960, was to be taken at the rate provided by the Merchant Marine Act, 1936, act June 29, 1936, ch. 858, 49 Stat. 1985 , prior to the amendments made by Pub. L. 86–518, and that the remaining depreciation was to be taken for the period beginning Jan. 1, 1960, on the basis of the remaining years of a useful life of twenty-five years, unless the vessel was reconstructed or reconditioned, in which event such depreciation from the time of such reconstruction or reconditioning was to be taken on the basis of the remaining years of a useful life of the vessel determined jointly by the Secretary of Commerce and the Secretary of the Treasury, that any such revision was to provide with respect to any remaining unpaid debts that such unpaid debts were to be paid in equal annual installments over the remaining years of a useful life of twenty-five years, and that provisions in such contracts affecting vessels covered by Pub. L. 86–518 providing for refund of construction-differential subsidy for domestic operations under section 1156 of this Appendix and costs of national defense features for commercial use were to be amended so that for such refund payments made for the period after Dec. 31, 1959, the base upon which such refund payments were computed annually thereafter were to be the undepreciated amount of subsidy or the national defense feature, as the case may be, as at Dec. 31, 1959, divided by the years of life of the vessels as provided under Pub. L. 86–518, remaining after Dec. 31, 1959.

Commercial Expectancy or Period of Depreciation of Tankers and Other Liquid Bulk Carriers

Section 9 of Pub. L. 86–518 provided that: "Nothing in any amendment made by this Act [see Effective Date of 1960 Amendment note above] shall operate or be interpreted to change from twenty to twenty-five years the provisions of the Merchant Marine Act, 1936, as amended [this chapter], relating to the commercial expectancy or period of depreciation of any tanker or other liquid bulk carrier."

Section Referred to in Other Sections

This section is referred to in section 1152 of this Appendix.