§1176. Readjustments; change in service; withdrawal from service; payment of excess profits; wages, etc.; American materials

Every contract for an operating-differential subsidy under this subchapter shall provide (1) that the amount of the future payments to the contractor shall be subject to review and readjustment from time to time, but not more frequently than once a year, at the instance of the Secretary of Transportation or of the contractor. If any such readjustment cannot be reached by mutual agreement, the Secretary of Transportation, on his own motion or on the application of the contractor, shall, after a proper hearing, determine the facts and make such readjustment in the amount of such future payments as he may determine to be fair and reasonable and in the public interest. The testimony in every such proceeding shall be reduced to writing and filed in the office of the Secretary of Transportation. His decision shall be based upon and governed by the changes which may have occurred since the date of the said contract, with respect to the items theretofore considered and on which such contract was based, and other conditions affecting shipping, and shall be promulgated in a formal order, which shall be accompanied by a report in writing in which the Secretary of Transportation shall state his findings of fact; (2) that the compensation to be paid under it shall be reduced, under such terms and in such amounts as the Secretary of Transportation shall determine, for any periods in which the vessel or vessels are laid up; (3) that if the Secretary of Transportation shall determine that a change in an essential service, which is receiving an operating-differential subsidy under this subchapter, is necessary in the accomplishment of the purposes of this chapter, it may make such change upon such readjustment of payments to the contractor as shall be arrived at by the method prescribed in clause (1) of these conditions; (4) that if at any time the contractor receiving an operating-differential subsidy claims that he cannot maintain and operate his vessels in such an essential service, with a reasonable profit upon his investment, and applies to the Secretary of Transportation for a modification or rescission of his contract to maintain such essential service, and the Secretary of Transportation determines that such claim is proved the Secretary of Transportation shall modify or rescind such contract and permit the contractor to withdraw such vessels from such essential service upon a date fixed by the Secretary of Transportation, and upon the date of such withdrawal the further payment of the operating differential subsidy shall cease and the contractor be discharged from any further obligation under such contract; (5) that the contractor shall conduct his operations with respect to essential services and any services authorized under section 1183 of this Appendix, covered by his contract in an economical and efficient manner, and (6) that whenever practicable, an operator who receives subsidy with respect to subsistence of officers and crews shall use as such subsistence items only articles, materials, and supplies of the growth, production, and manufacture of the United States, as defined in section 1155 of this Appendix, except when it is necessary to purchase supplies outside the United States to enable such vessel to continue and complete her voyage, and an operator who receives subsidy with respect to repairs shall perform such repairs within any of the United States or the Commonwealth of Puerto Rico, except in an emergency.

(June 29, 1936, ch. 858, title VI, §606, 49 Stat. 2004 ; June 23, 1938, ch. 600, §22, 52 Stat. 960 ; July 17, 1952, ch. 939, §16, 66 Stat. 764 ; May 10, 1956, ch. 247, §1, 70 Stat. 148 ; Pub. L. 86–624, §35(b), July 12, 1960, 74 Stat. 421 ; Pub. L. 87–45, §5, May 27, 1961, 75 Stat. 91 ; Pub. L. 91–469, §§20, 35(a), (k), Oct. 21, 1970, 84 Stat. 1026 , 1035, 1036; Pub. L. 97–31, §12(96), Aug. 6, 1981, 95 Stat. 162 .)

Amendments

1981-Pub. L. 97–31 substituted "Secretary of Transportation" for "Secretary of Commerce" wherever appearing.

1970-Pub. L. 91–469, §35(a), substituted "Secretary of Commerce" for "Commission" wherever appearing.

Cl. (1). Pub. L. 91–469, §35(k)(1)–(3), substituted "his" for "its" in two places, "he" for "it", and "His" for "Its", respectively.

Cl. (3). Pub. L. 91–469, §§20(1), 35(k)(2), substituted "and essential service" for "the service, route, or line" and "he" for "it", respectively.

Cl. (4). Pub. L. 91–469, §20(2), (3), substituted "in such an essential service" for "on such service, route, or line" and "essential service" for "service, route, or line" in two places, respectively.

Cl. (5). Pub. L. 91–469, §20(4), (5), (6)–(9), struck out cl. (5) providing that when at the end of any ten-year period the contractor's net profit on his subsidized vessels has averaged more than 10 percent of his capital necessarily employed, he shall pay one-half of such net profit to the United States, but not exceeding the operating-differential subsidy paid to him during the period, as partial or complete reimbursement of the operating subsidy; redesignated cl. (6) as (5); and substituted therein "essential services", "services", and "an economical" for "the vessel's services, routes, and lines", "cruises", and "the most economical" and struck out therefrom "but with due regard to the wage and manning scales and working conditions prescribed by the Commission as provided in subchapter III of this chapter" after "efficient manner,", respectively.

Cls. (6), (7). Pub. L. 91–469, §20(10), (11), redesignated cl. (7) as (6) and substituted "an operator who received subsidy with respect to subsistence of officers and crews shall use as such subsistence items" for "the operator shall use", "1155" for "1155(a)", and "and an operator who receives subsidy with respect to repairs shall perform such repairs within any of the United States or the Commonwealth of Puerto Rico," and struck out "and equipment" before "outside the United States" and definition of "continental limits of the United States" as including States of Alaska and Hawaii, respectively. Former cl. (6) redesignated (5).

1961-Cl. (6). Pub. L. 87–45 inserted ", and any cruises authorized under section 1183 of this Appendix," after "services, routes, and lines".

1960-Pub. L. 86–624 inserted definition of "continental limits of the United States."

1956-Cl. (5). Act May 10, 1956, provided that termination of subsidy contract shall not end the 10-year recapture period if subsidized operations continue under a new, or consecutive, contract.

1952-Cl. (5). Act July 17, 1952, substituted "life expectancy of the subsidized vessel determined as provided in section 1177(b) of this Appendix" for "twenty-year life expectancy of the subsidized vessels".

1938-Cl. (5). Act June 23, 1938, substituted "ten-year period" for "five-year period" in three places, and inserted provisions to permit computation of net profits without regard to capital gains and losses.

Amendment of Contract

Section 2 of act May 10, 1956, provided that: "Each operating-differential subsidy contract in force on the date of enactment of this act [May 10, 1956] shall, if the subsidized contractor consents, be amended to conform to the provisions of section 606 of the Merchant Marine Act, 1936 [this section], as amended by section 1 of this act."

Section Referred to in Other Sections

This section is referred to in section 1177 of this Appendix; title 26 section 7518.