[USC02] 46 USC Ch. 575: CONSTRUCTION, CHARTER, AND SALE OF VESSELS
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46 USC Ch. 575: CONSTRUCTION, CHARTER, AND SALE OF VESSELS
From Title 46—SHIPPINGSubtitle V—Merchant MarinePart F—Government-Owned Merchant Vessels

CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE OF VESSELS

SUBCHAPTER I—GENERAL

Sec.
57501.
Completion of long-range program.
57502.
Construction, reconditioning, and remodeling of vessels.
57503.
Competitive bidding.
57504.
Charter or sale of vessels acquired by Department of Transportation.
57505.
Employment of vessels on foreign trade routes.
57506.
Minimum selling price of vessels.

        

SUBCHAPTER II—CHARTERS

57511.
Demise charters.
57512.
Competitive bidding.
57513.
Minimum bid.
57514.
Qualifications of bidders.
57515.
Awarding of charters.
57516.
Operating-differential subsidies.
57517.
Recovery of excess profits.
57518.
Performance bond.
57519.
Insurance.
57520.
Vessel maintenance.
57521.
Termination of charter during national emergency.
57522.
Books and records, balance sheets, and inspection and auditing.

        

SUBCHAPTER III—MISCELLANEOUS

57531.
Construction and charter of vessels for unsuccessful routes.
57532.
Operation of experimental vessels.
57533.
Vessel chartering authority.

        

Amendments

2018Pub. L. 115–232, div. C, title XXXV, §3546(t), Aug. 13, 2018, 132 Stat. 2327, inserted period at end of item 57533.

2016Pub. L. 114–120, title III, §313(c)(2), Feb. 8, 2016, 130 Stat. 59, added item 57522.

2008Pub. L. 110–181, div. C, title XXXV, §3511(b), Jan. 28, 2008, 122 Stat. 594, added item 57533.

SUBCHAPTER I—GENERAL

§57501. Completion of long-range program

Whenever the Secretary of Transportation determines that the objectives and policies declared in sections 50101 and 50102 of this title cannot be fully realized within a reasonable time under title V of the Merchant Marine Act, 1936, and the President approves the determination, the Secretary, in accordance with this chapter, shall complete the long-range program described in section 50102 of this title.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1664; Pub. L. 114–120, title III, §313(b)(1), Feb. 8, 2016, 130 Stat. 58.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57501 46 App.:1191. June 29, 1936, ch. 858, title VII, §701, 49 Stat. 2008; Pub. L. 97–31, §12(103), Aug. 6, 1981, 95 Stat. 162.

The words "find and", "finding and", "in whole or in part", and "previously adopted" are omitted as unnecessary. The word "shall" is substituted for "is authorized and directed to" to eliminate unnecessary words.

References in Text

The Merchant Marine Act, 1936, referred to in text, is act June 29, 1936, ch. 858, 49 Stat. 1985. Title V of the Act enacted provisions set out as a note under section 53101 of this title. For complete classification of this Act to the Code, see Short Title of 1936 Amendment note set out under section 101 of this title and Tables.

Amendments

2016Pub. L. 114–120 substituted "title V" for "titles V and VI".

§57502. Construction, reconditioning, and remodeling of vessels

(a) In General.—The Secretary of Transportation may have new vessels constructed, and have old vessels reconditioned or remodeled, as the Secretary determines necessary to carry out the objectives of this subtitle.

(b) Place of Work.—Construction, reconditioning, and remodeling of vessels under subsection (a) shall take place in shipyards in the continental United States (including Alaska and Hawaii). However, if satisfactory contracts cannot be obtained from private shipbuilders, the Secretary may have the work done in navy yards.

(c) Applicability of Construction-Differential Subsidy Provisions.—Contracts for the construction, reconstruction, or reconditioning of a vessel by a private shipbuilder under this chapter are subject to the provisions of title V of the Merchant Marine Act, 1936, applicable to a contract with a private shipbuilder for the construction of a vessel under title V of that Act.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1664.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57502(a), (b) 46 App.:1192. June 29, 1936, ch. 858, title VII, §702, 49 Stat. 2008; Pub. L. 85–191, Aug. 28, 1957, 71 Stat. 471; Pub. L. 86–624, §35(c), July 12, 1960, 74 Stat. 421; Pub. L. 97–31, §12(104), Aug. 6, 1981, 95 Stat. 162.
57502(c) 46 App.:1193(b). June 29, 1936, ch. 858, title VII, §703(b), 49 Stat. 2008.

In subsection (b), the words "for such new construction or reconstruction, in accordance with the provisions of this chapter" are omitted as unnecessary.

References in Text

The Merchant Marine Act, 1936, referred to in subsec. (c), is act June 29, 1936, ch. 858, 49 Stat. 1985. Title V of the Act enacted provisions set out as notes under section 53101 of this title. For complete classification of this Act to the Code, see Short Title of 1936 Amendment note set out under section 101 of this title and Tables.

§57503. Competitive bidding

(a) Advertisement and Bidding.—The Secretary of Transportation may make a contract with a private shipbuilder for the construction of a new vessel, or for the reconstruction or reconditioning of an existing vessel, only after due advertisement and upon sealed competitive bids.

(b) Opening of Bids.—Bids required under this section shall be opened at the time and place stated in the advertisement for bids. All interested persons, including representatives of the press, shall be permitted to attend. The results of the bidding shall be publicly announced.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1665.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57503(a) 46 App.:1193(a). June 29, 1936, ch. 858, title VII, §703(a), (c) (related to construction, reconstruction, or reconditioning), 49 Stat. 2008; Pub. L. 97–31, §12(105), Aug. 6, 1981, 95 Stat. 163.
57503(b) 46 App.:1193(c) (related to construction, reconstruction, or reconditioning).

In subsection (b), the words "Bids required under this section" are substituted for "All bids required by the Secretary of Transportation for the construction, reconstruction, or reconditioning of vessels" to eliminate unnecessary words. The word "hour" is omitted as covered by "time".

§57504. Charter or sale of vessels acquired by Department of Transportation

Vessels transferred to or otherwise acquired by the Department of Transportation in any manner may be chartered or sold by the Secretary of Transportation as provided in this chapter.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1665.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57504 46 App.:1194. June 29, 1936, ch. 858, title VII, §704, 49 Stat. 2008; Apr. 1, 1937, ch. 64, 50 Stat. 57; Pub. L. 97–31, §12(106), Aug. 6, 1981, 95 Stat. 163.

§57505. Employment of vessels on foreign trade routes

(a) In General.—The Secretary of Transportation shall arrange for the employment of the Department of Transportation's vessels in steamship lines on such trade routes, exclusively serving the foreign trade of the United States, as the Secretary determines are essential for the development and maintenance of the commerce of the United States and the national defense. However, the Secretary shall first determine that those routes are not being adequately served by existing steamship lines privately owned and operated by citizens of the United States and documented under the laws of the United States.

(b) Policy To Encourage Private Operation.—The Secretary shall have a policy of encouraging private operation of each essential steamship line now owned by the United States Government by—

(1) selling the line to a citizen of the United States; or

(2) demising the Secretary's vessels on bareboat charter to citizens of the United States who agree to maintain the line in the manner provided in this chapter.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1665.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57505(a) 46 App.:1195 (1st sentence). June 29, 1936, ch. 858, title VII, §705 (1st, 2d sentences), 49 Stat. 2009; Pub. L. 97–31, §12(107), Aug. 6, 1981, 95 Stat. 163.
57505(b) 46 App.:1195 (2d sentence).

In subsection (a), the words "As soon as practicable after June 29, 1936, and continuing thereafter" are omitted as obsolete. The words "However, the Secretary shall first determine that those routes are not being adequately served" are substituted for "Provided, That such needs are not being adequately served" for clarity and because provisos are disfavored in modern drafting.

In subsection (b)(1), the words "in the manner provided in section 7 of the Merchant Marine Act, 1920 [46 App. U.S.C. 866], and in strict accordance with the provisions of section 5 of said Act" are omitted because section 5 of that Act was repealed in 1988, and section 7 is being repealed as obsolete by this bill without being restated.

§57506. Minimum selling price of vessels

(a) In General.—A vessel constructed under this subtitle or the Merchant Marine Act, 1936, may not be sold by the Secretary of Transportation for less than the price specified in this section.

(b) Operation in Foreign Trade.—If the vessel is to be operated in foreign trade, the minimum price is the estimated foreign construction cost (exclusive of national defense features) determined as of the date the construction contract is executed, less depreciation under subsection (d).

(c) Operation in Domestic Trade.—If the vessel is to be operated in domestic trade, the minimum price is the cost of construction in the United States (exclusive of national defense features), less depreciation under subsection (d).

(d) Depreciation.—Depreciation under subsections (b) and (c) shall be based on—

(1) a 25-year life for dry-cargo and passenger vessels; and

(2) a 20-year life for tankers and other bulk liquid carrier vessels.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1665.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57506 46 App.:1195 (last sentence). June 29, 1936, ch. 858, title VII, §705 (last sentence), as added Aug. 4, 1939, ch. 417, §11(a), 53 Stat. 1185; Pub. L. 86–518, §1, June 12, 1960, 74 Stat. 216; Pub. L. 97–31, §12(107), Aug. 6, 1981, 95 Stat. 163.
  46 App.:1125 note. Pub. L. 86–518, §9, June 12, 1960, 74 Stat. 217.

Subsection (d) is substituted for "less depreciation based on a twenty-five year life" because of section 9 of Public Law 86–518 (June 12, 1960, 74 Stat. 217), which provided that "Nothing in any amendment made by this Act [including section 1 substituting 'twenty-five' for 'twenty' in 46 App. U.S.C. 1195] shall operate or be interpreted to change from twenty to twenty-five years the provisions of the Merchant Marine Act, 1936, as amended, relating to the commercial expectancy or period of depreciation of any tanker or other liquid bulk carrier."

References in Text

The Merchant Marine Act, 1936, referred to in subsec. (a), is act June 29, 1936, ch. 858, 49 Stat. 1985, which was classified principally to chapter 27 (§1101 et seq.) of the former Appendix to this title. The Act, with the exception of title V, most of title VI, and sections 301, 801, 802, 809(a), and 909 thereof, was repealed and restated, mainly in this subtitle, by Pub. L. 109–304, §§8, 19, Oct. 6, 2006, 120 Stat. 1555, 1710. Title V and sections 301 and 909 of the Act are set out as notes under section 53101 of this title. Those portions of title VI not repealed by Pub. L. 109–304 and sections 802 and 809(a) of the Act were repealed by Pub. L. 114–120, title III, §313(a), Feb. 8, 2016, 130 Stat. 58. Section 801 of the Act was transferred to section 57522 of this title by Pub. L. 114–120, title III, §313(c)(1)(A), Feb. 8, 2016, 130 Stat. 58. For complete classification of the Act to the Code, see Tables. For disposition of sections of the former Appendix to Title 46, see Disposition Table preceding section 101 of this title.

SUBCHAPTER II—CHARTERS

§57511. Demise charters

A charter by the Secretary of Transportation under this chapter shall demise the vessel to the charterer subject to all usual conditions contained in a bareboat charter. The charter shall be for a term the Secretary considers to be in the best interest of the United States Government and the merchant marine.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1666.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57511 46 App.:1201. June 29, 1936, ch. 858, title VII, §711, 49 Stat. 2010; Pub. L. 97–31, §12(113), Aug. 6, 1981, 95 Stat. 163.

The words "for a term the Secretary considers to be" are substituted for "until January 1, 1940, shall be for terms of three years or less as the Secretary of Transportation may decide: Provided, That after January 1, 1940, charters may be executed by the Secretary of Transportation for such terms as the experience gained by the Secretary of Transportation shall indicate are" to eliminate unnecessary and obsolete words.

§57512. Competitive bidding

(a) In General.—The Secretary of Transportation may charter a vessel of the Department of Transportation to a private operator only on the basis of competitive sealed bidding. The bids must be submitted in strict compliance with the terms and conditions of a public advertisement soliciting the bids.

(b) Advertisement for Bids.—An advertisement for bids shall state—

(1) the number, type, and tonnage of the vessels being offered for bareboat charter for operation as a steamship line on a designated trade route;

(2) the minimum number of sailings required;

(3) the length of time of the charter;

(4) the right of the Secretary to reject all bids; and

(5) other information the Secretary considers necessary for the information of prospective bidders.


(c) Opening of Bids.—Bids required under this section shall be opened at the time and place stated in the advertisement for bids. All interested persons, including representatives of the press, shall be permitted to attend. The results of the bidding shall be publicly announced.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1666.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57512(a) 46 App.:1196(a) (1st sentence). June 29, 1936, ch. 858, title VII, §706(a), (b) (1st sentence related to announcement), 49 Stat. 2009; Pub. L. 97–31, §12(108), Aug. 6, 1981, 95 Stat. 163.
57512(b) 46 App.:1196(a) (last sentence), (b) (1st sentence related to announcement).
57512(c) 46 App.:1193(c) (related to chartering). June 29, 1936, ch. 858, title VII, §703(c) (related to chartering), 49 Stat. 2008; Pub. L. 97–31, §12(105), Aug. 6, 1981, 95 Stat. 163.

Subsection (b)(4) is substituted for "announce in his advertisements for bids that the Secretary of Transportation reserves the right to, reject any and all bids submitted" in 46 App. U.S.C. 1196(b) to improve the organization.

In subsection (c), the words "Bids required under this section" are substituted for "All bids required by the Secretary of Transportation . . . and for the chartering of the Secretary's vessels hereinafter provided for" to eliminate unnecessary words. The word "hour" is omitted as covered by "time".

§57513. Minimum bid

The Secretary of Transportation shall reject any bid for the charter under this subchapter of a vessel constructed under this subtitle or the Merchant Marine Act, 1936, if the charter hire offered is lower than the minimum charter hire would be if the vessel were chartered under section 57531 of this title.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1666.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57513 46 App.:1196(b) (last sentence). June 29, 1936, ch. 858, title VII, §706(b) (last sentence), as added Aug. 4, 1939, ch. 417, §11(b), 53 Stat. 1186; Pub. L. 97–31, §12(108), Aug. 6, 1981, 95 Stat. 163.

References in Text

The Merchant Marine Act, 1936, referred to in text, is act June 29, 1936, ch. 858, 49 Stat. 1985, which was classified principally to chapter 27 (§1101 et seq.) of the former Appendix to this title. The Act, with the exception of title V, most of title VI, and sections 301, 801, 802, 809(a), and 909 thereof, was repealed and restated, mainly in this subtitle, by Pub. L. 109–304, §§8, 19, Oct. 6, 2006, 120 Stat. 1555, 1710. Title V and sections 301 and 909 of the Act are set out as notes under section 53101 of this title. Those portions of title VI not repealed by Pub. L. 109–304 and sections 802 and 809(a) of the Act were repealed by Pub. L. 114–120, title III, §313(a), Feb. 8, 2016, 130 Stat. 58. Section 801 of the Act was transferred to section 57522 of this title by Pub. L. 114–120, title III, §313(c)(1)(A), Feb. 8, 2016, 130 Stat. 58. For complete classification of the Act to the Code, see Tables. For disposition of sections of the former Appendix to Title 46, see Disposition Table preceding section 101 of this title.

§57514. Qualifications of bidders

(a) Considerations.—In deciding whether to award a charter to a bidder, the Secretary of Transportation shall consider—

(1) the bidder's financial resources, credit standing, and practical experience in operating vessels; and

(2) other factors a prudent business person would consider in entering into a transaction involving a large capital investment.


(b) Disqualifications.—The Secretary may not charter a vessel to a person appearing to lack sufficient capital, credit, and experience to operate the vessel successfully over the period covered by the charter.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1666.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57514 46 App.:1203. June 29, 1936, ch. 858, title VII, §713, 49 Stat. 2010; Pub. L. 97–31, §12(115), Aug. 6, 1981, 95 Stat. 164.

§57515. Awarding of charters

(a) In General.—The Secretary of Transportation shall award the charter to the bidder proposing to pay the highest monthly charter hire. However, the Secretary may reject the highest or most advantageous or any other bid if the Secretary considers the charter hire offered too low or determines that the bidder lacks the qualifications required by section 57514 of this title.

(b) Highest Bid Rejected.—If the Secretary rejects the highest bid, the Secretary may—

(1) award the charter to the next highest bidder; or

(2) reject all bids and either readvertise the line or operate the line until conditions appear more favorable to reoffer the line for private charter.


(c) Reason for Rejection.—On request of a bidder, the reason for rejection shall be stated in writing to the bidder.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1667.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57515 46 App.:1196(b) (1st sentence related to authority). June 29, 1936, ch. 858, title VII, §§706(b) (1st sentence related to authority), 707, 49 Stat. 2009; Pub. L. 97–31, §12(108), (109), Aug. 6, 1981, 95 Stat. 163.
  46 App.:1197.

In subsection (a), the words "if the Secretary considers the charter hire offered too low" are substituted for "if, in the Secretary's discretion, the charter hire offered is deemed too low" to eliminate unnecessary words. The words "lacks the qualifications required by section 57514 of this title" are substituted for "lacks sufficient capital, credit, or experience to operate successfully the line" to avoid repeating the qualifications in more than one place.

§57516. Operating-differential subsidies

If the Secretary of Transportation considers it necessary, the Secretary may make a contract with a charterer of a vessel owned by the Secretary for payment of an operating-differential subsidy, on the same terms and conditions, and subject to the same limitations and restrictions, as otherwise provided with respect to payment of operating-differential subsidies to operators of privately-owned vessels.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1667.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57516 46 App.:1198. June 29, 1936, ch. 858, title VII, §708, 49 Stat. 2009; June 23, 1938, ch. 600, §31, 52 Stat. 962; Pub. L. 97–31, §12(110), Aug. 6, 1981, 95 Stat. 163.

§57517. Recovery of excess profits

(a) In General.—A charter under this chapter shall provide that if, at the end of a calendar year subsequent to the execution of the charter, the cumulative net voyage profit (after payment of the charter hire reserved in the charter and payment of the charterer's fair and reasonable overhead expenses applicable to operation of the chartered vessel) exceeds 10 percent a year of the charterer's capital necessarily employed in the business of the chartered vessel, the charterer shall pay to the Secretary of Transportation, as additional charter hire, half the cumulative net voyage profit in excess of 10 percent a year. However, any cumulative net voyage profit accounted for under this subsection is not to be included in the calculation of cumulative net voyage profit in any subsequent year.

(b) Terms To Be Defined and Used.—The Secretary shall define the terms "net voyage profit", "fair and reasonable overhead expenses", and "capital necessarily employed" for this section. Each advertisement for bids and each charter shall contain these definitions, stating the formula for determining each of these three amounts.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1667.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57517 46 App.:1199. June 29, 1936, ch. 858, title VII, §709, 49 Stat. 2010; Pub. L. 97–31, §12(111), Aug. 6, 1981, 95 Stat. 163.

§57518. Performance bond

The Secretary of Transportation shall require a charterer of a vessel of the Secretary to deposit with the Secretary an undertaking, with approved sureties, in such amount as the Secretary may require as security for the faithful performance of the terms of the charter, including indemnity against liens on the chartered vessel.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1667.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57518 46 App.:1200. June 29, 1936, ch. 858, title VII, §710, 49 Stat. 2010; Pub. L. 97–31, §12(112), Aug. 6, 1981, 95 Stat. 163.

§57519. Insurance

A charter under this chapter shall require the charterer to carry, at the charterer's expense, insurance on the chartered vessel covering all marine and port risks, protection and indemnity risks, and all other hazards and liabilities, adequate to cover damages claimed against and losses sustained by the chartered vessel arising during the term of the charter. The insurance shall be in such form, in such amount, and with such companies as the Secretary of Transportation may require. In accordance with law, any of the insurance risks may be underwritten by the Secretary.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1667.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57519 46 App.:1202(a). June 29, 1936, ch. 858, title VII, §712(a), 49 Stat. 2010; Aug. 7, 1939, ch. 555, §1, 53 Stat. 1254; Pub. L. 97–31, §12(114), Aug. 6, 1981, 95 Stat. 163.

§57520. Vessel maintenance

(a) In General.—A charter under this chapter shall require the charterer, at the charterer's expense, to—

(1) keep the chartered vessel in good repair and efficient operating condition; and

(2) make any repairs required by the Secretary of Transportation.


(b) Inspection.—The charter shall provide that the Secretary has the right to inspect the vessel at any time to ascertain its condition.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1668.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57520 46 App.:1202(b), (c). June 29, 1936, ch. 858, title VII, §712(b), (c), 49 Stat. 2010; Aug. 7, 1939, ch. 555, §1, 53 Stat. 1254; Pub. L. 97–31, §12(114), Aug. 6, 1981, 95 Stat. 163.

§57521. Termination of charter during national emergency

A charter under this chapter shall provide that during a national emergency proclaimed by the President or a period for which the President has proclaimed that the security of the national defense makes it advisable, the Secretary of Transportation may terminate the charter without cost to the United States Government on such notice to the charterer as the President determines.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1668.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57521 46 App.:1202(d). June 29, 1936, ch. 858, title VII, §712(d), 49 Stat. 2010; Aug. 7, 1939, ch. 555, §1, 53 Stat. 1254; Pub. L. 97–31, §12(114), Aug. 6, 1981, 95 Stat. 163.

§57522. Books and records, balance sheets, and inspection and auditing

Every contract executed by the Secretary of Transportation under this chapter shall contain provisions requiring (1) that, the contractor and every affiliate, domestic agent, subsidiary, or holding company connected with, or directly or indirectly controlling or controlled by, the contractor, to keep its books, records, and accounts, relating to the maintenance, operation, and servicing of the vessels, services, routes, and lines covered by the contract, in such form and under such regulations as may be prescribed by the Secretary of Transportation; (2) that the contractor and every affiliate, domestic agent, subsidiary, or holding company connected with, or directly or indirectly controlling or controlled by, the contractor, to file, upon notice from the Secretary of Transportation, balance sheets, profit and loss statements, and such other statements of financial operations, special report, memoranda of any facts and transactions, which in the opinion of the Secretary of Transportation affect the financial results in, the performance of, or transactions or operations under, such contract; (3) that the Secretary of Transportation shall be authorized to examine and audit the books, records, and accounts of all persons referred to in this section whenever he may deem it necessary or desirable; and (4) that upon the willful failure or refusal of any person described in this section to comply with the contract provisions required by this section, the Secretary of Transportation shall have the right to rescind the contract, and upon such rescission, the United States shall be relieved of all further liability on such contract.

(Added and amended Pub. L. 114–120, title III, §313(c)(1), Feb. 8, 2016, 130 Stat. 58.)

Codification

Section consists of text of act June 29, 1936, ch. 858, title VIII, §801, 49 Stat. 2011, as amended by Pub. L. 97–31, §12(119), Aug. 6, 1981, 95 Stat. 164. Section 801 of act June 29, 1936, ch. 858, which was formerly set out as a note under section 53101 of this title, was transferred to this section by Pub. L. 114–120, title III, §313(c)(1)(A), Feb. 8, 2016, 130 Stat. 58.

Amendments

2016Pub. L. 114–120, §313(c)(1)(B)(i), inserted "Books and records, balance sheets, and inspection and auditing" in section catchline.

Pub. L. 114–120, §313(c)(1)(B)(ii), which directed substitution of "this chapter" for "the provision of title VI or VII of this Act", was executed by making the substitution for "the provisions of title VI or VII of this Act" to reflect the probable intent of Congress.

Pub. L. 114–120, §313(c)(1)(B)(iii), struck out ": Provided, That the provisions of this paragraph shall not require the duplication of books, records, and accounts required to be kept in some other form by the Interstate Commerce Commission" after "prescribed by the Secretary of Transportation".

SUBCHAPTER III—MISCELLANEOUS

§57531. Construction and charter of vessels for unsuccessful routes

(a) In General.—If the Secretary of Transportation finds that a trade route determined to be essential under section 50103 of this title cannot be successfully developed and maintained and the Secretary's replacement program cannot be achieved under private operation of the trade route by a citizen of the United States with vessels documented under chapter 121 of this title, without further aid by the United States Government in addition to the financial aid authorized under title V of the Merchant Marine Act, 1936, the Secretary, without advertisement or competition, may—

(1) have constructed, in private shipyards or in navy yards, vessels of the types necessary for the trade route; and

(2) demise charter those new vessels to the operator of vessels of the United States established on the trade route.


(b) Amount of Charter Hire.—

(1) In general.—The annual charter hire under subsection (a) shall be at least 4 percent of the price (referred to in this section as the "foreign cost") at which the vessel would be sold if constructed under title V of the Merchant Marine Act, 1936, plus—

(A) a percentage of the depreciated foreign cost computed annually determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the term of the charter, adjusted to the nearest one-eighth percent; and

(B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs.


(2) Depreciation.—Depreciation under paragraph (1)(A) shall be based on—

(A) a 25-year life for dry-cargo and passenger vessels; and

(B) a 20-year life for tankers and other bulk liquid carrier vessels.


(c) Option To Purchase.—The charter may contain an option to the charterer to purchase the vessels from the Secretary of Transportation within 5 years after delivery under the charter, on the same terms and conditions as provided in title V of the Merchant Marine Act, 1936, for the purchase of new vessels from the Secretary. However—

(1) the purchase price shall be the foreign cost less depreciation to the date of purchase based on the useful life specified in subsection (b)(2);

(2) the required cash payment payable at the time of the purchase shall be 25 percent of the purchase price;

(3) the charter may provide that any part of the charter hire paid in excess of the minimum charter hire provided for in this section may be credited against the cash payment payable at the time of the purchase;

(4) the balance of the purchase price shall be paid within the remaining years of useful life (as specified in subsection (b)(2)) after the date of delivery of the vessel under the charter and in approximately equal annual installments, except that the first installment, which shall be payable on the next ensuing anniversary date of the delivery under the charter, shall be a proportionate part of the annual installment; and

(5) interest shall be payable on the unpaid balances from the date of purchase, at a rate not less than—

(A) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the average maturities of the loans, adjusted to the nearest one-eighth percent; plus

(B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs.


(d) Operation of Vessel.—

(1) Permissible voyages.—The charter shall provide for operation of the vessel exclusively—

(A) in foreign trade;

(B) on a round-the-world voyage;

(C) on a round voyage from the west coast of the United States to a European port that includes an intercoastal port of the United States;

(D) on a round voyage from the Atlantic coast of the United States to the Orient that includes an intercoastal port of the United States; or

(E) on a voyage in foreign trade on which the vessel may stop at Hawaii or an island territory or possession of the United States.


(2) Domestic trade.—The charter shall provide if the vessel is operated in domestic trade on any of the services specified in paragraph (1), the charterer will pay annually to the Secretary of Transportation that proportion of 1/25 of the difference between the domestic and foreign cost of the vessel as the gross revenue derived from the domestic trade bears to the gross revenue derived from the entire voyages completed during the preceding year.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1668; Pub. L. 114–120, title III, §313(b)(2), Feb. 8, 2016, 130 Stat. 58.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57531 46 App.:1204. June 29, 1936, ch. 858, title VII, §714, 49 Stat. 2011; June 23, 1938, ch. 600, §32, 52 Stat. 962; Aug. 4, 1939, ch. 417, §12, 53 Stat. 1186; Pub. L. 86–3, §18(b)(3), Mar. 18, 1959, 73 Stat. 12; Pub. L. 86–518, §5, June 12, 1960, 74 Stat. 216; Pub. L. 91–469, §22, Oct. 21, 1970, 84 Stat. 1032; Pub. L. 97–31, §12(116), Aug. 6, 1981, 95 Stat. 164.

In subsection (a)(2), the words "demise charter" are substituted for "demise . . . or bare-boat charter" to eliminate unnecessary words. The words "operator of vessels of the United States" are substituted for "American-flag operator" for consistency in the revised title.

Subsection (b)(2) is substituted for "Upon the basis of a twenty-five year life of the vessel" because of section 9 of Public Law 86–518 (June 12, 1960, 74 Stat. 217), which provided that "Nothing in any amendment made by this Act [including section 5 substituting 'twenty-five' for 'twenty' in 46 App. U.S.C. 1204] shall operate or be interpreted to change from twenty to twenty-five years the provisions of the Merchant Marine Act, 1936, as amended, relating to the commercial expectancy or period of depreciation of any tanker or other liquid bulk carrier."

In subsection (c), in paragraphs (1) and (4), references to the useful life specified in subsection (b)(2) are substituted for references to the twenty-five year useful life for the reason stated in explaining subsection (b)(2).

References in Text

The Merchant Marine Act, 1936, referred to in subsecs. (a), (b)(1), (c), is act June 29, 1936, ch. 858, 49 Stat. 1985. Title V of the Act enacted provisions set out as a note under section 53101 of this title. For complete classification of this Act to the Code, see Short Title of 1936 Amendment note set out under section 101 of this title and Tables.

Amendments

2016—Subsec. (a). Pub. L. 114–120 substituted "title V" for "titles V and VI" in introductory provisions.

§57532. Operation of experimental vessels

(a) Definition.—In this section, the term "experimental vessel" means a vessel owned by the United States Government (including a vessel in the National Defense Reserve Fleet) that has been constructed, reconditioned, or remodeled for experimental or testing purposes.

(b) Authority To Operate.—The Secretary of Transportation, for the purpose of practical development, trial, and testing, may operate an experimental vessel under a bareboat charter or general agency agreement in the foreign or domestic trade of the United States or for use for the account of a department or agency of the Government, without regard to other provisions of this subtitle and other laws related to chartering and general agency operations. Not more than 10 vessels may be operated and tested under this section in any one year.

(c) Terms of Operation.—Operation of a vessel under this section shall be on terms the Secretary considers appropriate to carry out the purposes of this subtitle. A bareboat charter under this section shall be at reasonable rates and include restrictions the Secretary considers appropriate to protect the public interest, including provisions for recapture of profits under section 57517 of this title. A charter or general agency agreement under this section shall be reviewed annually to determine whether conditions exist to justify continuance of the charter or agreement.

(d) Rights of Seamen.—A seaman engaged in vessel operations of the Secretary under this section and employed through a general agent in connection with a charter or agreement under this section is entitled to all the rights and remedies provided in sections 1(a) and (c), 3(c), and 4 of the Act of March 24, 1943 (50 U.S.C. 4701(a), (c), 4703(c), and 4704).

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1670; Pub. L. 115–232, div. C, title XXXV, §3546(u), Aug. 13, 2018, 132 Stat. 2327.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57532 46 App.:1205. June 29, 1936, ch. 858, title VII, §715, as added July 11, 1956, ch. 574, 70 Stat. 531; Pub. L. 97–31, §12(117), Aug. 6, 1981, 95 Stat. 164.

Subsection (d) is substituted for "Those provisions of law prescribed or incorporated under section 1241a of this Appendix, which relate to vessel operating activities of the Secretary of Transportation and to employment of seamen through general agents, shall be applicable in connection with charters and agreements entered into under this section" for clarity.

Amendments

2018—Subsec. (d). Pub. L. 115–232 substituted "(50 U.S.C. 4701(a), (c), 4703(c), and 4704)" for "(50 App. U.S.C. 1291(a), (c), 1293(c), 1294)".

§57533. Vessel chartering authority

The Secretary of Transportation may enter into contracts or other agreements on behalf of the United States to purchase, charter, operate, or otherwise acquire the use of any vessels documented under chapter 121 of this title and any other related real or personal property. The Secretary is authorized to use this authority as the Secretary deems appropriate.

(Added Pub. L. 110–181, div. C, title XXXV, §3511(a), Jan. 28, 2008, 122 Stat. 593.)