[USC02] 46 USC Subtitle V, Part F: Government-Owned Merchant Vessels
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46 USC Subtitle V, Part F: Government-Owned Merchant Vessels
From Title 46—SHIPPINGSubtitle V—Merchant Marine

Part F—Government-Owned Merchant Vessels

CHAPTER 571—GENERAL AUTHORITY

Sec.
57100.
National Defense Reserve Fleet.
57101.
Placement of vessels in National Defense Reserve Fleet.
57102.
Disposition of vessels not worth preserving.
57103.
Donation of nonretention vessels in the National Defense Reserve Fleet.
57104.
Acquisition of vessels from sale of obsolete vessels.
57105.
Acquisition of vessels for essential services, routes, or lines.
57106.
Maintenance, improvement, and operation of vessels.
57107.
Vessels for other agencies.
57108.
Consideration of ballast and equipment in determining selling price.
57109.
Operation of vessels purchased, chartered, or leased from Secretary of Transportation.

        

Amendments

2017Pub. L. 115–91, div. C, title XXXV, §3502(b)(9), Dec. 12, 2017, 131 Stat. 1911, added item 57100.

2012Pub. L. 112–213, title IV, §408(b), Dec. 20, 2012, 126 Stat. 1571, substituted "Donation of nonretention vessels in the National Defense Reserve Fleet" for "Sale of obsolete vessels in National Defense Reserve Fleet" in item 57103.

§57100. National Defense Reserve Fleet

(a) Fleet Components.—The Secretary of Transportation shall maintain a National Defense Reserve Fleet, including any vessel assigned by the Secretary to the Ready Reserve Force component of the fleet, consisting of those vessels owned or acquired by the United States Government that the Secretary of Transportation, after consultation with the Secretary of the Navy, determines are of value for national defense purposes and that the Secretary of Transportation decides to place and maintain in the fleet. Vessels in the National Defense Reserve Fleet, including vessels loaned to State maritime academies, shall be considered public vessels of the United States.

(b) Permitted Uses.—Except as otherwise provided by law, a vessel in the fleet may be used—

(1) for an account of an agency of the United States Government in a period during which vessels may be requisitioned under section 902 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1242); 1 or

(2) on the request of the Secretary of Defense, and in accordance with memoranda of agreement between the Secretary of Transportation and the Secretary of Defense, for—

(A) testing for readiness and suitability for mission performance;

(B) defense sealift functions for which other sealift assets are not reasonably available; and

(C) support of the deployment of the United States armed forces in a military contingency, for military contingency operations, or for civil contingency operations upon orders from the National Command Authority;


(3) for otherwise lawfully permitted storage or transportation of non-defense-related cargo as directed by the Secretary of Transportation with the concurrence of the Secretary of Defense;

(4) for training purposes to the extent authorized by the Secretary of Transportation with the concurrence of the Secretary of Defense;

(5) on a reimbursable basis, for charter to the government of any State, locality, or Territory of the United States, except that the prior consent of the Secretary of Defense for such use shall be required with respect to any vessel in the Ready Reserve Force or in the National Defense Reserve Fleet which is maintained in a retention status for the Department of Defense; or

(6) for civil contingency operations and Maritime Administration promotional and media events, in accordance with subsection (f).


(c) Ready Reserve Force Management.—

(1) Minimum requirements.—To ensure the readiness of vessels in the Ready Reserve Force component of the National Defense Reserve Fleet, the Secretary of Transportation shall, at a minimum—

(A) maintain all of the vessels in a manner that will enable each vessel to be activated within a period specified in plans for mobilization of the vessels;

(B) activate and conduct sea trials on each vessel at a frequency that is considered by the Secretary to be necessary;

(C) maintain and adequately crew, as necessary, in an enhanced readiness status those vessels that are scheduled to be activated in 5 or less days;

(D) locate those vessels that are scheduled to be activated near embarkation ports specified for those vessels; and

(E) notwithstanding section 2109 of title 46, United States Code, have each vessel inspected by the Secretary of the department in which the Coast Guard is operating to determine if the vessel meets the safety standards that would apply under part B of subtitle II of that title if the vessel were not a public vessel.


(2) Vessel managers.—

(A) Eligibility for contract.—A person, including a shipyard, is eligible for a contract for the management of a vessel in the Ready Reserve Force if the Secretary determines, at a minimum, that the person has—

(i) experience in the operation of commercial-type vessels or public vessels owned by the United States Government; and

(ii) the management capability necessary to operate, maintain, and activate the vessel at a reasonable price.


(B) Contract requirement.—The Secretary of Transportation shall include in each contract for the management of a vessel in the Ready Reserve Force a requirement that each seaman who performs services on any vessel covered by the contract hold the license or merchant mariner's document that would be required under chapter 71 or chapter 73 of title 46, United States Code, for a seaman performing that service while operating the vessel if the vessel were not a public vessel.


(d) Applicability of Limitations on Overhaul, Repair, and Maintenance in Foreign Shipyards.—

(1) Application of limitation.—The provisions of section 8680 of title 10 shall apply to vessels specified in subsection (b), and to the Secretary of Transportation with respect to those vessels, in the same manner as those provisions apply to vessels specified in subsection (b) of such section, and to the Secretary of the Navy, respectively.

(2) Covered vessels.—Vessels specified in this paragraph are vessels maintained by the Secretary of Transportation in support of the Department of Defense, including any vessel assigned by the Secretary of Transportation to the Ready Reserve Force that is owned by the United States.


(e) Exemption From Tank Vessel Construction Standards.—Vessels in the National Defense Reserve Fleet are exempt from the provisions of section 3703a.

(f) Use of NDRF Vessels for Civil Contingency Operations and Promotional and Media Events.—With the concurrence of the Secretary of Defense, the Secretary of Transportation may allow the use of vessels in the National Defense Reserve Fleet (NDRF) for civil contingency operations requested by another Federal agency, and for Maritime Administration promotional and media events relating to demonstration projects and research and development supporting the Administration's mission, if the Secretary of Transportation determines such use is in the best interest of the Government after considering the following factors:

(1) Availability.—The availability of NDRF or Ready Reserve Force (RRF) resources and the impact of such use on NDRF and RRF mission support to the defense and homeland security requirements of the Government.

(2) Interference.—Whether the such 2 use of vessels will support the mission of the Maritime Administration and not significantly interfere with NDRF vessel maintenance, repair, safety, readiness, and resource availability.

(3) Safety.—Whether safety precautions will be taken, including indemnification of liability when applicable.

(4) Cost.—Whether any costs incurred by such use will be funded as a reimbursable transaction between Federal agencies, as applicable.

(5) Other matters.—Any other matters the Maritime Administrator considers appropriate.


(g) Vessel Status.—A vessel in the National Defense Reserve Fleet determined by the Maritime Administration to be of insufficient value to remain in the National Defense Reserve Fleet shall remain a vessel within the meaning of that term in section 3 of title 1, United States Code, and subject to the rights and responsibilities of a vessel under admiralty law at least until such time as the vessel is delivered to a dismantling facility or is disposed of otherwise from the National Defense Reserve Fleet.

(Added and amended Pub. L. 115–91, div. C, title XXXV, §3502(a)(3), (b)(6), Dec. 12, 2017, 131 Stat. 1910; Pub. L. 115–232, div. A, title VIII, §809(q), Aug. 13, 2018, 132 Stat. 1844.)

References in Text

Section 902 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1242), referred to in subsec. (b)(1), is section 902 of act June 29, 1936, ch. 858, 49 Stat. 2015, which was classified to section 1242 of the former Appendix to this title prior to repeal and restatement as chapter 563 of this title by Pub. L. 109–304, §§8(c), 19, Oct. 6, 2006, 120 Stat. 1654, 1713.

Codification

Section, as added and amended by Pub. L. 115–91, is based on act Mar. 8, 1946, ch. 82, §11, 60 Stat. 49; June 28, 1947, ch. 161, §1, 61 Stat. 190; Feb. 27, 1948, ch. 78, §1(a), 62 Stat. 38; Feb. 28, 1949, ch. 12, 63 Stat. 9; June 29, 1949, ch. 281, §1, 63 Stat. 349; June 30, 1950, ch. 427, §2, 64 Stat. 308; Pub. L. 97–31, §12(157), Aug. 6, 1981, 95 Stat. 167; Pub. L. 101–115, §6, Oct. 13, 1989, 103 Stat. 693; Pub. L. 101–225, title III, §307(12), Dec. 12, 1989, 103 Stat. 1925; Pub. L. 102–241, §57, Dec. 19, 1991, 105 Stat. 2234; Pub. L. 102–587, title VI, §6205(a), Nov. 4, 1992, 106 Stat. 5094; Pub. L. 104–106, div. A, title X, §1014(b), Feb. 10, 1996, 110 Stat. 424; Pub. L. 104–239, §9, Oct. 8, 1996, 110 Stat. 3133; Pub. L. 109–364, div. C, title XXXV, §3503, Oct. 17, 2006, 120 Stat. 2516; Pub. L. 110–181, div. C, title XXXV, §§3513, 3516, Jan. 28, 2008, 122 Stat. 594, 595; Pub. L. 112–81, div. C, title XXXV, §3502, Dec. 31, 2011, 125 Stat. 1716; Pub. L. 112–213, title IV, §410, Dec. 20, 2012, 126 Stat. 1572; Pub. L. 114–328, div. C, title XXXV, §3504, Dec. 23, 2016, 130 Stat. 2776, which was formerly classified to section 4405 of Title 50, War and National Defense, before being transferred to this chapter and renumbered as this section.

Amendments

2018—Subsec. (d)(1). Pub. L. 115–232 substituted "section 8680 of title 10" for "section 7310 of title 10, United States Code,".

2017Pub. L. 115–91, §3502(b)(6)(A), inserted section enumerator and catchline.

Pub. L. 115–91, §3502(a)(3), transferred section 11 of act Mar. 8, 1946, to this chapter and renumbered it as this section. See Codification note above.

Subsec. (a). Pub. L. 115–91, §3502(b)(6)(A), inserted heading.

Subsec. (b). Pub. L. 115–91, §3502(b)(6)(B), inserted heading.

Subsec. (e). Pub. L. 115–91, §3502(b)(6)(C), inserted heading and struck out "of title 46, United States Code" after "section 3703a" in text.

Effective Date of 2018 Amendment

Amendment by Pub. L. 115–232 effective Feb. 1, 2019, with provision for the coordination of amendments and special rule for certain redesignations, see section 800 of Pub. L. 115–232, set out as a note preceding section 3001 of Title 10, Armed Forces.

Transfer of Functions

For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see sections 468(b), 551(d), 552(d), and 557 of Title 6, Domestic Security, and the Department of Homeland Security Reorganization Plan of November 25, 2002, as modified, set out as a note under section 542 of Title 6.

Vessel Repair and Maintenance Pilot Program

Pub. L. 104–239, §16, Oct. 8, 1996, 110 Stat. 3138, provided that:

"(a) In General.—The Secretary of Transportation shall conduct a pilot program to evaluate the feasibility of using renewable contracts for the maintenance and repair of outported vessels in the Ready Reserve Force to enhance the readiness of those vessels. Under the pilot program, the Secretary, subject to the availability of appropriations and within 6 months after the date of the enactment of this Act [Oct. 8, 1996], shall award 9 contracts for this purpose.

"(b) Use of Various Contracting Arrangements.—In conducting a pilot program under this section, the Secretary of Transportation shall use contracting arrangements similar to those used by the Department of Defense for procuring maintenance and repair of its vessels.

"(c) Contract Requirements.—Each contract with a shipyard under this section shall—

"(1) subject to subsection (d), provide for the procurement from the shipyard of all repair and maintenance (including activation, deactivation, and drydocking) for 1 vessel in the Ready Reserve Force that is outported in the geographical vicinity of the shipyard;

"(2) be effective for 1 fiscal year; and

"(3) be renewable, subject to the availability of appropriations, for each subsequent fiscal year through fiscal year 1998.

"(d) Limitation of Work Under Contracts.—A contract under this section may not provide for the procurement of operation or manning for a vessel that may be procured under another contract for the vessel to which section 11(d)(2) of the Merchant Ship Sales Act of 1946 (50 U.S.C. App. 1774(d)(2)) [probably means "(50 U.S.C. App. 1744(d)(2))", now 46 U.S.C. 57100(c)(2)] applies.

"(e) Geographic Distribution.—The Secretary shall seek to distribute contract awards under this section to shipyards located throughout the United States.

"(f) Reports.—The Secretary shall submit to the Congress—

"(1) an interim report on the effectiveness of each contract under this section in providing for economic and efficient repair and maintenance of the vessel included in the contract, no later than 20 months after the date of the enactment of this Act [Oct. 8, 1996]; and

"(2) a final report on that effectiveness no later than 6 months after the termination of all contracts awarded pursuant to this section."

1 See References in Text note below.

2 So in original.

§57101. Placement of vessels in National Defense Reserve Fleet

(a) In General.—Any vessel acquired by the Maritime Administration of 1,500 gross tons or more or such other vessels as the Secretary of Transportation determines are appropriate shall be placed in the National Defense Reserve Fleet.

(b) Removal From Fleet.—A vessel placed in the Fleet under subsection (a) may not be traded out or sold from the Fleet, except as provided in section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this title.

(c) Authority of Federal Entities To Transfer Vessels.—All Federal entities are authorized to transfer vessels to the National Defense Reserve Fleet without reimbursement subject to the approval of the Secretary of Transportation and the Secretary of the Navy with respect to Ready Reserve Force vessels and the Secretary of Transportation with respect to all other vessels.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1658; Pub. L. 112–213, title IV, §§406, 407, Dec. 20, 2012, 126 Stat. 1571; Pub. L. 115–91, div. C, title XXXV, §3502(b)(7), Dec. 12, 2017, 131 Stat. 1911.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57101 46 App.:1160(j). June 29, 1936, ch. 858, title V, §510(j), as added Pub. L. 89–254, §2, Oct. 10, 1965, 79 Stat. 980; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

In subsection (a), the words "vessel acquired by the Maritime Administration" are subtituted for "vessel heretofore or hereafter acquired under this section, or otherwise acquired by the Maritime Administration of the Department of Transportation under any other authority" to eliminate unnecessary words.

In subsection (b), the words "except as provided in section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this title" are substituted for "except as provided for in subsections (g) and (i) of this section. This limitation shall not affect the rights of the Secretary of Transportation to dispose of a vessel as provided in other sections of this subchapter or in subchapters VII or XI of this chapter" because of the restatement.

Amendments

2017—Subsec. (a). Pub. L. 115–91, which directed striking out "maintained under section 11 of the Merchant Ship Sales Act of 1946 (50 App. 1744)", was executed by striking out "maintained under section 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744)" before period at end, to reflect the probable intent of Congress.

2012—Subsec. (a). Pub. L. 112–213, §406, inserted "of 1,500 gross tons or more or such other vessels as the Secretary of Transportation determines are appropriate" after "Administration".

Subsec. (c). Pub. L. 112–213, §407, added subsec. (c).

§57102. Disposition of vessels not worth preserving

(a) In General.—If the Secretary of Transportation determines that a vessel owned by the Maritime Administration is of insufficient value for commercial or military operation to warrant its further preservation, the Secretary may scrap the vessel or sell the vessel for cash.

(b) Selling Procedure.—The sale of a vessel under subsection (a) shall be made on the basis of competitive sealed bids, after an appraisal and due advertisement. The purchaser does not have to be a citizen of the United States. The purchaser shall provide a surety bond, with a surety approved by the Secretary, to ensure that the vessel will not be operated in the foreign trade of the United States at any time within 10 years after the sale, in competition with a vessel owned by a citizen of the United States and documented under the laws of the United States.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1658.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57102 46 App.:1158(a). June 29, 1936, ch. 858, title V, §508(a), 49 Stat. 2000; Pub. L. 97–31, §12(89), Aug. 6, 1981, 95 Stat. 161; Pub. L. 108–136, title XXXV, §3512(1), Nov. 24, 2003, 117 Stat. 1789.

In subsection (a), the words "vessel owned by the Maritime Administration" are substituted for "vessel transferred to the Maritime Administration of the Department of Transportation by section 1112 of this Appendix, or hereafter acquired" to eliminate unnecessary words.

In subsection (b), the words "The sale of a vessel under section (a) shall be made on the basis of competitive sealed bids, after an appraisal and due advertisement. The purchaser does not have to be a citizen of the United States." are substituted for "after appraisement and due advertisement, and upon competitive sealed bids, either to citizens of the United States or to aliens" for clarity. The words "provide a surety bond, with a surety approved by the Secretary, to ensure that" are substituted for "enter into an undertaking with sureties approved by the Secretary of Transportation that" for clarity.

Limitation on Export of Vessels Owned by the Government of the United States for the Purpose of Dismantling, Recycling, or Scrapping

Pub. L. 110–417, div. C, title XXXV, §3502, Oct. 14, 2008, 122 Stat. 4761, provided that:

"(a) In General.—Except as provided in subsection (b), no vessel that is owned by the Government of the United States shall be approved for export to a foreign country for purposes of dismantling, recycling, or scrapping.

"(b) Exception.—Subsection (a) shall not apply with respect to a vessel if the Administrator of the Maritime Administration certifies to the Committee on Armed Services of the House of Representatives and the Committee on Commerce, Science, and Transportation of the Senate that—

"(1) a compelling need for dismantling, recycling, or scrapping the vessel exists;

"(2) there is no available capacity in the United States to conduct the dismantling, recycling, or scrapping of the vessel;

"(3) any dismantling, recycling, or scrapping of the vessel in a foreign country will be conducted in full compliance with environmental, safety, labor, and health requirements for ship dismantling, recycling, or scrapping that are equivalent to the laws of the United States; and

"(4) the export of the vessel under this section will only be for dismantling, recycling, or scrapping of the vessel.

"(c) United States Defined.—In this section the term 'United States' means the States of the United States, Puerto Rico, and Guam."

Vessel Disposal Program

Pub. L. 110–181, div. C, title XXXV, §3503, Jan. 28, 2008, 122 Stat. 592, provided that:

"(a) In General.—Within 30 days after the date of the enactment of this Act [Jan. 28, 2008], the Secretary of Transportation shall convene a working group to review and make recommendations on best practices for the storage and disposal of obsolete vessels owned or operated by the Federal Government. The Secretary shall invite senior representatives from the Maritime Administration, the Coast Guard, the Environmental Protection Agency, the National Oceanic and Atmospheric Administration, and the United States Navy to participate in the working group. The Secretary may request the participation of senior representatives of any other Federal department or agency, as appropriate, and may also request participation from concerned State environmental agencies.

"(b) Scope.—Among the vessels to be considered by the working group are Federally owned or operated vessels that are—

"(1) to be scrapped or recycled;

"(2) to be used as artificial reefs; or

"(3) to be used for the Navy's SINKEX program.

"(c) Purpose.—The working group shall—

"(1) examine current storage and disposal policies, procedures, and practices for obsolete vessels owned or operated by Federal agencies;

"(2) examine Federal and State laws and regulations governing such policies, procedures, and practices and any applicable environmental laws; and

"(3) within 90 days after the date of enactment of the [this] Act [Jan. 28, 2008], submit a plan to the Committee on Armed Services and the Committee on Commerce, Science and Transportation of the Senate and the Committee on Armed Services of the House of Representatives to improve and harmonize practices for storage and disposal of such vessels, including the interim transportation of such vessels.

"(d) Contents of Plan.—The working group shall include in the plan submitted under subsection (c)(3)—

"(1) a description of existing measures for the storage, disposal, and interim transportation of obsolete vessels owned or operated by Federal agencies in compliance with Federal and State environmental laws in a manner that protects the environment;

"(2) a description of Federal and State laws and regulations governing the current policies, procedures, and practices for the storage, disposal, and interim transportation of such vessels;

"(3) recommendations for environmental best practices that meet or exceed, and harmonize, the requirements of Federal environmental laws and regulations applicable to the storage, disposal, and interim transportation of such vessels;

"(4) recommendations for environmental best practices that meet or exceed the requirements of State laws and regulations applicable to the storage, disposal, and interim transportation of such vessels;

"(5) procedures for the identification and remediation of any environmental impacts caused by the storage, disposal, and interim transportation of such vessels; and

"(6) recommendations for necessary steps, including regulations if appropriate, to ensure that best environmental practices apply to all such vessels.

"(e) Implementation of Plan.—

"(1) In general.—As soon as practicable after the date of enactment of the [this] Act [Jan. 28, 2008], the head of each Federal department or agency participating in the working group, in consultation with the other Federal departments and agencies participating in the working group, shall take such action as may be necessary, including the promulgation of regulations, under existing authorities to ensure that the implementation of the plan provides for compliance with all Federal and State laws and for the protection of the environment in the storage, interim transportation, and disposal of obsolete vessels owned or operated by Federal agencies.

"(2) Armed services vessels.—The Secretary and the Secretary of Defense, in consultation with the Administrator of the Environmental Protection Agency, shall each ensure that environmental best practices are observed with respect to the storage, disposal, and interim transportation of obsolete vessels owned or operated by the Department of Defense.

"(f) Rule of Construction.—Nothing in this section shall be construed to supersede, limit, modify, or otherwise affect any other provision of law, including environmental law."

§57103. Donation of nonretention vessels in the National Defense Reserve Fleet

(a) In General.—The Secretary of Transportation may convey the right, title, and interest of the United States Government in any vessel of the National Defense Reserve Fleet that has been identified by the Secretary as an obsolete vessel of insufficient value to warrant its further preservation, if the recipient—

(1) is a non-profit organization, a State, or a municipal corporation or political subdivision of a State;

(2) agrees not to use, or allow others to use, the vessel for commercial transportation purposes;

(3) agrees to make the vessel available to the Government whenever the Secretary indicates that it is needed by the Government;

(4) agrees to hold the Government harmless for any claims arising from exposure to asbestos, polychlorinated biphenyls, lead paint, or other hazardous substances after conveyance of the vessel, except for claims arising from use of the vessel by the Government;

(5) has a conveyance plan and a business plan that describes the intended use of the vessel, each of which has been submitted to and approved by the Secretary;

(6) has provided proof, as determined by the Secretary, of resources sufficient to accomplish the transfer, necessary repairs and modifications, and initiation of the intended use of the vessel; and

(7) agrees that when the recipient no longer requires the vessel for use as described in the business plan required under paragraph (5)—

(A) the recipient will, at the discretion of the Secretary, reconvey the vessel to the Government in good condition except for ordinary wear and tear; or

(B) if the Board of Trustees of the recipient has decided to dissolve the recipient according to the laws of the State in which the recipient is incorporated, then—

(i) the recipient shall distribute the vessel, as an asset of the recipient, to a person that has been determined exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501(c)(3)), or to the Federal Government or a State or local government for a public purpose; and

(ii) the vessel shall be disposed of by a court of competent jurisdiction of the county in which the principal office of the recipient is located, for such purposes as the court shall determine, or to such organizations as the court shall determine are organized exclusively for public purposes.


(b) Other Equipment.—At the Secretary's discretion, additional equipment from other obsolete vessels of the Fleet may be conveyed to assist the recipient with maintenance, repairs, or modifications.

(c) Additional Terms.—The Secretary may require any additional terms the Secretary considers appropriate.

(d) Delivery of Vessel.—If conveyance is made under this section, the vessel shall be delivered to the recipient at a time and place to be determined by the Secretary. The vessel shall be conveyed in an "as is" condition.

(e) Limitations.—If at any time prior to delivery of the vessel to the recipient, the Secretary determines that a different disposition of the vessel would better serve the interests of the Government, the Secretary shall pursue the more favorable disposition of the obsolete vessel and shall not be liable for any damages that may result from an intended recipient's reliance upon a proposed transfer.

(f) Reversion.—The Secretary shall include in any conveyance under this section terms under which all right, title, and interest conveyed by the Secretary shall revert to the Government if the Secretary determines the vessel has been used other than as described in the business plan required under subsection (a)(5).

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1659; Pub. L. 112–213, title IV, §408(a), Dec. 20, 2012, 126 Stat. 1571.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57103 46 App.:1158(b). June 29, 1936, ch. 858, title V, §508(b), as added Pub. L. 108–136, title XXXV, §3512(2), Nov. 24, 2003, 117 Stat. 1789.

In subsection (a), before paragraph (1), the words "Notwithstanding section 1160(j) of this title" are omitted as unnecessary because section 46 App. U.S.C. 1160(j) is restated in section 57101 of the revised title and that section contains an exception which includes this section. In paragraph (1), the words "Commonwealth, or possession of the United States" and "or the District of Columbia" are omitted as unnecessary because of the definition of "State" in chapter 1 of the revised title.

Amendments

2012Pub. L. 112–213 substituted "Donation of nonretention vessels in the National Defense Reserve Fleet" for "Sale of obsolete vessels in National Defense Reserve Fleet" in section catchline.

§57104. Acquisition of vessels from sale of obsolete vessels

(a) In General.—The Secretary of Transportation may acquire suitable documented vessels with amounts in the Vessel Operations Revolving Fund derived from the sale of obsolete vessels in the National Defense Reserve Fleet.

(b) Valuation.—The acquired and obsolete vessels shall be valued at their scrap value in domestic or foreign markets as of the date of the acquisition for or sale from the Fleet. However, the value assigned to those vessels shall be determined on the same basis, with consideration given to the fair value of the cost of moving the vessel sold from the Fleet to the place of scrapping.

(c) Costs Incident to Lay-Up.—Costs incident to the lay-up of the vessel acquired under this section may be paid from amounts in the Fund.

(d) Transfers to Non-Citizens.—A vessel sold from the Fleet under this section may be scrapped in an approved foreign market without obtaining additional separate approval from the Secretary to transfer the vessel to a person not a citizen of the United States.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1660.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57104 46 App.:1160(i). June 29, 1936, ch. 858, title V, §510(i), as added Pub. L. 86–575, July 5, 1960, 74 Stat. 312; Pub. L. 89–254, §1, Oct. 10, 1965, 79 Stat. 980; Pub. L. 91–469, §13, Oct. 21, 1970, 84 Stat. 1022; Pub. L. 93–605, §1, Jan. 2, 1975, 88 Stat. 1965; Pub. L. 95–177, Nov. 15, 1977, 91 Stat. 1368; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161; Pub. L. 101–595, title VII, §704, Nov. 16, 1990, 104 Stat. 2994.

In subsection (b), the words "vessel sold from the Fleet" are substituted for "traded-out vessel" for clarity and consistency.

In subsection (d), the words "without obtaining additional separate approval from the Secretary to transfer the vessel to a person not a citizen of the United States" are substituted for "Notwithstanding the provisions of sections 808 and 835 of this Appendix" for clarity and to avoid the cross references.

§57105. Acquisition of vessels for essential services, routes, or lines

(a) In General.—The Secretary of Transportation may acquire a vessel, by purchase or otherwise, if—

(1) the Secretary considers the vessel necessary to establish, maintain, improve, or serve as a replacement on an essential service, route, or line in the foreign commerce of the United States, as determined under section 50103 of this title;

(2) the vessel was constructed in the United States; and

(3) the Secretary of the Navy has certified to the Secretary of Transportation that the vessel is suitable for economical and speedy conversion into a naval or military auxiliary or otherwise suitable for use by the United States Government in time of war or national emergency.


(b) Price.—The price paid for the vessel shall be based on a fair and reasonable valuation. However, the price may not exceed by more than 5 percent the cost of the 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 for reconditioning, less depreciation based on a 25-year life for a dry-cargo or passenger vessel and a 20-year life for a tanker or other liquid bulk carrier vessel.

(c) Documentation.—A vessel acquired under this section that is not documented under the laws of the United States at the time of acquisition shall be so documented as soon as practicable.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1660.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57105 46 App.:1125. June 29, 1936, ch. 858, title II, §215, as added June 23, 1938, ch. 600, §4, 52 Stat. 954; Pub. L. 86–518, §1, June 12, 1960, 74 Stat. 216; Pub. L. 97–31, §12(73), Aug. 6, 1981, 95 Stat. 160.
  46 App.:1125 note. Pub. L. 86–518, §9, June 12, 1960, 74 Stat. 217.

In subsection (a), the words "and to pay for the same out of his construction fund" are omitted as obsolete because the construction fund established under 46 App. U.S.C. 1116 was impliedly abolished by 46 App. U.S.C. 1119, as amended.

In subsection (b), the words "less depreciation based on a 25-year life for a dry-cargo or passenger vessel and a 20-year life for a tanker or other liquid bulk carrier vessel" are substituted for "less depreciation based upon a twenty-five year life expectancy 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 1 substituting 'twenty-five' for 'twenty' in 46 App. U.S.C. 1125] 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."

§57106. Maintenance, improvement, and operation of vessels

(a) In General.—The Secretary of Transportation may maintain, repair, recondition, remodel, and improve vessels owned by the United States Government and in the possession or under the control of the Secretary, to equip them adequately for competition in the foreign trade of the United States. The Secretary may operate such a vessel or charter the vessel on terms and conditions the Secretary considers appropriate to carry out the purposes of this subtitle.

(b) Documentation and Restrictions on Operation.—A vessel reconditioned, remodeled, or improved under subsection (a) shall be documented under the laws of the United States and remain so documented for at least 5 years after completion of the reconditioning, remodeling, or improvement. During that period, it shall be operated on voyages that are not exclusively coastwise.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1661.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57106 46 App.:871. June 5, 1920, ch. 250, §12, 41 Stat. 993; June 6, 1924, ch. 273, §2, 43 Stat. 468; Feb. 11, 1927, ch. 104, §1 (last par. under heading "United States Shipping Board"), 44 Stat. 1083; Exec. Order No. 6166, §12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, §204, title IX, §904, 49 Stat. 1987, 2016; Pub. L. 97–31, §12(43), Aug. 6, 1981, 95 Stat. 157.
  46 App.:891b. May 22, 1928, ch. 675, title II, §202, 45 Stat. 690; Exec. Order No. 6166, §12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, §204, title IX, §904, 49 Stat. 1987, 2016; Pub. L. 97–31, §12(51), Aug. 6, 1981, 95 Stat. 157.

This section is substituted for the source provisions to eliminate obsolete and unnecessary provisions.

§57107. Vessels for other agencies

(a) In General.—The Secretary of Transportation may construct, reconstruct, repair, equip, and outfit, by contract or otherwise, vessels or parts thereof, for any other department or agency of the United States Government to the extent the other department or agency is authorized by law to do so for its own account.

(b) Effect on Contract Authorization.—An obligation incurred or expenditure made by the Secretary under this section does not affect any contract authorization of the Secretary, but instead shall be charged against the existing appropriation or contract authorization of the department or agency.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1661.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57107 46 App.:1125a. Feb. 6, 1941, ch. 5, §4, 55 Stat. 6; Pub. L. 97–31, §12(74), Aug. 6, 1981, 95 Stat. 160.

In subsection (b), the words "heretofore or hereafter", "diminish or otherwise", and "and, to the amount of such obligation or expenditure, diminish" are omitted as unnecessary.

§57108. Consideration of ballast and equipment in determining selling price

The Maritime Administration may not sell a vessel until its ballast and equipment have been inventoried and their value considered in determining the selling price of the vessel.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1661.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57108 46 App.:864b. June 29, 1949, ch. 281, §1 (proviso), 63 Stat. 349; Pub. L. 97–31, §12(36), Aug. 6, 1981, 95 Stat. 156.

§57109. Operation of vessels purchased, chartered, or leased from Secretary of Transportation

Unless otherwise authorized by the Secretary of Transportation, a vessel purchased, chartered, or leased from the Secretary may be operated only under a certificate of documentation with a registry or coastwise endorsement. Such a vessel, while employed solely as a merchant vessel, is subject to the laws, regulations, and liabilities governing merchant vessels, whether the United States Government has an interest in the vessel as an owner or holds a mortgage, lien, or other interest.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1661.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57109 46 App.:808(b). Sept. 7, 1916, ch. 451, §9(b), 39 Stat. 730; July 15, 1918, ch. 152, §3, 40 Stat. 900; restated June 5, 1920, ch. 250, §18, 41 Stat. 994; Ex. Ord. No. 6166, §12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, §204, title IX, §904, 49 Stat. 1987, 2016; Pub. L. 97–31, §12(26), Aug. 6, 1981, 95 Stat. 155; Pub. L. 100–710, title I, §104(b)(2), Nov. 23, 1988, 102 Stat. 4750.

The words "only under a certificate of documentation with a registry or coastwise endorsement" are substituted for "only under such registry or enrollment and license" for clarity and to use the appropriate current language.

CHAPTER 573—VESSEL TRADE-IN PROGRAM

Sec.
57301.
Definitions.
57302.
Authority to acquire vessels.
57303.
Utility value and tonnage requirements.
57304.
Eligible acquisition dates.
57305.
Determination of trade-in allowance.
57306.
Payment of trade-in allowance.
57307.
Recognition of gain for tax purposes.
57308.
Use of vessels at least 25 years old.

        

§57301. Definitions

In this chapter:

(1) New vessel.—The term "new vessel" means a vessel—

(A) constructed under this subtitle and acquired within 2 years after the date of completion; or

(B) constructed in a domestic shipyard on private account and not under this subtitle, and documented under the laws of the United States.


(2) Obsolete vessel.—The term "obsolete vessel" means a vessel that—

(A) is of at least 1,350 gross tons;

(B) the Secretary of Transportation believes should, because of its age, obsolescence, or other reasons, be replaced in the public interest; and

(C) has been owned by a citizen of the United States for at least 3 years immediately before its acquisition under this chapter.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1662.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57301 46 App.:1160(a). June 29, 1936, ch. 858, title V, §510(a), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1183; July 17, 1952, ch. 939, §7, 66 Stat. 762; Pub. L. 85–332, Feb. 20, 1958, 72 Stat. 17; Pub. L. 87–755, Oct. 5, 1962, 76 Stat. 751; Pub. L. 91–469, §12(a), Oct. 21, 1970, 84 Stat. 1022; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

In paragraph (1)(A), the words "or is purchased under section 1204 of this Appendix, as amended, by the person turning in an obsolete vessel under this section" are omitted because the purchase authority under 46 App. U.S.C. 1204 was impliedly repealed by section 14 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1735 note).

§57302. Authority to acquire vessels

To promote the construction of new, safe, and efficient vessels to carry the domestic and foreign waterborne commerce of the United States, the Secretary of Transportation may acquire an obsolete vessel in exchange for an allowance of credit toward the cost of construction or purchase of a new vessel as provided in this chapter.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1662.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57302 46 App.:1160(b) (1st, last sentences). June 29, 1936, ch. 858, title V, §510(b) (1st, last sentences), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; Pub. L. 87–401, subdiv. (1), Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, §35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

The words "toward the cost of construction or purchase of a new vessel" are added for clarity. The text of 46 App. U.S.C. 1160(b) (last sentence) is omitted as obsolete.

§57303. Utility value and tonnage requirements

(a) Utility Value.—The utility value of a new vessel to be acquired under this chapter for operation in the domestic or foreign commerce of the United States may not be substantially less than that of the obsolete vessel acquired in exchange under this chapter.

(b) Tonnage.—If the Secretary of Transportation finds that the new vessel will have a utility value at least equal to that of the obsolete vessel, the new vessel may be of lesser gross tonnage than the obsolete vessel. However, the gross tonnage of the new vessel must be at least one-third the gross tonnage of the obsolete vessel.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1662.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57303 46 App.:1160(c). June 29, 1936, ch. 858, title V, §510(c), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

§57304. Eligible acquisition dates

At the option of the owner, the acquisition of an obsolete vessel under this chapter shall occur—

(1) when the owner contracts for the construction or purchase of a new vessel; or

(2) within 5 days of the actual date of delivery of the new vessel to the owner.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1662.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57304 46 App.:1160(b) (2d sentence). June 29, 1936, ch. 858, title V, §510(b) (2d sentence), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; Pub. L. 87–401, subdiv. (1), Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, §35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

The words "At the option of the owner" are substituted for "if the owner so requests" for clarity.

§57305. Determination of trade-in allowance

(a) In General.—The Secretary of Transportation shall determine the trade-in allowance for an obsolete vessel at the time of acquisition of the vessel. The allowance shall be the fair value of the vessel. In determining the value, the Secretary shall consider—

(1) the scrap value of the obsolete vessel in American and foreign markets;

(2) the depreciated value based on a 20-year or 25-year life, whichever applies to the obsolete vessel; and

(3) the market value of the obsolete vessel for operation in world commerce or in the domestic or foreign commerce of the United States.


(b) Use of Obsolete Vessels.—If acquisition of the obsolete vessel occurs when the owner contracts for the construction of the new vessel, and the owner uses the obsolete vessel during the period of construction of the new vessel, the Secretary shall reduce the trade-in allowance by an amount representing the fair value of that use. The Secretary shall establish the rate for use of the obsolete vessel when the contract for construction of the new vessel is made.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1663.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57305(a) 46 App.:1160(b) (3d sentence), (d) (1st, 2d sentences). June 29, 1936, ch. 858, title V, §510(b) (3d sentence), (d), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; July 17, 1952, ch. 939, §8, 66 Stat. 762; Pub. L. 86–518, §1, June 12, 1960, 74 Stat. 216; Pub. L. 87–401, Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, §35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.
57305(b) 46 App.:1160(d) (3d, last sentences).

In subsection (a), the words "fair value" are substituted for "fair and reasonable value" to eliminate unnecessary words. In paragraph (3), the word "commerce" is substituted for "trade" for consistency in the chapter.

In subsection (b), the words "for the entire period of such use" are omitted as unnecessary.

§57306. Payment of trade-in allowance

(a) Acquisition at Time of Contract.—If acquisition of an obsolete vessel under this chapter occurs when the owner contracts for the construction or purchase of the new vessel, the Secretary of Transportation shall apply the trade-in allowance to the purchase price of the new vessel rather than paying it to the owner. If the new vessel is constructed under this subtitle, the Secretary may apply the trade-in allowance to the required cash payments on terms and conditions the Secretary may prescribe. If the new vessel is not constructed under this subtitle, the Secretary shall pay the trade-in allowance to the builder of the vessel for the account of the owner when the Secretary acquires the obsolete vessel.

(b) Acquisition at Time of Delivery.—If acquisition of the obsolete vessel occurs when the new vessel is delivered to the owner, the Secretary shall deposit the trade-in allowance in the owner's capital construction fund.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1663.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57306 46 App.:1160(b) (4th–7th sentences). June 29, 1936, ch. 858, title V, §510(b) (4th–7th sentences), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; Pub. L. 87–401, subdiv. (1), Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, §§12(b), 35(a), Oct. 21, 1970, 84 Stat. 1022, 1035; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

In subsection (b), the words "acquisition of the obsolete vessel occurs" are substituted for "title to the obsolete vessel is acquired" for consistency in the chapter.

§57307. Recognition of gain for tax purposes

The owner of an obsolete vessel does not recognize a gain under the Federal income tax laws when the vessel is transferred to the Secretary of Transportation in exchange for a trade-in allowance under this chapter. The basis of the new vessel acquired with the allowance is the same as the basis of the obsolete vessel—

(1) increased by the difference between the cost of the new vessel and the trade-in allowance of the obsolete vessel; and

(2) decreased by the amount of loss recognized on the transfer.

(Pub. L. 109–304, §8(c), Oct. 6, 2006, 120 Stat. 1663.)

Historical and Revision Notes
Revised

Section

Source (U.S. Code)Source (Statutes at Large)
57307 46 App.:1160(e). June 29, 1936, ch. 858, title V, §510(e), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1184; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

The words "for gain or loss upon a sale or exchange and for depreciation under the applicable Federal income-tax laws" and "or vessels exchanged for credit upon the acquisition of such new vessel" are omitted as unnecessary. In paragraph (1), the words "the difference between the cost of the new vessel and the trade-in allowance of the obsolete vessel" are substituted for "the amount of the cost of such vessel (other than the cost represented by such obsolete vessel or vessels)" for clarity.

§57308. Use of vessels at least 25 years old

An obsolete vessel acquired under this chapter that is or becomes at least 25 years old may not be used for commercial operation. However, the vessel may be used—

(1) during a period in which vessels may be requisitioned under chapter 563 of this title; or

(2) except as otherwise provided in this subtitle, on trade routes serving only the foreign trade of the United States.

(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)
57308 46 App.:1160(g). June 29, 1936, ch. 858, title V, §510(g), as added Aug. 4, 1939, ch. 417, §7, 53 Stat. 1185; Pub. L. 86–518, §1, June 12, 1960, 74 Stat. 216; Pub. L. 97–31, §12(91), Aug. 6, 1981, 95 Stat. 161.

The words "and vessels presently in the Secretary's laid-up fleet which are or become twenty-five years old or more" and "or any such vessel in the laid-up fleet" are omitted as obsolete. In paragraph (2), the words "for the employment of the Secretary's vessels in steamship lines" are omitted as unnecessary.

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.)