-CITE-

46 USC APPENDIX Sec. 876 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 876. Power of Secretary and Commission to make rules and

regulations

-STATUTE-

(a) In general

The Secretary of Transportation is authorized and directed in aid

of the accomplishment of the purposes of this Act -

(1) To make all necessary rules and regulations to carry out

the provisions of this Act;

And the Federal Maritime Commission is authorized and directed in

aid of the accomplishment of the purposes of this Act:

(2) To make rules and regulations affecting shipping in the

foreign trade not in conflict with law in order to adjust or meet

general or special conditions unfavorable to shipping in the

foreign trade, whether in any particular trade or upon any

particular route or in commerce generally, including intermodal

movements, terminal operations, cargo solicitation, agency

services, ocean transportation intermediary services and

operations, and other activities and services integral to

transportation systems, and which arise out of or result from

foreign laws, rules, or regulations or from competitive methods,

pricing practices, or other practices employed by owners,

operators, agents, or masters of vessels of a foreign country;

and

(3) To request the head of any department, board, bureau, or

agency of the Government to suspend, modify, or annul rules or

regulations which have been established by such department,

board, bureau, or agency, or to make new rules or regulations

affecting shipping in the foreign trade other than such rules or

regulations relating to the Public Health Service, the Consular

Service, and the steamboat inspection service.

(b) Approval and final action

No rule or regulation shall be established by any department,

board, bureau, or agency of the Government which affects shipping

in the foreign trade, except rules or regulations affecting the

Public Health Service, the Consular Service, and the steamboat

inspection service, until such rule or regulation has been

submitted to the Federal Maritime Commission for its approval and

final action has been taken thereon by the Commission or the

President.

(c) Submission of facts to President

Whenever the head of any department, board, bureau, or agency of

the Government refuses to suspend, modify, or annul any rule or

regulation, or make a new rule or regulation upon request of the

Federal Maritime Commission, as provided in subsection (a)(3) of

this section, or objects to the decision of the Commission in

respect to the approval of any rule or regulation, as provided in

subsection (b) of this section, either the Commission or the head

of the department, board, bureau, or agency which has established

or is attempting to establish the rule or regulation in question

may submit the facts to the President, who is authorized to

establish or suspend, modify, or annul such rule or regulation.

(d) Prohibition against preference

No rule or regulation shall be established which in any manner

gives vessels owned by the United States any preference or favor

over those vessels documented under the laws of the United States

and owned by persons who are citizens of the United States.

(e) Motion or petition

The Commission may initiate a rule or regulation under subsection

(a)(2) of this section either on its own motion or pursuant to a

petition. Any person, including a common carrier, tramp operator,

bulk operator, shipper, shippers' association, ocean transportation

intermediary, marine terminal operator, or any component of the

Government of the United States, may file a petition for relief

under subsection (a)(2) of this section.

(f) Filing of information

In furtherance of the purposes of subsection (a)(2) of this

section -

(1) the Commission may, by order, require any person (including

any common carrier, tramp operator, bulk operator, shipper,

shippers' association, ocean transportation intermediary, or

marine terminal operator, or an officer, receiver, trustee,

lessee, agent, or employee thereof) to file with the Commission a

report, answers to questions, documentary material, or other

information which the Commission considers necessary or

appropriate;

(2) the Commission may require a report or answers to questions

to be made under oath;

(3) the Commission may prescribe the form and the time for

response to a report and answers to questions; and

(4) a person who fails to file a report, answer, documentary

material, or other information required under this paragraph

shall be liable to the United States Government for a civil

penalty of not more than $5,000 for each day that the information

is not provided.

(g) Discovery; witnesses; evidence

In proceedings under subsection (a)(2) of this section -

(1) the Commission may authorize a party to use depositions,

written interrogatories, and discovery procedures that, to the

extent practicable, are in conformity with the rules applicable

in civil proceedings in the district courts of the United States;

(2) the Commission may by subpoena compel the attendance of

witnesses and the production of books, papers, documents, and

other evidence;

(3) subject to funds being provided by appropriations Acts,

witnesses are, unless otherwise prohibited by law, entitled to

the same fees and mileage as in the courts of the United States;

(4) for failure to supply information ordered to be produced or

compelled by subpoena under paragraph (2), the Commission may -

(A) after notice and an opportunity for hearing, suspend

tariffs and service contracts of a common carrier or that

common carrier's right to use tariffs of conferences and

service contracts of agreements of which it is a member, or

(B) assess a civil penalty of not more than $5,000 for each

day that the information is not provided; and

(5) when a person violates an order of the Commission or fails

to comply with a subpoena, the Commission may seek enforcement by

a United States district court having jurisdiction over the

parties, and if, after hearing, the court determines that the

order was regularly made and duly issued, it shall enforce the

order by an appropriate injunction or other process, mandatory or

otherwise.

(h) Disclosure to public

Notwithstanding any other law, the Commission may refuse to

disclose to the public a response or other information provided

under the terms of this section.

(i) Finding of unfavorable conditions

If the Commission finds that conditions that are unfavorable to

shipping under subsection (a)(2) of this section exist, the

Commission may -

(1) limit sailings to and from United States ports or the

amount or type of cargo carried;

(2) suspend, in whole or in part, tariffs and service contracts

for carriage to or from United States ports, including a common

carrier's right to use tariffs of conferences and service

contracts of agreements in United States trades of which it is a

member for any period the Commission specifies;

(3) suspend, in whole or in part, an ocean common carrier's

right to operate under an agreement filed with the Commission,

including any agreement authorizing preferential treatment at

terminals, preferential terminal leases, space chartering, or

pooling of cargoes or revenue with other ocean common carriers;

(4) impose a fee, not to exceed $1,000,000 per voyage; or

(5) take any other action the Commission finds necessary and

appropriate to adjust or meet any condition unfavorable to

shipping in the foreign trade of the United States.

(j) Refusal of clearance and denial of entry

Upon request by the Commission -

(1) the collector of customs at the port or place of

destination in the United States shall refuse the clearance

required by section 91 of this Appendix to a vessel of a country

that is named in a rule or regulation issued by the Commission

under subsection (a)(2) of this section, and shall collect any

fees imposed by the Commission under subsection (i)(4) of this

section; and

(2) the Secretary of the department in which the Coast Guard is

operating shall deny entry for purpose of oceanborne trade, of a

vessel of a country that is named in a rule or regulation issued

by the Commission under subsection (a)(2) of this section, to any

port or place in the United States or the navigable waters of the

United States, or shall detain that vessel at the port or place

in the United States from which it is about to depart for another

port or place in the United States.

(k) Operation under suspended tariff or service contract

A common carrier that accepts or handles cargo for carriage under

a tariff or service contract that has been suspended under

subsection (g)(4) or (i)(2) of this section, or after its right to

use another tariff or service contract has been suspended under

those paragraphs, is subject to a civil penalty of not more than

$50,000 for each day that it is found to be operating under a

suspended tariff or service contract.

(l) Consultation with other agencies

The Commission may consult with, seek the cooperation of, or make

recommendations to other appropriate Government agencies prior to

taking any action under this section.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 19, 41 Stat. 995; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, Sec.

204, title IX, Sec. 904, 49 Stat. 1987, 2016; Pub. L. 97-31, Sec.

12(46), Aug. 6, 1981, 95 Stat. 157; Pub. L. 101-595, title I, Sec.

103, Nov. 16, 1990, 104 Stat. 2979; Pub. L. 102-587, title VI, Sec.

6205(b), Nov. 4, 1992, 106 Stat. 5094; Pub. L. 105-258, title III,

Sec. 301, Oct. 14, 1998, 112 Stat. 1915.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in subsec. (a), means act June 5, 1920, ch.

250, 41 Stat. 988, as amended, known as the Merchant Marine Act,

1920, which (except for sections repealed or reenacted in Title 46,

Shipping) is classified principally to this chapter. For complete

classification of this Act to the Code, see section 889 of this

Appendix and Tables.

-MISC1-

AMENDMENTS

1998 - Subsec. (a). Pub. L. 105-258, Sec. 301(a)(1)-(3), (b)(1),

(2), redesignated par. (1) as subsec. (a) and former subdivs. (a)

to (c) as pars. (1) to (3), respectively, and, in par. (2) as

redesignated, struck out "forwarding and" before "agency services"

and substituted "ocean transportation intermediary services and

operations," for "non-vessel-operating common carrier operations,"

and "methods, pricing practices, or other practices" for "methods

or practices".

Subsec. (b). Pub. L. 105-258, Sec. 301(b)(1), redesignated par.

(2) as subsec. (b).

Subsec. (c). Pub. L. 105-258, Sec. 301(b)(1), (8), (9),

redesignated par. (3) as subsec. (c) and substituted "subsection

(a)(3)" for "subdivision (c) of paragraph (1)" and "subsection (b)"

for "paragraph (2)".

Subsec. (d). Pub. L. 105-258, Sec. 301(b)(1), redesignated par.

(4) as subsec. (d).

Subsec. (e). Pub. L. 105-258, Sec. 301(a)(7), (b)(1), (10),

redesignated par. (5) as subsec. (e), substituted "transportation

intermediary," for "freight forwarder,", and substituted

"subsection (a)(2)" for "paragraph (1)(b)" in two places.

Subsec. (f). Pub. L. 105-258, Sec. 301(b)(1), (10), redesignated

par. (6) as subsec. (f) and substituted "subsection (a)(2)" for

"paragraph (1)(b)" in introductory provisions.

Subsec. (f)(1). Pub. L. 105-258, Sec. 301(a)(7), (b)(3),

redesignated subd. (a) as par. (1) and substituted "transportation

intermediary," for "freight forwarder,".

Subsec. (f)(2) to (4). Pub. L. 105-258, Sec. 301(b)(3),

redesignated subds. (b) to (d) as pars. (2) to (4), respectively.

Subsec. (g). Pub. L. 105-258, Sec. 301(b)(1), (10), redesignated

par. (7) as subsec. (g) and substituted "subsection (a)(2)" for

"paragraph (1)(b)" in introductory provisions.

Subsec. (g)(1) to (3). Pub. L. 105-258, Sec. 301(b)(4),

redesignated subds. (a) to (c) as pars. (1) to (3), respectively.

Subsec. (g)(4). Pub. L. 105-258, Sec. 301(b)(4), (11),

redesignated subd. (d) as par. (4) and substituted "paragraph (2),"

for "subdivision (b)," in introductory provisions.

Subsec. (g)(4)(A). Pub. L. 105-258, Sec. 301(a)(4), (5), (b)(5),

redesignated cl. (i) as subpar. (A) and substituted "tariffs and

service contracts of a common carrier" for "tariffs of a common

carrier" and "use tariffs of conferences and service contracts of

agreements" for "use the tariffs of conferences".

Subsec. (g)(4)(B). Pub. L. 105-258, Sec. 301(b)(5), redesignated

cl. (ii) as subpar. (B).

Subsec. (g)(5). Pub. L. 105-258, Sec. 301(b)(4), redesignated

subd. (e) as par. (5).

Subsec. (h). Pub. L. 105-258, Sec. 301(b)(1), redesignated par.

(8) as subsec. (h).

Subsec. (i). Pub. L. 105-258, Sec. 301(b)(1), (10), redesignated

par. (9) as subsec. (i) and substituted "subsection (a)(2)" for

"paragraph (1)(b)" in introductory provisions.

Subsec. (i)(1). Pub. L. 105-258, Sec. 301(b)(6), redesignated

subd. (a) as par. (1).

Subsec. (i)(2). Pub. L. 105-258, Sec. 301(a)(6), (b)(6),

redesignated subd. (b) as par. (2) and substituted "tariffs and

service contracts" for "tariffs filed with the Commission".

Pub. L. 105-258, Sec. 301(a)(5), which directed amendment of par.

(2) by substituting "use tariffs of conferences and service

contracts of agreements" for "use the tariffs of conferences", was

executed by making the substitution for "use tariffs of

conferences", to reflect the probable intent of Congress.

Subsec. (i)(3) to (5). Pub. L. 105-258, Sec. 301(b)(6),

redesignated subds. (c) to (e) as pars. (3) to (5), respectively.

Subsec. (j). Pub. L. 105-258, Sec. 301(b)(1), redesignated par.

(10) as subsec. (j).

Subsec. (j)(1). Pub. L. 105-258, Sec. 301(b)(7), (10), (12),

redesignated subd. (a) as par. (1) and substituted "subsection

(a)(2)" for "paragraph (1)(b)" and "subsection (i)(4)" for

"paragraph (9)(d)".

Subsec. (j)(2). Pub. L. 105-258, Sec. 301(b)(7), (10),

redesignated subd. (b) as par. (2) and substituted "subsection

(a)(2)" for "paragraph (1)(b)".

Subsec. (k). Pub. L. 105-258, Sec. 301(a)(8), (b)(1), (13),

redesignated par. (11) as subsec. (k), substituted "subsection

(g)(4) or (i)(2)" for "paragraph (7)(d) or (9)(b)", and substituted

"tariff or service contract" for "tariff" wherever appearing.

Subsec. (l). Pub. L. 105-258, Sec. 301(b)(1), redesignated par.

(12) as subsec. (l).

1992 - Par. (1)(b). Pub. L. 102-587, Sec. 6205(b)(1), substituted

"systems" for "sysetms" after "integral to transportation".

Par. (7)(d). Pub. L. 102-587, Sec. 6205(b)(2), substituted "under

subdivision (b)" for "in proceedings under paragraph (1)(b)(7) of

this section".

1990 - Par. (1)(b). Pub. L. 101-595, Sec. 103(1), inserted

"including intermodal movements, terminal operations, cargo

solicitation, forwarding and agency services, non-vessel-operating

common carrier operations, and other activities and services

integral to transportation sysetms," after "generally,".

Pars. (5) to (12). Pub. L. 101-595, Sec. 103(2), added pars. (5)

to (12).

1981 - Par. (1). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Commission", and added after subsec. (a) an

undesignated paragraph respecting authority of Federal Maritime

Commission. For prior transfers of functions, see Transfer of

Functions note below.

EFFECTIVE DATE OF 1998 AMENDMENT

Amendments by Pub. L. 105-258 effective May 1, 1999, see section

2 of Pub. L. 105-258, set out as a note under section 1701 of this

Appendix.

-TRANS-

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.

"Commission", meaning United States Maritime Commission,

substituted in text for "board", meaning United States Shipping

Board. For dissolution of Board and transfer of functions to United

States Maritime Commission, see Ex. Ord. No. 6166 and act June 29,

1936. Ex. Ord. No. 6166 is set out as a note under section 901 of

Title 5, Government Organization and Employees. For subsequent

transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan

No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under

section 1111 of this Appendix.

Functions of Public Health Service and of all other officers and

employees of Public Health Service, and functions of all agencies

of or in Public Health Service transferred to Secretary of Health,

Education, and Welfare by Reorg. Plan No. 3 of 1966, eff. June 25,

1966, 31 F.R. 8855, 80 Stat. 1610, set out in the Appendix to Title

5. Secretary of Health, Education, and Welfare redesignated

Secretary of Health and Human Services by section 509(b) of Pub. L.

96-88, which is classified to section 3508(b) of Title 20,

Education.

All offices of collector of customs, comptroller of customs,

surveyor of customs, and appraiser of merchandise in Bureau of

Customs of Department of the Treasury to which appointments were

required to be made by President with advice and consent of Senate

ordered abolished with such offices to be terminated not later than

Dec. 31, 1966, by Reorg. Plan No. 1 of 1965, eff. May 25, 1965, 30

F.R. 7035, 79 Stat. 1317, set out in the Appendix to Title 5,

Government Organization and Employees. All functions of offices

eliminated were already vested in Secretary of the Treasury by

Reorg. Plan No. 26 of 1950, eff. July 31, 1950, 15 F.R. 4935, 64

Stat. 1280, set out in the Appendix to Title 5.

Steamboat Inspection Service consolidated in Bureau of Marine

Inspection and Navigation which was later abolished. Functions

relating to inspection of vessels now vested in Commandant of the

Coast Guard. See note preceding section 3 of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1273a, 1710a of this

Appendix; title 28 section 2342.

-End-

-CITE-

46 USC APPENDIX Sec. 877 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 877. Coastwise laws extended to island Territories and

possessions

-STATUTE-

From and after February 1, 1922, the coastwise laws of the United

States shall extend to the island Territories and possessions of

the United States not covered thereby on June 5, 1920, and the

Secretary of Transportation is directed prior to the expiration of

such year to have established adequate steamship service at

reasonable rates to accommodate the commerce and the passenger

travel of said islands and to maintain and operate such service

until it can be taken over and operated and maintained upon

satisfactory terms by private capital and enterprise: Provided,

That if adequate shipping service is not established by February 1,

1922, the President shall extend the period herein allowed for the

establishment of such service in the case of any island Territory

or possession for such time as may be necessary for the

establishment of adequate shipping facilities therefor: And

provided further, That the coastwise laws of the United States

shall not extend to the Virgin Islands of the United States until

the President of the United States shall, by proclamation, declare

that such coastwise laws shall extend to the Virgin Islands and fix

a date for the going into effect of same.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 21, 41 Stat. 997; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; Apr. 16, 1936, ch. 228, 49 Stat. 1207;

June 29, 1936, ch. 858, title II, Sec. 204, title IX, Sec. 904, 49

Stat. 1987, 2016; Proc. No. 2695, eff. July 4, 1946, 11 F.R. 7517,

60 Stat. 1352; Pub. L. 97-31, Sec. 12(47), Aug. 6, 1981, 95 Stat.

157.)

-COD-

CODIFICATION

Provisos of this section authorizing the government of Philippine

Islands to regulate transportation between ports or places in

Philippine Archipelago until Congress authorized registry of

vessels owned in those islands, and providing that this section

should not go into effect in Philippine Islands until after

investigation and proclamation by President, omitted on authority

of Proc. No. 2695 of 1946, set out under section 1394 of Title 22,

Foreign Relations and Intercourse, which proclaimed independence of

Philippines.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission". For prior transfers of functions, see Transfer of

Functions note below.

1936 - Act Apr. 16, 1936, inserted last proviso.

-TRANS-

TRANSFER OF FUNCTIONS

"Commission", meaning United States Maritime Commission,

substituted in text for "board", meaning United States Shipping

Board. For dissolution of Board and transfer of functions to United

States Maritime Commission, see Ex. Ord. No. 6166 and act June 29,

1936. Ex. Ord. No. 6166 is set out as a note under section 901 of

Title 5, Government Organization and Employees. For subsequent

transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan

No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under

section 1111 of this Appendix.

-EXEC-

CANTON ISLAND

Proc. No. 3215, Dec. 12, 1957, 72 Stat. c19, extended period for

establishment of adequate shipping service for, and deferred

extension of coastwise laws to, Canton Island.

-End-

-CITE-

46 USC APPENDIX Sec. 883 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 883. Transportation of merchandise between points in United

States in other than domestic built or rebuilt and documented

vessels; incineration of hazardous waste at sea

-STATUTE-

No merchandise, including merchandise owned by the United States

Government, a State (as defined in section 2101 of the (!1) title

46), or a subdivision of a State, shall be transported by water, or

by land and water, on penalty of forfeiture of the merchandise (or

a monetary amount up to the value thereof as determined by the

Secretary of the Treasury, or the actual cost of the

transportation, whichever is greater, to be recovered from any

consignor, seller, owner, importer, consignee, agent, or other

person or persons so transporting or causing said merchandise to be

transported), between points in the United States, including

Districts, Territories, and possessions thereof embraced within the

coastwise laws, either directly or via a foreign port, or for any

part of the transportation, in any other vessel than a vessel built

in and documented under the laws of the United States and owned by

persons who are citizens of the United States, or vessels to which

the privilege of engaging in the coastwise trade is extended by

section 808 of this Appendix or section 22 (!2) of this Act:

Provided, That no vessel of more than 200 gross tons (as measured

under chapter 143 of title 46) having at any time acquired the

lawful right to engage in the coastwise trade, either by virtue of

having been built in, or documented under the laws of the United

States, and later sold foreign in whole or in part, or placed under

foreign registry, shall hereafter acquire the right to engage in

the coastwise trade: Provided further, That no vessel which has

acquired the lawful right to engage in the coastwise trade, by

virtue of having been built in or documented under the laws of the

United States, and which has later been rebuilt shall have the

right thereafter to engage in the coastwise trade, unless the

entire rebuilding, including the construction of any major

components of the hull or superstructure of the vessel, is effected

within the United States, its territories (not including trust

territories), or its possessions: Provided further, That this

section shall not apply to merchandise transported between points

within the continental United States, including Alaska, over

through routes heretofore or hereafter recognized by the Surface

Transportation Board for which routes rate tariffs have been or

shall hereafter be filed with the Board when such routes are in

part over Canadian rail lines and their own or other connecting

water facilities: Provided further, That this section shall not

become effective upon the Yukon River until the Alaska Railroad

shall be completed and the Secretary of Transportation shall find

that proper facilities will be furnished for transportation by

persons citizens of the United States for properly handling the

traffic: Provided further, That this section shall not apply to the

transportation of merchandise loaded on railroad cars or to motor

vehicles with or without trailers, and with their passengers or

contents when accompanied by the operator thereof, when such

railroad cars or motor vehicles are transported in any railroad car

ferry operated between fixed termini on the Great Lakes as a part

of a rail route, if such car ferry is owned by a common carrier by

water and operated as part of a rail route with the approval of the

Surface Transportation Board, and if the stock of such common

carrier by water, or its predecessor, was owned or controlled by a

common carrier by rail prior to June 5, 1920, and if the stock of

the common carrier owning such car ferry is, with the approval of

the Board, now owned or controlled by any common carrier by rail

and if such car ferry is built in and documented under the laws of

the United States: Provided further, That upon such terms and

conditions as the Secretary of the Treasury by regulation may

prescribe, and, if the transporting vessel is of foreign registry,

upon a finding by the Secretary of the Treasury, pursuant to

information obtained and furnished by the Secretary of State, that

the government of the nation of registry extends reciprocal

privileges to vessels of the United States, this section shall not

apply to the transportation by vessels of the United States not

qualified to engage in the coastwise trade, or by vessels of

foreign registry, of (a) empty cargo vans, empty lift vans, and

empty shipping tanks, (b) equipment for use with cargo vans, lift

vans, or shipping tanks, (c) empty barges specifically designed for

carriage aboard a vessel and equipment, excluding propulsion

equipment, for use with such barges, and (d) any empty instrument

for international traffic exempted from application of the customs

laws by the Secretary of the Treasury pursuant to the provisions of

section 1322(a) of title 19, if the articles described in clauses

(a) through (d) are owned or leased by the owner or operator of the

transporting vessel and are transported for his use in handling his

cargo in foreign trade; and (e) stevedoring equipment and material,

if such equipment and material is owned or leased by the owner or

operator of the transporting vessel, or is owned or leased by the

stevedoring company contracting for the lading or unlading of that

vessel, and is transported without charge for use in the handling

of cargo in foreign trade: Provided further, That upon such terms

and conditions as the Secretary of the Treasury by regulation may

prescribe, and, if the transporting vessel is of foreign registry,

upon his finding, pursuant to information furnished by the

Secretary of State, that the government of the nation of registry

extends reciprocal privileges to vessels of the United States, the

Secretary of the Treasury may suspend the application of this

section to the transportation of merchandise between points in the

United States (excluding transportation between the continental

United States and noncontiguous states, districts, territories, and

possessions embraced within the coastwise laws) which, while moving

in the foreign trade of the United States, is transferred from a

non-self-propelled barge certified by the owner or operator to be

specifically designed for carriage aboard a vessel and regularly

carried aboard a vessel in foreign trade to another such barge

owned or leased by the same owner or operator, without regard to

whether any such barge is under foreign registry or qualified to

engage in the coastwise trade: Provided further, That until April

1, 1984, and notwithstanding any other provisions of this section,

any vessel documented under the laws of the United States and owned

by persons who are citizens of the United States may, when operated

upon a voyage in foreign trade, transport merchandise in cargo

vans, lift vans, and shipping-tanks between points embraced within

the coastwise laws for transfer to or when transferred from another

vessel or vessels, so documented and owned, of the same operator

when the merchandise movement has either a foreign origin or a

foreign destination; but this proviso (1) shall apply only to

vessels which that same operator owned, chartered or contracted for

the construction of prior to November 16, 1979, and (2) shall not

apply to movements between points in the contiguous United States

and points in Hawaii, Alaska, the Commonwealth of Puerto Rico and

United States territories and possessions. For the purposes of this

section, after December 31, 1983, or after such time as an

appropriate vessel has been constructed and documented as a vessel

of the United States, the transportation of hazardous waste, as

defined in section 6903(5) of title 42, from a point in the United

States for the purpose of the incineration at sea of that waste

shall be deemed to be transportation by water of merchandise

between points in the United States: Provided, however, That the

provisions of this sentence shall not apply to this transportation

when performed by a foreign-flag ocean incineration vessel, owned

by or under construction on May 1, 1982, for a corporation wholly

owned by a citizen of the United States; the term "citizen of the

United States", as used in this proviso, means a corporation as

defined in section 802(a) and (b) of this Appendix. The

incineration equipment on these vessels shall meet all current

United States Coast Guard and Environmental Protection Agency

standards. These vessels shall, in addition to any other

inspections by the flag state, be inspected by the United States

Coast Guard, including drydock inspections and internal

examinations of tanks and void spaces, as would be required of a

vessel of the United States. Satisfactory inspection shall be

certified in writing by the Secretary of Transportation. Such

inspections may occur concurrently with any inspections required by

the flag state or subsequent to but no more than one year after the

initial issuance or the next scheduled issuance of the Safety of

Life at Sea Safety Construction Certificate. In making such

inspections, the Coast Guard shall refer to the conditions

established by the initial flag state certification as the basis

for evaluating the current condition of the hull and

superstructure. The Coast Guard shall allow the substitution of an

equivalent fitting, material, appliance, apparatus, or equipment

other than that required for vessels of the United States if the

Coast Guard has been satisfied that fitting, material, appliance,

apparatus, or equipment is at least as effective as that required

for vessels of the United States (!3) Provided further, That for

the purposes of this section, supplies aboard United States

documented fish processing vessels, which are necessary and used

for the processing or assembling of fishery products aboard such

vessels, shall be considered ship's equipment and not merchandise:

Provided further, That for purposes of this section, the term

"merchandise" includes valueless material: Provided further, That

this section applies to the transportation of valueless material or

any dredged material regardless of whether it has commercial value,

from a point or place in the United States or a point or place on

the high seas within the Exclusive Economic Zone as defined in the

Presidential Proclamation of March 10, 1983, to another point or

place in the United States or a point or place on the high seas

within that Exclusive Economic Zone: Provided further, That the

transportation of any platform jacket in or on a launch barge

between two points in the United States, at one of which there is

an installation or other device within the meaning of section

1333(a) of title 43, shall not be deemed transportation subject to

this section if the launch barge has a launch capacity of 12,000

long tons or more, was built as of June 7, 1988, and is documented

under the laws of the United States, and the platform jacket cannot

be transported on and launched from a launch barge of lesser launch

capacity that is identified by the Secretary of Transportation and

is available for such transportation; and for the purposes of this

proviso, the term "platform jacket" includes any type of offshore

drilling or production structure or components, including platform

jackets, tension leg or SPAR platform superstructures (including

the deck, drilling rig and support utilities, and supporting

structure) hull (including vertical legs and connecting pontoons or

vertical cylinder), tower and base sections of a platform jacket,

jacket structures, and deck modules (known as "topsides") of a

hydrocarbon development and production platform.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 27, 41 Stat. 999; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; Apr. 11, 1935, ch. 58, 49 Stat. 154;

July 2, 1935, ch. 355, 49 Stat. 442; June 29, 1936, ch. 858, title

II, Sec. 204, title IX, Sec. 904, 49 Stat. 1987, 2016; 1950 Reorg.

Plan No. 21, Sec. 204, eff. May 24, 1950, 15 F.R. 3178, 64 Stat.

1276; July 14, 1956, ch. 600, Sec. 1, 70 Stat. 544; Pub. L. 85-508,

Sec. 27(a), July 7, 1958, 72 Stat. 351; Pub. L. 86-583, Sec. 1,

July 5, 1960, 74 Stat. 321; Pub. L. 89-194, Sept. 21, 1965, 79

Stat. 823; Pub. L. 90-474, Aug. 11, 1968, 82 Stat. 700; Pub. L.

92-163, Sec. 1, Nov. 23, 1971, 85 Stat. 486; Pub. L. 95-410, title

II, Sec. 213, Oct. 3, 1978, 92 Stat. 904; Pub. L. 96-112, Sec. 4,

Nov. 16, 1979, 93 Stat. 848; Pub. L. 97-31, Sec. 12(49), Aug. 6,

1981, 95 Stat. 157; Pub. L. 97-389, title V, Secs. 502, 504, Dec.

29, 1982, 96 Stat. 1954, 1956; Pub. L. 100-239, Sec. 6(c)(1), Jan.

11, 1988, 101 Stat. 1782; Pub. L. 101-329, Sec. 1(a), June 7, 1988,

102 Stat. 588; Pub. L. 102-587, title V, Sec. 5501(b), Nov. 4,

1992, 106 Stat. 5085; Pub. L. 104-324, title VII, Sec. 747, title

XI, Sec. 1120(e), Oct. 19, 1996, 110 Stat. 3943, 3978; Pub. L.

107-295, title II, Sec. 213(c), Nov. 25, 2002, 116 Stat. 2100.)

-REFTEXT-

REFERENCES IN TEXT

Section 22 of this Act, referred to in text, is section 22 of act

June 5, 1920, which was classified to section 13 of former Title

46, Shipping, and was repealed by Pub. L. 100-710, title II, Sec.

202(4), Nov. 23, 1988, 102 Stat. 4753.

The Presidential Proclamation of March 10, 1983, referred to in

text, is Proc. No. 5030, Mar. 10, 1983, 48 F.R. 10605, which is set

out as a note under section 1453 of Title 16, Conservation.

-MISC1-

PRIOR PROVISIONS

Provisions similar to those in this section were contained in act

Feb. 17, 1898, ch. 26, Sec. 1, 30 Stat. 248, which was classified

to section 290 of this Appendix.

AMENDMENTS

2002 - Pub. L. 107-295 in proviso pertaining to transportation by

launch barge, inserted before period at end "; and for the purposes

of this proviso, the term 'platform jacket' includes any type of

offshore drilling or production structure or components, including

platform jackets, tension leg or SPAR platform superstructures

(including the deck, drilling rig and support utilities, and

supporting structure) hull (including vertical legs and connecting

pontoons or vertical cylinder), tower and base sections of a

platform jacket, jacket structures, and deck modules (known as

'topsides') of a hydrocarbon development and production platform".

1996 - Pub. L. 104-324 in first proviso inserted "of more than

200 gross tons (as measured under chapter 143 of title 46)" after

"no vessel", in third proviso substituted "Surface Transportation

Board" for "Interstate Commerce Commission" and "the Board" for

"said Commission", and in fifth proviso substituted "Surface

Transportation Board" for "Interstate Commerce Commission" the

first place appearing and "Board" for "Interstate Commerce

Commission" the second place appearing.

1992 - Pub. L. 102-587, in first sentence, substituted "No

merchandise, including merchandise owned by the United States

Government, a State (as defined in section 2101 of the title 46),

or a subdivision of a State," for "No merchandise".

1988 - Pub. L. 100-329 inserted provision relating to alternate

determination of penalty as based on actual cost of the

transportation, and provisos defining term "merchandise" to include

valueless material, making section applicable to valueless or

dredged material, and relating to transportation of any platform

jacket in or on a launch barge.

Pub. L. 100-239 struck out "of more than five hundred gross tons"

after "no vessel" in second proviso.

1982 - Pub. L. 97-389, Sec. 502, inserted provision relating to

the transportation of hazardous waste, the proviso thereto for

foreign-flag transport, and further provisions relating to

standards for and the inspection of vessels engaged in such

transport.

Pub. L. 97-389, Sec. 504, inserted proviso defining supplies

aboard United States fish processing vessels used for fishery

products manufacture as ship's equipment.

1981 - Pub. L. 97-31 in fourth proviso substituted "Secretary of

Transportation" for "Secretary of Commerce". For prior transfers of

functions, see Transfer of Functions note below.

1979 - Pub. L. 96-112 inserted proviso that, until April 1, 1984,

and notwithstanding any other provisions of this section, any

vessel documented under the laws of the United States and owned by

citizens of the United States could, when operated upon a voyage in

foreign trade, transport merchandise in cargo vans, lift vans, and

shipping-tanks between points embraced within the coastwise laws

for transfer to or when transferred from another vessel or vessels,

so documented and owned, of the same operator when the merchandise

movement had either a foreign origin or a foreign destination, but

that the proviso would apply only to vessels which that same

operator owned, chartered or contracted for the construction of

prior to Nov. 16, 1979, and would not apply to movements between

points in the contiguous United States and points in Hawaii,

Alaska, the Commonwealth of Puerto Rico and United States

territories and possessions.

1978 - Pub. L. 95-410, in first sentence, substituted "forfeiture

of merchandise" for "forfeiture thereof" and inserted parenthetical

text for forfeiture of a monetary amount up to the value of the

merchandise as determined by the Secretary of the Treasury to be

recovered from any consignor, seller, owner, importer, consignee,

agent, or other person or persons transporting or causing the

merchandise to be transported.

1971 - Pub. L. 92-163 inserted "and equipment, excluding

propulsion equipment, for use with such barges" after "(c) empty

barges specifically designed for carriage aboard a vessel" and

inserted reciprocity proviso reciprocally permitting foreign-flag

specialty barges, specifically designed and regularly carried

aboard a barge carrying ship in foreign trade to carry export or

import cargo between United States points which has been

transferred from one such barge to another.

1968 - Pub. L. 90-474 in final proviso designated existing

provisions relating to empty cargo vans, empty lift vans, and empty

shipping tanks as cl. (a), added cls. (b) to (d), saved modifying

provisions relating to empty cargo vans, empty lift vans, and empty

shipping tanks so as to render them applicable to cls. (a) to (d),

and added cl. (e).

1965 - Pub. L. 89-194 inserted proviso that section should not

apply to the transportation of empty cargo vans, lift vans, and

shipping tanks by vessels of the United States not qualified to

engage in the coastwise trade or by vessels of foreign registry so

long as such vans or tanks are owned or leased by the owner or

operator of the transporting vessels and are being transported for

use in the carriage of goods in foreign trade.

1960 - Pub. L. 86-583 prohibits the operation in the coastwise

trade of a rebuilt vessel unless the entire rebuilding, including

the construction of any major components of the hull and

superstructure of the vessel, is accomplished in the United States.

1958 - Pub. L. 85-508 substituted "including Alaska" for

"excluding Alaska".

1956 - Act July 14, 1956, inserted proviso to prohibit the

operation in coastwise trade of vessels of more than 500 gross tons

which have been rebuilt outside the United States.

1935 - Act July 2, 1935, amended section generally.

Act Apr. 11, 1935, inserted fifth proviso.

EFFECTIVE DATE OF 1988 AMENDMENT

Section 6(c)(2) of Pub. L. 100-239 provided that: "Paragraph (1)

of this subsection [amending this section] does not apply to a

vessel under contract to be purchased or rebuilt entered into

before July 28, 1987, if that vessel is rebuilt before July 28,

1990."

EFFECTIVE DATE OF 1960 AMENDMENT

Section 4 of Pub. L. 86-583 provided that: "This Act [amending

this section and section 883a of this Appendix] shall be effective

from the time of enactment [July 5, 1960] hereof: Provided,

however, That no vessel shall be deemed to have lost its coastwise

privileges as a result of the amendments made by this Act if it is

rebuilt within the United States, its Territories (not including

trust territories), or its possessions under a contract executed

before such date of enactment and if the work of rebuilding is

commenced not later than twenty-four months after such date of

enactment."

EFFECTIVE DATE OF 1956 AMENDMENT

Section 4 of act July 14, 1956, provided that: "This Act

[amending this section and enacting sections 883a and 883b of this

Appendix] shall be effective from the date of enactment [July 14,

1956] hereof: Provided, however, That no vessel shall be deemed to

have lost its coastwise privileges hereunder if it is rebuilt under

a contract entered into before such date of enactment and if the

work of rebuilding is commenced not later than six months after

such date of enactment."

REGULATIONS

Section 3 of Pub. L. 86-583 provided that: "The Secretary of the

Treasury shall prescribe such regulations as may be necessary to

carry out the purposes of this Act [amending sections 883 and 883a

of this Appendix]."

REPEALS

For effect of subtitle IV (Sec. 10101 et seq.) of Title 49,

Transportation, see note set out preceding section 801 of this

Appendix.

-TRANS-

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.

Functions conferred upon Secretary of Commerce by provisions of

Reorg. Plan No. 21 of 1950 to remain vested in Secretary except to

extent inconsistent with sections 101(b) and 104(b) of Reorg. Plan

No. 7 of 1961. See section 202 of Reorg. Plan No. 7 of 1961, set

out under section 1111 of this Appendix.

"Secretary of Commerce" substituted in text for "United States

Maritime Commission" on authority of Reorg. Plan No. 21 of 1950,

set out under section 1111 of this Appendix, section 306 of which

abolished United States Maritime Commission and section 204 of

which transferred to Secretary of Commerce such Commission's

functions not transferred to Federal Maritime Board.

Previously, "United States Maritime Commission" substituted for

"Shipping Board". For dissolution of Board and transfer of

functions to United States Maritime Commission, see Ex. Ord. No.

6166 and act June 29, 1936. Ex. Ord. No. 6166 is set out as a note

under section 901 of Title 5, Government Organization and

Employees. Executive and administrative functions of United States

Maritime Commission transferred to Chairman thereof by Reorg. Plan

No. 6 of 1949, eff. Aug. 20, 1949, 14 F.R. 5228, 63 Stat. 1069, set

out under section 1111 of this Appendix.

-MISC2-

CERTIFICATE OF DOCUMENTATION FOR LIQUIFIED GAS TANKER

Section 1120(f) of Pub. L. 104-324 provided that:

"Notwithstanding section 27 of the Merchant Marine Act, 1920 (46

App. U.S.C. 883), section 12106 of title 46, United States Code,

section 506 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1156)

and any agreement with the United States Government, the Secretary

of Transportation may issue a certificate of documentation with a

coastwise endorsement for a vessel to transport liquified natural

gas or liquified petroleum gas to the Commonwealth of Puerto Rico

from other ports in the United States, if the vessel -

"(1) is a foreign built vessel that was built prior to the date

of enactment of this Act [Oct. 19, 1996]; or

"(2) is documented under chapter 121 of title 46, United States

Code, before the date of enactment of this Act, even if the

vessel is placed under a foreign registry and subsequently

redocumented under that chapter for operation under this

section."

NONAPPLICABILITY OF PUB. L. 100-329 TO CERTAIN VESSELS

Section 5501(c) of Pub. L. 102-587 provided that: "The Act of

June 7, 1988 (Public Law 100-329; 102 Stat. 588) [amending this

section and section 316 of this Appendix, and enacting provisions

set out above and below], including the amendments made by that

Act, does not apply to a vessel -

"(1) engaged in the transportation of valueless material or

valueless dredged material; and

"(2) owned or chartered by a corporation that had on file with

the Secretary of Transportation on August 1, 1989, the

certificate specified in section 27A of the Merchant Marine Act,

1920 (46 App. U.S.C. 883-1)."

LAUNCH BARGE INVENTORY; PURPOSE; DEVELOPMENT, MAINTENANCE, AND

UPDATING; CONTENTS; PUBLICATION OF INITIAL AND CURRENT INVENTORY

Section 1(b) of Pub. L. 100-329 provided that:

"(1) For purposes of interpreting the proviso pertaining to

transportation of any platform jacket by launch barge, as added by

subsection (a) of this section to section 27 of the Merchant Marine

Act, 1920 (46 App. U.S.C. 883), the Secretary of Transportation

shall develop, maintain, and periodically update an inventory of

launch barges with less than a launch capacity of 12,000 long tons

that are qualified to engage in the coastwise trade. Each launch

barge listed on such inventory shall be identified by its name,

launch capacity, length, beam, depth, and other distinguishing

characteristics. For each such launch barge, the name and address

of the person to whom inquiries may be made shall also be included

on the inventory. A launch barge not listed on such inventory shall

be deemed not to be 'a launch barge of lesser launch capacity

identified by the Secretary of Transportation' within the meaning

of such proviso to section 27 of the Merchant Marine Act, 1920.

"(2) Not later than 15 days after the date of enactment of this

Act [June 7, 1988], the Secretary of Transportation shall publish

in the Federal Register an initial inventory of launch barges

developed and maintained in accordance with paragraph (1) of this

subsection.

"(3) Not later than 60 days after the date of enactment of this

Act [June 7, 1988], and periodically thereafter, the Secretary

shall publish in the Federal Register a current inventory of launch

barges developed, maintained, and updated in accordance with

paragraph (1) of this subsection."

TRANSPORTATION OF MUNICIPAL SEWAGE SLUDGE

Section 3 of Pub. L. 100-329 provided that: "Notwithstanding the

provisions of section 1 of this Act [amending this section and

enacting provisions set out as a note above], a vessel may

transport municipal sewage sludge if that vessel, regardless of

where it was built, is documented under the laws of the United

States and, on the date of enactment of this Act [June 7, 1988],

that vessel -

"(1) is in use by a municipality for the transportation of

sewage sludge; or

"(2) is under contract with a municipality for the

transportation of sewage sludge."

VESSEL UNDER CONTRACT WITH MUNICIPALITY FOR TRANSPORTATION OF

SEWAGE SLUDGE: APPLICABILITY OF PROVISIONS

Section 4 of Pub. L. 100-329 provided that: "For purposes of the

first paragraph of section 805(a) of the Merchant Marine Act, 1936

(46 App. U.S.C. 1223(a)), a vessel described in section 3(2) of

this Act [set out as a note above] is not a vessel engaged in

domestic intercoastal or coastwise service, but the prohibitions in

the second paragraph apply to that vessel."

CERTIFICATE OF DOCUMENTATION TO VESSEL TRANSPORTING VALUELESS

MATERIAL IN COASTWISE TRADE, OR DREDGED MATERIAL, WHETHER OR NOT OF

VALUE; ISSUANCE, ENDORSEMENT, ETC.

Section 5 of Pub. L. 100-329 provided that: "Notwithstanding the

provisions of section 1 of this Act [amending this section and

enacting provisions set out as a note above], the Secretary of the

department in which the Coast Guard is operating may issue a

certificate of documentation under section 12106 of title 46,

United States Code, to a vessel that -

"(1) is engaged in transporting only valueless material in the

coastwise trade or transporting dredged material, whether or not

of value, (A) from a point or place on the high seas within the

Exclusive Economic Zone as defined in the Presidential

Proclamation of March 10, 1983 [16 U.S.C. 1453 note], to a point

or place in the United States or to another point or place on the

high seas within such Exclusive Economic Zone or (B) from a point

or place within the United States to a point or place on the high

seas within such Exclusive Economic Zone;

"(2) had a certificate of documentation issued under section

12105 of that title on October 1, 1987;

"(3) had been sold foreign or placed under a foreign registry

before that certificate was issued; and

"(4) was built in the United States;

except that such certificate of documentation shall be endorsed to

restrict the use of such vessel to the transportation of valueless

material in the coastwise trade, and to the transportation of

dredged material, whether or not of value, (i) from a point or

place on the high seas within such Exclusive Economic Zone to a

point or place in the United States or to another point or place on

the high seas within such Exclusive Economic Zone, or (ii) from a

point or place within the United States to a point or place on the

high seas within such Exclusive Economic Zone."

TRANSPORTATION OF MERCHANDISE OR PASSENGERS WITHIN ALASKA BY

FOREIGN BUILT HOVERCRAFT

Pub. L. 95-599, title I, Sec. 146, Nov. 6, 1978, 92 Stat. 2714,

provided that:

"(a) Effective during the five-year period beginning on the date

of enactment of this Act [Nov. 6, 1978], nothing in section 27 of

the Merchant Marine Act, 1920 [this section], or any other

provision of law restricting the coastwise trade to vessels of the

United States shall prohibit the transportation within the State of

Alaska of merchandise or passengers by foreign built hovercraft.

"(b) For the purpose of this section the term 'hovercraft' means

a vehicle which travels over land or water in a cushion of air

generated by such vehicle."

REPORT TO CONGRESS REGARDING EFFECT OF RECIPROCITY PROVISIONS

Section 2 of Pub. L. 92-163 authorized the Secretary of the

Treasury, for a period of five years following Nov. 23, 1971, to

make a report at the beginning of each regular session to the

Congress regarding activities under Pub. L. 92-163, including but

not limited to the extent to which foreign governments are

extending reciprocal privileges to the vessels of the United

States.

ADMISSION OF ALASKA AS STATE

Effectiveness of amendment of this section by Pub. L. 85-508 was

dependent upon the admission of Alaska into the Union under section

8(b) of Pub. L. 85-508. Admission was accomplished Jan. 3, 1959, on

issuance of Proc. No. 3269, Jan. 3, 1959, 24 F.R. 81, 73 Stat. c16,

as required by sections 1 and 8(c) of Pub. L. 85-508. See notes

preceding section 21 of Title 48, Territories and Insular

Possessions.

JURISDICTION OVER COMMON CARRIERS BETWEEN PORTS IN HAWAII AND OTHER

PORTS

Pub. L. 86-3, Sec. 18(a), Mar. 18, 1959, 73 Stat. 12, as amended

Pub. L. 86-624, Sec. 46, July 12, 1960, 74 Stat. 423, provided

that: "Nothing contained in this Act shall be construed as

depriving the Federal Maritime Board [now Secretary of

Transportation] of the exclusive jurisdiction heretofore conferred

on it over common carriers engaged in transportation by water

between any port in the State of Hawaii and other ports in the

United States, or possessions, or as conferring on the Interstate

Commerce Commission jurisdiction over transportation by water

between any such ports."

[Interstate Commerce Commission abolished and functions of

Commission transferred, except as otherwise provided in Pub. L.

104-88, to Surface Transportation Board effective Jan. 1, 1996, by

section 702 of Title 49, Transportation, and section 101 of Pub. L.

104-88, set out as a note under section 701 of Title 49. References

to Interstate Commerce Commission deemed to refer to Surface

Transportation Board, a member or employee of the Board, or

Secretary of Transportation, as appropriate, see section 205 of

Pub. L. 104-88, set out as a note under section 701 of Title 49.]

JURISDICTION OVER COMMON CARRIERS BETWEEN PORTS IN ALASKA AND OTHER

PORTS

Section 27(b) of Pub. L. 85-508 provided that: "Nothing contained

in this or any other Act shall be construed as depriving the

Federal Maritime Board [now Secretary of Transportation] of the

exclusive jurisdiction heretofore conferred on it over common

carriers engaged in transportation by water between any port in the

State of Alaska and other ports in the United States, its

Territories or possessions, or as conferring upon the Interstate

Commerce Commission jurisdiction over transportation by water

between any such ports."

[Interstate Commerce Commission abolished and functions of

Commission transferred, except as otherwise provided in Pub. L.

104-88, to Surface Transportation Board effective Jan. 1, 1996, by

section 702 of Title 49, Transportation, and section 101 of Pub. L.

104-88, set out as a note under section 701 of Title 49. References

to Interstate Commerce Commission deemed to refer to Surface

Transportation Board, a member or employee of the Board, or

Secretary of Transportation, as appropriate, see section 205 of

Pub. L. 104-88, set out as a note under section 701 of Title 49.]

TRANSPORTATION OF LUMBER TO PUERTO RICO

Pub. L. 87-877, Sec. 4, Oct. 24, 1962, 76 Stat. 1201, allowed for

suspension of this section during a 1-year period beginning Oct.

24, 1962, with respect to transportation of lumber to Puerto Rico

from ports or terminal areas in the United States if Secretary of

Commerce determined that no domestic vessel was reasonably

available.

TRANSPORTATION OF COAL BETWEEN POINTS IN UNITED STATES IN CANADIAN

VESSELS

Act Aug. 7, 1956, ch. 1028, 70 Stat. 1090, permitted Canadian

vessels to transport coal to Ogdensburg, N.Y., from other points in

the United States, on the Great Lakes, or their connecting or

tributary waters for a period ending June 30, 1957.

TRANSPORTATION OF IRON ORE IN VESSELS OF CANADIAN REGISTRY

Act June 24, 1952, ch. 458, 66 Stat. 156, provided for the

transportation of iron ore and terminated on Dec. 31, 1952. Similar

provisions were contained in the following acts:

Mar. 29, 1951, ch. 25, 65 Stat. 28.

June 30, 1950, ch. 427, Sec. 5, 64 Stat. 309.

Mar. 28, 1949, ch. 36, 63 Stat. 16.

Mar. 24, 1948, ch. 144, 62 Stat. 84.

Jan. 27, 1942, ch. 21, 56 Stat. 19, as amended Aug. 1, 1942, ch.

544, 56 Stat. 735, and repealed July 25, 1947, ch. 327, Sec. 2b, 61

Stat. 451, eff. six months after July 25, 1947.

May 31, 1941, ch. 158, 55 Stat. 236.

TRANSPORTATION OF GRAIN BETWEEN UNITED STATES PORTS ON GREAT LAKES

BY VESSELS OF CANADIAN REGISTRY DURING 1951

Act Oct. 10, 1951, ch. 459, 65 Stat. 371, provided for the

transportation of grain and terminated on Dec. 31, 1951.

TRANSPORTATION OF MERCHANDISE BETWEEN HYDER, ALASKA, AND UNITED

STATES

Act July 30, 1947, ch. 387, 61 Stat. 632, as amended June 28,

1948, ch. 693, 62 Stat. 1067, provided for the transportation of

merchandise between Hyder, Alaska, and United States and terminated

on June 30, 1949.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 292, 316, 446b, 883-1 of

this Appendix; title 19 section 1554; title 46 sections 3704,

12101, 12106, 14305.

-FOOTNOTE-

(!1) So in original. The word "the" probably should not appear.

(!2) See References in Text note below.

(!3) So in original. Probably should be followed by a colon.

-End-

-CITE-

46 USC APPENDIX Sec. 883-1 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 883-1. Corporation as citizen; fisheries and transportation of

merchandise or passengers between points in United States; parent

and subsidiary corporations; domestic built vessels; certificate;

surrender of documents on change in status

-STATUTE-

Notwithstanding any other provision of law, a corporation

incorporated under the laws of the United States or any State,

Territory, District, or possession thereof, shall be deemed to be a

citizen of the United States for the purposes of and within the

meaning of that term as used in sections 316, 808, 835, and 883 of

this Appendix, and the laws relating to the documentation of

vessels, if it is established by a certificate filed with the

Secretary of the Treasury as hereinafter provided, that -

(a) a majority of the officers and directors of such

corporation are citizens of the United States;

(b) not less than 90 per centum of the employees of such

corporation are residents of the United States;

(c) such corporation is engaged primarily in a manufacturing or

mineral industry in the United States or any Territory, District,

or possession thereof;

(d) the aggregate book value of the vessels owned by such

corporation does not exceed 10 per centum of the aggregate book

value of the assets of such corporation; and

(e) such corporation purchases or produces in the United

States, its Territories, or possessions not less than 75 per

centum of the raw materials used or sold in its operations

but no vessel owned by any such corporation shall engage in the

fisheries or in the transportation of merchandise or passengers for

hire between points in the United States, including Territories,

Districts, and possessions thereof, embraced within the coastwise

laws, except as a service for a parent or subsidiary corporation

and except when such vessel is under demise or bareboat charter at

prevailing rates for use otherwise than in the domestic

noncontiguous trades from any such corporation to a carrier subject

to jurisdiction under subchapter II of chapter 135 of title 49,

which otherwise qualifies as a citizen under sections 802 and 803

of this Appendix, and which is not connected, directly or

indirectly, by way of ownership or control with such corporation.

As used herein (1), the term "parent" means a corporation which

controls, directly or indirectly, at least 50 per centum of the

voting stock of such corporation, and (2), the term "subsidiary"

means a corporation not less than 50 per centum of the voting stock

of which is controlled, directly or indirectly, by such corporation

or its parent, but no corporation shall be deemed to be a "parent"

or "subsidiary" hereunder unless it is incorporated under the laws

of the United States, or any State, Territory, District, or

possession thereof, and there has been filed with the Secretary of

the Treasury a certificate as hereinafter provided.

Vessels built in the United States and owned by a corporation

meeting the conditions hereof which are non-self-propelled or

which, if self-propelled, are of less than five hundred gross tons

as measured under section 14502 of title 46, or an alternate

tonnage measured under section 14302 of that title as prescribed by

the Secretary under section 14104 of that title, shall be entitled

to documentation under the laws of the United States, and except as

restricted by this section, shall be entitled to engage in the

coastwise trade and, together with their owners or masters, shall

be entitled to all the other benefits and privileges and shall be

subject to the same requirements, penalties, and forfeitures as may

be applicable in the case of vessels built in the United States and

otherwise documented or exempt from documentation under the laws of

the United States.

A corporation seeking hereunder to document a vessel under the

laws of the United States or to operate a vessel exempt from

documentation under the laws of the United States shall file with

the Secretary of the Treasury of the United States a certificate

under oath, in such form and at such times as may be prescribed by

him, executed by its duly authorized officer or agent, establishing

that such corporation complies with the conditions of this section

above set forth. A "parent" or "subsidiary" of such corporation

shall likewise file with the Secretary of the Treasury a

certificate under oath, in such form and at such time as may be

prescribed by him, executed by its duly authorized officer or

agent, establishing that such "parent" or "subsidiary" complies

with the conditions of this section above set forth, before such

corporation may transport any merchandise or passengers for such

parent or subsidiary. If any material matter of fact alleged in any

such certificate which, within the knowledge of the party so

swearing is not true, there shall be a forfeiture of the vessel (or

the value thereof) documented or operated hereunder in respect to

which the oath shall have been made. If any vessel shall transport

merchandise for hire in violation of this section, such merchandise

shall be forfeited to the United States. If any vessel shall

transport passengers for hire in violation of this section, such

vessel shall be subject to a penalty of $200 for each passenger so

transported. Any penalty or forfeiture incurred under this section

may be remitted or mitigated by the Secretary of the Treasury under

the provisions of section 2107(b) of title 46.

Any corporation which has filed a certificate with the Secretary

of the Treasury as provided for herein shall cease to be qualified

under this section if there is any change in its status whereby it

no longer meets the conditions above set forth, and any documents

theretofore issued to it, pursuant to the provisions of this

section, shall be forthwith surrendered by it to the Secretary of

the Treasury.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 27A, as added Pub. L. 85-902, Sept. 2,

1958, 72 Stat. 1736; amended Pub. L. 104-88, title III, Sec.

321(2), Dec. 29, 1995, 109 Stat. 950; Pub. L. 104-324, title VII,

Sec. 706, Oct. 19, 1996, 110 Stat. 3934.)

-COD-

CODIFICATION

In fourth par., "section 2107(b) of title 46" substituted for

"section 7 of title 46, United States Code" on authority of Pub. L.

98-89, Sec. 2(b), Aug. 26, 1983, 97 Stat. 598, section 1 of which

enacted Title 46, Shipping.

-MISC1-

AMENDMENTS

1996 - Pub. L. 104-324, in third par., inserted "as measured

under section 14502 of title 46, or an alternate tonnage measured

under section 14302 of that title as prescribed by the Secretary

under section 14104 of that title," after "five hundred gross

tons".

1995 - Pub. L. 104-88, in first par., substituted "carrier

subject to jurisdiction under subchapter II of chapter 135 of title

49, which otherwise" for "common or contract carrier subject to

part 3 of the Interstate Commerce Act, as amended, which

otherwise".

EFFECTIVE DATE OF 1995 AMENDMENT

Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2

of Pub. L. 104-88, set out as an Effective Date note under section

701 of Title 49, Transportation.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 30 section 1522; title 46

section 14305.

-End-

-CITE-

46 USC APPENDIX Sec. 883a 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 883a. Reports required of United States vessels rebuilt

abroad; penalty for failure to report; mitigation of penalty

-STATUTE-

If any vessel of more than five hundred gross tons as measured

under section 14502 of title 46, or an alternate tonnage measured

under section 14302 of that title as prescribed by the Secretary

under section 14104 of that title documented under the laws of the

United States, or last documented under such laws, is rebuilt, and

any part of the rebuilding, including the construction of major

components of the hull and superstructure of the vessel, is not

effected within the United States, its Territories (not including

trust territories) or its possessions, a report of the

circumstances of such rebuilding shall be made to the Secretary of

the Treasury, upon the first arrival of the vessel thereafter at a

port within the customs territory of the United States, if rebuilt

outside the United States, its Territories (not including trust

territories), or its possessions, or, in any other case, upon

completion of the rebuilding, in accordance with such regulations

as the Secretary may prescribe. If the required report is not made,

the vessel, together with its tackle, apparel, equipment, and

furniture, shall be forfeited, and the master and owner shall each

be liable to a penalty of $200. Any penalty or forfeiture incurred

under this Act may be remitted or mitigated by the Secretary under

the provisions of section 2107(b) of title 46.

-SOURCE-

(July 14, 1956, ch. 600, Sec. 2, 70 Stat. 544; Pub. L. 86-583, Sec.

2, July 5, 1960, 74 Stat. 321; Pub. L. 104-324, title VII, Sec.

707, Oct. 19, 1996, 110 Stat. 3934.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act July 14, 1956, ch. 600,

70 Stat. 544, as amended, which enacted sections 883a, and 883b of

this Appendix, amended section 883 of this Appendix, and enacted

provisions set out as a note under section 883 of this Appendix.

For complete classification of this Act to the Code, see Tables.

-COD-

CODIFICATION

"Section 2107(b) of title 46" substituted in text for "section

5294 of the Revised Statutes of the United States, as amended

(U.S.C., title 46, sec. 7)" on authority of Pub. L. 98-89, Sec.

2(b), Aug. 26, 1983, 97 Stat. 598, section 1 of which enacted Title

46, Shipping.

Section was enacted as part of act July 14, 1956, and not as part

of act June 5, 1920, ch. 250, 41 Stat. 988, known as the Merchant

Marine Act, 1920, which comprises this chapter.

-MISC1-

AMENDMENTS

1996 - Pub. L. 104-324 inserted "as measured under section 14502

of title 46, or an alternate tonnage measured under section 14302

of that title as prescribed by the Secretary under section 14104 of

that title" after "five hundred gross tons".

1960 - Pub. L. 86-583 provided for a report of the rebuilding of

any part of the vessel, including the construction of major

components of the hull and superstructure of the vessel, and for a

report upon completion of the rebuilding in certain cases.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-583 effective July 5, 1960, and effect on

rebuilding contracts executed before such date, see section 4 of

Pub. L. 86-583, set out as a note under section 883 of this

Appendix.

EFFECTIVE DATE

Section effective July 14, 1956, see section 4 of act July 14,

1956, set out as an Effective Date of 1956 Amendment note under

section 883 of this Appendix.

REGULATIONS

Secretary of the Treasury to prescribe regulations to carry out

the purposes of this section, see section 3 of Pub. L. 86-583, set

out as a note under section 883 of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 46 section 14305.

-End-

-CITE-

46 USC APPENDIX Sec. 883b 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 883b. Regulations

-STATUTE-

The Secretary of the Treasury shall prescribe such regulations as

may be necessary to carry out the purposes of this Act.

-SOURCE-

(July 14, 1956, ch. 600, Sec. 3, 70 Stat. 544.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act July 14, 1956, ch. 600,

70 Stat. 544, as amended, which enacted sections 883a, and 883b of

this Appendix, amended section 883 of this Appendix, and enacted

provisions set out as a note under section 883 of this Appendix.

For complete classification of this Act to the Code, see Tables.

-COD-

CODIFICATION

Section was enacted as part of act July 14, 1956, and not as part

of act June 5, 1920, ch. 250, 41 Stat. 988, known as the Merchant

Marine Act, 1920, which comprises this chapter.

-MISC1-

EFFECTIVE DATE

Section effective July 14, 1956, see section 4 of act July 14,

1956, set out as an Effective Date of 1956 Amendment note under

section 883 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 884 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 884. Charges for transportation subject to interstate

transportation provisions

-STATUTE-

No carrier shall charge, collect, or receive for transportation

subject to subtitle IV of title 49 of persons or property, under

any joint rate, fare, or charge, or under any export, import, or

other proportional rate, fare, or charge, which is based in whole

or in part on the fact that the persons or property affected

thereby is to be transported to, or has been transported from, any

port in a possession or dependency of the United States, or in a

foreign country, by a carrier by water in foreign commerce, any

lower rate, fare, or charge than that charged, collected, or

received by it for the transportation of persons, or of a like kind

of property, for the same distance, in the same direction, and over

the same route, in connection with commerce wholly within the

United States, unless the vessel so transporting such persons or

property is, or unless it was at the time of such transportation by

water, documented under the laws of the United States. Whenever the

Secretary of Transportation is of the opinion, however, that

adequate shipping facilities to or from any port in a possession or

dependency of the United States or a foreign country are not

afforded by vessels so documented he shall certify this fact to the

Surface Transportation Board, and the Board may, by order, suspend

the operation of the provisions of this section with respect to the

rates, fares, and charges for the transportation by rail of persons

and property transported from, or to be transported to such ports,

for such length of time and under such terms and conditions as he

may prescribe in such order, or in any order supplemental thereto.

Such suspension of operation of the provisions of this section may

be terminated by order of the Board whenever the Secretary of

Transportation is of the opinion that adequate shipping facilities

by such vessels to such ports are afforded and shall so certify to

the Board.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 28, 41 Stat. 999; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; June 29, 1936, ch. 858, Secs. 204,

904, 49 Stat. 1987, 2016; Pub. L. 97-31, Sec. 12(50), Aug. 6, 1981,

95 Stat. 157; Pub. L. 104-88, title III, Sec. 321(3), Dec. 29,

1995, 109 Stat. 950.)

-COD-

CODIFICATION

"Subtitle IV of title 49" substituted in text for "the Interstate

Commerce Act [49 U.S.C. 1 et seq.]" on authority of Pub. L. 95-473,

Sec. 3(b), Oct. 17, 1978, 92 Stat. 1466, the first section of which

enacted subtitle IV of Title 49, Transportation.

-MISC1-

AMENDMENTS

1995 - Pub. L. 104-88 struck out "common" after first reference

to "carrier", substituted "Surface Transportation Board" for

"Interstate Commerce Commission", and substituted "Board" for

"commission" wherever appearing.

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" in two places and "he" for "it". For prior

transfers of functions, see Transfer of Functions note below.

EFFECTIVE DATE OF 1995 AMENDMENT

Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2

of Pub. L. 104-88, set out as an Effective Date note under section

701 of Title 49, Transportation.

REPEALS

For effect of subtitle IV (Sec. 10101 et seq.) of Title 49,

Transportation, see note set out preceding section 801 of this

Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

"Maritime Commission", meaning United States Maritime Commission,

substituted in text for "board", meaning United States Shipping

Board. For dissolution of Board and transfer of functions to United

States Maritime Commission, see Ex. Ord. No. 6166 and act June 29,

1936. Ex. Ord. No. 6166 is set out as a note under section 901 of

Title 5, Government Organization and Employees. For subsequent

transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan

No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under

section 1111 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 885 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 885. Association of marine insurance companies; application of

antitrust laws

-STATUTE-

(a) Whenever used in this section -

(1) The term "association" means any association, exchange,

pool, combination, or other arrangement for concerted action; and

(2) The term "marine insurance companies" means any persons,

companies, or associations, authorized to write marine insurance

or reinsurance under the laws of the United States or of a State,

Territory, District, or possession thereof.

(b) Nothing contained in the "antitrust laws" as designated in

section 12 of title 15, shall be construed as declaring illegal an

association entered into by marine insurance companies for the

following purposes: To transact a marine insurance and reinsurance

business in the United States and in foreign countries and to

reinsure or otherwise apportion among its membership the risks

undertaken by such association or any of the component members.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 29, 41 Stat. 1000.)

-End-

-CITE-

46 USC APPENDIX Sec. 887 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 887. Partial invalidity

-STATUTE-

If any provision of this Act is declared unconstitutional or the

application of any provision to certain circumstances be held

invalid, the remainder of such Act and the application of such

provisions to circumstances other than those as to which it is held

invalid shall not be affected thereby.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 36, 41 Stat. 1007.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250,

41 Stat. 988, as amended, known as the Merchant Marine Act, 1920,

which (except for sections repealed or reenacted in Title 46,

Shipping) is classified principally to this chapter. For complete

classification of this Act to the Code, see section 889 of this

Appendix and Tables.

-End-

-CITE-

46 USC APPENDIX Sec. 888 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 888. Definitions

-STATUTE-

When used in this Act, unless the context otherwise requires, the

terms "person", "vessel", "documented under the laws of the United

States", and "citizen of the United States" shall have the meaning

assigned to them by sections 801, 802, and 803 of this Appendix;

and the term "alien" means any person not a citizen of the United

States.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 37, 41 Stat. 1008; Pub. L. 86-327,

Sec. 2, Sept. 21, 1959, 73 Stat. 597.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250,

41 Stat. 988, as amended, known as the Merchant Marine Act, 1920,

which (except for sections repealed or reenacted in Title 46,

Shipping) is classified principally to this chapter. For complete

classification of this Act to the Code, see section 889 of this

Appendix and Tables.

-COD-

CODIFICATION

The words "the term 'commission' means the United States Maritime

Commission;" were omitted preceding the definition of "alien" in

view of Reorg. Plan No. 21 of 1950, Secs. 204, 306, eff. May 24,

1950, 15 F.R. 3178, 64 Stat. 1276, 1277, set out under section 1111

of this Appendix, which abolished United States Maritime Commission

and transferred its functions to Federal Maritime Board and to

Secretary of Commerce.

-MISC1-

AMENDMENTS

1959 - Pub. L. 86-327 substituted "sections 1 and 2 of the

'Shipping Act, 1916,' as amended" for "sections 1 and 2 of the

'Shipping Act, 1916,' as amended by this Act", which sections are

referred to in the text as "sections 801, 802, and 803 of this

Appendix" for purposes of codification.

-TRANS-

TRANSFER OF FUNCTIONS

"Commission", meaning United States Maritime Commission, and

"United States Maritime Commission" substituted in text for "board"

and "Shipping Board", meaning United States Shipping Board,

respectively. For dissolution of Board and transfer of functions to

United States Maritime Commission, see Ex. Ord. No. 6166 and act

June 29, 1936. Ex. Ord. No. 6166 is set out as a note under section

901 of Title 5, Government Organization and Employees. Executive

and administrative functions of United States Maritime Commission

transferred to Chairman thereof by Reorg. Plan No. 6 of 1949, eff.

Aug. 20, 1949, 14 F.R. 5228, 63 Stat. 1069 set out under section

1111 of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 46 section 31329.

-End-

-CITE-

46 USC APPENDIX Sec. 889 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24 - MERCHANT MARINE ACT, 1920

-HEAD-

Sec. 889. Short title

-STATUTE-

This Act may be cited as the Merchant Marine Act, 1920.

-SOURCE-

(June 5, 1920, ch. 250, Sec. 39, 41 Stat. 1008.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250,

41 Stat. 988, as amended, known as the Merchant Marine Act, 1920,

which (except for sections repealed or reenacted in Title 46,

Shipping) is classified principally to this chapter. For complete

classification of this Act to the Code, see Tables.

-End-

-CITE-

46 USC APPENDIX CHAPTER 24A - MERCHANT MARINE

ACT, 1928 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-MISC1-

Sec.

891. Declaration of policy.

891b. Vessels of Secretary; remodeling and improving.

891c. Replacement vessels.

891u. Definitions.

891v. Reaffirmation of steamship line policy.

891w. Ship operations; allocations.

891x. Short title.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in section 1114 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 891 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891. Declaration of policy

-STATUTE-

The policy and the primary purpose declared in section 861 of

this Appendix are confirmed.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 1, 45 Stat. 689.)

-End-

-CITE-

46 USC APPENDIX Sec. 891b 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891b. Vessels of Secretary; remodeling and improving

-STATUTE-

In addition to his power to recondition and repair vessels under

section 871 of this Appendix, the Secretary of Transportation may

remodel and improve vessels owned by the United States and in his

possession or under his control, so as to equip them adequately for

competition in the foreign trade of the United States. Any vessel

so remodeled or improved shall be documented under the laws of the

United States and shall remain documented under such laws for not

less than five years from the date of the completion of the

remodeling or improving and so long as there remains due the United

States any money or interest on account of such vessel, and during

such period it shall be operated only on voyages which are not

exclusively coastwise.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 202, 45 Stat. 690; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, Sec.

204, title IX, Sec. 904, 49 Stat. 1987, 2016; Pub. L. 97-31, Sec.

12(51), Aug. 6, 1981, 95 Stat. 157.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" and "his" for "its" in three places. For prior

transfers of functions, see Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

"United States Maritime Commission" substituted in text for

"board", meaning United States Shipping Board. For dissolution of

Board and transfer of functions to United States Maritime

Commission, see Ex. Ord. No. 6166 and act June 29, 1936. Ex. Ord.

No. 6166 is set out as a note under section 901 of Title 5,

Government Organization and Employees. For subsequent transfers of

functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of

1950, and Reorg. Plan No. 7 of 1961, set out under section 1111 of

this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 891c 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891c. Replacement vessels

-STATUTE-

The necessity for the replacement of vessels owned by the United

States and in the possession or under the control of the Secretary

of Transportation and the construction for the Secretary of

Transportation of additional up-to-date cargo, combination cargo

and passenger, and passenger ships, to give the United States an

adequate merchant marine, is recognized, and the Secretary of

Transportation is authorized and directed to present to Congress

from time to time, recommendations setting forth what new vessels

are required for permanent operation under the United States flag

in foreign trade, and the estimated cost thereof, to the end that

Congress may, from time to time, make provision for replacements

and additions. All vessels built for the Secretary of

Transportation shall be built in the United States, and they shall

be planned with reference to their possible usefulness as

auxiliaries to the naval and military services of the United

States.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 203, 45 Stat. 690; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, Sec.

204, title IX, Sec. 904, 49 Stat. 1987, 2016; Pub. L. 97-31, Sec.

12(52), Aug. 6, 1981, 95 Stat. 157.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" in four places. For prior transfers of functions,

see Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

"Commission", meaning United States Maritime Commission,

substituted in text for "board", meaning United States Shipping

Board. For dissolution of Board and transfer of functions to United

States Maritime Commission, see Ex. Ord. No. 6166 and act June 29,

1936. Ex. Ord. No. 6166 is set out as a note under section 901 of

Title 5, Government Organization and Employees. For subsequent

transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan

No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under

section 1111 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 891u 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891u. Definitions

-STATUTE-

(a) When used in this Act, and for the purposes of this Act only,

the words "foreign trade" mean trade between the United States, its

Territories or possessions, or the District of Columbia and a

foreign country: Provided, however, That the loading or the

unloading of cargo, mail, or passengers at any port in any

Territory or possession of the United States shall be construed to

be foreign trade if the stop at such Territory or possession is an

intermediate stop on what would otherwise be a voyage in foreign

trade.

(b) When used in this Act the term "citizen of the United States"

includes a corporation, partnership, or association only if it is a

citizen of the United States within the meaning of sections 802 and

803 of this Appendix.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 703, 45 Stat. 698.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act May 22, 1928, ch. 675,

45 Stat. 689, as amended, known as the Merchant Marine Act, 1928,

which is classified generally to this chapter. For complete

classification of this Act to the Code, see References in Text note

set out under section 891x of this Appendix and Tables.

-End-

-CITE-

46 USC APPENDIX Sec. 891v 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891v. Reaffirmation of steamship line policy

-STATUTE-

The policy and the primary purpose declared in section 866 of

this Appendix are reaffirmed.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 704, 45 Stat. 698.)

-End-

-CITE-

46 USC APPENDIX Sec. 891w 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891w. Ship operations; allocations

-STATUTE-

In the allocations of the operations of the ships, the Secretary

of Transportation shall distribute them as far as possible and

without detriment to the service among the various ports of the

country.

-SOURCE-

(May 22, 1928, ch. 675, Sec. 705, 45 Stat. 698; Ex. Ord. No. 6166,

Sec. 12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, Sec.

204, title IX, Sec. 904, 49 Stat. 1987, 2016; Pub. L. 97-31, Sec.

12(53), Aug. 6, 1981, 95 Stat. 157.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Maritime Commission". For prior transfers of functions, see

Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

"Maritime Commission", meaning United States Maritime Commission,

substituted in text for "board", meaning United States Shipping

Board. For dissolution of Board and transfer of functions to United

States Maritime Commission, see Ex. Ord. No. 6166 and act June 29,

1936. Ex. Ord. No. 6166 is set out as a note under section 901 of

Title 5, Government Organization and Employees. For subsequent

transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan

No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under

section 1111 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 891x 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 24A - MERCHANT MARINE ACT, 1928

-HEAD-

Sec. 891x. Short title

-STATUTE-

This Act may be cited as the "Merchant Marine Act, 1928".

-SOURCE-

(May 22, 1928, ch. 675, Sec. 706, 45 Stat. 698.)

-REFTEXT-

REFERENCES IN TEXT

This Act, referred to in text, means act May 22, 1928, ch. 675,

45 Stat. 689, as amended, which enacted this chapter, and amended

sections 866 and 869 of this Appendix, section 654 of former Title

39, The Postal Service, and sections 870 and 880 of former Title

46, Shipping. For complete classification of this Act to the Code,

see Tables.

-End-

-HEAD-

-CITE-

46 USC APPENDIX CHAPTER 27 - MERCHANT MARINE

ACT, 1936 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

-MISC1-

CHAPTER 27 - MERCHANT MARINE ACT, 1936

-MISC1-

SUBCHAPTER I - DECLARATION OF POLICY

Sec.

1101. Fostering development and maintenance of merchant

marine.

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

1111. Powers and duties of agencies.

(a), (b) Repealed.

(c) Records of meetings; seal; rules and

regulations.

(d) Expenditures.

(e) Officers and employees.

(f) Traveling and subsistence expenses; pay for

military officer on assignment.

1111a. Administrative expenses; limitations.

1112. Operation of property by Secretary.

1114. Transfer of powers; rules and orders.

(a) Transfer of functions, powers, and duties.

(b) Rules and regulations.

(c) Enforcement of orders; penalties for

violations.

1115. Discrimination at ports by carriers by water against

other carriers.

1116. Construction fund.

1116a. Application to obligations against emergency ship

construction fund.

1117. Power to contract; audit of accounts; reports of

Comptroller General.

1118. Reports to Congress.

1119. Authorization of appropriations.

1120. Survey of existing merchant marine for creation of

adequate American-owned fleet.

1121. Investigations, studies, records, etc.

(a) Suitable ocean routes and lines to foreign

ports; vessels and costs of operation.

(b) Bulk cargo carrying services.

(c) Vessels required in proposed routes.

(d) Cost of construction in United States and

abroad.

(e) Relative cost of operation under laws of United

States and foreign countries.

(f) Foreign subsidies.

(g) Shipyards.

(h) Laws applicable to aircraft.

(i) Transportation to foreign ports of cotton,

coal, lumber, and cement.

(j) New designs of vessels; intercoastal and inland

water transportation.

1121-1. Priority loading for vessels engaged in coastwise

transportation of coal; exception, report to

Congress.

1121-2. National Maritime Enhancement Institutes.

(a) Designation by Secretary of Transportation.

(b) Activities.

(c) Submission of applications.

(d) Designation criteria.

(e) Awards.

(f) University transportation research funds.

1122. Maritime problems; cooperation with others; cargo

carriage; recommendations.

(a) Study of maritime problems.

(b) Inducing preferences for American vessels;

construction of super-liners.

(c) Collaboration with owners and builders.

(d) Liaison with other agencies and trade

organizations.

(e) Repealed.

(f) Development and implementation of new methods

of cargo carriage; preferences for cargo

containers.

(g) Recommendations for further legislation.

1122a. Vessel utilization and performance reports; filing;

civil penalty; lien upon vessel; remission or

mitigation of penalty.

1122b. Mobile trade fairs.

(a) Use of United States flag vessels and aircraft

insofar as practicable.

(b) Technical and financial assistance; exceptions.

(c) Use of foreign currencies.

1123. Obsolete tonnage; tramp service.

1124. Witnesses.

(a) Summoning; oaths; production of books and

papers; fees.

(b) Refusal to obey subpena; court orders;

contempt.

1125. Acquisition of vessels.

1125a. Construction, repair, etc., of vessels for Government

agencies.

1126-1. Training of future naval officers under Naval Reserve

Officer Training Corps programs at merchant marine

academies for promotion of maximum integration of

naval and merchant marine seapower of Nation.

SUBCHAPTER III - AMERICAN SEAMEN

1131. Manning and wage scales; subsidy contracts.

(a) Investigation of wages and working conditions;

establishment of wage and manning scales;

incorporation in subsidy contracts.

(b) Subsidy contracts; provisions relative to

officers and crew.

1132. Reemployment rights for certain merchant seamen.

(a) In general.

(b) Time for application.

(c) Certification determination.

(d) Equivalence to Military Selective Service Act

certificate.

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

1151. Subsidy authorized for vessels to be operated in

foreign trade.

(a) Application for subsidy for construction;

conditions precedent to granting.

(b) Submission of plans to Navy Department;

certification of approval.

(c) Application for subsidy for reconstruction or

reconditioning; conditions precedent to

granting; contracts.

1152. Construction of vessels; bids; subsidies.

(a) Approval of bids; contract with bidder;

acceptance of negotiated price; shipyard

records, availability; contract with applicant

or qualified citizen for purchase of vessel.

(b) Basis for fixing subsidy; cost of construction

in foreign yards; annual recomputation and

publication of foreign cost; limitation on

construction differential; report on American

shipbuilding industry.

(c) Terms of sale of vessel to purchaser.

(d) Repealed.

(e) Construction in navy yards; sales to citizens;

terms.

(f) Survey of shipbuilding capability; correction

of inadequacies; reimbursement of certain

vessel construction and delivery expenses.

(g) Sale of vessels acquired by Secretary.

(h) Installation or removal of national defense

features; title to such features.

(i) Plans, specifications, and proposals for

national defense features; certification of

approval.

1153. Documentation of completed vessel under laws of United

States; delivery to purchaser; first mortgage to

secure deferred payments.

1154. Purchase of vessel constructed in accordance with

application for subsidy; bid or negotiated price

basis for subsidy and payments for cost of national

defense features; documentation.

1155. Eligible shipyards; materials; conditions of

contracts; limitation to American shipyards; American

materials, waiver; ability of bidders; filing bids

and data.

1156. Operation of subsidy constructed vessel limited to

foreign trade; repayments to Secretary for

deviations.

1157. Construction of new vessel to replace obsolete;

purchase of old vessel by Secretary; bond of seller

against liens.

1158. Disposition of vessels transferred to Maritime

Administration of Department of Transportation.

1159. Vessels to be operated in domestic trade; terms and

conditions of construction aid and sale to purchaser.

1160. Acquisition of obsolete vessels.

(a) Definitions.

(b) Promotion of construction of new vessels;

allowance on obsolete vessels.

(c) Utility value of new vessel; gross tonnage.

(d) Amount of allowance on obsolete vessel;

determination of amount.

(e) Recognition of gain for income tax purposes;

basis for gain or loss.

(f) Report to Congress.

(g) Use of vessels 25 years old or more.

(h) Repealed.

(i) Exchange of vessels; valuation; scrapping of

traded out vessels.

(j) Placement in national defense reserve fleet of

acquired vessels.

1161. Reserve funds for construction or acquisition of

vessels; taxation.

(a) "New vessel" defined.

(b) Establishment of construction reserve funds.

(c) Recognition of gain for taxation where proceeds

of sale or indemnity for loss deposited in

fund.

(d) Basis for determining gain or loss and for

depreciation of new vessels.

(e) Order, proportions, etc., of deposits and

withdrawals.

(f) Amounts in fund as accumulation of earnings or

profits.

(g) Benefits of section conditioned upon manner and

time of expenditure of deposits.

(h) Authorizations of extensions of time.

(i) Taxation of deposits upon failure of

conditions.

(j) Assessment and collection of deficiency tax.

(k) Taxable years governed by section.

(l) Vessels deemed constructed or acquired by

taxpayers owning stock in corporations

constructing or acquiring vessels.

(m) Definitions.

(n) "Contract for the construction" and

"construction contract" defined.

(o) "Reconstruction and reconditioning" defined.

1162. Limitation on restrictions.

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

PART A - OPERATING-DIFFERENTIAL SUBSIDY PROGRAM

1171. Subsidy authorized for operation of vessels in foreign

trade or in off-season cruises.

(a) Application for subsidy; conditions precedent

to granting.

(b) Statements as to financial interests to

accompany application; penalty for false

statements.

1172. Determination of necessity of subsidy to meet

competition.

1173. Contracts for payment of subsidy.

(a) Authorization of contracts.

(b) Amount of subsidy.

(c) "Collective bargaining costs", "base period

costs", "base period", and "subsidizable wage

costs of United States officers and crews"

defined; determination of collective

bargaining costs and establishment of new base

periods; wage change index.

(d) Foreign wage computation; foreign manning.

(e) Monthly payment of wage subsidy; procedures for

calculation and payment of subsidy on certain

expenses.

(f) Monthly percentage payment of other than wage

subsidy; security for refund of overpayments;

payment of remainder after audit of voyage

accounts.

1174. Additional subsidy; when authorized.

1175. Vessels excluded from subsidy.

(a) Vessels engaged in coastwise or intercoastal

trade; vessels on inland waterways.

(b) Vessels more than 25 years old.

(c) Vessels to be operated in an essential service

served by citizens of United States.

1176. Readjustments; change in service; withdrawal from

service; payment of excess profits; wages, etc.;

American materials.

1177. Capital construction fund.

(a) Agreement rules; persons eligible; replacement,

additional, or reconstructed vessels for

prescribed trade and fishery operations;

amount of deposits, annual limitation;

conditions and requirements for deposits and

withdrawals.

(b) Ceiling on deposits; lessees; "agreement

vessel" defined.

(c) Investment requirements; depositories;

fiduciary requirements; interest-bearing

securities; stock: percentage for domestic

issues, listing and registration, prudent

acquisitions, value and percentage

equilibrium, and treatment of preferred

issues.

(d) Nontaxability of deposits; eligible deposits.

(e) Accounts within fund: capital account, capital

gain account, and ordinary income account;

limitation on capital losses.

(f) Purposes of qualified withdrawals; nonqualified

withdrawal treatment for nonfulfillment of

substantial obligations.

(g) Tax treatment of qualified withdrawals; basis:

reduction.

(h) Tax treatment of nonqualified withdrawals; FIFO

and LIFO bases; interest rate; amounts not

withdrawn after 25 years; highest marginal

rate of tax.

(i) Corporate reorganizations and partnership

changes.

(j) Treatment of existing funds; relation of old to

new fund.

(k) Definitions.

(l) Records; reports; rules and regulations;

termination of agreement upon changes in

regulations with substantial effect on rights

or obligations.

(m) Departmental reports and certification.

1177-1. Small fishing vessel construction reserves.

1177a. Deposits in special reserve fund; excusal; tax

treatment.

1178. Sale or assignment of contract; consent of Secretary;

purchaser subject to terms of contract; rescinding

contract on transfer without consent.

1179. Withholding payment to defaulting contractor.

1180. Vessels eligible to subsidy.

1181. Transfer of vessels to foreign registry on default of

United States.

(a) Application; hearing; grant or denial.

(b) Appeal from denial of application.

(c) Effectiveness of transfer.

1183. Off-season cruises by passenger vessels.

(a) "Passenger vessel" defined.

(b) Authorization for payment of subsidy.

(c) Authorization for payment of subsidy to

passenger vessels providing domestic service.

(d) Conditions for cruises or domestic service

while on voyages in an essential service in

foreign commerce.

(e) Application for approval of cruise; notice to

other American flag operators.

1183a. Off-season cruises additional to right of operator to

make voyages on regular service, route, or line,

including approved deviations.

1184. Suspension of operating differential subsidy contracts

by operator recipients.

1185. Construction, reconstruction, or acquisition of

vessels over five thousand deadweight tons in foreign

shipyards; preconditions.

1185a. Wind-up of program.

(a) In general.

(b) Existing subsidy contracts.

(c) Essential service and port equity requirements.

(d) Transfer and registration of vessel.

PART B - MARITIME SECURITY FLEET PROGRAM

1187. Establishment of fleet.

(a) In general.

(b) Vessel eligibility.

1187a. Operating agreements.

(a) In general.

(b) Requirements for operation.

(c) Regulatory relief.

(d) Effectiveness and annual payment requirements

of operating agreements.

(e) Certification required for payment.

(f) Operating agreement is obligation of United

States Government.

(g) Limitations.

(h) Payments.

(i) Priority for awarding agreements.

(j) Transfer of operating agreements.

(k) Reversion of unused authority.

(l) Procedure for considering application;

effective date for certain vessels.

(m) Early termination.

(n) Nonrenewal for lack of funds.

(o) Award of operating agreements.

(p) Notice to United States shipbuilders required.

1187b. National security requirements.

(a) Emergency Preparedness Agreement.

(b) Resources made available.

(c) Compensation.

(d) Temporary replacement vessels.

(e) Redelivery and liability of United States for

damages.

1187c. Definitions.

1187d. Authorization of appropriations.

1187e. Noncontiguous domestic trades.

(a) In general.

(b) Exceptions.

(c) Date of level of service.

(d) Increase in real gross product of noncontiguous

State or Commonwealth.

(e) Application.

(f) Denial of payments.

(g) Temporary service.

(h) Definitions.

SUBCHAPTER VII - PRIVATE CHARTER OPERATION

1191. Additional powers of Secretary for completion of

program.

1192. Construction or reconditioning of vessels by

Secretary.

1193. Competitive bidding.

(a) Construction, reconstruction, or reconditioning

of vessels.

(b) Requirements.

(c) Opening of bids.

1194. Charter or sale of vessels acquired by Department of

Transportation.

1195. Employment of vessels on foreign trade routes;

selection of routes; encouraging private operation by

sale or charter; selling price.

1196. Advertising for bids for charters; rejection of bids.

1197. Awarding charter on bids.

(a) Highest bid.

(b) Rejection of highest bid.

(c) Next highest bid; rejection of all bids and

readvertisement.

1198. Payment of subsidies to charterers.

1199. Excess profit; payment to Secretary; formula for

determining profit.

1200. Undertaking required of charterer.

1201. Terms and conditions of charters.

1202. Insurance requirements; repairs; inspection by

Secretary; termination of charter in national

emergency.

1203. Financial resources and other factors considered in

awarding charters.

1204. Construction and chartering of vessels for

unsuccessful routes; purchase of vessel by charterer;

purchase price; operation of vessel in foreign trade.

1205. Experimental operation and testing of United States

vessels; number; bareboat charters; review of

charters and agency agreements; provisions applicable

to charters and agreements.

SUBCHAPTER VIII - CONTRACT PROVISIONS

1211. Provision for books and records; filing balance

sheets; inspection and auditing by Secretary;

rescission of contract on failure to comply with

provisions.

1212. Purchase or requisition of vessels by United States;

amount of payment.

1213. Contracts designed equitably for all ports; minimum

allocation of funds; report to Congress; preference

to citizens of United States; regional offices for

Maritime Administration.

SUBCHAPTER VIII-A - OFFENSES AND PENALTIES

1222. Operating competing foreign-flag vessel forbidden.

(a) Operating-differential subsidy; competition

with essential American-flag service.

(b) Waiver; special circumstances.

(c) Exceptions.

(d) Statement to be filed with Secretary.

(e) Report to Congress.

(f) Use of foreign-flag vessels.

1223. Forbidden practices relating to coastwise service,

salaries, officers, and employees.

(a) Foreign trade subsidy contractor engaging in

coastwise or intercoastal trade.

(b) Contractor in default paying more than

specified salary.

(c) Repealed.

(d) Employing other persons or concerns as managing

or operating agent.

(e) Repealed.

(f) Penalty.

1226. Discrimination in respect to cargo.

1227. Agreements with other carriers forbidden; withholding

subsidies; actions by injured persons for damages.

1228. Fines and penalties; conviction as rendering persons

ineligible to receive benefits of law.

SUBCHAPTER IX - MISCELLANEOUS PROVISIONS

1241. Transportation in American vessels of Government

personnel and certain cargoes.

(a) Requirement that officers and employees travel

on American ships.

(b) Cargoes procured, furnished or financed by

United States; waiver in emergencies;

exceptions; definition.

(c) Motor vehicle owned by Government personnel.

1241-1. Shipment of exports financed by Government in United

States vessels.

1241a. Vessel operations revolving fund; establishment; uses;

limitation.

1241b. Availability of vessel operations revolving fund;

vessels involved in mortgage-foreclosure or

forfeiture proceedings; redelivery and layup of

chartered ships; custody and husbanding of

Government-owned ships.

1241c. Expenses for activation, repair and deactivation of

merchant ships; receipts.

1241d. Findings and declarations with respect to export

transportation of agricultural commodities.

1241e. Exemption of certain agricultural exports from

requirements of cargo preference laws.

1241f. Shipment requirements for certain exports sponsored by

Department of Agriculture.

(a) Minimum requirement respecting gross tonnage

transported in United States-flag commercial

vessels; implementation.

(b) Covered export activity.

(c) Terms and conditions.

(d) "Export activity" defined.

(e) Prevailing world market price.

1241g. Minimum tonnage.

1241h. Financing of shipment of agricultural commodities in

United States-flag vessels.

(a) Financing by Secretary of Transportation of

increased ocean freight charges.

(b) Reimbursement of Secretary of Agriculture and

Commodity Credit Corporation; computations.

(c) Issuance, etc., of obligations for financing.

(d) Authorization of appropriations.

(e) Notification of Congress respecting failure to

obtain funds necessary for financing.

1241i. Authorization of appropriations.

1241j. Termination of sections 1241e through 1241o of this

Appendix.

1241k. National Advisory Commission on Agricultural Export

Transportation Policy.

(a) Establishment.

(b) Membership; composition, appointment, etc.

(c) Chairman; vacancy.

1241l. Duties of Commission.

(a) Study and review of ocean transportation of

agricultural exports subject to cargo

preference laws; recommendations, scope, etc.

(b) Reporting requirements; termination of

Commission.

(c) Contents of reports.

1241m. Information and assistance to be furnished to

Commission.

1241n. Compensation and travel and subsistence expenses of

Commission members.

1241o. Definition of United States-flag vessel eligible to

carry cargoes under sections 1241f through 1241h of

this Appendix.

1241p. Effect on other laws.

1241q. Exemption of American Great Lakes vessels from

restriction on carriage of preference cargoes.

(a) Exemption from restriction.

(b) Restriction described.

(c) Subsequent application of restriction.

1241r. Designation of American Great Lakes vessels.

(a) In general.

(b) Construction and purchase agreement.

(c) Certain foreign registry and sale not

prohibited.

(d) Issuance of regulations.

1241s. Restrictions on operations of American Great Lakes

vessels.

(a) In general.

(b) Off-season carriage exception.

1241t. Revocation and termination of designation.

(a) Revocation.

(b) Civil penalty.

(c) Termination of designation.

1241u. Study and report.

(a) Study.

(b) Report.

1241v. Definitions.

1242. Requisition or purchase of vessels in time of

emergency.

(a) Compensation; restoration; consequential

damages.

(b) Determination of value of vessel.

(c) Charter of vessels; compensation; reimbursement

for loss or damage.

(d) Determination of amount of compensation.

(e) Use of vessels by Secretary; transfer to other

departments or agencies; reimbursement of

Secretary.

1242a. Maintenance of and adjustment of obligations with

respect to essential vessels affected by Neutrality

Act.

(a) "Essential vessel" defined.

(b) Adjustment of obligations and arrangements for

maintenance of essential vessels.

(c) Provisions included within adjustments and

arrangements.

(d) Readjustment or modification of adjustments and

arrangements.

(e) Expenses incurred in adjustments and

arrangements.

1244. Definitions.

1245. Separability; short title of chapter.

1247. Appointment of Secretary as trustee or receiver;

operation of vessels under court orders; payment of

operating costs; claims against corporation.

1248. Enrollment in a sealift readiness program.

SUBCHAPTER XI - FEDERAL SHIP MORTGAGE INSURANCE

1271. Definitions.

1272. Federal Ship Financing Fund.

1273. Authorization of Secretary to guarantee obligations.

(a) Principal and interest.

(b) Security interest.

(c) Amount of guarantee; percentage limitation;

determination of actual cost of vessel.

(d) Pledge of United States.

(e) Proof of obligations.

(f) Limitation on outstanding amount.

(g) Restrictions on commitments to guarantee

obligations on eligible export vessels.

(h) Risk categories.

1273a. Certain loan guarantees and commitments.

1274. Eligibility for guarantee.

(a) Purpose of obligations.

(b) Contents of obligations.

(c) Security.

(d) Restrictions.

(e) Guarantee fees.

(f) Investigation of applications.

(g) Disposition of moneys.

(h) Additional requirements.

(i) Limitation on authority to establish uniform

percentage limitations.

(j) Guarantees for eligible export vessels.

1274a. Authorization of Secretary to guarantee obligations

arising from statutorily mandated change in standards

for operation of vessels.

(a) Purpose of obligations; principal and interest.

(b) Limitations on length and amount of guaranteed

obligations; useful life of vessel.

(c) Security against default; fees; Vessel

Replacement Guarantee Fund.

(d) Additional requirements.

1275. Defaults.

(a) Rights of obligee.

(b) Notice of default.

(c) Secretary to complete, sell or operate

property.

(d) Cash payments; issuance of notes or

obligations.

(e) Actions against obligor.

1279a. Escrow fund.

(a) Creation.

(b) Disbursement prior to termination of escrow

agreement.

(c) Disbursement upon termination of escrow

agreement.

(d) Investment of fund.

(e) Payment of income.

(f) Terms of escrow agreement.

1279b. Deposit fund.

(a) Establishment of deposit fund.

(b) Agreement.

(c) Investment.

(d) Withdrawals.

1279c. Ocean thermal energy conversion demonstration

facilities and plantships.

(a) Financing of construction, reconstruction, or

reconditioning.

(b) Certification of reasonableness of risk.

(c) OTEC Demonstration Fund.

(d) Notes and obligations.

(e) Taxability of interest.

1279d. Loan guarantees for eligible export vessels.

(a) Authority to guarantee obligations for eligible

export vessels.

(b) Interagency council.

1279e. Loan guarantees for shipyard modernization and

improvement.

(a) General authority.

(b) Applicable laws, requirements, regulations, and

procedures.

(c) Transfer of funds.

(d) Definitions.

1279f. Fisheries financing and capacity reduction.

(a) Authorization for guarantees; issuance of

obligations.

(b) Requirements for guaranteed obligations.

(c) Fishing capacity reduction fund; establishment;

availability of amounts; deposit or

investment.

(d) Issuance of regulations.

(e) "Program" defined.

1279g. Direct loan obligations for fisheries financing and

capacity reduction.

1280. Advances to fund.

1280a. Eligible shipyards.

SUBCHAPTER XII - WAR RISK INSURANCE

1281. Definitions.

1282. Authority to provide insurance; consideration of risk.

(a) Authorization, approval, and consultation;

criteria.

(b) Consideration of risk.

(c) Condition of availability in time of war or

national emergency.

1283. Persons, property, and interests insurable.

1284. Risks other than war risks.

1285. Insurance of property of Government departments and

agencies.

1286. Liability insurance for persons performing services or

providing facilities for vessels.

1287. Reinsurance; rates; allowances to insurance carriers.

1288. Insurance fund; investments; appropriations.

1288a. Transfer of funds from Vessel Operations Revolving

Fund.

1289. Administrative provisions.

(a) Issuance of policies, rules, and regulations;

settlement of claims; valuation; rejection and

review of valuation.

(b) Forms and policies; rates; fees.

(c) Commercial practice controlling; limitation on

fees.

(d) Underwriting agents.

(e) Employment of marine insurance experts.

(f) Utilization of services of other Government

agencies.

1290. Seamen's rights unaffected.

1291. Reports to Congress.

1292. Actions on claims for losses; jurisdiction of courts;

limitation of actions.

1293. Additional insurance with other underwriters.

1294. Expiration of authority to provide insurance.

SUBCHAPTER XIII - MARITIME EDUCATION AND TRAINING

1295. Congressional declaration of policy.

1295a. Definitions.

1295b. Maintenance of Academy.

(a) Duty of Secretary.

(b) Nomination and appointment of cadets;

designation and licensing of individuals from

Trust Territory of Pacific Islands, Western

Hemisphere nations and nations other than

United States.

(c) Appointment of cadet as midshipman in United

States Naval Reserve; rights and privileges.

(d) Uniforms, textbooks, and transportation

allowances.

(e) Commitment agreements.

(f) Places of training.

(g) Bachelor of science degrees awarded.

(h) Board of Visitors.

(i) Advisory Board.

1295c. State maritime academies.

(a) Cooperation and assistance.

(b) Regional maritime academies.

(c) Training vessels.

(d) Annual payments.

(e) Detailing of personnel.

(f) Conditions to receiving payments or use of

vessels.

(g) Student incentive payment agreements.

(h) Appointment of cadet as midshipman in United

States Naval Reserve.

1295c-1. Plan for sharing training vessels.

1295d. Additional training.

(a) In general.

(b) Equipment or supplies required for training.

(c) Oil pollution prevention, response, and

clean-up program.

1295e. United States Maritime Service.

(a) Establishment and maintenance.

(b) Enrollment; compensation; course of study and

periods of training; uniforms.

(c) Ranks, grades, and ratings same as for United

States Coast Guard.

1295f. Civilian nautical school.

(a) "Civilian nautical school" defined.

(b) Examination and inspection of school; rating

and certification.

(c) Repealed.

(d) Fines and penalties.

1295g. Powers and duties of Secretary.

(a) Rules and regulations.

(b) Excess vessels and equipment.

(c) Securing of information, facilities, or

equipment; detailing of personnel.

(d) Employment of personnel.

-SECREF-

CHAPTER REFERRED TO IN OTHER SECTIONS

This chapter is referred to in sections 808, 865a of this

Appendix; title 40 sections 548, 3134; title 42 sections 9101,

9141; title 50 App. section 1744.

-End-

-CITE-

46 USC APPENDIX SUBCHAPTER I - DECLARATION OF

POLICY 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER I - DECLARATION OF POLICY

-HEAD-

SUBCHAPTER I - DECLARATION OF POLICY

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in section 1122 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1101 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER I - DECLARATION OF POLICY

-HEAD-

Sec. 1101. Fostering development and maintenance of merchant marine

-STATUTE-

It is necessary for the national defense and development of its

foreign and domestic commerce that the United States shall have a

merchant marine (a) sufficient to carry its domestic water-borne

commerce and a substantial portion of the water-borne export and

import foreign commerce of the United States and to provide

shipping service essential for maintaining the flow of such

domestic and foreign waterborne commerce at all times, (b) capable

of serving as a naval and military auxiliary in time of war or

national emergency, (c) owned and operated under the United States

flag by citizens of the United States, insofar as may be

practicable, (d) composed of the best-equipped, safest, and most

suitable types of vessels, constructed in the United States and

manned with a trained and efficient citizen personnel, and (e)

supplemented by efficient facilities for shipbuilding and ship

repair. It is declared to be the policy of the United States to

foster the development and encourage the maintenance of such a

merchant marine.

-SOURCE-

(June 29, 1936, ch. 858, title I, Sec. 101, 49 Stat. 1985; Pub. L.

91-469, Sec. 1, Oct. 21, 1970, 84 Stat. 1018.)

-MISC1-

AMENDMENTS

1970 - Pub. L. 91-469 struck out "on all routes" after "shipping

service" in cl. (a) and inserted cl. (e).

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1119, 1120, 1161, 1191,

1222 of this Appendix.

-End-

-CITE-

46 USC APPENDIX SUBCHAPTER II - CREATION AND

FUNCTIONS OF MARITIME AGENCIES 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-End-

-CITE-

46 USC APPENDIX Sec. 1111 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1111. Powers and duties of agencies

-STATUTE-

(a) Repealed. Pub. L. 97-31, Sec. 12(58)(A), Aug. 6, 1981, 95 Stat.

158

(b) Repealed. Pub. L. 101-225, title III, Sec. 307(7), Dec. 12,

1989, 103 Stat. 1925

(c) Records of meetings; seal; rules and regulations

The Commission shall, through its secretary, keep a true record

of all its meetings and the yea-and-nay votes taken therein, on

every action, order, contract, or financial transaction approved or

disapproved by the Commission. It shall have an official seal which

shall be judicially noticed, and shall adopt rules and regulations

in regard to its procedure and the conduct of its business.

(d) Expenditures

The Commission and the Secretary of Transportation may make such

expenditures as are necessary in the performance of their functions

from funds made available to them by this chapter or appropriated

after June 29, 1936, which further appropriations are authorized.

(e) Officers and employees

The Commission and the Secretary of Transportation may appoint

and prescribe the duties and fix the salaries of a secretary, a

director for each of not to exceed five divisions, a general

counsel, a clerk to each member of the Commission and not more than

three assistants, a clerk to the general counsel, not more than a

total of twenty naval architects or marine engineers, twenty

special experts, twenty-two examiners, twelve attorneys, and two

inspectors for each vessel at each shipyard at which vessels are

being constructed by it or under its supervision. The Commission

and the Secretary of Transportation may, subject to the provisions

of the civil-service laws and chapter 51 and subchapter III of

chapter 53 of title 5, appoint such other officers, engineers,

inspectors, attorneys, examiners, and other employees as are

necessary in the execution of their functions.

(f) Traveling and subsistence expenses; pay for military officer on

assignment

Each member, any employee of the Commission or the Secretary of

Transportation, and any person detailed to it or the Secretary of

Transportation from any other agency of the Government shall

receive necessary traveling and subsistence expenses, or per diem

allowance in lieu thereof, within the limitations prescribed by

law, while away from his official station upon official business of

the Commission or the Secretary of Transportation. Whenever any

officer (not exceeding five in number at any time) of the Army,

Navy, Marine Corps, or Coast Guard is detailed to the Commission or

the Secretary of Transportation, he shall receive from the

Commission or the Secretary of Transportation, for the period

during which he is so detailed, such compensation as added to his

pay and allowances as an officer in such service will make his

aggregate compensation equal to the pay and allowances he would

receive if he were the incumbent of an office or position in such

service (or in the corresponding executive department), which, in

the opinion of the Commission or the Secretary of Transportation,

involves the performance of work similar in importance, difficulty,

and responsibility to that performed by him while detailed to the

Commission or the Secretary of Transportation. Expenditures by the

Commission or the Secretary of Transportation shall be allowed and

paid on the presentation of itemized vouchers therefor approved by

the Commission or the Secretary of Transportation or a designated

employee thereof.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 201, 49 Stat. 1985; Aug. 4,

1939, ch. 417, Secs. 3, 4, 53 Stat. 1182; Oct. 28, 1949, ch. 782,

title XI, Sec. 1106(a), 63 Stat. 972; Pub. L. 85-507, Sec.

21(b)(4), July 7, 1958, 72 Stat. 337; Pub. L. 91-469, Sec. 36, Oct.

21, 1970, 84 Stat. 1036; Pub. L. 97-31, Sec. 12(58), Aug. 6, 1981,

95 Stat. 158; Pub. L. 101-225, title III, Sec. 307(7), Dec. 12,

1989, 103 Stat. 1925.)

-REFTEXT-

REFERENCES IN TEXT

The civil service laws, referred to in subsec. (e), are set out

in Title 5, Government Organization and Employees. See,

particularly, section 3301 et seq. of Title 5.

-COD-

CODIFICATION

Provisions of the first sentence of subsec. (e) that authorized

the appointment and fixing of the salaries of a secretary, etc.,

"without regard to the civil-service laws or the Classification Act

of 1923, as amended", and provisions that prohibited such employees

from receiving an annual salary at a rate in excess of that

provided under the Classification Act of 1923, as amended, were

omitted as obsolete and superseded.

Such appointments are now subject to the civil service laws

unless specifically excepted by such laws or by laws enacted

subsequent to Executive Order 8743, Apr. 23, 1941, issued by the

President pursuant to the act of Nov. 26, 1940, ch. 919, title I,

Sec. 1, 54 Stat. 1211, which covered most excepted positions into

the classified (competitive) civil service. The Order is set out as

a note under section 3301 of Title 5, Government Organization and

Employees.

As to the salaries of such personnel, sections 1202 and 1204 of

the Classification Act of 1949, 63 Stat. 972, 973, repealed the

Classification Act of 1923 and all other laws or parts of laws

inconsistent with the 1949 Act. The Classification Act of 1949 was

repealed by Pub. L. 89-554, Sept. 6, 1966, Sec. 8(a), 80 Stat. 632,

and reenacted as chapter 51 and subchapter III of chapter 53 of

Title 5. Section 5102 of Title 5 contains the applicability

provisions of the 1949 Act, and section 5103 of Title 5 authorizes

the Office of Personnel Management to determine the applicability

to specific positions and employees.

In the last sentence of subsec. (e), "chapter 51 and subchapter

III of chapter 53 of title 5" substituted for "the Classification

Act of 1949, as amended" on authority of Pub. L. 89-554, Sec. 7(b),

Sept. 6, 1966, 80 Stat. 631, the first section of which enacted

Title 5.

-MISC1-

AMENDMENTS

1989 - Subsec. (b). Pub. L. 101-225 struck out subsec. (b) which

read as follows: "No person shall hold office as a member of the

Commission who, within three years prior to his appointment, shall

have been employed by, or have had any pecuniary interest, in any

carrier by water or substantial pecuniary interest in any other

person who derives a substantial portion of his revenues from any

business associated with ships or shipping. Each member shall

devote his full time to the duties of his office. It shall be

unlawful for any member, officer, or employee of the Federal

Maritime Commission to be in the employ of any other person, firm,

or corporation, or to have any pecuniary interest in, or hold any

official relationship with, any carrier by water, shipbuilder,

contractor, or other person, firm, association, or corporation with

whom the Federal Maritime Commission may have business relations."

Subsec. (g). Pub. L. 101-225 struck out subsec. (g) which

provided that this section take effect June 29, 1936.

1981 - Subsec. (a). Pub. L. 97-31, Sec. 12(58)(A), struck out

subsec. (a) which related to establishment, etc., of the United

States Maritime Commission. For prior transfers of functions, see

Transfer of Functions note below.

Subsec. (d). Pub. L. 97-31, Sec. 12(58)(B), substituted "their"

for "its" and "them" for "it" and inserted reference to Secretary

of Transportation.

Subsec. (e). Pub. L. 97-31, Sec. 12(58)(C), substituted "their"

for "it", inserted reference to Secretary of Transportation, and

struck out proviso which related to the transfer of employees from

the United States Shipping Board Bureau or United States Shipping

Board Merchant Fleet Corporation to the United States Maritime

Commission and to the Acquisition of United States Civil Service

status.

Subsec. (f). Pub. L. 97-31, Sec. 12(58)(D), inserted references

to Secretary of Transportation.

1970 - Subsec. (b). Pub. L. 91-469 substituted in last sentence

"Federal Maritime Commission" for "Commission" in two places.

1958 - Subsec. (e). Pub. L. 85-507 struck out provisions which

authorized detail of certain personnel for training at institutions

for scientific education and research.

1949 - Subsec. (e). Act Oct. 28, 1949, substituted

"Classification Act of 1949" for "Classification Act of 1923, as

amended,".

1939 - Subsec. (e). Act Aug. 4, 1939, Sec. 3, authorized the

appointment of a clerk to the general counsel, increased the number

of naval architects and special experts from 12 to 20 each, and the

number of examiners from 12 to 22, and permitted not more than 5

members to be detailed annually for engineering, technical, or

other scientific education and training.

Subsec. (f). Act Aug. 4, 1939, Sec. 4, provided for the payment

of compensation to officers of the Army, Navy, Marine Corps, or

Coast Guard.

EFFECTIVE DATE OF 1958 AMENDMENT

For effective date of amendment by Pub. L. 85-507, see section

21(a) of Pub. L. 85-507.

REPEALS

Act Oct. 28, 1949, ch. 782, cited as a credit to this section,

was repealed (subject to a savings clause) by Pub. L. 89-554, Sept.

6, 1966, Sec. 8, 80 Stat. 632, 655.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out below.

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.

Coast Guard transferred to Department of Transportation, and

functions, powers, and duties relating to Coast Guard of Secretary

of the Treasury and of other officers and offices of Department of

the Treasury transferred to Secretary of Transportation by Pub. L.

89-670, Sec. 6(b)(1), Oct. 15, 1966, 80 Stat. 938. Section 6(b)(2)

of Pub. L. 89-670, however, provided that notwithstanding such

transfer of functions, Coast Guard shall operate as part of Navy in

time of war or when President directs as provided in section 3 of

Title 14, Coast Guard. See section 108 of Title 49, Transportation.

For transfer of functions of other officers, employees, and

agencies of Department of the Treasury, with certain exceptions, to

Secretary of the Treasury with power to delegate, see Reorg. Plan

No. 26 of 1950, Secs. 1, 2, eff. July 31, 1950, 15 F.R. 4935, 64

Stat. 1280, 1281, set out in the Appendix to Title 5, Government

Organization and Employees. Functions of Coast Guard, and

Commandant of Coast Guard, excepted from transfer when Coast Guard

is operating as part of Navy under sections 1 and 3 of Title 14.

-MISC2-

FEDERAL MARITIME COMMISSION; TERM OF OFFICE; VACANCIES; CONTINUITY

OF SERVICE

Pub. L. 89-56, June 30, 1965, 79 Stat. 195, provided; "That

Commissioners of the Federal Maritime Commission, provided for by

section 102 of Reorganization Plan Numbered 7 of 1961 (75 Stat.

849), shall hereafter be appointed for a term of five years except

that one of the two terms which commence July 1, 1965, shall

initially be for four years and thereafter shall be for five years:

Provided, however, That a person chosen to fill a vacancy shall be

appointed only for the unexpired term of the Commissioner whom he

succeeds: Provided, further, That upon the expiration of his term

of office a Commissioner shall continue to serve until his

successor shall have been appointed and shall have qualified."

COMPENSATION OF FEDERAL MARITIME COMMISSIONERS AND MARITIME

ADMINISTRATOR

Annual basic compensation of Chairman of Commission, members of

Commission, and Administrator, Maritime Administration, see

sections 5314 and 5315 of Title 5, Government Organization and

Employees.

-EXEC-

EX. ORD. NO. 11156. MARITIME ADVISORY COMMITTEE

Ex. Ord. No. 11156, eff. June 17, 1964, 29 F.R. 7855, which

established the Maritime Advisory Committee, was revoked by Ex.

Ord. No. 11427, eff. Sept. 4, 1968, 33 F.R. 12617.

-MISC3-

REORGANIZATION PLAN NO. 7 OF 1961

Eff. Aug. 12, 1961, 26 F.R. 7315, 75 Stat. 840, as amended Pub. L.

88-426, title III, Sec. 305(19), Aug. 14, 1964, 78 Stat. 425;

Pub. L. 91-469, Sec. 38, Oct. 21, 1970, 84 Stat. 1036; Pub. L.

105-258, title II, Sec. 202, Oct. 14, 1998, 112 Stat. 1915

Prepared by the President and transmitted to the Senate and the

House of Representatives in Congress assembled, June 12, 1961,

pursuant to the provisions of the Reorganization Act of 1949, 63

Stat. 203, as amended [see 5 U.S.C. 901 et seq.].

MARITIME FUNCTIONS

PART I. FEDERAL MARITIME COMMISSION

SECTION 101. CREATION OF FEDERAL MARITIME COMMISSION

(a) There is hereby established a Federal Maritime Commission,

hereinafter referred to as the Commission.

(b) The Commission shall not be a part of any executive

department or under the authority of the head of any executive

department.

SEC. 102. COMPOSITION OF THE COMMISSION

(a) The Commission shall be composed of five Commissioners, who

shall be appointed by the President by and with the advice and

consent of the Senate. Each Commissioner shall be removable by the

President for inefficiency, neglect of duty, or malfeasance in

office.

(b) The President shall from time to time designate one of the

Commissioners to be the Chairman of the Commission.

(c) Of the first five Commissioners appointed hereunder, one

shall be appointed for a term expiring on June 30, 1962, one for a

term expiring on June 30, 1963, one for a term expiring on June 30,

1964, and two for terms expiring on June 30, 1965. Their successors

shall be appointed for terms of four years, except that any person

chosen to fill a vacancy shall be appointed only for the unexpired

term of the Commissioner whom he succeeds. Not more than three of

the Commissioners shall be appointed from the same political party.

A vacancy in the office of any such Commissioner shall be filled in

the same manner as the original appointment.

(d) A vacancy or vacancies in the membership of Commission shall

not impair the power of the Commission to execute its functions.

The affirmative vote of a majority of the members serving on the

Commission is required to dispose of any matter before the

Commission. [As amended Pub. L. 88-426, title III, Sec. 305(19)(A),

Aug. 14, 1964, 78 Stat. 425; Pub. L. 105-258, title II, Sec. 202,

Oct. 14, 1998, 112 Stat. 1915.]

[Commissioners of the Federal Maritime Commission appointed to

five year terms, appointed to vacancies only for unexpired term,

and to serve until appointment and qualification of successor, see

Pub. L. 89-56, set out as a Federal Maritime Commission; Term of

Office; Vacancies; Continuity of Service note above.]

SEC. 103. TRANSFER OF FUNCTIONS TO COMMISSION

The following functions, which are now vested in the Federal

Maritime Board under the provisions of Reorganization Plan No. 21

of 1950 (64 Stat. 1273), are hereby transferred from that Board to

the Commission:

(a) All functions under the provisions of sections 14-20,

inclusive, and sections 22-33, inclusive, of the Shipping Act,

1916, as amended ([former] 46 U.S.C. 812-819 and 821-832),

including such functions with respect to the regulation and control

of rates, services, practices, and agreements of common carriers by

water and of other persons.

(b) All functions with respect to the regulation and control of

rates, fares, charges, classifications, tariffs, regulations, and

practices of common carriers by water under the provisions of the

Intercoastal Shipping Act, 1933, as amended ([former] 46 U.S.C.

843-848).

(c) The functions with respect to the making of rules and

regulations affecting shipping in the foreign trade to adjust or

meet conditions unfavorable to such shipping, and with respect to

the approval, suspension, modification, or annulment of rules or

regulations of other Federal agencies affecting shipping in the

foreign trade, under the provisions of section 19 of the Merchant

Marine Act, 1920, as amended (46 U.S.C. 876), exclusive of

subsection (1)(a) thereof.

(d) The functions with respect to investigating discriminatory

rates, charges, classifications, and practices in the foreign

trade, and with respect to recommending legislation to correct such

discrimination, under the provisions of section 212(e) of the

Merchant Marine Act, 1936, as amended (46 U.S.C. 1122(f)).

(e) To the extent that they relate to functions transferred to

the Commission by the foregoing provisions of this section:

(1) The functions with respect to requiring the filing of

reports, accounts, records, rates, charges, and memoranda, under

the provisions of section 21 of the Shipping Act, 1916, as amended

([former] 46 U.S.C. 820).

(2) The functions with respect to adopting rules and regulations,

making reports and recommendations to Congress, subpoenaing

witnesses, administering oaths, taking evidence, and requiring the

production of books, papers, and documents, under the provisions of

sections 204, 208, and 214 of the Merchant Marine Act, 1936, as

amended (46 U.S.C. 1114, 1118, and 1124).

SEC. 104. TRANSFER OF FUNCTIONS TO CHAIRMAN

There are hereby transferred to the Chairman of the Commission:

(a) The functions of the Chairman of the Federal Maritime Board,

including his functions derived from the provisions of

Reorganization Plan No. 6 of 1949, to the extent that they relate

to the functions transferred to the Commission by the provisions of

section 103 of this reorganization plan.

(b) The functions of the Secretary of Commerce to the extent that

they are necessary for, or incidental to, the administration of the

functions transferred to the Commission by the provisions of

section 103 of this reorganization plan.

SEC. 105. AUTHORITY TO DELEGATE

(a) The Commission shall have the authority to delegate, by

published order or rule, any of its functions to a division of the

Commission, an individual Commissioner, a hearing examiner, or an

employee or employee board, including functions with respect to

hearing, determining, ordering, certifying, reporting or otherwise

acting as to any work, business, or matter: Provided, however, That

nothing herein contained shall be deemed to supersede the

provisions of section 7(a) of the Administrative Procedure Act (60

Stat. 241), as amended [see 5 U.S.C. 556].

(b) With respect to the delegation of any of its functions, as

provided in subsection (a) of this section, the Commission shall

retain a discretionary right to review the action of any such

division of the Commission, individual Commissioner, hearing

examiner, employee or employee board, upon its own initiative or

upon petition of a party to or an intervenor in such action, within

such time and in such manner as the Commission shall by rule

prescribe: Provided, however, That the vote of a majority of the

Commission less one member thereof shall be sufficient to bring any

such action before the Commission for review.

(c) Should the right to exercise such discretionary review be

declined, or should no such review be sought within the time stated

in the rules promulgated by the Commission, then the action of any

such division of the Commission, individual Commissioner, hearing

examiner, employee or employee board, shall, for all purposes,

including appeal or review thereof, be deemed to be the action of

the Commission.

(d) There are hereby transferred to the Chairman of the

Commission the functions with respect to the assignment of

Commission personnel, including Commissioners, to perform such

functions as may have been delegated by the Commission to

Commission personnel, including Commissioners, pursuant to the

foregoing subsections of this section.

PART II. DEPARTMENT OF COMMERCE

SECTION 201. MARITIME ADMINISTRATOR

There shall be at the head of the Maritime Administration

(established by the provisions of Part II of Reorganization Plan

No. 21 of 1950) a Maritime Administrator, hereinafter referred to

as the Administrator. The Assistant Secretary of Commerce for

Maritime Affairs shall, ex officio, be the Administrator. The

Administrator shall perform such duties as the Secretary of

Commerce shall prescribe. [As amended Pub. L. 88-426, title III,

Sec. 305(19)(B), Aug. 14, 1964, 78 Stat. 425; Pub. L. 91-469, Sec.

38(a), Oct. 21, 1970, 84 Stat. 1036.]

SEC. 202. FUNCTIONS OF SECRETARY OF COMMERCE

(a) Except to the extent inconsistent with the provisions of

sections 101(b) or 104(b) of this reorganization plan, there shall

remain vested in the Secretary of Commerce all the functions

conferred upon the Secretary by the provisions of Reorganization

Plan No. 21 of 1950.

(b) There are hereby transferred to the Secretary of Commerce:

(1) All functions of the Federal Maritime Board under the

provisions of section 105(1) to 105(3), inclusive, of

Reorganization Plan No. 21 of 1950.

(2) Except to the extent transferred to the Commission by the

provisions of section 103(e) of this reorganization plan, the

functions described in the said section 103(e).

(3) Any other functions of the Federal Maritime Board not

otherwise transferred by the provisions of part I of this

reorganization plan.

(4) Except to the extent transferred to the Chairman of the

Commission by the provisions of Part I of this reorganization plan,

the functions of the Chairman of the Federal Maritime Board.

SEC. 203. DELEGATION OF FUNCTIONS

The provisions of sections 2 and 4 of Reorganization Plan No. 5

of 1950 (64 Stat. 1263) shall be applicable to all functions

transferred to the Secretary of Commerce by, or remaining vested in

him under, the provisions of this reorganization plan.

PART III. GENERAL PROVISIONS

SECTION 301. CONFLICT OF INTEREST

The provisions of the last sentence of section 201(b) of the

Merchant Marine Act, 1936, as affected by the provisions of

Reorganization Plan No. 21 of 1950 (46 U.S.C. Sec. 1111(b))

(prohibiting the members of the Federal Maritime Board and all

officers and employees of that Board or of the Maritime

Administration from being in the employ of any other person, firm,

or corporation, or from having any pecuniary interest in or holding

any official relationship with any carrier by water, shipbuilder,

contractor, or other person, firm, association, or corporation with

whom the Federal Maritime Board or the Maritime Administration may

have business relations) shall hereafter be applicable to the

Commissioners composing the Commission and all officers and

employees of the Commission. [As amended Pub. L. 91-469, Sec.

38(b), Oct. 21, 1970, 84 Stat. 1036.]

SEC. 302. INTERIM APPOINTMENTS

Pending the initial appointment hereunder of the Commissioners

composing the Commission and of the Maritime Administrator, but not

for a period exceeding 90 days, such officers of the executive

branch of the Government (including any person who is a member of

the Federal Maritime Board or Deputy Maritime Administrator

immediately prior to the taking effect of the provisions of this

reorganization plan) as the President shall designate under the

provisions of this section shall be Acting Commissioners of the

Federal Maritime Commission or Acting Maritime Administrator. The

President may designate one of such Acting Commissioners as Acting

Chairman of the Commission. Any person who is not while serving

under an interim appointment pursuant to the foregoing provisions

of this section receiving compensation attached to another Federal

office shall receive the compensation herein provided for the

office wherein he serves in an interim capacity.

SEC. 303. INCIDENTAL TRANSFERS

(a) So much of the personnel, property, records, and unexpended

balances of appropriations, allocations, and other funds employed,

used, held, available, or to be made available in connection with

the functions transferred to the Commission or to the Chairman of

the Commission by the provisions of Part I of this reorganization

plan as the Director of the Bureau of the Budget shall determine

shall be transferred to the Commission at such time or times as the

Director shall direct.

(b) Such further measures and dispositions as the Director of the

Bureau of the Budget shall deem to be necessary in order to

effectuate the transfers provided for in subsection (a) of this

section shall be carried out in such manner as he shall direct and

by such agencies as he shall designate.

(c) Subject to the foregoing provisions of this section, the

Secretary of Commerce may transfer within the Department of

Commerce personnel, property, records, and unexpended balances of

appropriations, allocations, and other funds employed, used, held,

available, or to be made available in connection with functions

which were transferred to the Department of Commerce (including the

Federal Maritime Board and the Chairman thereof) by the provisions

of Reorganization Plan No. 21 of 1950.

SEC. 304. ABOLITION OF FEDERAL MARITIME BOARD

The Federal Maritime Board, including the offices of the members

of the Board, is hereby abolished, and the Secretary of Commerce

shall provide for the termination of any outstanding affairs of the

said Board not otherwise provided for in this reorganization plan.

SEC. 305. STATUS OF PRIOR PLAN

The following provisions of Reorganization Plan No. 21 of 1950

are hereby superseded:

(1) Part I.

(2) Section 202.

(3) Sections 302 to 307, inclusive.

MESSAGE OF THE PRESIDENT

To the Congress of the United States:

I transmit herewith Reorganization Plan No. 7 of 1961, prepared

in accordance with the Reorganization Act of 1949, as amended, and

providing for the reorganization of maritime functions.

The basic objective of the plan is to strengthen and revitalize

the administration of our Federal programs concerned with the

promotion and development of the U.S. merchant marine by

concentrating responsibility in separate agencies for the

performance of regulatory and promotional functions. The plan

provides, therefore, for the creation of a separate Federal

Maritime Commission, composed of five Commissioners, which would be

charged with the regulatory functions of the present Federal

Maritime Board. There would be transferred from the Federal

Maritime Board to the Secretary of Commerce the award of subsidies

and related promotional functions. The Secretary of Commerce would

retain the functions transferred to him by Reorganization Plan No.

21 of 1950 which reorganized the U.S. Maritime Commission into a

Federal Maritime Board and a Maritime Administration in the

Department of Commerce. The plan retains the present Maritime

Administration, provides for an Administrator as head thereof,

retains a Deputy Maritime Administrator, and effects no change in

the Office of the Under Secretary of Commerce for Transportation.

The Federal Maritime Board is abolished.

Existing organizational arrangements have not proved to be

satisfactory. The development and maintenance of a sound maritime

industry require that the Federal Government carry out its dual

responsibilities for regulation and promotion with equal vigor and

effectiveness. Intermingling of regulatory and promotional

functions has tended in this instance to dilute responsibility and

has led to serious inadequacies, particularly in the administration

of regulatory functions. Recent findings by committees of the

Congress disclose serious violations of maritime laws and point to

the urgent need for a reorganization to vest in completely separate

agencies a responsibility for (1) regulatory functions and (2)

promotional and operating functions.

The plan would provide the most appropriate organizational

framework for each of the functions concerned. Regulation would be

made the exclusive responsibility of a separate commission

organized along the general lines of other regulatory agencies. On

the other hand, nonregulatory functions, including the

determination and award of subsidies and other promotional and

operating activities, would be concentrated in the head of the

Department of Commerce. The Secretary of Commerce is best qualified

to coordinate these activities with other transportation and

related economic programs.

The vesting of all subsidy functions in the Secretary of Commerce

will make it possible for the Congress and the President to hold a

single official responsible and accountable for the effective

conduct of all aspects of this program, including the size and

character of the fleet under the U.S. flag, the need for Government

assistance, and requirements for appropriations to support subsidy

programs. Furthermore, the placing of these functions in the

Secretary of Commerce will assure essential supervision and review

of subsidy awards.

The taking effect of the reorganizations included in the

accompanying reorganization plan will result in a modest increase

in expenditures. The improved organizational alinements provided by

the plan will, however, make possible a more effective and

expeditious administration of the statutory objectives to foster

and promote a U.S. merchant marine capable of meeting the Nation's

needs in peace and war. Failure to meet these objectives would be

far more costly than the anticipated increase in expenditures under

the plan.

After investigation, I have found and hereby declare that each

reorganization included in Reorganization Plan No. 7 of 1961 is

necessary to accomplish one or more of the purposes set forth in

section 2(a) of the Reorganization Act of 1949, as amended.

I have also found and hereby declare that it is necessary to

include in the accompanying reorganization plan, by reason of

reorganizations made thereby, provisions for the appointment and

compensation of new officers specified in sections 102 and 201 of

the plan. The rates of compensation fixed for these officers are,

respectively, those which I have found to prevail in respect of

comparable officers in the executive branch of the Government.

I recommend that the Congress allow the reorganization plan to

become effective.

John F. Kennedy.

The White House, June 12, 1961.

REORGANIZATION PLAN NO. 21 OF 1950

EFF. MAY 24, 1950, 15 F.R. 3178, 64 STAT. 1273, AS AMENDED REORG.

PLAN NO. 7 OF 1961, SEC. 305, EFF. AUG. 12, 1961, 26 F.R. 7315, 75

STAT. 840; OCT. 21, 1970, PUB. L. 91-469, SEC. 37, 84 STAT. 1036

Prepared by the President and transmitted to the Senate and the

House of Representatives in Congress assembled, March 13, 1950,

pursuant to the provisions of the Reorganization Act of 1949,

approved June 20, 1949 [see 5 U.S.C. 901 et seq.].

PART I. FEDERAL MARITIME BOARD

Sections 101-106. [Superseded. Reorg. Plan No. 7 of 1961, Sec.

305, eff. Aug. 12, 1961, 26 F.R. 7315, 75 Stat. 840. Section 101

established the Federal Maritime Board. Section 102 provided for

the composition of the Federal Maritime Board. Section 103

transferred certain functions from the Chairman of the United

States Maritime Commission to the Chairman of the Federal Maritime

Board. Section 104 transferred regulatory functions of the United

States Maritime Commission to the Federal Maritime Board. Section

105 transferred subsidy award and other functions of the United

States Maritime Commission to the Federal Maritime Board. Section

106 provided that the Board was to be an agency within the

Department of Commerce, but would be independent of the Secretary

of Commerce with respect to functions transferred to it under

section 104.]

PART II. MARITIME ADMINISTRATION

SEC. 201. CREATION OF MARITIME ADMINISTRATION

There is hereby established in the Department of Commerce a

Maritime Administration.

Sec. 202 [Superseded. Reorg. Plan No. 7 of 1961, Sec. 305, eff.

Aug. 12, 1961, 26 F.R. 7315, 75 Stat. 840. Section provided for a

Maritime Administrator to be at the head of the Maritime

Administration, and that the Chairman of the Federal Maritime Board

would be such Administrator and would perform duties prescribed by

the Secretary of Commerce.]

SEC. 203. DEPUTY MARITIME ADMINISTRATOR

There shall be in the Maritime Administration a Deputy Maritime

Administrator, who shall be appointed by the Secretary of Commerce,

after consultation with the Administrator, under the classified

civil service, and who shall perform such duties as the

Administrator shall prescribe. The Deputy Maritime Administrator

shall be Acting Maritime Administrator during the absence or

disability of the Administrator and, unless the Secretary of

Commerce shall designate another person, during a vacancy in the

office of Administrator: Provided, That such Deputy Administrator

shall at no time sit as a member or acting member of the Federal

Maritime Board.

SEC. 204. TRANSFER OF FUNCTIONS

Except as otherwise provided in part I of this reorganization

plan, all functions of the United States Maritime Commission and of

the Chairman of said Commission are hereby transferred to the

Secretary of Commerce. The Secretary of Commerce may from time to

time make such provisions as he shall deem appropriate authorizing

the performance by the Maritime Administrator of any function

transferred to such Secretary by the provisions of this

reorganization plan.

PART III. GENERAL PROVISIONS

SEC. 301. UNDER SECRETARY OF COMMERCE FOR TRANSPORTATION

There shall be in the Department of Commerce an additional office

of Under Secretary with the title "Under Secretary of Commerce for

Transportation." The Under Secretary of Commerce for Transportation

shall be appointed by the President, by and with the advice and

consent of the Senate, shall receive compensation at the rate

prescribed by law for Under Secretaries of Executive departments,

and shall perform such duties as the Secretary of Commerce shall

prescribe.

Secs. 302-307. [Superseded. Reorg. Plan No. 7 of 1961, Sec. 305,

eff. Aug. 12, 1961, 26 F.R. 7315, 75 Stat. 840. Section 302

provided that person who was both Administrator and Chairman was to

make joint use of the personnel under his supervision. Section 303

made conflict of interest provisions of the Merchant Marine Act,

1936, applicable to members of the Federal Maritime Board and

officers and employees of the Board or of the Maritime

Administration. Section 304 allowed the President to make interim

appointments to the Federal Maritime Board from officers of the

Executive Branch. Section 305 transferred to the Department of

Commerce all property, personnel, records, and funds of the United

States Maritime Commission. Section 306 abolished the United States

Maritime Commission. Section 307 provided that the functions

transferred by this reorganization plan would not be subject to

Reorg. Plan No. 5 of 1950.]

MESSAGE OF THE PRESIDENT

To the Congress of the United States:

I transmit herewith Reorganization Plan No. 21 of 1950, prepared

in accordance with the provisions of the Reorganization Act of

1949. This plan effects a basic reorganization of the functions of

the United States Maritime Commission along the lines recommended

by the Commission on Organization of the Executive Branch of the

Government.

Within the last 3 years three different bodies have studied the

administration of the Maritime Commission. All have concluded that

the operating deficiencies of the agency arise from inappropriate

and unsound organization and that a fundamental reorganization is

essential. The first of these bodies, the President's Advisory

Committee on the Merchant Marine, in 1947, stated:

It appears to the Committee that the organization structure

of the Maritime Commission as set up in the Merchant Marine Act

of 1936 is wholly inadequate for the efficient conduct of the

multitude of diverse activities for which the Maritime

Commission is now responsible. The deficiencies of the

statutory organization for administrative action are regarded

by the Committee to be the most serious obstacle standing in

the way of the development of the Merchant Marine of this

country.

Similarly, the survey of the Maritime Commission in 1948 for the

Senate Committee on Expenditures in the Executive Departments

concluded that -

The fundamental weakness of the Maritime Commission, as it is

now constituted, lies in its proscribed organization.

On the basis of investigations of the Maritime Commission by two of

its task forces, the Commission on Organization of the Executive

Branch stated:

It is an anomaly that a regulatory commission should also

conduct the executive function of managing a huge business;

that executive functions should be carried on by an agency that

is not subject to Presidential directions; that executive

functions should be carried on by a full-time board * * *.

While the recommendations of the various studies differ in some

details, they agree on principles and on the main features of

reorganization.

Basically, the administrative difficulties of the Maritime

Commission have arisen, as all these studies agree, from the fact

that the Commission is responsible for performing two fundamentally

different types of functions which call for different types of

organization. These two classes of functions are (a) regulatory and

(b) operating and promotional. Under various acts the Commission

regulates rates and services of water carriers; passes on

agreements among carriers; and protects shippers against unfair and

discriminatory practices. This type of activity requires the

deliberation and independence of judgment which a board or

commission is especially well designed to provide. But at the same

time the Commission is charged with the conduct of a variety of

large and costly promotional and business-type programs demanding

the prompt and vigorous administration for which experience both in

Government and in private enterprise has demonstrated that a single

executive is essential.

The Maritime Commission has charge of the construction of

merchant vessels for subsidized operators and for Government

account. It owns and maintains the largest merchant fleet in the

world, consisting of 2,200 vessels aggregating more than 22,000,000

dead-weight tons. It charters and sells ships and, in time of war

or national emergency, requisitions and operates vessels for the

Government. It grants construction and operating differential

subsidies to private shipping companies to maintain an active

privately operated American merchant marine. It makes loans and

insures mortgages to assist carriers in acquiring new vessels, and

it conducts programs for training officers and seamen for the

merchant marine. For the present fiscal year the performance of

these functions will involve the expenditure of approximately

$162,000,000 and the direction of an organization of 5,500

employees. In short, the administration of the Maritime Commission

is a vast business undertaking. Moreover, the work of the

Commission affects significantly the interests of both business and

labor in the maintenance of a sound maritime industry.

Further than this, many of the activities of the Maritime

Commission are closely related to other programs of the Government

and have to be coordinated with them. In the construction of a

subsidized ship the Commission must cooperate with the Coast Guard

on those features of design, materials, and equipment which affect

the safety of the vessel and with the Navy on those which

especially affect the use of the ship for national defense.

Furthermore, the whole program of subsidized ship construction

needs to be adjusted to the plans and requirements for national

defense. At the same time the Commission's programs for the

development of the merchant marine must be coordinated with our

foreign policy and with Federal programs with respect to other

branches of transportation.

While an independent commission is an appropriate instrument for

the performance of the regulatory functions of the Maritime

Commission, such an agency obviously is not the type required to

provide strong and efficient administration of the large operating

programs now entrusted to the Commission or to obtain the needed

coordination with other activities of the executive branch. This

fact is amply demonstrated by the administrative difficulties and

the complicated problems of coordination encountered in the

operation of the Commission since the war and by the necessity of

transferring a large part of its functions to the War Shipping

Administration, headed by a single executive, during the war.

Briefly, this reorganization plan provides for a small Federal

Maritime Board and a Maritime Administration in the Department of

Commerce to perform the functions of the Maritime Commission, and

abolishes the existing Commission. It transfers to the Board the

regulatory functions of the Commission and definitely guarantees

the independence of the Board in the performance of these

functions. In addition, it vests directly in the Board the

determination and award of construction and operating differential

subsidies. In the performance of its subsidy functions the Board

will be subject to general policy guidance by the Secretary of

Commerce. The Board, however, and it alone, will determine to whom

subsidies shall be granted and will make and award the subsidy

contracts. Its actions therein will be conclusive and will not be

subject to modification by any other agency or officer of the

Department of Commerce. The other functions of the Maritime

Commission, including carrying out the subsidy agreements made by

the Board and administering the various operating programs, are

transferred to the Secretary of Commerce for administration through

the Maritime Administration. Thus, the plan provides for each of

the two types of functions now vested in the Maritime Commission

the type of organization best suited to its performance. At the

same time, the plan will facilitate coordination of maritime

policies and programs with other related policies and programs.

The division of functions under this plan conforms directly to

the recommendations of the Commission on Organization of the

Executive Branch of the Government. While the award of subsidies is

a promotional rather than a regulatory function and might logically

be assigned to the Maritime Administration instead of the Board,

its impact on the shipping industry and on individual carriers is

such as to make desirable the deliberation and combined judgment of

a board. Accordingly, I have adhered to the recommendation of the

Commission on Organization that this function be vested in a

multiple body rather than a single official. Likewise, in line with

the recommendations of the Commission, the plan assigns the

determination of the over-all route pattern to the Secretary of

Commerce.

The Maritime Board will consist of three members appointed by the

President with the consent of the Senate for overlapping terms of 4

years. Not more than two of the members can be of the same

political party. The Board, therefore, will be a smaller and more

wieldy body which can function with greater expedition and

efficiency than the existing five-member Commission. The Chairman

will be designated by the President from the members of the Board

and will be, ex officio, the Maritime Administrator and as such the

head of the Maritime Administration. The plan also provides for a

Deputy Maritime Administrator appointed by the Secretary of

Commerce under the classified civil service. After investigation I

have found, and hereby declare, that by reason of the

reorganizations made by this plan, it is necessary to include in

the plan provisions for the appointment and compensation of the

members of the Federal Maritime Board and for the appointment of

the Deputy Maritime Administrator.

In making the Chairman of the Federal Maritime Board the Maritime

Administrator, the plan adopts an arrangement substantially similar

to that which prevailed during the war, when the same individual

served as Chairman of the Maritime Commission and head of the War

Shipping Administration. This arrangement will have important

advantages. It will facilitate cooperation between the Board and

the Administration on matters of concern to both. Also, it will

avoid dividing the personnel of the Maritime Commission, since the

Chairman of the Board will supervise the personnel assisting it in

the performance of its functions, as is now the case in the

Maritime Commission, and in his capacity as Administrator he will

have charge of the personnel carrying on the work of the Maritime

Administration. The plan provides for the joint operation of the

officers and employees under the Administrator and Chairman as a

single body of personnel. The maintenance of a unified staff is

essential for efficient and economical administration because many

of the technical and professional personnel, such as ship designers

and attorneys, now assist the Maritime Commission on problems of

subsidy determination and also participate in the subsequent

administration of subsidy agreements and in performing nonsubsidy

functions.

The inclusion of the new Board in the Department of Commerce will

permit the use of the administrative services of the Department.

More important, it will eliminate the necessity of splitting the

personnel of the Maritime Commission between the Department and an

outside agency. In addition, it will relieve the President of

having to handle relations with a separate maritime agency.

In establishing the Department of Commerce the Congress provided

in the organic act of the Department that -

It shall be the province and duty of said Department to

foster, promote, and develop the foreign and domestic commerce,

* * * shipping, * * * and the transportation facilities of the

United States.

Over the years, however, transportation functions have become

widely scattered throughout the executive branch. As a result,

intelligent planning and budgeting of Federal transportation

activities and the necessary coordination of transportation

programs have become extremely difficult or impossible. The

transfer of the functions of the Maritime Commission to the

Department of Commerce will constitute a major step in correcting

this condition.

Without question the Department of Commerce is now the

appropriate center for transportation programs. It contains the

Civil Aeronautics Administration - the major operating and

promotional agency of the Government in the field of air

transportation - and the Weather Bureau, and the Coast and Geodetic

Survey, which provide vital services to transportation. As a result

of Reorganization Plan No. 7 of 1949, it now also includes the

Bureau of Public Roads, the leading promotional agency dealing with

land transportation. Also, it has the Inland Waterways Corporation

in the field of water transportation. The transfer of the functions

of the Maritime Commission will bring into the Department the

principal water-transportation agency of the Government. These

actions will go a long way toward the establishment of a sound and

effective organization for the operating and promotional programs

of the Government relating to transportation.

It is my purpose to look to the Secretary of Commerce for

leadership with respect to transportation problems and for the

development of over-all transportation policy within the executive

branch. Because of the magnitude and importance of the

transportation functions transferred to the Department of Commerce

by this reorganization plan, I have found and hereby declare that

it is necessary to strengthen the top administrative structure of

the Department by providing for the appointment and compensation of

a new Under Secretary of Commerce for Transportation. This will

make available an officer of the highest rank to assist the

Secretary in supervising the varied and complex transportation

programs of the Department and providing central leadership in

transportation matters. With the many responsibilities of the

Secretary of Commerce in other areas, the creation of this office

is essential to enable him properly to fulfill his obligations with

respect to transportation.

After careful investigation I have found and I hereby declare

that each of the reorganizations contained in this reorganization

plan is necessary to accomplish one or more of the purposes set

forth in section 2(a) of the Reorganization Act of 1949. The rates

of compensation fixed by the provisions of the reorganization plan

for the Under Secretary of Commerce for Transportation, the

Chairman, and the other two members of the Federal Maritime Board

are, respectively, those which I have found to prevail in respect

of comparable officers in the executive branch of the Government.

In summary, the reorganizations provided by this plan will have

the following principal advantages: They will provide an efficient

organization headed by a single responsible official to administer

the large operating and business-type programs of the Maritime

Commission. At the same time, they will preserve the benefits of a

bipartisan board for the performance of the regulatory functions of

the Commission and the determination of subsidies. They will reduce

the number of agencies reporting directly to the President and

simplify the over-all management of the executive branch. In doing

so, they will provide more adequate machinery for supervising the

administration of the maritime programs and will facilitate their

coordination with related policies and programs of the executive

branch. Finally, they will accomplish a major advance in the

development of an effective organization of Federal transportation

programs in accord with the recommendations of the Commission on

Organization of the Executive Branch of the Government. While it is

impossible to estimate in advance the savings which will be brought

about by this plan, the improvements in administrative efficiency

resulting from it should produce substantial reductions in

expenditures for the programs transferred by the plan.

Harry S Truman.

The White House, March 13, 1950.

REORGANIZATION PLAN NO. 6 OF 1949

EFF. AUG. 20, 1949, 14 F.R. 5228, 63 STAT. 1069

Prepared by the President and transmitted to the Senate and the

House of Representatives in Congress assembled, June 20, 1949,

pursuant to the provisions of the Reorganization Act of 1949,

approved June 20, 1949 [see 5 U.S.C. 901 et seq.].

UNITED STATES MARITIME COMMISSION

SECTION 1. ADMINISTRATION OF FUNCTIONS OF COMMISSION

The Chairman of the United States Maritime Commission shall be

the chief executive and administrative officer of the United States

Maritime Commission. In executing and administering on behalf of

the Commission its functions (exclusive of functions transferred by

the provisions of section 2 of this reorganization plan) the

Chairman shall be governed by the policies, regulatory decisions,

findings, and determinations of the Commission.

SEC. 2. TRANSFER OF FUNCTIONS

There are hereby transferred from the United States Maritime

Commission to the Chairman of the Commission the functions of the

Commission with respect to (1) the appointment and supervision of

all personnel employed under the Commission, (2) the distribution

of business among such personnel and among organizational units of

the Commission, and (3) the use and expenditure of funds for

administrative purposes: Provided, That the provisions of this

section do not extend to personnel employed regularly and full time

in the offices of members of the Commission other than the

Chairman: Provided further, That the heads of the major

administrative units shall be appointed by the Chairman only after

consultation with the other members of the Commission.

SEC. 3. PERFORMANCE OF TRANSFERRED FUNCTIONS

The functions of the Chairman under the provisions of this

reorganization plan shall be performed by him or, subject to his

supervision and direction, by such officers and employees under his

jurisdiction as he shall designate.

MESSAGE OF THE PRESIDENT

To the Congress of the United States:

I transmit herewith Reorganization Plan No. 6 of 1949, prepared

in accordance with the Reorganization Act of 1949. This plan is

designed to strengthen the administration of the United States

Maritime Commission by making the Chairman and the chief executive

and administrative officer of the Commission and vesting in him

responsibility for the appointment of its personnel and the

supervision and direction of their activities. After investigation,

I have found and hereby declare that each reorganization included

in this plan is necessary to accomplish one or more of the purposes

set forth in section 2(a) of the Reorganization Act of 1949.

Unlike other major regulatory commissions, the Maritime

Commission is responsible not only for the performance of important

regulatory functions but also for the administration of large and

complex operating and promotional programs. Whereas the budgets of

most regulatory agencies amount to only a few million dollars

annually, the expenditures of the Maritime Commission exceed

$130,000,000 a year. As a result of the war the Commission is the

owner of a fleet of over 2,300 ships, aggregating more than

23,000,000 dead-weight tons.

While it is the policy of the Government, as set forth by the

Merchant Marine Act of 1936 and the Merchant Ship Sales Act of

1946, to develop and maintain an adequate and effective merchant

marine under private ownership, the Commission is still confronted

with the necessity of carrying on substantial programs for the

charter and sale of Government-owned vessels and with the

continuing task of maintaining the reserve merchant fleet.

Apart from its functions with respect to the war-built fleet, the

accomplishment of the Government's permanent objective with respect

to the development of the American merchant marine inevitably

involves the Commission to a wide variety of activities. Among

these are the regulation of rates and competitive practices of

water carriers, the determination of essential trade routes and

services, the award of subsidies to offset differences between

American and foreign costs, the design and construction of ships,

the inspection of subsidized vessels, and the training of seamen.

In the last 2 years the operation of the Maritime Commission has

been subjected to independent examination by three bodies - the

President's Advisory Committee on the Merchant Marine, the Senate

Committee on Expenditures in the Executive Departments, and the

Commission on Organization of the Executive Branch of the

Government. All of these studies have pointed to difficulties in

the conduct of the Commission's business and the necessity of

improved organization to strengthen the administration of the

agencies. The remedies proposed have differed in some respects, but

all the studies have emphasized the need of concentrating in a

single official the management of a large part of the agency's

work.

During the war such a concentration was temporarily accomplished

by Executive order under the authority of the First War Powers Act.

In effect, the Chairman of the Commission, as War Shipping

Administrator, was made directly responsible for the administration

of several major operating programs of the Commission. This

arrangement proved its value under the stress of war. About a year

after the end of the fighting, however, it was terminated and the

organization reverted to the prewar pattern.

As a result of postwar experience, the Commission appointed a

general manager in 1948. While this has brought considerable

improvement, it has not extricated the Commission from

administration to the degree which is desirable.

After careful consideration of the problems involved in improving

the operation of the Maritime Commission, I have concluded that the

proper action at this time is to concentrate in the Chairman the

responsibility for the internal administration of the agency. This

is achieved by the proposed reorganization plan by transferring to

the Chairman the appointment of the personnel of the agency, except

for the immediate assistants of the Commissioners, and the

supervision and direction of their work. This is substantially the

arrangement recommended for regulatory commissions by the

Commission on Organization of the Executive Branch of the

Government.

Such a plan of organization has many advantages. It leaves in the

Commission as a body the performance of regulatory functions, the

determination of subsidies, and the determination of major

policies. Thus, it utilizes the Commission for the type of work for

which such a body is best adapted. At the same time the plan places

under a single official the day-to-day direction of the work of the

staff within the policies and determinations adopted by the

Commission in the exercise of its functions. This will provide more

businesslike administration and help to overcome the delays,

backlogs, and operating difficulties which have hampered the

agency. At the same time by freeing the members of the Commission

of much detail, the plan will enable them to concentrate on major

questions of policy and program and thereby will obtain earlier and

better considered resolution of the basic problems of the agency.

Though the taking effect of this plan in itself may not result in

substantial immediate economies, it is probable that the improved

organizational arrangements will bring about, over a period of

time, improved operations and substantially reduced expenditures.

An itemization of these reductions, however, in advance if actual

experience under the plan is not practicable.

I am convinced that this reorganization plan will contribute

importantly to the more businesslike and efficient administration

of the programs of the Maritime Commission.

Harry S Truman.

The White House, June 20, 1949.

FEDERAL MARITIME BOARD AND MARITIME ADMINISTRATION

The following is a statement, in part, of the Department of

Commerce, relating to the organization and functions of the Federal

Maritime Board, and the Maritime Administration, created by Reorg.

Plan No. 21 of 1950, set out above, as such statement appeared in

16 F.R. 44 to 46, Jan. 3, 1951:

The statement of organization and functions of the Maritime

Administration issued in 15 F.R. 4454-4457 is hereby revoked and

the following substituted therefor:

1. Establishment. The Federal Maritime Board and the Maritime

Administration were established in the Department of Commerce by

Reorganization Plan No. 21 of 1950, effective May 24, 1950 [set out

above]. In performance of their functions the Federal Maritime

Board and the Maritime Administration are guided by the broad

declaration of policy stated in Title I of the Merchant Marine Act,

1936 (49 Stat. 1985) [46 U.S.C. 1101], reaffirmed in section 2 of

the Merchant Ship Sales Act, 1946 (60 Stat. 41) [50 App. U.S.C.

1735] * * *.

2. Organization of the Federal Maritime Board. The Federal

Maritime Board is composed of three members appointed by the

President by and with the advice and consent of the Senate. The

President designates one of the members to serve as Chairman of the

Federal Maritime Board. The Chairman serves as chief executive and

administrative officer of the Federal Maritime Board. Any two

members in office constitute a quorum for the transaction of the

business of the Federal Maritime Board, and the affirmative votes

of any two members are sufficient for the disposition of any matter

which may come before the Federal Maritime Board.

The Federal Maritime Board has the following organizational

components: (a) Office of the Chairman of the Federal Maritime

Board; (b) Offices of the Members of the Federal Maritime Board;

(c) Secretary's Office; (d) Regulation Office; and (e) Hearing

Examiners' Office.

Insofar as he deems desirable, the Chairman of the Federal

Maritime Board makes use of the officers and employees of the

Maritime Administration to perform activities for the Federal

Maritime Board.

3. Functions of the Federal Maritime Board - (a) Regulatory

functions. Under Reorganization Plan No. 21 of 1950 the Federal

Maritime Board is independent of the Secretary of Commerce in the

performance of the following functions: (1) All functions under the

provisions of sections 14 to 20, inclusive, and sections 22 to 33,

inclusive, of the Shipping Act, 1916, as amended [former 46 U.S.C.

812-819, 821-832], including such functions with respect to the

regulation and control of rates, services, practices, and

agreements of common carriers by water and of other persons;

(2) All functions with respect to the regulation and control of

rates, fares, charges, classifications, tariffs, regulations, and

practices of common carriers by water under the provisions of the

Intercoastal Shipping Act, 1933, as amended [former 46 U.S.C.

843-848];

(3) The functions with respect to the making of rules and

regulations affecting shipping in the foreign trade to adjust or

meet conditions unfavorable to such shipping, and with respect to

the approval, suspension, modification, or annulment of rules or

regulations of other Federal agencies affecting shipping in the

foreign trade, under the provisions of section 19 of the Merchant

Marine Act, 1920, as amended [46 U.S.C. 876], exclusive of

subsection (1)(a) thereof;

(4) The functions with respect to investigating discriminatory

rates, charges, classifications, and practices in the foreign

trade, and with respect to recommending legislation to correct such

discrimination, under the provisions of section 212(e) of the

Merchant Marine Act, 1936 [46 U.S.C. 1122(e)]; and

(5) So much of the functions with respect to requiring the filing

of reports, accounts, records, rates, charges, and memoranda, under

the provisions of section 21 of the Shipping Act, 1916, as amended

[former 46 U.S.C. 820], as relates to its functions under items (1)

through (4), above.

(b) Subsidy contracts. Under Reorganization Plan No. 21 of 1950

the Federal Maritime Board is guided by the general policies of the

Secretary of Commerce in performing the following functions: (1)

The functions with respect to making, amending, and terminating

construction (reconstruction or reconditioning) differential

subsidy contracts, including contracts for the construction,

reconstruction, or reconditioning of vessels and contracts for the

sale of vessels to subsidy applicants or contracts to pay a

differential subsidy and the cost of national defense features. In

the exercise of this function the Federal Maritime Board

investigates and determines the relative cost of construction of

comparable vessels in the United States and foreign countries and

the extent and character of aids and subsidies granted by foreign

governments to their merchant marines;

(2) The functions with respect to making, amending, and

terminating operating differential subsidy contracts and,

subsequent to entering into an operating differential subsidy

contract, making determinations with respect to employment and wage

conditions, and taking action on readjustment of operating cost

differentials and the sale, assignment, or transfer of the

contract. In the exercise of this function the Federal Maritime

Board investigates and determines the relative cost of operating

vessels under the registry of the United States and under foreign

registry, and the extent and character of aids and subsidies

granted by foreign governments to their merchant marines;

(3) The functions with respect to investigating and reporting on

relative construction and operating costs in the United States and

foreign maritime countries, and the relative advantages of

operating under United States or foreign registry, and on marine

insurance, navigation laws, and vessel mortgages as authorized

under section 12 of the Shipping Act, 1916 [former 46 U.S.C. 811];

and

(4) The functions with respect to requiring the filing of

reports, accounts, records, rates, charges, and memoranda as

relates to its functions as set forth in items (1), (2), and (3),

above.

(c) Charters under the Merchant Ship Sales Act, 1946. The Federal

Maritime Board makes determinations, after public hearings, as to

whether the bareboat charter of warbuilt dry cargo vessels owned by

the United States is required in the public interest in any service

then not adequately served and for which privately owned

American-flag vessels are not available for charter by private

operators on reasonable conditions and rates, and certifies its

findings to the Secretary of Commerce together with any

restrictions and conditions which it determines to be necessary or

appropriate to protect the public interest in respect to such

charters and to protect privately owned vessels against competition

from Government vessels chartered by the Secretary of Commerce. All

such charters are reviewed annually by the Federal Maritime Board

for the purpose of making recommendations to the Secretary of

Commerce as to whether conditions exist justifying the continuance

of the charters. The functions of the Secretary of Commerce with

respect to the chartering of vessels has been delegated to the

Maritime Administrator.

(d) War risk insurance. Pursuant to Public Law 763, 81st Congress

[46 U.S.C. 1281-1294], the Federal Maritime Board makes

determinations of the fair and reasonable value of vessels insured

under the provisions of Title XII of the Merchant Marine Act, 1936,

as amended [46 U.S.C. 1281-1294]. The Secretary of Commerce may not

settle an insurance claim with respect to a vessel in an amount in

excess of the vessel's fair and reasonable value as determined by

the Federal Maritime Board.

(e) In carrying out its functions under paragraphs (a), (b), (c)

and (d), above, the Federal Maritime Board adopts rules and

regulations; makes reports and recommendations to Congress;

subpoenas witnesses; administers oaths; takes evidence; requires

the production of books, papers and documents as necessary; issues

opinions; promulgates orders; engages in enforcement and other

legal proceedings; and performs all functions formerly performable

by the Maritime Commission, which have been transferred to the

Federal Maritime Board pursuant to Reorganization Plan No. 21 of

1950.

4. Organization of the Maritime Administration - (a) Maritime

Administrator. The Chairman of the Federal Maritime Board is ex

officio the Maritime Administrator. When serving as Maritime

Administrator, he reports and is responsible to the Secretary of

Commerce.

(b) Deputy Maritime Administrator. The Maritime Administrator is

assisted in his duties by a Deputy Maritime Administrator, who is

the Acting Maritime Administrator during the absence or disability

of the Maritime Administrator and, unless the Secretary of Commerce

designates another person, during a vacancy in the Office of

Maritime Administrator. The Deputy Maritime Administrator is

appointed by the Secretary of Commerce, after consultation with the

Maritime Administrator. The Deputy Maritime Administrator at no

time sits as a member of the Federal Maritime Board.

(c) Organizational components. The Maritime Administration has

the following organizational components: (1) Office of the Maritime

Administrator; (2) Staff Offices including the Office of the

General Counsel, the Program Planning Office, the Budget Office,

and the Personnel Office; (3) Division of Claims; (4) Office of

Subsidy and Government Aid; (5) Office of Maritime Operations; (6)

Office of Ship Construction; (7) Office of the Comptroller; and (8)

Offices of the Coast Directors.

(d) Use of officers and employees of the Federal Maritime Board.

Insofar as he deems desirable, the Maritime Administrator makes use

of officers and employees of the Federal Maritime Board under his

supervision as Chairman to perform activities for the Maritime

Administration.

(5) Functions of the Maritime Administrator. The Maritime

Administrator is responsible for the performance of all functions

transferred to the Secretary of Commerce under Reorganization Plan

No. 21 of 1950, subject to the limitations set forth in Department

Order No. 116, as amended, with power of redelegation, and for the

performance of activities for the Federal Maritime Board as

determined desirable by the Chairman of the Federal Maritime Board.

(a) The Office of the Maritime Administrator directs the

activities of the Maritime Administration and includes personnel

who render staff services to the Maritime Administrator.

(b) The Office of the General Counsel serves as the law office of

the Maritime Administration and Federal Maritime Board, renders

legal advice and opinions to them, and represents them in any

litigation in which either is interested. The Office of the General

Counsel has the following divisions: Division of Contracts,

Division of Legislation, and Division of Litigation.

(c) The Program Planning Office develops and recommends

long-range merchant marine policy and programs, reviews existing

policies and programs in the light of adopted long-range policy,

and conducts economic studies connected with policy formulation for

the Maritime Administrator and the Federal Maritime Board.

(d) The Budget Office develops and presents budgetary requests

and justifications and allots and maintains budgetary control of

appropriated funds for the Maritime Administration and the Federal

Maritime Board.

(e) The Personnel Office administers the personnel functions of

the Maritime Administration and the Federal Maritime Board related

to employment and position classification, including recruitment,

placement, separations, disciplinary actions, counseling and

grievance appeal services, training and safety programs, and wage

rate studies.

(f) The Division of Claims is responsible for analyzing and

recommending the basis of settlement of claims in favor of or

against the Maritime Administration arising out of the war-time

operations of the former Maritime Commission and War Shipping

Administration and other claims referred to it for processing prior

to August 22, 1949.

(g) The Office of Subsidy and Government Aid is responsible for

the processing of applications to the Federal Maritime Board and

the Maritime Administration for subsidy or other government aid and

the administration of government aid contracts after their

execution, for the coordination of the work of other organizational

components in connection therewith, and for the making of

recommendations with respect to the policy relating to vessel

chartering. The Office of Subsidy and Government Aid has the

following divisions: Division of Construction Cost Comparison,

Division of Contract Evaluation and Administration, Division of

Operating Cost Comparison, and Division of Shipping Data.

(h) The Office of Maritime Operations is responsible for the

conduct of activities relating to the charter, operation, repair,

reconversion, betterment, reconditioning, and disposal of

government-owned merchant vessels; the maintenance of reserve

fleets; the training of seagoing personnel; the procurement and

disposal of real and personal property; the maintenance or

operation of warehouses, marine terminals and reserve shipyards

port development; and the rendering of office services. The Office

of Maritime Operations has the following divisions: Division of

General Services, Division of Maintenance and Repair, Division of

Maritime Training, Division of Vessel Custody, and Division of

Vessel Operations.

(i) The Office of Ship Construction is responsible for the

conduct of activities of the Maritime Administration and the

Federal Maritime Board relating to ship design and construction,

and the rendering of technical direction to the Office of Maritime

Operations with respect to the reconversion, betterment and

reconditioning of Maritime Administration-owned vessels. The Office

of Ship Construction has the following divisions: Division of

Estimates, Division of Preliminary Design, Division of Production,

and Division of Technical Development; and contains the Vessel

Trial and Guarantee Survey Boards.

(j) The Office of the Comptroller is responsible for the

accounting, auditing, and insurance activities of the Maritime

Administration and the Federal Maritime Board. The Office of the

Comptroller has the following divisions: Division of Accounts,

Division of Audits, Division of Credits and Collections, and

Division of Insurance.

(k) The Offices of the Atlantic, Gulf, and Pacific Coast

Directors are responsible for maintaining general surveillance over

the management of field offices of the various organizational

components located on their respective coasts.

6. Filing of applications and other formal documents. All

applications and other formal documents required to be filed with

either the Federal Maritime Board or the Maritime Administration

shall be filed with the Secretary's Office, Federal Maritime Board.

NATIONAL SHIPPING AUTHORITY AND ADDITIONAL FUNCTIONS OF MARITIME

ADMINISTRATOR

The following is a statement of the Department of Commerce, 16

F.R. 2642, 2643, Mar. 23, 1951, amending the statement of such

Department set out in 16 F.R. 44 to 46, Jan. 3, 1951 (set out as a

note above):

The statement of organization and functions of the Federal

Maritime Board and the Maritime Administration issued in 16 F.R. 44

[set out as a note above] is amended by the addition of the

following:

Establishment of the National Shipping Authority. There is

established in the Maritime Administration a National Shipping

Authority, headed by a Director responsible to the Maritime

Administrator.

The National Shipping Authority shall perform such functions in

connection with the formulation and execution of plans and programs

for the operation, acquisition, and allocation of merchant vessels

and such other duties as the Maritime Administrator, within the

scope of his authority, may from time to time direct.

Functions of the Maritime Administrator. In addition to the

functions contained in paragraph 5 of 16 F.R. 44, the Maritime

Administrator shall perform the following functions:

(a) The functions conferred upon the Secretary of Commerce by

Public Law 591, 81st Congress, 2d Session [46 U.S.C. note prec. 1,

883 note; 50 App. U.S.C. 1735 note, 1738, 1744];

(b) The functions conferred upon the Secretary of Commerce by

Public Law 763, 81st Congress, 2d Session [46 U.S.C. 1281-1294],

except that the authority "to find that insurance adequate to the

needs of the waterborne commerce of the United States cannot be

obtained on reasonable terms and conditions in companies authorized

to do an insurance business in a State of the United States" is

reserved to the Secretary;

(c) The functions conferred upon the Secretary by Public Law 911,

81st Congress, 2d Session [act Jan. 6, 1951, ch. 1213, 64 Stat.

1224];

(d) The functions conferred upon the Secretary by Reorganization

Plan No. 21 of 1950 [set out above] to take action with respect to

the determination of essential trade routes and services or

subsequent modifications;

(e) The functions conferred upon the Secretary by Reorganization

Plan No. 21 of 1950 to establish policies of general application

for the purchase, acquisition, construction, charter, and sale of

vessels and for the administration of programs concerning operating

subsidies, reserve funds and transfers to foreign ownership or

registry, and charters to foreigners.

The Maritime Administrator may redelegate to officers and

employees of the Maritime Administration the performance of

particular functions herein assigned to the Maritime Administrator.

Effect on other notices. All orders, regulations, rulings,

certificates, directives, and other actions heretofore issued or

taken under the notices appearing at 15 F.R. 8739 and 16 F.R. 1130

and in effect immediately prior to the effective date of this

notice shall remain in full force and effect until hereafter

suspended, amended, or revoked under appropriate authority.

This notice amends the notice issued in 15 F.R. 3195, "Temporary

Delegations of Authority under Reorganization Plan No. 21 of 1950."

Effective date. This notice is effective March 13, 1951.

APPOINTMENT OF PERSONNEL

The following is a legal opinion, in part, dated August 29, 1950,

and prepared by the General Counsel of the Maritime Administration,

with respect to the authority of the chairman of the Federal

Maritime Board to make appointments of personnel under the Board

and the extent of the authority of the Secretary of Commerce under

Reorg. Plan No. 21 of 1950, set out above, as to such personnel:

Sec. 103 of Reorganization Plan 21 of 1950 [set out above]

transferred to the Chairman of the Federal Maritime Board "all

functions of the Chairman of the United States Maritime Commission

(including his functions under the provisions of Reorganization

Plan No. 6 of 1949 [set out above]) with respect to the functions

transferred to the Board by the provisions of Sections 104 and 105"

of Plan 21. Section 104 transferred to the Board the regulatory

functions of the Maritime Commission and Section 105 transferred

certain of the subsidy functions of the Commission, not including,

however, the function of administering subsidy contracts.

Sec. 106 of Plan 21 provides for the status of the Board and of

the Chairman and their relationship to the Secretary of Commerce. *

* *.

In order to fully understand the intent of Plan 21, it is

necessary to examine the status of the appointing authority of the

Chairman of the Maritime Commission immediately prior to the

transfer of functions under Plan 21. As set forth above, Section

103 of Plan 21 makes specific reference to the authority of the

Chairman of the Commission under Plan 6 of 1949 as being

transferred to the Chairman of the Board.

Reorganization Plan 6 was transmitted by the President to

Congress on June 20, 1949. Its purpose as stated in the message of

transmittal [set out in Appendix to Title 5, Government

Organization and Employees] was "to strengthen the administration

of the United States Maritime Commission by making the Chairman the

chief executive and administrative officer of the Commission and

vesting in him responsibility for the appointment of its personnel

and the supervision and direction of their activities." (Emphasis

supplied.)

Section 2 of Plan 6 transferred from the Commission to the

Chairman certain functions including the appointment of personnel

(exclusive of "personnel employed regularly and full time" in the

offices of other members) with the proviso that the Chairman would

consult with other members before appointing the heads of major

administration units. Section 1 of Plan 6 provided that in

exercising certain functions the Chairman should be guided by

policies of the Commission. This section significantly excepted

from such requirement the authority transferred to the Chairman

under Section 2 including the appointive authority. Thus the

appointive authority (excluding only personnel in offices of

Commission members) was exclusively and, except for the proviso

relating to heads of major units, unconditionally vested in the

Chairman of the Commission until Plan 21 took effect.

Plan 21 transferred all the functions of the Commission and of

the Chairman of the Commission. As stated above, some of these

functions went to the Federal Maritime Board (Secs. 104, 105).

Others were transferred to the Chairman of the Board (Sec. 103).

Functions not otherwise transferred went to the Secretary of

Commerce (Sec. 204).

The functions transferred to the Board and to the Chairman relate

to regulatory authority (to be exercised independently) and subsidy

functions (to be exercised subject to the guidance of general

policies established by the Secretary of Commerce). As Section 103

transferring functions to the Chairman relating to these subjects

makes specific reference to the authority of the Chairman of the

Commission under Plan 6, which included the appointment of

personnel, it appears evident that so much of the appointive power

as relates to personnel performing these functions passed to the

Chairman of the Board to be exercised by him independently as to

personnel performing regulatory functions and subject to the

injunction of Sec. 106 (to be guided by the policies of the

Secretary of Commerce) as to personnel performing services in

connection with the subsidy functions performed by the Board.

This conclusion is reinforced by reference to a decision of the

Attorney General to the Secretary of Commerce, dated May 13, 1940,

construing somewhat similar provisions in a reorganization plan

transferring to the Department certain functions of the Civil

Aeronautics Authority [Reorg. Plan No. IV of 1940, Sec. 7, eff.

June 30, 1940, 5 F.R. 2421, 54 Stat. 1234, set out in the Appendix

to Title 5, Government Organization and Employees] * * *. Despite

the specific mention of the personnel functions the Attorney

General held that the appointive authority was in the Board. This

decision was based upon reasoning recognizing the practical fact

that independence in the exercise of the functions of the Board

could not be achieved if the control of personnel and finances of

the Board were in the Secretary of Commerce.

I have reached the conclusion that the appointive authority as to

personnel engaged in regulatory and certain of the subsidy

functions is vested in the Chairman, notwithstanding certain facts

which might tend to indicate a different result.

Chief among these is the statement contained in the President's

message transmitting Plan 21, as follows:

"In making the Chairman of the Federal Maritime Board the

Maritime Administrator, the plan adopts an arrangement

substantially similar to that which prevailed during the war, when

the same individual served as Chairman of the Maritime Commission

and head of the War Shipping Administration. This arrangement will

have important advantages. It will facilitate cooperation between

the Board and the Administration on matters of concern to both.

Also, it will avoid dividing the personnel of the Maritime

Commission, since the Chairman of the Board will supervise the

personnel assisting it in the performance of its functions, as is

now the case in the Maritime Commission, and in his capacity as

Administrator he will have charge of the personnel carrying on the

work of the Maritime Administration. The plan provides for the

joint operation of the officers and employees under the

Administrator and Chairman as a single body of personnel. The

maintenance of a unified staff is essential for efficient and

economical administration because many of the technical and

professional personnel, such as ship designers and attorneys, now

assist the Maritime Commission on problems of subsidy determination

and also participate in the subsequent administration of subsidy

agreements and in performing nonsubsidy functions.

"The inclusion of the new Board in the Department of Commerce

will permit the use of the administrative services of the

Department. More important, it will eliminate the necessity of

splitting the personnel of the Maritime Commission between the

Department and an outside agency. * * *".

A literal reading of portions of this statement might be used as

a basis for argument that a single appointive authority was

intended. This meaning cannot be given the statement, however, in

view of the specific language of the Plan as previously discussed.

It is more likely that the President had in mind the fact that the

Plan seems to contemplate a delegation of authority from the

Secretary to the Chairman-Administrator by providing in Sec. 204

that "The Secretary of Commerce may from time to time make such

provisions as he shall deem appropriate authorizing the performance

by the Maritime Administrator of any function transferred to such

Secretary by the provisions of this reorganization plan." Sec. 302

provides that the Chairman-Administrator shall make joint use of

personnel.

Another argument against the conclusion stated could be based

upon the fact that Plan 21 makes specific reference in transferring

functions to the Board of certain titles and portions of the

Merchant Marine Act, 1936, as amended [this chapter], without

making any reference to Sec. 201(e) of that Act [subsec. (e) of

this section] which is the source of the appointive authority

formerly vested in the Commission. This argument fails, however,

when consideration is given to the fact that immediately prior to

Plan 21 this authority was vested not in the Commission but in the

Chairman of the Commission under Plan 6 and is included in the

specific reference to Plan 6.

It is clear that both Plan 21 and the President's transmittal

message contemplate the use of personnel to perform dual functions

for the Board and for the Administrator. It is equally clear that

the Plan itself does not contain provisions vesting in a single

appointive authority the power to establish such a group of

personnel. It is evident, therefore, that the President

contemplated that this objective be achieved by the Chairman's

voluntarily utilizing the services of employees appointed under the

authority of the Secretary to perform services in connection with

Board functions and, in his capacity as Administrator, utilizing

the services of employees employed by him under the direct grant of

authority in the Plan to perform duties assigned to him by the

Secretary. Thus the Plan, although directing the joint use of

personnel, intends that result to be accomplished through the use

of the administrative discretion granted the Chairman-Administrator

by Section 302 of the Plan to be exercised in the interest of

economy and efficiency, and does not vest exclusive appointing

authority either in the Secretary or the Chairman-Administrator.

-End-

-CITE-

46 USC APPENDIX Sec. 1111a 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1111a. Administrative expenses; limitations

-STATUTE-

After June 30, 1939, the Federal Maritime Commission and the

Secretary of Transportation shall not incur any obligations for

administrative expenses except pursuant to an annual appropriation

specifically therefor or to authority to use appropriations or

other funds otherwise available therefor.

-SOURCE-

(June 25, 1938, ch. 681, title I, 52 Stat. 1119; Pub. L. 97-31,

Sec. 12(59), Aug. 6, 1981, 95 Stat. 158.)

-COD-

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1936,

which comprises this chapter.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted reference to the Federal

Maritime Commission and the Secretary of Transportation for

reference to the United States Maritime Commission. For prior

transfers of functions of United States Maritime Commission, see

Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1112 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1112. Operation of property by Secretary

-STATUTE-

Notwithstanding any other provision of law, the Secretary of

Transportation may, in accordance with good business methods and on

such terms and conditions as he determines to effectuate the policy

of this chapter, operate or lease any lands, docks, wharves, piers,

or real property under his control, and all money received from

such operation or lease shall be available for expenditure by the

Secretary of Transportation as provided in this chapter. The

Secretary of Transportation may, upon such terms and conditions as

he may prescribe in accordance with sound business practice, make

such extensions and accept such renewals of the notes and other

evidences of indebtedness hereby transferred, and of the mortgages

and other contracts securing the same, as he may deem necessary to

carry out the objects of this chapter.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 202, 49 Stat. 1986; Aug.

26, 1937, ch. 822, Sec. 1, 50 Stat. 839; June 23, 1938, ch. 600,

Sec. 1, 52 Stat. 953; Pub. L. 97-31, Sec. 12(60), Aug. 6, 1981, 95

Stat. 158.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission", wherever appearing, "he" for "it", and "his" for

"its", and struck out provision relating to transfer of money,

etc., to the United States Maritime Commission. For prior transfers

of functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

1938 - Act June 23, 1938, permitted extensions and renewals of

notes, other evidences of indebtedness, and mortgages.

1937 - Act Aug. 26, 1937, permitted the operation or leasing of

lands, docks, wharves, piers or real property.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1158 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1114 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1114. Transfer of powers; rules and orders

-STATUTE-

(a) Transfer of functions, powers, and duties

All the functions, powers, and duties vested in the former United

States Shipping Board by the Shipping Act, 1916 [46 App. U.S.C. 801

et seq.], the Merchant Marine Act, 1920 [46 App. U.S.C. 861 et

seq.], the Merchant Marine Act, 1928 [46 App. U.S.C. 891 et seq.],

and amendments to those Acts, and now vested in the Department of

Commerce pursuant to section 12 of the President's Executive Order

[No. 6166] of June 10, 1933, are hereby transferred to the Federal

Maritime Commission and the Secretary of Transportation: Provided,

however, That after June 29, 1936, no further construction loans

shall be made under the provisions of section 11 of the Merchant

Marine Act, 1920, as amended.

(b) Rules and regulations

The Commission and the Secretary of Transportation are authorized

to adopt all necessary rules and regulations to carry out the

powers, duties, and functions vested in them by this chapter.

(c) Enforcement of orders; penalties for violations

The orders issued by the Federal Maritime Commission and the

Secretary of Transportation in the exercise of the powers

transferred to them by this subchapter shall be enforced in the

same manner as heretofore provided by law for enforcement of the

orders issued by the former United States Shipping Board, and

violation of such orders shall subject the person or corporation

guilty of such violation to the same penalties or punishment as

heretofore provided for violation of the orders of said Board.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 204, 49 Stat. 1987; June

23, 1938, ch. 600, Sec. 41, 52 Stat. 964; Pub. L. 97-31, Sec.

12(61), Aug. 6, 1981, 95 Stat. 158; Pub. L. 104-88, title III, Sec.

335(c)(1), Dec. 29, 1995, 109 Stat. 954.)

-REFTEXT-

REFERENCES IN TEXT

The Shipping Act, 1916, referred to in subsec. (a), is act Sept.

7, 1916, ch. 451, 39 Stat. 728, as amended, which is classified

generally to chapter 23 (Sec. 801 et seq.) of this Appendix. For

complete classification of this Act to the Code, see section 842 of

this Appendix and Tables.

The Merchant Marine Act, 1920, referred to in subsec. (a), is act

June 5, 1920, ch. 250, 41 Stat. 988, as amended, which (except for

sections repealed or reenacted in Title 46, Shipping) is classified

principally to chapter 24 (Sec. 861 et seq.) of this Appendix. For

complete classification of this Act to the Code, see section 889 of

this Appendix and Tables.

The Merchant Marine Act, 1928, referred to in subsec. (a), is act

May 22, 1928, ch. 675, 45 Stat. 689, as amended, which is

classified principally to chapter 24A (Sec. 891 et seq.) of this

Appendix. For complete classification of this Act to the Code, see

section 891x of this Appendix and Tables.

Executive Order No. 6166 of June 10, 1933, referred to in subsec.

(a), is set out under section 901 of Title 5, Government

Organization and Employees.

-MISC1-

AMENDMENTS

1995 - Subsec. (a). Pub. L. 104-88 struck out "the Intercoastal

Shipping Act, 1933," after "the Merchant Marine Act, 1928,".

1981 - Subsec. (a). Pub. L. 97-31, Sec. 12(61)(A), substituted

"Federal Maritime Commission and the Secretary of Transportation"

for "United States Maritime Commission". For prior transfers of

functions of United States Maritime Commission, see Transfer of

Functions note below.

Subsec. (b). Pub. L. 97-31, Sec. 12(61)(B)-(D), inserted "and the

Secretary of Transportation" after "Commission" and substituted

"are authorized" for "is authorized" and "vested in them" for

"vested in it". For prior transfers of functions of the Commission,

meaning the United States Maritime Commission, see Transfer of

Functions note below.

Subsec. (c). Pub. L. 97-31, Sec. 12(61)(A), (D), substituted

"Federal Maritime Commission and the Secretary of Transportation"

for "United States Maritime Commission" and "transferred to them"

for "transferred to it". For prior transfers of functions of United

States Maritime Commission, see Transfer of Functions note below.

1938 - Subsec. (b). Act June 23, 1938, struck out provisions

which authorized the President to transfer to the Interstate

Commerce Commission any or all regulatory powers, duties and

functions of the United States Maritime Commission.

EFFECTIVE DATE OF 1995 AMENDMENT

Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2

of Pub. L. 104-88, set out as an Effective Date note under section

701 of Title 49, Transportation.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 21 of 1950 and Reorg. Plan No. 7 of 1961, set

out under section 1111 of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1151, 1244 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1115 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1115. Discrimination at ports by carriers by water against

other carriers

-STATUTE-

Without limiting the power and authority otherwise vested in the

Federal Maritime Commission and the Secretary of Transportation, it

shall be unlawful for any common carrier by water, either directly

or indirectly, through the medium of an agreement, conference,

association, understanding, or otherwise, to prevent or attempt to

prevent any other such carrier from serving any port designed for

the accommodation of ocean-going vessels located on any improvement

project authorized by the Congress or through it by any other

agency of the Federal Government, lying within the continental

limits of the United States, at the same rates which it charges at

the nearest port already regularly served by it.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 205, 49 Stat. 1987; Pub. L.

97-31, Sec. 12(62), Aug. 6, 1981, 95 Stat. 159.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Federal Maritime Commission and

the Secretary of Transportation" for "Commission". For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

REPEALS

For effect of subtitle IV (Sec. 10101 et seq.) of Title 49,

Transportation, see note set out preceding section 801 of this

Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1116 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1116. Construction fund

-STATUTE-

All sums of money now in the construction loan fund created by

section 11 (!1) of the Merchant Marine Act, 1920, as amended,

together with the proceeds of all debts, accounts, choses in

action, and the proceeds of all notes, mortgages, and other

evidences of indebtedness, hereby transferred to the Department of

Transportation, and all of the proceeds of sales of ships and

surplus property heretofore or hereafter made, including proceeds

of notes or other evidences of debt taken therefor and the interest

thereon, and, notwithstanding any other provision of law, all money

representing amounts of unclaimed wages, salvage awards and

miscellaneous unclaimed items carried as liabilities on the books

of the former United States Shipping Board Merchant Fleet

Corporation and all money heretofore or hereafter received from the

operation or leasing of lands, docks, wharves, piers, or real

property shall be deposited in the Treasury of the United States

and there maintained as a revolving fund, herein designated as the

construction fund, and shall be available for expenditure by the

Secretary of Transportation in carrying out the provisions of this

chapter. All moneys received by the Department of Transportation

under the provisions of this chapter shall be deposited in its

construction fund, and all disbursements made by the Secretary of

Transportation under authority of this chapter shall be paid out of

said fund, and, notwithstanding any other provision of law, all

disbursements applicable to the money referred to in this section

may be made by the Secretary of Transportation out of said fund.

Further appropriations by Congress to replenish said fund are

authorized.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 206, 49 Stat. 1987; Aug.

26, 1937, ch. 822, Sec. 2, 50 Stat. 839; Pub. L. 97-31, Sec.

12(63), Aug. 6, 1981, 95 Stat. 159.)

-REFTEXT-

REFERENCES IN TEXT

Section 11 of the Merchant Marine Act, 1920, as amended, referred

to in text, was classified to section 870 of former Title 46,

Shipping, and was repealed by act June 29, 1936, ch. 858, title IX,

Sec. 903(b), 49 Stat. 2016.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Department of Transportation"

for "Commission" in two places and "Secretary of Transportation"

for "Commission" in three places. For prior transfers of functions

of the Commission, meaning the United States Maritime Commission,

see Transfer of Functions note below.

1937 - Act Aug. 26, 1937, amended section generally.

EFFECTIVE DATE OF 1937 AMENDMENT

Amendment effective as of June 29, 1936, see section 4 of act

Aug. 26, 1937.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

LIMITATIONS ON CONSTRUCTION FUND

Acts July 30, 1947, ch. 359, title I, Sec. 101, 61 Stat. 603, and

June 30, 1948, ch. 775, Sec. 101, 62 Stat. 1199, which were the

Independent Offices Appropriation Act, 1948, and The Supplemental

Independent Offices Appropriation Act, 1949, respectively, placed

limitations on obligations from the construction fund established

by this section.

REDUCTION OF CONTRACT AUTHORIZATIONS

Act May 29, 1945, ch. 136, 59 Stat. 226, authorized the transfer

out of the unexpended balance of appropriations made to the

Maritime Commission under the head "Construction fund, United

States Maritime Commission Act, June 24, 1936, revolving fund" up

until May 29, 1945, of the sum of $3,100,000,000 to be carried to

the surplus fund and be covered into the Treasury and reduced the

contract authorization for ship construction and facilities

incident by $4,265,000,000.

ADDITIONAL APPROPRIATIONS

Act Aug. 25, 1941, ch. 409, title III, 55 Stat. 682, appropriated

an amount not to exceed $1,296,650,000 to enable the Commission to

enter into further contracts for the construction of vessels,

production and procurement of parts, equipment, plants, etc.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1116a, 1242 of this

Appendix.

-FOOTNOTE-

(!1) See References in Text note below.

-End-

-CITE-

46 USC APPENDIX Sec. 1116a 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1116a. Application to obligations against emergency ship

construction fund

-STATUTE-

On and after March 22, 1947, the construction fund established by

section 1116 of this Appendix shall be available for the payment of

obligations previously incurred against the emergency ship

construction fund.

-SOURCE-

(Mar. 22, 1947, ch. 20, title II, 61 Stat. 18; 1950 Reorg. Plan No.

21, Sec. 306, eff. May 24, 1950, 15 F.R. 3178, 64 Stat. 1277.)

-COD-

CODIFICATION

Words "United States Maritime Commission" preceding "construction

fund" omitted and words "established by section 1116 of this

Appendix" inserted following "construction fund" on authority of

Reorg. Plan No. 21 of 1950, set out under section 1111 of this

Appendix.

Section was enacted as part of act Mar. 22, 1947, popularly known

as the Urgent Deficiency Appropriation Act, 1947, and not as part

of the Merchant Marine Act, 1936, which comprises this chapter.

-End-

-CITE-

46 USC APPENDIX Sec. 1117 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1117. Power to contract; audit of accounts; reports of

Comptroller General

-STATUTE-

The Federal Maritime Commission and the Secretary of

Transportation may enter into such contracts, upon behalf of the

United States, and may make such disbursements as may, in its or

his discretion, be necessary to carry on the activities authorized

by this chapter, or to protect, preserve, or improve the collateral

held by the Commission or Secretary to secure indebtedness, in the

same manner that a private corporation may contract within the

scope of the authority conferred by its charter. All the

Commission's and Secretary's financial transactions shall be

audited in the General Accounting Office according to approved

commercial practice as provided in the Act of March 20, 1922 (42

Stat. 444): Provided, That it shall be recognized that, because of

the business activities authorized by this chapter, the accounting

officers shall allow credit for all expenditures shown to be

necessary because of the nature of such authorized activities,

notwithstanding any existing statutory provision to the contrary.

The Comptroller General shall report annually or oftener to

Congress any departure by the Commission or Secretary from the

provisions of this chapter.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 207, 49 Stat. 1988; June

23, 1938, ch. 600, Sec. 2, 52 Stat. 954; Pub. L. 97-31, Sec.

12(64), Aug. 6, 1981, 95 Stat. 159.)

-REFTEXT-

REFERENCES IN TEXT

Act of March 20, 1922, ch. 104, 42 Stat. 444, referred to in

text, is not classified to the Code.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Federal Maritime Commission and

the Secretary of Transportation" for "Commission" first time it

appeared, and inserted "or his" after "its", "or Secretary" after

"Commission" and "and Secretary's" after "Commission's". For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

1938 - Act June 23, 1938, authorized disbursements, and provided

for the protection, preservation, or improvement of collateral held

to secure indebtedness.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 11 section 362.

-End-

-CITE-

46 USC APPENDIX Sec. 1118 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1118. Reports to Congress

-STATUTE-

The Federal Maritime Commission and the Secretary of

Transportation shall, by April 1 each year, make a report to

Congress, which shall include the results of its or his

investigations, a summary of its or his transactions, its or his

recommendations for legislation, a statement of all receipts under

this chapter, and the purposes for which all expenditures were

made.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 208, 49 Stat. 1988; Pub. L.

94-273, Sec. 36, Apr. 21, 1976, 90 Stat. 380; Pub. L. 97-31, Sec.

12(65), Aug. 6, 1981, 95 Stat. 159.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Federal Maritime Commission and

the Secretary of Transportation" for "Commission" and inserted "or

his" after "its" in three places. For prior transfers of functions

of the Commission, meaning the United States Maritime Commission,

see Transfer of Functions note below.

1976 - Pub. L. 94-273 substituted "by April 1 each year" for "at

the beginning of each regular session".

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

REPORTING OF ADMINISTERED AND OVERSIGHT FUNDS

Pub. L. 106-398, Sec. 1 [div. C, title XXXV, Sec. 3506], Oct. 30,

2000, 114 Stat. 1654, 1654A-494, provided that: "The Maritime

Administration, in its annual report to the Congress under section

208 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1118), and in

its annual budget estimate submitted to the Congress, shall state

separately the amount, source, intended use, and nature of any

funds (other than funds appropriated to the Administration or to

the Secretary of Transportation for use by the Administration)

administered, or subject to oversight, by the Administration."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1213, 1222 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1119 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1119. Authorization of appropriations

-STATUTE-

(a) Except as provided in subsection (b) of this section, there

are authorized to be appropriated such sums as may be necessary to

carry out the provisions of this chapter.

(b) Notwithstanding any other provision of this chapter or any

other law, there are authorized to be appropriated after December

31, 1967, for the use of the Maritime Administration for -

(1) acquisition, construction, or reconstruction of vessels;

(2) construction-differential subsidy incident to the

construction, reconstruction, or reconditioning of ships;

(3) cost of national defense features;

(4) payment of obligations incurred for operating-differential

subsidy;

(5) expenses necessary for research and development activities

(including reimbursement of the Vessel Operations Revolving Fund

for losses resulting from expenses of experimental ship

operations);

(6) reserve fleet expenses;

(7) maritime training at the Merchant Marine Academy at Kings

Point, New York;

(8) financial assistance to State maritime academies under

section 1295c of this Appendix;

(9) the Vessel Operations Revolving Fund;

(10) (!1) expenses necessary for additional training provided

under section 1295d of this Appendix;

(10) (!1) expenses necessary to carry out subchapter XIII of

this chapter; and

(11) other operations and training expenses related to the

development of waterborne transportation systems, the use of

waterborne transportation systems, or general administration;

only such sums as the Congress may specifically authorize by law:

Provided, however, That the Congress finds and declares that the

national policy set forth in section 1101 of this Appendix requires

that there should be authorized and appropriated for fiscal years

1971 through 1980 such sums as may be necessary to construct 300

ships of such sizes, types and designs as the Secretary of

Transportation may consider best suited to carry out the purposes

and policy of this chapter.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 209, 49 Stat. 1988; Aug.

26, 1937, ch. 822, Sec. 3, 50 Stat. 839; Pub. L. 90-81, Sept. 5,

1967, 81 Stat. 193; Pub. L. 91-469, Sec. 2, Oct. 21, 1970, 84 Stat.

1018; Pub. L. 95-173, Sec. 6(a), Nov. 12, 1977, 91 Stat. 1360; Pub.

L. 96-387, Sec. 4, Oct. 7, 1980, 94 Stat. 1546; Pub. L. 96-453,

Sec. 3(a), Oct. 15, 1980, 94 Stat. 2008; Pub. L. 97-31, Sec.

12(66), Aug. 6, 1981, 95 Stat. 159.)

-COD-

CODIFICATION

Subsec. (c) of this section, which related to availability, for

all objects of expenditure under this chapter, of all

appropriations and unexpended balances of appropriations in

connection with then existing ocean-mail contracts entered into

under sections 891e to 891r of former Title 46, Shipping, in

connection with which the powers and duties with respect thereto

had been transferred from the Postmaster General to the United

States Maritime Commission by section 1144 of this Appendix, was

omitted.

Subsec. (d) of this section, which made funds available under

former subsection (b) available for expenditures authorized by

former United States Maritime Commission under former provisions in

section 1111 of this Appendix, as soon as a majority of the members

of the United States Maritime Commission had taken the oath of

office, notwithstanding section 1246 of this Appendix, was omitted.

-MISC1-

AMENDMENTS

1981 - Subsec. (b). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Secretary of Commerce".

1980 - Subsec. (b). Pub. L. 96-453, which directed that pars. (7)

and (9) be amended, that par. (10), relating to other operations

and training expenses, be redesignated as (11), and that a par.

(10), relating to expenses necessary to carry out subchapter XIII

of this chapter, be added, was executed by amending pars. (8) and

(10), set out first, and adding a par. (10), set out second, as the

probable intent of Congress, in view of the prior redesignation of

par. (7) as (8), par. (9) as (10), set out first and (10) as (11)

by Pub. L. 96-387. The amendment substituted in par. (8) "State

maritime academies under section 1295c of this Appendix" for "State

Marine Schools" and in par. (10) "for additional training provided

under section 1295d" for "for extension and correspondence courses

authorized under section 1126(c)" and added a par. (10), relating

to expenses necessary to carry out subchapter XIII of this chapter.

Pub. L. 96-387 struck out in par. (2) "and cost of national

defense features" after "subsidy", added par. (3), and redesignated

former pars. (3) to (10) as (4) to (11), respectively.

1977 - Subsec. (b). Pub. L. 95-173 added pars. (9) and (10).

1970 - Subsec. (b). Pub. L. 91-469 authorized appropriations for

construction of 300 ships for fiscal years 1971 through 1980.

1967 - Subsec. (a). Pub. L. 90-81 inserted "Except as provided in

subsection (b) of this section" at beginning of subsec.

Subsec. (b). Pub. L. 90-81 added subsec. (b). A prior subsec.

(b), making available to the United States Maritime Commission all

appropriations and unexpended balances of the United States

Shipping Board Bureau and the United States Shipping Board Merchant

Fleet Corporation, had been eliminated as executed and obsolete.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-453 effective Oct. 1, 1981, see section 4

of Pub. L. 96-453, set out as an Effective Date note under section

1295 of this Appendix.

EFFECTIVE DATE OF 1977 AMENDMENT

Section 6(b) of Pub. L. 95-173 provided that: "The amendment made

by subsection (a) of this section [amending this section] shall be

effective for fiscal years beginning after September 30, 1978."

-FOOTNOTE-

(!1) See 1980 Amendment note below.

-End-

-CITE-

46 USC APPENDIX Sec. 1120 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1120. Survey of existing merchant marine for creation of

adequate American-owned fleet

-STATUTE-

It shall be the duty of the Secretary of Transportation to make a

survey of the American merchant marine, as it now exists, to

determine what additions and replacements are required to carry

forward the national policy declared in section 1101 of this

Appendix, and the Secretary of Transportation is directed to study,

perfect, and adopt a long-range program for replacements and

additions to the American merchant marine so that as soon as

practicable the following objectives may be accomplished:

First, the creation of an adequate and well-balanced merchant

fleet, including vessels of all types, to provide shipping service

essential for maintaining the flow of the foreign commerce of the

United States, the vessels in such fleet to be so designed as to be

readily and quickly convertible into transport and supply vessels

in a time of national emergency. In planning the development of

such a fleet the Secretary of Transportation is directed to

cooperate closely with the Navy Department as to national-defense

needs and the possible speedy adaptation of the merchant fleet to

national-defense requirements.

Second, the ownership and the operation of such a merchant fleet

by citizens of the United States insofar as may be practicable.

Third, the planning of vessels designed to afford the best and

most complete protection for passengers and crew against fire and

all marine perils.

Fourth, the creation and maintenance of efficient shipbuilding

and repair capacity in the United States with adequate numbers of

skilled personnel to provide an adequate mobilization base.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 210, 49 Stat. 1989; Pub. L.

91-469, Secs. 3, 35(a), Oct. 21, 1970, 84 Stat. 1018, 1035; Pub. L.

97-31, Sec. 12(67), Aug. 6, 1981, 95 Stat. 159.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469, Sec. 35(a), substituted "Secretary of

Commerce" for "Commission", twice in introductory par. and once in

par. "First".

Par. First. Pub. L. 91-469, Sec. 3(1), struck out "on all routes"

after "shipping service".

Par. Fourth. Pub. L. 91-469, Sec. 3(2), added par. "Fourth".

COMMISSION ON MERCHANT MARINE AND DEFENSE

Pub. L. 98-525, title XV, Sec. 1536, Oct. 19, 1984, 98 Stat.

2633, as amended by Pub. L. 99-145, title XIV, Sec. 1431, Nov. 8,

1985, 99 Stat. 754; Pub. L. 99-426, Sec. 1, Sept. 30, 1986, 100

Stat. 979, provided that:

"(a) There is hereby established a commission to be known as the

Commission on Merchant Marine and Defense (hereinafter in this

section referred to as the 'Commission').

"(b) The Commission shall study problems relating to

transportation of cargo and personnel for national defense purposes

in time of war or national emergency, the capability of the United

States merchant marine to meet the need for such transportation,

and the adequacy of the shipbuilding mobilization base of the

United States to meet the needs of naval and merchant ship

construction in time of war or national emergency. Based on the

results of the study, the Commission shall make such specific

recommendations, including recommendations for legislative action,

action by the executive branch, and action by the private sector,

as the Commission considers appropriate to foster and maintain a

United States merchant marine capable of meeting national security

requirements. The recommendations of the Commission shall be

provided in the reports of the Commission due 12 months after the

date on which sufficient members of the Commission to constitute a

quorum have been appointed and 24 months after such date, under

subsection (g).

"(c)(1) The Commission shall be composed of seven members, as

follows:

"(A) The Secretary of the Navy (or his delegate), who shall be

the chairman of the Commission.

"(B) The Administrator of the Maritime Administration (or his

delegate).

"(C) Five members appointed by the President, by and with the

advice and consent of the Senate, from among individuals of

recognized stature and distinction who by reason of their

background, experience, and knowledge in the fields of merchant

ship operations, shipbuilding and its supporting industrial base,

maritime labor, and defense matters are particularly suited to

serve on the Commission.

"(2) A vacancy in the Commission shall be filled in the manner in

which the original appointment was made. Appointments may be made

under paragraph (1)(C) without regard to section 5311(b) of title

5, United States Code. Members appointed under such paragraph shall

be appointed for the life of the Commission.

"(3) Four members of the Commission shall constitute a quorum,

but a lesser number may hold hearings. The Commission shall meet at

the call of the chairman.

"(d)(1) Members of the Commission appointed under subsection

(c)(1)(C) may each be paid at a rate equal to the daily equivalent

of the rate of basic pay payable for level IV of the Executive

Schedule for each day (including travel time) during which they are

engaged in the actual performance of the business of the

Commission. Other members of the Commission shall receive no

additional pay, allowances, or benefits by reason of their service

on the Commission.

"(2) A member of the Commission appointed under subsection

(c)(1)(C) (who is not otherwise employed by the Federal Government)

shall not be considered to be a Federal employee, except for the

purposes of -

"(A) chapter 81 of title 5, United States Code, relating to

compensation for work-related injuries; and

"(B) chapter 171 of title 28, United States Code, relating to

tort claims.

"(e)(1) The Commission may (without regard to section 5311(b) of

title 5, United States Code) appoint an executive director, who

shall be paid at a rate not to exceed the rate of basic pay payable

for level IV of the Executive Schedule.

"(2) The Commission may appoint such additional staff as it

considers appropriate. Such personnel shall be paid at a rate not

to exceed the rate of basic pay payable for grade GS-18 of the

General Schedule under section 5332 of title 5, United States Code.

"(3) The executive director and staff of the Commission may be

appointed without regard to the provisions of title 5, United

States Code, governing appointments in the executive branch and may

be paid without regard to the provisions of chapter 51 and

subchapter III of chapter 53 of such title relating to

classification and General Schedule pay rates.

"(4) The Commission may procure temporary and intermittent

services under section 3109(b) of title 5, United States Code.

"(f)(1) The Secretary of the Navy and the Administrator of the

Maritime Administration may detail personnel under their

jurisdiction to the Commission to assist the Commission in carrying

out its duties under this section.

"(2) The Secretary of the Navy and the Administrator of the

Maritime Administration may provide to the Commission such

administrative support services as the Commission may require.

"(g) Not later than nine months after the date on which

sufficient members of the Commission to constitute a quorum have

been appointed and not later than 21 months after such date, the

Commission shall submit to the President and to Congress a report

containing its findings of fact and its conclusions. Not later than

12 months after such date and not later than 24 months after such

date, the Commission, based upon those findings and conclusions,

shall prepare a report containing the recommendations of the

Commission as specified in subsection (b) and shall submit the

report to the President and Congress. Each such report shall be

prepared without any prior review or approval by any official of

the executive branch (other than the members and staff of the

Commission).

"(h) The Commission shall cease to exist 90 days after the date

on which the final report of the Commission under subsection (g) is

submitted to the President and the Congress.

"(i) There is authorized to be appropriated for fiscal years

1985, 1986, and 1987, a total of $1,500,000 to carry out this

section. Any amount appropriated under this subsection shall remain

available until 36 months after the date on which sufficient

members of the Commission to constitute a quorum have been

appointed."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1191 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1121 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1121. Investigations, studies, records, etc.

-STATUTE-

The Secretary of Transportation is authorized and directed to

investigate, determine, and keep current records of -

(a) Suitable ocean routes and lines to foreign ports; vessels and

costs of operation

The ocean services, routes, and lines from ports in the United

States, or in a Territory, district, or possession thereof, to

foreign markets, which are, or may be, determined by the Secretary

of Transportation to be essential for the promotion, development,

expansion, and maintenance of the foreign commerce of the United

States, and in reaching his determination the Secretary of

Transportation shall consider and give due weight to the cost of

maintaining each of such steamship lines, the probability that any

such line cannot be maintained except at a heavy loss

disproportionate to the benefit accruing to foreign trade, the

number of sailings and types of vessels that should be employed in

such lines, and any other facts and conditions that a prudent

business man would consider when dealing with his own business,

with the added consideration, however, of the intangible benefit

the maintenance of any such line may afford to the foreign commerce

of the United States, to the national defense, and to other

national requirements;

(b) Bulk cargo carrying services

The bulk cargo carrying services that should, for the promotion,

development, expansion, and maintenance of the foreign commerce of

the United States and for the national defense or other national

requirements be provided by United States-flag vessels whether or

not operating on particular services, routes, or lines;

(c) Vessels required in proposed routes

The type, size, speed, method of propulsion, and other

requirements of the vessels, including express-liner or super-liner

vessels, which should be employed in such services or on such

routes or lines, and the frequency and regularity of the sailings

of such vessels, with a view to furnishing adequate, regular,

certain, and permanent service, or which should be employed to

provide the bulk cargo carrying services necessary to the

promotion, maintenance, and expansion of the foreign commerce of

the United States and its national defense or other national

requirements whether or not such vessels operate on a particular

service, route, or line;

(d) Cost of construction in United States and abroad

The relative cost of construction of comparable vessels in the

United States and in foreign countries;

(e) Relative cost of operation under laws of United States and

foreign countries

The relative cost of marine insurance, maintenance, repairs,

wages and subsistence of officers and crews, and all other items of

expense, in the operation of comparable vessels under the laws,

rules, and regulations of the United States and under those of the

foreign countries whose vessels are substantial competitors of any

such American vessel;

(f) Foreign subsidies

The extent and character of the governmental aid and subsidies

granted by foreign governments to their merchant marine;

(g) Shipyards

The number, location, and efficiency of the shipyards existing on

June 29, 1936, or thereafter built in the United States;

(h) Laws applicable to aircraft

To investigate and determine what provisions of this chapter and

other Acts relating to shipping should be made applicable to

aircraft engaged in foreign commerce in order to further the policy

expressed in this chapter, and to recommend appropriate legislation

to this end;

(i) Transportation to foreign ports of cotton, coal, lumber, and

cement

The advisability of enactment of suitable legislation authorizing

the Secretary of Transportation in an economic or commercial

emergency, to aid the farmers and cotton, coal, lumber, and cement

producers in any section of the United States in the transportation

and landing of their products in any foreign port, which products

can be carried in dry-cargo vessels by reducing rates, by supplying

additional tonnage to any American operator, or by operation of

vessels directly by the Secretary of Transportation, until such

time as the Secretary of Transportation shall deem such special

rate reduction and operation unnecessary for the benefit of the

American farmers and such producers; and

(j) New designs of vessels; intercoastal and inland water

transportation

New designs, new methods of construction, and new types of

equipment for vessels; the possibilities of promoting the carrying

of American foreign trade in American vessels; and intercoastal and

inland water transportation, including their relation to

transportation by land and air.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 211, 49 Stat. 1989; Pub. L.

91-469, Secs. 4, 5, 35(a), (b), Oct. 21, 1970, 84 Stat. 1018, 1035;

Pub. L. 97-31, Sec. 12(67), Aug. 6, 1981, 95 Stat. 159.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 in introductory text and subsecs. (a) and

(i) substituted "Secretary of Transportation" for "Secretary of

Commerce" wherever appearing.

1970 - Pub. L. 91-469, Sec. 35(a), substituted "Secretary of

Commerce" for "Commission", once in introductory par., twice in

subsec. (a), and thrice in subsec. (i).

Subsec. (a). Pub. L. 91-469, Secs. 4(1), 35(b), required

consideration of the benefit the maintenance of any steamship line

may afford to other national requirements and substituted "his" for

"its" before "determination", respectively.

Subsec. (b). Pub. L. 91-469, Sec. 4(3), added subsec. (b). Former

subsec. (b) redesignated (c).

Subsec. (c). Pub. L. 91-649, Sec. 4(2), (4), (5), redesignated

former subsec. (b) as (c), inserted "method of propulsion" after

"speed", and required that the various requirements of the vessels

should be employed to provide bulk cargo carrying services,

necessary to the promotion, maintenance, and expansion of the

foreign commerce of the United States and its national defense or

other national requirements whether or not such vessels operate on

a particular service, route, or line, respectively. Former subsec.

(c) redesignated (d).

Subsec. (d). Pub. L. 91-469, Sec. 4(2), redesignated former

subsec. (c) as (d). Former subsec. (d) redesignated (e).

Subsec. (e). Pub. L. 91-469, Secs. 4(2), 5, redesignated former

subsec. (d) as (e) and struck out "in particular services, routes,

and lines" after "comparable vessels" and substituted "American

vessel" for "American service route, or line", respectively. Former

subsec. (e) redesignated (f).

Subsecs. (f) to (j). Pub. L. 91-469, Sec. 4(2), redesignated

former subsecs. (e) to (i) as (f) to (j), respectively.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1125, 1171, 1173, 1204,

1213, 1222 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1121-1 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1121-1. Priority loading for vessels engaged in coastwise

transportation of coal; exception, report to Congress

-STATUTE-

Notwithstanding any other provisions of law, any vessel engaged

in the coastwise transportation of coal produced in the United

States, from a port in the United States to another port in the

United States, shall have the priority to load at any such ports

ahead of any waiting vessels engaged in the export trade of coal

produced in the United States: Provided, That, the Secretary of

Transportation may, if he determines that it is in the national

interest, eliminate priority loading, as provided herein, at any

such port or ports, and to report such action to the Congress

within 30 days.

-SOURCE-

(Pub. L. 96-387, Sec. 5, Oct. 7, 1980, 94 Stat. 1546; Pub. L.

97-31, Sec. 12(68), Aug. 6, 1981, 95 Stat. 159; Pub. L. 99-662,

title IX, Sec. 947, Nov. 17, 1986, 100 Stat. 4200.)

-COD-

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1936,

which comprises this chapter.

-MISC1-

AMENDMENTS

1986 - Pub. L. 99-662 struck out "until June 30, 1987," after

"shall".

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce".

-End-

-CITE-

46 USC APPENDIX Sec. 1121-2 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1121-2. National Maritime Enhancement Institutes

-STATUTE-

(a) Designation by Secretary of Transportation

The Secretary of Transportation may designate National Maritime

Enhancement Institutes.

(b) Activities

Activities undertaken by such an Institute may include -

(1) conducting research concerning methods for improving the

performance of maritime industries;

(2) enhancing the competitiveness of domestic maritime

industries in international trade;

(3) forecasting trends in maritime trade;

(4) assessing technological advancements;

(5) developing management initiatives and training;

(6) analyzing economic and operational impacts of regulatory

policies and international negotiations or agreements pending

before international bodies;

(7) assessing the compatibility of domestic maritime

infrastructure systems with overseas transport systems;

(8) fostering innovations in maritime transportation pricing;

and

(9) improving maritime economics and finance.

(c) Submission of applications

An institution seeking designation as a National Maritime

Enhancement Institute shall submit an application under regulations

prescribed by the Secretary.

(d) Designation criteria

The Secretary shall designate an Institute under this section on

the basis of the following criteria:

(1) the demonstrated research and extension resources available

to the designee for carrying out the activities specified in

subsection (b) of this section;

(2) the capability of the designee to provide leadership in

making national and regional contributions to the solution of

both long-range and immediate problems of the domestic maritime

industry;

(3) the existence of an established program of the designee

encompassing research and training directed to enhancing maritime

industries;

(4) the demonstrated ability of the designee to assemble and

evaluate pertinent information from national and international

sources and to disseminate results of maritime industry research

and educational programs through a continuing education program;

and

(5) the qualification of the designee as a nonprofit

institution of higher learning.

(e) Awards

The Secretary may make awards on an equal matching basis to an

institute designated under subsection (a) of this section from

amounts appropriated. The aggregate annual amount of the Federal

share of the awards by the Secretary shall not exceed $500,000.

(f) University transportation research funds

(1) In general

The Secretary may make a grant under section 5505 of title 49

to an institute designated under subsection (a) of this section

for maritime and maritime intermodal research under that section

as if the institute were a university transportation center.

(2) Advice and consultation of MARAD

In making a grant under the authority of paragraph (1), the

Secretary, through the Research and Special Programs

Administration, shall advise the Maritime Administration

concerning the availability of funds for the grants, and consult

with the Administration on the making of the grants.

-SOURCE-

(Pub. L. 101-115, Sec. 8, Oct. 13, 1989, 103 Stat. 694; Pub. L.

101-595, title VII, Sec. 702, Nov. 16, 1990, 104 Stat. 2994; Pub.

L. 102-241, Sec. 47, Dec. 19, 1991, 105 Stat. 2227; Pub. L.

106-398, Sec. 1 [div. C, title XXXV, Sec. 3504], Oct. 30, 2000, 114

Stat. 1654, 1654A-493.)

-COD-

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1936,

which comprises this chapter.

-MISC1-

AMENDMENTS

2000 - Subsec. (f). Pub. L. 106-398 added subsec. (f).

1991 - Subsec. (e). Pub. L. 102-241 inserted "by the Secretary"

before "shall not" and substituted "$500,000" for "$100,000".

1990 - Subsec. (e). Pub. L. 101-595 amended subsec. (e)

generally. Prior to amendment, subsec. (e) read as follows: "The

Secretary may make research grants, on an equal matching basis, to

an institute from amounts appropriated pursuant to section 1(2)(B).

The aggregate amount of such grants shall not exceed $100,000."

-End-

-CITE-

46 USC APPENDIX Sec. 1122 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1122. Maritime problems; cooperation with others; cargo

carriage; recommendations

-STATUTE-

The Secretary of Transportation is authorized and directed -

(a) Study of maritime problems

To study all maritime problems arising in the carrying out of the

policy set forth in subchapter I of this chapter;

(b) Inducing preferences for American vessels; construction of

super-liners

To study, and to cooperate with vessel owners in devising means

by which -

(1) the importers and exporters of the United States can be

induced to give preference to vessels under United States

registry; and

(2) there may be constructed by or with the aid of the United

States express-liner or super-liner vessels comparable with those

of other nations, especially with a view to their use in national

emergency, and the use in connection with or in lieu of such

vessels of transoceanic aircraft service;

(c) Collaboration with owners and builders

To collaborate with vessel owners and shipbuilders in developing

plans for the economical construction of vessels and their

propelling machinery, of most modern economical types, giving

thorough consideration to all well-recognized means of propulsion

and taking into account the benefits accruing from standardized

production where practicable and desirable; and

(d) Liaison with other agencies and trade organizations

To establish and maintain liaison with such other boards,

commissions, independent establishments, and departments of the

United States Government, and with such representative trade

organizations throughout the United States as may be concerned,

directly or indirectly, with any movement of commodities in the

water-borne export and import foreign commerce of the United

States, for the purpose of securing preference to vessels of United

States registry in the shipment of such commodities.

(e) Repealed. Pub. L. 98-237, Sec. 20(a), Mar. 20, 1984, 98 Stat.

88

(f) Development and implementation of new methods of cargo

carriage; preferences for cargo containers

To study means and methods of encouraging the development and

implementation of new concepts for the carriage of cargo in the

domestic and foreign commerce of the United States, and to study

the economic and technological aspects of the use of cargo

containers as a method of carrying out the declaration of policy

set forth in subchapter I of this chapter, and in carrying out the

provisions of this subsection and such policy the United States

shall not give preference as between carriers upon the basis of

length, height, or width of cargo containers or length, height, or

width of cargo container cells and this requirement shall be

applicable to all existing container vessels and any container

vessel to be constructed or rebuilt; and

(g) Recommendations for further legislation

To make recommendations to Congress, from time to time, for such

further legislation as he deems necessary better to effectuate the

purpose and policy of this chapter.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 212, 49 Stat. 1990; Pub. L.

90-268, Sec. 1, Mar. 16, 1968, 82 Stat. 49; Pub. L. 97-31, Sec.

12(69), Aug. 6, 1981, 95 Stat. 159; Pub. L. 98-237, Sec. 20(a),

(c), Mar. 20, 1984, 98 Stat. 88, 90.)

-MISC1-

AMENDMENTS

1984 - Subsec. (e). Pub. L. 98-237, Sec. 20(a), struck out

subsec. (e) which related to investigation of any and all

discriminatory rates, charges, classifications, and practices

whereby exporters and shippers of cargo originating in the United

States are required by any common carrier by water in foreign trade

of United States to pay a higher rate from any United States port

to a foreign port than rate charged by such carrier on similar

cargo from such foreign port to such United States port, and making

of recommendations to Congress of measures by which such

discrimination could be corrected. See section 1710 of this

Appendix.

Pub. L. 98-237, Sec. 20(c), struck out undesignated pars.

following subsec. (d), "The Federal Maritime Commission is

authorized and directed - " and following subsec. (e), "The

Secretary of Transportation, is authorized and directed - ".

1981 - Pub. L. 97-31 substituted in provision preceding subsec.

(a) "Secretary of Transportation" for "Commission"; inserted,

following subsec. (d), "The Federal Maritime Commission is

authorized and directed - "; inserted, following subsec. (e), "The

Secretary of Transportation, is authorized and directed - "; and

substituted, in subsec. (g), "he" for "it". For prior transfers of

functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

1968 - Subsecs. (f), (g). Pub. L. 90-268 added subsec. (f) and

redesignated former subsec. (f) as (g).

SAVINGS PROVISION

Amendment by Pub. L. 98-237 not to affect suits filed before Mar.

20, 1984, or claims arising out of conduct engaged in before Mar.

20, 1984, and filed within 1 year after that date; and agreements,

contracts, modifications, and exemptions approved or licenses

issued by the Federal Maritime Commission prior to Mar. 20, 1984,

to continue as if approved or issued under chapter 36 (Sec. 1701 et

seq.) of this Appendix, but new agreements, contracts, and

modifications to existing, pending, or new contracts or agreements

to be considered under chapter 36 of this Appendix, see section

1719 of this Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1122a 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1122a. Vessel utilization and performance reports; filing;

civil penalty; lien upon vessel; remission or mitigation of

penalty

-STATUTE-

The operator of a vessel in waterborne foreign commerce of the

United States shall file at such times and in such manner as the

Secretary of Transportation may prescribe by regulations, such

report, account, record, or memorandum relating to the utilization

and performance of such vessel in commerce of the United States, as

the Secretary may determine to be necessary or desirable in order

to carry out the purposes and provisions of this chapter. Such

report, account, record, or memorandum shall be signed and verified

in accordance with regulations prescribed by the Secretary. An

operator who does not file the report, account, record, or

memorandum as required by this section and the regulations issued

hereunder, shall be liable to the United States in a penalty of $50

for each day of such violation. The amount of any penalty imposed

for any violation of this section upon the operator of any vessel

shall constitute a lien upon the vessel involved in the violation,

and such vessel may be libeled therefor in the district court of

the United States for the district in which it may be found. The

Secretary of Transportation may, in his discretion, remit or

mitigate any penalty imposed under this section on such terms as he

may deem proper.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 212(A), as added June 25,

1956, ch. 437, 70 Stat. 332; amended Pub. L. 97-31, Sec. 12(70),

Aug. 6, 1981, 95 Stat. 159.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 46 section 2306.

-End-

-CITE-

46 USC APPENDIX Sec. 1122b 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1122b. Mobile trade fairs

-STATUTE-

(a) Use of United States flag vessels and aircraft insofar as

practicable

The Secretary of Commerce shall encourage and promote the

development and use of mobile trade fairs which are designed to

show and sell the products of United States business and

agriculture at foreign ports and at other commercial centers

throughout the world where the operator or operators of the mobile

trade fairs use insofar as practicable United States flag vessels

and aircraft in the transportation of their exhibits.

(b) Technical and financial assistance; exceptions

The Secretary of Commerce is authorized to provide to the

operator or operators of such mobile trade fairs technical

assistance and support as well as financial assistance for the

purpose of defraying certain expenses incurred abroad (other than

the cost of transportation on foreign-flag vessels and aircraft),

when the Secretary determines that such operations provide an

economical and effective means of promoting export sales.

(c) Use of foreign currencies

In addition to any amounts appropriated to carry out trade

promotion activities, the President may use foreign currencies

owned by or owed to the United States to carry out this section.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 212(B), as added Pub. L.

87-839, Sec. 1, Oct. 18, 1962, 76 Stat. 1074; amended Pub. L.

89-66, July 7, 1965, 79 Stat. 211; Pub. L. 90-434, July 27, 1968,

82 Stat. 449; Pub. L. 100-418, title X, Sec. 10003(a), Aug. 23,

1988, 102 Stat. 1572.)

-COD-

CODIFICATION

Subsec. (d) of this section, which required the Secretary of

Commerce to submit an annual report to Congress on activities under

this chapter, terminated, effective May 15, 2000, pursuant to

section 3003 of Pub. L. 104-66, as amended, set out as a note under

section 1113 of Title 31, Money and Finance. See, also, 14th item

on page 53 of House Document No. 103-7.

-MISC1-

AMENDMENTS

1988 - Subsec. (c). Pub. L. 100-418 amended subsec. (c)

generally. Prior to amendment, subsec. (c) read as follows: "There

is authorized to be appropriated not to exceed $500,000 per fiscal

year for each of the six fiscal years during the period beginning

July 1, 1962, and ending June 30, 1968, and not to exceed $166,000

for the fiscal year ending June 30, 1969. In addition to such

appropriated sums, the President shall make maximum use of foreign

currencies owned by or owed to the United States to carry out the

purposes of this section."

1968 - Subsec. (a). Pub. L. 90-434 substituted "use insofar as

practicable" for "exclusively use".

Subsec. (b). Pub. L. 90-434 inserted "(other than the cost of

transportation on foreign-flag vessels and aircraft)," after

"expenses incurred abroad".

Subsec. (c). Pub. L. 90-434 authorized appropriation of not to

exceed $166,000 for the fiscal year ending June 30, 1969.

1965 - Subsec. (c). Pub. L. 89-66 substituted "six" and "June 30,

1968" for "three" and "June 30, 1965", respectively.

-End-

-CITE-

46 USC APPENDIX Sec. 1123 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1123. Obsolete tonnage; tramp service

-STATUTE-

The Secretary of Transportation shall make studies of and make

reports to Congress on the following:

(1) The scrapping or removal from service of old or obsolete

merchant tonnage owned by the United States or in use in the

merchant marine.

(2) Tramp shipping service and the advisability of citizens of

the United States participating in such service with vessels

under United States registry.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 213, 49 Stat. 1991; Pub. L.

87-877, Sec. 2(c), (d), Oct. 24, 1962, 76 Stat. 1201; Pub. L.

94-273, Sec. 27, Apr. 21, 1976, 90 Stat. 380; Pub. L. 97-31, Sec.

12(71), Aug. 6, 1981, 95 Stat. 159; Pub. L. 105-85, div. C, title

XXXVI, Sec. 3602, Nov. 18, 1997, 111 Stat. 2075.)

-MISC1-

AMENDMENTS

1997 - Pub. L. 105-85 substituted "on the following:" for "on - "

in introductory provisions, redesignated subsecs. (a) and (b) as

pars. (1) and (2), respectively, and realigned margins, substituted

period for semicolon at end of par. (1), directed substitution of

period for semicolon at end of par. (2) which could not be executed

because par. (2) already contained period at end, and struck out

subsec. (c) which read as follows: "The relative cost of

construction or reconditioning of comparable ocean vessels in

shipyards in the various coastal districts of the United States,

together with recommendations as to how such shipyards may compete

for work on an equalized basis; reports under this paragraph shall

be made annually on the first day of October of each year."

1981 - Pub. L. 97-31 substituted in provision preceding subsec.

(a) "Secretary of Transportation" for "Commission". For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

1976 - Subsec. (c). Pub. L. 94-273 substituted "October" for

"July".

1962 - Pub. L. 87-877 substituted "reports to Congress" for "a

report to Congress as soon as practicable on", in text preceding

subsec. (a), and inserted "; reports under this paragraph shall be

made annually on the first day of July of each year" in subsec.

(c).

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949 and Reorg. Plan No. 21 of 1950, set

out under section 1111 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1124 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1124. Witnesses

-STATUTE-

(a) Summoning; oaths; production of books and papers; fees

For the purpose of any investigation which, in the opinion of the

Secretary of Transportation, is necessary and proper in carrying

out this chapter, the Secretary may subpoena witnesses, administer

oaths and affirmations, take evidence, and require the production

of books, papers, or other documents that are relevant to the

matter under investigation. The attendance of witnesses and the

production of books, papers, or other documents may be required

from any place in the United States or any territory, district, or

possession thereof at any designated place of hearing. Witnesses

summoned before the Secretary shall be paid the same fees and

mileage that are paid witnesses in the courts of the United States.

(b) Refusal to obey subpena; court orders; contempt

Upon failure of any person to obey a subpoena issued by the

Secretary, the Secretary may invoke the aid of any district court

of the United States within the jurisdiction in which the person

resides or carries on business in requiring the attendance and

testimony of witnesses and the production of books, papers, or

other documents. Any such court may issue an order requiring the

person to appear before the Secretary, or an employee designated by

the Secretary, there to produce books, papers, or other documents,

if so ordered, or to give testimony relevant to the matter under

investigation. A failure to obey an order of the court may be

punished by the court as a contempt thereof. Process in such a case

may be served in the judicial district in which the person resides

or may be found.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 214, 49 Stat. 1991; June

23, 1938, ch. 600, Sec. 3, 52 Stat. 954; Pub. L. 91-452, title II,

Sec. 241, Oct. 15, 1970, 84 Stat. 930; Pub. L. 97-31, Sec. 12(72),

Aug. 6, 1981, 95 Stat. 159; Pub. L. 98-237, Sec. 20(a), Mar. 20,

1984, 98 Stat. 89; Pub. L. 98-595, Sec. 2, Oct. 30, 1984, 98 Stat.

3132.)

-MISC1-

AMENDMENTS

1984 - Pub. L. 98-595 amended section generally, striking out in

subsec. (a) "the Federal Maritime Commission or" before "the

Secretary of Transportation", "any member of the Commission, or any

officer or employee thereof designated by it or" before "the

Secretary", and "the Commission or" before "the Secretary shall be

paid", and in subsec. (b), striking out "the Commission or" before

"the Secretary," substituting "the Secretary" for "it or he", and

striking out "the Commission or" before "the Secretary" in two

places.

Pub. L. 98-237 provided that this section is repealed wherever it

applies to the Federal Maritime Commission, any member of the

Commission, or any member, officer, or employee designated by the

Commission. See Amendment note above for Pub. L. 98-595.

1981 - Subsec. (a). Pub. L. 97-31, Sec. 12(72)(A)-(C),

substituted "Federal Maritime Commission or the Secretary of

Transportation" for "Commission"; inserted "or the Secretary,"

after "designated by it," and "Commission". For prior transfers of

functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

Subsec. (b). Pub. L. 97-31, Sec. 12(72)(C), (D), inserted "or the

Secretary," after "Commission" in three places and substituted "it

or he" for "it". For prior transfers of functions of the

Commission, meaning the United States Maritime Commission, see

Transfer of Functions note below.

1970 - Subsec. (c). Pub. L. 91-452 struck out subsec. (c) which

related to the immunity from prosecution of any person compelled to

testify or produce evidence, document or otherwise, after claiming

his privilege against self-incrimination.

1938 - Subsec. (a). Act June 23, 1938, struck out "within the

Federal judicial district in which the witness resides" after

"place of hearing".

EFFECTIVE DATE OF 1970 AMENDMENT

Amendment by Pub. L. 91-452 effective on sixtieth day following

Oct. 15, 1970, and not to affect any immunity to which any

individual is entitled under this section by reason of any

testimony given before sixtieth day following Oct. 15, 1970, see

section 260 of Pub. L. 91-452, set out as an Effective Date;

Savings Provision note under section 6001 of Title 18, Crimes and

Criminal Procedure.

SAVINGS PROVISION

Amendment by Pub. L. 98-237 not to affect suits filed before Mar.

20, 1984, or claims arising out of conduct engaged in before Mar.

20, 1984, and filed within 1 year after that date; and agreements,

contracts, modifications, and exemptions approved or licenses

issued by the Federal Maritime Commission prior to Mar. 20, 1984,

to continue as if approved or issued under chapter 36 (Sec. 1701 et

seq.) of this Appendix, but new agreements, contracts, and

modifications to existing, pending, or new contracts or agreements

to be considered under chapter 36 of this Appendix, see section

1719 of this Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1125 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1125. Acquisition of vessels

-STATUTE-

The Secretary of Transportation is authorized to acquire by

purchase or otherwise such vessels constructed in the United States

as he may deem necessary to establish, maintain, improve, or effect

replacements upon any service, route, or line in the foreign

commerce of the United States determined to be essential under

section 1121 of this Appendix, and to pay for the same out of his

construction fund: Provided, That the price paid therefor shall be

based upon a fair and reasonable valuation, but it shall not exceed

by more than 5 per centum the cost of such vessel to the owner

(excluding any construction-differential subsidy and the cost of

national defense features paid by the Secretary of Transportation)

plus the actual cost previously expended thereon for reconditioning

less depreciation based upon a twenty-five year life expectancy of

the vessel. No such vessel shall be acquired by the Secretary of

Transportation unless the Secretary of the Navy has certified to

the Secretary of Transportation that such vessel is suitable for

economical and speedy conversion into a naval or military

auxiliary, or otherwise suitable for the use of the United States

in time of war or national emergency. Every vessel acquired under

authority of this section that is not documented under the laws of

the United States at the time of its acquisition shall be so

documented as soon as practicable.

-SOURCE-

(June 29, 1936, ch. 858, title II, Sec. 215, as added June 23,

1938, ch. 600, Sec. 4, 52 Stat. 954; amended Pub. L. 86-518, Sec.

1, June 12, 1960, 74 Stat. 216; Pub. L. 97-31, Sec. 12(73), Aug. 6,

1981, 95 Stat. 160.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" wherever appearing, "his" for "it", and "his" for

"its" in first sentence. In first sentence after "United States

as", "he" (rather than "his") was substituted for "it" as the

probable intent of Congress. For prior transfers of functions of

the Commission, meaning the United States Maritime Commission, see

Transfer of Functions note below.

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

expectancy" for "twenty-year life expectancy".

EFFECTIVE DATE OF 1960 AMENDMENT

Section 8(a) of Pub. L. 86-518 provided that: "The amendments

made by this Act [amending this section, sections 1152, 1153, 1156,

1157, 1159, 1160, 1175, 1177, 1181, 1195, 1204, 1274, and 1276 of

this Appendix, section 1276a of former Title 46, Shipping, and

section 1737 of Title 50, Appendix, War and National Defense] shall

apply only to vessels delivered by the shipbuilder on or after

January 1, 1946, and with respect to such vessels shall become

effective on January 1, 1960. With respect to vessels delivered by

the shipbuilder before January 1, 1946, the provisions of the

Merchant Marine Act, 1936 [this chapter], existing immediately

before the date of enactment of this Act [June 12, 1960] shall

continue in effect."

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949 and Reorg. Plan No. 21 of 1950, set

out under section 1111 of this Appendix.

-MISC2-

RATE OF DEPRECIATION FOR VESSELS DELIVERED BY SHIPBUILDER ON OR

AFTER JANUARY 1, 1946, AND BEFORE JANUARY 1, 1960

Section 8(b) of Pub. L. 86-518 provided that with regard to

vessels delivered by the shipbuilder on or after Jan. 1, 1946, and

before Jan. 1, 1960, depreciation under this section and sections

1152(g), 1157, 1160(d), 1177(b), 1181(c), 1195, and 1204 of this

Appendix and section 1276a(4) of former Title 46, Shipping, was

generally to be taken for the period prior to Jan. 1, 1960, at the

rate provided by this chapter, as it existed immediately prior to

the amendments made by Pub. L. 86-518, and for the period after

Jan. 1, 1960, such depreciation was generally to be taken on the

basis of the remaining years of a useful life of twenty-five years

unless the vessel was reconstructed or reconditioned in which event

such depreciation, from the time of such reconstruction or

reconditioning, was generally to be taken on the basis of the

remaining years of a useful life of the vessel determined jointly

by the Secretary of Commerce and the Secretary of the Treasury.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960; AMENDMENT OF CONTRACT DEALING WITH VESSELS HAVING EXTENDED

LIFE

Section 8(c) of Pub. L. 86-518, as amended by Pub. L. 88-225,

Dec. 23, 1963, 77 Stat. 469, provided that any contract, commitment

to insure a mortgage under subchapter XI of this chapter, or

mortgage, between any person and the United States or any agency

thereof, or any mortgage insurance contract under subchapter XI of

this chapter, which was entered into prior to June 12, 1960 and

which would have been affected if the provisions of the amendments

made by Pub. L. 86-518 [see Effective Date of 1960 Amendment note

above] were applicable thereto, could, at the request of such

person agreed to by any third parties in interest, or at the

request of the mortgagor agreed to by the mortgagee in the case of

such a mortgage insurance contract, made within one hundred and

eighty days after June 12, 1960 to the agency of the United States

holding such contract, be revised to be in accordance with the law

as amended by Pub. L. 86-518, with respect to such of the vessels

covered thereby as were designated by the applicant, that any such

revision was to provide with respect to the amendments to this

section and sections 1152(g), 1157, 1160(d), 1177(b), 1181(c),

1195, and 1204 of this Appendix and section 1276a(4) of former

Title 46, Shipping, that depreciation for the period prior to Jan.

1, 1960, was to be taken at the rate provided by the Merchant

Marine Act, 1936, act June 29, 1936, ch. 858, 49 Stat. 1985, prior

to the amendments made by Pub. L. 86-518, and that the remaining

depreciation was to be taken for the period beginning Jan. 1, 1960,

on the basis of the remaining years of a useful life of twenty-five

years, unless the vessel was reconstructed or reconditioned, in

which event such depreciation from the time of such reconstruction

or reconditioning was to be taken on the basis of the remaining

years of a useful life of the vessel determined jointly by the

Secretary of Commerce and the Secretary of the Treasury, that any

such revision was to provide with respect to any remaining unpaid

debts that such unpaid debts were to be paid in equal annual

installments over the remaining years of a useful life of

twenty-five years, and that provisions in such contracts affecting

vessels covered by Pub. L. 86-518 providing for refund of

construction-differential subsidy for domestic operations under

section 1156 of this Appendix and costs of national defense

features for commercial use were to be amended so that for such

refund payments made for the period after Dec. 31, 1959, the base

upon which such refund payments were computed annually thereafter

were to be the undepreciated amount of subsidy or the national

defense feature, as the case may be, as at Dec. 31, 1959, divided

by the years of life of the vessels as provided under Pub. L.

86-518, remaining after Dec. 31, 1959.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Section 9 of Pub. L. 86-518 provided that: "Nothing in any

amendment made by this Act [see Effective Date of 1960 Amendment

note above] shall operate or be interpreted to change from twenty

to twenty-five years the provisions of the Merchant Marine Act,

1936, as amended [this chapter], relating to the commercial

expectancy or period of depreciation of any tanker or other liquid

bulk carrier."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

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

-End-

-CITE-

46 USC APPENDIX Sec. 1125a 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1125a. Construction, repair, etc., of vessels for Government

agencies

-STATUTE-

The Secretary of Transportation is authorized to construct,

reconstruct, repair, equip, and outfit, by contract or otherwise,

vessels or parts thereof, for any other department or agency of the

Government, to the extent that such other department or agency is

authorized by law to do so for its own account, and any obligations

heretofore or hereafter incurred by the Secretary for any of the

aforesaid purposes shall not diminish or otherwise affect any

contract authorization granted to the Secretary: Provided, The

obligations incurred or the expenditures made are charged against

and, to the amount of such obligation or expenditure, diminish the

existing appropriation or contract authorization of such department

or agency.

-SOURCE-

(Feb. 6, 1941, ch. 5, Sec. 4, 55 Stat. 6; Pub. L. 97-31, Sec.

12(74), Aug. 6, 1981, 95 Stat. 160.)

-COD-

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1936,

which comprises this chapter.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" the first time it appeared and "Secretary" for

"Commission" the next two times it appeared. For prior transfers of

functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949 and Reorg. Plan No. 21 of 1950, set

out under section 1111 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1126-1 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER II - CREATION AND FUNCTIONS OF MARITIME AGENCIES

-HEAD-

Sec. 1126-1. Training of future naval officers under Naval Reserve

Officer Training Corps programs at merchant marine academies for

promotion of maximum integration of naval and merchant marine

seapower of Nation

-STATUTE-

(a) It is the policy of the United States that the United States

Navy and the Merchant Marine of the United States work closely

together to promote the maximum integration of the total seapower

forces of the Nation. In furtherance of this policy, it is

necessary and desirable that special steps be taken to assure that

Naval Reserve Officer Training Corps programs (for training future

naval officers) be maintained at Federal and State merchant marine

academies.

(b) It is the sense of the Congress that the Secretary of the

Navy should work with the Maritime Administrator and the

administrators of the several merchant marine academies to assure

that the training available at these academies is consistent with

Navy standards and needs.

-SOURCE-

(Pub. L. 94-361, title VI, Sec. 603, July 14, 1976, 90 Stat. 929;

Pub. L. 97-31, Sec. 12(76), Aug. 6, 1981, 95 Stat. 160.)

-COD-

CODIFICATION

Section was enacted as part of Pub. L. 94-361, popularly known as

the Department of Defense Appropriation Authorization Act, 1977,

and not as part of the Merchant Marine Act, 1936, which comprises

this chapter.

-MISC1-

AMENDMENTS

1981 - Subsec. (b). Pub. L. 97-31 substituted "Maritime

Administrator" for "Assistant Secretary of Commerce for Maritime

Affairs".

-End-

-CITE-

46 USC APPENDIX SUBCHAPTER III - AMERICAN SEAMEN 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER III - AMERICAN SEAMEN

-HEAD-

SUBCHAPTER III - AMERICAN SEAMEN

-End-

-CITE-

46 USC APPENDIX Sec. 1131 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER III - AMERICAN SEAMEN

-HEAD-

Sec. 1131. Manning and wage scales; subsidy contracts

-STATUTE-

(a) Investigation of wages and working conditions; establishment of

wage and manning scales; incorporation in subsidy contracts

The Secretary of Transportation is authorized and directed to

investigate the employment and wage conditions in ocean-going

shipping and, after making such investigation and after appropriate

hearings, to incorporate in the contracts authorized under

subchapters VI and VII of this chapter minimum manning scales and

minimum wage scales, and minimum working conditions for all

officers and crews employed on all types of vessels receiving an

operating-differential subsidy. After such minimum manning and wage

scales, and working conditions shall have been adopted by the

Secretary of Transportation, no change shall be made therein by the

Secretary of Transportation except upon public notice of the

hearing to be had, and a hearing by the Secretary of Transportation

of all interested parties, under such rules as the Secretary of

Transportation shall prescribe. The duly elected representatives of

the organizations certified as the proper collective bargaining

agencies shall have the right to represent the employees who are

members of their organizations at any such hearings. Every

contractor receiving an operating-differential subsidy shall post

and keep posted in a conspicuous place on each such vessel operated

by such contractor a printed copy of the minimum manning and wage

scales, and working conditions prescribed by his contract and

applicable to such vessel: Provided, however, That any increase in

the operating expenses of the subsidized vessel occasioned by any

change in the wage or manning scales or working conditions as

provided in this section shall be added to the

operating-differential subsidy previously authorized for the

vessel.

(b) Subsidy contracts; provisions relative to officers and crew

Every contract executed under authority of subchapters VI and VII

of this chapter shall require -

(1) Insofar as is practicable, officers' living quarters shall

be kept separate and apart from those furnished for members of

the crew;

(2) Licensed officers and unlicensed members of the crew shall

be entitled to make complaints or recommendations to the

Secretary of Transportation providing they file such complaint or

recommendation directly with the Secretary of Transportation, or

with their immediate superior officer who shall be required to

forward such complaint or recommendation with his remarks to the

Secretary of Transportation, or with the authorized

representatives of the respective collective bargaining agencies;

(3) Licensed officers who are members of the United States

Naval Reserve shall wear on their uniforms such special

distinguishing insignia as may be approved by the Secretary of

the Navy; officers being those men serving under licenses issued

by the Bureau of Marine Inspection and Navigation or the Coast

Guard;

(4) The uniform stripes, decoration, or other insignia shall be

of gold braid or woven gold or silver material, to be worn by

officers, and no member of the ship's crew other than licensed

officers shall be allowed to wear any uniform with such officer's

identifying insignia;

(5) No discrimination shall be practiced against licensed

officers, who are otherwise qualified, because of their failure

to qualify as members of the United States Naval Reserve.

-SOURCE-

(June 29, 1936, ch. 858, title III, Sec. 301, 49 Stat. 1992; June

23, 1938, ch. 600, Secs. 5, 6, 52 Stat. 955; 1946 Reorg. Plan No.

3, Secs. 101-104, eff. July 16, 1946, 11 F.R. 7875, 60 Stat. 1097;

Pub. L. 97-31, Sec. 12(82), Aug. 6, 1981, 95 Stat. 160.)

-MISC1-

AMENDMENTS

1981 - Subsec. (a). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Commission" in five places. For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

Subsec. (b)(2). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Commission" in three places. For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note set out below.

1938 - Subsec. (a). Act June 23, 1938, Sec. 5, substituted

"minimum working conditions" for "reasonable working conditions,"

struck out provisions which required a formal complaint before any

change in scales or working conditions, and permitted

representatives of organizations certified as the proper collective

bargaining agencies to represent employees at hearings.

Subsec. (b). Act June 23, 1938, Sec. 6, struck out provisions

which permitted complaints and recommendations to be made to the

Coast Guard or the Department of Labor, and which required licensed

officers to take their meals in the main dining salon of the

vessel.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

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.

Coast Guard transferred to Department of Transportation, and

functions, powers, and duties relating to Coast Guard of Secretary

of the Treasury and of other officers and offices of Department of

the Treasury transferred to Secretary of Transportation by Pub. L.

89-670, Sec. 6(b)(1), Oct. 15, 1966, 80 Stat. 938. Section 6(b)(2)

of Pub. L. 89-670, however, provided that notwithstanding such

transfer of functions, Coast Guard shall operate as part of Navy in

time of war or when President directs as provided in section 3 of

Title 14, Coast Guard. See section 108 of Title 49, Transportation.

For transfer of functions of other officers, employees, and

agencies of Department of the Treasury, with certain exceptions, to

Secretary of the Treasury with power to delegate, see Reorg. Plan

No. 26 of 1950, Secs. 1, 2, eff. July 31, 1950, 15 F.R. 4935, 64

Stat. 1280, 1281, set out in the Appendix to Title 5, Government

Organization and Employees. Functions of Coast Guard, and

Commandant of Coast Guard, excepted from transfer when Coast Guard

is operating as part of Navy under sections 1 and 3 of Title 14.

Phrase "or the Coast Guard" inserted in subsec. (b)(3) on

authority of Reorg. Plan No. 3 of 1946, Secs. 101-104, set out as a

note preceding section 3 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1132 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER III - AMERICAN SEAMEN

-HEAD-

Sec. 1132. Reemployment rights for certain merchant seamen

-STATUTE-

(a) In general

An individual who is certified by the Secretary of Transportation

under subsection (c) of this section shall be entitled to

reemployment rights and other benefits substantially equivalent to

the rights and benefits provided for by chapter 43 of title 38 for

any member of a Reserve component of the Armed Forces of the United

States who is ordered to active duty.

(b) Time for application

An individual may submit an application for certification under

subsection (c) of this section to the Secretary of Transportation

not later than 45 days after the date the individual completes a

period of employment described in subsection (c)(1)(A) of this

section with respect to which the application is submitted.

(c) Certification determination

Not later than 20 days after the date the Secretary of

Transportation receives from an individual an application for

certification under this subsection, the Secretary shall -

(1) determine whether or not the individual -

(A) was employed in the activation or operation of a vessel -

(i) in the National Defense Reserve Fleet maintained under

section 1744 of Title 50, Appendix, in a period in which that

vessel was in use or being activated for use under subsection

(b) of that section;

(ii) that is requisitioned or purchased under section 1242

of this Appendix; or

(iii) that is owned, chartered, or controlled by the United

States and used by the United States for a war, armed

conflict, national emergency, or maritime mobilization need

(including for training purposes or testing for readiness and

suitability for mission performance); and

(B) during the period of that employment, possessed a valid

license, certificate of registry, or merchant mariner's

document issued under chapter 71 or chapter 73 (as applicable)

of title 46; and

(2) if the Secretary makes affirmative determinations under

paragraph (1)(A) and (B), certify that individual under this

subsection.

(d) Equivalence to Military Selective Service Act certificate

For purposes of reemployment rights and benefits provided by this

section, a certification under subsection (c) of this section shall

be considered to be the equivalent of a certificate referred to in

paragraph (1) of section 4301(a) of title 38.(!1)

-SOURCE-

(June 29, 1936, ch. 858, title III, Sec. 302, as added Pub. L.

104-239, Sec. 10(a), Oct. 8, 1996, 110 Stat. 3133.)

-REFTEXT-

REFERENCES IN TEXT

A certificate referred to in paragraph (1) of section 4301(a) of

title 38, referred to in subsec. (d), probably means a certificate

described in section 9(a) of the Military Selective Service Act (50

App. U.S.C. 459(a)), which was referred to in section 4301(a)(1) of

Title 38, Veterans' Benefits, prior to the general amendment of

that section by section 2(a) of Pub. L. 103-353.

-MISC1-

PRIOR PROVISIONS

A prior section 1132 of former Title 46, Shipping, acts June 29,

1936, ch. 858, title III, Sec. 302, 49 Stat. 1992; Aug. 6, 1981,

Pub. L. 97-31, Sec. 12(83), 95 Stat. 160, related to citizenship of

officers and crew prior to repeal by Pub. L. 98-89, Sec. 4(b), Aug.

26, 1983, 97 Stat. 603. See sections 7102 and 8103 of Title 46,

Shipping.

EFFECTIVE DATE

Section 10(b) of Pub. L. 104-239 provided that: "The amendment

made by subsection (a) [enacting this section], shall apply to

employment described in section 302(c)(1)(A) of the Merchant Marine

Act, 1936 [subsec. (c)(1)(A) of this section], as amended by

subsection (a), occurring after the date of enactment of this Act

[Oct. 8, 1996]."

REGULATIONS

Section 10(c) of Pub. L. 104-239 provided that: "Not later than

120 days after the date of the enactment of this Act [Oct. 8,

1996], the Secretary of Transportation shall issue regulations

implementing this section [enacting this section and provisions set

out as a note above]."

-FOOTNOTE-

(!1) See References in Text note below.

-End-

-CITE-

46 USC APPENDIX SUBCHAPTER V -

CONSTRUCTION-DIFFERENTIAL SUBSIDY 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in sections 1161, 1191, 1193,

1204, 1212, 1228, 1244, 1274 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1151 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1151. Subsidy authorized for vessels to be operated in foreign

trade

-STATUTE-

(a) Application for subsidy for construction; conditions precedent

to granting

Any proposed ship purchaser who is a citizen of the United States

or any shipyard of the United States may make application to the

Secretary of Transportation for a construction-differential subsidy

to aid in the construction of a new vessel to be used in the

foreign commerce of the United States. No such application shall be

approved by the Secretary of Transportation unless he determines

that (1) the plans and specifications call for a new vessel which

will meet the requirements of the foreign commerce of the United

States, will aid in the promotion and development of such commerce,

and be suitable for use by the United States for national defense

or military purposes in time of war or national emergency; (2) if

the applicant is the proposed ship purchaser, the applicant

possesses the ability, experience, financial resources, and other

qualifications necessary for the operation and maintenance of the

proposed new vessel, and (3) the granting of the aid applied for is

reasonably calculated to carry out effectively the purposes and

policy of this chapter. The contract of sale, and the mortgage

given to secure the payment of the unpaid balance of the purchase

price shall not restrict the lawful or proper use or operation of

the vessel except to the extent expressly required by law. The

Secretary of Transportation may give preferred consideration to

applications that will tend to reduce construction-differential

subsidies and that propose the construction of ships of higher

transport capability and productivity.

(b) Submission of plans to Navy Department; certification of

approval

The Secretary of Transportation shall submit the plans and

specifications for the proposed vessel to the Navy Department for

examination thereof and suggestions for such changes therein as may

be deemed necessary or proper in order that such vessel shall be

suitable for economical and speedy conversion into a naval or

military auxiliary, or otherwise suitable for the use of the United

States Government in time of war or national emergency. If the

Secretary of the Navy approves such plans and specifications as

submitted, or as modified, in accordance with the provisions of

this subsection, he shall certify such approval to the Secretary of

Transportation.

(c) Application for subsidy for reconstruction or reconditioning;

conditions precedent to granting; contracts

Any citizen of the United States or any shipyard of the United

States may make application to the Secretary of Transportation for

a construction-differential subsidy to aid in reconstructing or

reconditioning any vessel that is to be used in the foreign

commerce of the United States. If the Secretary of Transportation,

in the exercise of his discretion, shall determine that the

granting of the financial aid applied for is reasonably calculated

to carry out effectively the purposes and policy of this chapter,

the Secretary of Transportation may approve such application and

enter into a contract or contracts with the applicant therefor

providing for the payment by the United States of a

construction-differential subsidy that is to be ascertained,

determined, controlled, granted, and paid, subject to all the

applicable conditions and limitations of this subchapter and under

such further conditions and limitations as may be prescribed in the

rules and regulations of the Secretary of Transportation has

adopted as provided in section 1114(b) of this Appendix; but the

financial aid authorized by this subsection shall be extended to

reconstruction or reconditioning only in exceptional cases and

after a thorough study and a formal determination by the Secretary

of Transportation that the proposed reconstruction or

reconditioning is consistent with the purposes and policy of this

chapter.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 501, 49 Stat. 1995; June 23,

1938, ch. 600, Sec. 8, 52 Stat. 955; July 17, 1952, ch. 939, Secs.

1, 2, 66 Stat. 760, 761; Pub. L. 91-469, Secs. 6, 35(a), (c), (d),

Oct. 21, 1970, 84 Stat. 1019, 1035; Pub. L. 91-603, Sec. 4(a), Dec.

31, 1970, 84 Stat. 1675; Pub. L. 97-31, Sec. 12(84), Aug. 6, 1981,

95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469, Sec. 35(a), substituted "Secretary of

Commerce" for "Commission", twice in subsecs. (a) and (b) and five

times in subsec. (c).

Subsec. (a). Pub. L. 91-603 substituted "for the operation and

maintenance of" for "to enable it to operate and maintain" in cl.

(2).

Pub. L. 91-469, Secs. 6(1), 35(c), substituted "Any proposed ship

purchaser who is a citizen of the United States or any shipyard of

the United States" for "Any citizen of the United States", inserted

in subd. (2) "if the applicant is the proposed ship purchaser,"

struck out of cl. (3) "to replace wornout or obsolete tonnage with

new and modern ships, or otherwise" after "reasonably calculated",

and authorized the Secretary of Commerce to give preferred

consideration to applications that will tend to reduce

construction-differential subsidies and that propose the

construction of ships of high transport capability and

productivity; and substituted "he" for "it" before "determines",

respectively.

Subsec. (c). Pub. L. 91-469, Secs. 6(2), 35(d), inserted "or any

shipyard of the United States" after "Any citizen of the United

States" and substituted "his" for "its" before "discretion",

respectively.

1952 - Subsecs. (a), (c). Act July 17, 1952, Secs. 1, 2, struck

out requirements as to essentiality of the service, route, or line

to be served by the vessel and provided that the lawful or proper

use of the vessel may not be restricted.

1938 - Subsec. (c). Act June 23, 1938, inserted reference to

section 1114(b).

COMMISSION ON AMERICAN SHIPBUILDING

Section 41 of Pub. L. 91-469 established a Commission on American

Shipbuilding, provided for the appointment and compensation of an

Executive Director of the commission and other personnel, empowered

the commission to study American shipbuilding with a view toward

increased productivity and reduced costs, and to make a report to

the President and Congress no later than three years after Oct. 21,

1970 of the commission's findings and recommendations, and provided

that the commission was to terminate sixty days after filing its

report.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1152, 1173 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1152 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1152. Construction of vessels; bids; subsidies

-STATUTE-

(a) Approval of bids; contract with bidder; acceptance of

negotiated price; shipyard records, availability; contract with

applicant or qualified citizen for purchase of vessel

If the Secretary of the Navy certifies his approval under section

1151(b) of this Appendix, and the Secretary of Transportation

approves the application, he may secure bids for the construction

of the proposed vessel according to the approved plans and

specifications. If the bid of the shipbuilder who is the lowest

responsible bidder is determined by the Secretary of Transportation

to be fair and reasonable, the Secretary of Transportation may

approve such bid, and if such approved bid is accepted by the

proposed ship purchaser, the Secretary of Transportation is

authorized to enter into a contract with the successful bidder for

the construction, outfitting, and equipment of the proposed vessel,

and for the payment by the Secretary of Transportation to the

shipbuilder, on terms to be agreed upon in the contract, of the

contract price of the vessel, out of the construction fund

hereinbefore referred to, or out of other available funds.

Notwithstanding the provisions of the first sentence of section

1155 of this Appendix with respect to competitive bidding, the

Secretary of Transportation is authorized to accept a price for the

construction of the ship which has been negotiated between a

shipyard and proposed ship purchaser if (1) the proposed ship

purchaser and the shipyard submit backup cost details and evidence

that the negotiated price is fair and reasonable; (2) the Secretary

of Transportation finds that the negotiated price is fair and

reasonable; and (3) the shipyard agrees that the Comptroller

General of the United States or any of his duly authorized

representatives shall, until the expiration of three years after

final payment have access to and the right to examine any pertinent

books, documents, papers, and records of the shipyard or any of its

subcontractors related to the negotiation or performance of any

contract or subcontract negotiated under this subsection and will

include in its subcontracts a provision to that effect.

Concurrently with entering into such contract with the shipbuilder,

the Secretary of Transportation is authorized to enter into a

contract for the sale of such vessel upon its completion, to the

applicant if he is the proposed ship purchaser and if not to

another citizen of the United States, if the Secretary of

Transportation determines that such citizen possesses the ability,

experience, financial resources, and other qualifications necessary

for the operation and maintenance of the vessel at a price

corresponding to the estimated cost, as determined by the Secretary

of Transportation pursuant to the provisions of this chapter, of

building such vessel in a foreign shipyard.

(b) Basis for fixing subsidy; cost of construction in foreign

yards; annual recomputation and publication of foreign cost;

limitation on construction differential; report on American

shipbuilding industry

The amount of reduction in selling price which is herein termed

"construction differential subsidy" shall equal, but not exceed,

the excess of the bid of the shipbuilder constructing the proposed

vessel (excluding the cost of any features incorporated in the

vessel for national defense uses, which shall be paid by the

Secretary in addition to the subsidy), over the fair and reasonable

estimate of cost, as determined by the Secretary, of the

construction of that type vessel if it were constructed under

similar plans and specifications (excluding national defense

features as above provided) in a foreign shipbuilding center which

is deemed by the Secretary to furnish a fair and representative

example for the determination of the estimated foreign cost of

construction of vessels of the type proposed to be constructed. The

Secretary of Transportation shall recompute such estimated foreign

cost annually unless, in the opinion of the Secretary, there has

been a significant change in shipbuilding market conditions. The

Secretary shall publish notice of his intention to compute or

recompute such estimated foreign cost and shall give interested

persons, including but not limited to shipyards and shipowners and

associations thereof, an opportunity to file written statements.

The Secretary's consideration shall include, but not be limited to,

all relevant matter so filed, and his determination shall include

or be accompanied by a concise explanation of the basis of his

determination. The construction differential approved and paid by

the Secretary shall not exceed 50 per centum of the cost of

constructing, reconstructing, or reconditioning the vessel

(excluding the cost of national defense features). If the Secretary

finds that the construction differential exceeds, in any case, the

foregoing percentage of such cost, the Secretary may negotiate with

any bidder (whether or not such person is the lowest bidder) and

may contract with such bidder (notwithstanding the first sentence

of section 1155 of this Appendix) for the construction,

reconstruction, or reconditioning of the vessel involved in a

domestic shipyard at a cost which will reduce the construction

differential to such percentage or less. In the event that the

Secretary has reason to believe that the bidding in any instance is

collusive, he shall report all of the evidence on which he acted

(1) to the Attorney General of the United States, and (2) to the

President of the Senate and to the Speaker of the House of

Representatives if the Congress shall be in session or if the

Congress shall not be in session, then to the Secretary of the

Senate and Clerk of the House, respectively.

(c) Terms of sale of vessel to purchaser

In such contract of sale between the purchaser and the Secretary

of Transportation, the purchaser shall be required to make cash

payments to the Secretary of Transportation of not less than 25 per

centum of the price at which the vessel is sold to the purchaser.

The cash payments shall be made at the time and in the same

proportion as provided for the payments on account of the

construction cost in the contract between the shipbuilder and the

Secretary of Transportation. The purchaser shall pay, not less

frequently than annually, interest on those portions of the

Secretary of Transportation's payments as made to the shipbuilder

which are chargeable to the purchaser's portion of the price of the

vessel (after deduction of the purchaser's cash payments) at a rate

not less than (i) a rate determined by the Secretary of the

Treasury, taking into consideration the current average market

yield on outstanding marketable obligations of the United States

with remaining periods to maturity comparable to the average

maturities of such loans, adjusted to the nearest one-eighth of 1

per centum, plus (ii) an allowance adequate in the judgment of the

Secretary of Transportation to cover administrative costs. The

balance of such purchase price shall be paid by the purchaser,

within twenty-five years after delivery of the vessel and in not to

exceed twenty-five equal annual installments, the first of which

shall be payable one year after the delivery of the vessel by the

Secretary of Transportation to the purchaser. Interest at the rate

per annum applicable to payments that are chargeable to the

purchaser's portion of the price of the vessel shall be paid on all

such installments of the purchase price remaining unpaid.

(d) Repealed. Pub. L. 87-877, Sec. 2(a), Oct. 24, 1962, 76 Stat.

1200

(e) Construction in navy yards; sales to citizens; terms

If no bids are received for the construction, outfitting, or

equipping of such vessel, or if it appears to the Secretary of

Transportation that the bids received from privately owned

shipyards of the United States are collusive, excessive, or

unreasonable, and if a citizen of the United States agrees to

purchase said vessel as provided in this section, then, to provide

employment for citizens of the United States, the Secretary of

Transportation may have such vessel constructed, outfitted, or

equipped at not in excess of the actual cost thereof in a navy yard

of the United States under such regulations as may be promulgated

by the Secretary of the Navy and the Secretary of Transportation.

In such event the Secretary of Transportation is authorized to pay

for any such vessel so constructed from his construction fund. The

Secretary of Transportation is authorized to sell any vessel so

constructed, outfitted, or equipped in a navy yard to a citizen of

the United States for the fair and reasonable value thereof, but at

not less than the cost thereof less the equivalent to the

construction differential subsidy determined as provided by

subsection (b) of this section, such sale to be in accordance with

all the provisions of this subchapter.

(f) Survey of shipbuilding capability; correction of inadequacies;

reimbursement of certain vessel construction and delivery

expenses

The Secretary of Transportation, with the advice of and in

coordination with the Secretary of the Navy, shall at least once

each year, as required for purposes of this chapter, survey the

existing privately owned shipyards capable of merchant ship

construction, or review available data on such shipyards if deemed

adequate, to determine whether their capabilities for merchant ship

construction, including facilities and skilled personnel, provide

an adequate mobilization base at strategic points for purposes of

national defense and national emergency. The Secretary of

Transportation, in connection with ship construction,

reconstruction, reconditioning, or remodeling under this subchapter

and subchapter VII of this chapter, upon a basis of a finding that

the award of the proposed construction, reconstruction,

reconditioning, or remodeling work will remedy an existing or

impending inadequacy in such mobilization base as to the

capabilities and capacities of a shipyard or shipyards at a

strategic point, and after taking into consideration the benefits

accruing from standardized construction, the conditions of

unemployment, and the needs and reasonable requirements of all

shipyards, may allocate such construction, reconstruction,

reconditioning, or remodeling to such yard or yards in such manner

as he may determine to be fair, just, and reasonable to all

sections of the country, subject to the provisions of this

subsection. In the allocation of construction work to such yards as

herein provided, the Secretary of Transportation may, after first

obtaining competitive bids for such work in compliance with the

provisions of this chapter, negotiate with the bidders and with

other shipbuilders concerning the terms and conditions of any

contract for such work, and is authorized to enter into such

contract at a price deemed by the Secretary of Transportation to be

fair and reasonable. Any contract entered into by the Secretary of

Transportation under the provisions of this subsection shall be

subject to all of the terms and conditions of this chapter,

excepting those pertaining to the awarding of contracts to the

lowest bidder which are inconsistent with the provisions of this

subsection. In the event that a contract is made providing for a

price in excess of the lowest responsible bid which otherwise would

be accepted, such excess shall be paid by the Secretary of

Transportation as a part of the cost of national defense, and shall

not be considered as a part of the construction-differential

subsidy. In the event that a contract is made providing for a price

lower than the lowest responsible bid which otherwise would be

accepted, the construction-differential subsidy shall be computed

on the contract price in lieu of such bid.

If, as a result of allocation under this subsection, the

purchaser incurs expenses for inspection and supervision of the

vessel during construction and for the delivery voyage of the

vessel in excess of the estimated expenses for the same services

that he would have incurred if the vessel had been constructed by

the lowest responsible bidder the Secretary of Transportation (with

respect to construction under this subchapter, except section 1159

of this Appendix) shall reimburse the purchaser for such excess,

less one-half of any gross income the purchaser receives that is

allocable to the delivery voyage minus one-half of the extra

expenses incurred to produce such gross income, and such

reimbursement shall not be considered part of the

construction-differential subsidy: Provided, That no interest shall

be paid on any refund authorized under this chapter. If the vessel

is constructed under section 1159 of this Appendix the Secretary of

Transportation shall reduce the price of the vessel by such excess,

less one-half of any gross income (minus one-half of the extra

expenses incurred to produce such gross income) the purchaser

receives that is allocable to the delivery voyage. In the case of a

vessel that is not to receive operating-differential subsidy, the

delivery voyage shall be deemed terminated at the port where the

vessel begins loading. In the case of a vessel that is to receive

operating-differential subsidy, the delivery voyage shall be deemed

terminated when the vessel begins loading at a United States port

in an essential service. In either case, however, the vessel owner

shall not be compensated for excess vessel delivery costs in an

amount greater than the expenses that would have been incurred in

delivering the vessel from the shipyard at which it was built to

the shipyard of the lowest responsible bidder. If as a result of

such allocation, the expenses the purchaser incurs with respect to

such services are less than the expenses he would have incurred for

such services if the vessel had been constructed by the lowest

responsible bidder, the purchaser shall pay to the Secretary of

Transportation an amount equal to such reduction and, if the vessel

was built with the aid of construction-differential subsidy, such

payment shall not be considered a reduction of the

construction-differential subsidy.

(g) Sale of vessels acquired by Secretary

Upon the application of any citizen of the United States to

purchase any vessel acquired by the Secretary of Transportation

under the provisions of section 1125 of this Appendix, the

Secretary of Transportation is authorized to sell such vessel to

the applicant for the fair and reasonable value thereof, but at not

less than the cost thereof to the Secretary of Transportation less

depreciation at the rate of 4 per centum per annum from the date of

completion, excluding the cost of national-defense features added

by the Secretary of Transportation, less the equivalent of any

applicable construction-differential subsidy as provided by

subsection (b) of this section, such sale to be in accordance with

all the provisions of this subchapter. Such vessel shall thereupon

be eligible for an operating-differential subsidy under subchapter

VI of this chapter, notwithstanding the provisions of section

1171(a)(1), and section 1180(1) of this Appendix, or any other

provision of law.

(h) Installation or removal of national defense features; title to

such features

The Secretary of Transportation is authorized to construct,

purchase, lease, acquire, store, maintain, sell, or otherwise

dispose of national defense features intended for installation on

vessels. The Secretary of Transportation is authorized to install

or remove such national defense features on any vessel (1) which is

in the National Defense Reserve Fleet as defined by section 1744(a)

of the Appendix to title 50, (2) which is requisitioned, purchased,

or chartered under section 1242 of this Appendix, (3) which serves

as security for the guarantee of an obligation by the Secretary of

Transportation under subchapter XI of this chapter, or (4) which is

the subject of an agreement between the owner of such vessel and

the Secretary of Transportation to install or remove such national

defense features. Title to such national defense features which the

Secretary of Transportation determines are not to be permanently

incorporated in a vessel shall not be affected by such installation

or removal unless otherwise transferred in accordance with the

provisions of this subchapter.

(i) Plans, specifications, and proposals for national defense

features; certification of approval

The Secretary of Transportation shall submit the plans and

specifications for such national defense features and the proposals

for their acquisition, storage, utilization, or disposition to the

Navy Department for examination thereof and suggestion for such

changes therein as may be deemed necessary or proper in order that

such features shall be suitable for the use of the United States

Government in time of war or national emergency. If the Secretary

of the Navy approves such plans, specifications, or proposals as

submitted, or as modified in accordance with the provisions of this

subsection, he shall certify such approval to the Secretary of

Transportation.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 502, 49 Stat. 1996; June 23,

1938, ch. 600, Secs. 9-14, 52 Stat. 955-957; Aug. 4, 1939, ch. 417,

Sec. 6, 53 Stat. 1183; July 26, 1956, ch. 737, 70 Stat. 657; Pub.

L. 86-518, Secs. 1, 2, June 12, 1960, 74 Stat. 216; Pub. L. 86-607,

Sec. 1, July 7, 1960, 74 Stat. 362; Pub. L. 87-877, Secs. 1, 2(a),

(e), (f), Oct. 24, 1962, 76 Stat. 1200, 1201; Pub. L. 88-370, July

11, 1964, 78 Stat. 313; Pub. L. 88-410, Sec. 1, Aug. 10, 1964, 78

Stat. 385; Pub. L. 89-127, Aug. 14, 1965, 79 Stat. 519; Pub. L.

89-589, Sept. 19, 1966, 80 Stat. 811; Pub. L. 90-572, Oct. 12,

1968, 82 Stat. 1004; Pub. L. 91-40, July 8, 1969, 83 Stat. 44; Pub.

L. 91-469, Secs. 7, 35(a), (e)-(g), Oct. 21, 1970, 84 Stat. 1019,

1035, 1036; Pub. L. 91-603, Sec. 4(b), Dec. 31, 1970, 84 Stat.

1675; Pub. L. 93-71, July 10, 1973, 87 Stat. 169; Pub. L. 94-372,

Secs. 2, 3, July 31, 1976, 90 Stat. 1042; Pub. L. 96-210, Mar. 17,

1980, 94 Stat. 100; Pub. L. 96-387, Sec. 3, Oct. 7, 1980, 94 Stat.

1545; Pub. L. 97-31, Sec. 12(84), (85), Aug. 6, 1981, 95 Stat.

161.)

-MISC1-

AMENDMENTS

1981 - Subsecs. (a), (b). Pub. L. 97-31, Sec. 12(84), substituted

"Secretary of Transportation" for "Secretary of Commerce" wherever

appearing.

Subsec. (c). Pub. L. 97-31, Sec. 12(84), (85), substituted

"Secretary of Transportation" for "Secretary of Commerce" wherever

appearing, and "Secretary of Transportation's" for "Secretary of

Commerce's".

Subsecs. (e) to (i). Pub. L. 97-31, Sec. 12(84), substituted

"Secretary of Transportation" for "Secretary of Commerce" wherever

appearing.

1980 - Subsec. (a). Pub. L. 96-210 struck out ", at any time

prior to June 30, 1979," before "to accept a price for".

Subsecs. (h), (i). Pub. L. 96-387 added subsecs. (h) and (i).

1976 - Subsec. (a). Pub. L. 94-372, Sec. 2, in third sentence,

substituted "at any time prior to June 30, 1979" for "at any time

prior to June 30, 1976", struck out former par. (i) relating to a

negotiated price resulting in a construction-differential subsidy

equal to or less than 45%, 43%, 41%, 39%, 37% and 35% for fiscal

years 1971, 1972, 1973, 1974, 1975 and 1976, respectively, and

redesignated former pars. (ii), (iii), and (iv) as (1), (2), and

(3), respectively.

Subsec. (b). Pub. L. 94-372, Sec. 3, substituted provisions

limiting the construction differential to 50% (excluding costs for

national defense features), and allowing the Secretary, where such

differential is exceeded, to contract with any bidder

(notwithstanding section 1155) to reduce the differential to within

such percentage for provisions limiting the differential to 55%

except for passenger vessels having characteristics set forth in

section 1153, which shall be 60%, limiting the differential after

June 30, 1970 to 50%, permitting the Secretary to negotiate and

contract with any bidder, regardless of section 1155 if in the

years 1972, 1973, 1974, 1975 and 1976 a specified percentage is

exceeded, prohibiting contracts commencing in 1972, where such

differential exceeds such limits unless consideration has been

given to the possibility that the commitment to ship construction

programs may not be continued under existing limits, and requiring

notification to the Commission on American Shipbuilding if the

Secretary finds it necessary to enter into such contracts.

1973 - Subsec. (a). Pub. L. 93-71 in third sentence, substituted

"June 30, 1976" for "June 30, 1973" and limited vessel construction

subsidy to 39 per centum in fiscal 1974, 37 per centum in fiscal

1975, and 35 per centum in fiscal 1976.

1970 - Pub. L. 91-469, Sec. 35(a), substituted "Secretary of

Commerce" for "Commission", six times in subsec. (a), four times in

subsec. (c), five times in subsec. (e), four times in subsec. (f),

and four times in subsec. (g).

Subsec. (a). Pub. L. 91-603 substituted "for the operation and

maintenance of" for "to enable it to operate and maintain".

Pub. L. 91-469, Secs. 7(1), 35(e), struck out in first sentence

", on behalf of the applicant," after "may secure", substituted in

second sentence "proposed ship purchaser, the Secretary of

Commerce" for "applicant, the Commission", inserted conditions

precedent to acceptance of negotiated price for ship construction

in fiscal years 1971, 1972, and 1973, including availability of

shipyard records in connection therewith, substituted in last

sentence "for the sale" for "with the applicant for the purchase by

him" before "of such vessel", and authorized sale of vessel upon

its completion to the applicant if he is the proposed ship

purchaser and if not to another citizen, if the Secretary

determines that such citizen possesses the necessary qualifications

to enable it to operate and maintain the vessel; and substituted

"he" for "it" before "may secure", respectively.

Subsec. (b). Pub. L. 91-469, Sec. 7(2), provided for

recomputation of estimated foreign cost annually, publication of

notice to compute or recompute such estimated foreign cost, offer

of opportunity to interested persons to file written statements,

consideration of relevant matter so filed, explanation of basis of

determination, prohibition commencing with fiscal year 1972 of

construction contracts requiring construction-differential in

excess of prescribed percentages unless there is no likelihood of

attaining the percentages and the commitment to the ship

construction program may not be continued, notice to Commission on

American Shipbuilding of execution of such a contract, and

submission of a Commission report on the American shipbuilding

industry within six months of the notice, substituted "may equal"

for "shall equal", "construction of that type vessel" for

"construction of the proposed vessel", "exceeds the following

percentages: in fiscal year 1971, 45 per centum; in fiscal year

1972, 43 per centum; in fiscal year 1973, 41 per centum; in fiscal

year 1974, 39 per centum; in fiscal year 1975, 37 per centum; in

fiscal year 1976 and thereafter, 35 per centum" for "in any case

exceeds the foregoing applicable percentage of such cost", and

"with such bidder, notwithstanding the provisions of the first

sentence of section 1155 of this Appendix with respect to

competitive bidding," for "on behalf of the applicant", and

inserted "with any bidder, whether or not such bidder is the lowest

bidder," after "the Secretary may negotiate" and ", or as close

thereto as possible" before "or less".

Subsec. (c). Pub. L. 91-469, Secs. 7(3), 35(f), inserted "of

sale" after introductory phrase "In such contract", in revising

interest rate substituted provision for a rate not less than a rate

determined by the Secretary of the Treasury, taking into

consideration the current average market yield on outstanding

marketable obligations of the United States with remaining periods

to maturity comparable to the average maturities of such loans,

adjusted to the nearest one-eighth of 1 per centum plus an

administrative cost allowance for prior rate of 3 1/2 per centum

per annum, substituted in last sentence "rate per annum applicable

to payments that are chargeable to the purchaser's portion of the

price of the vessel" for "rate of 3 1/2 per centum per annum",

"purchaser" for "applicant" in six places, "purchaser's portion of

the price" for "applicant's purchase price", and "purchaser's" for

"applicant's"; and substituted "Secretary of Commerce's" for

"Commission's", respectively.

Subsec. (e). Pub. L. 91-469, Secs. 7(4), 35(g), substituted "a

citizen of the United States" for "the applicant" in first sentence

and for "an applicant" in third sentence and "his" for "its" in

second sentence, respectively.

Subsec. (f). Pub. L. 91-469, Sec. 7(5), in first par.,

substituted "this subchapter and subchapter VII of this chapter"

for "subchapter VII of this chapter and section 1159 of this

Appendix, and the Federal Maritime Board, in connection with ship

construction, reconstruction, or reconditioning under this

subchapter (except section 1159 of this Appendix)," and "in such

manner as he may determine" for "in such manner as it may be

determined" in second sentence; and in second par., substituted

"purchaser" for "applicant" in six places and "United States port

in an essential service" for "United States port on any essential

service of the operator" in fourth sentence.

Subsec. (g). Pub. L. 91-469, Sec. 7(6), substituted "application"

and "any citizen of the United States" for "agreement" and "an

applicant under this subchapter" in first sentence.

1969 - Subsec. (b). Pub. L. 91-40 substituted "June 30, 1970" for

"June 30, 1969".

1968 - Subsec. (b). Pub. L. 90-572 substituted "June 30, 1969"

for "June 30, 1968".

1966 - Subsec. (b). Pub. L. 89-589 substituted "June 30, 1968"

for "June 30, 1966".

1965 - Subsec. (b). Pub. L. 89-127 substituted "June 30, 1966"

for "June 30, 1965".

1964 - Subsec. (b). Pub. L. 88-370 substituted "June 30, 1965"

for "June 30, 1964".

Subsec. (f). Pub. L. 88-410 provided for reimbursement of

expenses incurred during construction and the delivery voyage of a

vessel, if as a result of allocation under this subsection, they

are in excess of the estimated expenses that would have been

incurred if the vessel had been constructed by the lowest

responsible bidder, less one-half of any gross income allocable to

the delivery voyage, minus one-half the extra expenses incurred to

produce such income, and that such reimbursement shall not be part

of the construction-differential subsidy, that no interest be paid

on any refund authorized, that if the vessel is constructed under

section 1159 the price of the vessel is to be reduced by such

excess expenses less such gross income, calculated as above,

obtained on the delivery voyage, that if the vessel is not to

receive the operating-differential subsidy the delivery voyage

shall be deemed terminated at the port where the vessel begins

loading, and if it does receive the subsidy, when the vessel begins

loading at a United States port on any essential service of the

operator, but in either case there is to be no compensation greater

than the expenses that would have been incurred in delivering the

vessel from the shipyard at which it was built to the one of the

lowest bidder, that if the allocation results in a saving of

expenses for the applicant, the applicant shall pay an equal amount

to the Secretary, and if the vessel was built with the subsidy,

such payment shall not be considered a reduction of the subsidy.

1962 - Subsec. (b). Pub. L. 87-877, Sec. 1, among other changes,

substituted references to the Secretary, for references to the

Federal Maritime Board, wherever appearing, and provided that in

the reconstruction or reconditioning of a passenger vessel having

the characteristics set forth in section 1153 of this Appendix, the

construction differential shall not exceed 60 per centum of the

cost, excluding national defense features, however, after June 30,

1964, the construction differential approved by the Secretary for

any vessel shall not exceed 50 per centum of such cost.

Subsec. (d). Pub. L. 87-877, Sec. 2(a), repealed subsec. (d)

which provided for giving a preference to Pacific coast bidders in

obtaining a subsidy and specified the conditions to be met

therefor.

Subsec. (f). Pub. L. 87-877, Sec. 2(e), (f), substituted "at

least once each year" for "periodically", "existing or impending

inadequacy" for "existing inadequacy", and struck out ", with the

approval of the President," before "allocate such construction".

1960 - Subsec. (b). Pub. L. 86-607, Sec. 1(1), increased the

limitation on construction differential from 50 to 55 per centum of

the construction cost of a vessel and provided for such percentage

limitation in lieu of former 33 1/3 per centum of construction

cost, increased to 50 per centum on affirmative vote of two Board

members.

Subsec. (c). Pub. L. 86-518, Sec. 1, substituted "twenty-five"

for "twenty" in two places.

Subsec. (d). Pub. L. 86-607, Sec. 1(2), increased the limitation

on construction-differential from 50 to 55 per centum of the

construction cost of a vessel.

Subsec. (g). Pub. L. 86-518, Sec. 2, substituted "at the rate of

4 per centum per annum" for "based on a twenty-year life

expectancy".

1956 - Subsec. (f). Act July 26, 1956, substituted provisions

that required Secretary of Commerce, with advice of Secretary of

the Navy, to make periodic survey of privately owned shipyards to

determine adequacy for providing mobilization base, and that any

inadequacies would be corrected by Secretary of Commerce or Federal

Maritime Board with the approval of the President by allocating

work to such yards, for former provisions allowing periodic survey

by the Federal Maritime Board of both Navy and privately owned

shipyards.

1939 - Subsec. (b). Act Aug. 4, 1939, substituted "a foreign

shipbuilding center which is deemed by the Commission to furnish a

fair and representative example for the determination of the

estimated foreign cost of construction of vessels of the type

proposed to be constructed" for "a principal foreign shipbuilding

center which may reasonably be availed of by the principal foreign

competitors in the service in which the vessel is to be operated,

and which is deemed by the Commission to furnish a fair and

representative example for the determination of the estimated cost

of construction in foreign countries of vessels of the type

proposed to be constructed".

1938 - Subsec. (a). Act June 23, 1938, Sec. 9, substituted "of

the contract price of the vessel" for "the cost of the vessel".

Subsec. (b). Act June 23, 1938, Sec. 10, permitted negotiations

and contracts to build vessels in domestic shipyards in cases where

the construction differential exceeds 33 1/3 per centum or 50 per

centum of the cost, and to require a report where there is reason

to believe that the bidding is collusive.

Subsec. (c). Act June 23, 1938, Sec. 11, among other changes,

substituted "of not less than 25 per centum of the price at which

the vessel is sold to the applicant" for "a sum equal to 25 per

centum of the construction cost of the vessel paid by the

Commission (excluding cost of national-defense features as above

provided)", and required the applicant to pay, not less frequently

than annually, interest at the rate of 3 1/2 per centum per annum

on those portions of payments made to the shipbuilder which are

chargeable to the applicant's purchase price of the vessel (after

deduction of the applicant's cash payments).

Subsec. (d). Act June 23, 1938, Sec. 12, substituted

"construction-differential subsidy" for "construction subsidy", and

inserted provisions relating to limitation on approval of

construction-differential in excess of 50 per centum of the

construction cost of the vessel paid by the Commission.

Subsec. (f). Act June 23, 1938, Sec. 13, added subsec. (f).

Subsec. (g). Act June 23, 1938, Sec. 14, added subsec. (g).

EFFECTIVE DATE OF 1962 AMENDMENT

Section 5 of Pub. L. 87-877 provided that: "The amendment made by

the first section of this Act [amending this section] shall be

effective only with respect to contracts entered into with respect

to (a) the construction of a vessel the keel of which was laid

after June 30, 1959, or (b) the reconstruction or reconditioning of

a vessel the shipyard contract for which was entered into after

June 30, 1959, and the Secretary may, with the consent of the

parties thereto, modify any such contract entered into prior to the

date of the enactment of this Act [Oct. 24, 1962] to the extent

authorized by the amendment made by this Act."

EFFECTIVE DATE OF 1960 AMENDMENTS

Section 2 of Pub. L. 86-607, as amended by Pub. L. 87-222, Sept.

13, 1961, 75 Stat. 494, provided that: "The amendment made by this

Act [amending this section] shall be effective only with respect to

any contract entered into not later than two years after the date

of enactment of this Act [July 7, 1960] under the provisions of

section 502 of the Merchant Marine Act, 1936 [this section], with

respect to (a) the construction of a vessel the keel of which was

laid, or (b) the reconstruction or reconditioning of a vessel the

shipyard contract for which was entered into after June 30, 1959,

and the Federal Maritime Board may, with the consent of the parties

thereto, modify any such contract entered into prior to the date of

enactment of the first amendment to Public Law 86-607 (74 Stat.

362) [Sept. 13, 1961], to the extent authorized by the amendment

made by this Act, as amended."

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

MODIFICATION OF CONTRACTS; CONDITIONS

Section 2 of Pub. L. 88-410 provided that: "The amendment made by

this Act [amending this section] shall be effective with respect to

any contract entered into under the provisions of section 502 of

the Merchant Marine Act, 1936, as amended [this section], and the

Secretary of Commerce shall, with the consent of the other parties

thereto, modify any such contract entered into prior to the date of

the enactment of this Act [Aug. 10, 1964] to the extent authorized

by the amendment made by this Act, except that the Secretary shall

not agree to any such modification which would result in a payment

by the United States unless, within one year after enactment of

this Act, application is made for such modification. No payment

shall be made by the Secretary under the provisions of the

amendment made by this Act with respect to any contract entered

into after the date of enactment of this Act unless the recipient

of such payment has agreed to the modification of any contract

which was entered into prior to the date of enactment of this Act

and to which such recipient was a party, and which, if modified

under the authority of this section, would result in a payment to

the United States."

CONTRACTS FOR NEW SHIP CONSTRUCTION AWARDED ON BIDS OPENED PRIOR TO

OCTOBER 24, 1962

Section 2(a) of Pub. L. 87-877 provided in part: "That the repeal

of subsection (d) of section 502 of the Merchant Marine Act, 1936

[subsec. (d) of this section], shall not be effective with respect

to contracts for new ship construction under title V of said Act

[this subchapter] awarded on the basis of bids opened prior to the

date of the enactment of this Act. [Oct. 24, 1962]."

RATE OF DEPRECIATION FOR VESSELS DELIVERED BY SHIPBUILDER ON OR

AFTER JANUARY 1, 1946, AND BEFORE JANUARY 1, 1960

For provisions relating to computation of depreciation with

respect to vessels delivered by the shipbuilder on or after Jan. 1,

1946, and before Jan. 1, 1960, see section 8(b) of Pub. L. 86-518,

set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

CONSTRUCTION AND SALE OF SUPERLINER PASSENGER VESSELS

Pub. L. 85-521, July 15, 1958, 72 Stat. 359, provided: "That it

is necessary, in order to carry out the merchant marine policy

declared in the Merchant Marine Act, 1936, as amended [this

chapter], to have (a) a superliner passenger vessel equivalent to

the steamship United States, to replace the steamship America for

operation on an essential trade route in the North Atlantic, and

(b) a superliner passenger vessel with capacity of approximately

one thousand four hundred passengers for operation on an essential

trade route in the Pacific Ocean. Nothing herein shall preclude the

operation of either of these vessels in other areas, subject to the

approval of the Federal Maritime Board. There is hereby authorized

to be appropriated to the Department of Commerce such sums as may

be necessary, to remain available until expended, for the

construction, outfitting, and equipping of such vessels.

"Sec. 2. Concurrently with entering into contracts with

shipbuilders for the construction of said vessels, the Board is

authorized to enter into contracts for the sale of the vessels,

fully outfitted and equipped, upon their completion, (a) with

respect to the superliner passenger vessel equivalent to the

steamship United States, to the United States Lines Company, for

the fixed price of $47,000,000, and (b) with respect to the

superliner passenger vessel for operation in the Pacific Ocean, to

the American President Lines, Limited, for the fixed price of

$34,000,000, or 45 per centum of the domestic construction cost of

the vessel fully outfitted and equipped (excluding national defense

features and escalation) whichever is the greater. The sales prices

stated herein shall include the cost of stabilizers, all outfit and

equipment not covered by the shipbuilders' bids, customary

architects' and interior decorators' fees for design, inspection

during construction, and all escalation provided for in the

shipbuilders' bids: Provided, however, That such prices shall be

increased in an amount equal to 45 per centum of any net change in

the cost of the vessels (other than national defense features)

arising out of any changes in the bid specifications approved by

the Federal Maritime Board or any changes in the usual outfitting

and equipping of the vessels if such changes are requested by the

purchasers and approved by the Federal Maritime Board after the

enactment hereof. Terms and conditions of payment of the purchase

price shall be as provided for in sections 502(c) and 503 of the

Merchant Marine Act, 1936, as amended [sections 1152(c) and 1153 of

this Appendix]. In order that such construction of the superliner

passenger vessel equivalent to the steamship United States may be

accomplished promptly, the Federal Maritime Board, in its

discretion, may have such a vessel constructed, without further

bidding, under outstanding bids which have hitherto been made by

United States shipbuilders on a similar vessel.

"Sec. 3. Except as otherwise provided in this Act, the

construction and sale of the superliner passenger vessels

authorized by this Act shall be in accordance with the provisions

of the Merchant Marine Act, 1936, as amended [this chapter].

"Sec. 4. For the purposes of this Act the words 'construction

differential subsidy' used in the Merchant Marine Act, 1936, as

amended [this chapter], shall mean the difference between the sales

price paid by the purchaser hereunder and the cost of the vessel

(less national defense features) including the cost of stabilizers,

all outfit and equipment not covered by the shipbuilders' bids,

customary architects' and interior decorators' fees for design,

inspection during construction, and all escalation provided for in

the shipbuilders' bids.

"Sec. 5. Any contract for an operating differential subsidy on

the operation of a vessel constructed and sold under this Act shall

be subject to the provisions of title VI of the Merchant Marine

Act, 1936, as amended [subchapter VI of this chapter]: Provided,

however, That such contract shall provide that, if at the end of

any recapture period, the net profits on the operation of such

vessel for such recapture period, computed without regard to

profits or losses on other vessels operated by the contractor,

exceed 10 per centum per annum on a cumulative basis upon the

contractor's capital necessarily employed in the operation of such

vessel, as determined by the Federal Maritime Board, the contractor

shall account to the United States for an amount equal to 75 per

centum of such excess profits."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1154 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1153 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1153. Documentation of completed vessel under laws of United

States; delivery to purchaser; first mortgage to secure deferred

payments

-STATUTE-

Upon completion of the construction of any vessel in respect to

which a construction-differential subsidy is to be allowed under

this subchapter and its delivery by the shipbuilder to the

Secretary of Transportation, the vessel shall be documented under

the laws of the United States, and concurrently therewith, or as

soon thereafter as practicable, the vessel shall be delivered with

a bill of sale to the purchaser with warranty against liens,

pursuant to the contract of sale between the purchaser and the

Secretary of Transportation. The vessel shall remain documented

under the laws of the United States for not less than twenty-five

years, or so long as there remains due the United States any

principal or interest on account of the purchaser price, whichever

is the longer period. At the time of delivery of the vessel the

purchaser shall execute and deliver a first-preferred mortgage to

the United States to secure payment of any sums due from the

purchaser in respect to said vessel: Provided, That notwithstanding

any other provisions of law, the payment of any sums due in respect

to a passenger vessel purchased under section 1737(b) (!1) of the

Appendix to title 50, reconverted or restored for normal operation

in commercial services, or in respect to a passenger vessel

purchased under subchapter V of this chapter, which is delivered

subsequent to March 8, 1946, and which (i) is of not less than ten

thousand gross tons, (ii) has a designed speed approved by the

Secretary of Transportation but not less than eighteen knots, (iii)

has accommodations for not less than two hundred passengers, and,

(iv) is approved by the Secretary of Defense as being desirable for

national defense purposes, may, with the approval of the Secretary

of Transportation be secured only by a first-preferred mortgage on

said vessel. With the approval of the Secretary of Transportation,

such preferred mortgage may provide that the sole recourse against

the purchaser of such a passenger vessel under such mortgage, and

any of the notes secured thereby, shall be limited to repossession

of the vessel by the United States and the assignment of insurance

claims, if the purchaser shall have complied with all provisions of

the mortgage other than those relating to the payment of principal

and interest when due, and the obligation of the purchaser shall be

satisfied and discharged by the surrender of the vessel, and all

right, title, and interest therein to the United States. Such

vessel upon surrender shall be (i) free and clear of all liens and

encumbrances whatsoever, except the lien of the preferred mortgage,

(ii) in class, and (iii) in as good order and condition, ordinary

wear and tear excepted, as when acquired by the purchaser, except

that any deficiencies with respect to freedom from encumbrances,

condition, and class, may, to the extent covered by valid policies

of insurance, be satisfied by the assignment to the United States

of claims of the purchaser under such policies of insurance. The

purchaser shall also comply with all the provisions of section 868

of this Appendix.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 503, 49 Stat. 1997; June 23,

1938, ch. 600, Sec. 15, 52 Stat. 957; July 17, 1952, ch. 939, Sec.

3, 66 Stat. 761; Pub. L. 86-518, Sec. 1, June 12, 1960, 74 Stat.

216; Pub. L. 91-469, Secs. 8, 35(a), Oct. 21, 1970, 84 Stat. 1021,

1035; Pub. L. 97-31, Sec. 12(84), Aug. 6, 1981, 95 Stat. 161.)

-REFTEXT-

REFERENCES IN TEXT

Section 1737 of the Appendix to title 50, referred to in text,

was repealed by Pub. L. 101-225, title III, Sec. 307(12), Dec. 12,

1989, 103 Stat. 1925.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469 substituted "purchaser" for "applicant" in

three places, "sale between the purchaser and the Secretary of

Commerce" for "purchase between the applicant and the Commission"

in first sentence; and "Secretary of Commerce" for "Commission", in

four places, respectively.

1960 - Pub. L. 86-518 substituted "twenty-five years" for "twenty

years".

1952 - Act July 17, 1952, amended section to provide that as to

passenger vessels delivered after Mar. 8, 1946, the balance of the

payments shall be secured by a first preferred mortgage, that the

purchasers' obligation to pay will be discharged by surrender of

the vessel and all rights to the Government, and to set up

conditions governing type of vessel.

1938 - Act June 23, 1938, amended section generally, substituting

"construction-differential subsidy" for "construction subsidy", and

"or so long as there remains due" for "and so long as there remains

due".

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1154, 1159, 1162 of this

Appendix.

-FOOTNOTE-

(!1) See References in Text note below.

-End-

-CITE-

46 USC APPENDIX Sec. 1154 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1154. Purchase of vessel constructed in accordance with

application for subsidy; bid or negotiated price basis for

subsidy and payments for cost of national defense features;

documentation

-STATUTE-

If a qualified purchaser under the terms of this subchapter

desires to purchase a vessel to be constructed in accordance with

an application for construction-differential subsidy under this

subchapter, the Secretary of Transportation may, in lieu of

contracting to pay the entire cost of the vessel under section 1152

of this Appendix, contract to pay only construction-differential

subsidy and the cost of national defense features to the shipyard

constructing such vessel. The construction-differential subsidy and

payments for the cost of national defense features shall be based

upon the lowest responsible domestic bid unless the vessel is

constructed at a negotiated price as provided by section 1152(a) of

this Appendix or under a contract negotiated by the Secretary of

Transportation as provided in section 1152(b) of this Appendix in

which event the construction-differential subsidy and payments for

the cost of national defense features shall be based upon such

negotiated price. No construction-differential subsidy, as provided

in this section, shall be paid unless the said contract or

contracts or other arrangements contain such provisions as are

provided in this subchapter to protect the interests of the United

States as the Secretary of Transportation deems necessary. Such

vessel shall be documented under the laws of the United States as

provided in section 1153 of this Appendix. The contract of sale,

and the mortgage given to secure the payment of the unpaid balance

of the purchase price, shall not restrict the lawful or proper use

or operation of the vessel, except to the extent expressly required

by law.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 504, 49 Stat. 1998; June 23,

1938, ch. 600, Sec. 16, 52 Stat. 958; July 17, 1952, ch. 939, Sec.

4, 66 Stat. 761; Pub. L. 91-469, Secs. 9, 35(a), Oct. 21, 1970, 84

Stat. 1021, 1035; Pub. L. 97-31, Sec. 12(84), Aug. 6, 1981, 95

Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469, provided a negotiated price as an

alternative basis for payment of subsidy and cost of national

defense features, and substituted "Secretary of Commerce" for

"Commission", respectively.

1952 - Act July 17, 1952, inserted provision that the lawful or

proper use of the vessel may not be restricted.

1938 - Act June 23, 1938, substituted "domestic shipyards" for

"American shipyards", struck out "and if it is the lowest bid"

after "fair and reasonable", and changed "construction subsidy" to

"construction-differential subsidy".

-End-

-CITE-

46 USC APPENDIX Sec. 1155 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1155. Eligible shipyards; materials; conditions of contracts;

limitation to American shipyards; American materials, waiver;

ability of bidders; filing bids and data

-STATUTE-

All construction in respect of which a construction-differential

subsidy is allowed under this subchapter shall be performed in a

shipyard of the United States as the result of competitive bidding,

after due advertisement, with the right reserved in the Secretary

of Transportation to disapprove, any or all bids. In all such

construction the shipbuilder, subcontractors, materialmen, or

suppliers shall use, so far as practicable, only articles,

materials, and supplies of the growth, production, or manufacture

of the United States as defined in paragraph K (!1) of section 1401

of title 19; Provided, however, That with respect to other than

major components of the hull, superstructure, and any material used

in the construction thereof, (1) if the Secretary of Transportation

determines that the requirements of this sentence will unreasonably

delay completion of any vessel beyond its contract delivery date,

and (2) if such determination includes or is accompanied by a

concise explanation of the basis therefor, then the Secretary of

Transportation may waive such requirements to the extent necessary

to prevent such delay. No shipbuilder shall be deemed a responsible

bidder unless he possesses the ability, experience, financial

resources, equipment, and other qualifications necessary properly

to perform the proposed contract. Each bid submitted to the

Secretary of Transportation shall be accompanied by all detailed

estimates upon which it is based. The Secretary of Transportation

may require that the bids of any subcontractors, or other pertinent

data, accompany such bid. All such bids and data relating thereto

shall be kept on file until disposed of as provided by law. For the

purposes of this subchapter V, the term "shipyard of the United

States" means shipyards within any of the United States and the

Commonwealth of Puerto Rico.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 505, 49 Stat. 1998; June 23,

1938, ch. 600, Secs. 17, 40(a), 52 Stat. 958, 964; Oct. 25, 1951,

ch. 562, Sec. 3(4), 65 Stat. 639; Pub. L. 86-624, Sec. 35(a), July

12, 1960, 74 Stat. 421; Pub. L. 91-469, Secs. 10, 35(a), Oct. 21,

1970, 84 Stat. 1022, 1035; Pub. L. 97-31, Sec. 12(84), Aug. 6,

1981, 95 Stat. 161.)

-REFTEXT-

REFERENCES IN TEXT

Paragraph K of section 1401 of title 19, referred to in text,

which was classified to par. (k) of section 1401 of Title 19,

Customs Duties, was redesignated par. (h) of section 1401 of Title

19 by Pub. L. 91-271, title III, Sec. 301(c)(1), June 2, 1970, 84

Stat. 288.

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469 struck out subsec. (a) designation, struck

out of first sentence "within the continental limits" and "the

applicant to reject, and in" after "shipyard" and "right reserved

in", provided for waiver of use of American materials, substituted

definition of "shipyard of the United States" for definition of

"continental limits of the United States", and struck out: subsec.

(b) provisions for conditions of contracts, reports as to costs and

net profits, limitation on profit, payment to Secretary of excess

profit, subdivision of contracts, inspection of records and

premises, and contracts for scientific equipment; subsec. (c)

provisions as to method of determining profit and limitation on

salaries; subsec. (d) provisions for utilization of Treasury

Department employees; and subsec. (e) provisions for rescinding

approval of bid on refusal of bidder to comply with conditions, new

bids, and construction in navy yards; and substituted "Secretary of

Commerce" for "Commission" in three places, respectively.

1960 - Subsec. (a). Pub. L. 86-624 inserted definition of

"continental limits of the United States."

1951 - Subsec. (a). Act Oct. 25, 1951, substituted "on file until

disposed of as provided by law" for "permanently on file" in last

sentence.

1938 - Subsec. (a). Act June 23, 1938, Sec. 40(a), substituted

"construction-differential subsidy is allowed" for "subsidy is

allowed".

Subsec. (b). Act June 23, 1938, Sec. 17, made section

inapplicable to contracts or other arrangements entered into under

this subchapter by the terms of which the United States undertakes

to pay only for national-defense features.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1152, 1176 of this

Appendix.

-FOOTNOTE-

(!1) See References in Text note below.

-End-

-CITE-

46 USC APPENDIX Sec. 1156 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1156. Operation of subsidy constructed vessel limited to

foreign trade; repayments to Secretary for deviations

-STATUTE-

Every owner of a vessel for which a construction-differential

subsidy has been paid shall agree that the vessel shall be operated

exclusively in foreign trade, or on a round-the-world voyage, or on

a round voyage from the west coast of the United States to a

European port or ports which includes intercoastal ports of the

United States, or a round voyage from the Atlantic coast of the

United States to the Orient which includes intercoastal ports of

the United States, or on a voyage in foreign trade on which the

vessel may stop at the State of Hawaii, or an island possession or

island territory of the United States, and that if the vessel is

operated in the domestic trade on any of the above-enumerated

services, he will pay annually to the Secretary of Transportation

that proportion of one-twenty-fifth of the

construction-differential subsidy paid for such 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. The Secretary may consent in writing to the temporary

transfer of such vessel to service other than the service covered

by such agreement for periods not exceeding six months in any year,

whenever the Secretary may determine that such transfer is

necessary or appropriate to carry out the purposes of this chapter.

Such consent shall be conditioned upon the agreement by the owner

to pay to the Secretary, upon such terms and conditions as he may

prescribe, an amount which bears the same proportion to the

construction-differential subsidy paid by the Secretary as such

temporary period bears to the entire economic life of the vessel.

No operating-differential subsidy shall be paid for the operation

of such vessel for such temporary period.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 506, 49 Stat. 1999; June 23,

1938, ch. 600, Sec. 18, 52 Stat. 958; Mar. 18, 1959, Pub. L. 86-3,

Sec. 18(b)(1), 73 Stat. 12; Pub. L. 86-518, Sec. 3, June 12, 1960,

74 Stat. 216; Pub. L. 97-31, Sec. 12(87), Aug. 6, 1981, 95 Stat.

161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" the first time it appeared and "Secretary" for

"Commission" the next four times it appeared. For prior transfers

of functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

1960 - Pub. L. 86-518 substituted "one-twenty-fifth" for

"one-twentieth".

1959 - Pub. L. 86-3 included stops at the State of Hawaii for

vessels operated on voyages in foreign trade.

1938 - Act June 23, 1938, made changes in phraseology and

substituted "construction-differential subsidy" for "construction

subsidy".

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960, AMENDMENT OF CONTRACTS DEALING WITH VESSELS HAVING EXTENDED

LIFE

For provisions authorizing revision and amendment of certain

contracts, see section 8(c) of Pub. L. 86-518, as amended, set out

as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1162, 1177, 1183 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1157 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1157. Construction of new vessel to replace obsolete; purchase

of old vessel by Secretary; bond of seller against liens

-STATUTE-

If a contract is made by the Secretary of Transportation under

authority of this subchapter for the construction and sale of a new

vessel to replace a vessel then operated in foreign trade or

domestic trade, which in the judgment of the Secretary of

Transportation should be replaced because it is obsolete or

inadequate for successful operation in such trade, the Secretary of

Transportation is authorized, in his discretion, to buy such

replaced vessel from the owner at a fair and reasonable valuation,

which valuation shall not exceed the cost to the owner or any

former owner plus the actual cost previously expended thereon for

reconditioning, and less a reasonable and proper depreciation,

based upon not more than twenty-five-year life of the vessel, and

apply the purchase price agreed upon to that portion of the

construction cost of such new vessel which is to be borne by the

purchaser thereof: Provided, That the owner of such replaced vessel

shall execute a bond, with one or more approved sureties,

conditioned upon indemnifying the United States from all loss

resulting from any existing lien against such vessel: And provided

further, That such vessel has been documented under the laws of the

United States for a period of at least ten years prior to the date

of its purchase by the United States.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 507, 49 Stat. 2000; June 23,

1938, ch. 600, Sec. 19, 52 Stat. 959; July 17, 1952, ch. 939, Sec.

5, 66 Stat. 761; Pub. L. 86-518, Sec. 1, June 12, 1960, 74 Stat.

216; Pub. L. 97-31, Sec. 12(88), Aug. 6, 1981, 95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" in three places and "his" for "its". For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

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

"twenty-year life".

1952 - Act July 17, 1952, made section applicable to vessels in

domestic trade.

1938 - Act June 23, 1938, struck out provisions which authorized

a deduction for obsolescence.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

RATE OF DEPRECIATION FOR VESSELS DELIVERED BY SHIPBUILDER ON OR

AFTER JANUARY 1, 1946, AND BEFORE JANUARY 1, 1960

For provisions relating to computation of depreciation with

respect to vessels delivered by the shipbuilder on or after Jan. 1,

1946, and before Jan. 1, 1960, see section 8(b) of Pub. L. 86-518,

set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1158 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1158. Disposition of vessels transferred to Maritime

Administration of Department of Transportation

-STATUTE-

If the Secretary of Transportation shall determine that any

vessel transferred to the Maritime Administration of the Department

of Transportation by section 1112 of this Appendix, or hereafter

acquired, is of insufficient value for commercial or military

operation to warrant its further preservation, the Secretary of

Transportation is authorized (1) to scrap said vessel, or (2) to

sell such vessel for cash, after appraisement and due

advertisement, and upon competitive sealed bids, either to citizens

of the United States or to aliens: Provided, That the purchaser

thereof shall enter into an undertaking with sureties approved by

the Secretary of Transportation that such vessel shall not be

operated in the foreign commerce of the United States at any time

within the period of ten years after the date of the sale, in

competition with any other vessel owned by a citizen or citizens of

the United States and registered under the laws thereof.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 508, 49 Stat. 2000; Pub. L.

97-31, Sec. 12(89), Aug. 6, 1981, 95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" in three places and "the Maritime Administration

of the Department of Transportation" for "it". For prior transfers

of functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 10 section 2218; title 16

section 5405.

-End-

-CITE-

46 USC APPENDIX Sec. 1159 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1159. Vessels to be operated in domestic trade; terms and

conditions of construction aid and sale to purchaser

-STATUTE-

Any citizen of the United States may make application to the

Secretary of Transportation for aid in the construction of a new

vessel to be operated in the foreign or domestic trade (excepting

vessels engaged solely in the transportation of property on inland

rivers and canals exclusively). If such application is approved by

the Secretary of Transportation, the vessel may be constructed

under the terms and conditions of this subchapter, but no

construction-differential subsidy shall be allowed. The Secretary

of Transportation shall pay for the cost of national-defense

features incorporated in such vessel. In case the vessel is

designed to be of not less than three thousand five hundred gross

tons and to be capable of sustained speed of not less than ten

knots, or in the case of a passenger vessel operating solely on the

inland rivers and waterways which is designed to be of not less

than one thousand gross tons and to be capable of sustained speed

of not less than eight knots, or in the case of a ferry operating

solely in point-to-point transportation which is designed to be of

not less than seventy-five gross tons and to be capable of a

sustained speed of not less than eight knots, in the case of an

oceangoing tug of more than two thousand five hundred horsepower or

oceangoing barge of more than two thousand five hundred gross tons,

or in the case of a vessel of more than two thousand five hundred

horsepower designed to be capable of sustained speed of not less

than forty knots, the purchaser shall be required to pay the

Secretary of Transportation not less than 12 1/2 per centum of the

cost of such vessel, and in the case of any other vessel the

purchaser shall be required to pay the Secretary of Transportation

not less than 25 per centum of the cost of such vessel (excluding

from such cost, in either case, the cost of national defense

features); and the balance of such purchase price shall be paid by

the purchaser within twenty-five years in not to exceed twenty-five

equal annual installments, with interest at a rate not less than

(i) a rate determined by the Secretary of the Treasury, taking into

consideration the current average market yield on outstanding

marketable obligations of the United States with remaining periods

to maturity comparable to the average maturities of such loans,

adjusted to the nearest one-eighth of 1 per centum, plus (ii) an

allowance adequate in the judgment of the Secretary of

Transportation to cover administrative costs, the balance of such

purchase price being secured by a preferred mortgage on the vessel

sold and otherwise secured as the Secretary of Transportation may

determine: Provided, That, notwithstanding any other provisions of

law, the balance of the purchase price of a passenger vessel

constructed under this section which is delivered subsequent to

March 8, 1946, and which has the tonnage, speed, passenger

accommodations, and other characteristics set forth in section 1153

of this Appendix, may, with the approval of the Secretary of

Transportation, be secured as provided in such section, and the

obligation of the purchaser of such a vessel shall be satisfied and

discharged as provided in such section.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 509, 49 Stat. 2000; June 23,

1938, ch. 600, Sec. 20, 52 Stat. 959; June 6, 1939, ch. 186, 53

Stat. 810; July 17, 1952, ch. 939, Sec. 6, 66 Stat. 761; Pub. L.

86-518, Sec. 1, June 12, 1960, 74 Stat. 216; Pub. L. 87-877, Sec.

2(b), Oct. 24, 1962, 76 Stat. 1200; Pub. L. 90-183, Dec. 10, 1967,

81 Stat. 559; Pub. L. 90-214, Dec. 18, 1967, 81 Stat. 660; Pub. L.

91-469, Sec. 11, Oct. 21, 1970, 84 Stat. 1022; Pub. L. 92-374, Aug.

10, 1972, 86 Stat. 528; Pub. L. 95-173, Sec. 8, Nov. 12, 1977, 91

Stat. 1360; Pub. L. 95-505, Oct. 24, 1978, 92 Stat. 1755; Pub. L.

97-31, Sec. 12(90), Aug. 6, 1981, 95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1978 - Pub. L. 95-505 substituted "ten knots" for "fourteen

knots".

1977 - Pub. L. 95-173 inserted ", or in the case of a ferry

operating solely in point-to-point transportation which is designed

to be of not less than seventy-five gross tons and to be capable of

a sustained speed of not less than eight knots" after "less than

eight knots".

1972 - Pub. L. 92-374 inserted "or in the case of a vessel of

more than two thousand five hundred horsepower designed to be

capable of sustained speed of not less than forty knots" in

sentence dealing with percentage of cost payable by purchaser,

after "barge of more than two thousand five hundred gross tons".

1970 - Pub. L. 91-469 substituted "Secretary of Commerce" for

"Commission" in seven places, "purchaser" for "applicant" in first

three places, and provision for a rate of interest not less than a

rate determined by the Secretary of the Treasury, taking into

consideration the current average market yield on outstanding

marketable obligations of the United States with remaining periods

to maturity comparable to the average maturities of such loans,

adjusted to the nearest one-eighth of 1 per centum plus an

administrative cost allowance for prior rate of 3 1/2 per centum

per annum.

1967 - Pub. L. 90-214 included provision for oceangoing tugs of

more than two thousand five hundred horsepower or oceangoing barges

of more than two thousand five hundred gross tons.

Pub. L. 90-183 inserted "or in the case of a passenger vessel

operating solely on the inland rivers and waterways which is

designed to be of not less than one thousand gross tons and to be

capable of sustained speed of not less than eight knots" after

"fourteen knots,".

1962 - Pub. L. 87-877 struck out second proviso which, in the

case of a vessel to be constructed under this section, gave a

preference to an applicant who had his principal place of business

on the Pacific coast of the United States, but not including one in

business on or before Aug. 1, 1935, who subsequently changed his

principal place of business to the Pacific coast, if such vessel

was to be operated from such coast, the amount of the lowest

responsible shipyard bid did not exceed by more than six per

centum, a bid by such a shipyard on the Atlantic coast, and a port

on the Pacific coast was designated and continued as the home port

of the vessel, which set a lower rate of interest on deferred

payments that would otherwise be applicable with respect to periods

of construction of such vessel and its operation exclusively in

coastwise, intercoastal, and other domestic trade, and which

enumerated four conditions under which such lower interest rate

would not apply.

1960 - Pub. L. 86-518 substituted "twenty-five" for "twenty" in

two places.

1952 - Act July 17, 1952, provided that as to vessels delivered

after Mar. 8, 1946, the balance of the payments shall be secured by

a first preferred mortgage and that the purchaser's obligation to

pay will be discharged by surrender of the vessel and all rights to

the Government.

1939 - Act June 6, 1939, struck out "except as otherwise provided

in this title" after "no construction-differential subsidy shall be

allowed", and inserted provisions requiring the applicant to pay

not less than 12 1/2 per centum of the cost in case the vessel is

designed to be of not less than 3,500 gross tons and to be capable

of a sustained speed of not less than 14 knots.

1938 - Act June 23, 1938, substituted "foreign or domestic trade"

for "domestic trade", and inserted provisions requiring the

Commission to pay for the cost of national-defense features.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1152, 1274 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1160 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1160. Acquisition of obsolete vessels

-STATUTE-

(a) Definitions

When used in this section -

(1) The term "obsolete vessel" means a vessel or vessels, each

of which (A) is of not less than one thousand three hundred and

fifty gross tons, (B) in the judgment of the Secretary of

Transportation, should, by reason of age, obsolescence, or

otherwise, be replaced in the public interest and (C) has been

owned by a citizen or citizens of the United States for at least

three years immediately prior to the date of acquisition

hereunder.

(2) The term "new vessel" means a vessel or vessels, each of

which (A) is constructed under the provisions of this chapter,

and is acquired within two years from the date of completion of

such vessel, or is purchased under section 1204 of this Appendix,

as amended, by the person turning in an obsolete vessel under

this section, or (B) is hereafter constructed in a domestic

shipyard on private account and not under the provisions of this

chapter, and documented under the laws of the United States.

(b) Promotion of construction of new vessels; allowance on obsolete

vessels

In order 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 is authorized,

subject to the provisions of this section, to acquire any obsolete

vessel in exchange for an allowance of credit. The obsolete vessel

shall be acquired by the Secretary of Transportation, if the owner

so requests, either at the time the owner contracts for the

construction or purchase of a new vessel or within five days of the

actual date of delivery of the new vessel to the owner. The amount

of the allowance shall be determined at the time of the acquisition

of the obsolete vessel by the Secretary of Transportation. In the

event the obsolete vessel is acquired by the Secretary of

Transportation at the time the owner contracts for the construction

or purchase of the new vessel, the allowance shall not be paid to

the owner of the obsolete vessel, but shall be applied upon the

purchase price of a new vessel. In the case of a new vessel

constructed under the provisions of this chapter, such allowance

may, under such terms and conditions as the Secretary of

Transportation may prescribe, be applied upon the cash payments

required under this chapter. In case the new vessel is not

constructed under the provisions of this chapter, the allowance

shall, upon acquisition of the obsolete vessel by the Secretary of

Transportation, be paid, for the account of the owner, to the

shipbuilder constructing such new vessel. In the event that title

to the obsolete vessel is acquired by the Secretary of

Transportation at the time of delivery of the new vessel, the

allowance shall be deposited in the owner's capital construction

fund. This subsection shall apply to obsolete vessels exchanged for

new vessels hereafter contracted to be built, or eligible for such

exchange but not exchanged in connection with a contract for new

vessels executed prior to October 1, 1960.

(c) Utility value of new vessel; gross tonnage

The utility value of the new vessel for operation in the domestic

or foreign commerce of the United States shall not be substantially

less than that of the obsolete vessel. The gross tonnage of the

obsolete vessel may exceed the gross tonnage of the new vessel in a

ratio not in excess of three to one, if the Secretary of

Transportation finds that the new vessel, although of lesser

tonnage, will provide utility value equivalent to or greater than

that of the obsolete vessel.

(d) Amount of allowance on obsolete vessel; determination of amount

The allowance for an obsolete vessel shall be the fair and

reasonable value of such vessel as determined by the Secretary of

Transportation. In making such determination the Secretary of

Transportation shall consider: (1) the scrap value of the obsolete

vessel both in American and foreign markets, (2) the depreciated

value based on a twenty or twenty-five year life, whichever is

applicable to the obsolete vessel, and (3) the market value thereof

for operation in the world trade or in the foreign or domestic

trade of the United States. In the event the obsolete vessel is

acquired by the Secretary of Transportation at the time the owner

contracts for the construction of the new vessel, and the owner

uses such vessel during the period of construction of the new

vessel, the allowance shall be reduced by an amount representing

the fair value of such use. The rate for the use of the obsolete

vessel shall be fixed by the Secretary of Transportation for the

entire period of such use at the time of execution of the contract

for the construction of the new vessel.

(e) Recognition of gain for income tax purposes; basis for gain or

loss

No gain shall be recognized to the owner for the purpose of

Federal income taxes in the case of a transfer of an obsolete

vessel to the Secretary of Transportation under the provisions of

this section. The basis for gain or loss upon a sale or exchange

and for depreciation under the applicable Federal income-tax laws

of a new vessel acquired as contemplated in this section shall be

the same as the basis of the obsolete vessel or vessels exchanged

for credit upon the acquisition of such new vessel, increased in

the amount of the cost of such vessel (other than the cost

represented by such obsolete vessel or vessels) and decreased in

the amount of loss recognized upon such transfer.

(f) Report to Congress

The Secretary of Transportation shall include in his annual

report to Congress a detailed statement of all transactions

consummated under the provisions of the preceding subsections

during the period covered by such report.

(g) Use of vessels 25 years old or more

An obsolete vessel acquired by the Secretary of Transportation

under this section which is or becomes twenty-five years old or

more, and vessels presently in the Secretary's laid-up fleet which

are or become twenty-five years old or more, shall in no case be

used for commercial operation, except that any such obsolete

vessel, or any such vessel in the laid-up fleet may be used during

any period in which vessels may be requisitioned under section 1242

of this Appendix, as amended, and except as otherwise provided in

this chapter for the employment of the Secretary's vessels in

steamship lines on trade routes exclusively serving the foreign

trade of the United States.

(h) Repealed. Pub. L. 101-225, title III, Sec. 307(7), Dec. 12,

1989, 103 Stat. 1925

(i) Exchange of vessels; valuation; scrapping of traded out vessels

The Secretary of Transportation is authorized to acquire suitable

documented vessels, as defined in section 2101 of title 46, with

funds in the Vessel Operations Revolving Fund derived from the sale

of obsolete vessels in the National Defense Reserve Fleet. For

purposes of this subsection, 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 National

Defense Reserve Fleet; except that, in a transaction subject to

this section, the value assigned to those vessels will be

determined on the same basis, with consideration given to the fair

value of the cost of positioning the traded-out vessel to the place

of scrapping. All costs incident to the lay-up of the vessel

acquired under this subsection may be paid from balances in the

Fund. Notwithstanding the provisions of sections 808 and 835 of

this Appendix, vessels sold from the National Defense Reserve Fleet

under this subsection may be scrapped in approved foreign markets.

(j) Placement in national defense reserve fleet of acquired vessels

Any vessel heretofore or hereafter acquired under this section,

or otherwise acquired by the Maritime Administration of the

Department of Transportation under any other authority shall be

placed in the national defense reserve fleet established under

authority of section 11 of the Merchant Ship Sales Act of 1946 [50

App. U.S.C. 1744] and shall not be traded out or sold from such

reserve fleet, 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.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 510, as added Aug. 4, 1939,

ch. 417, Sec. 7, 53 Stat. 1183; amended July 17, 1952, ch. 939,

Secs. 7, 8, 66 Stat. 762; Aug. 10, 1954, ch. 664, 68 Stat. 680;

Pub. L. 85-332, Feb. 20, 1958, 72 Stat. 17; Pub. L. 86-518, Sec. 1,

June 12, 1960, 74 Stat. 216; Pub. L. 86-575, July 5, 1960, 74 Stat.

312; Pub. L. 87-401, Oct. 5, 1961, 75 Stat. 833; Pub. L. 87-755,

Oct. 5, 1962, 76 Stat. 751; Pub. L. 89-254, Secs. 1, 2, Oct. 10,

1965, 79 Stat. 980; Pub. L. 91-469, Secs. 12, 13, 35(a), Oct. 21,

1970, 84 Stat. 1022, 1035; Pub. L. 93-605, Sec. 1, Jan. 2, 1975, 88

Stat. 1965; Pub. L. 95-177, Nov. 15, 1977, 91 Stat. 1368; Pub. L.

97-31, Sec. 12(91), Aug. 6, 1981, 95 Stat. 161; Pub. L. 101-225,

title III, Sec. 307(7), Dec. 12, 1989, 103 Stat. 1925; Pub. L.

101-595, title VII, Sec. 704, Nov. 16, 1990, 104 Stat. 2994.)

-REFTEXT-

REFERENCES IN TEXT

The Federal income-tax laws, referred to in subsec. (e), are

classified generally to Title 26, Internal Revenue Code.

-MISC1-

AMENDMENTS

1990 - Subsec. (i). Pub. L. 101-595 amended subsec. (i)

generally. Prior to amendment, subsec. (i) read as follows: "The

Secretary of Transportation is authorized to acquire mariner class

vessels constructed under subchapter VII of this chapter and Public

Law 911, Eighty-first Congress, and other suitable vessels,

constructed in the United States, which have never been under

foreign documentation, in exchange for obsolete vessels in the

National Defense Reserve Fleet. For purposes of this subsection,

the trade-in and trade-out vessels shall be valued at the higher of

their scrap value in domestic or foreign markets as of the date of

the exchange: Provided, That in any exchange transactions, the

value assigned to the traded-in and traded-out vessels will be

determined on the same basis. The value of the traded-out vessels

shall be as nearly as possible equal to the value of the traded-in

vessel plus the fair value of the cost of towing the traded-out

vessel to the place of scrapping. To the extent the value of the

traded-out vessel exceeds the value of the traded-in vessel plus

the fair value of the cost of towing, the owner of the traded-in

vessel shall pay the excess to the Secretary of Transportation in

cash at the time of exchange. This excess shall be deposited into

the Vessel Operations Revolving Fund and all costs incident to the

lay-up of the vessels acquired under this chapter may be paid from

balances in the Fund. No payments shall be made by the Secretary of

Transportation to the owner of any traded-in vessel in connection

with any exchange under this subsection. Notwithstanding the

provisions of sections 808 and 835 of this Appendix, vessels traded

out under this subsection may be scrapped in approved foreign

markets. The provision of this subsection (i) as it read prior to

the 1975 amendment shall govern all transactions made thereunder

prior to that amendment."

1989 - Subsec. (h). Pub. L. 101-225 struck out subsec. (h) which

related to acquisition of tankers for national defense reserve.

1981 - Subsecs. (a)(1), (b). Pub. L. 97-31, Sec. 12(91)(A),

substituted "Secretary of Transportation" for "Secretary of

Commerce" wherever appearing.

Subsecs. (c) to (e). Pub. L. 97-31, Sec. 12(91)(B), substituted

"Secretary of Transportation" for "Commission" wherever appearing.

For prior transfers of functions of the Commission, meaning the

United States Maritime Commission, see Transfer of Functions note

below.

Subsec. (f). Pub. L. 97-31, Sec. 12(91)(B), (C), substituted

"Secretary of Transportation" for "Commission" and "his" for "its".

For prior transfers of functions of the Commission, meaning the

United States Maritime Commission, see Transfer of Functions note

below.

Subsec. (g). Pub. L. 97-31, Sec. 12(91)(B), (D), substituted

"Secretary of Transportation" for "Commission" and "Secretary's"

for "Commission's" in two places. For prior transfers of functions

of the Commission, meaning the United States Maritime Commission,

see Transfer of Functions note below.

Subsecs. (h), (i). Pub. L. 97-31, Sec. 12(91)(A), substituted

"Secretary of Transportation" for "Secretary of Commerce" wherever

appearing.

Subsec. (j). Pub. L. 97-31, Sec. 12(91)(A), (E), substituted

"Maritime Administration of the Department of Transportation" for

"Secretary of Commerce" and "Secretary of Transportation" for

"Secretary of Commerce".

1977 - Subsec. (i). Pub. L. 95-177 struck out ", within two years

after the enactment of this subsection," after "is authorized" and

"that are scheduled for scrapping" after "National Defense Reserve

Fleet", inserted "and other suitable vessels, constructed in the

United States, which have never been under foreign documentation,"

after "Eighty-first Congress,", and substituted "the trade-in and

trade-out vessels" for "the traded-in and traded-out vessels" and

"the 1975 Amendment" for "this amendment".

1975 - Subsec. (i). Pub. L. 93-605 added subsec. (i). A prior

subsec. (i) providing authority for the Secretary of Commerce to

acquire vessels of one thousand five hundred gross tons or over

which were constructed in the United States in exchange for more

modern or efficient ocean-going vessels of one thousand five

hundred gross tons or over owned by the United States under

specified conditions expired on July 5, 1972.

1970 - Subsec. (a)(1). Pub. L. 91-469, Sec. 12(a), in redefining

"obsolete vessel", substituted in subd. (B) "in the judgment of the

Secretary of Commerce, should, by reason of age, obsolescence, or

otherwise, be replaced in the public interest" for "is not less

than seventeen years old and, in the judgment of the Commission, is

obsolete or inadequate for successful operation in the domestic or

foreign trade of the United States", substituted in subd. (C) "has

been owned" for "is owned" and deleted therefrom "and has been

owned by such citizen or citizens" preceding "for at least three

years", and deleted concluding proviso defining "obsolete vessel"

as meaning a vessel, until June 30, 1964, which is not less than

1,350 gross tons, is not less than 12 years old, and is citizen

owned for three year period prior to acquisition hereunder.

Subsec. (b). Pub. L. 91-469, Secs. 12(b), 35(a), substituted

"capital construction fund" for "capital reserve fund" and

"Secretary of Commerce" for "Commission" in seven places,

respectively.

Subsec. (i). Pub. L. 91-469, Sec. 13, in amending first sentence,

substituted "1972" and "which were constructed in the United

States" for "1970" and "which were constructed or contracted for by

the United States shipyards before September 3, 1945" and struck

out "war-built vessels (which are defined for purposes of this

subsection as" and "which were constructed or contracted for by the

United States shipyards during the period beginning September 3,

1939, and ending September 2, 1945)" before and after "oceangoing

vessels of one thousand five hundred gross tons or over".

1965 - Subsec. (i). Pub. L. 89-254, Sec. 1(a), substituted

"before July 5, 1970, vessels of one thousand five hundred gross

tons or over which were constructed or contracted for by the United

States shipyards before September 3, 1945" for "within five years

from the date of enactment of this Act war-built vessels (which are

defined for purposes of this subsection as oceangoing vessels of

one thousand five hundred gross tons or over which were constructed

or contracted for by the United States shipyards during the period

beginning September 3, 1939, and ending September 2, 1945)", and

inserted "(which are defined for purposes of this subsection as

oceangoing vessels of one thousand five hundred gross tons or over

which were constructed or contracted for by the United States

shipyards during the period beginning September 3, 1939, and ending

September 2, 1945)".

Subsec. (i)(1). Pub. L. 89-254, Sec. 1(b), amended par. (1) to

apply the 3 year prohibition against any vessel being operated

under an operating-differential subsidy to the applicant or any

affiliate of the applicant rather than to the vessel itself.

Subsec. (i)(2). Pub. L. 89-254, Sec. 1(c), required the value of

a traded out vessel to be calculated in the same manner as its

value was determined when it was traded in, except that vessels

traded in prior to Oct. 1, 1960, shall be valued on the basis

yielding the highest fair return to the government commensurate

with the purpose of this subsection, and required in each exchange

of vessels under this subsection, the value of the traded-in

vessel, unless based on scrap value, and the value of the

traded-out vessel to be calculated in the same manner.

Subsec. (i)(9). Pub. L. 89-254, Sec. 1(d), substituted provisions

permitting tanker vessels to be traded out under the provisions of

this subsection only for major conversions into dry cargo carriers

or liquid bulk carriers, including natural gas carriers but

excluding bulk petroleum carriers, except where traded out for use

exclusively in trade and commerce on the Great Lakes, including the

St. Lawrence River and Gulf, for provisions which prohibited

tanker-vessels to be traded out under the provisions of this

subsection.

Subsec. (j). Pub. L. 89-254, Sec. 2, added subsec. (j).

1962 - Subsec. (a)(1). Pub. L. 87-755 substituted "June 30, 1964"

for "June 30, 1962".

1961 - Subsec. (b). Pub. L. 87-401, Sec. 1(1), provided that if

the owner requests, the vessel shall be acquired by the Federal

Maritime Board or Secretary of Commerce either when the owner

contracts for construction or purchase of a new ship or within 5

days of actual delivery of the new vessel to the owner, that the

amount of allowance be determined at the time of acquisition of the

vessel by the Board or Secretary, and if at such time, the owner

contracts for construction or purchase of a new vessel, the

allowance shall be applied upon the price of the new vessel, that

if the Board or Secretary acquired title to the vessel at time of

delivery of the new vessel, the allowance shall be deposited in the

owner's capital reserve fund, and that this subsection shall apply

to exchanges for vessels hereafter contracted to be built, or

eligible for exchange but not so exchanged in connection with

contracts for new vessels executed prior to Oct. 1, 1960.

Subsec. (d). Pub. L. 87-401, Sec. 1(2), provided for a

depreciation value based upon a twenty-year life, if applicable,

and substituted "In the event the obsolete vessel is acquired by

the Board or Secretary at the time the owner contracts for the

construction of a new vessel, and the owner" for "If the owner of

the obsolete vessel".

1960 - Subsec. (d). Pub. L. 86-518 substituted "twenty-five-year

life" for "twenty-year life".

Subsec. (g). Pub. L. 86-518 substituted "twenty-five years" for

"twenty years" in two places.

Subsec. (i). Pub. L. 86-575 added subsec. (i).

1958 - Subsec. (a)(1). Pub. L. 85-332 substituted "June 30, 1962"

for "June 30, 1958".

1954 - Subsec. (h). Act Aug. 10, 1954, added subsec. (h).

1952 - Subsec. (a)(1). Act July 17, 1952, Sec. 7, provided that

until June 30, 1958, the minimum age in determining the eligibility

of "obsolete vessels" for turn in for credit allowance on a new

vessel is reduced from 17 to 12 years.

Subsec. (d). Act July 17, 1952, Sec. 8, provided that the rate

for the use of the obsolete vessel should be fixed at the time that

the contract for the new vessel is entered into.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

SECRETARY OF COMMERCE AUTHORIZED TO PURCHASE STEAMSHIP UNITED

STATES; REQUISITION OR PURCHASE BY UNITED STATES

Pub. L. 92-296, Sec. 2, May 16, 1972, 86 Stat. 140, as amended by

Pub. L. 94-536, Oct. 17, 1976, 90 Stat. 2497; Pub. L. 96-111, Sec.

2, Nov. 15, 1979, 93 Stat. 846, provided that: "The Secretary of

Commerce is authorized and directed to purchase the steamship

United States, as is, where is, at the depreciated cost of the

vessel to the owner, as determined by the Secretary of Commerce,

less the unpaid principal and interest on the mortgage on the

vessel, for layup in the National Defense Reserve Fleet and

operation for the account of any agency or department of the United

States during any period in which vessels may be requisitioned

under section 902 of the Merchant Marine Act, 1936 [46 App. U.S.C.

1242], and/or for sale or charter to a qualified operator for

operation under the American flag in the coastwise and/or foreign

commerce of the United States and/or between foreign ports

notwithstanding the provision of section 506 of the Merchant Marine

Act, 1936 [46 App. U.S.C. 1156]: Provided, That for hire carriage

in coastwise commerce of the United States is limited to

passengers, their accompanying baggage, and one thousand

measurement tons of cargo, of forty cubic feet each, per annum in

any single coastwise trade: Provided further, That for hire

carriage of cargo in excess of the aforesaid one thousand tons

shall be unlawful, or for use as a floating hotel in or on the

navigable waters of the United States. Whenever the conditions set

forth in section 902, the Merchant Marine Act of 1936 [46 App.

U.S.C. 1242], exist, the vessel may be requisitioned or purchased

by the United States and just compensation for title or use, as the

case may be, shall be paid in accordance with section 902 of the

Merchant Marine Act, as amended (46 U.S.C. 1242) [46 App. U.S.C.

1242]. The depreciated cost of the vessel to the owner shall be

computed on the schedule adopted by the Internal Revenue Service

for income tax purposes. Such determination shall be final. The

Secretary of Commerce shall require the owner of the vessel to

agree that it will pay all existing private obligations related to

the vessel, and that it will commit an amount equal to the net

proceeds received from such sale in excess of existing obligations

and expenses incident to the sale, within a reasonable period not

to exceed twelve months of receipt, as equity capital for the

construction of new vessels which the Secretary determines are

built to effectuate the purposes and policy of the Merchant Marine

Act, 1936, as amended [this chapter]."

RATE OF DEPRECIATION FOR VESSELS DELIVERED BY SHIPBUILDER ON OR

AFTER JANUARY 1, 1946, AND BEFORE JANUARY 1, 1960

For provisions relating to computation of depreciation with

respect to vessels delivered by the shipbuilder on or after Jan. 1,

1946, and before Jan. 1, 1960, see section 8(b) of Pub. L. 86-518,

set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACTS, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

SUSPENSION OF SUBSECTION (G) REPEALED

Act May 14, 1940, ch. 201, Sec. 1, 54 Stat. 216, as extended by

act June 16, 1942, ch. 416, 56 Stat. 370, which suspended subsec.

(g) of this section until six months after the end of World War II

should have been proclaimed or such earlier time as the Congress by

concurrent resolution or the President might designate, was

repealed by act July 25, 1947, ch. 327, Sec. 1, 61 Stat. 449.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 10 section 2218; title 16

section 5405; title 26 section 1061.

-End-

-CITE-

46 USC APPENDIX Sec. 1161 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1161. Reserve funds for construction or acquisition of

vessels; taxation

-STATUTE-

(a) "New vessel" defined

When used in this section the term "new vessel" means any vessel

(1) documented or agreed with the Secretary of Transportation to be

documented under the laws of the United States; (2) constructed in

the United States after December 31, 1939, or the construction of

which has been financed under subchapters V or VII of this chapter,

or the construction of which has been aided by a mortgage insured

under subchapter XI of this chapter; and (3) either (A) of such

type, size, and speed as the Secretary of Transportation shall

determine to be suitable for use on the high seas or Great Lakes in

carrying out the purposes of this chapter, but not of less than two

thousand gross tons or of less speed than twelve knots, unless the

Secretary of Transportation shall determine and certify in each

case that a vessel of a specified lesser tonnage or speed is

desirable for use by the United States in case of war or national

emergency, or (B) constructed to replace a vessel or vessels

requisitioned or purchased by the United States.

(b) Establishment of construction reserve funds

For the purposes of promoting the construction, reconstruction,

reconditioning, or acquisition of vessels, or for other purposes

authorized in this section, necessary to carrying out the policy

set forth in section 1101 of this Appendix, any citizen of the

United States who is operating a vessel or vessels in the foreign

or domestic commerce of the United States or in the fisheries or

owns in whole or in part a vessel or vessels being so operated, or

who, at the time of purchase or requisition of the vessel by the

Government, was operating a vessel or vessels so engaged or owned

in whole or in part a vessel or vessels being so operated or had

acquired or was having constructed a vessel or vessels for the

purpose of operation in such commerce or in the fisheries, may

establish a construction reserve fund, for the construction,

reconstruction, reconditioning, or acquisition of new vessels, or

for other purposes authorized in this section, to be composed of

deposits of proceeds from sales of vessels, indemnities on account

of losses of vessels, earnings from the operation of vessels

documented under the laws of the United States and from services

incident thereto, and receipts, in the form of interest or

otherwise, with respect to amounts previously deposited. Such

construction reserve fund shall be established, maintained,

expended, and used in accordance with the provisions of this

section and rules or regulations to be prescribed jointly by the

Secretary of Transportation and the Secretary of the Treasury.

(c) Recognition of gain for taxation where proceeds of sale or

indemnity for loss deposited in fund

In the case of the sale or actual or constructive total loss of a

vessel, if the taxpayer deposits an amount equal to the net

proceeds of the sale or to the net indemnity with respect to the

loss in a construction reserve fund established under subsection

(b) of this section, then -

(1) if the taxpayer so elects in his income-tax return for the

taxable year in which the gain was realized, or

(2) in case a vessel is purchased or requisitioned by the

United States, or is lost, in any taxable year beginning after

December 31, 1939, and the taxpayer receives payment for the

vessel so purchased or requisitioned, or receives from the United

States indemnity on account of such loss, subsequent to the end

of such taxable year, if the taxpayer so elects prior to the

expiration of sixty days after the receipt of the payment or

indemnity, and in accordance with a form of election to be

prescribed by the Commissioner of Internal Revenue with the

approval of the Secretary of the Treasury,

no gain shall be recognized to the taxpayer in respect of such sale

or indemnification in the computation of net income for the

purposes of Federal income or excess-profits taxes. If an election

is made under subdivision (2) of this subsection and if computation

or recomputation in accordance with this subsection is otherwise

allowable but is prevented, on the date of making such election or

within six months thereafter, by any statute of limitation, such

computation or recomputation nevertheless shall be made

notwithstanding such statute if a claim therefor is filed within

six months after the date of making such election.

For the purposes of this subsection no amount shall be considered

as deposited in a construction reserve fund unless it is deposited

within sixty days after it is received by the taxpayer.

As used in this subsection the term "net proceeds" and the term

"net indemnity" mean the sum of (1) the adjusted basis of the

vessel and (2) the amount of gain which would be recognized to the

taxpayer without regard to this subsection.

(d) Basis for determining gain or loss and for depreciation of new

vessels

The basis for determining gain or loss and for depreciation, for

the purposes of Federal income or excess profits taxes, of any new

vessel constructed, reconstructed, reconditioned, or acquired by

the taxpayer, or with respect to which purchase-money indebtedness

is liquidated as provided in subsection (g) of this section, in

whole or in part out of the construction reserve fund shall be

reduced by that portion of the deposits in the fund expended in the

construction, reconstruction, reconditioning, acquisition, or

liquidation of purchase-money indebtedness of the new vessel which

represents gain not recognized for tax purposes under subsection

(c) of this section.

(e) Order, proportions, etc., of deposits and withdrawals

For the purposes of this section, (1) if the net proceeds of a

sale or the net indemnity in respect of a loss are deposited in

more than one deposit, the amount consisting of the gain shall be

considered as first deposited; (2) amounts expended, obligated, or

otherwise withdrawn shall be applied against the amounts deposited

in the fund in the order of deposit; and (3) if any deposit

consists in part of gain not recognized under subsection (c) of

this section, any expenditure, obligation, or withdrawal applied

against such deposit shall be considered to consist of gain in the

proportion that the part of the deposit consisting of gain bears to

the total amount of the deposit.

(f) Amounts in fund as accumulation of earnings or profits

With respect to any taxable year, amounts on deposit on the last

day of such year in a construction reserve fund in accordance with

this section and with respect to which all the requirements of

subsection (g) of this section have been satisfied, to the extent

that such requirements are applicable as of the last day of said

taxable year, shall not constitute an accumulation of earnings or

profits within the meaning of section 102 of the Internal Revenue

Code.

(g) Benefits of section conditioned upon manner and time of

expenditure of deposits

The provisions of subsections (c) and (f) of this section shall

apply to any deposit in the construction reserve fund only to the

extent that such deposit is expended or obligated for expenditure,

in accordance with rules and regulations to be prescribed jointly

by the Secretary of Transportation and the Secretary of the

Treasury -

(1) under a contract for the construction or acquisition of a

new vessel or vessels (or in the discretion of the Secretary of

Transportation, for a part interest therein), or, with the

approval of the Secretary of Transportation, for the

reconstruction or reconditioning of a new vessel or vessels,

entered into within (i) two years from the date of deposit or the

date of any extension thereof which may be granted by the

Secretary of Transportation pursuant to the provisions of

subsection (h) of this section, in the case of deposits made

prior to the date on which these amendatory provisions become

effective, or (ii) three years from the date of such deposit in

the case of a deposit made after such effective date, only if

under such rules and regulations -

(A) within such period not less than 12 1/2 per centum of

the construction or contract price of the vessel or vessels is

paid or irrevocably committed on account thereof and the plans

and specifications therefor are approved by the Secretary of

Transportation to the extent by him deemed necessary; and

(B) in case of a vessel or vessels not constructed under the

provisions of this subchapter or not purchased from the

Secretary of Transportation, (i) said construction is

completed, within six months from the date of the construction

contract, to the extent of not less than 5 per centum thereof

(or in case the contract covers more than one vessel, the

construction of the first vessel so contracted for is so

completed to the extent of not less than 5 per centum) as

estimated by the Secretary of Transportation and certified by

him to the Secretary of the Treasury, and (ii) all construction

under such contract is completed with reasonable dispatch

thereafter;

(2) for the liquidation of existing or subsequently incurred

purchase-money indebtedness to persons other than a parent

company of, or a company affiliated or associated with, the

mortgagor on a new vessel or vessels within (i) two years from

the date of deposit or the date of any extension thereof which

may be granted by the Secretary of Transportation pursuant to the

provisions of subsection (h) of this section, in the case of

deposits made prior to the date on which these amendatory

provisions become effective, or (ii) three years from the date of

such deposit in the case of a deposit made after such effective

date.

(h) Authorizations of extensions of time

The Secretary of Transportation is authorized under rules and

regulations to be prescribed jointly by the Secretary of the

Treasury and the Secretary of Transportation to grant extensions of

the period within which the deposits shall be expended or obligated

or within which construction shall have progressed to the extent of

5 per centum of completion as provided herein, but such extension

shall not be for an aggregate additional period in excess of two

years with respect to the expenditure or obligation of such

deposits or more than one year with respect to the progress of such

construction: Provided, That until January 1, 1965, in addition to

the extensions hereinbefore permitted, further extensions may be

granted ending not later than December 31, 1965.

(i) Taxation of deposits upon failure of conditions

Any such deposited gain or portion thereof which is not so

expended or obligated within the period provided, or which is

otherwise withdrawn before the expiration of such period, or with

respect to which the construction has not progressed to the extent

of 5 per centum of completion within the period provided, or with

respect to which the Secretary of Transportation finds and

certifies to the Secretary of the Treasury that, for causes within

the control of the taxpayer, the entire construction is not

completed with reasonable dispatch, if otherwise taxable income

under the law applicable to the taxable year in which such gain was

realized, shall be included in the gross income for such taxable

year, except for the purpose of the declared value excess-profits

tax and the capital stock tax. If any such deposited gain or

portion thereof with respect to a deposit made in any taxable year

ending on or before June 30, 1945 is so included in gross income

for such taxable year, there shall (in addition to any other

deficiency) be assessed, collected, and paid in the same manner as

if it were a deficiency, an amount equal to 1.1 per centum of the

amount of gain so included, such amount being in lieu of any

adjustment with respect to the declared value excess-profits tax

for such taxable year.

(j) Assessment and collection of deficiency tax

Notwithstanding any other provision of law, any deficiency in tax

for any taxable year resulting from the inclusion of any amount in

gross income as provided by subsection (i) of this section, and the

amount to be treated as a deficiency under such subsection in lieu

of any adjustment with respect to the declared value excess-profits

tax, may be assessed or a proceeding in court for the collection

thereof may be begun without assessment, at any time: Provided,

however, That interest on any such deficiency or amount to be

treated as a deficiency shall not begin until the date the

deposited gain or portion thereof in question is required under

subsection (i) of this section to be included in gross income.

(k) Taxable years governed by section

This section shall be applicable to a taxpayer only in respect of

sales or indemnifications for losses occurring within a taxable

year beginning after December 31, 1939, and only in respect of

earnings derived during a taxable year beginning after December 31,

1939.

(l) Vessels deemed constructed or acquired by taxpayers owning

stock in corporations constructing or acquiring vessels

For the purposes of this section a vessel shall be considered as

constructed or acquired by the taxpayer if constructed or acquired

by a corporation at a time when the taxpayer owns at least 95 per

centum of the total number of shares of each class of stock of the

corporation.

(m) Definitions

The terms used in this section shall have the same meaning as in

chapter 1 of the Internal Revenue Code.

(n) "Contract for the construction" and "construction contract"

defined

The terms "contract for the construction" and "construction

contract", as used in this section, shall include, in the case of a

taxpayer who constructs a new vessel in a shipyard owned by such

taxpayer, an agreement between such taxpayer and the Secretary of

Transportation with respect to such construction and containing

provisions deemed necessary or advisable by the Secretary of

Transportation to carry out the purposes and policy of this

section.

(o) "Reconstruction and reconditioning" defined

The terms "reconstruction and reconditioning", as used in this

section, shall include the reconstruction, reconditioning, or

modernization of a vessel for exclusive use on the Great Lakes,

including the Saint Lawrence River and Gulf, if the Secretary of

Transportation determines that the objectives of this chapter will

be promoted by such reconstruction, reconditioning, or

modernization, and, notwithstanding any other provisions of law,

such vessel shall be deemed to be a "new vessel" within the meaning

of this section for such reconstruction, reconditioning, or

modernization.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 511, as added Oct. 10, 1940,

ch. 849, 54 Stat. 1106; amended June 17, 1943, ch. 130, 57 Stat.

157; Dec. 23, 1944, ch. 714, 58 Stat. 920; July 17, 1952, ch. 939,

Secs. 9-14, 66 Stat. 762-764; Pub. L. 86-237, Sec. 1, Sept. 8,

1959, 73 Stat. 471; Pub. L. 87-303, Sec. 3, Sept. 26, 1961, 75

Stat. 661; Pub. L. 87-782, Sec. 1, Oct. 10, 1962, 76 Stat. 796;

Pub. L. 88-227, Sec. 1, Dec. 23, 1963, 77 Stat. 470; Pub. L.

88-595, Sec. 1, Sept. 12, 1964, 78 Stat. 943; Pub. L. 97-31, Sec.

12(92), Aug. 6, 1981, 95 Stat. 161.)

-REFTEXT-

REFERENCES IN TEXT

Section 102 of the Internal Revenue Code, referred to in subsec.

(f), means section 102 of the Internal Revenue Code of 1939, which

was classified to section 102 of former Title 26, Internal Revenue

Code. Section 102 was repealed by section 7851(a)(1) of Title 26,

Internal Revenue Code. For table of comparisons of the 1939 Code to

the 1986 Code, see Table I preceding section 1 of Title 26. See

also section 7851(e) of Title 26 for provision that references in

the 1986 Code to a provision of the 1939 Code, not then applicable,

shall be deemed a reference to the corresponding provision of the

1986 Code, which is then applicable.

Chapter 1 of the Internal Revenue Code, referred to in subsec.

(m), means chapter 1 of the Internal Revenue Code of 1939, which

was classified to chapter 1 of former Title 26, Internal Revenue

Code. Chapter 1 was comprised of sections 1 to 482 of former Title

26. Sections 1 to 142 and 145 to 482 were repealed by section

7851(a)(1) of Title 26, Internal Revenue Code. Sections 143 and 144

were repealed by section 7851(a)(2) of Title 26. For table of

comparisons of the 1939 Code to the 1986 Code, see Table I

preceding section 1 of Title 26. See also section 7851(e) of Title

26 for provision that references in the 1986 Code to a provision of

the 1939 Code, not then applicable, shall be deemed a reference to

the corresponding provision of the 1986 Code, which is then

applicable.

-MISC1-

AMENDMENTS

1981 - Subsecs. (a), (b). Pub. L. 97-31, Sec. 12(92)(A),

substituted "Secretary of Transportation" for "Commission" wherever

appearing. For prior transfers of functions of the Commission,

meaning the United States Maritime Commission, see Transfer of

Functions note below.

Subsec. (g). Pub. L. 97-31, Sec. 12(92), substituted "Secretary

of Transportation" for "Commission" wherever appearing and in

subpars. (A) and (B), substituted "him" for "it". For prior

transfers of functions of the Commission, meaning the United States

Maritime Commission, see Transfer of Functions note below.

Subsecs. (h), (i), (n), (o). Pub. L. 97-31, Sec. 12(92)(A),

substituted "Secretary of Transportation" for "Commission" wherever

appearing. For prior transfers of functions of the Commission,

meaning the United States Maritime Commission, see Transfer of

Functions note below.

1964 - Subsec. (h). Pub. L. 88-595 substituted "January 1, 1965"

for "January 1, 1964" and "December 31, 1965" for "December 31,

1964".

1963 - Subsec. (h). Pub. L. 88-227 substituted "January 1, 1964"

for "January 1, 1963" and "December 31, 1964" for "December 31,

1963".

1962 - Subsec. (h). Pub. L. 87-782 substituted "January 1, 1963"

for "January 1, 1962" and "December 31, 1963" for "December 31,

1962".

1961 - Subsec. (h). Pub. L. 87-303 substituted "January 1, 1962"

for "January 1, 1961" and "December 31, 1962" for "December 31,

1961".

1959 - Subsec. (h). Pub. L. 86-237 substituted "January 1, 1961"

and "December 31, 1961" for "March 31, 1953" and "September 30,

1953," respectively.

1952 - Subsec. (b). Act July 17, 1952, Sec. 9, extended its

provisions to the reconstruction and reconditioning of vessels.

Subsec. (c). Act July 17, 1952, Sec. 10, struck out obsolete

language.

Subsec. (d). Act July 17, 1952, Sec. 11, provided for the

adjustment in the tax basis of a vessel if the reserve funds are

used for reconstruction, reconditioning, or liquidation of a

purchase-money indebtedness on vessels.

Subsec. (g). Act July 17, 1952, Sec. 12, provided that the

reserve funds may be used for reconstruction, reconditioning, and

liquidation of purchase money indebtedness, and extended the time

of required commitment of deposits in order to avoid the imposition

of taxes at the established rate.

Subsec. (h). Act July 17, 1952, Sec. 13(a), extended extension

period.

Subsec. (i). Act July 17, 1952, Sec. 13(b), limited the

additional 1.1% tax imposed on deposits in lieu of the

capital-stock tax or declared excess profit tax to deposits made in

taxable years ending on or before June 30, 1945.

Subsec. (o). Act July 17, 1952, Sec. 14, added subsec. (o).

1944 - Subsec. (c). Act Dec. 23, 1944, amended first sentence

generally.

Subsec. (n). Act Dec. 23, 1944, added subsec. (n).

1943 - Subsec. (b). Act June 17, 1943, extended provisions of

first sentence to ownership in whole or in part and to persons who

had acquired or were having constructed a vessel or vessels.

Subsec. (c). Act June 17, 1943, changed the dates of deposit in

second sentence.

Subsec. (g). Act June 17, 1943, inserted "(or in the discretion

of the Commission, for a part interest therein)".

Subsec. (h). Act June 17, 1943, substituted "Commission" for

"Commissioner of Internal Revenue" at beginning of subsec. and

inserted proviso.

EFFECTIVE DATE OF 1964 AMENDMENT

Section 2 of Pub. L. 88-595 provided that: "The amendment made by

the first section of this Act [amending this section] shall take

effect December 31, 1964, or on the date of enactment of this Act

[Sept. 12, 1964], whichever date first occurs."

EFFECTIVE DATE OF 1963 AMENDMENT

Section 2 of Pub. L. 88-227 provided that: "The amendment made by

the first section of this Act [amending this section] shall take

effect December 31, 1963, or on the date of enactment of this Act

[Dec. 23, 1963], whichever date first occurs."

EFFECTIVE DATE OF 1962 AMENDMENT

Section 2 of Pub. L. 87-782 provided that: "The amendment made by

the first section of this Act [amending this section] shall take

effect December 31, 1962, or on the date of enactment of this Act

[Oct. 10, 1962], whichever date first occurs."

EFFECTIVE DATE OF 1959 AMENDMENT

Section 2 of Pub. L. 86-237 provided that: "The amendment made by

the first section of this Act [amending this section] shall take

effect June 30, 1959, or on the date of enactment of this Act

[Sept. 8, 1959], whichever date first occurs."

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-MISC2-

TERMINATION OF WAR

Section 5 of act Aug. 8, 1947, ch. 515, 61 Stat. 917, as amended

Apr. 20, 1949, ch. 82, 63 Stat. 56; Oct. 1, 1951, ch. 443, 65 Stat.

366; July 16, 1952, ch. 913, 66 Stat. 737, provided: "For the

purposes of the proviso of subsection (h) of section 511 of the

Merchant Marine Act, 1936, as amended, added to such subsection by

the Act of June 17, 1943 (57 Stat. 158) [subsec. (h) of this

section], the present war shall be considered as having terminated

on March 31, 1953."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in title 26 sections 543, 1023, 1061.

-End-

-CITE-

46 USC APPENDIX Sec. 1162 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER V - CONSTRUCTION-DIFFERENTIAL SUBSIDY

-HEAD-

Sec. 1162. Limitation on restrictions

-STATUTE-

Notwithstanding any other provision of law or contract, all

restrictions and requirements under sections 1153, 1156, and 1212

of this Appendix applicable to a liner vessel constructed,

reconstructed, or reconditioned with the aid of

construction-differential subsidy shall terminate upon the

expiration of the 25-year period beginning on the date of the

original delivery of the vessel from the shipyard.

-SOURCE-

(June 29, 1936, ch. 858, title V, Sec. 512, as added Pub. L.

104-239, Sec. 7, Oct. 8, 1996, 110 Stat. 3133.)

-End-

-CITE-

46 USC APPENDIX SUBCHAPTER VI - VESSEL OPERATING

ASSISTANCE PROGRAMS 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

-HEAD-

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

-SECREF-

SUBCHAPTER REFERRED TO IN OTHER SECTIONS

This subchapter is referred to in sections 1131, 1152, 1191,

1204, 1211, 1222, 1226, 1227, 1228, 1244 of this Appendix.

-End-

-CITE-

46 USC APPENDIX Part A - Operating-Differential

Subsidy Program 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

PART A - OPERATING-DIFFERENTIAL SUBSIDY PROGRAM

-SECREF-

PART REFERRED TO IN OTHER SECTIONS

This part is referred to in sections 808, 1187a, 1222, 1223 of

this Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1171 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1171. Subsidy authorized for operation of vessels in foreign

trade or in off-season cruises

-STATUTE-

(a) Application for subsidy; conditions precedent to granting

The Secretary of Transportation is authorized and directed to

consider the application of any citizen of the United States for

financial aid in the operation of a vessel or vessels, which are to

be used in an essential service in the foreign commerce of the

United States or in such service and in cruises authorized under

section 1183 of this Appendix. In this subchapter VI the term

"essential service" means the operation of a vessel on a service,

route, or line described in section 1121(a) of this Appendix or in

bulk cargo carrying service described in section 1121(b) of this

Appendix. No such application shall be approved by the Secretary of

Transportation unless he determines that (1) the operation of such

vessel or vessels in an essential service is required to meet

foreign-flag competition and to promote the foreign commerce of the

United States except to the extent such vessels are to be operated

on cruises authorized under section 1183 of this Appendix, and that

such vessel or vessels were built in the United States, or have

been documented under the laws of the United States not later than

February 1, 1928, or actually ordered and under construction for

the account of citizens of the United States prior to such date;

(2) the applicant owns, or leases or can and will build or

purchase, or lease, a vessel or vessels of the size, type, speed,

and number, and with the proper equipment required to enable him to

operate in an essential service, in such manner as may be necessary

to meet competitive conditions, and to promote foreign commerce;

(3) the applicant possesses the ability, experience, financial

resources, and other qualifications necessary to enable him to

conduct the proposed operations of the vessel or vessels as to meet

competitive conditions and promote foreign commerce; (4) the

granting of the aid applied for is necessary to place the proposed

operations of the vessel or vessels on a parity with those of

foreign competitors, and is reasonably calculated to carry out

effectively the purposes and policy of this chapter. To the extent

the application covers cruises, as authorized under section 1183 of

this Appendix, the Secretary of Transportation may make the portion

of this last determination relating to parity on the basis that any

foreign flag cruise from the United States competes with any

American flag cruise from the United States.

(b) Statements as to financial interests to accompany application;

penalty for false statements

Every application for an operating-differential subsidy under the

provisions of this subchapter shall be accompanied by statements

disclosing the names of all persons having any pecuniary interest,

direct or indirect, in such application, or in the ownership or use

of the vessel or vessels, routes, or lines covered thereby, and the

nature and extent of any such interest, together with such

financial and other statements as may be required by the Secretary

of Transportation. All such statements shall be under oath or

affirmation and in such form as the Secretary of Transportation

shall prescribe. Any person who, in an application for financial

aid under this subchapter or in any statement required to be filed

therewith, willfully makes any untrue statement of a material fact,

shall be guilty of a misdemeanor.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 601, 49 Stat. 2001; Pub. L.

87-45, Sec. 2, May 27, 1961, 75 Stat. 90; Pub. L. 91-469, Secs. 14,

35(a), (h), Oct. 21, 1970, 84 Stat. 1023, 1035, 1036; Pub. L.

91-603, Sec. 4(c), (d), Dec. 31, 1970, 84 Stat. 1675; Pub. L.

97-31, Sec. 12(93), Aug. 6, 1981, 95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Subsec. (a). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Secretary of Commerce" in two places and for

"Commission" in one place. For prior transfers of functions of the

Commission, meaning the United States Maritime Commission, see

Transfer of Functions note below.

Subsec. (b). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Commission" in two places. For prior transfers

of functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note below.

1970 - Subsec. (a). Pub. L. 91-603 included the leasing of

vessels in cl. (2).

Pub. L. 91-469 inserted definition of "essential service", and

substituted "an essential service" for "such service, route, or

line" in cl. (1) and "in an essential service" for "and maintain

the service, route, or line" in cl. (2); substituted "Secretary of

Commerce" for "Commission" in two places; and substituted "he" for

"it" in third sentence preceding "determines that", respectively.

1961 - Subsec. (a). Pub. L. 87-45 required the Federal Maritime

Board to consider applications for financial aid in the operation

of vessels in cruises under section 1183 of this Appendix, and

permitted the Board, to the extent the application covers such

cruises, to make the portion of the determination relating to

parity on the basis that any foreign flag cruise from the United

States competes with any American flag cruise from the United

States.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1152, 1185a of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1172 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1172. Determination of necessity of subsidy to meet

competition

-STATUTE-

Except with respect to cruises authorized under section 1183 of

this Appendix, no contract for an operating-differential subsidy

shall be made by the Secretary of Transportation for the operation

of a vessel or vessels to meet foreign competition, except direct

foreign-flag competition, until and unless the Secretary of

Transportation, after a full and complete investigation and

hearing, shall determine that an operating-differential subsidy is

necessary to meet competition of foreign-flag ships.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 602, 49 Stat. 2002; June

23, 1938, ch. 600, Sec. 40(b), 52 Stat. 964; Pub. L. 87-45, Sec. 3,

May 27, 1961, 75 Stat. 91; Pub. L. 91-469, Sec. 35(a), Oct. 21,

1970, 84 Stat. 1035; Pub. L. 97-31, Sec. 12(94), Aug. 6, 1981, 95

Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469 substituted "Secretary of Commerce" for

"Commission" in two places.

1961 - Pub. L. 87-45 excepted cruises authorized under section

1183 of this Appendix.

1938 - Act June 23, 1938, substituted "operating-differential

subsidy" for "operating subsidy".

-End-

-CITE-

46 USC APPENDIX Sec. 1173 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1173. Contracts for payment of subsidy

-STATUTE-

(a) Authorization of contracts

If the Secretary of Transportation approves the application, he

may enter into a contract with the applicant for the payment of an

operating-differential subsidy determined in accordance with the

provisions of subsection (b) of this section, for the operation of

such vessel or vessels in an essential service and in cruises

authorized under section 1183 of this Appendix for a period not

exceeding twenty years, and subject to such reasonable terms and

conditions, consistent with this chapter, as the Secretary of

Transportation shall require to effectuate the purposes and policy

of this chapter, including a performance bond with approved

sureties, if such bond is required by the Secretary of

Transportation.

(b) Amount of subsidy

Such contract shall provide, except as the parties should agree

upon a lesser amount, that the amount of the operating-differential

subsidy for the operation of vessels in an essential service shall

equal the excess of the subsidizable wage costs of the United

States officers and crews, the fair and reasonable cost of

insurance, subsistence of officers and crews on passenger vessels,

as defined in section 1183 of this Appendix, maintenance, and

repairs not compensated by insurance, incurred in the operation

under United States registry of the vessel or vessels covered by

the contract, over the estimated fair and reasonable cost of the

same items of expense (after deducting therefrom any estimated

increase in such items necessitated by features incorporated

pursuant to the provisions of section 1151(b) of this Appendix) if

such vessel or vessels were operated under the registry of a

foreign country whose vessels are substantial competitors of the

vessel or vessels covered by the contract: Provided, however, That

the Secretary of Transportation may, with respect to any vessel in

an essential bulk cargo carrying service as described in section

1121(b) of this Appendix, pay, in lieu of the

operating-differential subsidy provided by this subsection (b),

such sums as he shall determine to be necessary to make the cost of

operating such vessel competitive with the cost of operating

similar vessels under the registry of a foreign country. For any

period during which a vessel cruises as authorized by section 1183

of this Appendix, operating-differential subsidy shall be computed

as though the vessel were operating on the essential service to

which the vessel is assigned: Provided, however, That if the cruise

vessel calls at a port or ports outside of its assigned service,

but which is served with passenger vessels (as defined in section

1183 of this Appendix) by another subsidized operator at an

operating-differential subsidy rate for wages lower than the cruise

vessel has on its assigned essential service, the

operating-differential subsidy rates for each of the subsidizable

items for each day (a fraction of a day to count as a day) that the

vessel stops at such port shall be at the respective rates

applicable to the subsidized operator regularly serving the area.

(c) "Collective bargaining costs", "base period costs", "base

period", and "subsidizable wage costs of United States officers

and crews" defined; determination of collective bargaining costs

and establishment of new base periods; wage change index

(1) When used in this section -

(A) The term "collective bargaining costs" means the annual cost,

calculated on the basis of the per diem rate of expense as of any

date, of all items of expense required of the applicant through

collective bargaining or other agreement, covering the employ of

United States officers and crew of a vessel, including payments

required by law to assure old-age pensions, unemployment benefits,

or similar benefits and taxes or other governmental assessments on

crew payrolls, but excluding subsistence of officers and crews on

vessels other than passenger vessels as defined in section 1183 of

this Appendix and costs relating to:

(i) the officers or members of the crew that the Secretary of

Transportation has found, prior to the award of a contract for

the construction or reconstruction of a vessel, to be unnecessary

for the efficient and economical operation of such vessel:

Provided, That the Secretary of Transportation shall afford

representatives of the collective-bargaining unit or units

responsible for the manning of the vessel an opportunity to

comment on such finding prior to the effective date of such

finding: And provided further, That in determining whether

officers or members of the crew are necessary for the efficient

and economical operation of such vessel, the Secretary of

Transportation shall give due consideration to, but shall not be

bound by, wage and manning scales and working conditions required

by a bona fide collective-bargaining agreement, or

(ii) those officers or members of the crew that the Secretary

of Transportation has found, prior to ninety days following

October 21, 1970, to be unnecessary for the efficient and

economical operation of the vessel.

(B) The term "base period costs" means for the base period

beginning July 1, 1970, and ending June 30, 1971, the

collective-bargaining costs as of January 1, 1971, less all other

items of cost that have been disallowed by the Secretary of

Transportation prior to ninety days following October 21, 1970, and

not already excluded from collective-bargaining costs under

subparagraph (A)(i) or (A)(ii) of this subsection. In any

subsequent base period the term "base period costs" means the

average of the subsidizable wage cost of United States officers and

crews for the preceding annual period ending June 30 (calculated

without regard to the limitation of the last sentence of paragraph

(D) of this subdivision but increased or decreased by the increase

or decrease in the index described in subdivision (3) of this

subsection from January 1 of such annual period to January 1 of the

base period), and the collective-bargaining costs as of January 1

of the base period: Provided, That in no event shall the base

period cost be such that the difference between the base period

cost and the collective-bargaining costs as of January 1 of any

base period subsequent to the first base period exceeds

five-fourths of 1 per centum of the collective-bargaining costs as

of such January 1 multiplied by the number of years that have

elapsed since the most recent base period.

(C) The term "base period" means any annual period beginning July

1, and ending June 30 with respect to which a base period cost is

established.

(D) The term "subsidizable wage costs of United States officers

and crews" in any period other than a base period means the most

recent base period costs increased or decreased by the increase or

decrease from January 1 of such base period to January 1 of such

period in the index described in subdivision (3) hereof, and with

respect to a base period means the base period cost. The

subsidizable wage costs of United States officers and crews in any

period other than a base period shall not be less than 90 per

centum of the collective-bargaining costs as of January 1 of such

period nor greater than 110 per centum of such

collective-bargaining costs.

(2) The Secretary of Transportation shall determine the

collective-bargaining costs on ships in subsidized operation as of

January 1, 1971, and as of each January 1 thereafter, and shall as

of intervals of not less than two years nor more than four years,

establish a new base period cost, except that the Secretary shall

not establish a new base period unless he announces his intention

to do so prior to the December 31 that would be included in the new

base period.

(3) The Bureau of Labor Statistics shall compile the index

referred to in subdivision (1). Such index shall consist of the

average annual change in wages and benefits placed into effect for

employees covered by collective-bargaining agreements with equal

weight to be given to changes affecting employees in the

transportation industry (excluding the offshore maritime industry)

and to changes affecting employees in private nonagricultural

industries other than transportation. Such index shall be based on

the materials regularly used by the Bureau of Labor Statistics in

compiling its regularly published statistical series on wage and

benefit changes arrived at through collective bargaining. Such

materials shall remain confidential and not be subject to

disclosure.

(d) Foreign wage computation; foreign manning

Each foreign wage cost computation shall be made after an

opportunity is given to the contractor to submit in writing and in

timely fashion all relevant data within his possession. In making

the computation, the Secretary shall consider all relevant matter

so presented and all foreign wage cost data collected at his

request or on his behalf. Such foreign cost data shall be made

available to an interested contractor, unless the Secretary shall

find that disclosure of the data will prevent him from obtaining

such data in the future. In determining foreign manning for

purposes of this section, the foreign manning determined for any

ship type with respect to any base period shall not be redetermined

until the beginning of a new base period.

(e) Monthly payment of wage subsidy; procedures for calculation and

payment of subsidy on certain expenses

The wage subsidy shall be payable monthly for the voyages

completed during the month, upon the contractor's certification

that the subsidized vessels were in authorized service during the

month. The Secretary of Transportation shall prescribe procedures

for the calculation and payment of subsidy on items of expense

which are included in "collective-bargaining costs" but are not

included in the daily rate because they are unpredictably timed.

(f) Monthly percentage payment of other than wage subsidy; security

for refund of overpayments; payment of remainder after audit of

voyage accounts

Ninety percent of the amount of the insurance and maintenance and

repair and subsistence of officers and crews subsidy shall be

payable monthly for the voyages completed during the month on the

basis of the subsidy estimated to have accrued with respect to such

voyages. Any such payment shall be made only after there has been

furnished to the Secretary of Transportation such security as he

deems to be reasonable and necessary to assure refund of any

overpayment. The contractor and the Secretary of Transportation

shall audit the voyage accounts as soon as practicable after such

payment. The remaining 10 percent of such subsidy shall be payable

after such audit.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 603, 49 Stat. 2002; Aug. 4,

1939, ch. 417, Sec. 8, 53 Stat. 1185; Pub. L. 87-45, Sec. 4, May

27, 1961, 75 Stat. 91; Pub. L. 87-243, Sept. 14, 1961, 75 Stat.

513; Pub. L. 91-469, Secs. 15-17, 35(a), (i), Oct. 21, 1970, 84

Stat. 1023, 1024, 1035, 1036; Pub. L. 97-31, Sec. 12(94), Aug. 6,

1981, 95 Stat. 161.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Subsec. (a). Pub. L. 91-469, Secs. 15, 35(a), (i),

substituted "an essential service" for "such service, route, or

line," "Secretary of Commerce" for "Commission" in three places,

and "he" for "it" before "may enter", respectively.

Subsec. (b). Pub. L. 91-469, Sec. 16, in amending first sentence,

inserted ", except as the parties should agree upon a lesser

amount," after "shall provide", "subsistence of officers and crews

on passenger vessels, as defined in section 1183 of this Appendix,"

after "cost of insurance," and proviso for payment of necessary

sums to make operating costs of American-flag vessels providing

bulk cargo carrying services competitive with operating costs of

similar vessels under foreign registry, and substituted "vessels in

an essential service shall equal the excess of the subsidizable

wage costs of the United States officers and crews," for "vessels

on a service, route, or line shall not exceed the excess of",

"maintenance, and repairs not compensated by insurance" for

"maintenance, repairs not compensated by insurance," and "incurred"

for "wages and subsistence of officers and crews, and any other

items of expense in which the Commission shall find and determine

that the applicant is at a substantial disadvantage in competition

with vessels of the foreign country hereinafter referred to,".

Subsecs. (c) to (e). Pub. L. 91-469, Sec. 17(1), added subsecs.

(c) to (e). Former subsec. (c) redesignated (f).

Subsec. (f). Pub. L. 91-469, Sec. 17, redesignated former subsec.

(c) as (f), substituted provision for monthly payment of ninety

percent of subsidy (insurance and maintenance and repair and

subsistence of officers and crews) on basis of estimated accrual of

subsidy and payment of remaining ten percent after audit of voyage

accounts for prior provisions for determination and payment of

subsidy on basis of final accounting made annually or after some

agreed fixed period and for payments on account limited to 75 per

centum of estimated accrued amount and an additional 15 per centum

for any particular voyage after an audit, substituted provision to

"assure" rather than "insure" refund, and repealed second par.

prohibition against payment of subsidy until contractor provided

evidence that minimum wages prescribed by Secretary of Commerce

under section 1131(a) of this Appendix had been paid to ships

personnel.

1961 - Subsec. (a). Pub. L. 87-45, Sec. 4(a), inserted "and in

cruises authorized under section 1183 of this Appendix" after "in

such service, route, or line".

Subsec. (b). Pub. L. 87-45, Sec. 4(b), inserted provisions for

the computation of the subsidy for periods during which a vessel

cruises as authorized by section 1183 of this Appendix.

Subsec. (c). Pub. L. 87-243 increased, effective on and after

July 1, 1962, the amount payable on account from not more than 75

per centum to not more than 90 per centum of the amount estimated

to have accrued on account of such subsidy, and reduced the amount

payable to the contractor after the audit of the voyage from 15 to

5 per centum.

1939 - Subsec. (c). Act Aug. 4, 1939, permitted payment to the

contractor of an additional 15 per centum.

OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS; AMENDMENT AND RECAPTURE

PROVISIONS

Section 40 of Pub. L. 91-469 provided that:

"(a) The amendments made by this Act [see Short Title of 1970

Amendment note set out under section 1245 of this Appendix] shall

not affect any contract with the Secretary of Commerce or his

delegates that is in effect on the date of enactment of this Act

[Oct. 21, 1970]. At the request of the other party to such

operating-differential subsidy contract, the Secretary of Commerce

shall amend such contract so as to be in accordance with all of the

amendments made by this Act. No amendment made by this Act shall be

incorporated in such contract unless all such amendments are

incorporated in such contract, except that if the other party

elects to continue under the "old fund" as provided in section 607

as amended by section 21 of this Act [section 1177 of this

Appendix], such amendment need not be incorporated in such

contract. Until such contract is amended or if such contract is not

amended, it shall be administered in accordance with the provisions

of the Merchant Marine Act, 1936 [this chapter] as they existed

immediately prior to enactment of this Act. Nothing in section 16

of this Act amending section 603 of the Merchant Marine Act, 1936

[subsec. (b) of this section] or in the contracts made thereunder,

shall be deemed to affect or to change existing law or contracts

with respect to the proceedings now pending before the Secretary of

Commerce relating to the payment of subsidy in respect of cargoes

covered by section 901(b)(1) of the Merchant Marine Act, 1936

[section 1241(b)(1) of this Appendix], section 616(a) of Title 15,

United States Code, or section 2631 of Title 10, United States

Code.

"(b) If any operating-differential subsidy contract in existence

on the date of enactment of this Act [Oct. 21, 1970] is amended by

including all of the amendments made by this Act or all of the

amendments made by this Act other than those made by section 21

[amending section 1177 of this Appendix], the operator may elect to

terminate his recapture period as of the date of such contract

amendment and have his recapture computed on the basis of the

shortened period, or he may elect to continue his recapture period

until the end of its ten-year term and continue his recapture

obligations as provided by the Merchant Marine Act, 1936, prior to

the enactment of this Act [see Short Title of 1970 Amendment note

set out under section 1245 of this Appendix] until the end of such

ten-year period. The amendments in either event shall provide that,

with respect to seafaring personnel, in determining the rights and

obligations of the contractor under such contract, the limitation

of section 805(c) of the Merchant Marine Act, 1936 [section 1223(c)

of this Appendix], as it existed immediately before the enactment

of this Act [Oct. 21, 1970] shall not apply."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1183, 1185a of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1174 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1174. Additional subsidy; when authorized

-STATUTE-

If in the case of any particular foreign-trade route the

Secretary of Transportation shall find after consultation with the

Secretary of State, that the subsidy provided for in this

subchapter is in any respect inadequate to offset the effect of

governmental aid paid to foreign competitors, he may grant such

additional subsidy as he determines to be necessary for that

purpose.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 604, 49 Stat. 2003; June

23, 1938, ch. 600, Sec. 21, 52 Stat. 959; Aug. 4, 1939, ch. 417,

Sec. 9, 53 Stat. 1185; Pub. L. 97-31, Sec. 12(95), Aug. 6, 1981, 95

Stat. 162.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Commission" and "he" for "it", and struck out provision

relating to subsidy voting requirements. For prior transfers of

functions of the Commission, meaning the United States Maritime

Commission, see Transfer of Functions note set out below.

1939 - Act Aug. 4, 1939, reduced requirement in proviso from

unanimous vote to vote of four commissioners.

1938 - Act June 23, 1938, authorized additional subsidies only

where the Commission (which had reference to United States Maritime

Commission) by unanimous vote finds after consultation with the

Secretary of State that the subsidy is inadequate.

-TRANS-

TRANSFER OF FUNCTIONS

For transfer of functions of United States Maritime Commission,

see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and

Reorg. Plan No. 7 of 1961, set out under section 1111 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1175 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1175. Vessels excluded from subsidy

-STATUTE-

(a) Vessels engaged in coastwise or intercoastal trade; vessels on

inland waterways

No operating-differential subsidy shall be paid for the operation

of any vessel on a voyage on which it engages in coastwise or

intercoastal trade: Provided, however, That such subsidy may be

paid on a round-the-world voyage or a round voyage from the west

coast of the United States to a European port or ports or a round

voyage from the Atlantic coast to the Orient which includes

intercoastal ports of the United States or a voyage in foreign

trade on which the vessel may stop at the State of Hawaii, or an

island possession or island territory of the United States, and if

the subsidized vessel earns any gross revenue on the carriage of

mail, passengers, or cargo by reason of such coastal or

intercoastal trade the subsidy payment for the entire voyage shall

be reduced by an amount which bears the same ratio to the subsidy

otherwise payable as such gross revenue bears to the gross revenue

derived from the entire voyage. No vessel operating on the inland

waterways of the United States shall be considered for the purposes

of this chapter to be operating in foreign trade.

(b) Vessels more than 25 years old

No operating-differential subsidy shall be paid for the operation

of a vessel after the calendar year the vessel becomes 25 years of

age, unless the Secretary of Transportation has determined, before

October 8, 1996, that it is in the public interest to grant such

financial aid for the operation of such vessel.

(c) Vessels to be operated in an essential service served by

citizens of United States

No contract shall be made under this subchapter with respect to a

vessel to be operated in an essential service served by citizens of

the United States which would be in addition to the existing

service, or services, unless the Secretary of Transportation shall

determine after proper hearing of all parties that the service

already provided by vessels of United States registry is

inadequate, and that in the accomplishment of the purposes and

policy of this chapter additional vessels should be operated

thereon; and no contract shall be made with respect to a vessel

operated or to be operated in an essential service served by two or

more citizens of the United States with vessels of United States

registry, if the Secretary of Transportation shall determine the

effect of such a contract would be to give undue advantage or be

unduly prejudicial, as between citizens of the United States, in

the operation of vessels in such essential service unless following

public hearing, due notice of which shall be given to each operator

serving such essential service, the Secretary of Transportation

shall find that it is necessary to enter into such contract in

order to provide adequate service by vessels of United States

registry. The Secretary of Transportation in determining for the

purposes of this section whether services are competitive, shall

take into consideration the type, size, and speed of the vessels

employed, whether passenger or cargo, or combination passenger and

cargo, vessels, the ports or ranges between which they run, the

character of cargo carried, and such other facts as he may deem

proper.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 605, 49 Stat. 2003; July

17, 1952, ch. 939, Sec. 15, 66 Stat. 764; Pub. L. 86-3, Sec.

18(b)(2), Mar. 18, 1959, 73 Stat. 12; Pub. L. 86-518, Sec. 1, June

12, 1960, 74 Stat. 216; Pub. L. 89-348, Sec. 1(9), Nov. 8, 1965, 79

Stat. 1310; Pub. L. 91-469, Secs. 18, 19, 26(b), 35(a), (j), Oct.

21, 1970, 84 Stat. 1025, 1026, 1034-1036; Pub. L. 97-31, Sec.

12(96), Aug. 6, 1981, 95 Stat. 162; Pub. L. 104-239, Sec. 3(a),

Oct. 8, 1996, 110 Stat. 3126.)

-MISC1-

AMENDMENTS

1996 - Subsec. (b). Pub. L. 104-239 amended subsec. (b)

generally. Prior to amendment, subsec. (b) read as follows: "No

operating-differential subsidy shall be paid for the operation of a

vessel that is more than twenty-five years of age unless the

Secretary of Transportation finds that it is to the public interest

to grant such financial aid for the operation of such vessel and

enters a formal order thereon."

1981 - Subsecs. (b), (c). Pub. L. 97-31 substituted "Secretary of

Transportation" for "Secretary of Commerce" wherever appearing.

1970 - Subsec. (a). Pub. L. 91-469, Sec. 26(b), struck out "on

the Great Lakes or" after "No vessel operating" in last sentence.

Subsec. (b). Pub. L. 91-469, Sec. 18, substituted "unless the

Secretary of Commerce" for "unless the Commission" and deleted

preceding such words "except one whose life expectancy has been

determined as provided in section 1177(b) of this Appendix for a

period in no case to exceed the life expectancy determined

thereunder,".

Subsec. (c). Pub. L. 91-469, Secs. 19, 35(a), (j), substituted

"in an essential service" for "on a service, route, or line", "an

essential service" for "a service, route, or line", and "such

essential service" for "competitive services, routes, or lines,"

and struck out "in such service, route, or line" before "is

inadequate" in first sentence; substituted "Secretary of Commerce"

for "Commission" in four places; and substituted "he" for "it"

before "may deem" in last sentence, respectively.

1965 - Subsec. (b). Pub. L. 89-348 struck out provisions which

required an annual report covering each case and the reasons

therefor in which an exception is made to the prohibition against

payment of an operating-differential subsidy for the operation of a

vessel beyond its economic life.

1960 - Subsec. (b). Pub. L. 86-518 substituted "twenty-five

years" for "twenty years".

1959 - Subsec. (a). Pub. L. 86-3 included stops at the State of

Hawaii.

1952 - Subsec. (b). Act July 17, 1952, permitted the

recomputation of the life-expectancy of a reconstructed or

reconditioned vessel in use under an operating differential-subsidy

contract, and provided for recomputation of depreciation changes.

EFFECTIVE DATE OF 1960 AMENDMENT

Amendment by Pub. L. 86-518 applicable only to vessels delivered

by the shipbuilder on or after Jan. 1, 1946, and with respect to

such vessels shall become effective on Jan. 1, 1960, and with

respect to vessels delivered by the shipbuilder before Jan. 1,

1946, the provisions of this chapter existing immediately before

June 12, 1960, shall continue in effect, see section 8(a) of Pub.

L. 86-518, set out as a note under section 1125 of this Appendix.

REVISION OF CONTRACT, COMMITMENTS TO INSURE MORTGAGES, MORTGAGES,

AND MORTGAGE INSURANCE CONTRACTS ENTERED INTO PRIOR TO JUNE 12,

1960

For provisions authorizing revision, see section 8(c) of Pub. L.

86-518, set out as a note under section 1125 of this Appendix.

COMMERCIAL EXPECTANCY OR PERIOD OF DEPRECIATION OF TANKERS AND

OTHER LIQUID BULK CARRIERS

Nothing in any amendment made by Pub. L. 86-518 to operate or be

interpreted to change from 20 to 25 years the provisions of this

chapter relating to the commercial expectancy or period of

depreciation of any tanker or other liquid bulk carrier, see

section 9 of Pub. L. 86-518, set out as a note under section 1125

of this Appendix.

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1183, 1185a, 1213 of this

Appendix.

-End-

-CITE-

46 USC APPENDIX Sec. 1176 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1176. Readjustments; change in service; withdrawal from

service; payment of excess profits; wages, etc.; American

materials

-STATUTE-

Every contract for an operating-differential subsidy under this

subchapter shall provide (1) that the amount of the future payments

to the contractor shall be subject to review and readjustment from

time to time, but not more frequently than once a year, at the

instance of the Secretary of Transportation or of the contractor.

If any such readjustment cannot be reached by mutual agreement, the

Secretary of Transportation, on his own motion or on the

application of the contractor, shall, after a proper hearing,

determine the facts and make such readjustment in the amount of

such future payments as he may determine to be fair and reasonable

and in the public interest. The testimony in every such proceeding

shall be reduced to writing and filed in the office of the

Secretary of Transportation. His decision shall be based upon and

governed by the changes which may have occurred since the date of

the said contract, with respect to the items theretofore considered

and on which such contract was based, and other conditions

affecting shipping, and shall be promulgated in a formal order,

which shall be accompanied by a report in writing in which the

Secretary of Transportation shall state his findings of fact; (2)

that the compensation to be paid under it shall be reduced, under

such terms and in such amounts as the Secretary of Transportation

shall determine, for any periods in which the vessel or vessels are

laid up; (3) that if the Secretary of Transportation shall

determine that a change in an essential service, which is receiving

an operating-differential subsidy under this subchapter, is

necessary in the accomplishment of the purposes of this chapter, it

may make such change upon such readjustment of payments to the

contractor as shall be arrived at by the method prescribed in

clause (1) of these conditions; (4) that if at any time the

contractor receiving an operating-differential subsidy claims that

he cannot maintain and operate his vessels in such an essential

service, with a reasonable profit upon his investment, and applies

to the Secretary of Transportation for a modification or rescission

of his contract to maintain such essential service, and the

Secretary of Transportation determines that such claim is proved

the Secretary of Transportation shall modify or rescind such

contract and permit the contractor to withdraw such vessels from

such essential service upon a date fixed by the Secretary of

Transportation, and upon the date of such withdrawal the further

payment of the operating differential subsidy shall cease and the

contractor be discharged from any further obligation under such

contract; (5) that the contractor shall conduct his operations with

respect to essential services and any services authorized under

section 1183 of this Appendix, covered by his contract in an

economical and efficient manner, and (6) that whenever practicable,

an operator who receives subsidy with respect to subsistence of

officers and crews shall use as such subsistence items only

articles, materials, and supplies of the growth, production, and

manufacture of the United States, as defined in section 1155 of

this Appendix, except when it is necessary to purchase supplies

outside the United States to enable such vessel to continue and

complete her voyage, and an operator who receives subsidy with

respect to repairs shall perform such repairs within any of the

United States or the Commonwealth of Puerto Rico, except in an

emergency.

-SOURCE-

(June 29, 1936, ch. 858, title VI, Sec. 606, 49 Stat. 2004; June

23, 1938, ch. 600, Sec. 22, 52 Stat. 960; July 17, 1952, ch. 939,

Sec. 16, 66 Stat. 764; May 10, 1956, ch. 247, Sec. 1, 70 Stat. 148;

Pub. L. 86-624, Sec. 35(b), July 12, 1960, 74 Stat. 421; Pub. L.

87-45, Sec. 5, May 27, 1961, 75 Stat. 91; Pub. L. 91-469, Secs. 20,

35(a), (k), Oct. 21, 1970, 84 Stat. 1026, 1035, 1036; Pub. L.

97-31, Sec. 12(96), Aug. 6, 1981, 95 Stat. 162.)

-MISC1-

AMENDMENTS

1981 - Pub. L. 97-31 substituted "Secretary of Transportation"

for "Secretary of Commerce" wherever appearing.

1970 - Pub. L. 91-469, Sec. 35(a), substituted "Secretary of

Commerce" for "Commission" wherever appearing.

Cl. (1). Pub. L. 91-469, Sec. 35(k)(1)-(3), substituted "his" for

"its" in two places, "he" for "it", and "His" for "Its",

respectively.

Cl. (3). Pub. L. 91-469, Secs. 20(1), 35(k)(2), substituted "and

essential service" for "the service, route, or line" and "he" for

"it", respectively.

Cl. (4). Pub. L. 91-469, Sec. 20(2), (3), substituted "in such an

essential service" for "on such service, route, or line" and

"essential service" for "service, route, or line" in two places,

respectively.

Cl. (5). Pub. L. 91-469, Sec. 20(4), (5), (6)-(9), struck out cl.

(5) providing that when at the end of any ten-year period the

contractor's net profit on his subsidized vessels has averaged more

than 10 percent of his capital necessarily employed, he shall pay

one-half of such net profit to the United States, but not exceeding

the operating-differential subsidy paid to him during the period,

as partial or complete reimbursement of the operating subsidy;

redesignated cl. (6) as (5); and substituted therein "essential

services", "services", and "an economical" for "the vessel's

services, routes, and lines", "cruises", and "the most economical"

and struck out therefrom "but with due regard to the wage and

manning scales and working conditions prescribed by the Commission

as provided in subchapter III of this chapter" after "efficient

manner,", respectively.

Cls. (6), (7). Pub. L. 91-469, Sec. 20(10), (11), redesignated

cl. (7) as (6) and substituted "an operator who received subsidy

with respect to subsistence of officers and crews shall use as such

subsistence items" for "the operator shall use", "1155" for

"1155(a)", and "and an operator who receives subsidy with respect

to repairs shall perform such repairs within any of the United

States or the Commonwealth of Puerto Rico," and struck out "and

equipment" before "outside the United States" and definition of

"continental limits of the United States" as including States of

Alaska and Hawaii, respectively. Former cl. (6) redesignated (5).

1961 - Cl. (6). Pub. L. 87-45 inserted ", and any cruises

authorized under section 1183 of this Appendix," after "services,

routes, and lines".

1960 - Pub. L. 86-624 inserted definition of "continental limits

of the United States."

1956 - Cl. (5). Act May 10, 1956, provided that termination of

subsidy contract shall not end the 10-year recapture period if

subsidized operations continue under a new, or consecutive,

contract.

1952 - Cl. (5). Act July 17, 1952, substituted "life expectancy

of the subsidized vessel determined as provided in section 1177(b)

of this Appendix" for "twenty-year life expectancy of the

subsidized vessels".

1938 - Cl. (5). Act June 23, 1938, substituted "ten-year period"

for "five-year period" in three places, and inserted provisions to

permit computation of net profits without regard to capital gains

and losses.

AMENDMENT OF CONTRACT

Section 2 of act May 10, 1956, provided that: "Each

operating-differential subsidy contract in force on the date of

enactment of this act [May 10, 1956] shall, if the subsidized

contractor consents, be amended to conform to the provisions of

section 606 of the Merchant Marine Act, 1936 [this section], as

amended by section 1 of this act."

-SECREF-

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1177 of this Appendix;

title 26 section 7518.

-End-

-CITE-

46 USC APPENDIX Sec. 1177 01/06/03

-EXPCITE-

TITLE 46, APPENDIX - SHIPPING

CHAPTER 27 - MERCHANT MARINE ACT, 1936

SUBCHAPTER VI - VESSEL OPERATING ASSISTANCE PROGRAMS

Part A - Operating-Differential Subsidy Program

-HEAD-

Sec. 1177. Capital construction fund

-STATUTE-

(a) Agreement rules; persons eligible; replacement, additional, or

reconstructed vessels for prescribed trade and fishery

operations; amount of deposits, annual limitation; conditions and

requirements for deposits and withdrawals

Any citizen of the United States owning or leasing one or more

eligible vessels (as defined in subsection (k)(1) of this section)

may enter into an agreement with the Secretary under, and as

provided in, this section to establish a capital construction fund

(hereinafter in this section referred to as the "fund") with

respect to any or all of such vessels. Any agreement entered into

under this section shall be for the purpose of providing

replacement vessels, additional vessels, or reconstructed vessels,

built in the United States and documented under the laws of the

United States for operation in the United States foreign, Great

Lakes, or noncontiguous domestic trade or in the fisheries of the

United States and shall provide for the deposit in the fund of the

amounts agreed upon as necessary or appropriate to provide for

qualified withdrawals under subsection (f) of this section. The

deposits in the fund, and all withdrawals from the fund, whether

qualified or nonqualified, shall be subject to such conditions and

requirements as the Secretary may by regulations prescribe or are

set forth in such agreement; except that the Secretary may not

require any person to deposit in the fund for any taxable year more

than 50 percent of that portion of such person's taxable income for

such year (computed in the manner provided in subsection (b)(1)(A)

of this section) which is attributable to the operation of the

agreement vessels.

(b) Ceiling on deposits; lessees; "agreement vessel" defined

(1) The amount deposited under subsection (a) of this section in

the fund for any taxable year shall not exceed the sum of:

(A) that portion of the taxable income of the owner or lessee

for such year (computed as provided in chapter 1 of the Internal

Revenue Code of 1986 [26 U.S.C. 1 et seq.] but without regard to

the carryback of any net operating loss or net capital loss and

without regard to this section) which is attributable to the

operation of the agreement vessels in the foreign or domestic

commerce of the United States or in the fisheries of the United

States,

(B) the amount allowable as a deduction under section 167 of

the Internal Revenue Code of 1986 [26 U.S.C. 167] for such year

with respect to the agreement vessels,

(C) if the transaction is not taken into account for purposes

of subparagraph (A), the net proceeds (as defined in joint

regulations) from (i) the sale or other disposition of any

agreement vessel, or (ii) insurance or indemnity attributable to

any agreement vessel, and

(D) the receipts from the investment or reinvestment of amounts

held in such fund.

(2) In the case of a lessee, the maximum amount which may be

deposited with respect to an agreement vessel by reason of

paragraph (1)(B) for any period shall be reduced by any amount

which, under an agreement entered into under this section, the

owner is required or permitted to deposit for such period with

respect to such vessel by reason of paragraph (1)(B).

(3) For purposes of paragraph (1), the term "agreement vessel"

includes barges and containers which are part of the complement of

such vessel and which are provided for in the agreement.

(c) Investment requirements; depositories; fiduciary requirements;

interest-bearing securities; stock: percentage for domestic

issues, listing and registration, prudent acquisitions, value and

percentage equilibrium, and treatment of preferred issues

Amounts in any fund established under this section shall be kept

in the depository or depositories specified in the agreement and

shall be subject to such trustee and other fiduciary requirements

as may be specified by the Secretary. They may be invested only in

interest-bearing securities approved by the Secretary; except that,

if the Secretary consents thereto, an agreed percentage (not in

excess of 60 percent) of the assets of the fund may be invested in

the stock of domestic corporations. Such stock must be currently

fully listed and registered on an exchange registered with the

Securities and Exchange Commission as a national securities

exchange, and must be stock which would be acquired by prudent men

of discretion and intelligence in such matters who are seeking a

reasonable income and the preservation of their capital. If at any

time the fair market value of the stock in the fund is more than

the agreed percentage of the assets in the fund, any subsequent

investment of amounts deposited in the fund, and any subsequent

withdrawal from the fund, shall be made in such a way as to tend to

restore the fund to a situation in which the fair market value of

the stock does not exceed such agreed percentage. For purposes of

this subsection, if the common stock of a corporation meets the

requirements of this subsection and if the preferred stock of such

corporation would meet such requirements but for the fact that it

cannot be listed and registered as required because it is nonvoting

stock, such preferred stock shall be treated as meeting the

requirements of this subsection.

(d) Nontaxability of deposits; eligible deposits

(1) For purposes of the Internal Revenue Code of 1986 -

(A) taxable income (determined without regard to this section

and section 7518 of such Code [26 U.S.C. 7518]) for the taxable

year shall be reduced by an amount equal to the amount deposited

for the taxable year out of amounts referred to in subsection

(b)(1)(A) of this section,

(B) gain from a transaction referred to in subsection (b)(1)(C)

of this section, shall not be taken into account if an amount

equal to the net proceeds (as defined in joint regulations) from

such transaction is deposited in the fund,

(C) the earnings (including gains and losses) from the

investment and reinvestment of amounts held in the fund shall not

be taken into account,

(D) the earnings and profits of any corporation (within the

meaning of section 316 of such Code [26 U.S.C. 316]) shall be

determined without regard to this section and section 7518 of

such Code [26 U.S.C. 7518], and

(E) in applying the tax imposed by section 531 of such Code [26

U.S.C. 531] (relating to the accumulated earnings tax), amounts

while held in the fund shall not be taken into account.

(2) Paragraph (1) shall apply with respect to any amount only if

such amount is deposited in the fund pursuant to the agreement and

not later than the time provided in joint regulations.

(e) Accounts within fund: capital account, capital gain account,

and ordinary income account; limitation on capital losses

For purposes of this section -

(1) Within the fund established pursuant to this section three

accounts shall be maintained:

(A) the capital account,

(B) the capital gain account, and

(C) the ordinary income account.

(2) The capital account shall consist of -

(A) amounts referred to in subsection (b)(1)(B) of this

section,

(B) amounts referred to in subsection (b)(1)(C) of this section

other than that portion thereof which represents gain not taken

into account by reason of subsection (d)(1)(B) of this section,

(C) the percentage applicable under section 243(a)(1) of the

Internal Revenue Code of 1986 [26 U.S.C. 243(a)(1)] of any

dividend received by the fund with respect to which the person

maintaining the fund would (but for subsection (d)(1)(C) of this

section) be allowed a deduction under section 243 of the Internal

Revenue Code of 1986 [26 U.S.C. 243], and

(D) interest income exempt from taxation under section 103 of

such Code [26 U.S.C. 103].

(3) The capital gain account shall consist of -

(A) amounts representing capital gains on assets held for more

than 6 months and referred to in subsection (b)(1)(C) or

(b)(1)(D) of this section reduced by

(B) amounts representing capital losses on assets held in the

fund for more than 6 months.

(4) The ordinary income account shall consist of -

(A) amounts referred to in subsection (b)(1)(A) of this

section,

(B)(i) amounts representing capital gains on assets held for 6

months or less and referred to in subsection (b)(1)(C) or

(b)(1)(D) of this section, reduced by -

(ii) amounts representing capital losses on assets held in the

fund for 6 months or less,

(C) interest (not including any tax-exempt interest referred to

in paragraph (2)(D)) and other ordinary income (not including any

dividend referred to in subparagraph (E)) received on assets held

in the fund,

(D) ordinary income from a transaction described in subsection

(b)(1)(C) of this section, and

(E) the portion of any dividend referred to in paragraph (2)(C)

not taken into account under such paragraph.

(5) Except on termination of a fund, capital losses referred to

in paragraph (3)(B) or in paragraph (4)(B)(ii) shall be allowed

only as an offset to gains referred to in paragraph (3)(A) or

(4)(B)(i), respectively.

(f) Purposes of qualified withdrawals; nonqualified withdrawal

treatment for nonfulfillment of substantial obligations

(1) A qualified withdrawal from the fund is one made in

accordance with the terms of the agreement but only if it is for:

(A) the acquisition, construction, or reconstruction of a

qualified vessel,

(B) the acquisition, construction, or reconstruction of barges

and containers which are part of the complement of a qualified

vessel, or

(C) the payment of the principal on indebtedness incurred in

connection with the acquisition, construction or reconstruction

of a qualified vessel or a barge or container which is part of

the complement of a qualified vessel.

Except to the extent provided in regulations prescribed by the

Secretary, subparagraph (B), and so much of subparagraph (C) as

relates only to barges and containers, shall apply only with

respect to barges and containers constructed in the United States.

(2) Under joint regulations, if the Secretary determines that any

substantial obligation under any agreement is not being fulfilled,

he may, after notice and opportunity for hearing to the person

maintaining the fund, treat the entire fund or any portion thereof

as an amount withdrawn from the fund in a nonqualified withdrawal.

(g) Tax treatment of qualified withdrawals; basis: reduction

(1) Any qualified withdrawal from a fund shall be treated -

(A) first as made out of the capital account,

(B) second as made out of the capital gain account, and

(C) third as made out of the ordinary income account.

(2) If any portion of a qualified withdrawal for a vessel, barge,

or container is made out of the ordinary income account, the basis

of such vessel, barge, or container shall be reduced by an amount

equal to such portion.

(3) If any portion of a qualified withdrawal for a vessel, barge,

or container is made out of the capital gain account, the basis of

such vessel, barge, or container shall be reduced by an amount

equal to such portion.

(4) If any portion of a qualified withdrawal to pay the principal

on any indebtedness is made out of the ordinary income account or

the capital gain account, then an amount equal to the aggregate

reduction which would be required by paragraphs (2) and (3) if this

were a qualified withdrawal for a purpose described in such

paragraphs shall be applied,in the order provided in joint

regulations, to reduce the basis of vessels, barges, and containers

owned by the person maintaining the fund. Any amount of a

withdrawal remaining after the application of the preceding

sentence shall be treated as a nonqualified withdrawal.

(5) If any property the basis of which was reduced under

paragraph (2), (3), or (4) is disposed of, any gain realized on

such disposition, to the extent it does not exceed the aggregate

reduction in the basis of such property under such paragraphs,

shall be treated as an amount referred to in subsection (h)(3)(A)

of this section which was withdrawn on the date of such

disposition. Subject to such conditions and requirements as may be

provided in joint regulations, the preceding sentence shall not

apply to a disposition where there is a redeposit in an amount

determined under joint regulations which will, insofar as

practicable, restore the fund to the position it was in before the

withdrawal.

(h) Tax treatment of nonqualified withdrawals; FIFO and LIFO bases;

interest rate; amounts not withdrawn after 25 years; highest

marginal rate of tax

(1) Except as provided in subsection (i) of this section, any

withdrawal from a fund which is not a qualified withdrawal shall be

treated as a nonqualified withdrawal.

(2) Any nonqualified withdrawal from a fund shall be treated -

(A) first as made out of the ordinary income account,

(B) second as made out of the capital gain account, and

(C) third as made out of the capital account.

For purposes of this section, items withdrawn from any account

shall be treated as withdrawn on a first-in-first-out basis; except

that (i) any nonqualified withdrawal for research, development, and

design expenses incident to new and advanced ship design, machinery

and equipment, and (ii) any amount treated as a nonqualified

withdrawal under the second sentence of subsection (g)(4) of this

section, shall be treated as withdrawn on a last-in-first-out

basis.

(3) For purposes of the Internal Revenue Code of 1986 -

(A) any amount referred to in paragraph (2)(A) shall be

included in income as an item of ordinary income for the taxable

year in which the withdrawal is made,

(B) any amount referred to in paragraph (2)(B) shall be

included in income for the taxable year in which the withdrawal

is made as an item of gain realized during such year from the

disposition of an asset held for more than 6 months, and

(C) for the period on or before the last date prescribed for

payment of tax for the taxable year in which this withdrawal is

made -

(i) no interest shall be payable under section 6601 of such

Code [26 U.S.C. 6601] and no addition to the tax shall be

payable under section 6651 of such Code [26 U.S.C. 6651],

(ii) interest on the amount of the additional tax

attributable to any item referred to in subparagraph (A) or (B)

shall be paid at the applicable rate (as defined in paragraph

(4)) from the last date prescribed for payment of the tax for

the taxable year for which such item was deposited in the fund,

and

(iii) no interest shall be payable on amounts referred to in

clauses (i) and (ii) of paragraph (2) or in the case of any

nonqualified withdrawal arising from the application of the

recapture provision of section 1176(5) of this Appendix as in

effect on December 31, 1969.

(4) For purposes of paragraph (3)(C)(ii), the applicable rate of

interest for any nonqualified withdrawal -

(A) made in a taxable year beginning in 1970 or 1971 is 8

percent, or

(B) made in a taxable year beginning after 1971, shall be

determined and published jointly by the Secretary of the Treasury

and the Secretary and shall bear a relationship to 8 percent

which the Secretaries determine under joint regulations to be

comparable to the relationship which the money rates and

investment yields for the calendar year immediately preceding the

beginning of the taxable year bear to the money rates and

investment yields for the calendar year 1970.

(5) Amount not withdrawn from fund after 25 years from deposit

taxed as nonqualified withdrawal. -

(A) In general. - The applicable percentage of any amount which

remains in a capital construction fund at the close of the 26th,

27th, 28th, 29th, or 30th taxable year following the taxable year

for which such amount was deposited shall be treated as a

nonqualified withdrawal in accordance with the following table: