PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1485

Public Law 109–304

109th Congress

An Act

To complete the codification of title 46, United States Code, ‘‘Shipping’’, as positive

law.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. TABLE OF CONTENTS.

The table of contents for this Act is as follows:

Sec. 1. Table of contents.

Sec. 2. Purpose; conformity with original intent.

Sec. 3. Title analysis.

Sec. 4. Subtitle I of title 46.

Sec. 5. Subtitle II of title 46.

Sec. 6. Subtitle III of title 46.

Sec. 7. Subtitle IV of title 46.

Sec. 8. Subtitle V of title 46.

Sec. 9. Subtitle VI of title 46.

Sec. 10. Subtitle VII of title 46.

Sec. 11. Subtitle VIII of title 46.

Sec. 12. Maritime Administration.

Sec. 13. Amendments relating to Maritime Security Act of 2003.

Sec. 14. Amendments to partially restated provisions.

Sec. 15. Additional amendments to title 46.

Sec. 16. Recreational boating safety technical amendments.

Sec. 17. Conforming amendments to other laws.

Sec. 18. Transitional and savings provisions.

Sec. 19. Repeals.

SEC. 2. PURPOSE; CONFORMITY WITH ORIGINAL INTENT.

(a) PURPOSE.—The purpose of this Act is to complete the codification of title 46, United States Code, ‘‘Shipping’’, as positive

law, by reorganizing and restating the laws currently in the

appendix to title 46.

(b) CONFORMITY WITH ORIGINAL INTENT.—In the codification

of laws by this Act, the intent is to conform to the understood

policy, intent, and purpose of the Congress in the original enactments, with such amendments and corrections as will remove

ambiguities, contradictions, and other imperfections, in accordance

with section 205(c)(1) of House Resolution No. 988, 93d Congress,

as enacted into law by Public Law 93–554 (2 U.S.C. 285b(1)).

SEC. 3. TITLE ANALYSIS.

The title analysis of title 46, United States Code, is amended

to read as follows:

‘‘Subtitle Sec.

‘‘I. GENERAL ................................................................................................ 101

‘‘II. VESSELS AND SEAMEN ...................................................................... 2101

‘‘III. MARITIME LIABILITY .........................................................................30101

‘‘IV. REGULATION OF OCEAN SHIPPING ..............................................40101

‘‘V. MERCHANT MARINE ...........................................................................50101

46 USC note

prec. 101.

Oct. 6, 2006

[H.R. 1442]

120 STAT. 1486 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘VI. CLEARANCE, TONNAGE TAXES, AND DUTIES ...........................60101

‘‘VII. SECURITY AND DRUG ENFORCEMENT ........................................70101

‘‘VIII. MISCELLANEOUS ..................................................................................80101’’.

SEC. 4. SUBTITLE I OF TITLE 46.

Title 46, United States Code, is amended by inserting after

the title analysis the following:

‘‘Subtitle I—General

‘‘Chapter Sec.

‘‘1. Definitions ................................................................................................. 101

‘‘3. Federal Maritime Commission ............................................................ 301

‘‘5. Other General Provisions ..................................................................... 501

‘‘CHAPTER 1—DEFINITIONS

‘‘Sec.

‘‘101. Agency.

‘‘102. Barge.

‘‘103. Boundary Line.

‘‘104. Citizen of the United States.

‘‘105. Consular officer.

‘‘106. Documented vessel.

‘‘107. Exclusive economic zone.

‘‘108. Fisheries.

‘‘109. Foreign commerce or trade.

‘‘110. Foreign vessel.

‘‘111. Numbered vessel.

‘‘112. State.

‘‘113. Undocumented.

‘‘114. United States.

‘‘115. Vessel.

‘‘116. Vessel of the United States.

‘‘§ 101. Agency

‘‘In this title, the term ‘agency’ means a department, agency,

or instrumentality of the United States Government.

‘‘§ 102. Barge

‘‘In this title, the term ‘barge’ means a non-self-propelled vessel.

‘‘§ 103. Boundary Line

‘‘In this title, the term ‘Boundary Line’ means a line established

under section 2(b) of the Act of February 19, 1895 (33 U.S.C.

151).

‘‘§ 104. Citizen of the United States

‘‘In this title, the term ‘citizen of the United States’, when

used in reference to a natural person, means an individual who

is a national of the United States as defined in section 101(a)(22)

of the Immigration and Nationality Act (8 U.S.C. 1101(a)(22)).

‘‘§ 105. Consular officer

‘‘In this title, the term ‘consular officer’ means an officer or

employee of the United States Government designated under regulations to issue visas.

‘‘§ 106. Documented vessel

‘‘In this title, the term ‘documented vessel’ means a vessel

for which a certificate of documentation has been issued under

chapter 121 of this title.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1487

‘‘§ 107. Exclusive economic zone

‘‘In this title, the term ‘exclusive economic zone’ means the

zone established by Presidential Proclamation 5030 of March 10,

1983 (16 U.S.C. 1453 note).

‘‘§ 108. Fisheries

‘‘In this title, the term ‘fisheries’ includes processing, storing,

transporting (except in foreign commerce), planting, cultivating,

catching, taking, or harvesting fish, shellfish, marine animals,

pearls, shells, or marine vegetation in the navigable waters of

the United States or in the exclusive economic zone.

‘‘§ 109. Foreign commerce or trade

‘‘(a) IN GENERAL.—In this title, the terms ‘foreign commerce’

and ‘foreign trade’ mean commerce or trade between a place in

the United States and a place in a foreign country.

‘‘(b) CAPITAL CONSTRUCTION FUNDS AND CONSTRUCTION-DIFFERENTIAL SUBSIDIES.—In the context of capital construction funds

under chapter 535 of this title, and in the context of constructiondifferential subsidies under title V of the Merchant Marine Act,

1936, the terms ‘foreign commerce’ and ‘foreign trade’ also include,

in the case of liquid and dry bulk cargo carrying services, trading

between foreign ports in accordance with normal commercial bulk

shipping practices in a manner that will permit bulk vessels of

the United States to compete freely with foreign bulk vessels in

their operation or competition for charters, subject to regulations

prescribed by the Secretary of Transportation.

‘‘§ 110. Foreign vessel

‘‘In this title, the term ‘foreign vessel’ means a vessel of foreign

registry or operated under the authority of a foreign country.

‘‘§ 111. Numbered vessel

‘‘In this title, the term ‘numbered vessel’ means a vessel for

which a number has been issued under chapter 123 of this title.

‘‘§ 112. State

‘‘In this title, the term ‘State’ means a State of the United

States, the District of Columbia, Guam, Puerto Rico, the Virgin

Islands, American Samoa, the Northern Mariana Islands, and any

other territory or possession of the United States.

‘‘§ 113. Undocumented

‘‘In this title, the term ‘undocumented’ means not having and

not required to have a certificate of documentation issued under

chapter 121 of this title.

‘‘§ 114. United States

‘‘In this title, the term ‘United States’, when used in a

geographic sense, means the States of the United States, the District

of Columbia, Guam, Puerto Rico, the Virgin Islands, American

Samoa, the Northern Mariana Islands, and any other territory

or possession of the United States.

‘‘§ 115. Vessel

‘‘In this title, the term ‘vessel’ has the meaning given that

term in section 3 of title 1.

120 STAT. 1488 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 116. Vessel of the United States

‘‘In this title, the term ‘vessel of the United States’ means

a vessel documented under chapter 121 of this title (or exempt

from documentation under section 12102(c) of this title), numbered

under chapter 123 of this title, or titled under the law of a State.

‘‘CHAPTER 3—FEDERAL MARITIME COMMISSION

‘‘Sec.

‘‘301. General organization.

‘‘302. Quorum.

‘‘303. Record of meetings and votes.

‘‘304. Delegation of authority.

‘‘305. Regulations.

‘‘306. Annual report.

‘‘307. Expenditures.

‘‘§ 301. General organization

‘‘(a) ORGANIZATION.—The Federal Maritime Commission is an

independent establishment of the United States Government.

‘‘(b) COMMISSIONERS.—

‘‘(1) COMPOSITION.—The Commission is composed of 5

Commissioners, appointed by the President by and with the

advice and consent of the Senate. Not more than 3 Commissioners may be appointed from the same political party.

‘‘(2) TERMS.—The term of each Commissioner is 5 years,

with each term beginning one year apart. An individual

appointed to fill a vacancy is appointed only for the unexpired

term of the individual being succeeded. A vacancy shall be

filled in the same manner as the original appointment. When

the term of a Commissioner ends, the Commissioner may continue to serve until a successor is appointed and qualified.

‘‘(3) REMOVAL.—The President may remove a Commissioner

for inefficiency, neglect of duty, or malfeasance in office.

‘‘(c) CHAIRMAN.—

‘‘(1) DESIGNATION.—The President shall designate one of

the Commissioners as Chairman.

‘‘(2) GENERAL AUTHORITY.—The Chairman is the chief

executive and administrative officer of the Commission. In carrying out the duties and powers of the Commission (other

than under paragraph (3)), the Chairman is subject to the

policies, regulatory decisions, findings, and determinations of

the Commission.

‘‘(3) PARTICULAR DUTIES.—

‘‘(A) IN GENERAL.—The Chairman shall—

‘‘(i) appoint and supervise officers and employees

of the Commission;

‘‘(ii) appoint the heads of major organizational

units, but only after consultation with the other

Commissioners;

‘‘(iii) distribute the business of the Commission

among personnel and organizational units;

‘‘(iv) supervise the expenditure of money for

administrative purposes; and

‘‘(v) assign Commission personnel, including

Commissioners, to perform duties and powers delegated by the Commission under section 304 of this

title.

President.

President.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1489

‘‘(B) NONAPPLICATION.—Subparagraph (A) (other than

clause (v)) does not apply to personnel employed regularly

and full-time in the offices of Commissioners other than

the Chairman.

‘‘(4) DELEGATION.—The Chairman may designate officers

and employees under the Chairman’s jurisdiction to perform

duties and powers of the Chairman, subject to the Chairman’s

supervision and direction.

‘‘(d) SEAL.—The Commission shall have a seal which shall

be judicially recognized.

‘‘§ 302. Quorum

‘‘A vacancy or vacancies in the membership of the Federal

Maritime Commission do not impair the power of the Commission

to execute its functions. The affirmative vote of a majority of the

Commissioners serving on the Commission is required to dispose

of any matter before the Commission.

‘‘§ 303. Record of meetings and votes

‘‘The Federal Maritime Commission, through its secretary, shall

keep a record of its meetings and the votes taken on any action,

order, contract, or financial transaction of the Commission.

‘‘§ 304. Delegation of authority

‘‘(a) DELEGATION.—The Federal Maritime Commission, by published order or regulation, may delegate to a division of the Commission, an individual Commissioner, an employee board, or an officer

or employee of the Commission, any of its duties or powers,

including those relating to hearing, determining, ordering, certifying, reporting, or otherwise acting on any matter. This subsection

does not affect section 556(b) of title 5.

‘‘(b) REVIEW.—The Commission may review any action taken

under a delegation of authority under subsection (a). The review

may be taken on the Commission’s own initiative or on the petition

of a party to or an intervenor in the action, within the time and

in the manner prescribed by the Commission. The vote of a majority

of the Commission, less one member, is sufficient to bring an

action before the Commission for review.

‘‘(c) DEEMED ACTION OF COMMISSION.—If the Commission

declines review, or if review is not sought, within the time prescribed under subsection (b), the action taken under the delegation

of authority is deemed to be the action of the Commission.

‘‘§ 305. Regulations

‘‘The Federal Maritime Commission may prescribe regulations

to carry out its duties and powers.

‘‘§ 306. Annual report

‘‘(a) IN GENERAL.—Not later than April 1 of each year, the

Federal Maritime Commission shall submit a report to Congress.

The report shall include the results of its investigations, a summary

of its transactions, the purposes for which all of its expenditures

were made, and any recommendations for legislation.

‘‘(b) REPORT ON FOREIGN LAWS AND PRACTICES.—The Commission shall include in its annual report to Congress—

120 STAT. 1490 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(1) a list of the 20 foreign countries that generated the

largest volume of oceanborne liner cargo for the most recent

calendar year in bilateral trade with the United States;

‘‘(2) an analysis of conditions described in section 42302(a)

of this title being investigated or found to exist in foreign

countries;

‘‘(3) any actions being taken by the Commission to offset

those conditions;

‘‘(4) any recommendations for additional legislation to offset

those conditions; and

‘‘(5) a list of petitions filed under section 42302(b) of this

title that the Commission rejected and the reasons for each

rejection.

‘‘§ 307. Expenditures

‘‘The Federal Maritime Commission may make such expenditures as are necessary in the performance of its functions from

funds appropriated or otherwise made available to it, which appropriations are authorized.

‘‘CHAPTER 5—OTHER GENERAL PROVISIONS

‘‘Sec.

‘‘501. Waiver of navigation and vessel-inspection laws.

‘‘502. Cargo exempt from forfeiture.

‘‘503. Notice of seizure.

‘‘504. Remission of fees and penalties.

‘‘505. Penalty for violating regulation or order.

‘‘§ 501. Waiver of navigation and vessel-inspection laws

‘‘(a) ON REQUEST OF SECRETARY OF DEFENSE.—On request of

the Secretary of Defense, the head of an agency responsible for

the administration of the navigation or vessel-inspection laws shall

waive compliance with those laws to the extent the Secretary considers necessary in the interest of national defense.

‘‘(b) BY HEAD OF AGENCY.—When the head of an agency responsible for the administration of the navigation or vessel-inspection

laws considers it necessary in the interest of national defense,

the individual may waive compliance with those laws to the extent,

in the manner, and on the terms the individual prescribes.

‘‘(c) TERMINATION OF AUTHORITY.—The authority granted by

this section shall terminate at such time as the Congress by concurrent resolution or the President may designate.

‘‘§ 502. Cargo exempt from forfeiture

‘‘Cargo on a vessel is exempt from forfeiture under this title

if—

‘‘(1) the cargo is owned in good faith by a person not

the owner, master, or crewmember of the vessel; and

‘‘(2) the customs duties on the cargo have been paid or

secured for payment as provided by law.

‘‘§ 503. Notice of seizure

‘‘When a forfeiture of a vessel or cargo accrues, the official

of the United States Government required to give notice of the

seizure of the vessel or cargo shall include in the notice, if they

are known to that official, the name and the place of residence

of the owner or consignee at the time of the seizure.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1491

‘‘§ 504. Remission of fees and penalties

‘‘Any part of a fee, tax, or penalty paid or a forfeiture incurred

under a law or regulation relating to vessels or seamen may be

remitted if—

‘‘(1) application for the remission is made within one year

after the date of the payment or forfeiture; and

‘‘(2) it is found that the fee, tax, penalty, or forfeiture

was improperly or excessively imposed.

‘‘§ 505. Penalty for violating regulation or order

‘‘A person convicted of knowingly and willfully violating a regulation or order of the Federal Maritime Commission or the Secretary

of Transportation under subtitle IV or V of this title, for which

no penalty is expressly provided, shall be fined not more than

$500. Each day of a continuing violation is a separate offense.’’.

SEC. 5. SUBTITLE II OF TITLE 46.

Chapter 121 of title 46, United States Code, is amended to

read as follows:

‘‘CHAPTER 121—DOCUMENTATION OF VESSELS

‘‘SUBCHAPTER I—GENERAL

‘‘Sec.

‘‘12101. Definitions.

‘‘12102. Vessels requiring documentation.

‘‘12103. General eligibility requirements.

‘‘12104. Applications for documentation.

‘‘12105. Issuance of documentation.

‘‘12106. Surrender of title and number.

‘‘12107. Wrecked vessels.

‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL DOCUMENTATION

‘‘12111. Registry endorsement.

‘‘12112. Coastwise endorsement.

‘‘12113. Fishery endorsement.

‘‘12114. Recreational endorsement.

‘‘12115. Temporary endorsement for vessels procured outside the United States.

‘‘12116. Limited endorsements for Guam, American Samoa, and Northern Mariana

Islands.

‘‘12117. Oil spill response vessels.

‘‘12118. Owners engaged primarily in manufacturing or mineral industry.

‘‘12119. Owners engaged primarily in leasing or financing transactions.

‘‘12120. Liquified gas tankers.

‘‘12121. Small passenger vessels and uninspected passenger vessels.

‘‘SUBCHAPTER III—MISCELLANEOUS

‘‘12131. Command of documented vessels.

‘‘12132. Loss of coastwise trade privileges.

‘‘12133. Duty to carry certificate on vessel and allow examination.

‘‘12134. Evidentiary uses of documentation.

‘‘12135. Invalidation of certificates of documentation.

‘‘12136. Surrender of certificates of documentation.

‘‘12137. Recording of vessels built in the United States.

‘‘12138. List of documented vessels.

‘‘12139. Reports.

‘‘SUBCHAPTER IV—PENALTIES

‘‘12151. Penalties.

‘‘12152. Denial or revocation of endorsement for non-payment of civil penalty.

‘‘SUBCHAPTER I—GENERAL

‘‘§ 12101. Definitions

‘‘(a) REBUILT IN THE UNITED STATES.—In this chapter, a vessel

is deemed to have been rebuilt in the United States only if the

120 STAT. 1492 PUBLIC LAW 109–304—OCT. 6, 2006

entire rebuilding, including the construction of any major component

of the hull or superstructure, was done in the United States.

‘‘(b) RELATED TERMS IN OTHER LAWS.—When the following

terms are used in a law, regulation, document, ruling, or other

official act referring to the documentation of a vessel, the following

definitions apply:

‘‘(1) REGISTRY ENDORSEMENT.—The terms ‘certificate of registry’, ‘register’, and ‘registry’ mean a certificate of documentation with a registry endorsement issued under this chapter.

‘‘(2) COASTWISE ENDORSEMENT.—The terms ‘license’, ‘enrollment and license’, ‘license for the coastwise (or coasting) trade’,

and ‘enrollment and license for the coastwise (or coasting) trade’

mean a certificate of documentation with a coastwise endorsement issued under this chapter.

‘‘(3) YACHT.—The term ‘yacht’ means a recreational vessel

even if not documented.

‘‘§ 12102. Vessels requiring documentation

‘‘(a) IN GENERAL.—Except as otherwise provided, a vessel may

engage in a trade only if the vessel has been issued a certificate

of documentation with an endorsement for that trade under this

chapter.

‘‘(b) VESSELS LESS THAN 5 NET TONS.—A vessel of less than

5 net tons may engage in a trade without being documented if

the vessel otherwise satisfies the requirements to engage in the

particular trade.

‘‘(c) BARGES.—A barge qualified to engage in the coastwise

trade may engage in the coastwise trade, without being documented,

on rivers, harbors, lakes (except the Great Lakes), canals, and

inland waters.

‘‘§ 12103. General eligibility requirements

‘‘(a) IN GENERAL.—Except as otherwise provided, a certificate

of documentation for a vessel may be issued under this chapter

only if the vessel is—

‘‘(1) wholly owned by one or more individuals or entities

described in subsection (b);

‘‘(2) at least 5 net tons as measured under part J of this

subtitle; and

‘‘(3) not documented under the laws of a foreign country.

‘‘(b) ELIGIBLE OWNERS.—For purposes of subsection (a)(1), the

following are eligible owners:

‘‘(1) An individual who is a citizen of the United States.

‘‘(2) An association, trust, joint venture, or other entity

if—

‘‘(A) each of its members is a citizen of the United

States; and

‘‘(B) it is capable of holding title to a vessel under

the laws of the United States or a State.

‘‘(3) A partnership if—

‘‘(A) each general partner is a citizen of the United

States; and

‘‘(B) the controlling interest in the partnership is owned

by citizens of the United States.

‘‘(4) A corporation if—

‘‘(A) it is incorporated under the laws of the United

States or a State;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1493

‘‘(B) its chief executive officer, by whatever title, and

the chairman of its board of directors are citizens of the

United States; and

‘‘(C) no more of its directors are noncitizens than a

minority of the number necessary to constitute a quorum.

‘‘(5) The United States Government.

‘‘(6) The government of a State.

‘‘(c) TEMPORARY CERTIFICATES PRIOR TO MEASUREMENT.—Notwithstanding subsection (a)(2), the Secretary may issue a temporary

certificate of documentation for a vessel before it is measured.

‘‘§ 12104. Applications for documentation

‘‘(a) IN GENERAL.—An application for a certificate of documentation or endorsement under this chapter must be filed by the owner

of the vessel. The application must be filed in the manner, be

in the form, and contain the information prescribed by the Secretary.

‘‘(b) APPLICANT’S IDENTIFYING INFORMATION.—The Secretary

shall require the applicant to provide—

‘‘(1) if the applicant is an individual, the individual’s social

security number; or

‘‘(2) if the applicant is an entity—

‘‘(A) the entity’s taxpayer identification number; or

‘‘(B) if the entity does not have a taxpayer identification

number, the social security number of an individual who

is a corporate officer, general partner, or individual trustee

of the entity and who signs the application.

‘‘§ 12105. Issuance of documentation

‘‘(a) IN GENERAL.—Except as provided in section 12152 of this

title, the Secretary, on receipt of a proper application, shall issue

a certificate of documentation or a temporary certificate of documentation for a vessel satisfying the requirements of section 12103

of this title. The certificate shall contain each endorsement under

subchapter II of this chapter for which the owner applies and

the vessel is eligible.

‘‘(b) TEMPORARY CERTIFICATES FOR RECREATIONAL VESSELS.—

The Secretary may delegate, subject to the supervision and control

of the Secretary and under terms prescribed by regulation, to private entities determined and certified by the Secretary to be qualified, the authority to issue a temporary certificate of documentation

for a recreational vessel eligible under section 12103 of this title.

A temporary certificate issued under this subsection is valid for

not more than 30 days.

‘‘(c) INFORMATION TO BE INCLUDED IN CERTIFICATE.—A certificate of documentation shall—

‘‘(1) identify and describe the vessel;

‘‘(2) identify the owner of the vessel; and

‘‘(3) contain additional information prescribed by the Secretary.

‘‘(d) PROCEDURES TO ENSURE INTEGRITY AND ACCURACY.—The

Secretary shall prescribe procedures to ensure the integrity of,

and the accuracy of information contained in, certificates of documentation.

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‘‘§ 12106. Surrender of title and number

‘‘(a) IN GENERAL.—A documented vessel may not be titled by

a State or required to display numbers under chapter 123 of this

title, and any certificate of title issued by a State for a documented

vessel shall be surrendered as provided by regulations prescribed

by the Secretary.

‘‘(b) VESSELS COVERED BY PREFERRED MORTGAGE.—The Secretary may approve the surrender under subsection (a) of a certificate of title for a vessel covered by a preferred mortgage under

section 31322(d) of this title only if the mortgagee consents.

‘‘§ 12107. Wrecked vessels

‘‘(a) REQUIREMENTS.—A vessel is a wrecked vessel under this

chapter if it—

‘‘(1) was wrecked on a coast of the United States or adjacent

waters; and

‘‘(2) has undergone repairs in a shipyard in the United

States equal to at least 3 times the appraised salvage value

of the vessel.

‘‘(b) APPRAISALS.—The Secretary may appoint a board of three

appraisers to determine whether a vessel satisfies subsection (a)(2).

The costs of the appraisal shall be paid by the owner of the vessel.

‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL

DOCUMENTATION

‘‘§ 12111. Registry endorsement

‘‘(a) REQUIREMENTS.—A registry endorsement may be issued

for a vessel that satisfies the requirements of section 12103 of

this title.

‘‘(b) AUTHORIZED ACTIVITY.—A vessel for which a registry

endorsement is issued may engage in foreign trade or trade with

Guam, American Samoa, Wake, Midway, or Kingman Reef.

‘‘(c) CERTAIN VESSELS OWNED BY TRUSTS.— ‘‘(1) NONAPPLICATION OF BENEFICIARY CITIZENSHIP REQUIREMENT.—For the issuance of a certificate of documentation with

only a registry endorsement, the beneficiaries of a trust are

not required to be citizens of the United States if the trust

qualifies under paragraph (2) and the vessel is subject to a

charter to a citizen of the United States.

‘‘(2) REQUIREMENTS FOR TRUST TO QUALIFY.—

‘‘(A) IN GENERAL.—Subject to subparagraph (B), a trust

qualifies under this paragraph with respect to a vessel

only if—

‘‘(i) each trustee is a citizen of the United States;

and

‘‘(ii) the application for documentation of the vessel

includes the affidavit of each trustee stating that the

trustee is not aware of any reason involving a beneficiary of the trust that is not a citizen of the United

States, or involving any other person that is not a

citizen of the United States, as a result of which the

beneficiary or other person would hold more than 25

percent of the aggregate power to influence or limit

the exercise of the authority of the trustee with respect

to matters involving any ownership or operation of

Regulations.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1495

the vessel that may adversely affect the interests of

the United States.

‘‘(B) AUTHORITY OF NON-CITIZENS.—If any person that

is not a citizen of the United States has authority to

direct or participate in directing a trustee for a trust in

matters involving any ownership or operation of the vessel

that may adversely affect the interests of the United States

or in removing a trustee for a trust without cause, either

directly or indirectly through the control of another person,

the trust is not qualified under this paragraph unless the

trust instrument provides that persons who are not citizens

of the United States may not hold more than 25 percent

of the aggregate authority to so direct or remove a trustee.

‘‘(C) OWNERSHIP BY NON-CITIZENS.—Subparagraphs (A)

and (B) do not prohibit a person that is not a citizen

of the United States from holding more than 25 percent

of the beneficial interest in a trust.

‘‘(3) CITIZENSHIP OF PERSON CHARTERING VESSEL.—If a person chartering a vessel from a trust that qualifies under paragraph (2) is a citizen of the United States under section 50501

of this title, the vessel is deemed to be owned by a citizen

of the United States for purposes of that section and related

laws, except chapter 531 of this title.

‘‘§ 12112. Coastwise endorsement

‘‘(a) REQUIREMENTS.—A coastwise endorsement may be issued

for a vessel that—

‘‘(1) satisfies the requirements of section 12103 of this

title;

‘‘(2)(A) was built in the United States; or

‘‘(B) if not built in the United States—

‘‘(i) was captured in war by citizens of the United

States and lawfully condemned as prize;

‘‘(ii) was adjudged to be forfeited for a breach of the

laws of the United States; or

‘‘(iii) qualifies as a wrecked vessel under section 12107

of this title; and

‘‘(3) otherwise qualifies under the laws of the United States

to engage in the coastwise trade.

‘‘(b) AUTHORIZED ACTIVITY.—Subject to the laws of the United

States regulating the coastwise trade, a vessel for which a coastwise

endorsement is issued may engage in the coastwise trade.

‘‘§ 12113. Fishery endorsement

‘‘(a) REQUIREMENTS.—A fishery endorsement may be issued

for a vessel that—

‘‘(1) satisfies the requirements of section 12103 of this

title and, if owned by an entity, the entity satisfies the ownership requirements in subsection (c);

‘‘(2) was built in the United States;

‘‘(3) if rebuilt, was rebuilt in the United States;

‘‘(4) was not forfeited to the United States Government

after July 1, 2001, for a breach of the laws of the United

States; and

‘‘(5) otherwise qualifies under the laws of the United States

to engage in the fisheries.

‘‘(b) AUTHORIZED ACTIVITY.—

120 STAT. 1496 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(1) IN GENERAL.—Subject to the laws of the United States

regulating the fisheries, a vessel for which a fishery endorsement is issued may engage in the fisheries.

‘‘(2) USE BY PROHIBITED PERSONS.—A fishery endorsement

is invalid immediately if the vessel for which it is issued is

used as a fishing vessel while it is chartered or leased to

an individual who is not a citizen of the United States or

to an entity that is not eligible to own a vessel with a fishery

endorsement.

‘‘(c) OWNERSHIP REQUIREMENTS FOR ENTITIES.— ‘‘(1) IN GENERAL.—A vessel owned by an entity is eligible

for a fishery endorsement only if at least 75 percent of the

interest in the entity, at each tier of ownership and in the

aggregate, is owned and controlled by citizens of the United

States.

‘‘(2) DETERMINING 75 PERCENT INTEREST.—In determining

whether at least 75 percent of the interest in the entity is

owned and controlled by citizens of the United States under

paragraph (1), the Secretary shall apply section 50501(d) of

this title, except that for this purpose the terms ‘control’ or

‘controlled’—

‘‘(A) include the right to—

‘‘(i) direct the business of the entity;

‘‘(ii) limit the actions of or replace the chief executive officer, a majority of the board of directors, any

general partner, or any person serving in a management capacity of the entity; or

‘‘(iii) direct the transfer, operation, or manning

of a vessel with a fishery endorsement; but

‘‘(B) do not include the right to simply participate

in the activities under subparagraph (A), or the exercise

of rights under loan or mortgage covenants by a mortgagee

eligible to be a preferred mortgagee under section 31322(a)

of this title, except that a mortgagee not eligible to own

a vessel with a fishery endorsement may only operate

such a vessel to the extent necessary for the immediate

safety of the vessel or for repairs, drydocking, or berthing

changes.

‘‘(3) EXCEPTIONS.—This subsection does not apply to a

vessel when it is engaged in the fisheries in the exclusive

economic zone under the authority of the Western Pacific

Fishery Management Council established under section

302(a)(1)(H) of the Magnuson-Stevens Fishery Conservation

and Management Act (16 U.S.C. 1852(a)(1)(H)) or to a purse

seine vessel when it is engaged in tuna fishing in the Pacific

Ocean outside the exclusive economic zone or pursuant to the

South Pacific Regional Fisheries Treaty, provided that the

owner of the vessel continues to comply with the eligibility

requirements for a fishery endorsement under the Federal law

that was in effect on October 1, 1998. A fishery endorsement

issued pursuant to this paragraph is valid for engaging only

in the activities described in this paragraph.

‘‘(d) REQUIREMENTS BASED ON LENGTH, TONNAGE, OR HORSEPOWER.—

‘‘(1) APPLICATION.—This subsection applies to a vessel

that—

‘‘(A) is greater than 165 feet in registered length;

Applicability.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1497

‘‘(B) is more than 750 gross registered tons as measured

under chapter 145 of this title or 1,900 gross registered

tons as measured under chapter 143 of this title; or

‘‘(C) has an engine or engines capable of producing

a total of more than 3,000 shaft horsepower.

‘‘(2) REQUIREMENTS.—A vessel subject to this subsection

is not eligible for a fishery endorsement unless—

‘‘(A)(i) a certificate of documentation was issued for

the vessel and endorsed with a fishery endorsement that

was effective on September 25, 1997;

‘‘(ii) the vessel is not placed under foreign registry

after October 21, 1998; and

‘‘(iii) if the fishery endorsement is invalidated after

October 21, 1998, application is made for a new fishery

endorsement within 15 business days of the invalidation;

or

‘‘(B) the owner of the vessel demonstrates to the Secretary that the regional fishery management council of

jurisdiction established under section 302(a)(1) of the

Magnuson-Stevens Fishery Conservation and Management

Act (16 U.S.C. 1852(a)(1)) has recommended after October

21, 1998, and the Secretary of Commerce has approved,

conservation and management measures in accordance

with the American Fisheries Act (Public Law 105–277,

div. C, title II) (16 U.S.C. 1851 note) to allow the vessel

to be used in fisheries under the council’s authority.

‘‘(e) VESSELS MEASURING 100 FEET OR GREATER.—

‘‘(1) IN GENERAL.—The Administrator of the Maritime

Administration shall administer subsections (c) and (d) with

respect to vessels 100 feet or greater in registered length.

The owner of each such vessel shall file a statement of citizenship setting forth all relevant facts regarding vessel ownership

and control with the Administrator on an annual basis to

demonstrate compliance with those provisions.

‘‘(2) REGULATIONS.—Regulations to implement this subsection shall conform to the extent practicable with the regulations establishing the form of citizenship affidavit set forth

in part 355 of title 46, Code of Federal Regulations, as in

effect on September 25, 1997, except that the form of the

statement shall be written in a manner to allow the owner

of the vessel to satisfy any annual renewal requirements for

a certificate of documentation for the vessel and to comply

with this subsection and subsections (c) and (d), and shall

not be required to be notarized.

‘‘(3) TRANSFER OF OWNERSHIP.—Transfers of ownership and

control of vessels subject to subsection (c) or (d), which are

100 feet or greater in registered length, shall be rigorously

scrutinized for violations of those provisions, with particular

attention given to—

‘‘(A) leases, charters, mortgages, financing, and similar

arrangements;

‘‘(B) the control of persons not eligible to own a vessel

with a fishery endorsement under subsection (c) or (d),

over the management, sales, financing, or other operations

of an entity; and

120 STAT. 1498 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(C) contracts involving the purchase over extended

periods of time of all, or substantially all, of the living

marine resources harvested by a fishing vessel.

‘‘(f) VESSELS MEASURING LESS THAN 100 FEET.—The Secretary

shall establish reasonable and necessary requirements to demonstrate compliance with subsections (c) and (d), with respect to

vessels measuring less than 100 feet in registered length, and

shall seek to minimize the administrative burden on individuals

who own and operate those vessels.

‘‘(g) VESSELS PURCHASED THROUGH FISHING CAPACITY REDUC- TION PROGRAM.—A vessel purchased by the Secretary of Commerce

through a fishing capacity reduction program under the MagnusonStevens Fishery Conservation Management Act (16 U.S.C. 1801

et seq.) or section 308 of the Interjurisdictional Fisheries Act of

1986 (16 U.S.C. 4107) is not eligible for a fishery endorsement,

and any fishery endorsement issued for that vessel is invalid.

‘‘(h) REVOCATION OF ENDORSEMENTS.—The Secretary shall

revoke the fishery endorsement of any vessel subject to subsection

(c) or (d) whose owner does not comply with those provisions.

‘‘(i) REGULATIONS.—Regulations to implement subsections (c)

and (d) and sections 12151(c) and 31322(b) of this title shall prohibit

impermissible transfers of ownership or control, specify any transactions that require prior approval of an implementing agency,

identify transactions that do not require prior agency approval,

and to the extent practicable, minimize disruptions to the commercial fishing industry, to the traditional financing arrangements

of that industry, and to the opportunity to form fishery cooperatives.

‘‘§ 12114. Recreational endorsement

‘‘(a) REQUIREMENTS.—A recreational endorsement may be

issued for a vessel that satisfies the requirements of section 12103

of this title.

‘‘(b) AUTHORIZED ACTIVITY.—A vessel operating under a recreational endorsement may be operated only for pleasure.

‘‘(c) APPLICATION OF CUSTOMS LAWS.—A vessel for which a

recreational endorsement is issued may proceed between a port

of the United States and a port of a foreign country without entering

or clearing with the Secretary of Homeland Security. However,

a recreational vessel is subject to the requirements for reporting

arrivals under section 433 of the Tariff Act of 1930 (19 U.S.C.

1433), and individuals on the vessel are subject to applicable customs regulations.

‘‘§ 12115. Temporary endorsement for vessels procured outside the United States

‘‘(a) GENERAL AUTHORITY.—The Secretary and the Secretary

of State, acting jointly, may provide for the issuance of a certificate

of documentation with an appropriate endorsement for a vessel

procured outside the United States and meeting the ownership

requirements of section 12103 of this title.

‘‘(b) AUTHORIZED ACTIVITY.—Subject to limitations the Secretary may prescribe, a vessel documented under this section may

proceed to the United States and engage en route in foreign trade

or trade with Guam, American Samoa, Wake, Midway, or Kingman

Reef.

‘‘(c) APPLICATION OF UNITED STATES JURISDICTION AND LAWS.— A vessel documented under this section is subject to the jurisdiction

Requirements.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1499

and laws of the United States. However, if the Secretary considers

it to be in the public interest, the Secretary may suspend for

a period of not more than 6 months the application of a vessel

inspection law carried out by the Secretary or regulations prescribed

under that law.

‘‘(d) SURRENDER OF CERTIFICATE.—On the vessel’s arrival in

the United States, the certificate of documentation shall be surrendered as provided by regulations prescribed by the Secretary.

‘‘§ 12116. Limited endorsements for Guam, American Samoa,

and Northern Mariana Islands

‘‘(a) ENDORSEMENTS.—A vessel satisfying the requirements of

subsection (b) may be issued—

‘‘(1) a coastwise endorsement to engage in the coastwise

trade of fisheries products between places in Guam, American

Samoa, and the Northern Mariana Islands; or

‘‘(2) a fishery endorsement to engage in fishing in the

territorial sea and fishery conservation zone adjacent to Guam,

American Samoa, and the Northern Mariana Islands.

‘‘(b) REQUIREMENTS.—An endorsement may be issued under

subsection (a) for a vessel that—

‘‘(1) satisfies the requirements of section 12103 of this

title;

‘‘(2) was not built in the United States, except that for

an endorsement under subsection (a)(2), the vessel must not

have been built or rebuilt in the United States;

‘‘(3) is less than 200 gross tons as measured under section

14502 of this title, or an alternate tonnage as measured under

section 14302 of this title as prescribed by the Secretary under

section 14104 of this title; and

‘‘(4) otherwise qualifies under the laws of the United States

to engage in the coastwise trade or the fisheries, as the case

may be.

‘‘§ 12117. Oil spill response vessels

‘‘(a) REQUIREMENTS.—A coastwise endorsement may be issued

for a vessel that—

‘‘(1) satisfies the requirements for a coastwise endorsement,

except for the ownership requirement otherwise applicable

without regard to this section;

‘‘(2) is owned by a not-for-profit oil spill response cooperative or by members of such a cooperative that dedicate the

vessel to use by the cooperative;

‘‘(3) is at least 50 percent owned by individuals or entities

described in section 12103(b) of this title; and

‘‘(4) is to be used only for—

‘‘(i) deploying equipment, supplies, and personnel to

recover, contain, or transport oil discharged into the navigable waters of the United States or the exclusive economic

zone; or

‘‘(ii) training exercises to prepare to respond to such

a discharge.

‘‘(b) DEEMED OWNED BY CITIZENS.—A vessel satisfying subsection (a) is deemed to be owned only by citizens of the United

States under sections 12103, 12132, and 50501 of this title.

Regulations.

120 STAT. 1500 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 12118. Owners engaged primarily in manufacturing or

mineral industry

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) BOWATERS CORPORATION.—The term ‘Bowaters corporation’ means a corporation that has filed a certificate under

oath with the Secretary, in the form and at the times prescribed

by the Secretary, establishing that—

‘‘(A) the corporation is incorporated under the laws

of the United States or a State;

‘‘(B) a majority of the officers and directors of the

corporation are individuals who are citizens of the United

States;

‘‘(C) at least 90 percent of the employees of the corporation are residents of the United States;

‘‘(D) the corporation is engaged primarily in a manufacturing or mineral industry in the United States;

‘‘(E) the total book value of the vessels owned by the

corporation is not more than 10 percent of the total book

value of the assets of the corporation; and

‘‘(F) the corporation buys or produces in the United

States at least 75 percent of the raw materials used or

sold in its operations.

‘‘(2) PARENT.—The term ‘parent’ means a corporation that

has filed a certificate under oath with the Secretary, in the

form and at the times prescribed by the Secretary, establishing

that the corporation—

‘‘(A) is incorporated under the laws of the United States

or a State; and

‘‘(B) controls, directly or indirectly, at least 50 percent

of the voting stock of a Bowaters corporation.

‘‘(3) SUBSIDIARY.—The term ‘subsidiary’ means a corporation that has filed a certificate under oath with the Secretary,

in the form and at the times prescribed by the Secretary,

establishing that the corporation—

‘‘(A) is incorporated under the laws of the United States

or a State; and

‘‘(B) has at least 50 percent of its voting stock controlled, directly or indirectly, by a Bowaters corporation

or its parent.

‘‘(b) DEEMED CITIZEN.—A Bowaters corporation is deemed to

be a citizen of the United States for purposes of chapters 121,

551, and 561 and section 80104 of this title.

‘‘(c) ISSUANCE OF DOCUMENTATION.—A certificate of documentation and appropriate endorsement may be issued for a vessel that—

‘‘(1) is owned by a Bowaters corporation;

‘‘(2) was built in the United States; and

‘‘(3)(A) is self-propelled and less than 500 gross tons as

measured under section 14502 of this title, or an alternate

tonnage as measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title;

or

‘‘(B) is not self-propelled.

‘‘(d) EFFECTS OF DOCUMENTATION.—

‘‘(1) IN GENERAL.—Subject to paragraph (2)—

‘‘(A) a vessel documented under this section may

engage in the coastwise trade; and

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1501

‘‘(B) the vessel and its owner and master are entitled

to the same benefits and are subject to the same requirements and penalties as if the vessel were otherwise documented or exempt from documentation under this chapter.

‘‘(2) TRANSPORTATION OF PASSENGERS OR MERCHANDISE.— A vessel documented under this section may transport passengers or merchandise for hire in the coastwise trade only—

‘‘(A) as a service for a parent or subsidiary of the

corporation owning the vessel; or

‘‘(B) when under a demise or bareboat charter, at prevailing rates for use not in the domestic noncontiguous

trades, from the corporation owning the vessel to a carrier

that—

‘‘(i) is subject to jurisdiction under subchapter II

of chapter 135 of title 49;

‘‘(ii) otherwise qualifies as a citizen of the United

States under section 50501 of this title; and

‘‘(iii) is not owned or controlled, directly or

indirectly, by the corporation owning the vessel.

‘‘(e) VALIDITY OF CORPORATE CERTIFICATE.—A certificate filed

by a corporation under this section remains valid only as long

as the corporation continues to satisfy the conditions required of

the corporation by this section. When a corporation no longer satisfies those conditions, the corporation loses its status under this

section and immediately shall surrender to the Secretary any documents issued to it based on that status.

‘‘(f) PENALTIES.—

‘‘(1) FALSIFYING MATERIAL FACT.—If a corporation knowingly falsifies a material fact in a certificate filed under subsection (a), the vessel (or its value) documented or operated

under this section shall be forfeited.

‘‘(2) TRANSPORTING MERCHANDISE.—If a vessel transports

merchandise for hire in violation of this section, the merchandise shall be forfeited to the United States Government.

‘‘(3) TRANSPORTING PASSENGERS.—If a vessel transports

passengers for hire in violation of this section, the vessel is

liable for a penalty of $200 for each passenger so transported.

‘‘(4) REMISSION OR MITIGATION.—A penalty or forfeiture

incurred under this subsection may be remitted or mitigated

under section 2107(b) of this title.

‘‘§ 12119. Owners engaged primarily in leasing or financing

transactions

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) AFFILIATE.—The term ‘affiliate’ means, with respect

to any person, any other person that is—

‘‘(i) directly or indirectly controlled by, under common

control with, or controlling that person; or

‘‘(ii) named as being part of the same consolidated

group in any report or other document submitted to the

United States Securities and Exchange Commission or the

Internal Revenue Service.

‘‘(2) CARGO.—The term ‘cargo’ does not include cargo to

which title is held for non-commercial reasons and primarily

for the purpose of evading the requirements of subsection (c)(3).

‘‘(3) OIL.—The term ‘oil’ has the meaning given that term

in section 2101(20) of this title.

120 STAT. 1502 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(4) PASSIVE INVESTMENT.—The term ‘passive investment’

means an investment in which neither the investor nor any

affiliate of the investor is involved in, or has the power to

be involved in, the formulation, determination, or direction

of any activity or function concerning the management, use,

or operation of the asset that is the subject of the investment.

‘‘(5) QUALIFIED PROPRIETARY CARGO.—The term ‘qualified

proprietary cargo’ means—

‘‘(A) oil, petroleum products, petrochemicals, or liquefied natural gas cargo that is beneficially owned by the

person that submits to the Secretary an application or

annual certification under subsection (c)(3), or by an affiliate of that person, immediately before, during, or immediately after the cargo is carried in coastwise trade on

a vessel owned by that person;

‘‘(B) oil, petroleum products, petrochemicals, or liquefied natural gas cargo not beneficially owned by the person

that submits to the Secretary an application or an annual

certification under subsection (c)(3), or by an affiliate of

that person, but which is carried in coastwise trade by

a vessel owned by that person and which is part of an

arrangement in which vessels owned by that person and

at least one other person are operated collectively as one

fleet, to the extent that an equal amount of oil, petroleum

products, petrochemicals, or liquefied natural gas cargo

beneficially owned by that person, or by an affiliate of

that person, is carried in coastwise trade on one or more

other vessels, not owned by that person, or by an affiliate

of that person, if the other vessel or vessels are also part

of the same arrangement;

‘‘(C) in the case of a towing vessel associated with

a non-self-propelled tank vessel where both vessels function

as a single self-propelled vessel, oil, petroleum products,

petrochemicals, or liquefied natural gas cargo that is beneficially owned by the person that owns both the towing

vessel and the non-self-propelled tank vessel, or any United

States affiliate of that person, immediately before, during,

or immediately after the cargo is carried in coastwise trade

on either of those vessels; or

‘‘(D) any oil, petroleum products, petrochemicals, or

liquefied natural gas cargo carried on any vessel that is

either a self-propelled tank vessel having a length of at

least 210 meters or a tank vessel that is a liquefied natural

gas carrier that—

‘‘(i) was delivered by the builder of the vessel to

the owner of the vessel after December 31, 1999; and

‘‘(ii) was purchased by a person for the purpose,

and with the reasonable expectation, of transporting

on the vessel liquefied natural gas or unrefined petroleum beneficially owned by the owner of the vessel,

or an affiliate of the owner, from Alaska to the continental United States.

‘‘(6) UNITED STATES AFFILIATE.—The term ‘United States

affiliate’ means, with respect to any person, an affiliate the

principal place of business of which is located in the United

States.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1503

‘‘(b) REQUIREMENTS.—A coastwise endorsement may be issued

for a vessel if—

‘‘(1) the vessel satisfies the requirements for a coastwise

endorsement, except for the ownership requirement otherwise

applicable without regard to this section;

‘‘(2) the person that owns the vessel (or, if the vessel

is owned by a trust or similar arrangement, the beneficiary

of the trust or similar arrangement) meets the requirements

of subsection (c);

‘‘(3) the vessel is under a demise charter to a person that

certifies to the Secretary that the person is a citizen of the

United States under section 50501 of this title for engaging

in the coastwise trade; and

‘‘(4) the demise charter is for a period of at least 3 years

or a shorter period as may be prescribed by the Secretary.

‘‘(c) OWNERSHIP CERTIFICATION.—

‘‘(1) IN GENERAL.—A person meets the requirements of

this subsection if the person transmits to the Secretary each

year the certification required by paragraph (2) or (3) with

respect to a vessel.

‘‘(2) INVESTMENT CERTIFICATION.—To meet the certification

requirement of this paragraph, a person shall certify that it—

‘‘(A) is a leasing company, bank, or financial institution;

‘‘(B) owns, or holds the beneficial interest in, the vessel

solely as a passive investment;

‘‘(C) does not operate any vessel for hire and is not

an affiliate of any person that operates any vessel for

hire; and

‘‘(D) is independent from, and not an affiliate of, any

charterer of the vessel or any other person that has the

right, directly or indirectly, to control or direct the movement or use of the vessel.

‘‘(3) CERTAIN TANK VESSELS.—

‘‘(A) IN GENERAL.—To meet the certification requirement of this paragraph, a person shall certify that—

‘‘(i) the aggregate book value of the vessels owned

by the person and United States affiliates of the person

does not exceed 10 percent of the aggregate book value

of all assets owned by the person and its United States

affiliates;

‘‘(ii) not more than 10 percent of the aggregate

revenues of the person and its United States affiliates

is derived from the ownership, operation, or management of vessels;

‘‘(iii) at least 70 percent of the aggregate tonnage

of all cargo carried by all vessels owned by the person

and its United States affiliates and documented with

a coastwise endorsement is qualified proprietary cargo;

‘‘(iv) any cargo other than qualified proprietary

cargo carried by all vessels owned by the person and

its United States affiliates and documented with a

coastwise endorsement consists of oil, petroleum products, petrochemicals, or liquified natural gas;

‘‘(v) no vessel owned by the person or any of its

United States affiliates and documented with a coastwise endorsement carries molten sulphur; and

Certification.

120 STAT. 1504 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(vi) the person owned one or more vessels documented under this section as of August 9, 2004.

‘‘(B) APPLICATION ONLY TO CERTAIN VESSELS.—A person

may make a certification under this paragraph only with

respect to—

‘‘(i) a tank vessel having a tonnage of at least

6,000 gross tons, as measured under section 14502

of this title (or an alternative tonnage measured under

section 14302 of this title as prescribed by the Secretary under section 14104 of this title); or

‘‘(ii) a towing vessel associated with a non-selfpropelled tank vessel that meets the requirements of

clause (i), where both vessels function as a single selfpropelled vessel.

‘‘(d) FILING OF DEMISE CHARTER.—The demise charter and any

amendments to the charter shall be filed with the certification

required by subsection (b)(3) or within 10 days after filing an

amendment to the charter. The charter and amendments shall

be made available to the public.

‘‘(e) CONTINUATION OF ENDORSEMENT AFTER TERMINATION OF

CHARTER.—When a charter required by subsection (b)(3) is terminated for default by the charterer, the Secretary may continue

the coastwise endorsement for not more than 6 months on terms

and conditions the Secretary may prescribe.

‘‘(f) DEEMED OWNED BY CITIZENS.—A vessel satisfying the

requirements of this section is deemed to be owned only by citizens

of the United States under sections 12103 and 50501 of this title.

‘‘§ 12120. Liquified gas tankers

‘‘Notwithstanding any agreement with the United States

Government, the Secretary may issue a certificate of documentation

with a coastwise endorsement for a vessel to transport liquified

natural gas or liquified petroleum gas to Puerto Rico from other

ports in the United States, if the vessel—

‘‘(1) is a foreign built vessel that was built before October

19, 1996; or

‘‘(2) was documented under this chapter before that date,

even if the vessel is placed under a foreign registry and subsequently redocumented under this chapter for operation under

this section.

‘‘§ 12121. Small passenger vessels and uninspected passenger

vessels

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) ELIGIBLE VESSEL.—The term ‘eligible vessel’ means

a vessel that—

‘‘(A) was not built in the United States and is at

least 3 years old; or

‘‘(B) if rebuilt, was rebuilt outside the United States

at least 3 years before the certificate requested under subsection (b) would take effect.

‘‘(2) SMALL PASSENGER VESSEL; UNINSPECTED PASSENGER

VESSEL; PASSENGER FOR HIRE.—The terms ‘small passenger

vessel’, ‘uninspected passenger vessel’, and ‘passenger for hire’

have the meaning given those terms in section 2101 of this

title.

Public

information.

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1505

‘‘(b) ISSUANCE OF CERTIFICATE AND ENDORSEMENT.—Notwithstanding sections 12112, 12113, 55102, and 55103 of this title,

the Secretary may issue a certificate of documentation with an

appropriate endorsement for employment in the coastwise trade

as a small passenger vessel or an uninspected passenger vessel

in the case of an eligible vessel authorized to carry no more than

12 passengers for hire if the Secretary of Transportation, after

notice and an opportunity for public comment, determines that

the employment of the vessel in the coastwise trade will not

adversely affect—

‘‘(1) United States vessel builders; or

‘‘(2) the coastwise trade business of any person that employs

vessels built in the United States in that business.

‘‘(c) REVOCATION.— ‘‘(1) FOR FRAUD.—The Secretary shall revoke a certificate

or endorsement issued under subsection (b) if the Secretary

of Transportation, after notice and an opportunity for a hearing,

determines that the certificate or endorsement was obtained

by fraud.

‘‘(2) OTHER PROVISIONS NOT AFFECTED.—Paragraph (1) does

not affect—

‘‘(A) the criminal prohibition on fraud and false statements in section 1001 of title 18; or

‘‘(B) any other authority of the Secretary to revoke

a certificate or endorsement issued under subsection (b).

‘‘SUBCHAPTER III—MISCELLANEOUS

‘‘§ 12131. Command of documented vessels

‘‘(a) IN GENERAL.—Except as provided in subsection (b), a documented vessel may be placed under the commmand only of a citizen

of the United States.

‘‘(b) EXCEPTIONS.—Subsection (a) does not apply to—

‘‘(1) a vessel with only a recreational endorsement; or

‘‘(2) an unmanned barge operating outside of the territorial

waters of the United States.

‘‘§ 12132. Loss of coastwise trade privileges

‘‘(a) SOLD FOREIGN OR PLACED UNDER FOREIGN REGISTRY.—

A vessel of more than 200 gross tons (as measured under chapter

143 of this title), eligible to engage in the coastwise trade, and

later sold foreign in whole or in part or placed under foreign

registry may not thereafter engage in the coastwise trade.

‘‘(b) REBUILT OUTSIDE THE UNITED STATES.—A vessel eligible

to engage in the coastwise trade and later rebuilt outside the

United States may not thereafter engage in the coastwise trade.

‘‘§ 12133. Duty to carry certificate on vessel and allow examination

‘‘(a) DUTY TO CARRY.—The certificate of documentation of a

vessel shall be carried on the vessel unless the vessel is exempt

by regulation from carrying the certificate.

‘‘(b) AVAILABILITY.—The owner or individual in charge of a

vessel required to carry its certificate of documentation shall make

the certificate available for examination at the request of an officer

enforcing the revenue laws or as otherwise required by law or

regulation.

120 STAT. 1506 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) CRIMINAL PENALTY.—A person willfully violating subsection

(b) shall be fined under title 18, imprisoned for not more than

one year, or both.

‘‘§ 12134. Evidentiary uses of documentation

‘‘A certificate of documentation is—

‘‘(1) conclusive evidence of nationality for international purposes, but not in a proceeding conducted under the laws of

the United States;

‘‘(2) conclusive evidence of qualification to engage in a

specified trade; and

‘‘(3) not conclusive evidence of ownership in a proceeding

in which ownership is in issue.

‘‘§ 12135. Invalidation of certificates of documentation

‘‘A certificate of documentation or an endorsement on the certificate is invalid if the vessel for which it is issued—

‘‘(1) no longer meets the requirements of this chapter and

regulations prescribed under this chapter applicable to the

certificate or endorsement; or

‘‘(2) is placed under the command of an individual not

a citizen of the United States in violation of section 12131

of this title.

‘‘§ 12136. Surrender of certificates of documentation

‘‘(a) SURRENDER.—An invalid certificate of documentation, or

a certificate with an invalid endorsement, shall be surrendered

as provided by regulations prescribed by the Secretary.

‘‘(b) CONDITIONS FOR SURRENDER.—

‘‘(1) VESSELS OVER 1,000 TONS.—The Secretary may condition approval of the surrender of the certificate of documentation for a vessel over 1,000 gross tons.

‘‘(2) VESSELS COVERED BY MORTGAGE.—The Secretary may

approve the surrender of the certificate of documentation of

a vessel covered by a mortgage filed or recorded under section

31321 of this title only if the mortgagee consents.

‘‘(3) NOTICE OF LIEN.—The Secretary may not refuse to

approve the surrender of the certificate of documentation for

a vessel solely on the basis that a notice of a claim of a

lien on the vessel has been recorded under section 31343(a)

of this title.

‘‘(c) CONTINUED APPLICATION OF CERTAIN LAWS.—

‘‘(1) IN GENERAL.—Notwithstanding subsection (a), until

the certificate of documentation is surrendered with the

approval of the Secretary, a documented vessel is deemed to

continue to be documented under this chapter for purposes

of—

‘‘(A) chapter 313 of this title for an instrument filed

or recorded before the date of invalidation and an assignment after that date;

‘‘(B) sections 56101 and 56102(a)(2) and chapter 563

of this title; and

‘‘(C) any other law of the United States identified by

the Secretary by regulation as a law to which the Secretary

applies this subsection.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1507

‘‘(2) EXCEPTION.—This subsection does not apply when a

vessel is forfeited or sold by order of a district court of the

United States.

‘‘§ 12137. Recording of vessels built in the United States

‘‘The Secretary may provide for recording and certifying

information about vessels built in the United States that the Secretary considers to be in the public interest.

‘‘§ 12138. List of documented vessels

‘‘(a) IN GENERAL.—The Secretary shall publish periodically a

list of all documented vessels and information about those vessels

that the Secretary considers pertinent or useful. The list shall

contain a notation clearly indicating all vessels classed by the

American Bureau of Shipping.

‘‘(b) VESSELS FOR CABLE LAYING, MAINTENANCE, AND REPAIR.— ‘‘(1) IN GENERAL.—The Secretary of Transportation shall

develop, maintain, and periodically update an inventory of vessels that are documented under this chapter, are at least 200

feet in length, and have the capability to lay, maintain, or

repair a submarine cable, without regard to whether a particular vessel is classed as a cable ship or cable vessel.

‘‘(2) INFORMATION TO BE INCLUDED.—For each vessel listed

in the inventory, the Secretary of Transportation shall include

in the inventory—

‘‘(A) the name, length, beam, depth, and other distinguishing characteristics of the vessel;

‘‘(B) the abilities and limitations of the vessel with

respect to laying, maintaining, and repairing a submarine

cable; and

‘‘(C) the name and address of the person to whom

inquiries regarding the vessel may be made.

‘‘(3) PUBLICATION.—The Secretary of Transportation shall

publish in the Federal Register an updated inventory every

6 months.

‘‘§ 12139. Reports

‘‘(a) IN GENERAL.—To ensure compliance with this chapter and

laws governing the qualifications of vessels to engage in the coastwise trade and the fisheries, the Secretary may require owners,

masters, and charterers of documented vessels to submit reports

in any reasonable form and manner the Secretary may prescribe.

‘‘(b) VESSELS REBUILT OUTSIDE UNITED STATES.—

‘‘(1) IN GENERAL.—Under regulations prescribed by the Secretary, if a vessel exceeding the tonnage specified in paragraph

(2) and documented or last documented under the laws of

the United States is rebuilt outside the United States, the

owner or master shall submit a report of the rebuilding to

the Secretary.

‘‘(2) TONNAGE.—The tonnage referred to in paragraph (1)

is—

‘‘(A) 500 gross tons as measured under section 14502

of this title; or

‘‘(B) an alternate tonnage as measured under section

14302 of this title as prescribed by the Secretary under

section 14104 of this title.

Regulations.

Federal Register,

publication.

Publication.

120 STAT. 1508 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(3) TIMING OF SUBMISSION.—If the rebuilding is completed

in the United States, the report shall be submitted when the

rebuilding is completed. If the rebuilding is completed outside

the United States, the report shall be submitted when the

vessel first arrives at a port in the customs territory of the

United States.

‘‘SUBCHAPTER IV—PENALTIES

‘‘§ 12151. Penalties

‘‘(a) IN GENERAL.—A person that violates this chapter or a

regulation prescribed under this chapter is liable to the United

States Government for a civil penalty of not more than $10,000.

Each day of a continuing violation is a separate violation.

‘‘(b) SEIZURE AND FORFEITURE OF VESSELS.—A vessel and its

equipment are liable to seizure by and forfeiture to the Government

if—

‘‘(1) the owner of the vessel or the representative or agent

of the owner knowingly falsifies or conceals a material fact,

or knowingly makes a false statement or representation, about

the documentation of the vessel or in applying for documentation of the vessel;

‘‘(2) a certificate of documentation is knowingly and fraudulently used for the vessel;

‘‘(3) the vessel is operated after its endorsement has been

denied or revoked under section 12152 of this title;

‘‘(4) the vessel is employed in a trade without an appropriate endorsement;

‘‘(5) the vessel has only a recreational endorsement and

is operated other than for pleasure;

‘‘(6) the vessel is a documented vessel and is placed under

the command of a person not a citizen of the United States,

except as authorized by section 12131(b) of this title; or

‘‘(7) the vessel is rebuilt outside the United States and

a report of the rebuilding is not submitted as required by

section 12139(b) of this title.

‘‘(c) ENGAGING IN FISHING AFTER FALSIFYING ELIGIBILITY.—

In addition to other penalties under this section, the owner of

a documented vessel for which a fishery endorsement has been

issued is liable to the Government for a civil penalty of not more

than $100,000 for each day the vessel engages in fishing (as defined

in section 3 of the Magnuson-Stevens Fishery Conservation and

Management Act (16 U.S.C. 1802)) within the exclusive economic

zone, if the owner or the representative or agent of the owner

knowingly falsified or concealed a material fact, or knowingly made

a false statement or representation, about the eligibility of the

vessel under section 12113(c) or (d) of this title in applying for

or applying to renew the fishery endorsement.

‘‘§ 12152. Denial or revocation of endorsement for non-payment of civil penalty

‘‘If the owner of a vessel fails to pay a civil penalty imposed

by the Secretary, the Secretary may deny the issuance or renewal

of an endorsement, or revoke the endorsement, on a certificate

of documentation issued for the vessel under this chapter.’’.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1509

SEC. 6. SUBTITLE III OF TITLE 46.

(a) SUBTITLE ANALYSIS.—The analysis of subtitle III of title

46, United States Code, is amended to read as follows:

‘‘Chapter Sec.

‘‘301. General Liability Provisions ...............................................................30101

‘‘303. Death on the High Seas .........................................................................30301

‘‘305. Exoneration and Limitation of Liability ..........................................30501

‘‘307. Liability of Water Carriers ...................................................................30701

‘‘309. Suits in Admiralty Against the United States .................................30901

‘‘311. Suits Involving Public Vessels ............................................................31101

‘‘313. Commercial Instruments and Maritime Liens ................................31301’’.

(b) REPEALS.—Title 46, United States Code, is amended by

striking chapter 301 and the lines appearing immediately before

and immediately after chapter 313 indicating that certain chapters

are reserved.

(c) CHAPTERS 301–311.—Title 46, United States Code, is

amended by inserting after the analysis of subtitle III the following:

‘‘CHAPTER 301—GENERAL LIABILITY PROVISIONS

‘‘Sec.

‘‘30101. Extension of jurisdiction to cases of damage or injury on land.

‘‘30102. Liability to passengers.

‘‘30103. Liability of master, mate, engineer, and pilot.

‘‘30104. Personal injury to or death of seamen.

‘‘30105. Restriction on recovery by non-citizens and non-resident aliens for incidents in waters of other countries.

‘‘30106. Time limit on bringing maritime action for personal injury or death.

‘‘§ 30101. Extension of jurisdiction to cases of damage or

injury on land

‘‘(a) IN GENERAL.—The admiralty and maritime jurisdiction

of the United States extends to and includes cases of injury or

damage, to person or property, caused by a vessel on navigable

waters, even though the injury or damage is done or consummated

on land.

‘‘(b) PROCEDURE.—A civil action in a case under subsection

(a) may be brought in rem or in personam according to the principles

of law and the rules of practice applicable in cases where the

injury or damage has been done and consummated on navigable

waters.

‘‘(c) ACTIONS AGAINST UNITED STATES.—

‘‘(1) EXCLUSIVE REMEDY.—In a civil action against the

United States for injury or damage done or consummated on

land by a vessel on navigable waters, chapter 309 or 311

of this title, as appropriate, provides the exclusive remedy.

‘‘(2) ADMINISTRATIVE CLAIM.—A civil action described in

paragraph (1) may not be brought until the expiration of the

6-month period after the claim has been presented in writing

to the agency owning or operating the vessel causing the injury

or damage.

‘‘§ 30102. Liability to passengers

‘‘(a) LIABILITY.—The owner and master of a vessel, and the

vessel, are liable for personal injury to a passenger or damage

to a passenger’s baggage caused by—

‘‘(1) a neglect or failure to comply with part B or F of

subtitle II of this title; or

‘‘(2) a known defect in the steaming apparatus or hull

of the vessel.

120 STAT. 1510 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) NOT SUBJECT TO LIMITATION.—A liability imposed under

this section is not subject to limitation under chapter 305 of this

title.

‘‘§ 30103. Liability of master, mate, engineer, and pilot

‘‘A person may bring a civil action against a master, mate,

engineer, or pilot of a vessel, and recover damages, for personal

injury or loss caused by the master’s, mate’s, engineer’s, or pilot’s—

‘‘(1) negligence or willful misconduct; or

‘‘(2) neglect or refusal to obey the laws governing the

navigation of vessels.

‘‘§ 30104. Personal injury to or death of seamen

‘‘(a) CAUSE OF ACTION.—A seaman injured in the course of

employment or, if the seaman dies from the injury, the personal

representative of the seaman may elect to bring a civil action

at law, with the right of trial by jury, against the employer. Laws

of the United States regulating recovery for personal injury to,

or death of, a railway employee apply to an action under this

section.

‘‘(b) VENUE.—An action under this section shall be brought

in the judicial district in which the employer resides or the

employer’s principal office is located.

‘‘§ 30105. Restriction on recovery by non-citizens and nonresident aliens for incidents in waters of other

countries

‘‘(a) DEFINITION.—In this section, the term ‘continental shelf ’

has the meaning given that term in article I of the 1958 Convention

on the Continental Shelf.

‘‘(b) RESTRICTION.—Except as provided in subsection (c), a civil

action for maintenance and cure or for damages for personal injury

or death may not be brought under a maritime law of the United

States if—

‘‘(1) the individual suffering the injury or death was not

a citizen or permanent resident alien of the United States

at the time of the incident giving rise to the action;

‘‘(2) the incident occurred in the territorial waters or waters

overlaying the continental shelf of a country other than the

United States; and

‘‘(3) the individual suffering the injury or death was

employed at the time of the incident by a person engaged

in the exploration, development, or production of offshore mineral or energy resources, including drilling, mapping, surveying,

diving, pipelaying, maintaining, repairing, constructing, or

transporting supplies, equipment, or personnel, but not

including transporting those resources by a vessel constructed

or adapted primarily to carry oil in bulk in the cargo spaces.

‘‘(c) NONAPPLICATION.—Subsection (b) does not apply if the individual bringing the action establishes that a remedy is not available

under the laws of—

‘‘(1) the country asserting jurisdiction over the area in

which the incident occurred; or

‘‘(2) the country in which the individual suffering the injury

or death maintained citizenship or residency at the time of

the incident.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1511

‘‘§ 30106. Time limit on bringing maritime action for personal

injury or death

‘‘Except as otherwise provided by law, a civil action for damages

for personal injury or death arising out of a maritime tort must

be brought within 3 years after the cause of action arose.

‘‘CHAPTER 303—DEATH ON THE HIGH SEAS

‘‘Sec.

‘‘30301. Short title.

‘‘30302. Cause of action.

‘‘30303. Amount and apportionment of recovery.

‘‘30304. Contributory negligence.

‘‘30305. Death of plaintiff in pending action.

‘‘30306. Foreign cause of action.

‘‘30307. Commercial aviation accidents.

‘‘30308. Nonapplication.

‘‘§ 30301. Short title

‘‘This chapter may be cited as the ‘Death on the High Seas

Act’.

‘‘§ 30302. Cause of action

‘‘When the death of an individual is caused by wrongful act,

neglect, or default occurring on the high seas beyond 3 nautical

miles from the shore of the United States, the personal representative of the decedent may bring a civil action in admiralty against

the person or vessel responsible. The action shall be for the exclusive

benefit of the decedent’s spouse, parent, child, or dependent relative.

‘‘§ 30303. Amount and apportionment of recovery

‘‘The recovery in an action under this chapter shall be a fair

compensation for the pecuniary loss sustained by the individuals

for whose benefit the action is brought. The court shall apportion

the recovery among those individuals in proportion to the loss

each has sustained.

‘‘§ 30304. Contributory negligence

‘‘In an action under this chapter, contributory negligence of

the decedent is not a bar to recovery. The court shall consider

the degree of negligence of the decedent and reduce the recovery

accordingly.

‘‘§ 30305. Death of plaintiff in pending action

‘‘If a civil action in admiralty is pending in a court of the

United States to recover for personal injury caused by wrongful

act, neglect, or default described in section 30302 of this title,

and the individual dies during the action as a result of the wrongful

act, neglect, or default, the personal representative of the decedent

may be substituted as the plaintiff and the action may proceed

under this chapter for the recovery authorized by this chapter.

‘‘§ 30306. Foreign cause of action

‘‘When a cause of action exists under the law of a foreign

country for death by wrongful act, neglect, or default on the high

seas, a civil action in admiralty may be brought in a court of

the United States based on the foreign cause of action, without

abatement of the amount for which recovery is authorized.

Death on the

High Seas Act.

120 STAT. 1512 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 30307. Commercial aviation accidents

‘‘(a) DEFINITION.—In this section, the term ‘nonpecuniary damages’ means damages for loss of care, comfort, and companionship.

‘‘(b) BEYOND 12 NAUTICAL MILES.—In an action under this

chapter, if the death resulted from a commercial aviation accident

occurring on the high seas beyond 12 nautical miles from the

shore of the United States, additional compensation is recoverable

for nonpecuniary damages, but punitive damages are not recoverable.

‘‘(c) WITHIN 12 NAUTICAL MILES.—This chapter does not apply

if the death resulted from a commercial aviation accident occurring

on the high seas 12 nautical miles or less from the shore of the

United States.

‘‘§ 30308. Nonapplication

‘‘(a) STATE LAW.—This chapter does not affect the law of a

State regulating the right to recover for death.

‘‘(b) INTERNAL WATERS.—This chapter does not apply to the

Great Lakes or waters within the territorial limits of a State.

‘‘CHAPTER 305—EXONERATION AND LIMITATION OF

LIABILITY

‘‘Sec.

‘‘30501. Definition.

‘‘30502. Application.

‘‘30503. Declaration of nature and value of goods.

‘‘30504. Loss by fire.

‘‘30505. General limit of liability.

‘‘30506. Limit of liability for personal injury or death.

‘‘30507. Apportionment of losses.

‘‘30508. Provisions requiring notice of claim or limiting time for bringing action.

‘‘30509. Provisions limiting liability for personal injury or death.

‘‘30510. Vicarious liability for medical malpractice with regard to crew.

‘‘30511. Action by owner for limitation.

‘‘30512. Liability as master, officer, or seaman not affected.

‘‘§ 30501. Definition

‘‘In this chapter, the term ‘owner’ includes a charterer that

mans, supplies, and navigates a vessel at the charterer’s own

expense or by the charterer’s own procurement.

‘‘§ 30502. Application

‘‘Except as otherwise provided, this chapter (except section

30503) applies to seagoing vessels and vessels used on lakes or

rivers or in inland navigation, including canal boats, barges, and

lighters.

‘‘§ 30503. Declaration of nature and value of goods

‘‘(a) IN GENERAL.—If a shipper of an item named in subsection

(b), contained in a parcel, package, or trunk, loads the item as

freight or baggage on a vessel, without at the time of loading

giving to the person receiving the item a written notice of the

true character and value of the item and having that information

entered on the bill of lading, the owner and master of the vessel

are not liable as carriers. The owner and master are not liable

beyond the value entered on the bill of lading.

‘‘(b) ITEMS.—The items referred to in subsection (a) are precious

metals, gold or silver plated articles, precious stones, jewelry, trinkets, watches, clocks, glass, china, coins, bills, securities, printings,

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1513

engravings, pictures, stamps, maps, papers, silks, furs, lace, and

similar items of high value and small size.

‘‘§ 30504. Loss by fire

‘‘The owner of a vessel is not liable for loss or damage to

merchandise on the vessel caused by a fire on the vessel unless

the fire resulted from the design or neglect of the owner.

‘‘§ 30505. General limit of liability

‘‘(a) IN GENERAL.—Except as provided in section 30506 of this

title, the liability of the owner of a vessel for any claim, debt,

or liability described in subsection (b) shall not exceed the value

of the vessel and pending freight. If the vessel has more than

one owner, the proportionate share of the liability of any one owner

shall not exceed that owner’s proportionate interest in the vessel

and pending freight.

‘‘(b) CLAIMS SUBJECT TO LIMITATION.—Unless otherwise

excluded by law, claims, debts, and liabilities subject to limitation

under subsection (a) are those arising from any embezzlement,

loss, or destruction of any property, goods, or merchandise shipped

or put on board the vessel, any loss, damage, or injury by collision,

or any act, matter, or thing, loss, damage, or forfeiture, done,

occasioned, or incurred, without the privity or knowledge of the

owner.

‘‘(c) WAGES.—Subsection (a) does not apply to a claim for wages.

‘‘§ 30506. Limit of liability for personal injury or death

‘‘(a) APPLICATION.—This section applies only to seagoing vessels,

but does not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fishing vessels, fish tender vessels, canal boats,

scows, car floats, barges, lighters, or nondescript vessels.

‘‘(b) MINIMUM LIABILITY.—If the amount of the vessel owner’s

liability determined under section 30505 of this title is insufficient

to pay all losses in full, and the portion available to pay claims

for personal injury or death is less than $420 times the tonnage

of the vessel, that portion shall be increased to $420 times the

tonnage of the vessel. That portion may be used only to pay claims

for personal injury or death.

‘‘(c) CALCULATION OF TONNAGE.—Under subsection (b), the tonnage of a self-propelled vessel is the gross tonnage without deduction for engine room, and the tonnage of a sailing vessel is the

tonnage for documentation. However, space for the use of seamen

is excluded.

‘‘(d) CLAIMS ARISING ON DISTINCT OCCASIONS.—Separate limits

of liability apply to claims for personal injury or death arising

on distinct occasions.

‘‘(e) PRIVITY OR KNOWLEDGE.—In a claim for personal injury

or death, the privity or knowledge of the master or the owner’s

superintendent or managing agent, at or before the beginning of

each voyage, is imputed to the owner.

‘‘§ 30507. Apportionment of losses

‘‘If the amounts determined under sections 30505 and 30506

of this title are insufficient to pay all claims—

‘‘(1) all claimants shall be paid in proportion to their respective losses out of the amount determined under section 30505

of this title; and

120 STAT. 1514 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) personal injury and death claimants, if any, shall be

paid an additional amount in proportion to their respective

losses out of the additional amount determined under section

30506(b) of this title.

‘‘§ 30508. Provisions requiring notice of claim or limiting

time for bringing action

‘‘(a) APPLICATION.—This section applies only to seagoing vessels,

but does not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fishing vessels, fish tender vessels, canal boats,

scows, car floats, barges, lighters, or nondescript vessels.

‘‘(b) MINIMUM TIME LIMITS.—The owner, master, manager, or

agent of a vessel transporting passengers or property between ports

in the United States, or between a port in the United States

and a port in a foreign country, may not limit by regulation,

contract, or otherwise the period for—

‘‘(1) giving notice of, or filing a claim for, personal injury

or death to less than 6 months after the date of the injury

or death; or

‘‘(2) bringing a civil action for personal injury or death

to less than one year after the date of the injury or death.

‘‘(c) EFFECT OF FAILURE TO GIVE NOTICE.—When notice of

a claim for personal injury or death is required by a contract,

the failure to give the notice is not a bar to recovery if—

‘‘(1) the court finds that the owner, master, or agent of

the vessel had knowledge of the injury or death and the owner

has not been prejudiced by the failure;

‘‘(2) the court finds there was a satisfactory reason why

the notice could not have been given; or

‘‘(3) the owner of the vessel fails to object to the failure

to give the notice.

‘‘(d) TOLLING OF PERIOD TO GIVE NOTICE.—If a claimant is

a minor or mental incompetent, or if a claim is for wrongful death,

any period provided by a contract for giving notice of the claim

is tolled until the earlier of—

‘‘(1) the date a legal representative is appointed for the

minor, incompetent, or decedent’s estate; or

‘‘(2) 3 years after the injury or death.

‘‘§ 30509. Provisions limiting liability for personal injury or

death

‘‘(a) PROHIBITION.—

‘‘(1) IN GENERAL.—The owner, master, manager, or agent

of a vessel transporting passengers between ports in the United

States, or between a port in the United States and a port

in a foreign country, may not include in a regulation or contract

a provision limiting—

‘‘(A) the liability of the owner, master, or agent for

personal injury or death caused by the negligence or fault

of the owner or the owner’s employees or agents; or

‘‘(B) the right of a claimant for personal injury or

death to a trial by court of competent jurisdiction.

‘‘(2) VOIDNESS.—A provision described in paragraph (1) is

void.

‘‘(b) EMOTIONAL DISTRESS, MENTAL SUFFERING, AND PSYCHO- LOGICAL INJURY.—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1515

‘‘(1) IN GENERAL.—Subsection (a) does not prohibit a provision in a contract or in ticket conditions of carriage with a

passenger that relieves an owner, master, manager, agent,

operator, or crewmember of a vessel from liability for infliction

of emotional distress, mental suffering, or psychological injury

so long as the provision does not limit such liability when

the emotional distress, mental suffering, or psychological injury

is—

‘‘(A) the result of physical injury to the claimant caused

by the negligence or fault of a crewmember or the owner,

master, manager, agent, or operator;

‘‘(B) the result of the claimant having been at actual

risk of physical injury, and the risk was caused by the

negligence or fault of a crewmember or the owner, master,

manager, agent, or operator; or

‘‘(C) intentionally inflicted by a crewmember or the

owner, master, manager, agent, or operator.

‘‘(2) SEXUAL OFFENSES.—This subsection does not limit the

liability of a crewmember or the owner, master, manager, agent,

or operator of a vessel in a case involving sexual harassment,

sexual assault, or rape.

‘‘§ 30510. Vicarious liability for medical malpractice with

regard to crew

‘‘In a civil action by any person in which the owner or operator

of a vessel or employer of a crewmember is claimed to have vicarious

liability for medical malpractice with regard to a crewmember occurring at a shoreside facility, and to the extent the damages resulted

from the conduct of any shoreside doctor, hospital, medical facility,

or other health care provider, the owner, operator, or employer

is entitled to rely on any statutory limitations of liability applicable

to the doctor, hospital, medical facility, or other health care provider

in the State of the United States in which the shoreside medical

care was provided.

‘‘§ 30511. Action by owner for limitation

‘‘(a) IN GENERAL.—The owner of a vessel may bring a civil

action in a district court of the United States for limitation of

liability under this chapter. The action must be brought within

6 months after a claimant gives the owner written notice of a

claim.

‘‘(b) CREATION OF FUND.—When the action is brought, the owner

(at the owner’s option) shall—

‘‘(1) deposit with the court, for the benefit of claimants—

‘‘(A) an amount equal to the value of the owner’s

interest in the vessel and pending freight, or approved

security; and

‘‘(B) an amount, or approved security, that the court

may fix from time to time as necessary to carry out this

chapter; or

‘‘(2) transfer to a trustee appointed by the court, for the

benefit of claimants—

‘‘(A) the owner’s interest in the vessel and pending

freight; and

‘‘(B) an amount, or approved security, that the court

may fix from time to time as necessary to carry out this

chapter.

120 STAT. 1516 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) CESSATION OF OTHER ACTIONS.—When an action has been

brought under this section and the owner has complied with subsection (b), all claims and proceedings against the owner related

to the matter in question shall cease.

‘‘§ 30512. Liability as master, officer, or seaman not affected

‘‘This chapter does not affect the liability of an individual

as a master, officer, or seaman, even though the individual is

also an owner of the vessel.

‘‘CHAPTER 307—LIABILITY OF WATER CARRIERS

‘‘Sec.

‘‘30701. Definition.

‘‘30702. Application.

‘‘30703. Bills of lading.

‘‘30704. Loading, stowage, custody, care, and delivery.

‘‘30705. Seaworthiness.

‘‘30706. Defenses.

‘‘30707. Criminal penalty.

‘‘§ 30701. Definition

‘‘In this chapter, the term ‘carrier’ means the owner, manager,

charterer, agent, or master of a vessel.

‘‘§ 30702. Application

‘‘(a) IN GENERAL.—Except as otherwise provided, this chapter

applies to a carrier engaged in the carriage of goods to or from

any port in the United States.

‘‘(b) LIVE ANIMALS.—Sections 30703 and 30704 of this title

do not apply to the carriage of live animals.

‘‘§ 30703. Bills of lading

‘‘(a) ISSUANCE.—On demand of a shipper, the carrier shall issue

a bill of lading or shipping document.

‘‘(b) CONTENTS.—The bill of lading or shipping document shall

include a statement of—

‘‘(1) the marks necessary to identify the goods;

‘‘(2) the number of packages, or the quantity or weight,

and whether it is carrier’s or shipper’s weight; and

‘‘(3) the apparent condition of the goods.

‘‘(c) PRIMA FACIE EVIDENCE OF RECEIPT.—A bill of lading or

shipping document issued under this section is prima facie evidence

of receipt of the goods described.

‘‘§ 30704. Loading, stowage, custody, care, and delivery

‘‘A carrier may not insert in a bill of lading or shipping document a provision avoiding its liability for loss or damage arising

from negligence or fault in loading, stowage, custody, care, or proper

delivery. Any such provision is void.

‘‘§ 30705. Seaworthiness

‘‘(a) PROHIBITION.—A carrier may not insert in a bill of lading

or shipping document a provision lessening or avoiding its obligation

to exercise due diligence to—

‘‘(1) make the vessel seaworthy; and

‘‘(2) properly man, equip, and supply the vessel.

‘‘(b) VOIDNESS.—A provision described in subsection (a) is void.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1517

‘‘§ 30706. Defenses

‘‘(a) DUE DILIGENCE.—If a carrier has exercised due diligence

to make the vessel in all respects seaworthy and to properly man,

equip, and supply the vessel, the carrier and the vessel are not

liable for loss or damage arising from an error in the navigation

or management of the vessel.

‘‘(b) OTHER DEFENSES.—A carrier and the vessel are not liable

for loss or damage arising from—

‘‘(1) dangers of the sea or other navigable waters;

‘‘(2) acts of God;

‘‘(3) public enemies;

‘‘(4) seizure under legal process;

‘‘(5) inherent defect, quality, or vice of the goods;

‘‘(6) insufficiency of package;

‘‘(7) act or omission of the shipper or owner of the goods

or their agent; or

‘‘(8) saving or attempting to save life or property at sea,

including a deviation in rendering such a service.

‘‘§ 30707. Criminal penalty

‘‘(a) IN GENERAL.—A carrier that violates this chapter shall

be fined under title 18.

‘‘(b) LIEN.—The amount of the fine and costs for the violation

constitute a lien on the vessel engaged in the carriage. A civil

action in rem to enforce the lien may be brought in the district

court of the United States for any district in which the vessel

is found.

‘‘(c) DISPOSITION OF FINE.—Half of the fine shall go to the

person injured by the violation and half to the United States

Government.

‘‘CHAPTER 309—SUITS IN ADMIRALTY AGAINST THE

UNITED STATES

‘‘Sec.

‘‘30901. Short title.

‘‘30902. Definition.

‘‘30903. Waiver of immunity.

‘‘30904. Exclusive remedy.

‘‘30905. Period for bringing action.

‘‘30906. Venue.

‘‘30907. Procedure for hearing and determination.

‘‘30908. Exemption from arrest or seizure.

‘‘30909. Security.

‘‘30910. Exoneration and limitation.

‘‘30911. Costs and interest.

‘‘30912. Arbitration, compromise, or settlement.

‘‘30913. Payment of judgment or settlement.

‘‘30914. Release of privately owned vessel after arrest or attachment.

‘‘30915. Seizures and other proceedings in foreign jurisdictions.

‘‘30916. Recovery by the United States for salvage services.

‘‘30917. Disposition of amounts recovered by the United States.

‘‘30918. Reports.

‘‘§ 30901. Short title

‘‘This chapter may be cited as the ‘Suits in Admiralty Act’.

‘‘§ 30902. Definition

‘‘In this chapter, the term ‘federally-owned corporation’ means

a corporation in which the United States owns all the outstanding

capital stock.

Suits in

Admiralty Act.

120 STAT. 1518 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 30903. Waiver of immunity

‘‘(a) IN GENERAL.—In a case in which, if a vessel were privately

owned or operated, or if cargo were privately owned or possessed,

or if a private person or property were involved, a civil action

in admiralty could be maintained, a civil action in admiralty in

personam may be brought against the United States or a federallyowned corporation. In a civil action in admiralty brought by the

United States or a federally-owned corporation, an admiralty claim

in personam may be filed or a setoff claimed against the United

States or corporation.

‘‘(b) NON-JURY.—A claim against the United States or a federally-owned corporation under this section shall be tried without

a jury.

‘‘§ 30904. Exclusive remedy

‘‘If a remedy is provided by this chapter, it shall be exclusive

of any other action arising out of the same subject matter against

the officer, employee, or agent of the United States or the federallyowned corporation whose act or omission gave rise to the claim.

‘‘§ 30905. Period for bringing action

‘‘A civil action under this chapter must be brought within

2 years after the cause of action arose.

‘‘§ 30906. Venue

‘‘(a) IN GENERAL.—A civil action under this chapter shall be

brought in the district court of the United States for the district

in which—

‘‘(1) any plaintiff resides or has its principal place of business; or

‘‘(2) the vessel or cargo is found.

‘‘(b) TRANSFER.—On a motion by a party, the court may transfer

the action to any other district court of the United States.

‘‘§ 30907. Procedure for hearing and determination

‘‘(a) IN GENERAL.—A civil action under this chapter shall proceed and be heard and determined according to the principles

of law and the rules of practice applicable in like cases between

private parties.

‘‘(b) IN REM.—

‘‘(1) REQUIREMENTS.—The action may proceed according

to the principles of an action in rem if—

‘‘(A) the plaintiff elects in the complaint; and

‘‘(B) it appears that an action in rem could have been

maintained had the vessel or cargo been privately owned

and possessed.

‘‘(2) EFFECT ON RELIEF IN PERSONAM.—An election under

paragraph (1) does not prevent the plaintiff from seeking relief

in personam in the same action.

‘‘§ 30908. Exemption from arrest or seizure

‘‘The following are not subject to arrest or seizure by judicial

process in the United States:

‘‘(1) A vessel owned by, possessed by, or operated by or

for the United States or a federally-owned corporation.

‘‘(2) Cargo owned or possessed by the United States or

a federally-owned corporation.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1519

‘‘§ 30909. Security

‘‘Neither the United States nor a federally-owned corporation

may be required to give a bond or admiralty stipulation in a

civil action under this chapter.

‘‘§ 30910. Exoneration and limitation

‘‘The United States is entitled to the exemptions from and

limitations of liability provided by law to an owner, charterer,

operator, or agent of a vessel.

‘‘§ 30911. Costs and interest

‘‘(a) IN GENERAL.—A judgment against the United States or

a federally-owned corporation under this chapter may include costs

and interest at the rate of 4 percent per year until satisfied. Interest

shall run as ordered by the court, except that interest is not allowable for the period before the action is filed.

‘‘(b) CONTRACT PROVIDING FOR INTEREST.—Notwithstanding

subsection (a), if the claim is based on a contract providing for

interest, interest may be awarded at the rate and for the period

provided in the contract.

‘‘§ 30912. Arbitration, compromise, or settlement

‘‘The Secretary of a department of the United States Government, or the board of trustees of a federally-owned corporation,

may arbitrate, compromise, or settle a claim under this chapter.

‘‘§ 30913. Payment of judgment or settlement

‘‘(a) IN GENERAL.—The proper accounting officer of the United

States shall pay a final judgment, arbitration award, or settlement

under this chapter on presentation of an authenticated copy.

‘‘(b) SOURCE OF PAYMENT.—Payment shall be made from an

appropriation or fund available specifically for the purpose. If no

appropriation or fund is specifically available, there is hereby appropriated, out of money in the Treasury not otherwise appropriated,

an amount sufficient to pay the judgment, award, or settlement.

‘‘§ 30914. Release of privately owned vessel after arrest or

attachment

‘‘If a privately owned vessel not in the possession of the United

States or a federally-owned corporation is arrested or attached

in a civil action arising or alleged to have arisen from prior ownership, possession, or operation by the United States or corporation,

the vessel shall be released without bond or stipulation on a statement by the United States, through the Attorney General or other

authorized law officer, that the United States is interested in the

action, desires release of the vessel, and assumes liability for the

satisfaction of any judgment obtained by the plaintiff. After the

vessel is released, the action shall proceed against the United

States in accordance with this chapter.

‘‘§ 30915. Seizures and other proceedings in foreign jurisdictions

‘‘(a) IN GENERAL.—If a vessel or cargo described in section

30908 or 30914 of this title is arrested, attached, or otherwise

seized by judicial process in a foreign country, or if an action

is brought in a court of a foreign country against the master

of such a vessel for a claim arising from the ownership, possession,

120 STAT. 1520 PUBLIC LAW 109–304—OCT. 6, 2006

or operation of the vessel, or the ownership, possession, or carriage

of such cargo, the Secretary of State, on request of the Attorney

General or another officer authorized by the Attorney General,

may direct the United States consul residing at or nearest the

place at which the action was brought—

‘‘(1) to claim the vessel or cargo as immune from arrest,

attachment, or other seizure, and to execute an agreement,

stipulation, bond, or undertaking, for the United States or

federally-owned corporation, for the release of the vessel or

cargo and the prosecution of any appeal; or

‘‘(2) if an action has been brought against the master

of such a vessel, to enter the appearance of the United States

or corporation and to pledge the credit of the United States

or corporation to the payment of any judgment and costs in

the action.

‘‘(b) ARRANGING BOND OR STIPULATION.—The Attorney General

may—

‘‘(1) arrange with a bank, surety company, or other person,

whether in the United States or a foreign country, to execute

a bond or stipulation; and

‘‘(2) pledge the credit of the United States to secure the

bond or stipulation.

‘‘(c) PAYMENT OF JUDGMENT.—The appropriate accounting

officer of the United States or corporation may pay a judgment

in an action described in subsection (a) on presentation of a copy

of the judgment if certified by the clerk of the court and authenticated by—

‘‘(1) the certificate and seal of the United States consul

claiming the vessel or cargo, or by the consul’s successor; and

‘‘(2) the certificate of the Secretary as to the official capacity

of the consul.

‘‘(d) RIGHT TO CLAIM IMMUNITY NOT AFFECTED.—This section

does not affect the right of the United States to claim immunity

of a vessel or cargo from foreign jurisdiction.

‘‘§ 30916. Recovery by the United States for salvage services

‘‘(a) CIVIL ACTION.—The United States, and the crew of a merchant vessel owned or operated by the United States, or a federallyowned corporation, may bring a civil action to recover for salvage

services provided by the vessel and crew.

‘‘(b) DEPOSIT OF AMOUNTS RECOVERED.—Any amount recovered

under this section by the United States for its own benefit, and

not for the benefit of the crew, shall be deposited in the Treasury

to the credit of the department of the United States Government,

or the corporation, having control of the possession or operation

of the vessel.

‘‘§ 30917. Disposition of amounts recovered by the United

States

‘‘Amounts recovered in a civil action brought by the United

States on a claim arising from the ownership, possession, or operation of a merchant vessel, or the ownership, possession, or carriage

of cargo, shall be deposited in the Treasury to the credit of the

department of the United States Government, or the federallyowned corporation, having control of the vessel or cargo, for

reimbursement of the appropriation, insurance fund, or other fund

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1521

from which the compensation for which the judgment was recovered

was or will be paid.

‘‘§ 30918. Reports

‘‘The Secretary of each department of the United States Government, and the board of trustees of each federally-owned corporation,

shall report to Congress at each session thereof all arbitration

awards and settlements agreed to under this chapter since the

previous session, for which the time to appeal has expired or been

waived.

‘‘CHAPTER 311—SUITS INVOLVING PUBLIC VESSELS

‘‘Sec.

‘‘31101. Short title.

‘‘31102. Waiver of immunity.

‘‘31103. Applicable procedure.

‘‘31104. Venue.

‘‘31105. Security when counterclaim filed.

‘‘31106. Exoneration and limitation.

‘‘31107. Interest.

‘‘31108. Arbitration, compromise, or settlement.

‘‘31109. Payment of judgment or settlement.

‘‘31110. Subpoenas to officers or members of crew.

‘‘31111. Claims by nationals of foreign countries.

‘‘31112. Lien not recognized or created.

‘‘31113. Reports.

‘‘§ 31101. Short title

‘‘This chapter may be cited as the ‘Public Vessels Act’.

‘‘§ 31102. Waiver of immunity

‘‘(a) IN GENERAL.—A civil action in personam in admiralty

may be brought, or an impleader filed, against the United States

for—

‘‘(1) damages caused by a public vessel of the United States;

or

‘‘(2) compensation for towage and salvage services,

including contract salvage, rendered to a public vessel of the

United States.

‘‘(b) COUNTERCLAIM OR SETOFF.—If the United States brings

a civil action in admiralty for damages caused by a privately owned

vessel, the owner of the vessel, or the successor in interest, may

file a counterclaim in personam, or claim a setoff, against the

United States for damages arising out of the same subject matter.

‘‘§ 31103. Applicable procedure

‘‘A civil action under this chapter is subject to the provisions

of chapter 309 of this title except to the extent inconsistent with

this chapter.

‘‘§ 31104. Venue

‘‘(a) IN GENERAL.—A civil action under this chapter shall be

brought in the district court of the United States for the district

in which the vessel or cargo is found within the United States.

‘‘(b) VESSEL OR CARGO OUTSIDE TERRITORIAL WATERS.—If the

vessel or cargo is outside the territorial waters of the United

States—

‘‘(1) the action shall be brought in the district court of

the United States for any district in which any plaintiff resides

or has an office for the transaction of business; or

Public Vessels

Act.

120 STAT. 1522 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) if no plaintiff resides or has an office for the transaction

of business in the United States, the action may be brought

in the district court of the United States for any district.

‘‘§ 31105. Security when counterclaim filed

‘‘If a counterclaim is filed for a cause of action for which

the original action is filed under this chapter, the respondent to

the counterclaim shall give security in the usual amount and form

to respond to the counterclaim, unless the court for cause shown

orders otherwise. The proceedings in the original action shall be

stayed until the security is given.

‘‘§ 31106. Exoneration and limitation

‘‘The United States is entitled to the exemptions from and

limitations of liability provided by law to an owner, charterer,

operator, or agent of a vessel.

‘‘§ 31107. Interest

‘‘A judgment in a civil action under this chapter may not

include interest for the period before the judgment is issued unless

the claim is based on a contract providing for interest.

‘‘§ 31108. Arbitration, compromise, or settlement

‘‘The Attorney General may arbitrate, compromise, or settle

a claim under this chapter if a civil action based on the claim

has been commenced.

‘‘§ 31109. Payment of judgment or settlement

‘‘The proper accounting officer of the United States shall pay

a final judgment, arbitration award, or settlement under this

chapter on presentation of an authenticated copy. Payment shall

be made from any money in the Treasury appropriated for the

purpose.

‘‘§ 31110. Subpoenas to officers or members of crew

‘‘An officer or member of the crew of a public vessel may

not be subpoenaed in a civil action under this chapter without

the consent of—

‘‘(1) the Secretary of the department or the head of the

independent establishment having control of the vessel at the

time the cause of action arose; or

‘‘(2) the master or commanding officer of the vessel at

the time the subpoena is issued.

‘‘§ 31111. Claims by nationals of foreign countries

‘‘A national of a foreign country may not maintain a civil

action under this chapter unless it appears to the satisfaction

of the court in which the action is brought that the government

of that country, in similar circumstances, allows nationals of the

United States to sue in its courts.

‘‘§ 31112. Lien not recognized or created

‘‘This chapter shall not be construed as recognizing the existence of or as creating a lien against a public vessel of the United

States.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1523

‘‘§ 31113. Reports

‘‘The Attorney General shall report to Congress at each session

thereof all claims settled under this chapter.’’.

SEC. 7. SUBTITLE IV OF TITLE 46.

Title 46, United States Code, is amended by inserting after

subtitle III the following:

‘‘Subtitle IV—Regulation of Ocean Shipping

‘‘PART A—OCEAN SHIPPING

‘‘Chapter Sec.

‘‘401. General ..................................................................................................... 40101

‘‘403. Agreements .............................................................................................. 40301

‘‘405. Tariffs, Service Contracts, Refunds, and Waivers .......................... 40501

‘‘407. Controlled Carriers ............................................................................... 40701

‘‘409. Ocean Transportation Intermediaries .............................................. 40901

‘‘411. Prohibitions and Penalties .................................................................. 41101

‘‘413. Enforcement ............................................................................................ 41301

‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

‘‘421. Regulations Affecting Shipping in Foreign Trade ......................... 42101

‘‘423. Foreign Shipping Practices ................................................................. 42301

‘‘PART C—MISCELLANEOUS

‘‘441. Evidence of Financial Responsibility for Passenger Transportation.44101

‘‘PART A—OCEAN SHIPPING

‘‘CHAPTER 401—GENERAL

‘‘Sec.

‘‘40101. Purposes.

‘‘40102. Definitions.

‘‘40103. Administrative exemptions.

‘‘40104. Reports filed with the Commission.

‘‘§ 40101. Purposes

‘‘The purposes of this part are to—

‘‘(1) establish a nondiscriminatory regulatory process for

the common carriage of goods by water in the foreign commerce

of the United States with a minimum of government intervention and regulatory costs;

‘‘(2) provide an efficient and economic transportation

system in the ocean commerce of the United States that is,

insofar as possible, in harmony with, and responsive to, international shipping practices;

‘‘(3) encourage the development of an economically sound

and efficient liner fleet of vessels of the United States capable

of meeting national security needs; and

‘‘(4) promote the growth and development of United States

exports through competitive and efficient ocean transportation

and by placing a greater reliance on the marketplace.

‘‘§ 40102. Definitions

‘‘In this part:

‘‘(1) AGREEMENT.—The term ‘agreement’—

120 STAT. 1524 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(A) means a written or oral understanding, arrangement, or association, and any modification or cancellation

thereof; but

‘‘(B) does not include a maritime labor agreement.

‘‘(2) ANTITRUST LAWS.—The term ‘antitrust laws’ means—

‘‘(A) the Sherman Act (15 U.S.C. 1 et seq.);

‘‘(B) sections 73 and 74 of the Wilson Tariff Act (15

U.S.C. 8, 9);

‘‘(C) the Clayton Act (15 U.S.C. 12 et seq.);

‘‘(D) the Act of June 19, 1936 (15 U.S.C. 13, 13a,

13b, 21a);

‘‘(E) the Federal Trade Commission Act (15 U.S.C.

41 et seq.);

‘‘(F) the Antitrust Civil Process Act (15 U.S.C. 1311

et seq.); and

‘‘(G) Acts supplementary to those Acts.

‘‘(3) ASSESSMENT AGREEMENT.—The term ‘assessment

agreement’ means an agreement, whether part of a collective

bargaining agreement or negotiated separately, to the extent

the agreement provides for the funding of collectively bargained

fringe-benefit obligations on other than a uniform worker-hour

basis, regardless of the cargo handled or type of vessel or

equipment used.

‘‘(4) BULK CARGO.—The term ‘bulk cargo’ means cargo that

is loaded and carried in bulk without mark or count.

‘‘(5) CHEMICAL PARCEL-TANKER.—The term ‘chemical parceltanker’ means a vessel that has—

‘‘(A) a cargo-carrying capability consisting of individual

cargo tanks for bulk chemicals that—

‘‘(i) are a permanent part of the vessel; and

‘‘(ii) have segregation capability with piping systems to permit simultaneous carriage of several bulk

chemical cargoes with minimum risk of cross-contamination; and

‘‘(B) a valid certificate of fitness under the International Maritime Organization Code for the Construction

and Equipment of Ships Carrying Dangerous Chemicals

in Bulk.

‘‘(6) COMMON CARRIER.—The term ‘common carrier’—

‘‘(A) means a person that—

‘‘(i) holds itself out to the general public to provide

transportation by water of passengers or cargo between

the United States and a foreign country for compensation;

‘‘(ii) assumes responsibility for the transportation

from the port or point of receipt to the port or point

of destination; and

‘‘(iii) uses, for all or part of that transportation,

a vessel operating on the high seas or the Great Lakes

between a port in the United States and a port in

a foreign country; but

‘‘(B) does not include a carrier engaged in ocean

transportation by ferry boat, ocean tramp, or chemical

parcel-tanker, or by vessel when primarily engaged in the

carriage of perishable agricultural commodities—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1525

‘‘(i) if the carrier and the owner of those commodities are wholly-owned, directly or indirectly, by a person primarily engaged in the marketing and distribution of those commodities; and

‘‘(ii) only with respect to the carriage of those

commodities.

‘‘(7) CONFERENCE.—The term ‘conference’—

‘‘(A) means an association of ocean common carriers

permitted, pursuant to an approved or effective agreement,

to engage in concerted activity and to use a common tariff;

but

‘‘(B) does not include a joint service, consortium,

pooling, sailing, or transshipment agreement.

‘‘(8) CONTROLLED CARRIER.—The term ‘controlled carrier’

means an ocean common carrier that is, or whose operating

assets are, directly or indirectly, owned or controlled by a

government, with ownership or control by a government being

deemed to exist for a carrier if—

‘‘(A) a majority of the interest in the carrier is owned

or controlled in any manner by that government, an agency

of that government, or a public or private person controlled

by that government; or

‘‘(B) that government has the right to appoint or disapprove the appointment of a majority of the directors,

the chief operating officer, or the chief executive officer

of the carrier.

‘‘(9) DEFERRED REBATE.—The term ‘deferred rebate’ means

a return by a common carrier of any freight money to a shipper,

where the return is—

‘‘(A) consideration for the shipper giving all or any

portion of its shipments to that or any other common

carrier over a fixed period of time;

‘‘(B) deferred beyond the completion of the service for

which it was paid; and

‘‘(C) made only if the shipper has agreed to make

a further shipment with that or any other common carrier.

‘‘(10) FOREST PRODUCTS.—The term ‘forest products’

includes lumber in bundles, rough timber, ties, poles, piling,

laminated beams, bundled siding, bundled plywood, bundled

core stock or veneers, bundled particle or fiber boards, bundled

hardwood, wood pulp in rolls, wood pulp in unitized bales,

and paper and paper board in rolls or in pallet or skid-sized

sheets.

‘‘(11) INLAND DIVISION.—The term ‘inland division’ means

the amount paid by a common carrier to an inland carrier

for the inland portion of through transportation offered to the

public by the common carrier.

‘‘(12) INLAND PORTION.—The term ‘inland portion’ means

the charge to the public by a common carrier for the nonocean portion of through transportation.

‘‘(13) LOYALTY CONTRACT.—The term ‘loyalty contract’

means a contract with an ocean common carrier or agreement

providing for—

‘‘(A) a shipper to obtain lower rates by committing

all or a fixed portion of its cargo to that carrier or agreement; and

‘‘(B) a deferred rebate arrangement.

120 STAT. 1526 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(14) MARINE TERMINAL OPERATOR.—The term ‘marine terminal operator’ means a person engaged in the United States

in the business of providing wharfage, dock, warehouse, or

other terminal facilities in connection with a common carrier,

or in connection with a common carrier and a water carrier

subject to subchapter II of chapter 135 of title 49.

‘‘(15) MARITIME LABOR AGREEMENT.—The term ‘maritime

labor agreement’—

‘‘(A) means—

‘‘(i) a collective bargaining agreement between an

employer subject to this part, or a group of such

employers, and a labor organization representing

employees in the maritime or stevedoring industry;

‘‘(ii) an agreement preparatory to such a collective

bargaining agreement among members of a multiemployer bargaining group; or

‘‘(iii) an agreement specifically implementing provisions of such a collective bargaining agreement or providing for the formation, financing, or administration

of a multi-employer bargaining group; but

‘‘(B) does not include an assessment agreement.

‘‘(16) NON-VESSEL-OPERATING COMMON CARRIER.—The term

‘non-vessel-operating common carrier’ means a common carrier

that—

‘‘(A) does not operate the vessels by which the ocean

transportation is provided; and

‘‘(B) is a shipper in its relationship with an ocean

common carrier.

‘‘(17) OCEAN COMMON CARRIER.—The term ‘ocean common

carrier’ means a vessel-operating common carrier.

‘‘(18) OCEAN FREIGHT FORWARDER.—The term ‘ocean freight

forwarder’ means a person that—

‘‘(A) in the United States, dispatches shipments from

the United States via a common carrier and books or

otherwise arranges space for those shipments on behalf

of shippers; and

‘‘(B) processes the documentation or performs related

activities incident to those shipments.

‘‘(19) OCEAN TRANSPORTATION INTERMEDIARY.—The term

‘ocean transportation intermediary’ means an ocean freight forwarder or a non-vessel-operating common carrier.

‘‘(20) SERVICE CONTRACT.—The term ‘service contract’

means a written contract, other than a bill of lading or receipt,

between one or more shippers, on the one hand, and an individual ocean common carrier or an agreement between or

among ocean common carriers, on the other, in which—

‘‘(A) the shipper or shippers commit to providing a

certain volume or portion of cargo over a fixed time period;

and

‘‘(B) the ocean common carrier or the agreement commits to a certain rate or rate schedule and a defined service

level, such as assured space, transit time, port rotation,

or similar service features.

‘‘(21) SHIPMENT.—The term ‘shipment’ means all of the

cargo carried under the terms of a single bill of lading.

‘‘(22) SHIPPER.—The term ‘shipper’ means—

‘‘(A) a cargo owner;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1527

‘‘(B) the person for whose account the ocean transportation of cargo is provided;

‘‘(C) the person to whom delivery is to be made;

‘‘(D) a shippers’ association; or

‘‘(E) a non-vessel-operating common carrier that

accepts responsibility for payment of all charges applicable

under the tariff or service contract.

‘‘(23) SHIPPERS’ ASSOCIATION.—The term ‘shippers’ association’ means a group of shippers that consolidates or distributes

freight on a nonprofit basis for the members of the group

to obtain carload, truckload, or other volume rates or service

contracts.

‘‘(24) THROUGH RATE.—The term ‘through rate’ means the

single amount charged by a common carrier in connection with

through transportation.

‘‘(25) THROUGH TRANSPORTATION.—The term ‘through

transportation’ means continuous transportation between origin

and destination for which a through rate is assessed and which

is offered or performed by one or more carriers, at least one

of which is a common carrier, between a United States port

or point and a foreign port or point.

‘‘§ 40103. Administrative exemptions

‘‘(a) IN GENERAL.—The Federal Maritime Commission, on

application or its own motion, may by order or regulation exempt

for the future any class of agreements between persons subject

to this part or any specified activity of those persons from any

requirement of this part if the Commission finds that the exemption

will not result in substantial reduction in competition or be detrimental to commerce. The Commission may attach conditions to

an exemption and may, by order, revoke an exemption.

‘‘(b) OPPORTUNITY FOR HEARING.—An order or regulation of

exemption or revocation of an exemption may be issued only if

the Commission has provided an opportunity for a hearing to

interested persons and departments and agencies of the United

States Government.

‘‘§ 40104. Reports filed with the Commission

‘‘(a) IN GENERAL.—The Federal Maritime Commission may

require a common carrier or an officer, receiver, trustee, lessee,

agent, or employee of the carrier to file with the Commission

a periodical or special report, an account, record, rate, or charge,

or a memorandum of facts and transactions related to the business

of the carrier. The report, account, record, rate, charge, or memorandum shall be made under oath if the Commission requires,

and shall be filed in the form and within the time prescribed

by the Commission.

‘‘(b) CONFERENCE MINUTES.—Conference minutes required to

be filed with the Commission under this section may not be released

to third parties or published by the Commission.

‘‘CHAPTER 403—AGREEMENTS

‘‘Sec.

‘‘40301. Application.

‘‘40302. Filing requirements.

‘‘40303. Content requirements.

‘‘40304. Commission action.

120 STAT. 1528 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘40305. Assessment agreements.

‘‘40306. Nondisclosure of information.

‘‘40307. Exemption from antitrust laws.

‘‘§ 40301. Application

‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.—This part applies

to an agreement between or among ocean common carriers to—

‘‘(1) discuss, fix, or regulate transportation rates, including

through rates, cargo space accommodations, and other conditions of service;

‘‘(2) pool or apportion traffic, revenues, earnings, or losses;

‘‘(3) allot ports or regulate the number and character of

voyages between ports;

‘‘(4) regulate the volume or character of cargo or passenger

traffic to be carried;

‘‘(5) engage in an exclusive, preferential, or cooperative

working arrangement between themselves or with a marine

terminal operator;

‘‘(6) control, regulate, or prevent competition in international ocean transportation; or

‘‘(7) discuss and agree on any matter related to a service

contract.

‘‘(b) MARINE TERMINAL OPERATOR AGREEMENTS.—This part

applies to an agreement between or among marine terminal operators, or between or among one or more marine terminal operators

and one or more ocean common carriers, to—

‘‘(1) discuss, fix, or regulate rates or other conditions of

service; or

‘‘(2) engage in exclusive, preferential, or cooperative

working arrangements, to the extent the agreement involves

ocean transportation in the foreign commerce of the United

States.

‘‘(c) ACQUISITIONS.—This part does not apply to an acquisition

by any person, directly or indirectly, of any voting security or

assets of any other person.

‘‘(d) MARITIME LABOR AGREEMENTS.—This part does not apply

to a maritime labor agreement. However, this subsection does not

exempt from this part any rate, charge, regulation, or practice

of a common carrier that is required to be set forth in a tariff

or is an essential term of a service contract, whether or not the

rate, charge, regulation, or practice arises out of, or is otherwise

related to, a maritime labor agreement.

‘‘(e) ASSESSMENT AGREEMENTS.—This part (except sections

40305 and 40307(a)) does not apply to an assessment agreement.

‘‘§ 40302. Filing requirements

‘‘(a) IN GENERAL.—A true copy of every agreement referred

to in section 40301(a) or (b) of this title shall be filed with the

Federal Maritime Commission. If the agreement is oral, a complete

memorandum specifying in detail the substance of the agreement

shall be filed.

‘‘(b) EXCEPTIONS.—Subsection (a) does not apply to—

‘‘(1) an agreement related to transportation to be performed

within or between foreign countries; or

‘‘(2) an agreement among common carriers to establish,

operate, or maintain a marine terminal in the United States.

‘‘(c) REGULATIONS.—The Commission may by regulation prescribe the form and manner in which an agreement shall be filed

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1529

and any additional information and documents necessary to

evaluate the agreement.

‘‘§ 40303. Content requirements

‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.—

‘‘(1) RESTRICTIONS.—An ocean common carrier agreement

may not—

‘‘(A) prohibit or restrict a member of the agreement

from engaging in negotiations for a service contract with

a shipper;

‘‘(B) require a member of the agreement to disclose

a negotiation on a service contract, or the terms of a

service contract, other than those terms required to be

published under section 40502(d) of this title; or

‘‘(C) adopt mandatory rules or requirements affecting

the right of an agreement member to negotiate and enter

into a service contract.

‘‘(2) VOLUNTARY GUIDELINES.—An ocean common carrier

agreement may provide authority to adopt voluntary guidelines

relating to the terms and procedures of an agreement member’s

service contracts if the guidelines explicitly state the right

of members of the agreement not to follow the guidelines.

Any guidelines adopted shall be submitted confidentially to

the Federal Maritime Commission.

‘‘(b) CONFERENCE AGREEMENTS.—Each conference agreement

must—

‘‘(1) state its purpose;

‘‘(2) provide reasonable and equal terms for admission and

readmission to conference membership for any ocean common

carrier willing to serve the particular trade or route;

‘‘(3) permit any member to withdraw from conference membership on reasonable notice without penalty;

‘‘(4) at the request of any member, require an independent

neutral body to police fully the obligations of the conference

and its members;

‘‘(5) prohibit the conference from engaging in conduct

prohibited by section 41105(1) or (3) of this title;

‘‘(6) provide for a consultation process designed to promote—

‘‘(A) commercial resolution of disputes; and

‘‘(B) cooperation with shippers in preventing and eliminating malpractices;

‘‘(7) establish procedures for promptly and fairly considering requests and complaints of shippers; and

‘‘(8) provide that—

‘‘(A) any member of the conference may take independent action on a rate or service item on not more

than 5 days’ notice to the conference; and

‘‘(B) except for an exempt commodity not published

in the conference tariff, the conference will include the

new rate or service item in its tariff for use by that member,

effective no later than 5 days after receipt of the notice,

and by any other member that notifies the conference that

it elects to adopt the independent rate or service item

on or after its effective date, in lieu of the existing conference tariff provision for that rate or service item.

Deadline.

Confidential

information.

120 STAT. 1530 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) INTERCONFERENCE AGREEMENTS.—Each agreement between

carriers not members of the same conference must provide the

right of independent action for each carrier. Each agreement

between conferences must provide the right of independent action

for each conference.

‘‘(d) VESSEL SHARING AGREEMENTS.— ‘‘(1) IN GENERAL.—An ocean common carrier that is the

owner, operator, or bareboat, time, or slot charterer of a liner

vessel documented under section 12103 or 12111(c) of this

title may agree with an ocean common carrier described in

paragraph (2) to which it charters or subcharters the vessel

or space on the vessel that the charterer or subcharterer may

not use or make available space on the vessel for the carriage

of cargo reserved by law for vessels of the United States.

‘‘(2) CARRIER DESCRIBED.—An ocean common carrier

described in this paragraph is one that is not the owner, operator, or bareboat charterer for at least one year of liner vessels

of the United States that are eligible to be included in the

Maritime Security Fleet Program and are enrolled in an Emergency Preparedness Program under chapter 531 of this title.

‘‘§ 40304. Commission action

‘‘(a) NOTICE OF FILING.—Within 7 days after an agreement

is filed, the Federal Maritime Commission shall transmit a notice

of the filing to the Federal Register for publication.

‘‘(b) PRELIMINARY REVIEW AND REJECTION.—After preliminary

review, the Commission shall reject an agreement that it finds

does not meet the requirements of sections 40302 and 40303 of

this title. The Commission shall notify in writing the person filing

the agreement of the reason for rejection.

‘‘(c) REVIEW AND EFFECTIVE DATE.—Unless rejected under subsection (b), an agreement (other than an assessment agreement)

is effective—

‘‘(1) on the 45th day after filing, or on the 30th day after

notice of the filing is published in the Federal Register, whichever is later; or

‘‘(2) if additional information or documents are requested

under subsection (d)—

‘‘(A) on the 45th day after the Commission receives

all the additional information and documents; or

‘‘(B) if the request is not fully complied with, on the

45th day after the Commission receives the information

and documents submitted and a statement of the reasons

for noncompliance with the request.

‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.—Before the

expiration of the period specified in subsection (c)(1), the Commission may request from the person filing the agreement any additional information and documents the Commission considers necessary to make the determinations required by this section.

‘‘(e) MODIFICATION OF REVIEW PERIOD.—

‘‘(1) SHORTENING.—On request of the party filing an agreement, the Commission may shorten a period specified in subsection (c), but not to a date that is less than 14 days after

notice of the filing of the agreement is published in the Federal

Register.

‘‘(2) EXTENSION.—The period specified in subsection (c)(2)

may be extended only by the United States District Court

Notification.

Federal Register,

publication.

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1531

for the District of Columbia in a civil action brought by the

Commission under section 41307(c) of this title.

‘‘(f) FIXED TERMS.—The Commission may not limit the effectiveness of an agreement to a fixed term.

‘‘§ 40305. Assessment agreements

‘‘(a) FILING REQUIREMENT.—An assessment agreement shall be

filed with the Federal Maritime Commission and is effective on

filing.

‘‘(b) COMPLAINTS.—If a complaint is filed with the Commission

within 2 years after the date of an assessment agreement, the

Commission shall disapprove, cancel, or modify the agreement,

or an assessment or charge pursuant to the agreement, that the

Commission finds, after notice and opportunity for a hearing, to

be unjustly discriminatory or unfair as between carriers, shippers,

or ports. The Commission shall issue its final decision in the proceeding within one year after the date the complaint is filed.

‘‘(c) ADJUSTMENTS OF ASSESSMENTS AND CHARGES.—To the

extent that the Commission finds under subsection (b) that an

assessment or charge is unjustly discriminatory or unfair as

between carriers, shippers, or ports, the Commission shall adjust

the assessment or charge for the period between the filing of the

complaint and the final decision by awarding prospective credits

or debits to future assessments and charges. However, if the

complainant has ceased activities subject to the assessment or

charge, the Commission may award reparations.

‘‘§ 40306. Nondisclosure of information

‘‘Information and documents (other than an agreement) filed

with the Federal Maritime Commission under this chapter are

exempt from disclosure under section 552 of title 5 and may not

be made public except as may be relevant to an administrative

or judicial proceeding. This section does not prevent disclosure

to either House of Congress or to a duly authorized committee

or subcommittee of Congress.

‘‘§ 40307. Exemption from antitrust laws

‘‘(a) IN GENERAL.—The antitrust laws do not apply to—

‘‘(1) an agreement (including an assessment agreement)

that has been filed and is effective under this chapter;

‘‘(2) an agreement that is exempt under section 40103

of this title from any requirement of this part;

‘‘(3) an agreement or activity within the scope of this part,

whether permitted under or prohibited by this part, undertaken

or entered into with a reasonable basis to conclude that it

is—

‘‘(A) pursuant to an agreement on file with the Federal

Maritime Commission and in effect when the activity takes

place; or

‘‘(B) exempt under section 40103 of this title from

any filing or publication requirement of this part;

‘‘(4) an agreement or activity relating to transportation

services within or between foreign countries, whether or not

via the United States, unless the agreement or activity has

a direct, substantial, and reasonably foreseeable effect on the

commerce of the United States;

Deadline.

Notification.

Hearing.

Effective date.

120 STAT. 1532 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(5) an agreement or activity relating to the foreign inland

segment of through transportation that is part of transportation

provided in a United States import or export trade;

‘‘(6) an agreement or activity to provide wharfage, dock,

warehouse, or other terminal facilities outside the United

States; or

‘‘(7) an agreement, modification, or cancellation approved

before June 18, 1984, by the Commission under section 15

of the Shipping Act, 1916, or permitted under section 14b

of that Act, and any properly published tariff, rate, fare, or

charge, or classification, rule, or regulation explanatory thereof

implementing that agreement, modification, or cancellation.

‘‘(b) EXCEPTIONS.—This part does not extend antitrust immunity to—

‘‘(1) an agreement with or among air carriers, rail carriers,

motor carriers, or common carriers by water not subject to

this part relating to transportation within the United States;

‘‘(2) a discussion or agreement among common carriers

subject to this part relating to the inland divisions (as opposed

to the inland portions) of through rates within the United

States;

‘‘(3) an agreement among common carriers subject to this

part to establish, operate, or maintain a marine terminal in

the United States; or

‘‘(4) a loyalty contract.

‘‘(c) RETROACTIVE EFFECT OF DETERMINATIONS.—A determination by an agency or court that results in the denial or removal

of the immunity to the antitrust laws under subsection (a) does

not remove or alter the antitrust immunity for the period before

the determination.

‘‘(d) RELIEF UNDER CLAYTON ACT.—A person may not recover

damages under section 4 of the Clayton Act (15 U.S.C. 15), or

obtain injunctive relief under section 16 of that Act (15 U.S.C.

26), for conduct prohibited by this part.

‘‘CHAPTER 405—TARIFFS, SERVICE CONTRACTS,

REFUNDS, AND WAIVERS

‘‘Sec.

‘‘40501. General rate and tariff requirements.

‘‘40502. Service contracts.

‘‘40503. Refunds and waivers.

‘‘§ 40501. General rate and tariff requirements

‘‘(a) AUTOMATED TARIFF SYSTEM.—

‘‘(1) IN GENERAL.—Each common carrier and conference

shall keep open to public inspection in an automated tariff

system, tariffs showing all its rates, charges, classifications,

rules, and practices between all points or ports on its own

route and on any through transportation route that has been

established. However, a common carrier is not required to

state separately or otherwise reveal in tariffs the inland divisions of a through rate.

‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply with

respect to bulk cargo, forest products, recycled metal scrap,

new assembled motor vehicles, waste paper, or paper waste.

‘‘(b) CONTENTS OF TARIFFS.—A tariff under subsection (a)

shall—

Public

information.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1533

‘‘(1) state the places between which cargo will be carried;

‘‘(2) list each classification of cargo in use;

‘‘(3) state the level of compensation, if any, of any ocean

freight forwarder by a carrier or conference;

‘‘(4) state separately each terminal or other charge, privilege, or facility under the control of the carrier or conference

and any rules that in any way change, affect, or determine

any part or the total of the rates or charges;

‘‘(5) include sample copies of any bill of lading, contract

of affreightment, or other document evidencing the transportation agreement; and

‘‘(6) include copies of any loyalty contract, omitting the

shipper’s name.

‘‘(c) ELECTRONIC ACCESS.—A tariff under subsection (a) shall

be made available electronically to any person, without time,

quantity, or other limitation, through appropriate access from

remote locations. A reasonable fee may be charged for such access,

except that no fee may be charged for access by a Federal agency.

‘‘(d) TIME-VOLUME RATES.—A rate contained in a tariff under

subsection (a) may vary with the volume of cargo offered over

a specified period of time.

‘‘(e) EFFECTIVE DATES.—

‘‘(1) INCREASES.—A new or initial rate or change in an

existing rate that results in an increased cost to a shipper

may not become effective earlier than 30 days after publication.

However, for good cause, the Federal Maritime Commission

may allow the rate to become effective sooner.

‘‘(2) DECREASES.—A change in an existing rate that results

in a decreased cost to a shipper may become effective on

publication.

‘‘(f) MARINE TERMINAL OPERATOR SCHEDULES.—A marine terminal operator may make available to the public a schedule of

rates, regulations, and practices, including limitations of liability

for cargo loss or damage, pertaining to receiving, delivering, handling, or storing property at its marine terminal. Any such schedule

made available to the public is enforceable by an appropriate court

as an implied contract without proof of actual knowledge of its

provisions.

‘‘(g) REGULATIONS.—

‘‘(1) IN GENERAL.—The Commission shall by regulation prescribe the requirements for the accessibility and accuracy of

automated tariff systems established under this section. The

Commission, after periodic review, may prohibit the use of

any automated tariff system that fails to meet the requirements

established under this section.

‘‘(2) REMOTE TERMINALS.—The Commission may not require

a common carrier to provide a remote terminal for electronic

access under subsection (c).

‘‘(3) MARINE TERMINAL OPERATOR SCHEDULES.—The

Commission shall by regulation prescribe the form and manner

in which marine terminal operator schedules authorized by

this section shall be published.

‘‘§ 40502. Service contracts

‘‘(a) IN GENERAL.—An individual ocean common carrier or an

agreement between or among ocean common carriers may enter

Public

information.

Contracts.

120 STAT. 1534 PUBLIC LAW 109–304—OCT. 6, 2006

into a service contract with one or more shippers subject to the

requirements of this part.

‘‘(b) FILING REQUIREMENTS.—

‘‘(1) IN GENERAL.—Each service contract entered into under

this section by an individual ocean common carrier or an agreement shall be filed confidentially with the Federal Maritime

Commission.

‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply to contracts regarding bulk cargo, forest products, recycled metal

scrap, new assembled motor vehicles, waste paper, or paper

waste.

‘‘(c) ESSENTIAL TERMS.—Each service contract shall include—

‘‘(1) the origin and destination port ranges;

‘‘(2) the origin and destination geographic areas in the

case of through intermodal movements;

‘‘(3) the commodities involved;

‘‘(4) the minimum volume or portion;

‘‘(5) the line-haul rate;

‘‘(6) the duration;

‘‘(7) service commitments; and

‘‘(8) the liquidated damages for nonperformance, if any.

‘‘(d) PUBLICATION OF CERTAIN TERMS.—When a service contract

is filed confidentially with the Commission, a concise statement

of the essential terms specified in paragraphs (1), (3), (4), and

(6) of subsection (c) shall be published and made available to

the general public in tariff format.

‘‘(e) DISCLOSURE OF CERTAIN TERMS.—

‘‘(1) DEFINITIONS.—In this subsection, the terms ‘dock area’

and ‘within the port area’ have the same meaning and scope

as in the applicable collective bargaining agreement between

the requesting labor organization and the carrier.

‘‘(2) DISCLOSURE.—An ocean common carrier that is a party

to or is otherwise subject to a collective bargaining agreement

with a labor organization shall, in response to a written request

by the labor organization, state whether it is responsible for

the following work at a dock area or within a port area in

the United States with respect to cargo transportation under

a service contract:

‘‘(A) The movement of the shipper’s cargo on a dock

area or within the port area or to or from railroad cars

on a dock area or within the port area.

‘‘(B) The assignment of intraport carriage of the shipper’s cargo between areas on a dock or within the port

area.

‘‘(C) The assignment of the carriage of the shipper’s

cargo between a container yard on a dock area or within

the port area and a rail yard adjacent to the container

yard.

‘‘(D) The assignment of container freight station work

and container maintenance and repair work performed at

a dock area or within the port area.

‘‘(3) WITHIN REASONABLE TIME.—The common carrier shall

provide the information described in paragraph (2) to the

requesting labor organization within a reasonable period of

time.

‘‘(4) EXISTENCE OF COLLECTIVE BARGAINING AGREEMENT.— This subsection does not require the disclosure of information

Confidential

information.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1535

by an ocean common carrier unless there exists an applicable

and otherwise lawful collective bargaining agreement pertaining to that carrier. A disclosure by an ocean common carrier

may not be deemed an admission or an agreement that any

work is covered by a collective bargaining agreement. A dispute

about whether any work is covered by a collective bargaining

agreement and the responsibility of an ocean common carrier

under a collective bargaining agreement shall be resolved solely

in accordance with the dispute resolution procedures contained

in the collective bargaining agreement and the National Labor

Relations Act (29 U.S.C. 151 et seq.), and without reference

to this subsection.

‘‘(5) EFFECT UNDER OTHER LAWS.—This subsection does not

affect the lawfulness or unlawfulness under this part or any

other Federal or State law of any collective bargaining agreement or element thereof, including any element that constitutes

an essential term of a service contract.

‘‘(f) REMEDY FOR BREACH.—Unless the parties agree otherwise,

the exclusive remedy for a breach of a service contract is an action

in an appropriate court. The contract dispute resolution forum

may not be controlled by or in any way affiliated with a controlled

carrier or by the government that owns or controls the carrier.

‘‘§ 40503. Refunds and waivers

‘‘The Federal Maritime Commission, on application of a carrier

or shipper, may permit a common carrier or conference to refund

a portion of the freight charges collected from a shipper, or to

waive collection of a portion of the charges from a shipper, if—

‘‘(1) there is an error in a tariff, a failure to publish a

new tariff, or an error in quoting a tariff, and the refund

or waiver will not result in discrimination among shippers,

ports, or carriers;

‘‘(2) the common carrier or conference, before filing an

application for authority to refund or waive any charges for

an error in a tariff or a failure to publish a tariff, has published

a new tariff setting forth the rate on which the refund or

waiver would be based; and

‘‘(3) the application for the refund or waiver is filed with

the Commission within 180 days from the date of shipment.

‘‘CHAPTER 407—CONTROLLED CARRIERS

‘‘Sec.

‘‘40701. Rates.

‘‘40702. Rate standards.

‘‘40703. Effective date of rates.

‘‘40704. Commission review.

‘‘40705. Presidential review of Commission orders.

‘‘40706. Exceptions.

‘‘§ 40701. Rates

‘‘(a) IN GENERAL.—A controlled carrier may not—

‘‘(1) maintain a rate or charge in a tariff or service contract,

or charge or assess a rate, that is below a just and reasonable

level; or

‘‘(2) establish, maintain, or enforce in a tariff or service

contract a classification, rule, or regulation that results, or

is likely to result, in the carriage or handling of cargo at

a rate or charge that is below a just and reasonable level.

120 STAT. 1536 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) COMMISSION PROHIBITION.—The Federal Maritime Commission, at any time after notice and opportunity for a hearing, may

prohibit the publication or use of a rate, charge, classification,

rule, or regulation that a controlled carrier has failed to demonstrate

is just and reasonable.

‘‘(c) BURDEN OF PROOF.—In a proceeding under this section,

the burden of proof is on the controlled carrier to demonstrate

that its rate, charge, classification, rule, or regulation is just and

reasonable.

‘‘(d) VOIDNESS.—A rate, charge, classification, rule, or regulation

that has been suspended or prohibited by the Commission is void

and its use is unlawful.

‘‘§ 40702. Rate standards

‘‘(a) DEFINITION.—In this section, the term ‘constructive costs’

means the costs of another carrier, other than a controlled carrier,

operating similar vessels and equipment in the same or a similar

trade.

‘‘(b) STANDARDS.—In determining whether a rate, charge, classification, rule, or regulation of a controlled carrier is just and reasonable, the Federal Maritime Commission—

‘‘(1) shall take into account whether the rate or charge

that has been published or assessed, or that would result from

the pertinent classification, rule, or regulation, is below a level

that is fully compensatory to the controlled carrier based on

the carrier’s actual costs or constructive costs; and

‘‘(2) may take into account other appropriate factors,

including whether the rate, charge, classification, rule, or regulation is—

‘‘(A) the same as, or similar to, those published or

assessed by other carriers in the same trade;

‘‘(B) required to ensure movement of particular cargo

in the same trade; or

‘‘(C) required to maintain acceptable continuity, level,

or quality of common carrier service to or from affected

ports.

‘‘§ 40703. Effective date of rates

‘‘Notwithstanding section 40501(e) of this title and except for

service contracts, a rate, charge, classification, rule, or regulation

of a controlled carrier may not become effective, without special

permission of the Federal Maritime Commission, until the 30th

day after publication.

‘‘§ 40704. Commission review

‘‘(a) REQUEST FOR JUSTIFICATION.—On request of the Federal

Maritime Commission, a controlled carrier shall file with the

Commission, within 20 days of the request, a statement of justification that sufficiently details the carrier’s need and purpose for

an existing or proposed rate, charge, classification, rule, or regulation and upon which the Commission may reasonably base a determination of its lawfulness.

‘‘(b) DETERMINATION.—Within 120 days after receipt of information requested under subsection (a), the Commission shall determine

whether the rate, charge, classification, rule, or regulation may

be unjust and unreasonable.

Deadline.

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1537

‘‘(c) SHOW CAUSE ORDER.—Whenever the Commission is of the

opinion that a rate, charge, classification, rule, or regulation published or assessed by a controlled carrier may be unjust and

unreasonable, the Commission shall issue an order to the controlled

carrier to show cause why the rate, charge, classification, rule,

or regulation should not be prohibited.

‘‘(d) SUSPENSION PENDING DETERMINATION.— ‘‘(1) NOT YET EFFECTIVE.—Pending a determination of the

lawfulness of a rate, charge, classification, rule, or regulation

in a proceeding under subsection (c), the Commission may

suspend the rate, charge, classification, rule, or regulation at

any time before its effective date.

‘‘(2) ALREADY EFFECTIVE.—If a rate, charge, classification,

rule, or regulation has already become effective, the Commission, on issuance of an order to show cause, may suspend

the rate, charge, classification, rule, or regulation on at least

30 days’ notice to the controlled carrier.

‘‘(3) MAXIMUM SUSPENSION.—A period of suspension under

this subsection may not exceed 180 days.

‘‘(e) REPLACEMENT DURING SUSPENSION.—Whenever the

Commission has suspended a rate, charge, classification, rule, or

regulation under this section, the controlled carrier may publish

a new rate, charge, classification, rule, or regulation to take effect

immediately during the suspension in lieu of the suspended rate,

charge, classification, rule, or regulation. However, the Commission

may reject the new rate, charge, classification, rule, or regulation

if the Commission believes it is unjust and unreasonable.

‘‘§ 40705. Presidential review of Commission orders

‘‘(a) TRANSMISSION TO PRESIDENT.—The Federal Maritime

Commission shall transmit to the President, concurrently with

publication thereof, each order of suspension or final order of

prohibition issued under section 40704 of this title.

‘‘(b) PRESIDENTIAL REQUEST AND COMMISSION ACTION.—Within

10 days after receipt or the effective date of a Commission order

referred to in subsection (a), the President, in writing, may request

the Commission to stay the effect of the order if the President

finds that the stay is required for reasons of national defense

or foreign policy. The reasons shall be specified in the request.

The Commission shall immediately grant the request by issuing

an order in which the President’s request shall be described. During

a stay, the President shall, whenever practicable, attempt to resolve

the matter by negotiating with representatives of the applicable

foreign governments.

‘‘§ 40706. Exceptions

‘‘This chapter does not apply to—

‘‘(1) a controlled carrier of a foreign country whose vessels

are entitled by a treaty of the United States to receive national

or most-favored-nation treatment; or

‘‘(2) a trade served only by controlled carriers.

‘‘CHAPTER 409—OCEAN TRANSPORTATION

INTERMEDIARIES

‘‘Sec.

‘‘40901. License requirement.

‘‘40902. Financial responsibility.

Deadline.

120 STAT. 1538 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘40903. Suspension or revocation of license.

‘‘40904. Compensation by common carriers.

‘‘§ 40901. License requirement

‘‘(a) IN GENERAL.—A person in the United States may not

act as an ocean transportation intermediary unless the person

holds an ocean transportation intermediary’s license issued by the

Federal Maritime Commission. The Commission shall issue a

license to a person that the Commission determines to be qualified

by experience and character to act as an ocean transportation

intermediary.

‘‘(b) EXCEPTION.—A person whose primary business is the sale

of merchandise may forward shipments of the merchandise for

its own account without an ocean transportation intermediary’s

license.

‘‘§ 40902. Financial responsibility

‘‘(a) IN GENERAL.—A person may not act as an ocean transportation intermediary unless the person furnishes a bond, proof of

insurance, or other surety—

‘‘(1) in a form and amount determined by the Federal

Maritime Commission to insure financial responsibility; and

‘‘(2) issued by a surety company found acceptable by the

Secretary of the Treasury.

‘‘(b) SCOPE OF FINANCIAL RESPONSIBILITY.—A bond, insurance,

or other surety obtained under this section—

‘‘(1) shall be available to pay any penalty assessed under

section 41109 of this title or any order for reparation issued

under section 41305 of this title;

‘‘(2) may be available to pay any claim against an ocean

transportation intermediary arising from its transportationrelated activities—

‘‘(A) with the consent of the insured ocean transportation intermediary and subject to review by the surety

company; or

‘‘(B) when the claim is deemed valid by the surety

company after the ocean transportation intermediary has

failed to respond to adequate notice to address the validity

of the claim; and

‘‘(3) shall be available to pay any judgment for damages

against an ocean transportation intermediary arising from its

transportation-related activities, if the claimant has first

attempted to resolve the claim under paragraph (2) and the

claim has not been resolved within a reasonable period of

time.

‘‘(c) REGULATIONS ON COURT JUDGMENTS.—The Commission

shall prescribe regulations for the purpose of protecting the interests

of claimants, ocean transportation intermediaries, and surety

companies with respect to the process of pursuing claims against

ocean transportation intermediary bonds, insurance, or sureties

through court judgments. The regulations shall provide that a judgment for monetary damages may not be enforced except to the

extent that the damages claimed arise from the transportationrelated activities of the insured ocean transportation intermediary,

as defined by the Commission.

‘‘(d) RESIDENT AGENT.—An ocean transportation intermediary

not domiciled in the United States shall designate a resident agent

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1539

in the United States for receipt of service of judicial and administrative process, including subpoenas.

‘‘§ 40903. Suspension or revocation of license

‘‘(a) FAILURE TO MAINTAIN QUALIFICATIONS OR TO COMPLY.—

The Federal Maritime Commission, after notice and opportunity

for a hearing, shall suspend or revoke an ocean transportation

intermediary’s license if the Commission finds that the ocean

transportation intermediary—

‘‘(1) is not qualified to provide intermediary services; or

‘‘(2) willfully failed to comply with a provision of this part

or with an order or regulation of the Commission.

‘‘(b) FAILURE TO MAINTAIN BOND, PROOF OF INSURANCE, OR

OTHER SURETY.—The Commission may revoke an ocean transportation intermediary’s license for failure to maintain a bond, proof

of insurance, or other surety as required by section 40902(a) of

this title.

‘‘§ 40904. Compensation by common carriers

‘‘(a) CERTIFICATION OF LICENSE AND SERVICES.—A common carrier may compensate an ocean freight forwarder for a shipment

dispatched for others only when the ocean freight forwarder has

certified in writing that it holds an ocean transportation

intermediary’s license (if required under section 40901 of this title)

and has—

‘‘(1) engaged, booked, secured, reserved, or contracted

directly with the carrier or its agent for space aboard a vessel

or confirmed the availability of the space; and

‘‘(2) prepared and processed the ocean bill of lading, dock

receipt, or other similar document for the shipment.

‘‘(b) DUAL COMPENSATION.—A common carrier may not pay

compensation for services described in subsection (a) more than

once on the same shipment.

‘‘(c) BENEFICIAL INTEREST SHIPMENTS.—An ocean freight forwarder may not receive compensation from a common carrier for

a shipment in which the ocean freight forwarder has a direct

or indirect beneficial interest. A common carrier may not knowingly

pay compensation on that shipment.

‘‘(d) LIMITS ON AUTHORITY OF CONFERENCE OR GROUP.—A conference or group of two or more ocean common carriers in the

foreign commerce of the United States that is authorized to agree

on the level of compensation paid to an ocean freight forwarder

may not—

‘‘(1) deny a member of the conference or group the right,

upon notice of not more than 5 days, to take independent

action on any level of compensation paid to an ocean freight

forwarder; or

‘‘(2) agree to limit the payment of compensation to an

ocean freight forwarder to less than 1.25 percent of the aggregate of all rates and charges applicable under a tariff and

assessed against the cargo on which the services of the ocean

freight forwarder are provided.

‘‘CHAPTER 411—PROHIBITIONS AND PENALTIES

‘‘Sec.

‘‘41101. Joint ventures and consortiums.

‘‘41102. General prohibitions.

120 STAT. 1540 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘41103. Disclosure of information.

‘‘41104. Common carriers.

‘‘41105. Concerted action.

‘‘41106. Marine terminal operators.

‘‘41107. Monetary penalties.

‘‘41108. Additional penalties.

‘‘41109. Assessment of penalties.

‘‘§ 41101. Joint ventures and consortiums

‘‘In this chapter, a joint venture or consortium of two or more

common carriers operating as a single entity is deemed to be a

single common carrier.

‘‘§ 41102. General prohibitions

‘‘(a) OBTAINING TRANSPORTATION AT LESS THAN APPLICABLE

RATES.—A person may not knowingly and willfully, directly or

indirectly, by means of false billing, false classification, false

weighing, false report of weight, false measurement, or any other

unjust or unfair device or means, obtain or attempt to obtain

ocean transportation for property at less than the rates or charges

that would otherwise apply.

‘‘(b) OPERATING CONTRARY TO AGREEMENT.—A person may not

operate under an agreement required to be filed under section

40302 or 40305 of this title if—

‘‘(1) the agreement has not become effective under section

40304 of this title or has been rejected, disapproved, or canceled;

or

‘‘(2) the operation is not in accordance with the terms

of the agreement or any modifications to the agreement made

by the Federal Maritime Commission.

‘‘(c) PRACTICES IN HANDLING PROPERTY.—A common carrier,

marine terminal operator, or ocean transportation intermediary

may not fail to establish, observe, and enforce just and reasonable

regulations and practices relating to or connected with receiving,

handling, storing, or delivering property.

‘‘§ 41103. Disclosure of information

‘‘(a) PROHIBITION.—A common carrier, marine terminal operator, or ocean freight forwarder, either alone or in conjunction

with any other person, directly or indirectly, may not knowingly

disclose, offer, solicit, or receive any information concerning the

nature, kind, quantity, destination, consignee, or routing of any

property tendered or delivered to a common carrier, without the

consent of the shipper or consignee, if the information—

‘‘(1) may be used to the detriment or prejudice of the

shipper, the consignee, or any common carrier; or

‘‘(2) may improperly disclose its business transaction to

a competitor.

‘‘(b) EXCEPTIONS.—Subsection (a) does not prevent providing

the information—

‘‘(1) in response to legal process;

‘‘(2) to the Federal Maritime Commission or an agency

of the United States Government; or

‘‘(3) to an independent neutral body operating within the

scope of its authority to fulfill the policing obligations of the

parties to an agreement effective under this part.

‘‘(c) DISCLOSURE FOR DETERMINING BREACH OR COMPILING

STATISTICS.—An ocean common carrier that is a party to a conference agreement approved under this part, a receiver, trustee,

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1541

lessee, agent, or employee of the carrier, or any other person authorized by the carrier to receive information—

‘‘(1) may give information to the conference or any person

or agency designated by the conference, for the purpose of—

‘‘(A) determining whether a shipper or consignee has

breached an agreement with the conference or its member

lines;

‘‘(B) determining whether a member of the conference

has breached the conference agreement; or

‘‘(C) compiling statistics of cargo movement; and

‘‘(2) may not prevent the conference or its designee from

soliciting or receiving information for any of those purposes.

‘‘§ 41104. Common carriers

‘‘A common carrier, either alone or in conjunction with any

other person, directly or indirectly, may not—

‘‘(1) allow a person to obtain transportation for property

at less than the rates or charges established by the carrier

in its tariff or service contract by means of false billing, false

classification, false weighing, false measurement, or any other

unjust or unfair device or means;

‘‘(2) provide service in the liner trade that is—

‘‘(A) not in accordance with the rates, charges, classifications, rules, and practices contained in a tariff published

or a service contract entered into under chapter 405 of

this title, unless excepted or exempted under section 40103

or 40501(a)(2) of this title; or

‘‘(B) under a tariff or service contract that has been

suspended or prohibited by the Federal Maritime Commission under chapter 407 or 423 of this title;

‘‘(3) retaliate against a shipper by refusing, or threatening

to refuse, cargo space accommodations when available, or resort

to other unfair or unjustly discriminatory methods because

the shipper has patronized another carrier, or has filed a complaint, or for any other reason;

‘‘(4) for service pursuant to a tariff, engage in any unfair

or unjustly discriminatory practice in the matter of—

‘‘(A) rates or charges;

‘‘(B) cargo classifications;

‘‘(C) cargo space accommodations or other facilities,

with due regard being given to the proper loading of the

vessel and the available tonnage;

‘‘(D) loading and landing of freight; or

‘‘(E) adjustment and settlement of claims;

‘‘(5) for service pursuant to a service contract, engage in

any unfair or unjustly discriminatory practice in the matter

of rates or charges with respect to any port;

‘‘(6) use a vessel in a particular trade for the purpose

of excluding, preventing, or reducing competition by driving

another ocean common carrier out of that trade;

‘‘(7) offer or pay any deferred rebates;

‘‘(8) for service pursuant to a tariff, give any undue or

unreasonable preference or advantage or impose any undue

or unreasonable prejudice or disadvantage;

‘‘(9) for service pursuant to a service contract, give any

undue or unreasonable preference or advantage or impose any

120 STAT. 1542 PUBLIC LAW 109–304—OCT. 6, 2006

undue or unreasonable prejudice or disadvantage with respect

to any port;

‘‘(10) unreasonably refuse to deal or negotiate;

‘‘(11) knowingly and willfully accept cargo from or transport

cargo for the account of an ocean transportation intermediary

that does not have a tariff as required by section 40501 of

this title and a bond, insurance, or other surety as required

by section 40902 of this title; or

‘‘(12) knowingly and willfully enter into a service contract

with an ocean transportation intermediary that does not have

a tariff as required by section 40501 of this title and a bond,

insurance, or other surety as required by section 40902 of

this title, or with an affiliate of such an ocean transportation

intermediary.

‘‘§ 41105. Concerted action

‘‘A conference or group of two or more common carriers may

not—

‘‘(1) boycott or take any other concerted action resulting

in an unreasonable refusal to deal;

‘‘(2) engage in conduct that unreasonably restricts the use

of intermodal services or technological innovations;

‘‘(3) engage in any predatory practice designed to eliminate

the participation, or deny the entry, in a particular trade of

a common carrier not a member of the conference, a group

of common carriers, an ocean tramp, or a bulk carrier;

‘‘(4) negotiate with a non-ocean carrier or group of nonocean carriers (such as truck, rail, or air operators) on any

matter relating to rates or services provided to ocean common

carriers within the United States by those non-ocean carriers,

unless the negotiations and any resulting agreements are not

in violation of the antitrust laws and are consistent with the

purposes of this part, except that this paragraph does not

prohibit the setting and publishing of a joint through rate

by a conference, joint venture, or association of ocean common

carriers;

‘‘(5) deny in the export foreign commerce of the United

States compensation to an ocean freight forwarder or limit

that compensation to less than a reasonable amount;

‘‘(6) allocate shippers among specific carriers that are parties to the agreement or prohibit a carrier that is a party

to the agreement from soliciting cargo from a particular shipper,

except as—

‘‘(A) authorized by section 40303(d) of this title;

‘‘(B) required by the law of the United States or the

importing or exporting country; or

‘‘(C) agreed to by a shipper in a service contract;

‘‘(7) for service pursuant to a service contract, engage in

any unjustly discriminatory practice in the matter of rates

or charges with respect to any locality, port, or person due

to the person’s status as a shippers’ association or ocean

transportation intermediary; or

‘‘(8) for service pursuant to a service contract, give any

undue or unreasonable preference or advantage or impose any

undue or unreasonable prejudice or disadvantage with respect

to any locality, port, or person due to the person’s status as

a shippers’ association or ocean transportation intermediary.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1543

‘‘§ 41106. Marine terminal operators

‘‘A marine terminal operator may not—

‘‘(1) agree with another marine terminal operator or with

a common carrier to boycott, or unreasonably discriminate in

the provision of terminal services to, a common carrier or

ocean tramp;

‘‘(2) give any undue or unreasonable preference or advantage or impose any undue or unreasonable prejudice or disadvantage with respect to any person; or

‘‘(3) unreasonably refuse to deal or negotiate.

‘‘§ 41107. Monetary penalties

‘‘(a) IN GENERAL.—A person that violates this part or a regulation or order of the Federal Maritime Commission issued under

this part is liable to the United States Government for a civil

penalty. Unless otherwise provided in this part, the amount of

the penalty may not exceed $5,000 for each violation or, if the

violation was willfully and knowingly committed, $25,000 for each

violation. Each day of a continuing violation is a separate violation.

‘‘(b) LIEN ON CARRIER’S VESSELS.—The amount of a civil penalty

imposed on a common carrier under this section constitutes a lien

on the vessels operated by the carrier. Any such vessel is subject

to an action in rem to enforce the lien in the district court of

the United States for the district in which it is found.

‘‘§ 41108. Additional penalties

‘‘(a) SUSPENSION OF TARIFFS.—For a violation of section

41104(1), (2), or (7) of this title, the Federal Maritime Commission

may suspend any or all tariffs of the common carrier, or that

common carrier’s right to use any or all tariffs of conferences

of which it is a member, for a period not to exceed 12 months.

‘‘(b) OPERATING UNDER SUSPENDED TARIFF.—A common carrier

that accepts or handles cargo for carriage under a tariff that has

been suspended, or after its right to use that tariff has been suspended, is liable to the United States Government for a civil penalty

of not more than $50,000 for each shipment.

‘‘(c) FAILURE TO PROVIDE INFORMATION.—

‘‘(1) PENALTIES.—If the Commission finds, after notice and

opportunity for a hearing, that a common carrier has failed

to supply information ordered to be produced or compelled

by subpoena under section 41303 of this title, the Commission

may—

‘‘(A) suspend any or all tariffs of the carrier or the

carrier’s right to use any or all tariffs of conferences of

which it is a member; and

‘‘(B) request the Secretary of Homeland Security to

refuse or revoke any clearance required for a vessel operated by the carrier, and when so requested, the Secretary

shall refuse or revoke the clearance.

‘‘(2) DEFENSE BASED ON FOREIGN LAW.—If, in defense of

its failure to comply with a subpoena or discovery order, a

common carrier alleges that information or documents located

in a foreign country cannot be produced because of the laws

of that country, the Commission shall immediately notify the

Secretary of State of the failure to comply and of the allegation

relating to foreign laws. On receiving the notification, the Secretary of State shall promptly consult with the government

Foreign relations.

Notification.

120 STAT. 1544 PUBLIC LAW 109–304—OCT. 6, 2006

of the nation within which the information or documents are

alleged to be located for the purpose of assisting the Commission in obtaining the information or documents.

‘‘(d) IMPAIRING ACCESS TO FOREIGN TRADE.—If the Commission

finds, after notice and opportunity for a hearing, that the action

of a common carrier, acting alone or in concert with another person,

or a foreign government has unduly impaired access of a vessel

documented under the laws of the United States to ocean trade

between foreign ports, the Commission shall take action that it

finds appropriate, including imposing any of the penalties authorized by this section. The Commission also may take any of the

actions authorized by sections 42304 and 42305 of this title.

‘‘(e) SUBMISSION OF ORDER TO PRESIDENT.—Before an order

under this section becomes effective, it shall be submitted immediately to the President. The President, within 10 days after

receiving it, may disapprove it if the President finds that disapproval is required for reasons of national defense or foreign

policy.

‘‘§ 41109. Assessment of penalties

‘‘(a) GENERAL AUTHORITY.—Until a matter is referred to the

Attorney General, the Federal Maritime Commission may, after

notice and opportunity for a hearing, assess a civil penalty provided

for in this part. The Commission may compromise, modify, or remit,

with or without conditions, a civil penalty.

‘‘(b) FACTORS IN DETERMINING AMOUNT.—In determining the

amount of a civil penalty, the Commission shall take into account

the nature, circumstances, extent, and gravity of the violation committed and, with respect to the violator, the degree of culpability,

history of prior offenses, ability to pay, and other matters justice

may require.

‘‘(c) EXCEPTION.—A civil penalty may not be imposed for conspiracy to violate section 41102(a) or 41104(1) or (2) of this title

or to defraud the Commission by concealing such a violation.

‘‘(d) PROHIBITED BASIS OF PENALTY.—The Commission or a

court may not order a person to pay the difference between the

amount billed and agreed upon in writing with a common carrier

or its agent and the amount set forth in a tariff or service contract

by that common carrier for the transportation service provided.

‘‘(e) TIME LIMIT.—A proceeding to assess a civil penalty under

this section must be commenced within 5 years after the date

of the violation.

‘‘(f) REVIEW OF CIVIL PENALTY.—A person against whom a

civil penalty is assessed under this section may obtain review

under chapter 158 of title 28.

‘‘(g) CIVIL ACTIONS TO COLLECT.—If a person does not pay

an assessment of a civil penalty after it has become final or after

the appropriate court has entered final judgment in favor of the

Commission, the Attorney General at the request of the Commission

may seek to collect the amount assessed in an appropriate district

court of the United States. The court shall enforce the order of

the Commission unless it finds that the order was not regularly

made and duly issued.

‘‘CHAPTER 413—ENFORCEMENT

‘‘Sec.

‘‘41301. Complaints.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1545

‘‘41302. Investigations.

‘‘41303. Discovery and subpoenas.

‘‘41304. Hearings and orders.

‘‘41305. Award of reparations.

‘‘41306. Injunctive relief sought by complainants.

‘‘41307. Injunctive relief sought by the Commission.

‘‘41308. Enforcement of subpoenas and orders.

‘‘41309. Enforcement of reparation orders.

‘‘§ 41301. Complaints

‘‘(a) IN GENERAL.—A person may file with the Federal Maritime

Commission a sworn complaint alleging a violation of this part,

except section 41307(b)(1). If the complaint is filed within 3 years

after the claim accrues, the complainant may seek reparations

for an injury to the complainant caused by the violation.

‘‘(b) NOTICE AND RESPONSE.—The Commission shall provide

a copy of the complaint to the person named in the complaint.

Within a reasonable time specified by the Commission, the person

shall satisfy the complaint or answer it in writing.

‘‘(c) IF COMPLAINT NOT SATISFIED.—If the complaint is not

satisfied, the Commission shall investigate the complaint in an

appropriate manner and make an appropriate order.

‘‘§ 41302. Investigations

‘‘(a) IN GENERAL.—The Federal Maritime Commission, on complaint or its own motion, may investigate any conduct or agreement

that the Commission believes may be in violation of this part.

The Commission may by order disapprove, cancel, or modify any

agreement that operates in violation of this part.

‘‘(b) EFFECTIVENESS OF AGREEMENT DURING INVESTIGATION.—

Unless an injunction is issued under section 41306 or 41307 of

this title, an agreement under investigation by the Commission

remains in effect until the Commission issues its order.

‘‘(c) DATE FOR DECISION.—Within 10 days after the initiation

of a proceeding under this section or section 41301 of this title,

the Commission shall set a date by which it will issue its final

decision. The Commission by order may extend the date for good

cause.

‘‘(d) SANCTIONS FOR DELAY.—If, within the period for final

decision under subsection (c), the Commission determines that it

is unable to issue a final decision because of undue delay caused

by a party to the proceeding, the Commission may impose sanctions,

including issuing a decision adverse to the delaying party.

‘‘(e) REPORT.—The Commission shall make a written report

of every investigation under this part in which a hearing was

held, stating its conclusions, decisions, findings of fact, and order.

The Commission shall provide a copy of the report to all parties

and publish the report for public information. A published report

is competent evidence in a court of the United States.

‘‘§ 41303. Discovery and subpoenas

‘‘(a) IN GENERAL.—In an investigation or adjudicatory proceeding under this part—

‘‘(1) the Federal Maritime Commission may subpoena witnesses and evidence; and

‘‘(2) a party may use depositions, written interrogatories,

and discovery procedures under regulations prescribed by the

Commission that, to the extent practicable, shall conform to

the Federal Rules of Civil Procedure (28 App. U.S.C.).

Public

information.

120 STAT. 1546 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) WITNESS FEES.—Unless otherwise prohibited by law, a

witness is entitled to the same fees and mileage as in the courts

of the United States.

‘‘§ 41304. Hearings and orders

‘‘(a) OPPORTUNITY FOR HEARING.—The Federal Maritime

Commission shall provide an opportunity for a hearing before

issuing an order relating to a violation of this part or a regulation

prescribed under this part.

‘‘(b) MODIFICATION OF ORDER.—The Commission may reverse,

suspend, or modify any of its orders.

‘‘(c) REHEARING.—On application of a party to a proceeding,

the Commission may grant a rehearing of the same or any matter

determined in the proceeding. Except by order of the Commission,

a rehearing does not operate as a stay of an order.

‘‘(d) PERIOD OF EFFECTIVENESS.—An order of the Commission

remains in effect for the period specified in the order or until

suspended, modified, or set aside by the Commission or a court

of competent jurisdiction.

‘‘§ 41305. Award of reparations

‘‘(a) DEFINITION.—In this section, the term ‘actual injury’

includes the loss of interest at commercial rates compounded from

the date of injury.

‘‘(b) BASIC AMOUNT.—If the complaint was filed within the

period specified in section 41301(a) of this title, the Federal Maritime Commission shall direct the payment of reparations to the

complainant for actual injury caused by a violation of this part,

plus reasonable attorney fees.

‘‘(c) ADDITIONAL AMOUNTS.—On a showing that the injury was

caused by an activity prohibited by section 41102(b), 41104(3) or

(6), or 41105(1) or (3) of this title, the Commission may order

the payment of additional amounts, but the total recovery of a

complainant may not exceed twice the amount of the actual injury.

‘‘(d) DIFFERENCE BETWEEN RATES.—If the injury was caused

by an activity prohibited by section 41104(4)(A) or (B) of this title,

the amount of the injury shall be the difference between the rate

paid by the injured shipper and the most favorable rate paid by

another shipper.

‘‘§ 41306. Injunctive relief sought by complainants

‘‘(a) IN GENERAL.—After filing a complaint with the Federal

Maritime Commission under section 41301 of this title, the

complainant may bring a civil action in a district court of the

United States to enjoin conduct in violation of this part.

‘‘(b) VENUE.—The action must be brought in the judicial district

in which—

‘‘(1) the Commission has brought a civil action against

the defendant under section 41307(a) of this title; or

‘‘(2) the defendant resides or transacts business, if the

Commission has not brought such an action.

‘‘(c) REMEDIES BY COURT.—After notice to the defendant, and

a showing that the standards for granting injunctive relief by courts

of equity are met, the court may grant a temporary restraining

order or preliminary injunction for a period not to exceed 10 days

after the Commission has issued an order disposing of the complaint.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1547

‘‘(d) ATTORNEY FEES.—A defendant prevailing in a civil action

under this section shall be allowed reasonable attorney fees to

be assessed and collected as part of the costs of the action.

‘‘§ 41307. Injunctive relief sought by the Commission

‘‘(a) GENERAL VIOLATIONS.—In connection with an investigation

under section 41301 or 41302 of this title, the Federal Maritime

Commission may bring a civil action to enjoin conduct in violation

of this part. The action must be brought in the district court

of the United States for any judicial district in which the defendant

resides or transacts business. After notice to the defendant, and

a showing that the standards for granting injunctive relief by courts

of equity are met, the court may grant a temporary restraining

order or preliminary injunction for a period not to exceed 10 days

after the Commission has issued an order disposing of the issues

under investigation.

‘‘(b) REDUCTION IN COMPETITION.—

‘‘(1) ACTION BY COMMISSION.—If, at any time after the

filing or effective date of an agreement under chapter 403

of this title, the Commission determines that the agreement

is likely, by a reduction in competition, to produce an unreasonable reduction in transportation service or an unreasonable

increase in transportation cost, the Commission, after notice

to the person filing the agreement, may bring a civil action

in the United States District Court for the District of Columbia

to enjoin the operation of the agreement. The Commission’s

sole remedy with respect to an agreement likely to have such

an effect is an action under this subsection.

‘‘(2) REMEDIES BY COURT.—In an action under this subsection, the court may issue—

‘‘(A) a temporary restraining order or a preliminary

injunction; and

‘‘(B) a permanent injunction after a showing that the

agreement is likely to have the effect described in paragraph (1).

‘‘(3) BURDEN OF PROOF AND THIRD PARTIES.—In an action

under this subsection, the burden of proof is on the Commission.

The court may not allow a third party to intervene.

‘‘(c) FAILURE TO PROVIDE INFORMATION.—If a person filing an

agreement, or an officer, director, partner, agent, or employee of

the person, fails substantially to comply with a request for the

submission of additional information or documents within the period

provided in section 40304(c) of this title, the Commission may

bring a civil action in the United States District Court for the

District of Columbia. At the request of the Commission, the Court—

‘‘(1) may order compliance;

‘‘(2) shall extend the period specified in section 40304(c)(2)

of this title until there has been substantial compliance; and

‘‘(3) may grant other equitable relief that the court decides

is appropriate.

‘‘(d) REPRESENTATION.—The Commission may represent itself

in a proceeding under this section in—

‘‘(1) a district court of the United States, on notice to

the Attorney General; and

‘‘(2) a court of appeals of the United States, with the

approval of the Attorney General.

120 STAT. 1548 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 41308. Enforcement of subpoenas and orders

‘‘(a) CIVIL ACTION.—If a person does not comply with a subpoena

or order of the Federal Maritime Commission, the Attorney General,

at the request of the Commission, or an injured party, may seek

enforcement in a district court of the United States having jurisdiction over the parties. If, after hearing, the court determines that

the subpoena or order was regularly made and duly issued, the

court shall enforce the subpoena or order.

‘‘(b) TIME LIMIT ON BRINGING ACTIONS.—An action under this

section to enforce an order of the Commission must be brought

within 3 years after the date the order was violated.

‘‘§ 41309. Enforcement of reparation orders

‘‘(a) CIVIL ACTION.—If a person does not comply with an order

of the Federal Maritime Commission for the payment of reparation,

the person to whom the award was made may seek enforcement

of the order in a district court of the United States having jurisdiction over the parties.

‘‘(b) PARTIES AND SERVICE OF PROCESS.—All parties in whose

favor the Commission has made an award of reparation by a single

order may be joined as plaintiffs, and all other parties in the

order may be joined as defendants, in a single action in a judicial

district in which any one plaintiff could maintain an action against

any one defendant. Service of process against a defendant not

found in that district may be made in a district in which any

office of that defendant is located or in which any port of call

on a regular route operated by that defendant is located. Judgment

may be entered for any plaintiff against the defendant liable to

that plaintiff.

‘‘(c) NATURE OF REVIEW.—In an action under this section, the

findings and order of the Commission are prima facie evidence

of the facts stated in the findings and order.

‘‘(d) COSTS AND ATTORNEY FEES.—The plaintiff is not liable

for costs of the action or for costs of any subsequent stage of

the proceedings unless they accrue on the plaintiff’s appeal. A

prevailing plaintiff shall be allowed reasonable attorney fees to

be assessed and collected as part of the costs of the action.

‘‘(e) TIME LIMIT ON BRINGING ACTIONS.—An action under this

section to enforce an order of the Commission must be brought

within 3 years after the date the order was violated.

‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

‘‘CHAPTER 421—REGULATIONS AFFECTING SHIPPING IN

FOREIGN TRADE

‘‘Sec.

‘‘42101. Regulations of the Commission.

‘‘42102. Regulations of other agencies.

‘‘42103. No preference to Government-owned vessels.

‘‘42104. Information, witnesses, and evidence.

‘‘42105. Disclosure to public.

‘‘42106. Other actions to remedy unfavorable conditions.

‘‘42107. Refusal of clearance and entry.

‘‘42108. Penalty for operating under suspended tariff or service contract.

‘‘42109. Consultation with other agencies.

‘‘§ 42101. Regulations of the Commission

‘‘(a) UNFAVORABLE CONDITIONS.—To further the objectives and

policy set forth in section 50101 of this title, the Federal Maritime

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1549

Commission shall prescribe regulations affecting shipping in foreign

trade, not in conflict with law, to adjust or meet general or special

conditions unfavorable to shipping in foreign trade, whether in

a particular trade or on a 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 laws

or regulations of a foreign country or competitive methods, pricing

practices, or other practices employed by owners, operators, agents,

or masters of vessels of a foreign country.

‘‘(b) INITIATION OF REGULATION.—A regulation under subsection

(a) may be initiated by the Commission on its own motion or

on the petition of any person, including another component of

the United States Government.

‘‘§ 42102. Regulations of other agencies

‘‘(a) REQUEST TO AGENCY.—To further the objectives and policy

set forth in section 50101 of this title, the Federal Maritime

Commission shall request the head of a department, agency, or

instrumentality of the United States Government to suspend,

modify, or annul any existing regulations, or to make new regulations, affecting shipping in the foreign trade, except regulations

relating to the Public Health Service, the Consular Service, or

the inspection of vessels.

‘‘(b) PRIOR REVIEW AND APPROVAL.—A department, agency, or

instrumentality of the Government may not prescribe a regulation

affecting shipping in the foreign trade (except a regulation affecting

the Public Health Service, the Consular Service, or the inspection

of vessels) until the regulation has been submitted to the Commission for its approval and final action has been taken by the Commission or the President.

‘‘(c) SUBMISSION TO PRESIDENT.—If the head of a department,

agency, or instrumentality of the Government refuses to comply

with a request under subsection (a) or objects to a decision of

the Commission under subsection (b), the Commission or the head

of the department, agency, or instrumentality may submit the facts

to the President. The President may establish, suspend, modify,

or annul the regulation.

‘‘§ 42103. No preference to Government-owned vessels

‘‘A regulation may not give a vessel owned by the United

States Government a preference over a vessel owned by citizens

of the United States and documented under the laws of the United

States.

‘‘§ 42104. Information, witnesses, and evidence

‘‘(a) ORDER TO SUPPLY INFORMATION.—In carrying out section

42101 of this title, the Federal Maritime Commission may order

any person (including a 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 the Commission considers necessary or appropriate.

The Commission may require the response to any such order to

120 STAT. 1550 PUBLIC LAW 109–304—OCT. 6, 2006

be made under oath. The response shall be provided in the form

and within the time specified by the Commission.

‘‘(b) SUBPOENAS AND DISCOVERY.—In carrying out section 42101

of this title, the Commission may—

‘‘(1) subpoena witnesses and evidence; and

‘‘(2) authorize a party to use depositions, written interrogatories, and discovery procedures that, to the extent practicable,

conform to the Federal Rules of Civil Procedure (28 App.

U.S.C.).

‘‘(c) WITNESS FEES.—Unless otherwise prohibited by law, and

subject to funds being appropriated, a witness in a proceeding

under section 42101 of this title is entitled to the same fees and

mileage as in the courts of the United States.

‘‘(d) PENALTIES.—For failure to supply information ordered to

be produced or compelled by subpoena under this section, the

Commission may—

‘‘(1) after notice and opportunity for a hearing, suspend

tariffs and service contracts of a common carrier or the common

carrier’s right to use tariffs of conferences and service contracts

of agreements of which it is a member; or

‘‘(2) assess a civil penalty of not more than $5,000 for

each day that the information is not provided.

‘‘(e) ENFORCEMENT.—If a person does not comply with an order

or subpoena of the Commission under this section, the Commission

may seek enforcement in a district court of the United States

having jurisdiction over the parties. If, after hearing, the court

determines that the order or subpoena was regularly made and

duly issued, the court shall enforce the order or subpoena.

‘‘§ 42105. Disclosure to public

‘‘Notwithstanding any other provision of law, the Federal Maritime Commission may refuse to disclose to the public a response

or other information submitted to it under this chapter.

‘‘§ 42106. Other actions to remedy unfavorable conditions

‘‘If the Federal Maritime Commission finds that conditions

unfavorable to shipping in foreign trade as described in section

42101 of this title exist, the Commission may—

‘‘(1) limit voyages 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 any agreement filed with the Commission, including any agreement authorizing preferential treatment at terminals, preferential terminal leases, space chartering, or pooling of cargo 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.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1551

‘‘§ 42107. Refusal of clearance and entry

‘‘At the request of the Federal Maritime Commission—

‘‘(1) the Secretary of Homeland Security shall—

‘‘(A) refuse the clearance required by section 60105

of this title to a vessel of a country that is named in

a regulation prescribed by the Commission under section

42101 of this title; and

‘‘(B) collect any fees imposed by the Commission under

section 42106(4) of this title; and

‘‘(2) the Secretary of the department in which the Coast

Guard is operating shall—

‘‘(A) deny entry, for purposes of oceanborne trade, of

a vessel of a country that is named in a regulation prescribed by the Commission under section 42101 of this

title, to a port or place in the United States or the navigable

waters of the United States; or

‘‘(B) detain the 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.

‘‘§ 42108. Penalty for operating 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

section 42104(d)(1) or 42106(2) of this title, or after its right to

use another tariff or service contract has been suspended under

those provisions, is liable to the United States Government for

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.

‘‘§ 42109. Consultation with other agencies

‘‘The Federal Maritime Commission may consult with, seek

the cooperation of, or make recommendations to other appropriate

agencies of the United States Government prior to taking any

action under this chapter.

‘‘CHAPTER 423—FOREIGN SHIPPING PRACTICES

‘‘Sec.

‘‘42301. Definitions.

‘‘42302. Investigations.

‘‘42303. Information requests.

‘‘42304. Action against foreign carriers.

‘‘42305. Refusal of clearance and entry.

‘‘42306. Submission of determinations to President.

‘‘42307. Review of regulations and orders.

‘‘§ 42301. Definitions

‘‘(a) DEFINED IN PART A.—In this chapter, the terms ‘common

carrier’, ‘marine terminal operator’, ‘ocean common carrier’, ‘ocean

transportation intermediary’, ‘shipper’, and ‘shippers’ association’

have the meaning given those terms in section 40102 of this title.

‘‘(b) OTHER DEFINITIONS.—In this chapter:

‘‘(1) FOREIGN CARRIER.—The term ‘foreign carrier’ means

an ocean common carrier a majority of whose vessels are documented under the laws of a foreign country.

‘‘(2) MARITIME SERVICES.—The term ‘maritime services’

means port-to-port transportation of cargo by vessels operated

by an ocean common carrier.

120 STAT. 1552 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(3) MARITIME-RELATED SERVICES.—The term ‘maritimerelated services’ means intermodal operations, terminal operations, cargo solicitation, agency services, ocean transportation

intermediary services and operations, and all other activities

and services integral to total transportation systems of ocean

common carriers and their foreign domiciled affiliates for themselves and others.

‘‘(4) UNITED STATES CARRIER.—The term ‘United States carrier’ means an ocean common carrier operating vessels documented under the laws of the United States.

‘‘(5) UNITED STATES OCEANBORNE TRADE.—The term ‘United

States oceanborne trade’ means the carriage of cargo between

the United States and a foreign country, whether directly or

indirectly, by an ocean common carrier.

‘‘§ 42302. Investigations

‘‘(a) IN GENERAL.—The Federal Maritime Commission shall

investigate whether any laws, rules, regulations, policies, or practices of a foreign government, or any practices of a foreign carrier

or other person providing maritime or maritime-related services

in a foreign country, result in the existence of conditions that—

‘‘(1) adversely affect the operations of United States carriers

in United States oceanborne trade; and

‘‘(2) do not exist for foreign carriers of that country in

the United States under the laws of the United States or

as a result of acts of United States carriers or other persons

providing maritime or maritime-related services in the United

States.

‘‘(b) INITIATION OF INVESTIGATION.—An investigation under subsection (a) may be initiated by the Commission on its own motion

or on the petition of any person, including another component

of the United States Government.

‘‘(c) TIME FOR DECISION.—The Commission shall complete an

investigation under this section and render a decision within 120

days after it is initiated. However, the Commission may extend

this 120-day period for an additional 90 days if the Commission

is unable to obtain sufficient information to determine whether

a condition specified in subsection (a) exists. A notice providing

an extension shall state clearly the reasons for the extension.

‘‘§ 42303. Information requests

‘‘(a) IN GENERAL.—To further the purposes of section 42302(a)

of this title, the Federal Maritime Commission may order any

person (including a common carrier, 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 any periodic or special report, answers

to questions, documentary material, or other information the

Commission considers necessary or appropriate. The Commission

may require the response to any such order to be made under

oath. The response shall be provided in the form and within the

time specified by the Commission.

‘‘(b) SUBPOENAS.—In an investigation under section 42302 of

this title, the Commission may subpoena witnesses and evidence.

‘‘(c) NONDISCLOSURE.—Notwithstanding any other provision of

law, the Commission may determine that any information submitted

Notification.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1553

to it in response to a request under this section, or otherwise,

shall not be disclosed to the public.

‘‘§ 42304. Action against foreign carriers

‘‘(a) IN GENERAL.—Subject to section 42306 of this title, whenever the Federal Maritime Commission, after notice and opportunity

for comment or hearing, determines that the conditions specified

in section 42302(a) of this title exist, the Commission shall take

such action to offset those conditions as it considers necessary

and appropriate against any foreign carrier that is a contributing

cause, or whose government is a contributing cause, to those conditions. The action may include—

‘‘(1) limitations on voyages to and from United States ports

or on the amount or type of cargo carried;

‘‘(2) suspension, in whole or in part, of any or all tariffs

and service contracts, including an ocean common carrier’s

right to use any or all tariffs and service contracts of conferences in United States trades of which it is a member for

any period the Commission specifies;

‘‘(3) suspension, in whole or in part, of an ocean common

carrier’s right to operate under any agreement filed with the

Commission, including any agreement authorizing preferential

treatment at terminals, preferential terminal leases, space chartering, or pooling of cargo or revenue with other ocean common

carriers; and

‘‘(4) a fee not to exceed $1,000,000 per voyage.

‘‘(b) CONSULTATION.—The Commission may consult with, seek

the cooperation of, or make recommendations to other appropriate

agencies of the United States Government prior to taking any

action under subsection (a).

‘‘§ 42305. Refusal of clearance and entry

‘‘Subject to section 42306 of this title, whenever the Federal

Maritime Commission determines that the conditions specified in

section 42302(a) of this title exist, then at the request of the

Commission—

‘‘(1) the Secretary of Homeland Security shall refuse the

clearance required by section 60105 of this title to a vessel

of a foreign carrier that is identified by the Commission under

section 42304 of this title; and

‘‘(2) the Secretary of the department in which the Coast

Guard is operating shall—

‘‘(A) deny entry, for purposes of oceanborne trade, of

a vessel of a foreign carrier that is identified by the

Commission under section 42304 of this title, to a port

or place in the United States or the navigable waters

of the United States; or

‘‘(B) detain the 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.

‘‘§ 42306. Submission of determinations to President

‘‘Before a determination under section 42304 of this title

becomes effective or a request is made under section 42305 of

this title, the determination shall be submitted immediately to

the President. The President, within 10 days after receiving it,

may disapprove it in writing, setting forth the reasons for the

120 STAT. 1554 PUBLIC LAW 109–304—OCT. 6, 2006

disapproval, if the President finds that disapproval is required

for reasons of national defense or foreign policy.

‘‘§ 42307. Review of regulations and orders

‘‘A regulation or final order of the Federal Maritime Commission under this chapter is reviewable exclusively in the same forum

and in the same manner as provided in section 2342(3)(B) of title

28.

‘‘PART C—MISCELLANEOUS

‘‘CHAPTER 441—EVIDENCE OF FINANCIAL

RESPONSIBILITY FOR PASSENGER TRANSPORTATION

‘‘Sec.

‘‘44101. Application.

‘‘44102. Financial responsibility to indemnify passengers for nonperformance of

transportation. ‘‘44103. Financial responsibility to pay liability for death or injury.

‘‘44104. Civil penalty.

‘‘44105. Refusal of clearance.

‘‘44106. Conduct of proceedings.

‘‘§ 44101. Application

‘‘This chapter applies to a vessel that—

‘‘(1) has berth or stateroom accommodations for at least

50 passengers; and

‘‘(2) boards passengers at a port in the United States.

‘‘§ 44102. Financial responsibility to indemnify passengers

for nonperformance of transportation

‘‘(a) FILING REQUIREMENT.—A person in the United States may

not arrange, offer, advertise, or provide transportation on a vessel

to which this chapter applies unless the person has filed with

the Federal Maritime Commission evidence of financial responsibility to indemnify passengers for nonperformance of the transportation.

‘‘(b) SATISFACTORY EVIDENCE.—To satisfy subsection (a), a person must file—

‘‘(1) information the Commission considers necessary; or

‘‘(2) a copy of a bond or other security, in such form as

the Commission by regulation may require.

‘‘(c) AUTHORIZED ISSUER OF BOND.—If a bond is filed, it must

be issued by a bonding company authorized to do business in

the United States.

‘‘§ 44103. Financial responsibility to pay liability for death

or injury

‘‘(a) GENERAL REQUIREMENT.—The owner or charterer of a

vessel to which this chapter applies shall establish, under regulations prescribed by the Federal Maritime Commission, financial

responsibility to meet liability for death or injury to passengers

or other individuals on a voyage to or from a port in the United

States.

‘‘(b) AMOUNTS.— ‘‘(1) IN GENERAL.—The amount of financial responsibility

required under subsection (a) shall be based on the number

of passenger accommodations as follows:

‘‘(A) $20,000 for each of the first 500 passenger accommodations.

Regulations.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1555

‘‘(B) $15,000 for each additional passenger accommodation between 501 and 1,000.

‘‘(C) $10,000 for each additional passenger accommodation between 1,001 and 1,500.

‘‘(D) $5,000 for each additional passenger accommodation over 1,500.

‘‘(2) MULTIPLE VESSELS.—If the owner or charterer is operating more than one vessel subject to this chapter, the amount

of financial responsibility shall be based on the number of

passenger accommodations on the vessel with the largest

number of passenger accommodations.

‘‘(c) AVAILABILITY TO PAY JUDGMENT.—The amount determined

under subsection (b) shall be available to pay a judgment for damages (whether less than or more than $20,000) for death or injury

to a passenger or other individual on a voyage to or from a port

in the United States.

‘‘(d) MEANS OF ESTABLISHING.—Financial responsibility under

this section may be established by one or more of the following

if acceptable to the Commission:

‘‘(1) Insurance.

‘‘(2) Surety bond issued by a bonding company authorized

to do business in the United States.

‘‘(3) Qualification as a self-insurer.

‘‘(4) Other evidence of financial responsibility.

‘‘§ 44104. Civil penalty

‘‘A person that violates section 44102 or 44103 of this title

is liable to the United States Government for a civil penalty of

not more than $5,000, plus $200 for each passage sold, to be

assessed by the Federal Maritime Commission. The Commission

may remit or mitigate the penalty on terms the Commission considers proper.

‘‘§ 44105. Refusal of clearance

‘‘The Secretary of Homeland Security shall refuse the clearance

required by section 60105 of this title, at the port or place of

departure from the United States, of a vessel that is subject to

this chapter and does not have evidence issued by the Federal

Maritime Commission of compliance with sections 44102 and 44103

of this title.

‘‘§ 44106. Conduct of proceedings

‘‘Part A of this subtitle applies to proceedings conducted by

the Federal Maritime Commission under this chapter.’’.

SEC. 8. SUBTITLE V OF TITLE 46.

(a) SUBTITLE ANALYSIS.—The analysis of subtitle V of title

46, United States Code, is amended to read as follows:

‘‘PART A—GENERAL

‘‘Chapter Sec.

‘‘501. Policy, Studies, and Reports ................................................................ 50101

‘‘503. Administrative ........................................................................................ 50301

‘‘505. Other General Provisions ..................................................................... 50501

‘‘PART B—MERCHANT MARINE SERVICE

‘‘511. General ..................................................................................................... 51101

120 STAT. 1556 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘513. United States Merchant Marine Academy ....................................... 51301

‘‘515. State Maritime Academy Support Program .................................... 51501

‘‘517. Other Support for Merchant Marine Training ................................ 51701

‘‘519. Merchant Marine Awards ..................................................................... 51901

‘‘521. Miscellaneous .......................................................................................... 52101

‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS

‘‘531. Maritime Security Fleet ........................................................................ 53101

‘‘533. Construction Reserve Funds ............................................................... 53301

‘‘535. Capital Construction Funds ................................................................ 53501

‘‘537. Loans and Guarantees .......................................................................... 53701

‘‘539. War Risk Insurance ............................................................................... 53901

‘‘PART D—PROMOTIONAL PROGRAMS

‘‘551. Coastwise Trade ..................................................................................... 55101

‘‘553. Passenger and Cargo Preferences ..................................................... 55301

‘‘555. Miscellaneous .......................................................................................... 55501

‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES

‘‘561. Restrictions on Transfers ..................................................................... 56101

‘‘563. Emergency Acquisition of Vessels ...................................................... 56301

‘‘565. Essential Vessels Affected by Neutrality Act ................................... 56501

‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

‘‘571. General Authority .................................................................................. 57101

‘‘573. Vessel Trade-In Program ...................................................................... 57301

‘‘575. Construction, Charter, and Sale of Vessels ...................................... 57501

‘‘PART G—RESTRICTIONS AND PENALTIES

‘‘581. Restrictions and Penalties ...................................................................58101’’.

(b) CHAPTERS PRECEDING CHAPTER 531.—Subtitle V of title

46, United States Code, is amended by inserting after the subtitle

analysis the following:

‘‘PART A—GENERAL

‘‘CHAPTER 501—POLICY, STUDIES, AND REPORTS

‘‘Sec.

‘‘50101. Objectives and policy.

‘‘50102. Survey of merchant marine.

‘‘50103. Determinations of essential services.

‘‘50104. Studies of general maritime problems.

‘‘50105. Studies and cooperation relating to the construction of vessels.

‘‘50106. Studies on the operation of vessels.

‘‘50107. Studies on marine insurance.

‘‘50108. Studies on cargo carriage and cargo containers.

‘‘50109. Miscellaneous studies.

‘‘50110. Securing preference to vessels of the United States.

‘‘50111. Reports to Congress.

‘‘50112. National Maritime Enhancement Institutes.

‘‘50113. Use and performance reports by operators of vessels.

‘‘§ 50101. Objectives and policy

‘‘(a) OBJECTIVES.—It is necessary for the national defense and

the development of the domestic and foreign commerce of the United

States that the United States have a merchant marine—

‘‘(1) sufficient to carry the waterborne domestic commerce

and a substantial part of the waterborne export and import

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1557

foreign commerce of the United States and to provide shipping

service essential for maintaining the flow of the waterborne

domestic and foreign commerce at all times;

‘‘(2) capable of serving as a naval and military auxiliary

in time of war or national emergency;

‘‘(3) owned and operated as vessels of the United States

by citizens of the United States;

‘‘(4) composed of the best-equipped, safest, and most suitable types of vessels and manned with a trained and efficient

citizen personnel; and

‘‘(5) supplemented by efficient facilities for building and

repairing vessels.

‘‘(b) POLICY.—It is the policy of the United States to encourage

and aid the development and maintenance of a merchant marine

satisfying the objectives described in subsection (a).

‘‘§ 50102. Survey of merchant marine

‘‘(a) IN GENERAL.—The Secretary of Transportation shall survey

the merchant marine of the United States to determine whether

replacements and additions are required to carry out the objectives

and policy of section 50101 of this title. The Secretary shall study,

perfect, and adopt a long-range program for replacements and additions that will result, as soon as practicable, in—

‘‘(1) an adequate and well-balanced merchant fleet,

including vessels of all types, that will provide shipping service

essential for maintaining the flow of foreign commerce by vessels designed to be readily and quickly convertible into transport and supply vessels in a time of national emergency;

‘‘(2) ownership and operation of the fleet by citizens of

the United States insofar as practicable;

‘‘(3) vessels designed to afford the best and most complete

protection for passengers and crew against fire and all marine

perils; and

‘‘(4) an efficient capacity for building and repairing vessels

in the United States with an adequate number of skilled personnel to provide an adequate mobilization base.

‘‘(b) COOPERATION WITH SECRETARY OF NAVY.—In carrying out

subsection (a)(1), the Secretary of Transportation shall cooperate

closely with the Secretary of the Navy as to national defense

requirements.

‘‘§ 50103. Determinations of essential services

‘‘(a) ESSENTIAL SERVICES, ROUTES, AND LINES.— ‘‘(1) IN GENERAL.—The Secretary of Transportation shall

investigate, determine, and keep current records of the ocean

services, routes, and lines from ports in the United States,

or in the territories and possessions of the United States,

to foreign markets, which the Secretary determines to be essential for the promotion, development, expansion, and maintenance of the foreign commerce of the United States. In making

such a determination, the Secretary shall consider and give

due weight to—

‘‘(A) the cost of maintaining each line;

‘‘(B) the probability that a line cannot be maintained

except at a heavy loss disproportionate to the benefit to

foreign trade;

120 STAT. 1558 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(C) the number of voyages and types of vessels that

should be employed in a line;

‘‘(D) the intangible benefit of maintaining a line to

the foreign commerce of the United States, the national

defense, and other national requirements; and

‘‘(E) any other facts and conditions a prudent business

person would consider when dealing with the person’s own

business.

‘‘(2) SAINT LAWRENCE SEAWAY.—For purposes of paragraph

(1), the Secretary shall establish services, routes, and lines

that reflect the seasonal closing of the Saint Lawrence Seaway

and provide for alternate routing of vessels through a different

range of ports during that closing to maintain continuity of

service on a year-round basis.

‘‘(b) BULK CARGO CARRYING SERVICES.—The Secretary shall

investigate, determine, and keep current records of the bulk cargo

carrying services that should be provided by vessels of the United

States (whether or not operating on particular services, routes,

or lines) for the promotion, development, expansion, and maintenance of the foreign commerce of the United States and the national

defense or other national requirements.

‘‘(c) TYPES OF VESSELS.—The Secretary shall investigate, determine, and keep current records of the type, size, speed, method

of propulsion, and other requirements of the vessels, including

express-liner or super-liner vessels, that should be employed in—

‘‘(1) the services, routes, or lines described in subsection

(a), and the frequency and regularity of the voyages of the

vessels, with a view to furnishing adequate, regular, certain,

and permanent service; and

‘‘(2) the bulk cargo carrying services described in subsection

(b).

‘‘§ 50104. Studies of general maritime problems

‘‘The Secretary of Transportation shall study all maritime problems arising in carrying out the policy in section 50101 of this

title.

‘‘§ 50105. Studies and cooperation relating to the construction of vessels

‘‘(a) RELATIVE COSTS AND NEW DESIGNS.—The Secretary of

Transportation shall investigate, determine, and keep current

records of—

‘‘(1) the relative cost of construction of comparable vessels

in the United States and in foreign countries; and

‘‘(2) new designs, new methods of construction, and new

types of equipment for vessels.

‘‘(b) RULES, CLASSIFICATIONS, AND RATINGS.—The Secretary

shall examine the rules under which vessels are constructed abroad

and in the United States and the methods of classifying and rating

the vessels.

‘‘(c) COLLABORATION WITH OWNERS AND BUILDERS.—The Secretary shall 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 from standardized production

where practicable and desirable.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1559

‘‘(d) EXPRESS-LINER AND SUPER-LINER VESSELS.—The Secretary

shall study and cooperate with vessel owners in devising means

by which there may be constructed, by or with the aid of the

United States Government, express-liner or super-liner vessels comparable to those of other nations, especially with a view to their

use in a national emergency, and the use of transoceanic aircraft

service in connection with or in lieu of those vessels.

‘‘§ 50106. Studies on the operation of vessels

‘‘(a) RELATIVE COSTS.—The Secretary of Transportation shall

investigate, determine, and keep current records of 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 and regulations

of the United States and those of the foreign countries whose

vessels are substantial competitors of American vessels.

‘‘(b) SHIPYARDS.—The Secretary shall investigate, determine,

and keep current records of the number, location, and efficiency

of shipyards in the United States.

‘‘(c) NAVIGATION LAWS.—The Secretary shall examine the

navigation laws and regulations of the United States and make

such recommendations to Congress as the Secretary considers

proper for the amendment, improvement, and revision of those

laws and for the development of the merchant marine of the United

States.

‘‘§ 50107. Studies on marine insurance

‘‘The Secretary of Transportation shall—

‘‘(1) examine into the subject of marine insurance, the

number of companies in the United States, domestic and foreign, engaging in marine insurance, the extent of the insurance

on hulls and cargoes placed or written in the United States,

and the extent of reinsurance of American maritime risks in

foreign companies; and

‘‘(2) ascertain what steps may be necessary to develop

an ample marine insurance system as an aid in the development

of the merchant marine of the United States.

‘‘§ 50108. Studies on cargo carriage and cargo containers

‘‘(a) STUDIES.—The Secretary of Transportation shall study—

‘‘(1) the 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

‘‘(2) the economic and technological aspects of the use of

cargo containers as a method of carrying out the policy in

section 50101 of this title.

‘‘(b) RESTRICTION.—In carrying out subsection (a) and the policy

in section 50101 of this title, the United States Government may

not give preference as between carriers based on the length, height,

or width of cargo containers or the length, height, or width of

cargo container cells. This restriction applies to all existing container vessels and any container vessel to be constructed or rebuilt.

‘‘§ 50109. Miscellaneous studies

‘‘(a) FOREIGN SUBSIDIES.—The Secretary of Transportation shall

investigate, determine, and keep current records of the extent and

Records.

Records.

Records.

120 STAT. 1560 PUBLIC LAW 109–304—OCT. 6, 2006

character of the governmental aid and subsidies granted by foreign

governments to their merchant marine.

‘‘(b) LAWS APPLICABLE TO AIRCRAFT.—The Secretary shall investigate, determine, and keep current records of the provisions of

law relating to shipping that should be made applicable to aircraft

engaged in foreign commerce to further the policy in section 50101

of this title, and any appropriate legislation in this regard.

‘‘(c) AID FOR COTTON, COAL, LUMBER, AND CEMENT.—The Secretary shall investigate, determine, and keep current records of

the advisability of enactment of suitable legislation authorizing

the Secretary, in an economic or commercial emergency, to aid

farmers and producers of cotton, coal, lumber, and cement 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, until the Secretary considers the special rate

reduction and operation unnecessary for the benefit of those farmers

and producers.

‘‘(d) INTERCOASTAL AND INLAND WATER TRANSPORTATION.—The

Secretary shall investigate, determine, and keep current records

of intercoastal and inland water transportation, including their

relation to transportation by land and air.

‘‘(e) OBSOLETE TONNAGE AND TRAMP SERVICE.—The Secretary

shall make studies and reports to Congress on—

‘‘(1) the scrapping or removal from service of old or obsolete

merchant tonnage owned by the United States Government

or in use in the merchant marine; and

‘‘(2) tramp shipping service and the advisability of citizens

of the United States participating in that service with vessels

under United States registry.

‘‘(f) MORTGAGE LOANS.—The Secretary shall investigate the

legal status of mortgage loans on vessel property, with a view

to the means of improving the security of those loans and of encouraging investment in American shipping.

‘‘§ 50110. Securing preference to vessels of the United States

‘‘(a) POSSIBILITIES OF PROMOTING CARRIAGE.—The Secretary

of Transportation shall investigate, determine, and keep current

records of the possibilities of promoting the carriage of United

States foreign trade in vessels of the United States.

‘‘(b) INDUCEMENTS TO IMPORTERS AND EXPORTERS.—The Secretary shall study and cooperate with vessel owners in devising

means by which the importers and exporters of the United States

can be induced to give preference to vessels of the United States.

‘‘(c) LIAISON WITH AGENCIES AND ORGANIZATIONS.—The Secretary shall establish and maintain liaison with such other agencies

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 waterborne export and import foreign commerce of the United

States, for the purpose of securing preference to vessels of the

United States in the shipment of those commodities.

‘‘§ 50111. Reports to Congress

‘‘(a) IN GENERAL.—Not later than April 1 of each year, the

Secretary of Transportation shall submit a report to Congress.

Records.

Reports.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1561

The report shall include, with respect to activities of the Secretary

under this subtitle, the results of investigations, a summary of

transactions, a statement of all expenditures and receipts, the purposes for which all expenditures were made, and any recommendations for legislation.

‘‘(b) ADMINISTERED AND OVERSIGHT FUNDS.—The Secretary, in

the report under subsection (a) and in the annual budget estimate

for the Maritime Administration submitted to 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.

‘‘(c) ADDITIONAL RECOMMENDATIONS FOR LEGISLATION.—The

Secretary, from time to time, shall make recommendations to Congress for legislation the Secretary considers necessary to better

achieve the objectives and policy of section 50101 of this title.

‘‘§ 50112. National Maritime Enhancement Institutes

‘‘(a) DESIGNATION.—The Secretary of Transportation may designate National Maritime Enhancement Institutes.

‘‘(b) ACTIVITIES.—Activities undertaken by an institute may

include—

‘‘(1) conducting research about methods to improve 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) APPLICATION FOR DESIGNATION.—An institution seeking

designation as a National Maritime Enhancement Institute shall

submit an application under regulations prescribed by the Secretary.

‘‘(d) CRITERIA FOR DESIGNATION.—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 applicant for carrying out the activities specified

in subsection (b).

‘‘(2) The ability of the applicant 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

applicant encompassing research and training directed to

enhancing maritime industries.

‘‘(4) The demonstrated ability of the applicant to assemble

and evaluate pertinent information from national and international sources and to disseminate results of maritime

120 STAT. 1562 PUBLIC LAW 109–304—OCT. 6, 2006

industry research and educational programs through a continuing education program.

‘‘(5) The qualification of the applicant as a nonprofit institution of higher learning.

‘‘(e) FINANCIAL AWARDS.—The Secretary may make awards on

an equal matching basis to an institute designated under subsection

(a) from amounts appropriated. The aggregate annual amount of

the Federal share of the awards by the Secretary may not exceed

$500,000.

‘‘(f) UNIVERSITY TRANSPORTATION RESEARCH FUNDS.—The Secretary may make a grant under section 5505 of title 49 to an

institute designated under subsection (a) for maritime and maritime

intermodal research under that section as if the institute were

a university transportation center. In making a grant, the Secretary,

through the Research and Innovative Technology Administration,

shall advise the Maritime Administration on the availability of

funds for the grants and consult with the Administration on making

the grants.

‘‘§ 50113. Use and performance reports by operators of vessels

‘‘(a) FILING REQUIREMENT.—The Secretary of Transportation

by regulation may require the operator of a vessel in the waterborne

foreign commerce of the United States to file such report, account,

record, or memorandum on the use and performance of the vessel

as the Secretary considers desirable to assist in carrying out this

subtitle. The report, account, record, or memorandum shall be

signed and verified, and be filed at the times and in the manner,

as provided by regulation.

‘‘(b) CIVIL PENALTY.—An operator not filing a report, account,

record, or memorandum required by the Secretary under this section

is liable to the United States Government for a civil penalty of

$50 for each day of the violation. A penalty imposed under this

section on the operator of a vessel constitutes a lien on the vessel

involved in the violation. A civil action in rem to enforce the

lien may be brought in the district court of the United States

for any district in which the vessel is found. The Secretary may

remit or mitigate any penalty imposed under this section.

‘‘CHAPTER 503—ADMINISTRATIVE

‘‘Sec.

‘‘50301. Vessel Operations Revolving Fund.

‘‘50302. Port development.

‘‘50303. Operating property and extending term of notes.

‘‘50304. Sale and transfer of property.

‘‘50305. Appointment of trustee or receiver and operation of vessels.

‘‘50306. Requiring testimony and records in investigations.

‘‘§ 50301. Vessel Operations Revolving Fund

‘‘(a) IN GENERAL.—There is a ‘Vessel Operations Revolving

Fund’ for use by the Secretary of Transportation in carrying out

duties and powers related to vessel operations, including charter,

operation, maintenance, repair, reconditioning, and improvement

of merchant vessels under the jurisdiction of the Secretary. The

Fund has a working capital of $20,000,000, to remain available

until expended.

‘‘(b) RELATIONSHIP TO OTHER LAWS.—Notwithstanding any

other law, rates for shipping services provided under the Fund

Rates.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1563

shall be prescribed by the Secretary and the Fund shall be credited

with receipts from vessel operations conducted under the Fund.

Sections 1(a) and (c), 3(c), and 4 of the Act of March 24, 1943

(50 App. U.S.C. 1291(a), (c), 1293(c), 1294), apply to those operations

and to seamen employed through general agents as employees

of the United States Government. Notwithstanding any other law

on the employment of persons by the Government, the seamen

may be employed in accordance with customary commercial practices in the maritime industry.

‘‘(c) ADVANCEMENTS.—With the approval of the Director of the

Office of Management and Budget, the Secretary may advance

amounts the Secretary considers necessary, but not more than

2 percent of vessel operating expenses, from the Fund to the appropriation ‘Salaries and Expenses’ in carrying out duties and powers

related to vessel operations, without regard to the limitations on

amounts stated in that appropriation.

‘‘(d) TRANSFERS.—The unexpended balances of working funds

or of allocation accounts established after January 1, 1951, for

the activities provided for in subsection (a), and receipts received

from those activities, may be transferred to the Fund, which shall

be available for the purposes of those working funds or allocation

accounts.

‘‘(e) LIMITATION.—

‘‘(1) IN GENERAL.—Amounts made available to the Secretary

for maritime activities by this section or any other law may

not be used to pay for a vessel described in paragraph (2)

unless the compensation to be paid is computed under section

56303 of this title as that section is interpreted by the Comptroller General.

‘‘(2) APPLICABLE VESSELS.—Paragraph (1) applies to a

vessel—

‘‘(A) the title to which is acquired by the Government

by requisition or purchase;

‘‘(B) the use of which is taken by requisition or agreement; or

‘‘(C) lost while insured by the Government.

‘‘(3) NONAPPLICABLE VESSELS.—Paragraph (1) does not

apply to a vessel under a construction-differential subsidy contract.

‘‘(f) AVAILABILITY FOR ADDITIONAL PURPOSES.—The Fund is

available for—

‘‘(1) necessary expenses incurred in the protection,

preservation, maintenance, acquisition, or use of vessels

involved in mortgage foreclosure or forfeiture proceedings

instituted by the Government, including payment of prior

claims and liens, expenses of sale, or other related charges;

‘‘(2) necessary expenses incident to the redelivery and layup, in the United States, of vessels chartered as of June 20,

1956, under agreements not calling for their return to the

Government;

‘‘(3) the activation, repair, and deactivation of merchant

vessels chartered for limited emergency purposes during fiscal

year 1957 under the jurisdiction of the Secretary; and

‘‘(4) payment of expenses of custody and maintenance of

Government-owned vessels not in the National Defense Reserve

Fleet.

120 STAT. 1564 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(g) EXPENSES AND RECEIPTS RELATED TO CHARTER OPERATIONS.—The Fund is available for expenses incurred in activating,

repairing, and deactivating merchant vessels chartered under the

jurisdiction of the Secretary. Receipts from charter operations of

Government-owned vessels under the jurisdiction of the Secretary

shall be credited to the Fund.

‘‘§ 50302. Port development

‘‘(a) GENERAL REQUIREMENTS.—With the objective of promoting,

encouraging, and developing ports and transportation facilities in

connection with water commerce over which the Secretary of

Transportation has jurisdiction, the Secretary, in cooperation with

the Secretary of the Army, shall—

‘‘(1) investigate territorial regions and zones tributary to

ports, taking into consideration the economies of transportation

by rail, water, and highway and the natural direction of the

flow of commerce;

‘‘(2) investigate the causes of congestion of commerce at

ports and applicable remedies;

‘‘(3) investigate the subject of water terminals, including

the necessary docks, warehouses, and equipment, to devise

and suggest the types most appropriate for different locations

and for the most expeditious and economical transfer or interchange of passengers or property between water carriers and

rail carriers;

‘‘(4) consult with communities on the appropriate location

and plan of construction of wharves, piers, and water terminals;

‘‘(5) investigate the practicability and advantages of harbor,

river, and port improvements in connection with foreign and

coastwise trade; and

‘‘(6) investigate any other matter that may tend to promote

and encourage the use by vessels of ports adequate to care

for the freight that naturally would pass through those ports.

‘‘(b) SUBMISSION OF FINDINGS TO SURFACE TRANSPORTATION

BOARD.—After an investigation under subsection (a), if the Secretary of Transportation believes that the rates or practices of

a rail carrier subject to the jurisdiction of the Surface Transportation Board are detrimental to the objective specified in subsection

(a), or that new rates or practices, new or additional port terminal

facilities, or affirmative action by a rail carrier is necessary to

promote that objective, the Secretary may submit findings to the

Board for action the Board considers appropriate under existing

law.

‘‘§ 50303. Operating property and extending term of notes

‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation

may—

‘‘(1) operate or lease docks, wharves, piers, or real property

under the Secretary’s control; and

‘‘(2) make extensions and accept renewals of—

‘‘(A) promissory notes and other evidences of indebtedness on property; and

‘‘(B) mortgages and other contracts securing the property.

‘‘(b) TERMS OF TRANSACTIONS.—A transaction under subsection

(a) shall be on terms the Secretary considers necessary to carry

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1565

out the purposes of this subtitle, but consistent with sound business

practice.

‘‘(c) AVAILABILITY OF AMOUNTS.—Amounts received by the Secretary from a transaction under this section are available for

expenditure by the Secretary as provided in this subtitle.

‘‘§ 50304. Sale and transfer of property

‘‘(a) AUTHORITY TO SELL.—The Secretary of Transportation may

sell property (other than vessels transferred under section 4 of

the Merchant Marine Act, 1920 (ch. 250, 41 Stat. 990)) on terms

the Secretary considers appropriate.

‘‘(b) TRANSFERS FROM MILITARY TO CIVILIAN CONTROL.—When

the President considers it in the interest of the United States,

the President may transfer to the Secretary of Transportation

possession and control of property described in the second paragraph

of section 17 of the Merchant Marine Act, 1920 (ch. 250, 41 Stat.

994), as originally enacted, that is possessed and controlled by

the Secretary of a military department.

‘‘(c) TRANSFERS FROM CIVILIAN TO MILITARY CONTROL.—When

the President considers it necessary, the President by executive

order may transfer to the Secretary of a military department possession and control of property described in section 17 of the Merchant

Marine Act, 1920 (ch. 250, 41 Stat. 994), as originally enacted,

that is possessed and controlled by the Secretary of Transportation.

The President’s order shall state the need for the transfer and

the period of the need. When the President decides that the need

has ended, the possession and control shall revert to the Secretary

of Transportation. The property may not be sold except as provided

by law.

‘‘§ 50305. Appointment of trustee or receiver and operation

of vessels

‘‘(a) APPOINTMENT OF TRUSTEES AND RECEIVERS.—

‘‘(1) APPOINTMENT OF SECRETARY.—In a proceeding in a

court of the United States in which a trustee or receiver may

be appointed for a corporation operating a vessel of United

States registry between the United States and a foreign

country, on which the United States Government holds a mortgage, the court may appoint the Secretary of Transportation

as the sole trustee or receiver (subject to the direction of the

court) if—

‘‘(A) the court finds that the appointment will—

‘‘(i) inure to the advantage of the estate and the

parties in interest; and

‘‘(ii) tend to carry out the purposes of this subtitle;

and

‘‘(B) the Secretary expressly consents to the appointment.

‘‘(2) APPOINTMENT OF OTHER PERSON.—The appointment

of another person as trustee or receiver without a hearing

becomes effective when ratified by the Secretary, but the Secretary may demand a hearing.

‘‘(b) OPERATION OF VESSELS.—

‘‘(1) IN GENERAL.—If the court is unwilling to allow the

trustee or receiver to operate the vessel in foreign commerce

without financial aid from the Government pending termination

of the proceeding, and the Secretary certifies to the court that

120 STAT. 1566 PUBLIC LAW 109–304—OCT. 6, 2006

the continued operation of the vessel is essential to the foreign

commerce of the United States and is reasonably calculated

to carry out the purposes of this subtitle, the court may allow

the Secretary to operate the vessel, either directly or through

a managing agent or operator employed by the Secretary. The

Secretary must agree to comply with terms imposed by the

court sufficient to protect the parties in interest. The Secretary

also must agree to pay all operating losses resulting from

the operation. The operation shall be for the account of the

trustee or receiver.

‘‘(2) PAYMENT OF OPERATING LOSSES AND OTHER AMOUNTS.— The Secretary has no claim against the corporation, its estate,

or its assets for operating losses paid by the Secretary, but

the Secretary may pay amounts for depreciation the Secretary

considers reasonable and other amounts the court considers

just. The payment of operating losses and the other amounts

and compliance with terms imposed by the court shall be in

satisfaction of any claim against the Secretary resulting from

the operation of the vessel.

‘‘(3) DEEMED OPERATION BY GOVERNMENT.—A vessel operated by the Secretary under this subsection is deemed to be

a vessel operated by the United States under chapter 309

of this title.

‘‘§ 50306. Requiring testimony and records in investigations

‘‘(a) IN GENERAL.—In conducting an investigation that the Secretary of Transportation considers necessary and proper to carry

out this subtitle, the Secretary may administer oaths, take evidence,

and subpoena persons to testify and produce documents relevant

to the matter under investigation. Persons may be required to

attend or produce documents from any place in the United States

at any designated place of hearing.

‘‘(b) FEES AND MILEAGE.—Persons subpoenaed by the Secretary

under subsection (a) shall be paid the same fees and mileage

paid to witnesses in the courts of the United States.

‘‘(c) ENFORCEMENT OF SUBPOENAS.—If a person disobeys a subpoena issued under subsection (a), the Secretary may seek an

order enforcing the subpoena from the district court of the United

States for the district in which the person resides or does business.

Process may be served in the judicial district in which the person

resides or is found. The court may issue an order to obey the

subpoena and punish a refusal to obey as a contempt of court.

‘‘CHAPTER 505—OTHER GENERAL PROVISIONS

‘‘Sec.

‘‘50501. Entities deemed citizens of the United States.

‘‘50502. Applicability to receivers, trustees, successors, and assigns.

‘‘50503. Oceanographic research vessels.

‘‘50504. Sailing school vessels.

‘‘§ 50501. Entities deemed citizens of the United States

‘‘(a) IN GENERAL.—In this subtitle, a corporation, partnership,

or association is deemed to be a citizen of the United States only

if the controlling interest is owned by citizens of the United States.

However, if the corporation, partnership, or association is operating

a vessel in the coastwise trade, at least 75 percent of the interest

must be owned by citizens of the United States.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1567

‘‘(b) ADDITIONAL REQUIREMENTS FOR CORPORATIONS.—In this

subtitle, a corporation is deemed to be a citizen of the United

States only if, in addition to satisfying the requirements in subsection (a)—

‘‘(1) it is incorporated under the laws of the United States

or a State;

‘‘(2) its chief executive officer, by whatever title, and the

chairman of its board of directors are citizens of the United

States; and

‘‘(3) no more of its directors are noncitizens than a minority

of the number necessary to constitute a quorum.

‘‘(c) DETERMINATION OF CONTROLLING CORPORATE INTEREST.—

The controlling interest in a corporation is owned by citizens of

the United States under subsection (a) only if—

‘‘(1) title to the majority of the stock in the corporation

is vested in citizens of the United States free from any trust

or fiduciary obligation in favor of a person not a citizen of

the United States;

‘‘(2) the majority of the voting power in the corporation

is vested in citizens of the United States;

‘‘(3) there is no contract or understanding by which the

majority of the voting power in the corporation may be exercised, directly or indirectly, in behalf of a person not a citizen

of the United States; and

‘‘(4) there is no other means by which control of the corporation is given to or permitted to be exercised by a person not

a citizen of the United States.

‘‘(d) DETERMINATION OF 75 PERCENT CORPORATE INTEREST.—

At least 75 percent of the interest in a corporation is owned by

citizens of the United States under subsection (a) only if—

‘‘(1) title to at least 75 percent of the stock in the corporation is vested in citizens of the United States free from any

trust or fiduciary obligation in favor of a person not a citizen

of the United States;

‘‘(2) at least 75 percent of the voting power in the corporation is vested in citizens of the United States;

‘‘(3) there is no contract or understanding by which more

than 25 percent of the voting power in the corporation may

be exercised, directly or indirectly, in behalf of a person not

a citizen of the United States; and

‘‘(4) there is no other means by which control of more

than 25 percent of any interest in the corporation is given

to or permitted to be exercised by a person not a citizen of

the United States.

‘‘§ 50502. Applicability to receivers, trustees, successors, and

assigns

‘‘This subtitle applies to receivers, trustees, successors, and

assigns of any person to whom this subtitle applies.

‘‘§ 50503. Oceanographic research vessels

‘‘An oceanographic research vessel (as defined in section 2101

of this title) is deemed not to be engaged in trade or commerce.

120 STAT. 1568 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 50504. Sailing school vessels

‘‘(a) DEFINITIONS.—In this section, the terms ‘sailing school

instructor’, ‘sailing school student’, and ‘sailing school vessel’ have

the meaning given those terms in section 2101 of this title.

‘‘(b) NOT SEAMEN.—A sailing school student or sailing school

instructor is deemed not to be a seaman under—

‘‘(1) parts B, F, and G of subtitle II of this title; or

‘‘(2) the maritime law doctrines of maintenance and cure

or warranty of seaworthiness.

‘‘(c) NOT MERCHANT VESSEL OR ENGAGED IN TRADE OR COM- MERCE.—A sailing school vessel is deemed not to be—

‘‘(1) a merchant vessel under section 11101(a)–(c) of this

title; or

‘‘(2) a vessel engaged in trade or commerce.

‘‘(d) EVIDENCE OF FINANCIAL RESPONSIBILITY.—The owner or

charterer of a sailing school vessel shall maintain evidence of financial responsibility to meet liability for death or injury to sailing

school students and sailing school instructors on a voyage on the

vessel. The amount of financial responsibility shall be at least

$50,000 for each student and instructor. Financial responsibility

under this subsection may be evidenced by insurance or other

adequate financial resources.

‘‘PART B—MERCHANT MARINE SERVICE

‘‘CHAPTER 511—GENERAL

‘‘Sec.

‘‘51101. Policy.

‘‘51102. Definitions.

‘‘51103. General authority of Secretary of Transportation.

‘‘51104. General authority of Secretary of the Navy.

‘‘§ 51101. Policy

‘‘It is the policy of the United States that merchant marine

vessels of the United States should be operated by highly trained

and efficient citizens of the United States and that the United

States Navy and the merchant marine of the United States should

work closely together to promote the maximum integration of the

total seapower forces of the United States.

‘‘§ 51102. Definitions

‘‘In this part:

‘‘(1) ACADEMY.—The term ‘Academy’ means the United

States Merchant Marine Academy located at Kings Point, New

York, and maintained under chapter 513 of this title.

‘‘(2) COST OF EDUCATION PROVIDED.—The term ‘cost of education provided’ means the financial costs incurred by the

United States Government for providing training or financial

assistance to students at the Academy and the State maritime

academies, including direct financial assistance, room, board,

classroom academics, and other training activities.

‘‘(3) MERCHANT MARINE OFFICER.—The term ‘merchant

marine officer’ means an individual issued a license by the

Coast Guard authorizing service as—

‘‘(A) a master, mate, or pilot on a documented vessel

that—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1569

‘‘(i) is of at least 1,000 gross tons as measured

under section 14502 of this title or an alternate tonnage

measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this

title; and

‘‘(ii) operates on the oceans or the Great Lakes;

or

‘‘(B) an engineer officer on a documented vessel propelled by machinery of at least 4,000 horsepower.

‘‘(4) STATE MARITIME ACADEMY.—The term ‘State maritime

academy’ means—

‘‘(A) a State maritime academy or college sponsored

by a State and assisted under chapter 515 of this title;

and

‘‘(B) a regional maritime academy or college sponsored

by a group of States and assisted under chapter 515 of

this title.

‘‘§ 51103. General authority of Secretary of Transportation

‘‘(a) EDUCATION AND TRAINING.—The Secretary of Transportation may provide for the education and training of citizens of

the United States for the safe and efficient operation of the merchant marine of the United States at all times, including operation

as a naval and military auxiliary in time of war or national emergency.

‘‘(b) SURPLUS PROPERTY FOR INSTRUCTIONAL PURPOSES.—

‘‘(1) IN GENERAL.—The Secretary may cooperate with and

assist the institutions named in paragraph (2) by making vessels, shipboard equipment, and other marine equipment, owned

by the United States Government and determined to be excess

or surplus, available to those institutions for instructional purposes, by gift, loan, sale, lease, or charter on terms the Secretary

considers appropriate.

‘‘(2) INSTITUTIONS.—The institutions referred to in paragraph (1) are—

‘‘(A) the United States Merchant Marine Academy;

‘‘(B) a State maritime academy; and

‘‘(C) a nonprofit training institution jointly approved

by the Secretary of Transportation and the Secretary of

the department in which the Coast Guard is operating

as offering training courses that meet Federal regulations

for maritime training.

‘‘(c) ASSISTANCE FROM OTHER AGENCIES.—

‘‘(1) IN GENERAL.—The Secretary of Transportation may

secure directly from an agency, on a reimbursable basis,

information, facilities, and equipment necessary to carry out

this part.

‘‘(2) DETAILING PERSONNEL.—At the request of the Secretary, the head of an agency (including a military department)

may detail, on a reimbursable basis, personnel from the agency

to the Secretary to assist in carrying out this part.

‘‘(d) ACADEMY PERSONNEL.—To carry out this part, the Secretary may—

‘‘(1) employ an individual as a professor, lecturer, or

instructor at the Academy, without regard to the provisions

of title 5 governing appointments in the competitive service;

and

120 STAT. 1570 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) pay the individual without regard to chapter 51 and

subchapter III of chapter 53 of title 5.

‘‘§ 51104. General authority of Secretary of the Navy

‘‘The Secretary of the Navy, in cooperation with the Maritime

Administrator and the head of each State maritime academy, shall

ensure that—

‘‘(1) the training of future merchant marine officers at

the United States Merchant Marine Academy and at State

maritime academies includes programs for naval science

training in the operation of merchant vessels as a naval and

military auxiliary; and

‘‘(2) naval officer training programs for future officers,

insofar as possible, are maintained at designated maritime

academies consistent with Navy standards and needs.

‘‘CHAPTER 513—UNITED STATES MERCHANT MARINE

ACADEMY

‘‘Sec.

‘‘51301. Maintenance of the Academy.

‘‘51302. Nomination and competitive appointment of cadets.

‘‘51303. Non-competitive appointments.

‘‘51304. Additional appointments from particular areas.

‘‘51305. Prohibited basis for appointment.

‘‘51306. Cadet commitment agreements.

‘‘51307. Places of training.

‘‘51308. Uniforms, textbooks, and transportation allowances.

‘‘51309. Academic degree.

‘‘51310. Deferment of service obligation under cadet commitment agreements.

‘‘51311. Midshipman status in the Naval Reserve.

‘‘51312. Board of Visitors.

‘‘51313. Advisory Board.

‘‘51314. Limitation on charges and fees for attendance.

‘‘§ 51301. Maintenance of the Academy

‘‘The Secretary of Transportation shall maintain the United

States Merchant Marine Academy to provide instruction to individuals to prepare them for service in the merchant marine of the

United States.

‘‘§ 51302. Nomination and competitive appointment of cadets

‘‘(a) REQUIREMENTS.—An individual may be nominated for a

competitive appointment as a cadet at the United States Merchant

Marine Academy only if the individual—

‘‘(1) is a citizen or national of the United States; and

‘‘(2) meets the minimum requirements that the Secretary

of Transportation shall establish.

‘‘(b) NOMINATORS.—Nominations for competitive appointments

for the positions allocated under subsection (c) may be made as

follows:

‘‘(1) A Senator may nominate residents of the State represented by that Senator.

‘‘(2) A Member of the House of Representatives may nominate residents of the State in which the congressional district

represented by that Member is located.

‘‘(3) A Delegate to the House of Representatives from the

District of Columbia, the Virgin Islands, Guam, or American

Samoa may nominate residents of the jurisdiction represented

by that Delegate.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1571

‘‘(4) The Resident Commissioner to the United States from

Puerto Rico may nominate residents of Puerto Rico.

‘‘(5) The Governor of the Northern Mariana Islands may

nominate residents of the Northern Mariana Islands.

‘‘(6) The Panama Canal Commission may nominate—

‘‘(A) residents, or sons or daughters of residents, of

an area or installation in Panama and made available

to the United States under the Panama Canal Treaty of

1977, the agreements relating to and implementing that

Treaty, signed September 7, 1977, and the Agreement

Between the United States of America and the Republic

of Panama Concerning Air Traffic Control and Related

Services, concluded January 8, 1979; and

‘‘(B) sons or daughters of personnel of the United States

Government and the Panama Canal Commission residing

in Panama.

‘‘(c) ALLOCATION OF POSITIONS.—Positions for competitive

appointments shall be allocated each year as follows:

‘‘(1) Positions shall be allocated for residents of each State

nominated by the Members of Congress from that State in

proportion to the representation in Congress from that State.

‘‘(2) Four positions shall be allocated for residents of the

District of Columbia nominated by the Delegate to the House

of Representatives from the District of Columbia.

‘‘(3) One position each shall be allocated for residents of

the Virgin Islands, Guam, and American Samoa nominated

by the Delegates to the House of Representatives from the

Virgin Islands, Guam, and American Samoa, respectively.

‘‘(4) One position shall be allocated for a resident of Puerto

Rico nominated by the Resident Commissioner to the United

States from Puerto Rico.

‘‘(5) One position shall be allocated for a resident of the

Northern Mariana Islands nominated by the Governor of the

Northern Mariana Islands.

‘‘(6) Two positions shall be allocated for individuals nominated by the Panama Canal Commission.

‘‘(d) COMPETITIVE SYSTEM FOR APPOINTMENT.—

‘‘(1) ESTABLISHMENT OF SYSTEM.—The Secretary shall

establish a competitive system for selecting individuals nominated under subsection (b) to fill the positions allocated under

subsection (c). The system must determine the relative merit

of each individual based on competitive examinations, an

assessment of the individual’s academic background, and other

effective indicators of motivation and probability of successful

completion of training at the Academy.

‘‘(2) APPOINTMENTS BY JURISDICTION.—The Secretary shall

appoint individuals to fill the positions allocated under subsection (c) for each jurisdiction in the order of merit of the

individuals nominated from that jurisdiction.

‘‘(3) REMAINING UNFILLED POSITIONS.—If positions remain

unfilled after the appointments are made under paragraph

(2), the Secretary shall appoint individuals to fill the positions

in the order of merit of the remaining individuals nominated

from all jurisdictions.

120 STAT. 1572 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 51303. Non-competitive appointments

‘‘The Secretary of Transportation may appoint each year without competition as cadets at the United States Merchant Marine

Academy not more than 40 qualified individuals with qualities

the Secretary considers to be of special value to the Academy.

In making these appointments, the Secretary shall try to achieve

a national demographic balance at the Academy.

‘‘§ 51304. Additional appointments from particular areas

‘‘(a) OTHER COUNTRIES IN WESTERN HEMISPHERE.—The President may appoint individuals from countries in the Western Hemisphere other than the United States to receive instruction at the

United States Merchant Marine Academy. Not more than 12

individuals may receive instruction under this subsection at the

same time, and not more than 2 individuals from the same country

may receive instruction under this subsection at the same time.

‘‘(b) OTHER COUNTRIES GENERALLY.—

‘‘(1) APPOINTMENT.—The Secretary of Transportation, with

the approval of the Secretary of State, may appoint individuals

from countries other than the United States to receive instruction at the Academy. Not more than 30 individuals may receive

instruction under this subsection at the same time.

‘‘(2) REIMBURSEMENT.—The Secretary of Transportation

shall ensure that the country from which an individual comes

under this subsection will reimburse the Secretary for the

cost (as determined by the Secretary) of the instruction and

allowances received by the individual.

‘‘(c) PANAMA.—

‘‘(1) APPOINTMENT.—The Secretary of Transportation, with

the approval of the Secretary of State, may appoint individuals

from Panama to receive instruction at the Academy. Individuals

appointed under this subsection are in addition to those

appointed under any other provision of this chapter.

‘‘(2) REIMBURSEMENT.—The Secretary of Transportation

shall be reimbursed for the cost (as determined by the Secretary) of the instruction and allowances received by an individual appointed under this subsection.

‘‘(d) ALLOWANCES AND REGULATIONS.—Individuals receiving

instruction under this section are entitled to the same allowances

and are subject to the same regulations on admission, attendance,

discipline, resignation, discharge, dismissal, and graduation, as

cadets at the Academy appointed from the United States.

‘‘§ 51305. Prohibited basis for appointment

‘‘Preference may not be given to an individual for appointment

as a cadet at the United States Merchant Marine Academy because

one or more members of the individual’s immediate family are

alumni of the Academy.

‘‘§ 51306. Cadet commitment agreements

‘‘(a) AGREEMENT REQUIREMENTS.—A citizen of the United States

appointed as a cadet at the United States Merchant Marine

Academy must sign, as a condition of the appointment, an agreement to—

‘‘(1) complete the course of instruction at the Academy;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1573

‘‘(2) fulfill the requirements for a license as an officer

in the merchant marine of the United States before graduation

from the Academy;

‘‘(3) maintain a valid license as an officer in the merchant

marine of the United States for at least 6 years after graduation

from the Academy, accompanied by the appropriate national

and international endorsements and certification required by

the Coast Guard for service aboard vessels on domestic and

international voyages;

‘‘(4) apply for, and accept if tendered, an appointment as

a commissioned officer in the Naval Reserve (including the

Merchant Marine Reserve, Naval Reserve), the Coast Guard

Reserve, or any other reserve unit of an armed force of the

United States, and, if tendered the appointment, to serve for

at least 6 years after graduation from the Academy;

‘‘(5) serve the foreign and domestic commerce and the

national defense of the United States for at least 5 years

after graduation from the Academy—

‘‘(A) as a merchant marine officer on a documented

vessel or a vessel owned and operated by the United States

Government or by a State;

‘‘(B) as an employee in a United States maritimerelated industry, profession, or marine science (as determined by the Secretary of Transportation), if the Secretary

determines that service under subparagraph (A) is not

available to the individual;

‘‘(C) as a commissioned officer on active duty in an

armed force of the United States, as a commissioned officer

in the National Oceanic and Atmospheric Administration,

or in other maritime-related Federal employment which

serves the national security interests of the United States,

as determined by the Secretary; or

‘‘(D) by a combination of the service alternatives

referred to in subparagraphs (A)–(C); and

‘‘(6) report to the Secretary on compliance with this subsection.

‘‘(b) FAILURE TO COMPLETE COURSE OF INSTRUCTION.—

‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines that an individual who has attended the Academy for

at least 2 years has failed to fulfill the part of the agreement

described in subsection (a)(1), the individual may be ordered

by the Secretary of Defense to serve on active duty in one

of the armed forces of the United States for a period of not

more than 2 years. In cases of hardship as determined by

the Secretary of Transportation, the Secretary of Transportation

may waive this paragraph in whole or in part.

‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is

unable or unwilling to order an individual to serve on active

duty under paragraph (1), or if the Secretary of Transportation

determines that reimbursement of the cost of education provided would better serve the interests of the United States,

the Secretary of Transportation may recover from the individual

the cost of education provided by the Government.

‘‘(c) FAILURE TO CARRY OUT OTHER REQUIREMENTS.—

‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines that an individual has failed to fulfill any part of the

agreement described in subsection (a)(2)–(6), the individual may

120 STAT. 1574 PUBLIC LAW 109–304—OCT. 6, 2006

be ordered to serve on active duty for a period of at least

3 years but not more than the unexpired period (as determined

by the Secretary) of the service required by subsection (a)(5).

The Secretary of Transportation, in consultation with the Secretary of Defense, shall determine in which service the individual shall serve. In cases of hardship as determined by the

Secretary of Transportation, the Secretary of Transportation

may waive this paragraph in whole or in part.

‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is

unable or unwilling to order an individual to serve on active

duty under paragraph (1), or if the Secretary of Transportation

determines that reimbursement of the cost of education provided would better serve the interests of the United States,

the Secretary of Transportation may recover from the individual

the cost of education provided. The Secretary may reduce the

amount to be recovered to reflect partial performance of service

obligations and other factors the Secretary determines merit

a reduction.

‘‘(d) ACTIONS TO RECOVER COST.—To aid in the recovery of

the cost of education provided by the Government under a commitment agreement under this section, the Secretary of Transportation

may—

‘‘(1) request the Attorney General to bring a civil action

against the individual; and

‘‘(2) make use of the Federal debt collection procedures

in chapter 176 of title 28 or other applicable administrative

remedies.

‘‘§ 51307. Places of training

‘‘The Secretary of Transportation may provide for the training

of cadets at the United States Merchant Marine Academy—

‘‘(1) on vessels owned or subsidized by the United States

Government;

‘‘(2) on other documented vessels, with the permission of

the owner; and

‘‘(3) in shipyards or plants and with industrial or educational organizations.

‘‘§ 51308. Uniforms, textbooks, and transportation allowances

‘‘The Secretary of Transportation shall provide cadets at the

United States Merchant Marine Academy—

‘‘(1) all required uniforms and textbooks; and

‘‘(2) allowances for transportation (including reimbursement of traveling expenses) when traveling under orders as

a cadet.

‘‘§ 51309. Academic degree

‘‘(a) BACHELOR’S DEGREE.—

‘‘(1) IN GENERAL.—The Superintendent of the United States

Merchant Marine Academy may confer the degree of bachelor

of science on an individual who—

‘‘(A) has met the conditions prescribed by the Secretary

of Transportation; and

‘‘(B) if a citizen of the United States, has passed the

examination for a merchant marine officer’s license.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1575

‘‘(2) EFFECT OF PHYSICAL DISQUALIFICATION.—An individual

not allowed to take the examination for a merchant marine

officer’s license only because of physical disqualification may

not be denied a degree for not taking the examination.

‘‘(b) MASTER’S DEGREE.—The Superintendent of the Academy

may confer a master’s degree on an individual who has met the

conditions prescribed by the Secretary. A master’s degree program

may be funded through non-appropriated funds. To maintain the

appropriate academic standards, the program shall be accredited

by the appropriate accreditation body. The Secretary may prescribe

regulations necessary to administer such a program.

‘‘(c) GRADUATION NOT ENTITLEMENT TO HOLD LICENSE.—

Graduation from the Academy does not entitle an individual to

hold a license authorizing service on a merchant vessel.

‘‘§ 51310. Deferment of service obligation under cadet

commitment agreements

‘‘The Secretary of Transportation may defer the service commitment of an individual under section 51306(a)(5) of this title (as

specified in the cadet commitment agreement) for not more than

2 years if the individual is engaged in a graduate course of study

approved by the Secretary. However, deferment of service as a

commissioned officer under section 51306(a)(5) must be approved

by the Secretary of the military department that has jurisdiction

over the service or by the Secretary of Commerce for service with

the National Oceanic and Atmospheric Administration.

‘‘§ 51311. Midshipman status in the Naval Reserve

‘‘(a) APPLICATION REQUIREMENT.—Before being appointed as

a cadet at the United States Merchant Marine Academy, a citizen

of the United States must agree to apply for midshipman status

in the Naval Reserve (including the Merchant Marine Reserve,

Naval Reserve).

‘‘(b) APPOINTMENT.— ‘‘(1) IN GENERAL.—A citizen of the United States appointed

as a cadet at the Academy shall be appointed by the Secretary

of the Navy as a midshipman in the Naval Reserve (including

the Merchant Marine Reserve, Naval Reserve).

‘‘(2) RIGHTS AND PRIVILEGES.—The Secretary of the Navy

shall provide for cadets of the Academy who are midshipmen

in the United States Naval Reserve to be—

‘‘(A) issued an identification card (referred to as a

‘military ID card’); and

‘‘(B) entitled to all rights and privileges in accordance

with the same eligibility criteria as apply to other members

of the Ready Reserve of the reserve components of the

armed forces.

‘‘(3) COORDINATION.—The Secretary of the Navy shall carry

out paragraphs (1) and (2) in coordination with the Secretary

of Transportation.

‘‘§ 51312. Board of Visitors

‘‘(a) IN GENERAL.—A Board of Visitors to the United States

Merchant Marine Academy shall be established, for a term of 2

years commencing at the beginning of each Congress, to visit the

Academy annually on a date determined by the Secretary of

120 STAT. 1576 PUBLIC LAW 109–304—OCT. 6, 2006

Transportation and to make recommendations on the operation

of the Academy.

‘‘(b) APPOINTMENT.—

‘‘(1) IN GENERAL.—The Board shall be composed of—

‘‘(A) 2 Senators appointed by the chairman of the Committee on Commerce, Science, and Transportation of the

Senate;

‘‘(B) 3 Members of the House of Representatives

appointed by the chairman of the Committee on Armed

Services of the House of Representatives;

‘‘(C) 1 Senator appointed by the Vice President;

‘‘(D) 2 Members of the House of Representatives

appointed by the Speaker of the House of Representatives;

and

‘‘(E) the chairmen of the Committee on Commerce,

Science, and Transportation of the Senate and the Committee on Armed Services of the House of Representatives,

as ex officio members.

‘‘(2) SUBSTITUTE APPOINTMENT.—If an appointed member

of the Board is unable to visit the Academy as provided in

subsection (a), another individual may be appointed as a substitute in the manner provided in paragraph (1).

‘‘(c) STAFF.—The chairmen of the Committee on Commerce,

Science, and Transportation of the Senate and the Committee on

Armed Services of the House of Representatives may designate

staff members of their committees to serve without reimbursement

as staff for the Board.

‘‘(d) TRAVEL EXPENSES.—When serving away from home or

regular place of business, a member of the Board or a staff member

designated under subsection (c) shall be allowed travel expenses,

including per diem in lieu of subsistence, as authorized by section

5703 of title 5.

‘‘§ 51313. Advisory Board

‘‘(a) IN GENERAL.—An Advisory Board to the United States

Merchant Marine Academy shall be established to visit the Academy

at least once during each academic year, for the purpose of examining the course of instruction and management of the Academy

and advising the Maritime Administrator and the Superintendent

of the Academy.

‘‘(b) APPOINTMENT AND TERMS.—The Board shall be composed

of not more than 7 individuals appointed by the Secretary of

Transportation. The individuals must be distinguished in education

and other fields related to the Academy. Members of the Board

shall be appointed for terms of not more than 3 years and may

be reappointed. The Secretary shall designate one of the members

as chairman.

‘‘(c) TRAVEL EXPENSES.—When serving away from home or regular place of business, a member of the Board shall be allowed

travel expenses, including per diem in lieu of subsistence, as authorized by section 5703 of title 5.

‘‘(d) RELATIONSHIP TO OTHER LAW.—The Federal Advisory Committee Act (5 App. U.S.C.) does not apply to the Board.

‘‘§ 51314. Limitation on charges and fees for attendance

‘‘(a) PROHIBITION.—Except as provided in subsection (b), no

charge or fee for tuition, room, or board for attendance at the

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1577

United States Merchant Marine Academy may be imposed unless

the charge or fee is specifically authorized by a law enacted after

October 5, 1994.

‘‘(b) EXCEPTION.—The prohibition specified in subsection (a)

does not apply with respect to any item or service provided to

cadets for which a charge or fee is imposed as of October 5, 1994.

The Secretary of Transportation shall notify Congress of any change

made by the Academy in the amount of a charge or fee authorized

under this subsection.

‘‘CHAPTER 515—STATE MARITIME ACADEMY SUPPORT

PROGRAM

‘‘Sec.

‘‘51501. General support program.

‘‘51502. Detailing of personnel.

‘‘51503. Regional maritime academies.

‘‘51504. Use of training vessels.

‘‘51505. Annual payments for maintenance and support.

‘‘51506. Conditions to receiving payments and use of vessels.

‘‘51507. Places of training.

‘‘51508. Allowances for students.

‘‘51509. Student incentive payment agreements.

‘‘51510. Deferment of service obligation under student incentive payment agreements.

‘‘51511. Midshipman status in the Naval Reserve.

‘‘§ 51501. General support program

‘‘(a) ASSISTANCE TO STATE MARITIME ACADEMIES.—The Secretary of Transportation shall cooperate with and assist State maritime academies in providing instruction to individuals to prepare

them for service in the merchant marine of the United States.

‘‘(b) COURSE DEVELOPMENT.—The Secretary shall provide to

each State maritime academy guidance and assistance in developing

courses on the operation and maintenance of new vessels, on equipment, and on innovations being introduced to the merchant marine

of the United States.

‘‘§ 51502. Detailing of personnel

‘‘At the request of the Governor of a State, the President

may detail, without reimbursement, personnel of the Navy, the

Coast Guard, and the Maritime Service to a State maritime

academy to serve as a superintendent, professor, lecturer, or

instructor at the academy.

‘‘§ 51503. Regional maritime academies

‘‘The Governors of the States cooperating to sponsor a regional

maritime academy shall designate in writing one of those States

to conduct the affairs of that academy. A regional maritime academy

is eligible for assistance from the United States Government on

the same basis as a State maritime academy sponsored by a single

State.

‘‘§ 51504. Use of training vessels

‘‘(a) APPLICATIONS TO USE VESSELS.—The Governor of a State

sponsoring a State maritime academy (or the Governor of the State

designated to conduct the affairs of a regional maritime academy)

may apply in writing to the Secretary of Transportation to obtain

the use of a training vessel for the academy. A vessel provided

under this section remains the property of the United States

Government.

120 STAT. 1578 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) GENERAL AUTHORITY.—Subject to subsection (c), the Secretary may provide to a State maritime academy, for use as a

training vessel, a suitable vessel under the control of the Secretary

or made available to the Secretary under subsection (e). If a suitable

vessel is not available, the Secretary may build and provide a

suitable vessel.

‘‘(c) APPROVAL REQUIREMENTS.—The Secretary may provide a

vessel under this section only if—

‘‘(1) an application has been made under subsection (a);

‘‘(2) the State maritime academy satisfies section 51506(a)

of this title; and

‘‘(3) a suitable port will be available for the safe mooring

of the vessel while the academy is using the vessel.

‘‘(d) PREPARATION AND MAINTENANCE.—A vessel provided under

this section shall be—

‘‘(1) repaired, reconditioned, and equipped (with all apparel,

charts, books, and instruments of navigation) as necessary for

use as a training vessel; and

‘‘(2) maintained in good repair by the Secretary.

‘‘(e) AGENCY VESSELS.—An agency may provide to the Secretary,

for use by a State maritime academy, a vessel (including equipment)

that—

‘‘(1) is suitable for training purposes; and

‘‘(2) can be provided without detriment to the service to

which the vessel is assigned.

‘‘(f) FUEL COSTS.—The Secretary may pay to a State maritime

academy the costs of fuel used by a vessel provided under this

section while used for training.

‘‘(g) REMOVING VESSELS FROM SERVICE AND VESSEL SHARING.—

The Secretary may not—

‘‘(1) take a vessel, currently in use as a training vessel

under this section, out of service to implement an alternative

program (including vessel sharing) unless the vessel is

incapable of being maintained in good repair as required by

subsection (d); or

‘‘(2) implement a program requiring a State maritime

academy to share its training vessel with another State maritime academy, except with the express consent of Congress.

‘‘§ 51505. Annual payments for maintenance and support

‘‘(a) PAYMENT AGREEMENTS.—The Secretary of Transportation

may make an agreement (effective for not more than 4 years)

with the following academies to provide annual payments to those

academies for their maintenance and support:

‘‘(1) One State maritime academy in each State that satisfies section 51506(a) of this title.

‘‘(2) Each regional maritime academy that satisfies section

51506(a) of this title.

‘‘(b) PAYMENTS.—

‘‘(1) IN GENERAL.—Subject to paragraph (2), an annual payment to an academy under subsection (a) shall be at least

equal to the amount given to the academy for its maintenance

and support by the State in which it is located, or, for a

regional maritime academy, by all States cooperating to sponsor

the academy.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1579

‘‘(2) MAXIMUM.—The amount under paragraph (1) may not be more than $25,000. However, if the academy satisfies section

51506(b) of this title, the amount shall be—

‘‘(A) $100,000 for a State maritime academy; and

‘‘(B) $200,000 for a regional maritime academy.

‘‘§ 51506. Conditions to receiving payments and use of vessels

‘‘(a) GENERAL CONDITIONS.—As conditions of receiving an

annual payment or the use of a vessel under this chapter, a State

maritime academy must—

‘‘(1) provide courses of instruction on navigation, marine

engineering (including steam and diesel propulsion), the operation and maintenance of new vessels and equipment, and

innovations being introduced to the merchant marine of the

United States;

‘‘(2) agree in writing to conform to the standards for

courses, training facilities, admissions, and instruction that

the Secretary of Transportation may establish after consultation

with the superintendents of State maritime academies; and

‘‘(3) agree in writing to require, as a condition for graduation, that each individual who is a citizen of the United States

and who is attending the academy in a merchant marine officer

preparation program pass the examination required for the

issuance of a license under section 7101 of this title.

‘‘(b) ADDITIONAL CONDITION TO PAYMENTS OF MORE THAN

$25,000.—As a condition of receiving an annual payment of more

than $25,000 under section 51505 of this title, a State maritime

academy also must agree to admit each year a number of citizens

of the United States who meet its admission requirements and

reside in a State not supporting that academy. The Secretary shall

determine the number of individuals to be admitted by each

academy under this subsection. The number may not be more

than one-third of the total number of individuals attending the

academy at any time.

‘‘§ 51507. Places of training

‘‘The Secretary of Transportation may provide for the training

of students attending a State maritime academy—

‘‘(1) on vessels owned or subsidized by the United States

Government;

‘‘(2) on other documented vessels, with the permission of

the owner; and

‘‘(3) in shipyards or plants and with industrial or educational organizations.

‘‘§ 51508. Allowances for students

‘‘Under regulations prescribed by the Secretary of Transportation, a student at a State maritime academy shall receive from

the Secretary allowances for transportation (including reimbursement of traveling expenses) when traveling under orders to receive

training under section 51507 of this title.

‘‘§ 51509. Student incentive payment agreements

‘‘(a) GENERAL AUTHORITY.—If a State maritime academy has

an agreement with the Secretary of Transportation under section

51505 of this title, the Secretary may make an agreement with

a student at the academy who is a citizen of the United States

Regulations.

120 STAT. 1580 PUBLIC LAW 109–304—OCT. 6, 2006

to make student incentive payments to the individual. An agreement with a student may not be effective for more than 4 academic

years. The Secretary shall allocate payments under this section

among the various State maritime academies in an equitable

manner.

‘‘(b) PAYMENTS.—Payments under an agreement under this sec- tion shall be equal to $4,000 each academic year and be paid,

as prescribed by the Secretary, while the individual is attending

the academy. The payments shall be used for uniforms, books,

and subsistence.

‘‘(c) MIDSHIPMAN AND ENLISTED RESERVE STATUS.—An agreement under this section shall require the student to accept midshipman and enlisted reserve status in the Naval Reserve (including

the Merchant Marine Reserve, Naval Reserve) before receiving any

payments under the agreement.

‘‘(d) AGREEMENT REQUIREMENTS.—An agreement under this section shall require the student to—

‘‘(1) complete the course of instruction at the academy

the individual is attending;

‘‘(2) take the examination for a license as an officer in

the merchant marine of the United States before graduation

from the academy and fulfill the requirements for such a license

within 3 months after graduation from the academy;

‘‘(3) maintain a valid license as an officer in the merchant

marine of the United States for at least 6 years after graduation

from the academy, accompanied by the appropriate national

and international endorsements and certification required by

the Coast Guard for service aboard vessels on domestic and

international voyages;

‘‘(4) accept, if tendered, an appointment as a commissioned

officer in the Naval Reserve (including the Merchant Marine

Reserve, Naval Reserve), the Coast Guard Reserve, or any

other reserve unit of an armed force of the United States,

and, if tendered the appointment, to serve for at least 6 years

after graduation from the academy;

‘‘(5) serve the foreign and domestic commerce and the

national defense of the United States for at least 3 years

after graduation from the academy—

‘‘(A) as a merchant marine officer on a documented

vessel or a vessel owned and operated by the United States

Government or by a State;

‘‘(B) as an employee in a United States maritimerelated industry, profession, or marine science (as determined by the Secretary), if the Secretary determines that

service under subparagraph (A) is not available to the

individual;

‘‘(C) as a commissioned officer on active duty in an

armed force of the United States, as a commissioned officer

in the National Oceanic and Atmospheric Administration,

or in other maritime-related Federal employment which

serves the national security interests of the United States,

as determined by the Secretary; or

‘‘(D) by a combination of the service alternatives

referred to in subparagraphs (A)–(C); and

‘‘(6) report to the Secretary on compliance with this subsection.

‘‘(e) FAILURE TO COMPLETE COURSE OF INSTRUCTION.—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1581

‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines that an individual who has accepted the payments

described in subsection (b) for a minimum of 2 academic years

has failed to fulfill the part of the agreement described in

subsection (d)(1), the individual may be ordered by the Secretary of Defense to serve on active duty in the armed forces

of the United States for a period of not more than 2 years.

In cases of hardship as determined by the Secretary of

Transportation, the Secretary of Transportation may waive this

paragraph in whole or in part.

‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is

unable or unwilling to order an individual to serve on active

duty under paragraph (1), or if the Secretary of Transportation

determines that reimbursement of the cost of education provided would better serve the interests of the United States,

the Secretary of Transportation may recover from the individual

the amount of student incentive payments, plus interest and

attorney fees. The Secretary may reduce the amount to be

recovered to reflect partial performance of service obligations

and other factors the Secretary determines merit a reduction.

‘‘(f) FAILURE TO CARRY OUT OTHER REQUIREMENTS.—

‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines that an individual has failed to fulfill any part of the

agreement described in subsection (d)(2)–(6), the individual may

be ordered to serve on active duty for a period of at least

2 years but not more than the unexpired period (as determined

by the Secretary) of the service required by subsection (d)(5).

The Secretary of Transportation, in consultation with the Secretary of Defense, shall determine in which service the individual shall serve. In cases of hardship as determined by the

Secretary of Transportation, the Secretary of Transportation

may waive this paragraph in whole or in part.

‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is

unable or unwilling to order an individual to serve on active

duty under paragraph (1), or if the Secretary of Transportation

determines that reimbursement of the cost of education provided would better serve the interests of the United States,

the Secretary of Transportation may recover from the individual

the amount of student incentive payments, plus interest and

attorney fees. The Secretary may reduce the amount to be

recovered to reflect partial performance of service obligations

and other factors the Secretary determines merit a reduction.

‘‘(g) ACTIONS TO RECOVER COST.—To aid in the recovery of

the cost of education provided by the Government under a commitment agreement under this section, the Secretary of Transportation

may—

‘‘(1) request the Attorney General to bring a civil action

against the individual; and

‘‘(2) make use of the Federal debt collection procedures

in chapter 176 of title 28 or other applicable administrative

remedies.

‘‘§ 51510. Deferment of service obligation under student

incentive payment agreements

‘‘The Secretary of Transportation may defer the service commitment of an individual under section 51509(d)(5) of this title (as

specified in the agreement under section 51509) for not more than

120 STAT. 1582 PUBLIC LAW 109–304—OCT. 6, 2006

2 years if the individual is engaged in a graduate course of study

approved by the Secretary. However, deferment of service as a

commissioned officer on active duty must be approved by the Secretary of the affected military department (or the Secretary of

Commerce, for service with the National Oceanic and Atmospheric

Administration).

‘‘§ 51511. Midshipman status in the Naval Reserve

‘‘A citizen of the United States attending a State maritime

academy may be appointed by the Secretary of the Navy as a

midshipman in the Naval Reserve (including the Merchant Marine

Reserve, Naval Reserve).

‘‘CHAPTER 517—OTHER SUPPORT FOR MERCHANT

MARINE TRAINING

‘‘Sec.

‘‘51701. United States Maritime Service.

‘‘51702. Civilian nautical schools.

‘‘51703. Additional training.

‘‘51704. Training for maritime oil pollution prevention, response, and clean-up.

‘‘§ 51701. United States Maritime Service

‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation

may establish and maintain a voluntary organization, to be known

as the United States Maritime Service, for the training of citizens

of the United States to serve on merchant vessels of the United

States.

‘‘(b) SPECIFIC AUTHORITY.—The Secretary may—

‘‘(1) determine the number of individuals to be enrolled

for training and reserve purposes in the Service;

‘‘(2) fix the rates of pay and allowances of the individuals

without regard to chapter 51 or subchapter III of chapter 53

of title 5;

‘‘(3) prescribe the course of study and the periods of training

for the Service; and

‘‘(4) prescribe the uniform of the Service and the rules

on providing and wearing the uniform.

‘‘(c) RANKS, GRADES, AND RATINGS.—The ranks, grades, and

ratings for personnel of the Service shall be the same as those

prescribed for personnel of the Coast Guard.

‘‘(d) MEDALS AND AWARDS.—The Secretary may establish and

maintain a medals and awards program to recognize distinguished

service, superior achievement, professional performance, and other

commendable achievement by personnel of the Service.

‘‘§ 51702. Civilian nautical schools

‘‘(a) DEFINITION.—In this section, the term ‘civilian nautical

school’ means a school operated in the United States (except the

United States Merchant Marine Academy, a State maritime

academy, or another school operated by the United States Government) that offers instruction to individuals quartered on a vessel

primarily to train them for service in the merchant marine.

‘‘(b) INSPECTION.—Each civilian nautical school is subject to

inspection by the Secretary of Transportation.

‘‘(c) RATING AND CERTIFICATION.—The Secretary may, under

regulations the Secretary may prescribe, provide for the rating

and certification of civilian nautical schools as to the adequacy

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1583

of their course of instruction, the competence of their instructors,

and the suitability of the equipment used in their course of instruction.

‘‘§ 51703. Additional training

‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation

may provide additional training on maritime subjects to supplement

other training opportunities and make the training available to

the personnel of the merchant marine of the United States and

individuals preparing for a career in the merchant marine of the

United States.

‘‘(b) EQUIPMENT, SUPPLIES, AND CONTRACTS.—The Secretary

may—

‘‘(1) prepare or buy equipment or supplies required for

the additional training; and

‘‘(2) without regard to section 3709 of the Revised Statutes

(41 U.S.C. 5), make contracts for services the Secretary considers necessary to prepare the equipment and supplies and

to supervise and administer the additional training.

‘‘§ 51704. Training for maritime oil pollution prevention,

response, and clean-up

‘‘(a) ASSISTANCE IN ESTABLISHING PROGRAM.—The Secretary

of Transportation shall assist maritime training institutions

approved by the Secretary in establishing a training program for

maritime oil pollution prevention, response, and clean-up.

‘‘(b) PROVIDING TRAINING VESSELS.—Subject to subsection (c),

the Secretary may provide, with title free of all liens, to maritime

training institutions that have a program established under subsection (a), offshore supply vessels and tug/supply vessels that

were built in the United States and are in the possession of the

Maritime Administration because of a default on a loan guaranteed

under chapter 537 of this title.

‘‘(c) REQUIREMENTS.—In addition to any other requirements

the Secretary considers appropriate, the following requirements

apply to vessels provided under this section:

‘‘(1) The vessel shall be offered to the institution at a

location selected by the Secretary.

‘‘(2) The institution shall use the vessel to train students

and appropriate maritime industry personnel in oil spill prevention, response, clean-up, and related skills.

‘‘(3) The institution shall make the vessel and qualified

students available to appropriate Federal, State, and local oil

spill response authorities when there is a maritime oil spill.

‘‘(4) The institution may not sell, trade, charter, donate,

scrap, or in any way alter or dispose of the vessel without

prior approval of the Secretary.

‘‘(5) The institution may not use the vessel in competition

with a privately-owned vessel documented under chapter 121

of this title or titled under the law of a State, unless necessary

to carry out this section.

‘‘(6) When the institution can no longer use the vessel

for its training program, the institution shall return the vessel

to the Secretary. The Secretary shall take possession at the

institution and thereafter may provide the vessel to another

institution under this section or dispose of the vessel.

120 STAT. 1584 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘CHAPTER 519—MERCHANT MARINE AWARDS

‘‘Sec.

‘‘51901. Awards for individual acts or service.

‘‘51902. Gallant Ship Award.

‘‘51903. Multiple awards.

‘‘51904. Presentation to representatives.

‘‘51905. Flags and grave markers.

‘‘51906. Special certificates for civilian service to armed forces.

‘‘51907. Manufacture and sale of awards and replacements.

‘‘51908. Prohibition against unauthorized manufacture, sale, possession, or display

of awards.

‘‘§ 51901. Awards for individual acts or service

‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation

may award decorations and medals of appropriate design (including

ribbons, ribbon bars, emblems, rosettes, miniature facsimiles,

plaques, citations, or other suitable devices or insignia) for individual acts or service in the merchant marine of the United States.

The design may be similar to the design of a decoration or medal

authorized for members of the armed forces for similar acts or

service.

‘‘(b) SPECIFIC AUTHORITY.—The Secretary may award—

‘‘(1) a Merchant Marine Distinguished Service Medal to

an individual for outstanding acts, conduct, or valor beyond

the line of duty;

‘‘(2) a Merchant Marine Meritorious Service Medal to an

individual for meritorious acts, conduct, or valor in the line

of duty, but not of the outstanding character that would warrant

the award of the Merchant Marine Distinguished Service

Medal;

‘‘(3) a decoration or medal to an individual for service

during a war, national emergency proclaimed by the President

or Congress, or operations by the armed forces outside the

continental United States under conditions of danger to life

and property; and

‘‘(4) a decoration or medal to an individual for other acts

or service of conspicuous gallantry, intrepidity, and extraordinary heroism under conditions of danger to life and property

that would warrant a similar decoration or medal for a member

of the armed forces.

‘‘§ 51902. Gallant Ship Award

‘‘(a) AWARDS TO VESSELS.—The Secretary of Transportation

may award a Gallant Ship Award and a citation to a vessel

(including a foreign vessel) participating in outstanding or gallant

action in a marine disaster or other emergency to save life or

property at sea. The Secretary may award a plaque to the vessel,

and a replica of the plaque may be preserved as a permanent

historical record.

‘‘(b) AWARDS TO CREWS.—The Secretary of Transportation may

award an appropriate citation ribbon bar to the master and each

individual serving, at the time of the action, on a vessel issued

an award under subsection (a).

‘‘(c) CONSULTATION.—The Secretary of Transportation shall consult with the Secretary of State before awarding an award or

citation to a foreign vessel or its crew under this section.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1585

‘‘§ 51903. Multiple awards

‘‘An individual may not be awarded more than one of any

type of decoration or medal under this chapter. For each succeeding

act or service justifying the same decoration or medal, a suitable

device may be awarded to be worn with the decoration or medal.

‘‘§ 51904. Presentation to representatives

‘‘If an individual to be issued an award under this chapter

is unable to accept the award personally, the Secretary of Transportation may present the award to an appropriate representative.

‘‘§ 51905. Flags and grave markers

‘‘Except as authorized under another law, the Secretary of

Transportation may issue, at no cost, a flag of the United States

and a grave marker to the family or personal representative of

a deceased individual who served in the merchant marine of the

United States in support of the armed forces of the United States

or its allies during a war or national emergency.

‘‘§ 51906. Special certificates for civilian service to armed

forces

‘‘(a) GENERAL AUTHORITY.—The Maritime Administrator may

issue a special certificate to an individual, or the personal representative of an individual, in recognition of service of that individual

in the merchant marine of the United States, if the service has

been determined to be active duty under section 401 of the GI

Bill Improvement Act of 1977 (Public Law 95–202; 38 U.S.C. 106

note).

‘‘(b) RELATIONSHIP TO OTHER LAWS.—Issuance of a certificate

under subsection (a) does not entitle an individual to any rights,

privileges, or benefits under a law of the United States.

‘‘§ 51907. Manufacture and sale of awards and replacements

‘‘The Secretary of Transportation may—

‘‘(1) authorize private persons to manufacture decorations

and medals authorized under this chapter or a prior law; and

‘‘(2) provide at cost, or authorize private persons to sell

at reasonable prices, replacements for those decorations and

medals.

‘‘§ 51908. Prohibition against unauthorized manufacture,

sale, possession, or display of awards

‘‘(a) PROHIBITION.—Except as authorized under this chapter,

a person may not manufacture, sell, possess, or display a decoration

or medal provided for in this chapter.

‘‘(b) CIVIL PENALTY.—A person violating this section is liable

to the United States Government for a civil penalty of not more

than $2,000.

‘‘CHAPTER 521—MISCELLANEOUS

‘‘Sec.

‘‘52101. Reemployment rights for certain merchant seamen.

‘‘§ 52101. Reemployment rights for certain merchant seamen

‘‘(a) IN GENERAL.—An individual who is certified by the Secretary of Transportation under subsection (c) shall be entitled to

120 STAT. 1586 PUBLIC LAW 109–304—OCT. 6, 2006

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) to the Secretary

not later than 45 days after the date the individual completes

a period of employment described in subsection (c)(1)(A) with respect

to which the application is submitted.

‘‘(c) CERTIFICATION DETERMINATION.—Not later than 20 days

after the date the Secretary receives from an individual an application for certification under this subsection, the Secretary shall—

‘‘(1) determine whether the individual—

‘‘(A) was employed in the activation or operation of

a vessel—

‘‘(i) in the National Defense Reserve Fleet maintained under section 11 of the Merchant Ship Sales

Act of 1946 (50 App. U.S.C. 1744) in a period in which

the vessel was in use or being activated for use under

subsection (b) of that section;

‘‘(ii) requisitioned or purchased under chapter 563

of this title; or

‘‘(iii) owned, chartered, or controlled by the United

States Government and used by the Government 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 73 of this title; and

‘‘(2) if the Secretary makes affirmative determinations

under subparagraphs (A) and (B) of paragraph (1), certify that

individual under this subsection.

‘‘(d) EQUIVALENCE TO MILITARY SELECTIVE SERVICE ACT CER- TIFICATE.—For purposes of reemployment rights and benefits provided by this section, a certification under subsection (c) shall

be considered to be the equivalent of a certificate described in

section 9(a) of the Military Selective Service Act (50 App. U.S.C.

459(a)).

‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS’’.

(c) CHAPTERS FOLLOWING CHAPTER 531.—Subtitle V of title

46, United States Code, is amended by adding at the end the

following:

‘‘CHAPTER 533—CONSTRUCTION RESERVE FUNDS

‘‘Sec.

‘‘53301. Definitions.

‘‘53302. Authority for construction reserve funds.

‘‘53303. Persons eligible to establish funds.

‘‘53304. Vessel ownership.

‘‘53305. Eligible fund deposits.

‘‘53306. Recognition of gain for tax purposes.

‘‘53307. Basis for determining gain or loss and for depreciating new vessels.

‘‘53308. Order and proportions of deposits and withdrawals.

‘‘53309. Accumulation of deposits.

‘‘53310. Obligation of deposits and period for construction of certain vessels.

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1587

‘‘53311. Taxation of deposits on failure of conditions.

‘‘53312. Assessment and collection of deficiency tax.

‘‘§ 53301. Definitions

‘‘(a) IN GENERAL.—In this chapter:

‘‘(1) CONSTRUCTION CONTRACT.—The term ‘construction contract’ includes, for a taxpayer constructing a new vessel in

a shipyard owned by that taxpayer, an agreement between

the taxpayer and the Secretary of Transportation for that

construction containing provisions the Secretary considers

advisable to carry out this chapter.

‘‘(2) NEW VESSEL.—The term ‘new vessel’ means—

‘‘(A) a vessel—

‘‘(i) constructed in the United States after

December 31, 1939, constructed with a constructiondifferential subsidy under title V of the Merchant

Marine Act, 1936, or constructed with financing or

a financing guarantee under chapter 537 or 575 of

this title;

‘‘(ii) documented or agreed with the Secretary to

be documented under the laws of the United States;

and

‘‘(iii)(I) of a type, size, and speed that the Secretary

determines is suitable for use on the high seas or

Great Lakes in carrying out this subtitle, but not less

than 2,000 gross tons or less than 12 knots speed

unless the Secretary certifies in each case that a vessel

of lesser tonnage or speed is desirable for use by the

United States Government in case of war or national

emergency; or

‘‘(II) constructed to replace a vessel bought or

requisitioned by the Government; and

‘‘(B) a vessel reconstructed or reconditioned for use

only on the Great Lakes, including the Saint Lawrence

River and Gulf, if the Secretary finds that the reconstruction or reconditioning will promote the objectives of this

subtitle.

‘‘(b) ADDITIONAL TAX-RELATED TERMS.—Other terms used in

this chapter have the same meaning as in chapter 1 of the Internal

Revenue Code of 1986 (26 U.S.C. ch. 1).

‘‘§ 53302. Authority for construction reserve funds

‘‘(a) GENERAL AUTHORITY.—An eligible person under section

53303 of this title may establish a construction reserve fund for

the construction, reconstruction, reconditioning, or acquisition of

a new vessel or for other purposes authorized by this chapter.

‘‘(b) APPLICATION OF CERTAIN LAWS AND REGULATIONS.—The

fund shall be established, maintained, expended, and used as provided by this chapter and regulations prescribed jointly by the

Secretary of Transportation and the Secretary of the Treasury.

‘‘§ 53303. Persons eligible to establish funds

‘‘A construction reserve fund may be established by a citizen

of the United States that—

‘‘(1) is operating a vessel in the foreign or domestic commerce of the United States or in the fisheries;

120 STAT. 1588 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) owns, in whole or in part, a vessel being operated

in the foreign or domestic commerce of the United States or

in the fisheries;

‘‘(3) was operating a vessel in the foreign or domestic

commerce of the United States or in the fisheries when it

was bought or requisitioned by the United States Government;

‘‘(4) owned, in whole or in part, a vessel being operated

in the foreign or domestic commerce of the United States or

in the fisheries when it was bought or requisitioned by the

Government; or

‘‘(5) had acquired or was having constructed a vessel to

operate in the foreign or domestic commerce of the United

States or in the fisheries when it was bought or requisitioned

by the Government.

‘‘§ 53304. Vessel ownership

‘‘In this chapter, a vessel is deemed to be constructed or

acquired by a taxpayer if constructed or acquired by a corporation

when the taxpayer owns at least 95 percent of each class of stock

of the corporation.

‘‘§ 53305. Eligible fund deposits

‘‘A construction reserve fund may include deposits of—

‘‘(1) the proceeds from the sale of a vessel;

‘‘(2) indemnities for the loss of a vessel;

‘‘(3) earnings from the operation of a documented vessel

and from services incident to the operation; and

‘‘(4) interest or other amounts accrued on deposits in the

fund.

‘‘§ 53306. Recognition of gain for tax purposes

‘‘(a) DEFINITIONS.—In this section, the terms ‘net proceeds’ and

‘net indemnity’ mean the sum of—

‘‘(1) the adjusted basis of the vessel; and

‘‘(2) the amount of gain the taxpayer would recognize without regard to this section.

‘‘(b) RECOGNITION OF GAIN.—In computing net income under

the income or excess profits tax laws of the United States, a taxpayer does not recognize a gain on the sale or the actual or constructive total loss of a vessel if the taxpayer—

‘‘(1) deposits an amount equal to the net proceeds of the

sale or the net indemnity for the loss in a construction reserve

fund within 60 days after receiving the payment of proceeds

or indemnity; and

‘‘(2) elects under this section not to recognize the gain.

‘‘(c) WHEN ELECTION MUST BE MADE.—

‘‘(1) IN GENERAL.—Except as provided in paragraph (2),

the taxpayer must make the election referred to in subsection

(b) in the taxpayer’s income tax return for the taxable year

in which the gain was realized.

‘‘(2) RECEIPT AFTER TAXABLE YEAR.—If the vessel is bought

or requisitioned by the United States Government, or is lost,

and the taxpayer receives payment for the vessel or indemnity

for the loss from the Government after the end of the taxable

year in which it was bought, requisitioned, or lost, the taxpayer

must make the election referred to in subsection (b) within

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1589

60 days after receiving the payment or indemnity, on a form

prescribed by the Secretary of the Treasury.

‘‘(d) EFFECT OF STATUTE OF LIMITATION.—If the taxpayer makes

an election under subsection (c)(2), and computation or recomputation under this section is otherwise allowable but is prevented

by a statute of limitation on the date the election is made or

within 6 months thereafter, the computation or recomputation

nevertheless shall be made notwithstanding the statute if the taxpayer files a claim for the computation or recomputation within

6 months after the date of making the election.

‘‘§ 53307. Basis for determining gain or loss and for depreciating new vessels

‘‘Under the income or excess profits tax laws of the United

States, the basis for determining a gain or loss and for depreciation

of a new vessel constructed, reconstructed, reconditioned, or

acquired by the taxpayer, or for which purchase-money indebtedness

is liquidated as provided in section 53310 of this title, with amounts

from a construction reserve fund, shall be reduced by that part

of the deposits in the fund expended in the construction, reconstruction, reconditioning, acquisition, or liquidation of purchase-money

indebtedness of the new vessel that represents a gain not recognized

for tax purposes under section 53306 of this title.

‘‘§ 53308. Order and proportions of deposits and withdrawals

‘‘In this chapter—

‘‘(1) if the net proceeds of a sale or the net indemnity

for a loss is deposited in more than one deposit, the amount

consisting of the gain shall be deemed to be deposited first;

‘‘(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 a deposit consists in part of a gain not recognized

under section 53306 of this title, any expenditure, obligation,

or withdrawal applied against that deposit shall be deemed

to be a gain in the proportion that the part of the deposit

consisting of a gain bears to the total amount of the deposit.

‘‘§ 53309. Accumulation of deposits

‘‘For any taxable year, amounts on deposit in a construction

reserve fund on the last day of the taxable year, for which the

requirements of section 53310 of this title have been satisfied (to

the extent they apply on the last day of the taxable year), are

deemed to have been retained for the reasonable needs of the

business within the meaning of section 537(a) of the Internal Revenue Code of 1986 (26 U.S.C. 537(a)).

‘‘§ 53310. Obligation of deposits and period for construction

of certain vessels

‘‘(a) APPLICATION OF SECTIONS 53306 AND 53309.—Sections

53306 and 53309 of this title apply to a deposit in a construction

reserve fund only if, within 3 years after the date of the deposit

(and any extension under subsection (c))—

‘‘(1)(A) a contract is made for the construction or acquisition

of a new vessel or, with the approval of the Secretary of

Transportation, for a part interest in a new vessel or for the

reconstruction or reconditioning of a new vessel;

120 STAT. 1590 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(B) the deposit is expended or obligated for expenditure

under that contract;

‘‘(C) at least 12.5 percent of the construction or contract

price of the vessel is paid or irrevocably committed for payment;

and

‘‘(D) the plans and specifications for the vessel are approved

by the Secretary to the extent the Secretary considers necessary; or

‘‘(2) the deposit is expended or obligated for expenditure

for the liquidation of existing or subsequently incurred purchase-money indebtedness to a person not a parent company

of, or a company affiliated or associated with, the mortgagor

on a new vessel.

‘‘(b) ADDITIONAL REQUIREMENTS FOR CERTAIN VESSELS.—In

addition to the requirements of subsection (a)(1), for a vessel not

constructed under a construction-differential subsidy contract or

not bought from the Secretary of Transportation—

‘‘(1) at least 5 percent of the construction (or, if the contract

covers more than one vessel, at least 5 percent of the construction of the first vessel) must be completed within 6 months

after the date of the construction contract (or within the period

of an extension under subsection (c)), as estimated by the

Secretary and certified by the Secretary to the Secretary of

the Treasury; and

‘‘(2) construction under the contract must be completed

with reasonable dispatch thereafter.

‘‘(c) EXTENSIONS.—The Secretary of Transportation may grant

extensions of the period within which the deposits must be expended

or obligated or within which the construction must have progressed

to the extent of 5 percent completion under this section. However,

the extensions may not be for a total of more than 2 years for

the expenditure or obligation of deposits or one year for the progress

of construction.

‘‘§ 53311. Taxation of deposits on failure of conditions

‘‘A deposited gain, if otherwise taxable income under the law

applicable to the taxable year in which the gain was realized,

shall be included in gross income for that taxable year, except

for purposes of the declared value excess profits tax and the capital

stock tax, if—

‘‘(1) the deposited gain is not expended or obligated within

the appropriate period under section 53310 of this title;

‘‘(2) the deposited gain is withdrawn before the end of

that period;

‘‘(3) the construction related to that deposited gain has

not progressed to the extent of 5 percent of completion within

the appropriate period under section 53310 of this title; or

‘‘(4) 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 related to that deposited

gain is not completed with reasonable dispatch.

‘‘§ 53312. Assessment and collection of deficiency tax

‘‘Notwithstanding any other provision of law, a deficiency in

tax for a taxable year resulting from the inclusion of an amount

in gross income as provided by section 53311 of this title, and

the amount to be treated as a deficiency under section 53311

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1591

instead of as an adjustment for the declared value excess profits

tax, may be assessed or a civil action may be brought to collect

the deficiency without assessment, at any time. Interest on a deficiency or amount to be treated as a deficiency does not begin

until the date the deposited gain or part of the deposited gain

in question is required to be included in gross income under section

51111.

‘‘CHAPTER 535—CAPITAL CONSTRUCTION FUNDS

‘‘Sec.

‘‘53501. Definitions.

‘‘53502. Regulations.

‘‘53503. Establishing a capital construction fund.

‘‘53504. Deposits and withdrawals.

‘‘53505. Ceiling on deposits.

‘‘53506. Investment and fiduciary requirements.

‘‘53507. Nontaxation of deposits.

‘‘53508. Separate accounts within a fund.

‘‘53509. Qualified withdrawals.

‘‘53510. Tax treatment of qualified withdrawals and basis of property.

‘‘53511. Tax treatment of nonqualified withdrawals.

‘‘53512. FIFO and LIFO withdrawals.

‘‘53513. Corporate reorganizations and partnership changes.

‘‘53514. Relationship of old fund to new fund.

‘‘53515. Records and reports.

‘‘53516. Termination of agreement after change in regulations.

‘‘53517. Reports.

‘‘§ 53501. Definitions

‘‘In this chapter:

‘‘(1) AGREEMENT VESSEL.—The term ‘agreement vessel’

means—

‘‘(A) an eligible vessel or a qualified vessel that is

subject to an agreement under this chapter; and

‘‘(B) a barge or container that is part of the complement

of a vessel described in subparagraph (A) if provided for

in the agreement.

‘‘(2) ELIGIBLE VESSEL.—The term ‘eligible vessel’ means—

‘‘(A) a vessel—

‘‘(i) constructed in the United States (and, if

reconstructed, reconstructed in the United States), constructed outside the United States but documented

under the laws of the United States on April 15, 1970,

or constructed outside the United States for use in

the United States foreign trade pursuant to a contract

made before April 15, 1970;

‘‘(ii) documented under the laws of the United

States; and

‘‘(iii) operated in the foreign or domestic trade

of the United States or in the fisheries of the United

States; and

‘‘(B) a commercial fishing vessel—

‘‘(i) constructed in the United States and, if

reconstructed, reconstructed in the United States;

‘‘(ii) of at least 2 net tons but less than 5 net

tons;

‘‘(iii) owned by a citizen of the United States;

‘‘(iv) having its home port in the United States;

and

‘‘(v) operated in the commercial fisheries of the

United States.

120 STAT. 1592 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(3) JOINT REGULATIONS.—The term ‘joint regulations’

means regulations prescribed jointly by the Secretary and the

Secretary of the Treasury under section 53502(b) of this title.

‘‘(4) NONCONTIGUOUS TRADE.—The term ‘noncontiguous

trade’ means—

‘‘(A) trade between—

‘‘(i) one of the contiguous 48 States; and

‘‘(ii) Alaska, Hawaii, Puerto Rico, or an insular

territory or possession of the United States; and

‘‘(B) trade between—

‘‘(i) a place in Alaska, Hawaii, Puerto Rico, or

an insular territory or possession of the United States;

and

‘‘(ii) another place in Alaska, Hawaii, Puerto Rico,

or an insular territory or possession of the United

States.

‘‘(5) QUALIFIED VESSEL.—The term ‘qualified vessel’

means—

‘‘(A) a vessel—

‘‘(i) constructed in the United States (and, if

reconstructed, reconstructed in the United States), constructed outside the United States but documented

under the laws of the United States on April 15, 1970,

or constructed outside the United States for use in

the United States foreign trade pursuant to a contract

made before April 15, 1970;

‘‘(ii) documented under the laws of the United

States; and

‘‘(iii) agreed, between the Secretary and the person

maintaining the capital construction fund established

under section 53503 of this title, to be operated in

the United States foreign, Great Lakes, or noncontiguous domestic trade or in the fisheries of the United

States; and

‘‘(B) a commercial fishing vessel—

‘‘(i) constructed in the United States and, if

reconstructed, reconstructed in the United States;

‘‘(ii) of at least 2 net tons but less than 5 net

tons;

‘‘(iii) owned by a citizen of the United States;

‘‘(iv) having its home port in the United States;

and

‘‘(v) operated in the commercial fisheries of the

United States.

‘‘(6) SECRETARY.—The term ‘Secretary’ means—

‘‘(A) the Secretary of Commerce with respect to an

eligible vessel or a qualified vessel operated or to be operated in the fisheries of the United States; and

‘‘(B) the Secretary of Transportation with respect to

other vessels.

‘‘(7) UNITED STATES FOREIGN TRADE.—The term ‘United

States foreign trade’ includes those areas in domestic trade

in which a vessel built with a construction-differential subsidy

is allowed to operate under the first sentence of section 506

of the Merchant Marine Act, 1936.

‘‘(8) VESSEL.—The term ‘vessel’ includes—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1593

‘‘(A) cargo handling equipment that the Secretary

determines is intended for use primarily on the vessel;

and

‘‘(B) an ocean-going towing vessel, an ocean-going

barge, or a comparable towing vessel or barge operated

on the Great Lakes.

‘‘§ 53502. Regulations

‘‘(a) IN GENERAL.—Except as provided in subsection (b), the

Secretary shall prescribe regulations to carry out this chapter.

‘‘(b) TAX LIABILITY.—The Secretary and the Secretary of the

Treasury shall prescribe joint regulations for the determination

of tax liability under this chapter.

‘‘§ 53503. Establishing a capital construction fund

‘‘(a) IN GENERAL.—A citizen of the United States owning or

leasing an eligible vessel may make an agreement with the Secretary under this chapter to establish a capital construction fund

for the vessel.

‘‘(b) ALLOWABLE PURPOSE.—The purpose of the agreement shall

be to provide 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.

‘‘§ 53504. Deposits and withdrawals

‘‘(a) REQUIRED DEPOSITS.—An agreement to establish a capital

construction fund shall provide for the deposit in the fund of the

amounts agreed to be appropriate to provide for qualified withdrawals under section 53509 of this title.

‘‘(b) APPLICABLE REQUIREMENTS.—Deposits in and withdrawals

from the fund are subject to the requirements included in the

agreement or prescribed by the Secretary by regulation. However,

the Secretary may not require a person to deposit in the fund

for a taxable year more than 50 percent of that portion of the

person’s taxable income for that year (as determined under section

53505(a)(1) of this title) that is attributable to the operation of

an agreement vessel.

‘‘§ 53505. Ceiling on deposits

‘‘(a) MAXIMUM DEPOSITS.—The amount deposited in a capital

construction fund for a taxable year may not exceed the sum of—

‘‘(1) that portion of the taxable income of the owner or

lessee for the taxable year (computed under chapter 1 of the

Internal Revenue Code of 1986 (26 U.S.C. ch. 1) but without

regard to the carryback of net operating loss or net capital

loss or this chapter) that is attributable to the operation of

agreement vessels in the foreign or domestic trade of the United

States or in the fisheries of the United States;

‘‘(2) the amount allowable as a deduction under section

167 of such Code (26 U.S.C. 167) for the taxable year for

agreement vessels;

‘‘(3) if the transaction is not taken into account for purposes

of paragraph (1), the net proceeds (as defined in joint regulations) from the disposition of an agreement vessel or from

120 STAT. 1594 PUBLIC LAW 109–304—OCT. 6, 2006

insurance or indemnity attributable to an agreement vessel;

and

‘‘(4) the receipts from the investment or reinvestment of

amounts held in the fund.

‘‘(b) REDUCTIONS FOR LESSEES.—For a lessee, the maximum

amount that may be deposited for an agreement vessel under subsection (a)(2) for any period shall be reduced by any amount the

owner is required or permitted, under the capital construction fund

agreement, to deposit for that period for the vessel under subsection

(a)(2).

‘‘§ 53506. Investment and fiduciary requirements

‘‘(a) IN GENERAL.—Amounts in a capital construction fund shall

be kept in the depository specified in the agreement and shall

be subject to trustee and other fiduciary requirements prescribed

by the Secretary. Except as provided in subsection (b), amounts

in the fund may be invested only in interest-bearing securities

approved by the Secretary.

‘‘(b) STOCK INVESTMENTS.—

‘‘(1) IN GENERAL.—With the approval of the Secretary, an

agreed percentage (but not more than 60 percent) of the assets

of the fund may be invested in the stock of domestic corporations that—

‘‘(A) is fully listed and registered on an exchange registered with the Securities and Exchange Commission as

a national securities exchange; and

‘‘(B) would be acquired by a prudent investor seeking

a reasonable income and the preservation of capital.

‘‘(2) PREFERRED STOCK.—The preferred stock of a corporation is deemed to satisfy the requirements of this subsection,

even though it may not be registered and listed because it

is nonvoting stock, if the common stock of the corporation

satisfies the requirements and the preferred stock otherwise

would satisfy the requirements.

‘‘(c) MAINTAINING AGREED PERCENTAGE.—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 a way that tends to restore the

fair market value of the stock to not more than the agreed percentage.

‘‘§ 53507. Nontaxation of deposits

‘‘(a) TAX TREATMENT.—Subject to subsection (b), under the

Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.)—

‘‘(1) taxable income (determined without regard to this

chapter and section 7518 of such Code (26 U.S.C. 7518)) for

the taxable year shall be reduced by the amount deposited

for the taxable year out of amounts referred to in section

53505(a)(1) of this title;

‘‘(2) a gain from a transaction referred to in section

53505(a)(3) of this title shall not be taken into account if

an amount equal to the net proceeds (as defined in joint regulations) from the transaction is deposited in the fund;

‘‘(3) the earnings (including gains and losses) from the

investment and reinvestment of amounts held in the fund shall

not be taken into account;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1595

‘‘(4) the earnings and profits of a corporation (within the

meaning of section 316 of such Code (26 U.S.C. 316)) shall

be determined without regard to this chapter and section 7518

of such Code (26 U.S.C. 7518); and

‘‘(5) in applying the tax imposed by section 531 of such

Code (26 U.S.C. 531), amounts held in the fund shall not

be taken into account.

‘‘(b) CONDITION.—This section applies to an amount only if

the amount is deposited in the fund under the agreement within

the time provided in joint regulations.

‘‘§ 53508. Separate accounts within a fund

‘‘(a) IN GENERAL.—A capital construction fund shall have three

accounts:

‘‘(1) The capital account.

‘‘(2) The capital gain account.

‘‘(3) The ordinary income account.

‘‘(b) CAPITAL ACCOUNT.—The capital account shall consist of—

‘‘(1) amounts referred to in section 53505(a)(2) of this title;

‘‘(2) amounts referred to in section 53505(a)(3) of this title,

except that portion representing a gain not taken into account

because of section 53507(a)(2) of this title;

‘‘(3) 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 for which the person

maintaining the fund would be allowed (were it not for section

53507(a)(3) of this title) a deduction under section 243 of such

Code (26 U.S.C. 243); and

‘‘(4) interest income exempt from taxation under section

103 of such Code (26 U.S.C. 103).

‘‘(c) CAPITAL GAIN ACCOUNT.—The capital gain account shall

consist of—

‘‘(1) amounts representing capital gains on assets held for

more than 6 months and referred to in section 53505(a)(3)

or (4) of this title; minus

‘‘(2) amounts representing capital losses on assets held

in the fund for more than 6 months.

‘‘(d) ORDINARY INCOME ACCOUNT.—The ordinary income account

shall consist of—

‘‘(1) amounts referred to in section 53505(a)(1) of this title;

‘‘(2)(A) amounts representing capital gains on assets held

for not more than 6 months and referred to in section

53505(a)(3) or (4) of this title; minus

‘‘(B) amounts representing capital losses on assets held

in the fund for not more than 6 months;

‘‘(3) interest (except tax-exempt interest referred to in subsection (b)(4)) and other ordinary income (except any dividend

referred to in paragraph (5)) received on assets held in the

fund;

‘‘(4) ordinary income from a transaction described in section

53505(a)(3) of this title; and

‘‘(5) that portion of any dividend referred to in subsection

(b)(3) not taken into account under subsection (b)(3).

‘‘(e) WHEN LOSSES ALLOWED.—Except on termination of a fund,

capital losses referred to in subsection (c) or (d)(2) shall be allowed

only as an offset to gains referred to in subsection (c) or (d)(2),

respectively.

120 STAT. 1596 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 53509. Qualified withdrawals

‘‘(a) IN GENERAL.—Subject to subsection (b), a withdrawal from

a capital construction fund is a qualified withdrawal if it is made

under the terms of the agreement and is for—

‘‘(1) the acquisition, construction, or reconstruction of a

qualified vessel or a barge or container that is part of the

complement of a qualified vessel; or

‘‘(2) the payment of the principal on indebtedness incurred

in the acquisition, construction, or reconstruction of a qualified

vessel or a barge or container that is part of the complement

of a qualified vessel.

‘‘(b) BARGES AND CONTAINERS.—Except as provided in regulations prescribed by the Secretary, subsection (a) applies to a barge

or container only if it is constructed in the United States.

‘‘(c) TREATMENT AS NONQUALIFIED WITHDRAWAL.—Under joint

regulations, if the Secretary determines that a substantial obligation under an agreement is not being fulfilled, the Secretary, after

notice and opportunity for a hearing to the person maintaining

the fund, may treat any amount in the fund as an amount withdrawn from the fund in a nonqualified withdrawal.

‘‘§ 53510. Tax treatment of qualified withdrawals and basis

of property

‘‘(a) ORDER OF WITHDRAWALS.—A qualified withdrawal from

a capital construction fund shall be treated as made—

‘‘(1) first from the capital account;

‘‘(2) second from the capital gain account; and

‘‘(3) third from the ordinary income account.

‘‘(b) ORDINARY INCOME ACCOUNT WITHDRAWALS.—If a portion

of a qualified withdrawal for a vessel, barge, or container is made

from the ordinary income account, the basis of the vessel, barge,

or container shall be reduced by an amount equal to that portion.

‘‘(c) CAPITAL GAIN ACCOUNT WITHDRAWALS.—If a portion of

a qualified withdrawal for a vessel, barge, or container is made

from the capital gain account, the basis of the vessel, barge, or

container shall be reduced by an amount equal to that portion.

‘‘(d) WITHDRAWALS TO PAY PRINCIPAL.—If a portion of a qualified withdrawal to pay the principal on indebtedness is made from

the ordinary income account or the capital gain account, an amount

equal to the total reduction that would be required by subsections

(b) and (c) if the withdrawal were a qualified withdrawal for a

purpose described in those subsections 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.

The remaining amount of the withdrawal shall be treated as a

nonqualified withdrawal.

‘‘(e) GAIN ON PROPERTY WITH REDUCED BASIS.—If property,

the basis of which was reduced under subsection (b), (c), or (d),

is disposed of, any gain realized on the disposition, to the extent

it does not exceed the total reduction in the basis of the property

under those subsections, shall be treated as an amount referred

to in section 53511(c)(1) of this title withdrawn on the date of

disposition of the property. Subject to conditions prescribed in joint

regulations, this subsection does not apply to a disposition if there

is a redeposit, in an amount determined under joint regulations,

that restores the fund as far as practicable to the position it was

in before the withdrawal.

Regulations.

Regulations.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1597

‘‘§ 53511. Tax treatment of nonqualified withdrawals

‘‘(a) IN GENERAL.—Except as provided in section 53513 of this

title, a withdrawal from a fund that is not a qualified withdrawal

shall be treated as a nonqualified withdrawal.

‘‘(b) ORDER OF WITHDRAWALS.—A nonqualified withdrawal shall

be treated as made—

‘‘(1) first from the ordinary income account;

‘‘(2) second from the capital gain account; and

‘‘(3) third from the capital account.

‘‘(c) TAX TREATMENT.—For purposes of the Internal Revenue

Code of 1986 (26 U.S.C. 1 et seq.)—

‘‘(1) a nonqualified withdrawal from the ordinary income

account shall be included in income as an item of ordinary

income for the taxable year in which the withdrawal is made;

‘‘(2) a nonqualified withdrawal from the capital gain

account shall be included in income for the taxable year in

which the withdrawal is made as an item of gain realized

during that year from the disposition of an asset held for

more than 6 months; and

‘‘(3) for the period through the last date prescribed for

payment of tax for the taxable year in which the withdrawal

is made—

‘‘(A) 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);

‘‘(B) interest on the amount of the additional tax attributable to an amount treated as a nonqualified withdrawal

from the ordinary income account or the capital gain

account shall be paid at the rate determined under subsection (d) from the last date prescribed for payment of

the tax for the taxable year for which the amount was

deposited in the fund; and

‘‘(C) no interest shall be payable on amounts treated

as withdrawn on a last-in-first-out basis under section

53512 of this title.

‘‘(d) INTEREST RATE.—The rate of interest under subsection

(c)(3)(B) for a nonqualified withdrawal made in a taxable year

beginning after 1971 shall be determined and published jointly

by the Secretary and the Secretary of the Treasury. The rate

shall be such that its relationship to 8 percent is comparable,

as determined by the Secretaries under joint regulations, to the

relationship between—

‘‘(1) the money rates and investment yields for the calendar

year immediately before the beginning of the taxable year;

and

‘‘(2) the money rates and investment yields for the calendar

year 1970.

‘‘(e) NONQUALIFIED WITHDRAWALS.—

‘‘(1) IN GENERAL.—The following applicable percentage of

any amount that remains in a capital construction fund at

the close of the following specified taxable year following the

taxable year for which the amount was deposited shall be

treated as a nonqualified withdrawal:

Regulations.

120 STAT. 1598 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘If the amount remains in the fund at The

applicable

the close of the— percentage

is—

‘‘26th taxable year ............................................................................ 20 percent

‘‘27th taxable year ............................................................................ 40 percent

‘‘28th taxable year ............................................................................ 60 percent

‘‘29th taxable year ............................................................................ 80 percent

‘‘30th taxable year ............................................................................ 100 percent.

‘‘(2) EARNINGS.—The earnings of a capital construction fund

for any taxable year (except net gains) shall be treated under

this subsection as an amount deposited for the taxable year.

‘‘(3) CONTRACT FOR QUALIFIED WITHDRAWAL.—Under paragraph (1), an amount shall not be treated as remaining in

a capital construction fund at the close of a taxable year to

the extent there is a binding contract at the close of the taxable

year for a qualified withdrawal of the amount for an identified

item for which the withdrawal may be made.

‘‘(4) EXCESS EARNINGS.—If the Secretary determines that

the balance in a capital construction fund exceeds the amount

appropriate to meet the vessel construction program objectives

of the person that established the fund, the amount of the

excess shall be treated as a nonqualified withdrawal under

paragraph (1) unless the person develops appropriate program

objectives within 3 years to dissipate the excess.

‘‘(5) AMOUNTS IN FUND ON JANUARY 1, 1987.—Under this

subsection, amounts in a capital construction fund on January

1, 1987, shall be treated as having been deposited in that

fund on that date.

‘‘(f) TAX DETERMINATIONS.—

‘‘(1) IN GENERAL.—For a taxable year for which there is

a nonqualified withdrawal (including an amount treated as

a nonqualified withdrawal under subsection (e)), the tax

imposed by chapter 1 of the Internal Revenue Code of 1986

(26 U.S.C. ch. 1) shall be determined by—

‘‘(A) excluding the withdrawal from gross income; and

‘‘(B) increasing the tax imposed by chapter 1 of such

Code by the product of the amount of the withdrawal

and the highest tax rate specified in section 1 (or section

11 for a corporation) of such Code (26 U.S.C. 1, 11).

‘‘(2) MAXIMUM TAX RATE.—For that portion of a nonqualified

withdrawal made from the capital gain account during a taxable

year to which section 1(h) or 1201(a) of such Code (26 U.S.C.

1(h), 1201(a)) applies, the tax rate used under paragraph (1)(B)

may not exceed 15 percent (or 34 percent for a corporation).

‘‘(3) TAX BENEFIT RULE.—If any portion of a nonqualified

withdrawal is properly attributable to deposits (except earnings

on deposits) made by the taxpayer in a taxable year that

did not reduce the taxpayer’s liability for tax under chapter

1 of such Code (26 U.S.C. ch. 1) for a taxable year before

the taxable year in which the withdrawal occurs—

‘‘(A) that portion shall not be taken into account under

paragraph (1); and

‘‘(B) an amount equal to that portion shall be allowed

as a deduction under section 172 of such Code (26 U.S.C.

172) for the taxable year in which the withdrawal occurs.

‘‘(4) COORDINATION WITH DEDUCTION FOR NET OPERATING

LOSSES.—A nonqualified withdrawal excluded from gross

income under paragraph (1) shall be excluded in determining

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1599

taxable income under section 172(b)(2) of such Code (26 U.S.C.

172(b)(2)).

‘‘§ 53512. FIFO and LIFO withdrawals

‘‘(a) FIFO.—Except as provided in subsection (b), an amount

withdrawn from an account under this chapter shall be treated

as withdrawn on a first-in-first-out basis.

‘‘(b) LIFO.—An amount withdrawn from an account under this

chapter shall be treated as withdrawn on a last-in-first-out basis

if it is—

‘‘(1) a nonqualified withdrawal for research, development,

and design expenses incident to new and advanced vessel

design, machinery, and equipment; or

‘‘(2) an amount treated as a nonqualified withdrawal under

section 53510(d) of this title.

‘‘§ 53513. Corporate reorganizations and partnership

changes

‘‘Under joint regulations—

‘‘(1) a transfer of a capital construction fund from one

person to another person in a transaction to which section

381 of the Internal Revenue Code of 1986 (26 U.S.C. 381)

applies may be treated as if the transaction is not a nonqualified

withdrawal; and

‘‘(2) a similar rule shall be applied to a continuation of

a partnership (within the meaning of subchapter K of chapter

1 of such Code (26 U.S.C. 701 et seq.)).

‘‘§ 53514. Relationship of old fund to new fund

‘‘(a) DEFINITION.—In this section, the term ‘old fund’ means

a capital construction fund maintained before October 21, 1970.

‘‘(b) ELECTION TO MAINTAIN OLD FUND.—A person maintaining

an old fund may elect to continue the old fund, but may not—

‘‘(1) hold amounts in the old fund beyond the expiration

date provided in the agreement under which the old fund

is maintained (determined without regard to an extension or

renewal made after April 14, 1970); or

‘‘(2) maintain simultaneously the old fund and a new fund

established under this chapter.

‘‘(c) APPLICATION OF NEW FUND AGREEMENT TO OLD FUND

AMOUNTS.—If a person makes an agreement under this chapter

to establish a new fund, the person may agree to extend the agreement to some or all of the amounts in an old fund. Each item

in the old fund to be transferred shall be transferred in a nontaxable

transaction to the appropriate account in the new fund. For purposes of section 53511(c)(3) of this title, the date of the deposit

of an item so transferred shall be July 1, 1971, or the date of

the deposit in the old fund, whichever is later.

‘‘§ 53515. Records and reports

‘‘A person maintaining a fund under this chapter shall keep

records and make reports as required by the Secretary or the

Secretary of the Treasury.

120 STAT. 1600 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 53516. Termination of agreement after change in regulations

‘‘If, after an agreement has been made under this chapter,

a change is made either in the joint regulations or in the regulations

prescribed by the Secretary under this chapter that could have

a substantial effect on the rights or duties of a person maintaining

a fund under this chapter, that person may terminate the agreement.

‘‘§ 53517. Reports

‘‘(a) IN GENERAL.—Within 120 days after the close of each

calendar year, the Secretary of Transportation and the Secretary

of Commerce each shall provide the Secretary of the Treasury

a written report on the capital construction funds under the particular Secretary’s jurisdiction for the calendar year.

‘‘(b) CONTENTS.—The report shall state the name and taxpayer

identification number of each person—

‘‘(1) establishing a capital construction fund during the

calendar year;

‘‘(2) maintaining a capital construction fund on the last

day of the calendar year;

‘‘(3) terminating a capital construction fund during the

calendar year;

‘‘(4) making a deposit to or withdrawal from a capital

construction fund during the calendar year, and the amount

of the deposit or withdrawal; or

‘‘(5) having been determined during the calendar year to

have failed to fulfill a substantial obligation under a capital

construction fund agreement to which the person is a party.

‘‘CHAPTER 537—LOANS AND GUARANTEES

‘‘SUBCHAPTER I—GENERAL

‘‘Sec.

‘‘53701. Definitions.

‘‘53702. General authority.

‘‘53703. Application procedures.

‘‘53704. Funding limits.

‘‘53705. Pledge of United States Government.

‘‘53706. Eligible purposes of obligations.

‘‘53707. Findings related to obligors and operators.

‘‘53708. Findings related to economic soundness.

‘‘53709. Amount of obligations.

‘‘53710. Contents of obligations.

‘‘53711. Security interest.

‘‘53712. Monitoring financial condition and operations of obligor.

‘‘53713. Administrative fees.

‘‘53714. Guarantee fees.

‘‘53715. Escrow fund.

‘‘53716. Deposit fund.

‘‘53717. Management of funds in the Treasury.

‘‘53718. Annual report to Congress.

‘‘SUBCHAPTER II—DEFAULT PROVISIONS

‘‘53721. Rights of obligee.

‘‘53722. Actions by Secretary.

‘‘53723. Payments by Secretary and issuance of obligations.

‘‘53724. Rights to secured property.

‘‘53725. Actions against obligor.

‘‘SUBCHAPTER III—PARTICULAR PROJECTS

‘‘53731. Commercial demonstration ocean thermal energy conversion facilities and

plantships.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1601

‘‘53732. Eligible export vessels.

‘‘53733. Shipyard modernization and improvement.

‘‘53734. Replacement of vessels because of changes in operating standards.

‘‘53735. Fisheries financing and capacity reduction.

‘‘SUBCHAPTER I—GENERAL

‘‘§ 53701. Definitions

‘‘In this chapter:

‘‘(1) ACTUAL COST.—The term ‘actual cost’ means the sum

of—

‘‘(A) all amounts paid by or for the account of the

obligor as of the date on which a determination is made

under section 53715(d)(1) of this title; and

‘‘(B) all amounts that the Secretary reasonably estimates the obligor will become obligated to pay from time

to time thereafter, for the construction, reconstruction, or

reconditioning of the vessel, including guarantee fees that

will become payable under section 53714 of this title in

connection with all obligations issued for construction,

reconstruction, or reconditioning of the vessel or equipment

to be delivered, and all obligations issued for the delivered

vessel or equipment.

‘‘(2) CONSTRUCTION, RECONSTRUCTION, AND RECONDITIONING.—The terms ‘construction’, ‘reconstruction’, and

‘reconditioning’ include designing, inspecting, outfitting, and

equipping.

‘‘(3) DEPRECIATED ACTUAL COST.—The term ‘depreciated

actual cost’ of a vessel means—

‘‘(A) if the vessel was not reconstructed or

reconditioned, the actual cost of the vessel depreciated

on a straight line basis over the useful life of the vessel

as determined by the Secretary, not to exceed 25 years

from the date of delivery by the builder; or

‘‘(B) if the vessel was reconstructed or reconditioned,

the sum of—

‘‘(i) the actual cost of the vessel depreciated on

a straight line basis from the date of delivery by the

builder to the date of the reconstruction or reconditioning, using the original useful life of the vessel,

and from the date of the reconstruction or reconditioning, using a useful life of the vessel determined

by the Secretary; and

‘‘(ii) any amount paid or obligated to be paid for

the reconstruction or reconditioning, depreciated on

a straight line basis using a useful life of the vessel

determined by the Secretary.

‘‘(4) ELIGIBLE EXPORT VESSEL.—The term ‘eligible export

vessel’ means a vessel that—

‘‘(A) is constructed, reconstructed, or reconditioned in

the United States for use in world-wide trade; and

‘‘(B) will, on delivery or redelivery, become or remain

documented under the laws of a country other than the

United States.

‘‘(5) FISHERY FACILITY.—

‘‘(A) IN GENERAL.—Subject to subparagraph (B), the

term ‘fishery facility’ means—

‘‘(i) for operations on land—

120 STAT. 1602 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(I) a structure or appurtenance thereto

designed for the unloading and receiving from vessels, the processing, the holding pending processing, the distribution after processing, or the

holding pending distribution, of fish from a fishery;

‘‘(II) the land necessary for the structure or

appurtenance; and

‘‘(III) equipment that is for use with the structure or appurtenance and that is necessary for

performing a function referred to in subclause (I);

‘‘(ii) for operations not on land, a vessel built in

the United States and used for, equipped to be used

for, or of a type normally used for, the processing

of fish; or

‘‘(iii) for aquaculture, including operations on land

or elsewhere—

‘‘(I) a structure or appurtenance thereto

designed for aquaculture;

‘‘(II) the land necessary for the structure or

appurtenance;

‘‘(III) equipment that is for use with the structure or appurtenance and that is necessary for

performing a function referred to in subclause (I);

and

‘‘(IV) a vessel built in the United States and

used for, equipped to be used for, or of a type

normally used for, aquaculture.

‘‘(B) REQUIRED OWNERSHIP.—Under subparagraph (A),

the structure, appurtenance, land, equipment, or vessel

must be owned by—

‘‘(i) an individual who is a citizen of the United

States; or

‘‘(ii) an entity that is a citizen of the United States

under section 50501 of this title and that is at least

75 percent owned (as determined under that section)

by citizens of the United States.

‘‘(6) FISHING VESSEL.—The term ‘fishing vessel’ has the

meaning given that term in section 3 of the Magnuson-Stevens

Fishery Conservation and Management Act (16 U.S.C. 1802),

and any reference in this chapter to a vessel designed principally for commercial use in the fishing trade or industry

is deemed to be a reference to a fishing vessel.

‘‘(7) MORTGAGE.—The term ‘mortgage’ includes—

‘‘(A) a preferred mortgage as defined in section 31301

of this title; and

‘‘(B) a mortgage on a vessel that will become a preferred mortgage when filed or recorded under chapter 313

of this title.

‘‘(8) OBLIGATION.—The term ‘obligation’ means an

instrument of indebtedness issued for a purpose described in

section 53706 of this title, except—

‘‘(A) an obligation issued by the Secretary under section

53723 of this title; and

‘‘(B) an obligation eligible for investment of funds under

section 53715(f) or 53717 of this title.

‘‘(9) OBLIGEE.—The term ‘obligee’ means the holder of an

obligation.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1603

‘‘(10) OBLIGOR.—The term ‘obligor’ means a party primarily

liable for payment of the principal of or interest on an obligation.

‘‘(11) OCEAN THERMAL ENERGY CONVERSION FACILITY OR

PLANTSHIP.—The term ‘ocean thermal energy conversion facility

or plantship’ means an at-sea facility or vessel, whether mobile,

floating unmoored, moored, or standing on the seabed, that

uses temperature differences in ocean water to produce electricity or another form of energy capable of being used directly

to perform work, and includes—

‘‘(A) equipment installed on the facility or vessel to

use the electricity or other form of energy to produce,

process, refine, or manufacture a product;

‘‘(B) a cable or pipeline used to deliver the electricity,

freshwater, or product to shore; and

‘‘(C) other associated equipment and appurtenances

of the facility or vessel to the extent they are located

seaward of the high water mark.

‘‘(12) SECRETARY.—The term ‘Secretary’ means—

‘‘(A) the Secretary of Commerce with respect to fishing

vessels and fishery facilities; and

‘‘(B) the Secretary of Transportation with respect to

other vessels and general shipyard facilities (as defined

in section 53733(a) of this title).

‘‘(13) VESSEL.—The term ‘vessel’ means any type of vessel,

whether in existence or under construction, including—

‘‘(A) a cargo vessel;

‘‘(B) a passenger vessel;

‘‘(C) a combination cargo and passenger vessel;

‘‘(D) a tanker;

‘‘(E) a tug or towboat;

‘‘(F) a barge;

‘‘(G) a dredge;

‘‘(H) a floating drydock with a capacity of at least

35,000 lifting tons and a beam of at least 125 feet between

the wing walls;

‘‘(I) an oceanographic research vessel;

‘‘(J) an instruction vessel;

‘‘(K) a pollution treatment, abatement, or control

vessel;

‘‘(L) a fishing vessel whose ownership meets the citizenship requirements under section 50501 of this title for

documenting vessels to operate in the coastwise trade; and

‘‘(M) an ocean thermal energy conversion facility or

plantship that is or will be documented under the laws

of the United States.

‘‘§ 53702. General authority

‘‘(a) IN GENERAL.—The Secretary, on terms the Secretary may

prescribe, may guarantee or make a commitment to guarantee

the payment of the principal of and interest on an obligation eligible

to be guaranteed under this chapter. A guarantee or commitment

to guarantee shall cover 100 percent of the principal and interest.

‘‘(b) DIRECT LOANS FOR FISHERIES.—

‘‘(1) IN GENERAL.—Notwithstanding any other provision of

this chapter, any obligation involving a fishing vessel, fishery

facility, aquaculture facility, individual fishing quota, or fishing

120 STAT. 1604 PUBLIC LAW 109–304—OCT. 6, 2006

capacity reduction program issued under this chapter after

October 11, 1996, shall be a direct loan obligation for which

the Secretary shall be the obligee, rather than an obligation

issued to an obligee other than the Secretary and guaranteed

by the Secretary. A direct loan obligation under this subsection

shall be treated in the same manner and to the same extent

as an obligation guaranteed under this chapter except with

respect to provisions of this chapter that by their nature can

only be applied to obligations guaranteed under this chapter.

‘‘(2) INTEREST RATE.—Notwithstanding any other provision

of this chapter, the annual rate of interest an obligor shall

pay on a direct loan obligation under this subsection is 2

percent plus the additional percent the Secretary must pay

as interest to borrow from the Treasury the funds to make

the loan.

‘‘§ 53703. Application procedures

‘‘(a) TIME FOR DECISION.—

‘‘(1) IN GENERAL.—The Secretary shall approve or deny

an application for a loan guarantee under this chapter within

270 days after the date on which the signed application is

received by the Secretary.

‘‘(2) EXTENSION.—On request by an applicant, the Secretary

may extend the 270-day period in paragraph (1) to a date

not later than 2 years after the date on which the signed

application was received by the Secretary.

‘‘(b) CERTIFICATION OF REVIEW.—The Secretary may not guarantee or make a commitment to guarantee an obligation under

this chapter unless the Secretary certifies that a full and fair

consideration of all the regulatory requirements, including economic

soundness and financial requirements applicable to the obligor and

related parties, and a thorough assessment of the technical, economic, and financial aspects of the loan application, has been made.

‘‘§ 53704. Funding limits

‘‘(a) GENERAL LIMITATIONS.—The total unpaid principal amount

of obligations guaranteed under this chapter and outstanding at

one time may not exceed $12,000,000,000. Of that amount—

‘‘(1) $850,000,000 shall be limited to obligations related

to fishing vessels and fishery facilities; and

‘‘(2) $3,000,000,000 shall be limited to obligations related

to eligible export vessels.

‘‘(b) ADDITIONAL LIMITATIONS.—Additional limitations may not

be imposed on new commitments to guarantee loans for any fiscal

year, except in amounts established in advance by annual authorization laws. A vessel eligible for a guarantee under this chapter

may not be denied eligibility because of its type.

‘‘(c) LIMITS BASED ON RISK FACTORS.—

‘‘(1) DEFINITION.—In this subsection, the term ‘cost’ has

the meaning given that term in section 502 of the Federal

Credit Reform Act of 1990 (2 U.S.C. 661a).

‘‘(2) SYSTEM OF RISK CATEGORIES.—The Secretary shall—

‘‘(A) establish, and update annually, a system of risk

categories for obligations guaranteed under this chapter

that categorizes the relative risk of guarantees based on

the risk factors set forth in paragraph (4);

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1605

‘‘(B) determine annually for each risk category a subsidy rate equivalent to the cost of obligations in the category, expressed as a percentage of the amount guaranteed

for obligations in the category; and

‘‘(C) ensure that each risk category is comprised of

loans that are relatively homogeneous in cost and share

characteristics predictive of defaults and other costs, given

the facts known at the time of obligation or commitment,

using a risk category system that is based on historical

analysis of program data and statistical evidence concerning the likely costs of defaults or other costs that

are expected to be associated with the loans in the category.

‘‘(3) USE OF SYSTEM.—

‘‘(A) PLACING OBLIGATION IN CATEGORY.—Before

making a guarantee under this chapter for an obligation,

and annually for projects subject to a guarantee, the Secretary shall apply the risk factors specified in paragraph

(4) to place the obligation in a risk category established

under paragraph (2).

‘‘(B) REDUCTION OF AVAILABLE AMOUNT.—The Secretary

shall consider the total amount available to the Secretary

for making guarantees under this chapter to be reduced

by the amount determined by multiplying—

‘‘(i) the amount guaranteed under this chapter for

an obligation; by

‘‘(ii) the subsidy rate for the category in which

the obligation is placed under subparagraph (A).

‘‘(C) ESTIMATED COST.—The estimated cost to the

United States Government of a guarantee under this

chapter for an obligation is deemed to be the amount

determined under subparagraph (B) for the obligation.

‘‘(D) RESTRICTION ON FURTHER GUARANTEES.—The Secretary may not guarantee obligations under this chapter

after the total amount available to the Secretary under

appropriations laws for the cost of loan guarantees is

considered to be reduced to zero under subparagraph (B).

‘‘(4) RISK FACTORS.—The risk factors referred to in this

subsection are—

‘‘(A) if applicable, the country risk for each eligible

export vessel financed or to be financed by an obligation;

‘‘(B) the period for which an obligation is guaranteed

or to be guaranteed;

‘‘(C) the amount of an obligation guaranteed or to

be guaranteed in relation to the total cost of the project

financed or to be financed by the obligation;

‘‘(D) the financial condition of an obligor or applicant

for a guarantee;

‘‘(E) if applicable, other guarantees related to the

project;

‘‘(F) if applicable, the projected employment of each

vessel or equipment to be financed with an obligation;

‘‘(G) if applicable, the projected market that will be

served by each vessel or equipment to be financed with

an obligation;

‘‘(H) the collateral provided for a guarantee for an

obligation;

120 STAT. 1606 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(I) the management and operating experience of an

obligor or applicant for a guarantee;

‘‘(J) whether a guarantee under this chapter is or will

be in effect during the construction period of the project;

and

‘‘(K) the concentration risk presented by an unduly

large percentage of loans outstanding by any one borrower

or group of affiliated borrowers.

‘‘§ 53705. Pledge of United States Government

‘‘(a) FULL FAITH AND CREDIT.—The full faith and credit of

the United States Government is pledged to the payment of a

guarantee made under this chapter, for both principal and interest,

including interest (as may be provided for in the guarantee) accruing

between the date of default under a guaranteed obligation and

the date of payment in full of the guarantee.

‘‘(b) INCONTESTABILITY.—A guarantee or commitment to guarantee made under this chapter is conclusive evidence of the eligibility of the obligation for the guarantee. The validity of a guarantee

or commitment to guarantee made under this chapter is incontestable.

‘‘§ 53706. Eligible purposes of obligations

‘‘(a) IN GENERAL.—To be eligible for a guarantee under this

chapter, an obligation must aid in any of the following:

‘‘(1)(A) Financing (including reimbursement of an obligor

for expenditures previously made for) the construction,

reconstruction, or reconditioning of a vessel (including an

eligible export vessel) designed principally for research, or for

commercial use—

‘‘(i) in the coastwise or intercoastal trade;

‘‘(ii) on the Great Lakes, or on bays, sounds, rivers,

harbors, or inland lakes of the United States;

‘‘(iii) in foreign trade as defined in section 109(b) of

this title;

‘‘(iv) as an ocean thermal energy conversion facility

or plantship;

‘‘(v) as a floating drydock in the construction,

reconstruction, reconditioning, or repair of vessels; or

‘‘(vi) as an eligible export vessel in worldwide trade.

‘‘(B) A guarantee under subparagraph (A) may not be made

more than one year after delivery of the vessel (or redelivery

if the vessel was reconstructed or reconditioned) unless the

proceeds of the obligation are used to finance the construction,

reconstruction, or reconditioning of a vessel or of facilities or

equipment related to marine operations.

‘‘(2) Financing (including reimbursement of an obligor for

expenditures previously made for) the construction, reconstruction, reconditioning, or purchase of a vessel owned by citizens

of the United States and designed principally for research,

or for commercial use in the fishing industry.

‘‘(3) Financing the purchase, reconstruction, or reconditioning of a vessel or fishery facility—

‘‘(A) for which an obligation was guaranteed under

this chapter; and

‘‘(B) that, under subchapter II of this chapter—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1607

‘‘(i) is a vessel or fishery facility for which an

obligation was accelerated and paid;

‘‘(ii) was acquired by the Federal Ship Financing

Fund or successor account under section 53717 of this

title; or

‘‘(iii) was sold at foreclosure begun or intervened

in by the Secretary.

‘‘(4) Financing any part of the repayment to the United

States Government of any amount of a construction-differential

subsidy paid for a vessel.

‘‘(5) Refinancing an existing obligation (regardless of

whether guaranteed under this chapter) issued for a purpose

described in paragraphs (1)–(4), including a short-term obligation incurred to obtain temporary funds with the intention

of refinancing.

‘‘(6) Financing or refinancing (including reimbursement of

an obligor for expenditures previously made for) the construction, reconstruction, reconditioning, or purchase of a fishery

facility.

‘‘(7) Financing or refinancing (including reimbursement of

an obligor for expenditures previously made for) the purchase

of an individual fishing quota in accordance with section

303(d)(4) of the Magnuson-Stevens Fishery Conservation and

Management Act (16 U.S.C. 1853(d)(4)).

‘‘(b) NON-VESSELS TREATED AS VESSELS.—An obligation guaranteed under subsection (a)(6) or (7) shall be treated, for purposes

of this chapter, in the same manner and to the same extent as

an obligation that aids in financing the construction, reconstruction,

reconditioning, or purchase of a vessel, except with respect to provisions that by their nature can only be applied to vessels.

‘‘(c) PRIORITIES FOR CERTAIN VESSELS.—In guaranteeing or

making a commitment to guarantee an obligation under this

chapter, the Secretary shall give priority to—

‘‘(1) a vessel that is otherwise eligible for a guarantee

and is constructed with assistance under subtitle D of the

Maritime Security Act of 2003 (46 U.S.C. 53101 note); and

‘‘(2) after applying paragraph (1), a vessel that is otherwise

eligible for a guarantee and that the Secretary of Defense

determines—

‘‘(A) is suitable for service as a naval auxiliary in

time of war or national emergency; and

‘‘(B) meets a shortfall in sealift capacity or capability.

‘‘§ 53707. Findings related to obligors and operators

‘‘(a) RESPONSIBLE OBLIGOR.—The Secretary may not guarantee

or make a commitment to guarantee an obligation under this

chapter unless the Secretary finds that the obligor is responsible

and has the ability, experience, financial resources, and other qualifications necessary for the adequate operation and maintenance

of each vessel that will serve as security for the guarantee.

‘‘(b) OPERATORS OF LINER VESSELS.—The Secretary of Transportation may not guarantee or make a commitment to guarantee

a loan for the construction, reconstruction, or reconditioning of

a liner vessel under this chapter unless the Chairman of the Federal

Maritime Commission certifies that the operator of the vessel has

not been found by the Commission to have committed, within the

previous 5 years—

120 STAT. 1608 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(1) a violation of part A of subtitle IV of this title that

involves unjust or unfair discriminatory treatment or undue

or unreasonable prejudice or disadvantage with respect to a

United States shipper, ocean transportation intermediary,

ocean common carrier, or port; or

‘‘(2) a violation of part B of subtitle IV of this title.

‘‘(c) OPERATORS OF FISHING VESSELS.—The Secretary of Commerce may not guarantee or make a commitment to guarantee

a loan for the construction, reconstruction, or reconditioning of

a fishing vessel under this chapter if the operator of the vessel

has been—

‘‘(1) held liable, or the vessel has been held liable in rem,

for a civil penalty under section 308 of the Magnuson-Stevens

Fishery Conservation and Management Act (16 U.S.C. 1858)

and the operator has not paid the penalty;

‘‘(2) found guilty of an offense under section 309 of the

Magnuson-Stevens Fishery Conservation and Management Act

(16 U.S.C. 1859) and not paid the assessed fine or served

the assessed sentence;

‘‘(3) held liable for a civil or criminal penalty under section

105 of the Marine Mammal Protection Act of 1972 (16 U.S.C.

1375) and not paid the assessed fine or served the assessed

sentence; or

‘‘(4) held liable for a civil penalty by the Coast Guard

under this title or title 33 and not paid the assessed fine.

‘‘(d) WAIVERS CONCERNING FINANCIAL CONDITION.—The Secretary shall prescribe regulations concerning circumstances under

which waivers of, or exceptions to, otherwise applicable regulatory

requirements concerning financial condition can be made. The regulations shall require that—

‘‘(1) the economic soundness requirements in section

53708(a) of this title are met after the waiver of the financial

condition requirement; and

‘‘(2) the waiver shall provide for the imposition of other

requirements on the obligor designed to compensate for the

increased risk associated with the obligor’s failure to meet

regulatory requirements applicable to financial condition.

‘‘§ 53708. Findings related to economic soundness

‘‘(a) BY SECRETARY OF TRANSPORTATION.—The Secretary of

Transportation may not guarantee or make a commitment to guarantee an obligation under this chapter unless the Secretary finds

that the property or project for which the obligation will be executed

will be economically sound. In making that finding, the Secretary

shall consider—

‘‘(1) the need in the particular segment of the maritime

industry for new or additional capacity, including any impact

on existing equipment for which a guarantee under this chapter

is in effect;

‘‘(2) the market potential for employment of the vessel

over the life of the guarantee;

‘‘(3) projected revenues and expenses associated with

employment of the vessel;

‘‘(4) any charter, contract of affreightment, transportation

agreement, or similar agreement or undertaking relevant to

the employment of the vessel;

‘‘(5) other relevant criteria; and

Regulations.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1609

‘‘(6) for inland waterways, the need for technical improvements, including increased fuel efficiency or improved safety.

‘‘(b) BY SECRETARY OF COMMERCE.—The Secretary of Commerce

may not guarantee or make a commitment to guarantee an obligation under this chapter unless the Secretary finds, at or prior

to the time the commitment is made or the guarantee becomes

effective, that—

‘‘(1) the property or project for which the obligation will

be executed will be economically sound; and

‘‘(2) for a fishing vessel, the purpose of the financing or

refinancing is consistent with—

‘‘(A) the wise use of the fisheries resources and the

development, advancement, management, conservation,

and protection of the fisheries resources; or

‘‘(B) the need for technical improvements, including

increased fuel efficiency or improved safety.

‘‘(c) USED FISHING VESSELS AND FACILITIES.—The Secretary

of Commerce may not guarantee or make a commitment to guarantee an obligation under this chapter for the purchase of a used

fishing vessel or used fishery facility unless the vessel or facility

will be—

‘‘(1) reconstructed or reconditioned in the United States

and will contribute to the development of the United States

fishing industry; or

‘‘(2) used—

‘‘(A) in the harvesting of fish from an underused

fishery; or

‘‘(B) for a purpose described in the definition of ‘fishery

facility’ in section 53701 of this title with respect to an

underused fishery.

‘‘(d) INDEPENDENT ANALYSIS.—The Secretary may make a determination that aspects of an application under this chapter require

independent analysis to be conducted by third party experts due

to risk factors associated with markets, technology, financial structures, or other risk factors identified by the Secretary. Any independent analysis conducted under this subsection shall be performed by a party chosen by the Secretary.

‘‘(e) ADDITIONAL EQUITY BECAUSE OF INCREASED RISKS.—Notwithstanding any other provision of this chapter, the Secretary

may make a determination that an application under this title

requires additional equity because of increased risk factors associated with markets, technology, financial structures, or other risk

factors identified by the Secretary.

‘‘§ 53709. Amount of obligations

‘‘(a) IN GENERAL.—The principal of an obligation may not be

guaranteed in an amount greater than the amount determined

by multiplying the percentage applicable under subsection (b) by—

‘‘(1) the amount paid by or for the account of the obligor

(as determined by the Secretary, which determination shall

be conclusive) for the construction, reconstruction, or reconditioning of the vessel used as security for the guarantee; or

‘‘(2) if the obligor creates an escrow fund under section

53715 of this title, the actual cost of the vessel.

‘‘(b) LIMITATIONS ON AMOUNT BORROWED.— ‘‘(1) IN GENERAL.—Except as otherwise provided, the principal amount of an obligation guaranteed under this chapter

120 STAT. 1610 PUBLIC LAW 109–304—OCT. 6, 2006

may not exceed 75 percent of the actual cost or depreciated

actual cost, as determined by the Secretary, of the vessel used

as security for the guarantee.

‘‘(2) CERTAIN APPROVED VESSELS.—The principal amount

may not exceed 87.5 percent of the actual cost or depreciated

actual cost if—

‘‘(A) the size and speed of the vessel are approved

by the Secretary;

‘‘(B) the vessel is or would have been eligible for mortgage aid for construction under section 509 of the Merchant

Marine Act, 1936, or would have been eligible except that

the vessel was built with a construction-differential subsidy

and the subsidy has been repaid; and

‘‘(C) the vessel is of a type described in that section

for which the minimum down payment required by that

section is 12.5 percent of the cost of the vessel.

‘‘(3) BARGES.—For a barge constructed without a construction-differential subsidy or for which the subsidy has been

repaid, the principal amount may not exceed 87.5 percent of

the actual cost or depreciated actual cost.

‘‘(4) FISHING VESSELS AND FISHERY FACILITIES.—For a

fishing vessel or fishery facility, the principal amount may

not exceed 80 percent of the actual cost or depreciated actual

cost. However, debt for the vessel or facility may not be placed

through the Federal Financing Bank.

‘‘(5) OTEC.—For an ocean thermal energy conversion

facility or plantship constructed without a construction-differential subsidy, the principal amount may not exceed 87.5 percent

of the actual cost or depreciated actual cost of the facility

or plantship.

‘‘(6) ELIGIBLE EXPORT VESSELS.—For an eligible export

vessel, the principal amount may not exceed 87.5 percent of

the actual cost or depreciated actual cost.

‘‘(c) SECURITY INVOLVING MULTIPLE VESSELS.—The principal

amount of an obligation having more than one vessel as security

for the guarantee may not exceed the sum of the principal amounts

allowable for all the vessels.

‘‘(d) PROHIBITION ON UNIFORM PERCENTAGE LIMITATIONS.—The

Secretary may not establish a percentage under any provision of

subsection (b) that is to be applied uniformly to all guarantees

or commitments to guarantee made under that provision.

‘‘(e) PROHIBITION ON MINIMUM PRINCIPAL AMOUNT.—The Secretary may not establish, as a condition of eligibility for a guarantee

under this chapter, a minimum principal amount for an obligation

covering the reconstruction or reconditioning of a fishing vessel

or fishery facility. For purposes of this chapter, the reconstruction

or reconditioning of a fishing vessel or fishery facility does not

include the routine minor repair or maintenance of the vessel

or facility.

‘‘§ 53710. Contents of obligations

‘‘(a) IN GENERAL.—An obligation guaranteed under this chapter

must—

‘‘(1) provide for payments by the obligor satisfactory to

the Secretary;

‘‘(2) provide for interest (exclusive of guarantee fees and

other fees) at a rate not more than the annual rate on the

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1611

unpaid principal that the Secretary determines is reasonable,

considering the range of interest rates prevailing in the private

market for similar loans and the risks assumed by the Secretary;

‘‘(3) have a maturity date satisfactory to the Secretary,

but—

‘‘(A) not more than 25 years after the date of delivery

of the vessel used as security for the guarantee; or

‘‘(B) if the vessel has been reconstructed or

reconditioned, not more than the later of—

‘‘(i) 25 years after the date of delivery of the vessel;

or

‘‘(ii) the remaining years of useful life of the vessel

as determined by the Secretary; and

‘‘(4) provide, or a related agreement must provide, that

if the vessel used as security for the guarantee is a delivered

vessel, the vessel shall be—

‘‘(A) in class A–1, American Bureau of Shipping, or

meet other standards acceptable to the Secretary, with

all required certificates, including marine inspection certificates of the Coast Guard or, in the case of an eligible

export vessel, of the appropriate foreign authorities under

a treaty, convention, or other international agreement to

which the United States is a party, and with all outstanding requirements and recommendations necessary for

class retention accomplished, unless the Secretary permits

a deferment of repairs necessary to meet these requirements; and

‘‘(B) well equipped, in good repair, and in every respect

seaworthy and fit for service.

‘‘(b) PROVISIONS FOR CERTAIN PASSENGER VESSELS.—

‘‘(1) IN GENERAL.—With the Secretary’s approval, if the

vessel used as security for the guarantee is a passenger vessel

having the tonnage, speed, passenger accommodations, and

other characteristics described in section 503 of the Merchant

Marine Act, 1936, an obligation guaranteed under this chapter

or a related agreement may provide that—

‘‘(A) the only recourse by the United States Government against the obligor for payments under the guarantee

will be repossession of the vessel and assignment of insurance claims; and

‘‘(B) the obligor’s liability for payments under the guarantee will be satisfied and discharged by the surrender

of the vessel and all interest in the vessel to the Government in the condition described in paragraph (2).

‘‘(2) SURRENDER OF VESSEL.—

‘‘(A) IN GENERAL.—On surrender, the vessel must be—

‘‘(i) free and clear of all liens and encumbrances

except the security interest conveyed to the Secretary

under this chapter;

‘‘(ii) in class; and

‘‘(iii) in as good order and condition (ordinary wear

and tear excepted) as when acquired by the obligor.

‘‘(B) COVERING DEFICIENCIES BY INSURANCE.—To the

extent covered by insurance, a deficiency related to a

requirement in subparagraph (A) may be satisfied by

120 STAT. 1612 PUBLIC LAW 109–304—OCT. 6, 2006

assignment of the obligor’s insurance claims to the Government.

‘‘(c) OTHER PROVISIONS TO PROTECT SECURITY INTERESTS.—

An obligation guaranteed under this chapter and any related agreement must contain other provisions for the protection of the security

interests of the Government (including acceleration, assumption,

and subrogation provisions and the issuance of notes by the obligor

to the Secretary), liens and releases of liens, payment of taxes,

and other matters that the Secretary may prescribe.

‘‘§ 53711. Security interest

‘‘(a) IN GENERAL.—The Secretary may guarantee an obligation

under this chapter only if the obligor conveys or agrees to convey

to the Secretary a security interest the Secretary considers necessary to protect the interest of the United States Government.

‘‘(b) MULTIPLE VESSELS AND TYPES OF SECURITY.—The security

interest may relate to more than one vessel and may consist of

more than one type of security. If the security interest relates

to more than one vessel, the obligation may have the latest maturity

date allowable under section 53710(a)(3) of this title for any of

the vessels used as security for the guarantee. However, the Secretary may require such payments of principal prior to maturity,

with respect to all related obligations, as the Secretary considers

necessary to maintain adequate security for the guarantee.

‘‘§ 53712. Monitoring financial condition and operations of

obligor

‘‘(a) IN GENERAL.—The Secretary shall monitor the financial

condition and operations of the obligor on a regular basis during

the term of the guarantee. The Secretary shall document the results

of the monitoring on an annual or quarterly basis depending on

the condition of the obligor. If the Secretary determines that the

financial condition of the obligor warrants additional protections

to the Secretary, the Secretary shall take appropriate action under

subsection (b). If the Secretary determines that the financial condition of the obligor jeopardizes its continued ability to perform its

responsibilities in connection with the guarantee of an obligation

by the Secretary, the Secretary shall make an immediate determination whether default should take place and whether further measures described in subsection (b) should be taken to protect the

interests of the Secretary while ensuring that program objectives

are met.

‘‘(b) CONTRACT PROVISIONS TO PROTECT SECRETARY.—The Secretary shall include provisions in a loan agreement with an obligor

that provides additional authority to the Secretary to take action

to limit potential losses in connection with a defaulted loan or

a loan that is in jeopardy due to the deteriorating financial condition

of the obligor. These provisions include requirements for additional

collateral or greater equity contributions that are effective upon

the occurrence of verifiable conditions relating to the obligor’s financial condition or the status of the vessel or shipyard project.

‘‘§ 53713. Administrative fees

‘‘(a) IN GENERAL.—The Secretary shall charge and collect from

the obligor fees the Secretary considers reasonable for—

‘‘(1) investigating an application for a guarantee;

‘‘(2) appraising property offered as security for a guarantee;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1613

‘‘(3) issuing a commitment;

‘‘(4) providing services related to an escrow fund under

section 53715 of this title; and

‘‘(5) inspecting property during construction, reconstruction,

or reconditioning.

‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection

(a) may not exceed 0.5 percent of the original principal amount

of the obligations to be guaranteed.

‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may

charge and collect fees to cover the costs of independent analysis

under section 53708(d) of this title. Notwithstanding section 3302

of title 31, any fee collected under this subsection shall—

‘‘(1) be credited as an offsetting collection to the account

that finances the administration of the loan guarantee program;

‘‘(2) be available for expenditure only to pay the costs

of activities and services for which the fee is imposed; and

‘‘(3) remain available until expended.

‘‘§ 53714. Guarantee fees

‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall

prescribe regulations to assess a fee for guaranteeing an obligation

under this chapter.

‘‘(b) COMPUTATION OF FEE.—

‘‘(1) IN GENERAL.—The amount of the fee for a guarantee

under this chapter shall be equal to the sum of the amounts

determined under paragraph (2) for the years in which the

guarantee is in effect.

‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred

to in paragraph (1) for a year in which the guarantee is in

effect is the present value of the amount calculated under

paragraph (3). To determine the present value, the Secretary

shall apply a discount rate determined by the Secretary of

the Treasury, considering current market yields on outstanding

obligations of the United States Government having periods

to maturity comparable to the period to maturity for the

guaranteed obligation.

‘‘(3) CALCULATION OF AMOUNT.—The amount referred to

in paragraph (2) shall be calculated by multiplying—

‘‘(A) the estimated average unpaid principal amount

of the obligation that will be outstanding during the year

(excluding the average amount, other than interest, on

deposit during the year in an escrow fund under section

53715 of this title); by

‘‘(B) the fee rate set under paragraph (4).

‘‘(4) SETTING FEE RATES.—To set the fee rate referred to

in paragraph (3)(B), the Secretary shall establish a formula

that—

‘‘(A) takes into account the security provided for the

guaranteed obligation; and

‘‘(B) is a sliding scale based on the creditworthiness

of the obligor, using—

‘‘(i) the lowest allowable rate under paragraph (5)

for the most creditworthy obligors; and

‘‘(ii) the highest allowable rate under paragraph

(5) for the least creditworthy obligors.

‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under

paragraph (4) shall be—

120 STAT. 1614 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(A) for a delivered vessel or equipment, at least 0.5

percent and not more than 1 percent; and

‘‘(B) for a vessel to be constructed, reconstructed, or

reconditioned or equipment to be delivered, at least 0.25

percent and not more than 0.5 percent.

‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an

obligation under this chapter shall be collected not later than the

date on which an amount is first paid on the obligation.

‘‘(d) FINANCING THE FEE.—A fee paid under this section is

eligible to be financed under this chapter and shall be included

in the actual cost of the obligation guaranteed.

‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not

refundable. However, an obligor shall receive credit for the amount

paid for the remaining term of the obligation if the obligation

is refinanced and guaranteed under this chapter after the refinancing.

‘‘§ 53715. Escrow fund

‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed

under this chapter are to be used to finance the construction,

reconstruction, or reconditioning of a vessel that will serve as security for a guarantee under this chapter, the Secretary may accept

and hold in escrow, under an escrow agreement with the obligor,

a portion of the proceeds of all obligations guaranteed under this

chapter whose proceeds are to be so used which is equal to—

‘‘(1) the excess of—

‘‘(A) the principal amount of all obligations whose proceeds are to be so used; over

‘‘(B) 75 percent or 87.5 percent, whichever is applicable

under section 53709(b) of this title, of the amount paid

by or for the account of the obligor for the construction,

reconstruction, or reconditioning of the vessel; plus

‘‘(2) any interest the Secretary may require on the amount

described in paragraph (1).

‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED

VESSELS.—If the security for the guarantee of an obligation relates

both to a vessel to be constructed, reconstructed, or reconditioned

and to a delivered vessel, the principal amount of the obligation

shall be prorated for purposes of subsection (a) under regulations

prescribed by the Secretary.

‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.—

‘‘(1) PURPOSES.—The Secretary shall disburse amounts in

the escrow fund, as specified in the escrow agreement, to—

‘‘(A) pay amounts the obligor is obligated to pay for—

‘‘(i) the construction, reconstruction, or reconditioning of a vessel used as security for the guarantee;

and

‘‘(ii) interest on the obligations;

‘‘(B) redeem the obligations under a refinancing

guaranteed under this chapter; and

‘‘(C) pay any excess interest deposits to the obligor

at times provided for in the escrow agreement.

‘‘(2) MANNER OF PAYMENT.—If a payment becomes due

under the guarantee before the termination of the escrow agreement, the amount in the escrow fund at the time the payment

becomes due, including realized income not yet paid to the

obligor, shall be paid into the appropriate account under section

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1615

53717 of this title. The amount shall be credited against

amounts due or to become due from the obligor to the Secretary

on the guaranteed obligations or, to the extent not so required,

be paid to the obligor.

‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— ‘‘(1) IN GENERAL.—No disbursement shall be made under

subsection (c) to any person until the total amount paid by

or for the account of the obligor from sources other than the

proceeds of the obligation equals at least 25 percent or 12.5

percent, whichever is applicable under section 53709(b) of this

title, of the aggregate actual cost of the vessel, as previously

approved by the Secretary. If the aggregate actual cost of

the vessel has increased since the Secretary’s initial approval

or if it increases after the first disbursement is permitted

under this subsection, then no further disbursements shall

be made under subsection (c) until the total amount paid by

or for the account of the obligor from sources other than the

proceeds of the obligation equals at least 25 percent or 12.5

percent, as applicable, of the increase, as determined by the

Secretary, in the aggregate actual cost of the vessel. This paragraph does not require the Secretary to consent to finance

any increase in actual cost unless the Secretary determines

that such an increase in the obligation meets all the terms

and conditions of this chapter or other applicable law.

‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The

Secretary shall, by regulation, establish a transparent, independent, and risk-based process for verifying and documenting

the progress of projects under construction before disbursing

guaranteed loan funds. At a minimum, the process shall require

documented proof of progress in connection with the construction, reconstruction, or reconditioning of a vessel or vessels

before disbursements are made from the escrow fund. The

Secretary may require that the obligor provide a certificate

from an independent party certifying that the requisite progress

in construction, reconstruction, or reconditioning has taken

place.

‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.—

‘‘(1) IN GENERAL.—If a payment has not become due under

the guarantee before the termination of the escrow agreement,

the balance of the escrow fund at the time of termination

shall be disbursed to—

‘‘(A) prepay the excess of—

‘‘(i) the principal amount of all obligations whose

proceeds are to be used to finance the construction,

reconstruction, or reconditioning of the vessel used or

to be used as security for the guarantee; over

‘‘(ii) 75 percent or 87.5 percent, whichever is

applicable under section 53709(b) of this title, of the

actual cost of the vessel to the extent paid; and

‘‘(B) pay interest on that prepaid amount of principal.

‘‘(2) REMAINING BALANCE.—Any remaining balance of the

escrow fund shall be paid to the obligor.

‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any

part of an escrow fund in obligations of the United States Government with maturities such that the escrow fund will be available

as required for purposes of the escrow agreement. Investment

income shall be paid to the obligor when received.

Regulations.

120 STAT. 1616 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement

shall contain other terms the Secretary considers necessary to protect fully the interests of the Government.

‘‘§ 53716. Deposit fund

‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury

for purposes of this section. The Secretary, in accordance with

an agreement under subsection (b), may deposit into and hold

in the fund cash belonging to an obligor to serve as collateral

for a guarantee made under this chapter with respect to the obligor.

‘‘(b) AGREEMENT.—The Secretary and an obligor shall make

a reserve fund or other collateral account agreement to govern

the deposit, withdrawal, retention, use, and reinvestment of cash

of the obligor held in the fund. The agreement shall contain—

‘‘(1) terms and conditions required by this section;

‘‘(2) terms that grant to the United States Government

a security interest in all amounts deposited into the fund;

and

‘‘(3) any additional terms considered by the Secretary to

be necessary to protect fully the interests of the Government.

‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any

part of the amounts in the fund in obligations of the Government

with maturities such that amounts in the fund will be available

as required for purposes of the agreement under subsection (b).

Cash balances in the fund in excess of current requirements shall

be maintained in a form of uninvested funds, and the Secretary

of the Treasury shall pay interest on these funds.

‘‘(d) WITHDRAWALS.—

‘‘(1) IN GENERAL.—Cash deposited into the fund may not

be withdrawn without the consent of the Secretary.

‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may pay any income earned on cash of an obligor deposited into the fund in accordance with the agreement with the

obligor under subsection (b).

‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may

retain and offset any or all of the cash of an obligor in the

fund, and any income realized thereon, as part of the Secretary’s

recovery against the obligor in case of a default by the obligor

on an obligation.

‘‘§ 53717. Management of funds in the Treasury

‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the

Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).

‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.—

‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of

Transportation shall account for payments and disbursements

involving obligations guaranteed under this chapter and not

subject to FCRA in an account in the Treasury entitled the

Federal Ship Financing Fund Liquidating Account (a liquidating account as defined in FCRA).

‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation shall account for payments and disbursements involving

obligations guaranteed under this chapter and subject to FCRA

in a separate account in the Treasury entitled the Federal

Ship Financing Guaranteed Loan Financing Account (a

financing account as defined in FCRA).

‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1617

‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce shall account for payments and disbursements involving

obligations guaranteed under this chapter and not subject to

FCRA in a separate account in the Treasury established for

this purpose.

‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce

shall account for payments and disbursements involving obligations guaranteed under this chapter and subject to FCRA in

a separate account in the Treasury established for this purpose.

‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of Commerce shall account for payments and disbursements

involving direct loans made under this chapter in a separate account

in the Treasury established for this purpose.

‘‘§ 53718. Annual report to Congress

‘‘The Secretary of Transportation shall report to Congress

annually on the loan guarantee program under this chapter. Each

report shall include—

‘‘(1) the size, in dollars, of the portfolio of loans guaranteed;

‘‘(2) the size, in dollars, of projects in the portfolio facing

financial difficulties;

‘‘(3) the number and type of projects covered;

‘‘(4) a profile of pending loan applications;

‘‘(5) the amount of appropriations available for new guarantees;

‘‘(6) a profile of each project approved since the last report;

and

‘‘(7) a profile of any defaults since the last report.

‘‘SUBCHAPTER II—DEFAULT PROVISIONS

‘‘§ 53721. Rights of obligee

‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection

(c), if an obligor has continued in default for 30 days in the payment

of principal or interest on an obligation guaranteed under this

chapter, the obligee or the obligee’s agent may demand that the

Secretary pay the unpaid principal amount of the obligation and

the unpaid interest on the obligation to the date of payment. The

demand must be made within the earlier of—

‘‘(1) a period that may be specified in the guarantee or

a related agreement; or

‘‘(2) 90 days from the date of the default.

‘‘(b) PAYMENTS BY SECRETARY.—

‘‘(1) IN GENERAL.—If a demand is made under subsection

(a), the Secretary shall pay to the obligee or the obligee’s

agent the unpaid principal amount of the obligation and the

unpaid interest on the obligation to the date of payment. Payment shall be made within the earlier of—

‘‘(A) a period that may be specified in the guarantee

or a related agreement; or

‘‘(B) 30 days from the date of the demand.

‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not

required to make payment under this subsection if, within

the appropriate period under paragraph (1), the Secretary finds

that the obligor was not in default or that the default was

remedied before the demand.

120 STAT. 1618 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE

DEMAND.—An obligee or the obligee’s agent may not demand payment under this section if the Secretary, before the demand and

on terms that may be provided in the obligation or a related

agreement, has assumed the obligor’s rights and duties under the

obligation and any related agreement and made any payment in

default. However, the guarantee of the obligation remains in effect

after the Secretary’s assumption.

‘‘§ 53722. Actions by Secretary

‘‘(a) GENERAL AUTHORITY.—On default under an obligation or

related agreement between the Secretary and the obligor, the Secretary, on terms that may be provided in the obligation or agreement, may—

‘‘(1) assume the obligor’s rights and duties under the obligation or agreement, make any payment in default, and notify

the obligee or the obligee’s agent of the default and the Secretary’s assumption; or

‘‘(2) notify the obligee or the obligee’s agent of the default.

‘‘(b) DEMANDS BY OBLIGEES.—

‘‘(1) DEMAND.—If the Secretary proceeds under subsection

(a)(2), the obligee or the obligee’s agent may demand that

the Secretary pay the unpaid principal amount of the obligation

and the unpaid interest on the obligation. The demand must

be made within the earlier of—

‘‘(A) a period that may be specified in the guarantee

or a related agreement; or

‘‘(B) 60 days from the date of the Secretary’s notice.

‘‘(2) PAYMENT.—If a demand is made under paragraph (1),

the Secretary shall pay to the obligee or the obligee’s agent

the unpaid principal amount of the obligation and the unpaid

interest on the obligation to the date of payment. Payment

shall be made within the earlier of—

‘‘(A) a period that may be specified in the guarantee

or a related agreement; or

‘‘(B) 30 days from the date of the demand.

‘‘(c) CONTINUED EFFECT OF GUARANTEE.—A guarantee of an

obligation remains in effect after an assumption of the obligation

by the Secretary.

‘‘(d) ADDITIONAL RESPONSES.—If there is a default on an obligation, the Secretary shall conduct operations under this chapter

in a manner that—

‘‘(1) maximizes the net present value return from the sale

or disposition of assets associated with the obligation, including

prompt referral to the Attorney General for collection as appropriate;

‘‘(2) minimizes the amount of any loss realized in the resolution of the guarantee;

‘‘(3) ensures adequate competition and fair and consistent

treatment of offerors; and

‘‘(4) requires appraisal of assets by an independent

appraiser.

‘‘§ 53723. Payments by Secretary and issuance of obligations

‘‘(a) CASH PAYMENT.—Amounts required to be paid by the Secretary under section 53721 or 53722 of this title shall be paid

in cash.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1619

‘‘(b) ISSUANCE OF OBLIGATIONS.—If amounts in the appropriate

account under section 53717 of this title are not sufficient to make

a payment required under section 53721 or 53722 of this title,

the Secretary may issue obligations to the Secretary of the Treasury.

The Secretary, with the approval of the Secretary of the Treasury,

shall prescribe the form, denomination, maturity, and other terms

(except the interest rate) of the obligations. The Secretary of the

Treasury shall set the interest rate for the obligations, considering

the current average market yield on outstanding marketable obligations of the United States Government of comparable maturities

during the month before the obligations are issued.

‘‘(c) PURCHASE OF OBLIGATIONS.—The Secretary of the Treasury

shall purchase the obligations issued under this section. To purchase

the obligations, the Secretary of the Treasury may use as a public

debt transaction the proceeds from the sale of securities issued

under chapter 31 of title 31. The purposes for which securities

may be issued under that chapter are extended to include the

purchase of obligations under this subsection. The Secretary of

the Treasury may sell obligations purchased under this section.

A redemption, purchase, or sale of the obligations by the Secretary

of the Treasury is a public debt transaction of the Government.

‘‘(d) DEPOSITS AND REDEMPTIONS.—The Secretary shall deposit

amounts borrowed under this section in the appropriate account

under section 53717 of this title and make redemptions of the

obligations from that account.

‘‘§ 53724. Rights to secured property

‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary

makes a payment on, or assumes, an obligation under section

53721 or 53722 of this title, the Secretary acquires the rights

under the security agreement with the obligor in the security held

by the Secretary to guarantee the obligation.

‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding any other law relating to the acquisition, handling, or

disposal of property by the United States Government, the Secretary

has the right, in the Secretary’s discretion, to complete, reconstruct,

recondition, renovate, repair, maintain, operate, charter, or sell

any property acquired under a security agreement with an obligor,

or to place a vessel so acquired in the National Defense Reserve

Fleet. The terms of a sale under this subsection shall be as approved

by the Secretary.

‘‘§ 53725. Actions against obligor

‘‘(a) IN GENERAL.—For a default under a guaranteed obligation

or related agreement, the Secretary may take any action against

the obligor or another liable party that the Secretary considers

necessary to protect the interests of the United States Government.

A civil action may be brought in the name of the United States

or the obligee. The obligee shall make available to the Government

all records and evidence necessary to prosecute the action.

‘‘(b) TITLE, POSSESSION, AND PURCHASE.—

‘‘(1) IN GENERAL.—The Secretary may—

‘‘(A) accept a conveyance of title to and possession

of property from the obligor or another party liable to

the Secretary; and

120 STAT. 1620 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(B) purchase the property for an amount not greater

than the unpaid principal amount of the obligation and

interest thereon.

‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property,

the Secretary receives an amount of cash greater than the

unpaid principal amount of the obligation, the unpaid interest

on the obligation, and the expenses of collecting those amounts,

the Secretary shall pay the excess to the obligor.

‘‘SUBCHAPTER III—PARTICULAR PROJECTS

‘‘§ 53731. Commercial demonstration ocean thermal energy

conversion facilities and plantships

‘‘(a) IN GENERAL.—Under subchapter I of this chapter, the

Secretary may guarantee or make a commitment to guarantee

the payment of the principal of and interest on an obligation that

aids in financing (including reimbursement of an obligor for expenditures previously made for) the construction, reconstruction, or

reconditioning of a commercial demonstration ocean thermal energy

conversion facility or plantship. This section may be used to guarantee obligations for a total of not more than 5 separate facilities

and plantships or a demonstrated 400 megawatt capacity, whichever

comes first.

‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise

provided in this section, a guarantee or commitment to guarantee

under this section is subject to all the provisions applicable to

a guarantee or commitment to guarantee under subchapter I of

this chapter.

‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic soundness under section 53708 of this title applies to a

guarantee or commitment to guarantee for that portion of a facility

or plantship not to be supported with appropriated Federal funds.

‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment

to guarantee may not be made under this section unless the Secretary of Energy, in consultation with the Secretary, certifies to

the Secretary that, for the facility or plantship for which the guarantee or commitment to guarantee is sought, there is sufficient

guarantee of performance and payment to lower the risk to the

United States Government to a reasonable level. In deciding

whether to issue such a certification, the Secretary of Energy shall

consider—

‘‘(1) the successful demonstration of the technology to be

used in the facility at a scale sufficient to establish the likelihood of technical and economic viability in the proposed market;

and

‘‘(2) the need of the United States to develop new and

renewable sources of energy and the benefits to be realized

from the construction and successful operation of the facility

or plantship.

‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of

an obligation guaranteed under this section may not exceed 87.5

percent of—

‘‘(1) the actual cost or depreciated actual cost of the facility

or plantship; or

‘‘(2) if the facility or plantship is supported with appropriated Federal funds, the total principal amount of that portion

of the actual cost or depreciated actual cost for which the

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1621

obligor is obligated to secure financing under the agreement

between the obligor and the Department of Energy or other

Federal agency.

‘‘(f) OTEC DEMONSTRATION FUND.—

‘‘(1) IN GENERAL.—There is a special subaccount, known

as the OTEC Demonstration Fund, in the account established

under section 53717(b)(1) of this title.

‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund

shall be used for obligation guarantees authorized under this

section that do not qualify under subchapter I of this chapter.

Except as otherwise provided in this section, the OTEC Demonstration Fund shall be operated in the same manner as

the parent account. However—

‘‘(A) amounts received by the Secretary under subchapter I of this chapter related to guarantees or commitments to guarantee made under this section shall be deposited only in the OTEC Demonstration Fund; and

‘‘(B) when obligations issued by the Secretary under

section 53723 of this title related to the OTEC Demonstration Fund are outstanding, any amount received by the

Secretary under subchapter I of this chapter related to

ocean thermal energy conversion facilities or plantships

shall be deposited in the OTEC Demonstration Fund.

‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund

may be transferred to the parent account when and to the

extent the balance in the OTEC Demonstration Fund exceeds

the total guarantees or commitments to guarantee made under

this section then outstanding, plus obligations issued by the

Secretary under section 53723 of this title related to the OTEC

Demonstration Fund.

‘‘(4) LIABILITY.—The parent account is not liable for a guarantee or commitment to guarantee made under this section.

‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total

unpaid principal amount of the obligations guaranteed with

the backing of the OTEC Demonstration Fund and outstanding

at any one time may not exceed $1,650,000,000.

‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723

of this title applies to the OTEC Demonstration Fund. However,

obligations issued by the Secretary under that section related to

the OTEC Demonstration Fund shall be payable only from proceeds

realized by the OTEC Demonstration Fund.

‘‘(h) TAXATION OF INTEREST.—Interest on an obligation guaranteed under this section shall be included in gross income under

chapter 1 of the Internal Revenue Code of 1986 (26 U.S.C. ch.

1).

‘‘§ 53732. Eligible export vessels

‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an

obligation for an eligible export vessel in accordance with—

‘‘(1) the terms applicable under this chapter for vessels

documented under the laws of the United States; or

‘‘(2) other terms the Secretary determines are more favorable than those terms and compatible with export credit terms

offered by foreign governments for the sale of vessels built

in foreign shipyards.

‘‘(b) INTERAGENCY COUNCIL.—

120 STAT. 1622 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(1) ESTABLISHMENT.—There is an interagency council to

carry out this section.

‘‘(2) COMPOSITION.—The council is composed of the following individuals or their designees:

‘‘(A) The Secretary of Transportation, who is the chairman of the council.

‘‘(B) The Secretary of the Treasury.

‘‘(C) The Secretary of State.

‘‘(D) The Assistant to the President for Economic Policy.

‘‘(E) The United States Trade Representative.

‘‘(F) The President and Chairman of the Export-Import

Bank of the United States.

‘‘(3) FUNCTIONS.—The council shall—

‘‘(A) obtain information on shipbuilding loan guarantees, direct and indirect subsidies, and other favorable

treatment of shipyards provided by foreign governments

to shipyards in competition with United States shipyards;

‘‘(B) consult regularly with United States shipbuilders

to obtain the essential information about international

shipbuilding competition on which to set terms for loan

guarantees under subsection (a)(2); and

‘‘(C) provide guidance to the Secretary in establishing

terms for loan guarantees under subsection (a)(2).

‘‘(4) ANNUAL REPORT.—Not later than January 31 of each

year, the Secretary shall submit to Congress a report on activities of the Secretary under this section during the preceding

year. The report shall include—

‘‘(A) documentation of sources of information about

assistance by governments of other countries to shipyards

in those countries; and

‘‘(B) a summary of recommendations made to the Secretary during the preceding year about applications submitted to the Secretary during that year for loan guarantees to construct eligible export vessels.

‘‘(c) REQUIRED FINDINGS.—

‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary

may not guarantee or make a commitment to guarantee an

obligation for an eligible export vessel unless the Secretary

finds that the construction, reconstruction, or reconditioning

of the vessel will aid in the transition of United States shipyards to commercial activities or will preserve shipbuilding

assets that would be essential in time of war or national emergency.

‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary

may not make a commitment to guarantee an obligation for

an eligible export vessel unless the Secretary determines that

making the commitment will not result in denial of an economically sound application for a commitment to guarantee an

obligation for a vessel documented under the laws of the United

States and operating in the domestic or foreign commerce of

the United States. The Secretary has sole discretion in making

the determination. In making the determination, the Secretary

shall consider—

‘‘(A) the status and economic soundness of pending

applications for commitments to guarantee obligations for

vessels documented under the laws of the United States

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1623

that are operating or will be operating in the domestic

or foreign commerce of the United States; and

‘‘(B) the amount of guarantee authority available.

‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may

not guarantee or make a commitment to guarantee an obligation

for an eligible export vessel unless the owner of the vessel agrees

with the Secretary that the vessel will not be transferred to a

country designated by the Secretary of Defense as a country whose

interests are hostile to the interests of the United States.

‘‘(e) REVIEW BY SECRETARY OF DEFENSE.—

‘‘(1) NOTIFICATION.—The Secretary shall promptly notify

the Secretary of Defense of the receipt of an application for

a loan guarantee for an eligible export vessel.

‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30

days after receiving the notice, may disapprove the guarantee

based on an assessment of the potential use of the vessel

in a manner that may harm the national security interests

of the United States. The Secretary may not disapprove a

guarantee solely because of the type of vessel to be constructed.

‘‘(3) DELEGATION.—The authority of the Secretary of

Defense to disapprove a guarantee under this subsection may

be delegated only to a civilian officer of the Department of

Defense appointed by the President by and with the advice

and consent of the Senate.

‘‘(4) PROHIBITION.—The Secretary may not make a loan

guarantee disapproved by the Secretary of Defense under this

subsection.

‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue

a commitment to guarantee an obligation for an eligible export

vessel under this chapter after the last date on which such a

commitment may be issued under any treaty or convention entered

into after November 30, 1993, that prohibits guarantee of such

an obligation.

‘‘§ 53733. Shipyard modernization and improvement

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term

‘advanced shipbuilding technology’ includes—

‘‘(A) numerically controlled machine tools, robots, automated process control equipment, computerized flexible

manufacturing systems, associated computer software, and

other technology for improving shipbuilding and related

industrial production that advance the state-of-the-art; and

‘‘(B) novel techniques and processes designed to

improve shipbuilding quality, productivity, and practice,

and to promote sustainable development, including

engineering design, quality assurance, concurrent

engineering, continuous process production technology,

energy efficiency, waste minimization, design for

recyclability or parts reuse, inventory management,

upgraded worker skills, and communications with customers and suppliers.

‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard facility’ means—

‘‘(A) for operations on land—

120 STAT. 1624 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(i) a structure or appurtenance thereto designed

for the construction, reconstruction, repair, rehabilitation, or refurbishment of a vessel, including a graving

dock, building way, ship lift, wharf, or pier crane;

‘‘(ii) the land necessary for the structure or appurtenance; and

‘‘(iii) equipment that is for use with the structure

or appurtenance and that is necessary for performing

a function referred to in clause (i); and

‘‘(B) for operations not on land, a vessel, floating drydock, or barge built in the United States and used for,

equipped to be used for, or of a type normally used for,

performing a function referred to in subparagraph (A)(i).

‘‘(3) MODERN SHIPBUILDING TECHNOLOGY.—The term

‘modern shipbuilding technology’ means the best available

proven technology, techniques, and processes appropriate to

enhancing the productivity of shipyards.

‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter,

the Secretary may guarantee or make a commitment to guarantee

the payment of the principal of and interest on an obligation for

advanced shipbuilding technology and modern shipbuilding technology of a general shipyard facility in the United States. Only

a private shipyard is eligible to receive a guarantee.

‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise

provided in this section, a guarantee or commitment to guarantee

under this section is subject to all the provisions applicable to

a guarantee or commitment to guarantee under subchapter I of

this chapter.

‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an

obligation guaranteed under this chapter may not exceed 87.5 percent of the actual cost of the advanced shipbuilding technology

or modern shipbuilding technology.

‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the

transfer of amounts from a department, agency, or instrumentality

of the United States Government and may use those amounts

to cover the cost (as defined in section 502 of the Federal Credit

Reform Act of 1990 (2 U.S.C. 661a)) of making guarantees or

commitments to guarantee under this section.

‘‘§ 53734. Replacement of vessels because of changes in operating standards

‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this chapter, the Secretary, on terms the Secretary may

prescribe, may guarantee or make a commitment to guarantee

the payment of the principal of and interest on an obligation that

aids in financing or refinancing (including reimbursement of an

obligor for expenditures previously made for) a contract for the

construction or reconstruction of a vessel if—

‘‘(1) the vessel is designed and to be used for commercial

use in coastwise, intercoastal, or foreign trade;

‘‘(2) the construction or reconstruction is necessary to

replace a vessel that cannot continue to be operated because

of a change required by law in the standards for the operation

of vessels, and the applicant for the guarantee or commitment

would not otherwise legally be able to continue operating vessels in the trades in which the applicant operated vessels

before the change;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1625

‘‘(3) the applicant is presently engaged in transporting cargoes in vessels of the type and class that will be constructed

or reconstructed under this section and agrees to employ vessels

constructed or reconstructed under this section as replacements

only for vessels made obsolete by the change in operating

standards;

‘‘(4) the capacity of the vessels to be constructed or

reconstructed under this section will not increase the cargo

carrying capacity of the vessels being replaced;

‘‘(5) the Secretary has not determined that the market

demand for the vessel over its useful life will diminish so

as to make granting the guarantee fiduciarily imprudent;

‘‘(6) the vessel, if to be reconstructed, will have a useful

life of at least 15 years after the reconstruction; and

‘‘(7) the Secretary has considered the criteria specified in

section 53708(a)(3)–(5) of this title.

‘‘(b) TERM AND AMOUNT OF OBLIGATION.—

‘‘(1) TERM.—The term of an obligation guaranteed under

this section may not exceed 25 years.

‘‘(2) AMOUNT.—The amount of an obligation guaranteed

under this section may not exceed 87.5 percent of the actual

cost or depreciated actual cost to the applicant for the construction or reconstruction of the vessel. The Secretary may not

establish a percentage under this paragraph that is to be

applied uniformly to all guarantees or commitments to guarantee made under this section.

‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—A guarantee or

commitment to guarantee under this section is also subject to

sections 53701, 53702(a), 53704, 53705, 53707(a), 53708(d) and (e),

53709(a), 53710(a)(1), (2), and (4) and (c), 53711(a), 53713, 53714,

53717, and 53721–53725 of this title.

‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require

by regulation that an applicant under this section provide adequate

security against default.

‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for

the guarantee of an obligation under this section that is in addition

to the fee established under section 53714 of this title. The fee

may be—

‘‘(1) an annual fee of not more than an additional 1 percent

added to the fee established under section 53714 of this title;

or

‘‘(2) a fee based on the amount of the obligation versus

the percentage of the obligor’s fleet being replaced by vessels

constructed or reconstructed under this section.

‘‘§ 53735. Fisheries financing and capacity reduction

‘‘(a) DEFINITION.—In this section, the term ‘program’ means

a fishing capacity reduction program established under section 312

of the Magnuson-Stevens Fishery Conservation and Management

Act (16 U.S.C. 1861a).

‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee

the repayment of debt obligations issued by entities under this

section. Debt obligations to be guaranteed may be issued by any

entity that has been approved by the Secretary and has agreed

with the Secretary to conditions the Secretary considers necessary

for this section to achieve the objective of the program and to

protect the interest of the United States.

Regulations.

120 STAT. 1626 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed under this section shall—

‘‘(1) be treated in the same manner and to the same extent

as other obligations guaranteed under this chapter, except with

respect to provisions of this chapter that by their nature cannot

be applied to obligations guaranteed under this section;

‘‘(2) have the fishing fees established under the program

paid into a separate subaccount of the fishing capacity reduction

fund established under this section; ‘‘(3) not exceed $100,000,000 in an unpaid principal amount

outstanding at any one time for a program;

‘‘(4) have such maturity (not to exceed 20 years), take

such form, and contain such conditions as the Secretary determines necessary for the program to which they relate;

‘‘(5) have as the exclusive source of repayment (subject

to the second sentence of subsection (d)(2)) and as the exclusive

payment security, the fishing fees established under the program; and

‘‘(6) at the discretion of the Secretary be issued in the

public market or sold to the Federal Financing Bank.

‘‘(d) FISHING CAPACITY REDUCTION FUND.—

‘‘(1) IN GENERAL.—There is a separate account in the

Treasury, known as the Fishing Capacity Reduction Fund.

Within the Fund, at least one subaccount shall be established

for each program into which shall be paid all fishing fees

established under the program and other amounts authorized

for the program.

‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall

be available, without appropriation or fiscal year limitation,

to the Secretary to pay the cost of the program, including

payments to financial institutions to pay debt obligations

incurred by entities under this section. Funds available for

this purpose from other amounts available for the program

may also be used to pay those debt obligations.

‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently needed for the purpose of this section shall be kept

on deposit or invested in obligations of the United States

Government.

‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations

the Secretary considers necessary to carry out this section.

‘‘CHAPTER 539—WAR RISK INSURANCE

‘‘Sec.

‘‘53901. Definitions.

‘‘53902. Authority to provide insurance.

‘‘53903. Insurable interests.

‘‘53904. Liability insurance for persons involved in war or defense efforts.

‘‘53905. Agency insurance.

‘‘53906. Hull insurance valuation.

‘‘53907. Reinsurance.

‘‘53908. Additional insurance privately obtained.

‘‘53909. War risk insurance revolving fund.

‘‘53910. Administrative.

‘‘53911. Civil actions for losses.

‘‘53912. Expiration date.

‘‘§ 53901. Definitions

‘‘In this chapter:

‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’

includes—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1627

‘‘(A) a documented vessel with a registry or coastwise

endorsement under chapter 121 of this title;

‘‘(B) an undocumented vessel owned or chartered by

or made available to the United States Government; and

‘‘(C) a tug, barge, or other watercraft (whether or not

documented) owned by a citizen of the United States and

used in essential water transportation or in the fisheries,

except only for sport fishing.

‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty

container on a vessel.

‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF

THE UNITED STATES.—The term ‘transportation in the waterborne commerce of the United States’ includes the operation

of a vessel in the fisheries, except only for sport fishing.

‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the

extent the Secretary of Transportation determines—

‘‘(A) any part of a loss excluded from marine insurance

coverage under a ‘free of capture or seizure’ clause or

analogous clause; and

‘‘(B) any other loss from a hostile act, including confiscation, expropriation, nationalization, or deprivation.

‘‘§ 53902. Authority to provide insurance

‘‘(a) IN GENERAL.—With the approval of the President, and

after such consultation with interested agencies of United States

Government as the President may require, the Secretary of

Transportation may provide insurance and reinsurance against loss

or damage from war risks as provided by this chapter whenever

it appears to the Secretary that insurance adequate for the needs

of the waterborne commerce of the United States cannot be obtained

on reasonable terms and conditions from companies authorized

to do insurance business in a State of the United States.

‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under

this chapter shall be based, insofar as practicable, on consideration

of the risk involved.

‘‘(c) AVAILABILITY OF VESSEL DURING WAR OR NATIONAL EMERGENCY.—Insurance or reinsurance for a vessel may be provided

under this chapter only on the condition that the vessel will be

available to the Government in time of war or national emergency.

‘‘§ 53903. Insurable interests

‘‘(a) IN GENERAL.—The Secretary of Transportation may provide

insurance and reinsurance under this chapter for—

‘‘(1) an American vessel, including a vessel under construction;

‘‘(2) a foreign vessel—

‘‘(A) owned by a citizen of the United States; or

‘‘(B) engaged in transportation in the waterborne commerce of the United States or in such other transportation

by water or such other services as the Secretary considers

to be in the interest of the national defense or national

economy of the United States, when so engaged;

‘‘(3) cargo—

‘‘(A) shipped or to be shipped on a vessel insurable

under this section, including by express or registered mail;

‘‘(B) owned by a citizen or resident of the United States;

120 STAT. 1628 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(C) imported to or exported from the United States,

or sold or purchased by a citizen or resident of the United

States, under a contract of sale or purchase the terms

of which provide that the risk of loss by war risks or

the obligation to provide insurance against war risks is

on a citizen or resident of the United States; or

‘‘(D) shipped between ports in the United States;

‘‘(4) disbursements, including advances to masters and general average disbursements, and freight and passage money

of a vessel insurable under this section;

‘‘(5) personal effects of an individual on a vessel insurable

under this section;

‘‘(6) loss of life, injury, or detention by an enemy of the

United States after capture, with respect to an individual on

a vessel insurable under this section; and

‘‘(7) statutory or contractual obligations or other liabilities

of a vessel insurable under this section or of the owner or

charterer of such a vessel, of a nature customarily covered

by insurance.

‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining

whether to provide insurance or reinsurance for a foreign vessel,

the Secretary shall consider the characteristics, employment, and

general management of the vessel by the owner or charterer.

‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection

(a)(5)–(7), insofar as it involves a liability related to an individual

on the vessel, may include risks other than war risks to the extent

the Secretary considers advisable.

‘‘§ 53904. Liability insurance for persons involved in war or

defense efforts

‘‘(a) IN GENERAL.—The Secretary of Transportation may provide

insurance under this chapter against legal liability that a person

may incur in providing services or facilities for a vessel if, in

the opinion of the Secretary, the insurance—

‘‘(1) is required in prosecuting a war or for national defense;

and

‘‘(2) cannot be obtained at reasonable rates or on reasonable

terms and conditions from approved companies authorized to

do insurance business in a State of the United States.

‘‘(b) LIMITATIONS.—Employer liability insurance and worker

compensation insurance against legal liability to employees may

not be provided under this section.

‘‘§ 53905. Agency insurance

‘‘(a) IN GENERAL.—With the approval of the President, an

agency of the United States Government may obtain insurance

provided for by this chapter from the Secretary of Transportation,

except as provided in sections 17302 and 17303 of title 40.

‘‘(b) PREMIUM WAIVERS.—With the approval of the President,

the Secretary of Transportation may provide insurance under this

chapter at the request of the Secretary of Defense and other agencies the President may prescribe, without payment of an insurance

premium if the Secretary of Defense or agency agrees to indemnify

the Secretary of Transportation against loss covered by the insurance. The Secretary of Defense and agencies may make such an

indemnity agreement.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1629

‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President

(or an official designated by the President) on the agreement shall

be treated as the approval required by section 53902(a) of this

title.

‘‘§ 53906. Hull insurance valuation

‘‘(a) STATED VALUATION.—The valuation in a hull insurance

policy for actual or constructive total loss of the insured vessel

shall be a stated valuation determined by the Secretary of Transportation. The stated valuation—

‘‘(1) shall exclude national defense features paid for by

the United States Government; and

‘‘(2) may not exceed the amount that would be payable

if the ownership of the vessel had been requisitioned under

chapter 563 of this title at the time the insurance attached

under the policy.

‘‘(b) REJECTING STATED VALUATION.—Within 60 days after the

insurance attaches under a policy referred to in subsection (a)

or within 60 days after the Secretary determines the valuation,

whichever is later, the insured may reject the valuation and pay,

at the rate provided in the policy, premiums based on the asserted

valuation the insured specifies at the time of rejection. However,

the asserted valuation is not binding on the Government in any

subsequent action on the policy.

‘‘(c) AMOUNT OF CLAIM.—If a vessel is actually or constructively

totally lost and the insured under a policy referred to in subsection

(a) has not rejected the stated valuation determined by the Secretary, the amount of a claim adjusted, compromised, settled,

adjudged, or paid may not exceed the stated valuation. However,

if the insured has rejected the valuation, the insured—

‘‘(1) shall be paid, as a tentative advance only, 75 percent

of the stated valuation; and

‘‘(2) may bring a civil action against the United States

in a court having jurisdiction of the claim to recover a valuation

equal to the just compensation the court determines would

have been payable if the ownership of the vessel had been

requisitioned under chapter 563 of this title at the time the

insurance attached under the policy.

‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination

as provided under subsection (c)(2), premiums paid under the policy

shall be adjusted based on the court’s determination and the rates

provided for in the policy.

‘‘§ 53907. Reinsurance

‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is authorized to provide insurance under this chapter, the

Secretary may provide reinsurance to a company authorized to

do insurance business in a State of the United States. The Secretary

may obtain reinsurance from such a company for any insurance

provided by the Secretary under this chapter.

‘‘(b) RATES.—The Secretary may not provide reinsurance at

rates less than, nor obtain reinsurance at rates more than, the

rates established by the Secretary on the same or similar risks

or the rates charged by the insurance company for the insurance

reinsured, whichever is more advantageous to the Secretary. However, the Secretary may provide an allowance to the insurance

120 STAT. 1630 PUBLIC LAW 109–304—OCT. 6, 2006

company for the costs of services and facilities the company provides, in an amount the Secretary considers reasonable according

to good business practice. The allowance to the company may not

include any amount for soliciting or stimulating insurance business.

‘‘§ 53908. Additional insurance privately obtained

‘‘With the approval of the Secretary of Transportation, a person

having an insurable interest in a vessel may obtain insurance

on the vessel with other underwriting agents in addition to the

insurance with the Secretary. The Secretary is not entitled to the

benefit of the additional insurance.

‘‘§ 53909. War risk insurance revolving fund

‘‘(a) IN GENERAL.—There is a war risk insurance revolving

fund in the Treasury.

‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts

appropriated to carry out this chapter and amounts received in

carrying out this chapter.

‘‘(c) PAYMENTS.—There shall be paid from the fund amounts

for return premiums, losses, settlements, judgments, and all liabilities incurred by the United States Government under this chapter.

‘‘(d) INVESTMENT.—The Secretary of Transportation may

request the Secretary of the Treasury to invest such portion of

the fund as is not, in the judgment of the Secretary of Transportation, required to meet the current needs of the fund. These

investments shall be made by the Secretary of the Treasury in

public debt securities of the Government, with maturities suitable

to the needs of the fund, and bearing interest rates determined

by the Secretary of the Treasury, taking into consideration current

market yields on outstanding marketable obligations of the Government of comparable maturity. Interest and benefits from the securities shall be deposited in the fund.

‘‘§ 53910. Administrative

‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying

out this chapter, the Secretary of Transportation may act in accordance with commercial practice in the marine insurance business.

‘‘(b) REGULATIONS.—The Secretary may prescribe regulations

the Secretary considers appropriate to carry out this chapter.

‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may

prescribe and change forms and policies, and fix and change the

amounts insured and rates of premium, under this chapter.

‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an

annual fee in an amount calculated to cover the expenses of processing applications for insurance, employing underwriting agents,

and appointing experts under this chapter.

‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may

settle and pay claims, and pay judgments against the United States,

related to insurance under this chapter.

‘‘(f) UNDERWRITING AGENTS.—

‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary finds it practical to do so shall, employ a domestic

company or group of domestic companies, authorized to do

marine insurance business in a State of the United States,

to act as underwriting agent for the Secretary. The services

of an underwriting agent may be used in adjusting claims,

but a claim may not be paid until approved by the Secretary.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1631

‘‘(2) COMPENSATION.—The Secretary may allow the company or group of companies reasonable compensation for services as the underwriting agent. The compensation may include

an allowance for expenses reasonably incurred by the agent,

but may not include any amount for soliciting or stimulating

business.

‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in

subsection (f)(2), the Secretary may not pay an insurance broker

or other person acting in a similar intermediary capacity a fee

or other consideration for participating in arranging insurance when

the Secretary directly insures any of the risk.

‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, without regard to the laws and regulations on the employment of Federal employees, may appoint and prescribe the duties

of experts in marine insurance as the Secretary considers necessary

to carry out this chapter.

‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the

consent of another agency of the United States Government, the

Secretary may use information, services, facilities, officers, and

employees of the agency in carrying out this chapter.

‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by regulation vessel location reporting requirements for a

vessel insured under this chapter.

‘‘§ 53911. Civil actions for losses

‘‘(a) IN GENERAL.—If there is a disagreement about a loss

insured under this chapter, a civil action in admiralty may be

brought against the United States in the district court of the United

States for the district in which the plaintiff or the plaintiff’s agent

resides. If the plaintiff has no residence in the United States,

the action may be brought in the United States District Court

for the District of Columbia or in the district court for any district

in which the Attorney General agrees to accept service. Any person

who may have an interest in the insurance may be made a party,

either initially or on the motion of either party.

‘‘(b) EXCLUSIVE REMEDY.—A civil action against the United

States under this section is exclusive of any other action by reason

of the same subject matter against an officer, employee, or agent

employed or retained by the Government under this chapter.

‘‘(c) PROCEDURE.—A civil action under this section shall be

heard and determined under chapter 309 of this title.

‘‘(d) TOLLING OF LIMITATIONS PERIOD.—If a claim is filed with

the Secretary of Transportation, the running of the limitations

period for bringing a civil action is suspended until the Secretary

denies the claim, and for 60 days thereafter. The Secretary is

deemed to have denied the claim if the Secretary does not act

on the claim within 6 months after the claim is filed, unless the

Secretary for good cause shown agrees with the claimant on a

different period for the Secretary to act on the claim.

‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of the Government under the insurance and there is a

dispute about the persons entitled to receive payment, the Government may bring a civil action interpleading those persons. The

action shall be brought in the United States District Court for

the District of Columbia or in the district court for the district

in which any of those persons resides. A person not residing or

found in the district may be made a party by service in any

120 STAT. 1632 PUBLIC LAW 109–304—OCT. 6, 2006

reasonable manner the court directs. If the court is satisfied that

unknown persons might make a claim under the insurance, the

court may direct service on those unknown persons by publication

in the Federal Register. Judgment after service by publication in

the Federal Register discharges the Government from further

liability to all persons.

‘‘§ 53912. Expiration date

‘‘The authority of the Secretary of Transportation to provide

insurance and reinsurance under this chapter expires on December

31, 2010.

‘‘PART D—PROMOTIONAL PROGRAMS

‘‘CHAPTER 551—COASTWISE TRADE

‘‘Sec.

‘‘55101. Application of coastwise laws.

‘‘55102. Transportation of merchandise.

‘‘55103. Transportation of passengers.

‘‘55104. Transportation of passengers between Puerto Rico and other ports in the

United States.

‘‘55105. Transportation of hazardous waste.

‘‘55106. Merchandise transferred between barges.

‘‘55107. Empty cargo containers and barges.

‘‘55108. Platform jackets.

‘‘55109. Dredging.

‘‘55110. Transportation of dredged material.

‘‘55111. Towing.

‘‘55112. Vessel escort operations and towing assistance.

‘‘55113. Use of foreign documented oil spill response vessels.

‘‘55114. Unloading fish from foreign vessels.

‘‘55115. Supplies on fish processing vessels.

‘‘55116. Canadian rail lines.

‘‘55117. Great Lakes rail route.

‘‘55118. Foreign railroads whose road enters by ferry, tugboat, or towboat.

‘‘55119. Yukon River.

‘‘55120. Transshipment of imported merchandise intended for immediate exportation.

‘‘55121. Transportation of merchandise and passengers on Canadian vessels.

‘‘§ 55101. Application of coastwise laws

‘‘(a) IN GENERAL.—Except as provided in subsection (b), the

coastwise laws apply to the United States, including the island

territories and possessions of the United States.

‘‘(b) EXCEPTIONS.—The coastwise laws do not apply to—

‘‘(1) American Samoa;

‘‘(2) the Northern Mariana Islands, except as provided in

section 502(b) of the Covenant To Establish a Commonwealth

of the Northern Mariana Islands in Political Union With the

United States of America (48 U.S.C. 1801 note);

‘‘(3) Canton Island until the President declares by

proclamation that the coastwise laws apply to Canton Island;

or

‘‘(4) the Virgin Islands until the President declares by

proclamation that the coastwise laws apply to the Virgin

Islands.

‘‘§ 55102. Transportation of merchandise

‘‘(a) DEFINITION.—In this section, the term ‘merchandise’

includes—

‘‘(1) merchandise owned by the United States Government,

a State, or a subdivision of a State; and

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1633

‘‘(2) valueless material.

‘‘(b) REQUIREMENTS.—Except as otherwise provided in this

chapter or chapter 121 of this title, a vessel may not provide

any part of the transportation of merchandise by water, or by

land and water, between points in the United States to which

the coastwise laws apply, either directly or via a foreign port,

unless the vessel—

‘‘(1) is wholly owned by citizens of the United States for

purposes of engaging in the coastwise trade; and

‘‘(2) has been issued a certificate of documentation with

a coastwise endorsement under chapter 121 or is exempt from

documentation but would otherwise be eligible for such a certificate and endorsement.

‘‘(c) PENALTY.—Merchandise transported in violation of subsection (b) is liable to seizure by and forfeiture to the Government.

Alternatively, an amount equal to the value of the merchandise

(as determined by the Secretary of Homeland Security) or the

actual cost of the transportation, whichever is greater, may be

recovered from any person transporting the merchandise or causing

the merchandise to be transported.

‘‘§ 55103. Transportation of passengers

‘‘(a) IN GENERAL.—Except as otherwise provided in this chapter

or chapter 121 of this title, a vessel may not transport passengers

between ports or places in the United States to which the coastwise

laws apply, either directly or via a foreign port, unless the vessel—

‘‘(1) is wholly owned by citizens of the United States for

purposes of engaging in the coastwise trade; and

‘‘(2) has been issued a certificate of documentation with

a coastwise endorsement under chapter 121 or is exempt from

documentation but would otherwise be eligible for such a certificate and endorsement.

‘‘(b) PENALTY.—The penalty for violating subsection (a) is $300

for each passenger transported and landed.

‘‘§ 55104. Transportation of passengers between Puerto Rico

and other ports in the United States

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) CERTIFICATE.—The term ‘certificate’ means a certificate

of financial responsibility for indemnification of passengers for

nonperformance of transportation issued by the Federal Maritime Commission under section 44102 of this title.

‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’

means a vessel of similar size, or offering similar service, as

any other vessel transporting passengers under subsection (b).

‘‘(b) EXEMPTION.—Except as otherwise provided in this section,

a vessel not qualified to engage in the coastwise trade may transport

passengers between a port in Puerto Rico and another port in

the United States.

‘‘(c) EXPIRATION OF EXEMPTION.—

‘‘(1) WHEN COASTWISE-QUALIFIED VESSEL OFFERING

SERVICE.—On a showing to the Secretary of the department

in which the Coast Guard is operating, by the vessel owner

or charterer, that a United States passenger vessel qualified

to engage in the coastwise trade is offering or advertising

passenger service between a port in Puerto Rico and another

port in the United States pursuant to a certificate, the Secretary

120 STAT. 1634 PUBLIC LAW 109–304—OCT. 6, 2006

shall notify the owner or operator of each vessel transporting

passengers under subsection (b) to terminate that transportation within 270 days after the Secretary’s notification. Except

as provided in subsection (d), the authority to transport passengers under subsection (b) expires at the end of that 270-

day period.

‘‘(2) WHEN NON-COASTWISE-QUALIFIED VESSEL OFFERING

SERVICE.—On a showing to the Secretary, by the vessel owner

or charterer, that a United States passenger vessel not qualified

to engage in the coastwise trade is offering or advertising

passenger service between a port in Puerto Rico and another

port in the United States pursuant to a certificate, the Secretary

shall notify the owner or operator of each foreign vessel transporting passengers under subsection (b) to terminate that

transportation within 270 days after the Secretary’s notification. Except as provided in subsection (d), the authority of

a foreign vessel to transport passengers under subsection (b)

expires at the end of that 270-day period.

‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising

the service described in subsection (c) has not begun that service

within 270 days after the Secretary’s notification, the expiration

provided by subsection (c) is delayed until 90 days after the vessel

offering or advertising the service begins that service.

‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that

the service on which an expiration was based is no longer available,

the expired authority to transport passengers is reinstated.

‘‘§ 55105. Transportation of hazardous waste

‘‘(a) IN GENERAL.—The transportation of hazardous waste, as

defined in section 1004(5) of the Resource Conservation and

Recovery Act of 1976 (42 U.S.C. 6903(5)), from a point in the

United States to sea for incineration is deemed to be transportation

of merchandise under section 55102 of this title.

‘‘(b) NONAPPLICATION TO CERTAIN FOREIGN VESSELS.—

‘‘(1) IN GENERAL.—Subsection (a) does not apply to

transportation performed by a foreign ocean incineration vessel

owned by or under construction on May 1, 1982, for a corporation wholly owned by citizens of the United States under section

50501(a)–(c) of this title.

‘‘(2) STANDARDS FOR INCINERATION EQUIPMENT.—Incineration equipment on a vessel described in paragraph (1) must

meet standards of the Coast Guard and the Environmental

Protection Agency.

‘‘(3) INSPECTION.—A vessel described in paragraph (1) shall

be inspected by the Coast Guard, regardless of whether

inspected by the nation in which it is registered. The inspection

shall be the same as would be required of a vessel of the

United States, including drydock inspection and internal examination of tanks and void spaces. The inspection may be made

concurrently with an inspection by that nation or within one

year after the initial issuance or next scheduled issuance of

the Safety of Life at Sea Safety Construction Certificate. In

making the inspection, the Coast Guard shall refer to the

condition of the hull and superstructure established by the

initial foreign certification as the basis for evaluating the current condition of the hull and superstructure. The Coast Guard

shall allow the substitution of fittings, material, apparatus,

Notification.

Deadline.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1635

equipment, and appliances different from those required for

vessels of the United States if satisfied they are equivalent

and at least as effective as those required for vessels of the

United States. A satisfactory inspection under this paragraph

shall be certified in writing by the Secretary of the department

in which the Coast Guard is operating.

‘‘(c) EFFECTIVE DATE.—Subsection (a) is not effective until an

appropriate vessel has been built and documented under chapter

121 of this title.

‘‘§ 55106. Merchandise transferred between barges

‘‘(a) IN GENERAL.—On terms and conditions the Secretary of

Homeland Security may prescribe by regulation, the Secretary may

suspend the application of section 55102 of this title to the transportation of merchandise that is transferred, when moving in the

foreign trade of the United States, from a barge certified by the

owner or operator as designed specifically for carriage on a vessel

and carried regularly on a vessel in foreign trade, to another such

barge owned or leased by the same owner or operator. However,

this subsection does not apply to transportation between the continental United States and noncontiguous States, territories, or

possessions to which the coastwise laws apply.

‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This

section applies to a vessel of foreign registry only if the Secretary

of Homeland Security finds, based on information from the Secretary of State, that the government of the nation of registry extends

reciprocal privileges to vessels of the United States.

‘‘§ 55107. Empty cargo containers and barges

‘‘(a) IN GENERAL.—Subject to subsections (b) and (c), and on

terms and conditions the Secretary of Homeland Security may

prescribe by regulation, section 55102 of this title does not apply

to the transportation of—

‘‘(1) empty cargo vans, empty lift vans, or empty shipping

tanks;

‘‘(2) equipment for use with cargo vans, lift vans, or shipping tanks;

‘‘(3) empty barges specifically designed for carriage aboard

a vessel and equipment (except propulsion equipment) for use

with those barges;

‘‘(4) empty instruments for international traffic exempted

from the customs laws under section 322(a) of the Tariff Act

of 1930 (19 U.S.C. 1322(a)); or

‘‘(5) stevedoring equipment and material.

‘‘(b) CONDITIONS.—

‘‘(1) PARAGRAPHS (1)–(4).—Paragraphs (1)–(4) of subsection

(a) apply only if the items named are owned or leased by

the owner or operator of the vessel and transported for its

use in handling its cargo in foreign trade.

‘‘(2) PARAGRAPH (5).—Paragraph (5) of subsection (a) applies

only if the items named are—

‘‘(A) owned or leased by the owner or operator of the

vessel or by the stevedoring company having the contract

for the loading or unloading of the vessel; and

‘‘(B) transported without charge for use in the handling

of cargo in foreign trade.

120 STAT. 1636 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(c) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This

section applies to a vessel of foreign registry only if the Secretary

of Homeland Security finds, based on information from the Secretary of State, that the government of the nation of registry extends

reciprocal privileges to vessels of the United States.

‘‘§ 55108. Platform jackets

‘‘(a) DEFINITIONS.—In this section:

‘‘(1) COASTWISE QUALIFIED VESSEL.—The term ‘coastwise

qualified vessel’ means a vessel that has been issued a certificate of documentation with a coastwise endorsement under

chapter 121 of this title.

‘‘(2) PLATFORM JACKET.—The term ‘platform jacket’ refers

to a single physical component and includes any type of offshore

exploration, development, or production structure or component

thereof, including—

‘‘(A) platform jackets;

‘‘(B) tension leg or SPAR platform superstructures

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

supporting structure);

‘‘(C) hull (including vertical legs and connecting pontoons or vertical cylinder);

‘‘(D) tower and base sections of a platform jacket;

‘‘(E) jacket structures; and

‘‘(F) deck modules (known as ‘topsides’).

‘‘(b) AUTHORIZED TRANSPORTATION.—Section 55102 of this title

does not apply to the transportation of a platform jacket in or

on a non-coastwise qualified 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 4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), if—

‘‘(1) the launch barge was built before December 31, 2000,

and has a launch capacity of at least 12,000 long tons; and

‘‘(2) the Secretary of Transportation makes a determination,

in accordance with procedures established under subsection

(c), that a suitable coastwise qualified vessel is not available

for use in the transportation and, if needed, launch or installation of a platform jacket.

‘‘(c) PROCEDURES TO MAXIMIZE USE OF COASTWISE QUALIFIED

VESSELS.—The Secretary of Transportation shall adopt procedures

implementing this section that are reasonably designed to provide

timely information so as to maximize the use of coastwise qualified

vessels. The procedures shall, among other things, establish that

for purposes of this section, a coastwise qualified vessel shall be

deemed to be not available only if—

‘‘(1) on application by an owner or operator for the use

of a non-coastwise qualified launch barge for transportation

of a platform jacket under this section (which application shall

include all relevant information, including engineering details

and timing requirements), the Secretary promptly publishes

a notice in the Federal Register—

‘‘(A) describing the project and the platform jacket

involved;

‘‘(B) advising that all relevant information reasonably

needed to assess the transportation requirements for the

platform jacket will be made available to interested parties

on request; and

Notification.

Federal Register,

publication.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1637

‘‘(C) requesting that information on the availability

of coastwise qualified vessels be submitted within 30 days

after publication of that notice; and

‘‘(2)(A) no information is submitted to the Secretary within

that 30 day period; or

‘‘(B) the owner or operator of a coastwise qualified vessel

submits information to the Secretary asserting that the owner

or operator has a suitable coastwise qualified vessel available

for the transportation, but the Secretary determines, within

90 days after the notice is first published, that the coastwise

qualified vessel is not suitable or reasonably available for the

transportation.

‘‘§ 55109. Dredging

‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel

may engage in dredging in the navigable waters of the United

States only if—

‘‘(1) the vessel is wholly owned by citizens of the United

States for purposes of engaging in the coastwise trade;

‘‘(2) the charterer, if any, is a citizen of the United States

for purposes of engaging in the coastwise trade; and

‘‘(3) the vessel has been issued a certificate of documentation with a coastwise endorsement under chapter 121 of this

title or is exempt from documentation but would otherwise

be eligible for such a certificate and endorsement.

‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with

a registry endorsement may engage in the dredging of gold in

Alaska.

‘‘(c) PENALTY.—If a vessel is operated in knowing violation

of this section, the vessel and its equipment are liable to seizure

by and forfeiture to the United States Government.

‘‘§ 55110. Transportation of dredged material

‘‘Section 55102 of this title applies to the transportation of

valueless material or dredged material, regardless of whether it

has commercial value, from a point in the United States or on

the high seas within the exclusive economic zone, to another point

in the United States or on the high seas within the exclusive

economic zone.

‘‘§ 55111. Towing

‘‘(a) IN GENERAL.—Except when towing a vessel in distress,

a vessel may not do any part of any towing described in subsection

(b) unless the towing vessel—

‘‘(1) is wholly owned by citizens of the United States for

purposes of engaging in the coastwise trade; and

‘‘(2) has been issued a certificate of documentation with

a coastwise endorsement under chapter 121 of this title or

is exempt from documentation but would otherwise be eligible

for such a certificate and endorsement.

‘‘(b) APPLICABLE TOWING.—Subsection (a) applies to the towing

of—

‘‘(1) a vessel between ports or places in the United States

to which the coastwise laws apply, either directly or via a

foreign port or place;

‘‘(2) a vessel from point to point within the harbors of

ports or places to which the coastwise laws apply; or

Deadline.

Deadline.

120 STAT. 1638 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(3) a vessel transporting valueless material or dredged

material, regardless of whether it has commercial value, from

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

exclusive economic zone, to another point in the United States

or on the high seas within the exclusive economic zone.

‘‘(c) PENALTIES.—

‘‘(1) OWNER AND MASTER.—The owner and master of a

vessel towing another vessel in violation of this section are

each liable for a penalty of at least $350 but not more than

$1,100. A penalty under this paragraph constitutes a lien on

the vessel. The lien is enforceable in a district court of the

United States for any district in which the vessel is found.

Clearance may not be granted to the vessel until the penalties

have been paid.

‘‘(2) VESSEL.—In addition to the penalties under paragraph

(1), the towing vessel is liable for a penalty of $60 per ton

based on the tonnage of each towed vessel.

‘‘§ 55112. Vessel escort operations and towing assistance

‘‘(a) IN GENERAL.—Except in the case of a vessel in distress,

only a vessel of the United States may perform the following escort

vessel operations within the navigable waters of the United States:

‘‘(1) Operations that commence or terminate at a port or

place in the United States.

‘‘(2) Operations required by United States law or regulation.

‘‘(3) Operations provided in whole or in part within or

through navigation facilities owned, maintained, or operated

by the United States Government or the approaches to those

facilities, other than facilities operated by the St. Lawrence

Seaway Development Corporation on the St. Lawrence River

portion of the Seaway.

‘‘(b) ESCORT VESSELS.—For purposes of this section, an escort

vessel is—

‘‘(1) any vessel that is assigned and dedicated to assist

another vessel, whether or not tethered to that vessel, solely

as a safety precaution to assist in controlling the speed or

course of the assisted vessel in the event of a steering or

propulsion equipment failure, or any other similar emergency

circumstance, or in restricted waters where additional assistance in maneuvering the vessel is required to ensure its safe

operation; and

‘‘(2) in the case of a vessel being towed under section

55111 of this title, any vessel that is assigned and dedicated

to the vessel being towed in addition to any towing vessel

required under that section.

‘‘(c) RELATIONSHIP TO OTHER LAW.—This section does not affect

section 55111 of this title.

‘‘(d) PENALTY.—A person violating this section is liable to the

Government for a civil penalty of not more than $10,000 for each

day during which the violation occurs.

‘‘§ 55113. Use of foreign documented oil spill response vessels

‘‘Notwithstanding any other provision of law, an oil spill

response vessel documented under the laws of a foreign country

may operate in waters of the United States on an emergency

and temporary basis, for the purpose of recovering, transporting,

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1639

and unloading in a United States port oil discharged as a result

of an oil spill in or near those waters, if—

‘‘(1) an adequate number and type of oil spill response

vessels documented under the laws of the United States cannot

be engaged to recover oil from an oil spill in or near those

waters in a timely manner, as determined by the Federal

On-Scene Coordinator for a discharge or threat of a discharge

of oil; and

‘‘(2) the foreign country has by its laws accorded to vessels

of the United States the same privileges accorded to vessels

of the foreign country under this section.

‘‘§ 55114. Unloading fish from foreign vessels

‘‘(a) PROHIBITIONS.—Except as otherwise provided by this section or a treaty or convention to which the United States is a

party, a foreign vessel may not unload, in a port of the United

States—

‘‘(1) its catch of fish taken on board on the high seas

or fish products processed from that catch of fish; or

‘‘(2) fish or fish products taken on board that vessel on

the high seas from a vessel engaged in fishing operations or

the processing of fish or fish products.

‘‘(b) REGULATIONS ON OBTAINING INFORMATION.—The Secretary

of Commerce may prescribe regulations the Secretary considers

necessary to obtain information on the transportation of fish products by vessels of the United States for foreign fish processing

vessels to points in the United States.

‘‘(c) VIRGIN ISLANDS.—

‘‘(1) IN GENERAL.—A foreign vessel of not more than 50

feet overall in length may unload its catch of fresh fish (whole

or with the heads, viscera, or fins removed, but not frozen,

otherwise processed, or further advanced) in a port of the

Virgin Islands for immediate consumption in those islands.

Fish unloaded under this paragraph may be sold or transferred

only for immediate consumption. In the absence of satisfactory

evidence that a sale or transfer to an agent, representative,

or employee of a freezer or cannery is for immediate consumption, the sale or transfer is deemed not to be for immediate

consumption. This paragraph does not prohibit the freezing,

smoking, or other processing of fresh fish by the ultimate

consumer of the fish.

‘‘(2) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded

in the Virgin Islands that are retained, sold, or transferred,

except as allowed by paragraph (1), are liable to seizure by

and forfeiture to the United States Government. A person

retaining, selling, transferring, buying, or receiving the fish

is liable to the Government for a civil penalty of not more

than $1,000 for each violation. A penalty or forfeiture under

this paragraph may be compromised, modified, or remitted

under section 2107(b) of this title.

‘‘(d) NORTHERN MARIANA ISLANDS.—Subsection (a) does not

apply to the Northern Mariana Islands.

Virgin Islands.

120 STAT. 1640 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 55115. Supplies on fish processing vessels

‘‘Section 55102 of this title does not apply to supplies aboard

a United States documented fish processing vessel that are necessary and used for processing or assembling fishery products

aboard such a vessel.

‘‘§ 55116. Canadian rail lines

‘‘Section 55102 of this title does not apply to the transportation

of merchandise between points in the continental United States,

including Alaska, over through routes in part over Canadian rail

lines and connecting water facilities if the routes are recognized

by the Surface Transportation Board and rate tariffs for the routes

have been filed with the Board.

‘‘§ 55117. Great Lakes rail route

‘‘Section 55102 of this title does not apply to the transportation

of merchandise loaded on a railroad car or to a motor vehicle

with or without a trailer, and with its passengers or contents

when accompanied by the operator, when the railroad car or motor

vehicle is transported in a railroad car ferry operated between

fixed terminals on the Great Lakes as part of a rail route, if—

‘‘(1) the 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;

‘‘(2) the stock of the common carrier by water, or its predecessor, was owned or controlled by a common carrier by rail

prior to June 5, 1920;

‘‘(3) the stock of the common carrier owning the car ferry

is, with the approval of the Board, now owned or controlled

by a common carrier by rail; and

‘‘(4) the car ferry is built in and documented under the

laws of the United States.

‘‘§ 55118. Foreign railroads whose road enters by ferry, tugboat, or towboat

‘‘A foreign railroad, whose road enters the United States by

ferry, tugboat, or towboat, may own and operate a vessel not having

a coastwise endorsement in connection with the water transportation of the passenger, freight, express, baggage, and mail cars

used by that road, together with the passengers, freight, express

matter, baggage, and mails transported in those cars. However,

the foreign railroad is subject to the same restrictions imposed

by law on a vessel of the United States entering a port of the

United States from the same foreign country. Except as otherwise

authorized by this chapter, the ferry, tugboat, or towboat may

not, under penalty of forfeiture, be used in the transportation of

merchandise between ports or places in the United States to which

the coastwise laws apply.

‘‘§ 55119. Yukon River

‘‘Section 55102 of this title does not apply to the transportation

of merchandise on the Yukon River until the Alaska Railroad is

completed and the Secretary of Transportation finds that proper

facilities will be available for transportation by citizens of the

United States to properly handle the traffic.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1641

‘‘§ 55120. Transshipment of imported merchandise intended

for immediate exportation

‘‘The Secretary of Homeland Security may prescribe regulations

for the transshipment and transportation of merchandise that is

imported into the United States by sea for immediate exportation

to a foreign port by sea, or by a river, the right to ascend or

descend which for the purposes of commerce is secured by treaty

to the citizens of the United States and the subjects of a foreign

power.

‘‘§ 55121. Transportation of merchandise and passengers on

Canadian vessels

‘‘(a) BETWEEN ROCHESTER AND ALEXANDRIA BAY.—Until passenger service is established by vessels of the United States between

the port of Rochester, New York, and the port of Alexandria Bay,

New York, the Secretary of Homeland Security may issue annually

permits to Canadian passenger vessels to transport passengers

between those ports. Canadian vessels holding such a permit are

not subject to section 55103 of this title.

‘‘(b) WITHIN ALASKA OR BETWEEN ALASKA AND OTHER POINTS

IN THE UNITED STATES.—Until the Secretary of Transportation

determines that service by vessels of the United States is available

to provide the transportation described in paragraph (1) or (2),

sections 55102 and 55103 of this title do not apply to the transportation on Canadian vessels of—

‘‘(1) passengers between ports in southeastern Alaska; or

‘‘(2) passengers or merchandise between Hyder, Alaska,

and other points in southeastern Alaska or in the United States

outside Alaska.

‘‘CHAPTER 553—PASSENGER AND CARGO PREFERENCES

‘‘SUBCHAPTER I—GENERAL

‘‘Sec.

‘‘55301. Priority loading for coal.

‘‘55302. Transportation of United States Government personnel.

‘‘55303. Motor vehicles owned by United States Government personnel.

‘‘55304. Exports financed by the United States Government.

‘‘55305. Cargoes procured, furnished, or financed by the United States Government.

‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF AGRICULTURAL

COMMODITIES

‘‘55311. Findings and purposes.

‘‘55312. Determining prevailing world market price.

‘‘55313. Exemption of certain agricultural exports from cargo preference provisions.

‘‘55314. Transportation requirements for certain exports sponsored by the Secretary of Agriculture.

‘‘55315. Minimum tonnage.

‘‘55316. Financing the transportation of agricultural commodities.

‘‘55317. Termination of subchapter.

‘‘55318. Effect on other law.

‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS

‘‘55331. Definitions.

‘‘55332. Designating American Great Lakes vessels.

‘‘55333. Exemption from restriction on transporting certain cargo.

‘‘55334. Restrictions on operations.

‘‘55335. Revocations and terminations of designations.

‘‘55336. Civil penalty.

New York.

120 STAT. 1642 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘SUBCHAPTER I—GENERAL

‘‘§ 55301. Priority loading for coal

‘‘A 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 be given priority in

loading at any of those ports ahead of a waiting vessel engaged

in the export transportation of coal produced in the United States.

However, if the Secretary of Transportation finds that it is in

the national interest, the Secretary may eliminate this priority

loading at any port. The Secretary shall report to Congress within

30 days an action eliminating priority loading under this section.

‘‘§ 55302. Transportation of United States Government personnel

‘‘(a) IN GENERAL.—An officer or employee of the United States

Government traveling by sea on official business overseas or to

or from a territory or possession of the United States shall travel

and transport personal effects on a vessel documented under the

laws of the United Sates if such a vessel is available, unless the

necessity of the mission requires the use of a foreign vessel.

‘‘(b) REGULATIONS.—The Administrator of General Services

shall prescribe regulations under which agencies may not pay for

or reimburse an officer or employee for travel or transportation

expenses incurred on a foreign vessel in the absence of satisfactory

proof of the necessity of using the vessel.

‘‘§ 55303. Motor vehicles owned by United States Government personnel

‘‘Notwithstanding any other law, privately-owned American

shipping services may be used to transport motor vehicles owned

by personnel of the United States Government whenever transportation of those vehicles at Government expense is otherwise authorized by law.

‘‘§ 55304. Exports financed by the United States Government

‘‘It is the sense of Congress that any loans made by an

instrumentality of the United States Government to foster the

exporting of agricultural or other products shall provide that the

products may be transported only on vessels of the United States

unless, as to any or all of those products, the Secretary of Transportation, after investigation, certifies to the instrumentality that vessels of the United States are not available in sufficient number,

in sufficient tonnage capacity, on necessary schedules, or at reasonable rates.

‘‘§ 55305. Cargoes procured, furnished, or financed by the

United States Government

‘‘(a) DEFINITION.—In this section, the term ‘privately-owned

commercial vessel of the United States’ does not include a vessel

that, after September 21, 1961, was built or rebuilt outside the

United States or documented under the laws of a foreign country,

until the vessel has been documented under the laws of the United

States for at least 3 years.

‘‘(b) MINIMUM TONNAGE.—When the United States Government

procures, contracts for, or otherwise obtains for its own account,

or furnishes to or for the account of a foreign country without

Reports.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1643

provision for reimbursement, any equipment, materials, or commodities, within or without the United States, or advances funds or

credits, or guarantees the convertibility of foreign currencies in

connection with the furnishing of the equipment, materials, or

commodities, the appropriate agencies shall take steps necessary

and practicable to ensure that at least 50 percent of the gross

tonnage of the equipment, materials, or commodities (computed

separately for dry bulk carriers, dry cargo liners, and tankers)

which may be transported on ocean vessels is transported on privately-owned commercial vessels of the United States, to the extent

those vessels are available at fair and reasonable rates for commercial vessels of the United States, in a manner that will ensure

a fair and reasonable participation of commercial vessels of the

United States in those cargoes by geographic areas.

‘‘(c) WAIVERS.—The President, the Secretary of Defense, or Congress (by concurrent resolution or otherwise) may waive this section

temporarily by—

‘‘(1) declaring the existence of an emergency justifying a

waiver; and

‘‘(2) notifying the appropriate agencies of the waiver.

‘‘(d) PROGRAMS OF OTHER AGENCIES.—An agency having responsibility under this section shall administer its programs with respect

to this section under regulations prescribed by the Secretary of

Transportation. The Secretary shall review the administration of

those programs and report annually to Congress on their administration.

‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF

AGRICULTURAL COMMODITIES

‘‘§ 55311. Findings and purposes

‘‘(a) FINDINGS.—Congress finds that—

‘‘(1) a productive and healthy agricultural industry and

a strong and active United States maritime industry are vitally

important to the economic well-being and security of the United

States;

‘‘(2) both industries must compete in international markets

increasingly dominated by foreign trade barriers and the subsidization practices of foreign governments; and

‘‘(3) increased agricultural exports and the use of merchant

vessels of the United States contribute positively to the United

States balance of trade and generate employment opportunities

in the United States.

‘‘(b) PURPOSES.—The purposes of this subchapter are to—

‘‘(1) enable the Secretary of Agriculture to plan export

programs effectively, by clarifying the ocean transportation

requirements applicable to those programs;

‘‘(2) take immediate and positive steps to promote the

growth of the cargo-carrying capacity of the United States

merchant marine;

‘‘(3) expand international trade in United States agricultural commodities and products and develop, maintain, and

expand markets for United States agricultural exports;

‘‘(4) improve the efficiency of administration of both the

commodity purchasing and selling activities and the ocean

transportation activities associated with export programs sponsored by the Secretary;

Reports.

Regulations.

120 STAT. 1644 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(5) stimulate and promote the agricultural and maritime

industries of the United States and encourage cooperative

efforts by both industries to address their common problems;

and

‘‘(6) provide for the appropriate disposition of these findings

and purposes.

‘‘§ 55312. Determining prevailing world market price

‘‘(a) AGRICULTURAL COMMODITIES AND PRODUCTS.—The prevailing world market price for agricultural commodities or their

products shall be determined under this subchapter under procedures prescribed by the Secretary of Agriculture. The Secretary

shall prescribe the procedures by regulation, with notice and opportunity for public comment under section 553 of title 5.

‘‘(b) SERVICES AND NON-AGRICULTURAL COMMODITIES AND

PRODUCTS.—If a determination of the prevailing world market price

of any other type of materials, goods, equipment, or service is

required to determine whether a barter or exchange transaction

is subject to section 55314(b)(6) or (7) of this title, the determination

shall be made by the Secretary of Agriculture in consultation with

the heads of other appropriate agencies.

‘‘§ 55313. Exemption of certain agricultural exports from

cargo preference provisions

‘‘Sections 55304 and 55305 of this title do not apply to export

activities of the Secretary of Agriculture or the Commodity Credit

Corporation under which—

‘‘(1) agricultural commodities or their products acquired

by the Corporation are made available to United States

exporters, users, processors, or foreign purchasers for the purpose of developing, maintaining, or expanding export markets

for United States agricultural commodities or their products

at prevailing world market prices;

‘‘(2) payments are made available to United States

exporters, users, or processors or, except as provided in section

55314 of this title, cash grants are made available to foreign

purchasers, for the purpose described in paragraph (1);

‘‘(3) commercial credit guarantees are blended with direct

credits from the Corporation to reduce the effective rate of

interest on export sales of United States agricultural commodities or their products;

‘‘(4) credit or credit guarantees for not more than 3 years

are extended by the Corporation to finance or guarantee export

sales of United States agricultural commodities or their products; or

‘‘(5) agricultural commodities or their products owned or

controlled by or under loan from the Corporation are exchanged

or bartered for materials, goods, equipment, or services at least

equal in value to the agricultural commodities or their products

for which they are exchanged or bartered (determined on the

basis of prevailing world market prices at the time of the

exchange or barter), but this paragraph does not exempt from

the cargo preference provisions referred to in section 55314(b)

of this title any requirement otherwise applicable to the materials, goods, equipment, or services imported under the transaction.

Regulations.

Notification.

Public comment.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1645

‘‘§ 55314. Transportation requirements for certain exports

sponsored by the Secretary of Agriculture

‘‘(a) MINIMUM TONNAGE.— ‘‘(1) IN GENERAL.—In addition to the requirement under

section 55305 of this title for the transportation of a percentage

of gross tonnage on commercial vessels of the United States,

25 percent of the gross tonnage of agricultural commodities

or their products specified in subsection (b) shall be transported

each calendar year on commercial vessels of the United States

that—

‘‘(A) are necessary for national security; and

‘‘(B) if more than 25 years old, were rebuilt within

the last 5 years and certified by the Secretary of Transportation as having a useful life of at least 5 years after

that rebuilding.

‘‘(2) CALENDAR YEAR.—To provide for effective and equitable

administration of the cargo preference laws, the calendar year

for the purpose of compliance with minimum percentage

requirements is the 12-month period beginning October 1 of

each year.

‘‘(b) APPLICABLE EXPORT ACTIVITY.—This section applies to

export activity (except inspection or weighing activities, other activities carried out for health or safety, or technical assistance provided

in the handling of commercial transactions) of the Secretary of

Agriculture or the Commodity Credit Corporation—

‘‘(1) carried out under the Agricultural Trade Development

and Assistance Act of 1954 (7 U.S.C. 1691 et seq.);

‘‘(2) carried out under section 416 of the Agricultural Act

of 1949 (7 U.S.C. 1431);

‘‘(3) carried out under the Bill Emerson Humanitarian

Trust Act (7 U.S.C. 1736f–1);

‘‘(4) under which agricultural commodities or their products

are—

‘‘(A) donated through foreign governments or private

or public agencies, including intergovernmental organizations; or

‘‘(B) sold for foreign currencies or for dollars on credit

terms of more than 10 years;

‘‘(5) under which agricultural commodities or their products

are made available for emergency food relief at less than prevailing world market prices;

‘‘(6) under which a cash grant is made directly or through

an intermediary to a foreign purchaser to enable the purchaser

to obtain United States agricultural commodities or their products in an amount greater than the difference between the

prevailing world market price and the United States market

price, free along side vessel at a United States port; or

‘‘(7) under which agricultural commodities owned or controlled by or under loan from the Corporation are exchanged

or bartered for materials, goods, equipment, or services produced in foreign countries, except export activities described

in section 55313(5) of this title.

‘‘(c) ADDITIONAL REQUIREMENTS.—

‘‘(1) APPLICATION OF SECTION 55305.—The requirement for

transportation on vessels of the United States under subsection

(a) is subject to the same terms and conditions as provided

in section 55305 of this title.

120 STAT. 1646 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) ALLOCATION OF COMMODITIES.—Subject to paragraph

(3), in carrying out this section and section 55305 of this title,

the Corporation shall take steps necessary and practicable,

and consistent with this section and section 55305, without

detriment to any port range to allocate, on the principle of

lowest landed cost without regard to the country of registry

of the vessel, 25 percent of the bagged, processed, or fortified

commodities provided under title II of the Agricultural Trade

Development and Assistance Act of 1954 (7 U.S.C. 1721 et

seq.).

‘‘(3) CALCULATIONS.—In carrying out paragraph (2), first

there shall be calculated the allocation of 100 percent of the

quantity to be procured on an overall lowest landed cost basis

without regard to the country of registry of the vessel, and

then there shall be allocated to the Great Lakes port range

any cargoes for which it has the lowest landed cost under

that calculation. The requirements for transportation on vessels

of the United States under this section and section 55305

of this title do not apply to commodities allocated to the Great

Lakes port range under paragraph (2). Commodities allocated

to the Great Lakes port range under paragraph (2) may not

be reallocated or diverted to another port range to meet those

requirements to the extent that the total tonnage of commodities to which paragraph (2) applies that is furnished and

transported from the Great Lakes port range is less than 25

percent of the total annual tonnage of the commodities furnished.

‘‘(4) AWARDING CONTRACTS.—In awarding a contract for

the transportation by vessel of commodities from the Great

Lakes port range pursuant to an export activity referred to

in subsection (b), an agency—

‘‘(A) shall consider expressions of freight interest for

any vessel from a vessel operator who meets reasonable

requirements for financial and operational integrity; and

‘‘(B) may not deny award of the contract to a person

based on the type of vessel on which the transportation

would be provided (including on the basis that the transportation would not be provided on a liner vessel, as that

term is used in the Shipping Act of 1984, as in effect

on November 14, 1995), if the person otherwise satisfies

reasonable requirements for financial and operational

integrity.

‘‘(5) NONAVAILABILITY OF VESSELS.—A determination of

nonavailability of vessels of the United States resulting from

the application of this subsection may not reduce the gross

tonnage of commodities required by this section and section

55305 of this title to be transported on vessels of the United

States.

‘‘§ 55315. Minimum tonnage

‘‘(a) DEFINITION.—In this section, the term ‘base period’ means

the 5-year period running from the sixth through the second prior

fiscal years.

‘‘(b) REQUIREMENT.—For each fiscal year, the minimum

quantity of agricultural commodities to be exported under programs

subject to section 55314 of this title is the average of the tonnage

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1647

exported under those programs during the base period, discarding

the high and low years.

‘‘(c) WAIVERS.—The President may waive the minimum quantity

for a fiscal year under this section if the President determines

and reports to Congress, together with reasons, that the quantity

cannot be used effectively for the purposes of those programs or,

based on a certification by the Secretary of Agriculture, that the

commodities are not available for reasons that include the unavailability of funds.

‘‘§ 55316. Financing the transportation of agricultural

commodities

‘‘(a) FINANCING OF INCREASED CHARGES.—The Secretary of

Transportation shall finance any increased ocean freight charges

incurred in any fiscal year that result from the application of

section 55314 of this title.

‘‘(b) REIMBURSEMENT OF INCREASED CHARGES.—

‘‘(1) IN GENERAL.—The Secretary of Transportation shall

reimburse the Secretary of Agriculture and the Commodity

Credit Corporation for the amount by which, in any fiscal

year—

‘‘(A) the total cost of ocean freight and ocean freight

differential for which obligations are incurred by the Secretary of Agriculture and the Corporation on exports of

agricultural commodities and their products under the agricultural export programs specified in section 55314(b) of

this title; exceeds

‘‘(B) 20 percent of the value of the commodities and

their products and the cost of the ocean freight and ocean

freight differential on which obligations are incurred by

the Secretary of Agriculture and the Corporation during

that fiscal year.

‘‘(2) COMMODITIES SHIPPED FROM INVENTORY.—For purposes

of this subsection, commodities shipped from the inventory

of the Corporation shall be valued as provided in section 412(d)

of the Agricultural Trade Development and Assistance Act of

1954 (7 U.S.C. 1736f(d)).

‘‘(c) ISSUANCE AND PURCHASE OF OBLIGATIONS.—

‘‘(1) ISSUANCE.—To meet the expenses required to be

assumed under subsections (a) and (b), the Secretary of

Transportation shall issue obligations to the Secretary of the

Treasury. The Secretary of Transportation, with the approval

of the Secretary of the Treasury, shall prescribe the form,

denomination, maturity, and other terms (except the interest

rate) of the obligations. The Secretary of the Treasury shall

set the interest rate for the obligations, considering the average

market yield on outstanding marketable obligations of the

United States Government of comparable maturities during

the month before the obligations are issued.

‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the obligations issued under this subsection. To purchase

the obligations, the Secretary of the Treasury may use as

a public debt transaction the proceeds from the sale of securities

issued under chapter 31 of title 31. The purposes for which

securities may be issued under that chapter are extended to

include the purchase of obligations under this subsection. A

120 STAT. 1648 PUBLIC LAW 109–304—OCT. 6, 2006

redemption or purchase of the obligations by the Secretary

of the Treasury is a public debt transaction of the Government.

‘‘(d) SOURCE OF FUNDS FOR REIMBURSEMENT.—Reimbursement

of the Secretary of Transportation for costs incurred under this

section shall be made with appropriated funds rather than through

cancellation of notes.

‘‘(e) APPROPRIATIONS.— ‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized

to be appropriated an amount sufficient to reimburse the Secretary of Transportation for the costs incurred under this section, including administrative expenses and the principal and

interest due on obligations issued to the Secretary of the

Treasury.

‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each

fiscal year, such amounts as may be necessary are hereby

appropriated to pay interest and to liquidate debt on obligations

issued to the Secretary of the Treasury under this section.

‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary of Transportation is unable to obtain the funds necessary

to finance the increased ocean freight charges resulting from the

requirements of subsections (a) and (b) and section 55314(a) of

this title, the Secretary shall notify Congress within 10 working

days of the discovery of the insufficiency.

‘‘§ 55317. Termination of subchapter

‘‘This subchapter terminates 90 days after the date on which

a notification is made under section 55316(f) of this title, except

for shipments of agricultural commodities and their products subject

to contracts made before the end of that 90-day period, unless

within that 90-day period the Secretary of Transportation proclaims

that funds are available to finance increased freight charges

resulting from the requirements of sections 55314(a) and 55316(a)

and (b) of this title. On the termination of this subchapter under

this section—

‘‘(1) this subchapter does not exempt export activities from,

or subject export activities to, the cargo preference laws; and

‘‘(2) the 50-percent requirement in section 55305 of this

title remains in effect.

‘‘§ 55318. Effect on other law

‘‘This subchapter does not affect chapter 5 of title 5.

‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS

‘‘§ 55331. Definitions

‘‘In this subchapter:

‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American

Great Lakes vessel’ means a vessel so designated under section

55332 of this title, but only during the period the designation

is in effect.

‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake

Superior, Lake Michigan, Lake Huron, Lake Erie, Lake Ontario,

the Saint Lawrence River west of Saint Regis, New York,

and their connecting and tributary waters.

‘‘(3) GREAT LAKES SHIPPING SEASON.—The term ‘Great

Lakes shipping season’ means the period each year during

which the Saint Lawrence Seaway is open for navigation by

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1649

vessels, as declared by the Saint Lawrence Seaway Development Corporation.

‘‘§ 55332. Designating American Great Lakes vessels

‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a vessel as an American Great Lakes vessel if—

‘‘(1) an application for designation is submitted to the Secretary under regulations prescribed by the Secretary;

‘‘(2) the vessel is documented under the laws of the United

States;

‘‘(3) the vessel, on the effective date of the designation,

is—

‘‘(A) at least 1, but not more than 6, years old; or

‘‘(B) at least 1, but not more than 11, years old if

the Secretary finds that suitable vessels are not available

to provide the type of service for which the vessel will

be used after the designation;

‘‘(4) the vessel has not previously been designated as an

American Great Lakes vessel; and

‘‘(5) the owner makes an agreement as provided under

subsection (b).

‘‘(b) AGREEMENTS.—A vessel may be designated as an American

Great Lakes vessel only if the person that will be the owner of

the vessel at the time of the designation makes an agreement

with the Secretary providing that if the Secretary determines that

the vessel is necessary to the defense of the United States, the

United States Government will have an exclusive right, during

the 120-day period following the date of a revocation of the designation under section 55335 of this title, to purchase the vessel for

a price equal to the greater of—

‘‘(1) the approximate world market value of the vessel;

or

‘‘(2) the cost of the vessel to the owner less a reasonable

amount for depreciation.

‘‘(c) CERTAIN FOREIGN DOCUMENTATION AND SALE NOT PROHIBITED.—Notwithstanding any other law, if the Government does

not exercise its right of purchase under an agreement under subsection (b), the owner of the vessel is not prohibited from—

‘‘(1) documenting the vessel under the laws of a foreign

country; or

‘‘(2) selling the vessel to a person not a citizen of the

United States.

‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations

establishing requirements for submitting applications under this

section.

‘‘§ 55333. Exemption from restriction on transporting certain

cargo

‘‘The 3-year documentation requirement of section 55305(a) of

this title does not apply to a vessel designated as an American

Great Lakes vessel during the period of its designation.

‘‘§ 55334. Restrictions on operations

‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an

American Great Lakes vessel may not be used to—

‘‘(1) engage in trade—

120 STAT. 1650 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(A) from a port in the United States that is not

located on the Great Lakes; or

‘‘(B) between ports in the United States;

‘‘(2) transport bulk cargo (as defined in section 40102 of

this title) that is subject to section 55305 or 55314 of this

title or section 2631 of title 10; or

‘‘(3) provide a service (except ocean freight service) as—

‘‘(A) a contract carrier; or

‘‘(B) a common carrier on a fixed advertised schedule

offering frequent sailings at regular intervals in the foreign

trade of the United States.

‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel

may be used for not more than 90 days during any 12-month

period to engage in trade prohibited by subsection (a)(1)(A), except

during the Great Lakes shipping season.

‘‘§ 55335. Revocations and terminations of designations

‘‘(a) REVOCATIONS.—After notice and an opportunity for a

hearing, the Secretary of Transportation may revoke a designation

of a vessel as an American Great Lakes vessel if the Secretary

finds that—

‘‘(1) the vessel does not meet a requirement for the designation;

‘‘(2) the vessel has been operated in violation of this subchapter; or

‘‘(3) the owner or operator of the vessel has violated an

agreement made under section 55332(b) of this title.

‘‘(b) TERMINATIONS.—On petition and a showing of good cause

by the owner of a vessel, the Secretary may terminate the designation of a vessel as an American Great Lakes vessel. The Secretary

may impose conditions in a termination order to prevent significant

adverse effects on other operators of vessels of the United States.

‘‘§ 55336. Civil penalty

‘‘After notice and an opportunity for a hearing, the Secretary

of Transportation may impose a civil penalty of not more than

$1,000,000 on the owner of an American Great Lakes vessel for

any act for which the designation may be revoked under section

55335 of this title.

‘‘CHAPTER 555—MISCELLANEOUS

‘‘Sec.

‘‘55501. Mobile trade fairs.

‘‘§ 55501. Mobile trade fairs

‘‘(a) IN GENERAL.—The Secretary of Commerce shall encourage

and promote the development and use of mobile trade fairs 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 operators of the fairs use, insofar as practicable,

vessels and aircraft of the United States in transporting their

exhibits.

‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary determines that a mobile trade fair provides an economical

and effective means of promoting export sales, the Secretary may

provide to the operator of the fair—

‘‘(1) technical assistance and support; and

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1651

‘‘(2) financial assistance to defray certain expenses incurred

outside the United States, except the cost of transportation

on foreign vessels and aircraft.

‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section,

the President may use, in addition to amounts appropriated to

carry out trade promotion activities, foreign currencies owned by

or owed to the United States Government.

‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES

‘‘CHAPTER 561—RESTRICTIONS ON TRANSFERS

‘‘Sec.

‘‘56101. Approval required to transfer vessel to noncitizen.

‘‘56102. Additional controls during war or national emergency.

‘‘56103. Conditional approvals.

‘‘56104. Penalty for false statements.

‘‘56105. Forfeiture procedure.

‘‘§ 56101. Approval required to transfer vessel to noncitizen

‘‘(a) RESTRICTIONS.— ‘‘(1) IN GENERAL.—Except as otherwise provided in this

section, section 12119 of this title, or section 611 of the Merchant Marine Act, 1936, a person may not, without the approval

of the Secretary of Transportation—

‘‘(A) sell, lease, charter, deliver, or in any other manner

transfer, or agree to sell, lease, charter, deliver, or in

any other manner transfer, to a person not a citizen of

the United States, an interest in or control of—

‘‘(i) a documented vessel owned by a citizen of

the United States; or

‘‘(ii) a vessel last documented under the laws of

the United States; or

‘‘(B) place under foreign registry, or operate under

the authority of a foreign country, a documented vessel

or a vessel last documented under the laws of the United

States.

‘‘(2) EXCEPTIONS.—Paragraph (1)(A) does not apply to a

vessel that has been operated only for pleasure or only as

a fishing vessel, fish processing vessel, or fish tender vessel

(as defined in section 2101 of this title).

‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing

with respect to a vessel to be documented under chapter 121 of

this title, the Secretary may grant approval under subsection (a)

before the vessel is documented.

‘‘(c) EXCEPTIONS.—Notwithstanding any other provision of this

subtitle, the Merchant Marine Act, 1936, or any contract with

the Secretary made under this subtitle or that Act, a person may

place a vessel under foreign registry without the approval of the

Secretary if—

‘‘(1)(A) the Secretary, in conjunction with the Secretary

of Defense, determines that at least one replacement vessel

of equal or greater military capability and of a capacity that

is equivalent or greater, as measured by deadweight tons, gross

tons, or container equivalent units, as appropriate, is documented under chapter 121 of this title by the owner of the

vessel placed under foreign registry; and

‘‘(B) the replacement vessel is not more than 10 years

old on the date of that documentation; or

120 STAT. 1652 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) an operating agreement covering the vessel under

chapter 531 of this title has expired.

‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or

transfer of a vessel, or of an interest in or control of a vessel,

in violation of this section is void.

‘‘(e) PENALTIES.—

‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells,

charters, or transfers a vessel, or an interest in or control

of a vessel, in violation of this section shall be fined under

title 18, imprisoned for not more than 5 years, or both.

‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a vessel, or an interest in or control of a vessel, in violation

of this section is liable to the United States Government for

a civil penalty of not more than $10,000 for each violation.

‘‘(3) FORFEITURE.—A documented vessel may be seized by

and forfeited to the Government if, in violation of this section,

a person—

‘‘(A) knowingly sells, charters, or transfers the vessel

or an interest in or control of the vessel; or

‘‘(B) places the vessel under foreign registry or operates

the vessel under the authority of a foreign country.

‘‘§ 56102. Additional controls during war or national emergency

‘‘(a) IN GENERAL.—During war, or a national emergency

declared by Presidential proclamation, a person may not, without

the approval of the Secretary of Transportation—

‘‘(1) place under foreign registry a vessel owned in whole

or in part by a citizen of the United States or a corporation

incorporated under the laws of the United States or of a State;

‘‘(2) sell, mortgage, lease, charter, deliver, or in any other

manner transfer, or agree to sell, mortgage, lease, charter,

deliver, or in any other manner transfer, to a person not a

citizen of the United States—

‘‘(A) a vessel owned as described in paragraph (1),

or an interest therein;

‘‘(B) a vessel documented under the laws of the United

States, or an interest therein; or

‘‘(C) a facility for building or repairing vessels, or an

interest therein;

‘‘(3) issue, assign, or transfer to a person not a citizen

of the United States an instrument of indebtedness secured

by a mortgage of a vessel to a trustee, by an assignment

of an owner’s interest in a vessel under construction to a

trustee, or by a mortgage of a facility for building or repairing

vessels to a trustee, unless the trustee or a substitute trustee

is approved by the Secretary under subsection (b);

‘‘(4) enter into an agreement or understanding to construct

a vessel in the United States for, or to be delivered to, a

person not a citizen of the United States without expressly

stipulating that construction will not begin until after the war

or national emergency has ended;

‘‘(5) enter into an agreement or understanding whereby

there is vested in, or for the benefit of, a person not a citizen

of the United States the controlling interest in a corporation

that is incorporated under the laws of the United States or

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1653

a State and that owns a vessel or facility for building or

repairing vessels; or

‘‘(6) cause or procure a vessel, constructed in whole or

in part in the United States and never cleared for a foreign

port, to depart from a port of the United States before it

has been documented under the laws of the United States.

‘‘(b) TRUSTEES.—

‘‘(1) APPROVAL.—The Secretary shall approve a trustee or

substitute trustee under subsection (a)(3) if and only if the

trustee is a bank or trust company that—

‘‘(A) is organized as a corporation, and is doing business, under the laws of the United States or a State;

‘‘(B) is authorized under those laws to exercise corporate trust powers;

‘‘(C) is a citizen of the United States;

‘‘(D) is subject to supervision or examination by Federal

or State authority; and

‘‘(E) has a combined capital and surplus (as set forth

in its most recent published report of condition) of at least

$3,000,000.

‘‘(2) DISAPPROVAL.—If a trustee or substitute trustee ceases

to meet the conditions in paragraph (1), the Secretary shall

disapprove the trustee or substitute trustee. After the disapproval, the restrictions on transfer or assignment without

the Secretary’s approval in subsection (a)(3) apply.

‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) applies, a trustee referred to in subsection (a)(3),

even though approved as a trustee by the Secretary, may not

operate the vessel under the mortgage or assignment without

the Secretary’s approval.

‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in

violation of this section is void.

‘‘(d) RECOVERY OF CONSIDERATION.—

‘‘(1) IN GENERAL.—A person that deposited or paid consideration in connection with a transaction prohibited by this section

may recover the consideration after tender of the vessel, facility,

stock, or other security, or interest therein, to the person entitled to it, or the forfeiture thereof to the United States Government.

‘‘(2) EXCEPTION.—Paragraph (1) does not apply if the person

in whose interest the consideration was deposited, or to whom

it was paid, entered into the transaction in the belief that

the person depositing or paying the consideration was a citizen

of the United States.

‘‘(e) PENALTIES.—

‘‘(1) CRIMINAL PENALTY.—A person that violates, or

attempts or conspires to violate, this section shall be fined

under title 18, imprisoned for not more than 5 years, or both.

‘‘(2) FORFEITURE.—The following shall be forfeited to the

Government:

‘‘(A) A vessel, a facility for building or repairing vessels,

or an interest in a vessel or such a facility, that is sold,

mortgaged, leased, chartered, delivered, transferred, or

documented, or agreed to be sold, mortgaged, leased, chartered, delivered, transferred, or documented, in violation

of this section.

120 STAT. 1654 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(B) Stock and other securities sold or transferred,

or agreed to be sold or transferred, in violation of this

section.

‘‘(C) A vessel departing in violation of subsection (a)(6).

‘‘§ 56103. Conditional approvals

‘‘(a) IN GENERAL.—In approving an act or transaction under

section 56101 or 56102 of this title, the Secretary of Transportation

may do so absolutely or upon conditions the Secretary considers

advisable. The Secretary shall state the conditions in the notice

of approval.

‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the same penalties as a violation resulting from an act

done without the required approval. The violation occurs at the

time the condition is violated.

‘‘§ 56104. Penalty for false statements

‘‘A person that knowingly makes a false statement of a material

fact to the Secretary of Transportation or another officer, employee,

or agent of the Department of Transportation, to obtain the Secretary’s approval under section 56101 or 56102 of this title, shall

be fined under title 18, imprisoned for not more than 5 years,

or both.

‘‘§ 56105. Forfeiture procedure

‘‘(a) IN GENERAL.—A forfeiture under this chapter may be

enforced in the same way as a forfeiture under the laws on the

collection of duties. However, such a forfeiture may be remitted

without seizure of the vessel.

‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter

to enforce a forfeiture, a prior criminal conviction of a person

for a violation of this chapter with respect to the subject matter

of the forfeiture is prima facie evidence of the violation against

the person convicted.

‘‘CHAPTER 563—EMERGENCY ACQUISITION OF VESSELS

‘‘Sec.

‘‘56301. General authority.

‘‘56302. Charter terms.

‘‘56303. Compensation.

‘‘56304. Disputed compensation.

‘‘56305. Vessel encumbrances.

‘‘56306. Use and transfer of vessels.

‘‘56307. Return of vessels.

‘‘§ 56301. General authority

‘‘During a national emergency declared by Presidential

proclamation, or a period for which the President has proclaimed

that the security of the national defense makes it advisable, the

Secretary of Transportation may requisition or purchase, or requisition or charter the use of, a vessel owned by citizens of the United

States, a documented vessel, or a vessel under construction in

the United States.

‘‘§ 56302. Charter terms

‘‘(a) IN GENERAL.—If a vessel is requisitioned for use but not

ownership under this chapter, the Secretary of Transportation,

at the time of requisition or as soon thereafter as the situation

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1655

allows, shall offer the person entitled to possession of the vessel

a charter containing—

‘‘(1) the terms the Secretary believes should govern the

relationship between the United States Government and the

person; and

‘‘(2) the rate of hire the Secretary considers just compensation for the use of the vessel and the services required under

the charter.

‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the

charter and rate of hire, the parties shall proceed as provided

in section 56304 of this title.

‘‘§ 56303. Compensation

‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of

Transportation shall determine and pay just compensation for a

vessel requisitioned under this chapter.

‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel

may not be considered enhanced by the circumstances requiring

its requisition. Consequential damages arising from the requisition

may not be paid.

‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.—

‘‘(1) IF PAID.—If a construction-differential subsidy has been

paid for the vessel, the value of the vessel at the time of

requisition shall be determined under section 802 of the Merchant Marine Act, 1936.

‘‘(2) IF NOT PAID.—If a construction-differential subsidy has

not been paid for the vessel, the value of any national defense

features previously paid for by the United States Government

shall be excluded.

‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost

or damaged by a risk assumed by the Government under the

charter, but a valuation for the vessel or a means of compensation

has not been agreed to, the Secretary shall pay just compensation

for the loss or damage, to the extent the person is not reimbursed

through insurance.

‘‘§ 56304. Disputed compensation

‘‘If the person entitled to compensation disputes the amount

of just compensation determined by the Secretary of Transportation

under this chapter, the Secretary shall pay the person, as a tentative advance, 75 percent of the amount determined. The person

may bring a civil action against the United States to recover just

compensation. If the tentative advance paid under this section

is greater than the amount of the court’s judgment, the person

shall refund the difference.

‘‘§ 56305. Vessel encumbrances

‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel

does not prevent the requisition of the vessel under this chapter.

‘‘(b) DEPOSIT IN TREASURY.— ‘‘(1) IN GENERAL.—If an encumbrance exists, the Secretary

of Transportation may deposit part of the compensation or

advance of compensation to be paid under this chapter (but

not more than the total amount of all encumbrances) in a

fund in the Treasury. The Secretary shall publish notice of

the creation of the fund in the Federal Register.

Notification.

Federal Register,

publication.

120 STAT. 1656 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts

deposited in the fund shall be available to pay the compensation

or any of the encumbrances (including encumbrances stipulated

to in a court of the United States or a State) existing at

the time the vessel was requisitioned.

‘‘(c) CIVIL ACTION.— ‘‘(1) IN GENERAL.—Within 6 months after publication of

notice under subsection (b), the holder of an encumbrance may

bring a civil action in admiralty, according to the principles

of libels in rem, against the fund.

‘‘(2) VENUE.—The action must be brought in the district

court of the United States—

‘‘(A) from whose custody the vessel was or may be

requisitioned; or

‘‘(B) in whose district the vessel was located when

it was requisitioned.

‘‘(3) SERVICE OF PROCESS.—Service of process shall be made

on the appropriate United States Attorney, the Attorney General, and the Secretary, in the manner provided by the Federal

Rules of Civil Procedure (28 App. U.S.C.). Notice of the action

shall be given to all interested persons as ordered by the

court.

‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and be determined according to the principles of law

and the rules of practice applicable in like cases between private

parties.

‘‘§ 56306. Use and transfer of vessels

‘‘(a) IN GENERAL.—The Secretary of Transportation may repair,

recondition, reconstruct, operate, or charter for operation, a vessel

acquired under this chapter.

‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may

transfer the possession or control of a vessel acquired under this

chapter to another department or agency of the United States

Government on terms and conditions approved by the President.

The department or agency shall promptly reimburse the Secretary

for expenditures for just compensation, purchase price, charter hire,

repairs, reconditioning, or reconstruction.

‘‘§ 56307. Return of vessels

‘‘When a vessel requisitioned for use but not ownership is

returned to the owner, the Secretary of Transportation shall—

‘‘(1) return the vessel in a condition at least as good as

when taken, less ordinary wear and tear; or

‘‘(2) pay the owner an amount sufficient to recondition

the vessel to that condition, less ordinary wear and tear.

‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY

NEUTRALITY ACT

‘‘Sec.

‘‘56501. Definition.

‘‘56502. Adjusting obligations and arranging maintenance.

‘‘56503. Types of adjustments and arrangements.

‘‘56504. Changes in adjustments and arrangements.

‘‘§ 56501. Definition

‘‘In this chapter, the term ‘essential vessel’ means a vessel

that is—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1657

‘‘(1)(A) security for a mortgage indebtedness to the United

States Government; or

‘‘(B) constructed under this subtitle or required by a contract under this subtitle to be operated on a certain essential

foreign trade route; and

‘‘(2) necessary in the interests of commerce and national

defense to be maintained in condition for prompt use.

‘‘§ 56502. Adjusting obligations and arranging maintenance

‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of Transportation may adjust obligations and arrange for

maintenance of an essential vessel as provided in this chapter

if the Secretary determines, after any investigation or proceeding

the Secretary considers desirable, that—

‘‘(1) the operation of the vessel in the service, route, or

line to which it is assigned under this subtitle, or in which

it otherwise would be operated, is not—

‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C.

441 et seq.) or a proclamation issued under that Act; or

‘‘(B) compatible with maintaining the availability of

the vessel for national defense and commerce;

‘‘(2) it is not feasible under existing law to employ the

vessel in any other service or operation in foreign or domestic

trade (except temporary or emergency operation under section

56503(b)(5) of this title); and

‘‘(3) the applicant, because of the restrictions of the Neutrality Act of 1939 (22 U.S.C. 441 et seq.) or the withdrawal

of vessels for national defense under paragraph (1), is not

earning or will not earn a reasonable return on the capital

necessarily employed in its business.

‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under

subsection (a) shall continue in effect only as long as the circumstances described in subsection (a) continue to exist.

‘‘§ 56503. Types of adjustments and arrangements

‘‘(a) SUSPENSION REQUIREMENTS.—An adjustment or arrangement under this chapter shall include suspension of—

‘‘(1) the requirement to operate the vessel in foreign trade

under the applicable operating-differential or construction-differential subsidy contract or mortgage or other agreement; and

‘‘(2) the right to operating-differential subsidy for the vessel.

‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To

the extent the Secretary of Transportation considers appropriate

to carry out the purposes of this subtitle, an adjustment or arrangement under this chapter may include any of the following:

‘‘(1) Lay-up of the vessel by the owner or in the custody

of the Secretary, with payment or reimbursement by the Secretary of necessary and proper expenses (including reasonable

overhead and insurance) or a fixed periodic allowance instead

of payment or reimbursement.

‘‘(2) Postponement, for not more than the total period of

the lay-up, of the maturity date of each installment of the

principal of obligations to the United States Government for

the vessel (regardless of whether the maturity date is during

a lay-up period), or rearrangement of those maturities.

‘‘(3) Postponement or cancellation of interest accruing on

the obligations during a lay-up period.

120 STAT. 1658 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(4) Extension, for not more than the total period of the

lay-up, of the 20-year life limitation for the vessel and other

limitations and provisions of this subtitle based on a 20-year

life.

‘‘(5) Provision for temporary or emergency employment of

the vessel (instead of lay-up) as may be practicable, with such

arrangements for management of the vessel, payment of

expenses, and application of the proceeds of the employment,

as the Secretary may approve, with any period of operation

being included as part of the lay-up period.

‘‘(6) Payment to the Secretary, on termination of the

arrangements with the applicant, of the applicant’s net profits

(earned while the arrangements were in effect) in excess of

10 percent a year on the capital necessarily employed in the

applicant’s business, as reimbursement for obligations postponed or canceled and expenses incurred or paid by the Secretary under this section.

‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the

applicant represented by a vessel of the applicant laid-up or operated under this section shall be included in capital necessarily

employed in the applicant’s business. The Secretary may require

a vessel laid-up or operated under this section to be security for

reimbursement.

‘‘§ 56504. Changes in adjustments and arrangements

‘‘The Secretary of Transportation may change an adjustment

or arrangement made under this chapter as the Secretary considers

necessary to carry out this chapter.

‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

‘‘CHAPTER 571—GENERAL AUTHORITY

‘‘Sec.

‘‘57101. Placement of vessels in National Defense Reserve Fleet.

‘‘57102. Disposition of vessels not worth preserving.

‘‘57103. Sale of obsolete vessels in National Defense Reserve Fleet.

‘‘57104. Acquisition of vessels from sale of obsolete vessels.

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

‘‘57106. Maintenance, improvement, and operation of vessels.

‘‘57107. Vessels for other agencies.

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

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

Transportation.

‘‘§ 57101. Placement of vessels in National Defense Reserve

Fleet

‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime

Administration shall be placed in the National Defense Reserve

Fleet maintained under section 11 of the Merchant Ship Sales

Act of 1946 (50 App. U.S.C. 1744).

‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under

subsection (a) may not be traded out or sold from the Fleet, except

as provided in section 57102, 57103, or 57104 or chapter 533,

537, 573, or 575 of this title.

‘‘§ 57102. Disposition of vessels not worth preserving

‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that a vessel owned by the Maritime Administration is of

insufficient value for commercial or military operation to warrant

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1659

its further preservation, the Secretary may scrap the vessel or

sell the vessel for cash.

‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection

(a) shall be made on the basis of competitive sealed bids, after

an appraisal and due advertisement. The purchaser does not have

to be a citizen of the United States. The purchaser shall provide

a surety bond, with a surety approved by the Secretary, to ensure

that the vessel will not be operated in the foreign trade of the

United States at any time within 10 years after the sale, in competition with a vessel owned by a citizen of the United States and

documented under the laws of the United States.

‘‘§ 57103. Sale of obsolete vessels in National Defense Reserve

Fleet

‘‘(a) IN GENERAL.—The Secretary of Transportation may convey

the right, title, and interest of the United States Government in

any vessel of the National Defense Reserve Fleet that has been

identified by the Secretary as an obsolete vessel of insufficient

value to warrant its further preservation, if the recipient—

‘‘(1) is a non-profit organization, a State, or a municipal

corporation or political subdivision of a State;

‘‘(2) agrees not to use, or allow others to use, the vessel

for commercial transportation purposes;

‘‘(3) agrees to make the vessel available to the Government

whenever the Secretary indicates that it is needed by the

Government;

‘‘(4) agrees to hold the Government harmless for any claims

arising from exposure to asbestos, polychlorinated biphenyls,

lead paint, or other hazardous substances after conveyance

of the vessel, except for claims arising from use of the vessel

by the Government;

‘‘(5) has a conveyance plan and a business plan that

describes the intended use of the vessel, each of which has

been submitted to and approved by the Secretary;

‘‘(6) has provided proof, as determined by the Secretary,

of resources sufficient to accomplish the transfer, necessary

repairs and modifications, and initiation of the intended use

of the vessel; and

‘‘(7) agrees that when the recipient no longer requires the

vessel for use as described in the business plan required under

paragraph (5)—

‘‘(A) the recipient will, at the discretion of the Secretary, reconvey the vessel to the Government in good

condition except for ordinary wear and tear; or

‘‘(B) if the Board of Trustees of the recipient has

decided to dissolve the recipient according to the laws

of the State in which the recipient is incorporated, then—

‘‘(i) the recipient shall distribute the vessel, as

an asset of the recipient, to a person that has been

determined exempt from taxation under section

501(c)(3) of the Internal Revenue Code of 1986 (26

U.S.C. 501(c)(3)), or to the Federal Government or

a State or local government for a public purpose; and

‘‘(ii) the vessel shall be disposed of by a court

of competent jurisdiction of the county in which the

principal office of the recipient is located, for such

purposes as the court shall determine, or to such

120 STAT. 1660 PUBLIC LAW 109–304—OCT. 6, 2006

organizations as the court shall determine are organized exclusively for public purposes.

‘‘(b) OTHER EQUIPMENT.—At the Secretary’s discretion, additional equipment from other obsolete vessels of the Fleet may

be conveyed to assist the recipient with maintenance, repairs, or

modifications.

‘‘(c) ADDITIONAL TERMS.—The Secretary may require any additional terms the Secretary considers appropriate.

‘‘(d) DELIVERY OF VESSEL.—If conveyance is made under this

section, the vessel shall be delivered to the recipient at a time

and place to be determined by the Secretary. The vessel shall

be conveyed in an ‘as is’ condition.

‘‘(e) LIMITATIONS.—If at any time prior to delivery of the vessel

to the recipient, the Secretary determines that a different disposition of the vessel would better serve the interests of the Government, the Secretary shall pursue the more favorable disposition

of the obsolete vessel and shall not be liable for any damages

that may result from an intended recipient’s reliance upon a proposed transfer.

‘‘(f) REVERSION.—The Secretary shall include in any conveyance

under this section terms under which all right, title, and interest

conveyed by the Secretary shall revert to the Government if the

Secretary determines the vessel has been used other than as

described in the business plan required under subsection (a)(5).

‘‘§ 57104. Acquisition of vessels from sale of obsolete vessels

‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire

suitable documented vessels with amounts in the Vessel Operations

Revolving Fund derived from the sale of obsolete vessels in the

National Defense Reserve Fleet.

‘‘(b) VALUATION.—The acquired and obsolete vessels shall be

valued at their scrap value in domestic or foreign markets as

of the date of the acquisition for or sale from the Fleet. However,

the value assigned to those vessels shall be determined on the

same basis, with consideration given to the fair value of the cost

of moving the vessel sold from the Fleet to the place of scrapping.

‘‘(c) COSTS INCIDENT TO LAY-UP.—Costs incident to the layup of the vessel acquired under this section may be paid from

amounts in the Fund.

‘‘(d) TRANSFERS TO NON-CITIZENS.—A vessel sold from the Fleet

under this section may be scrapped in an approved foreign market

without obtaining additional separate approval from the Secretary

to transfer the vessel to a person not a citizen of the United

States.

‘‘§ 57105. Acquisition of vessels for essential services, routes,

or lines

‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire

a vessel, by purchase or otherwise, if—

‘‘(1) the Secretary considers the vessel necessary to establish, maintain, improve, or serve as a replacement on an essential service, route, or line in the foreign commerce of the United

States, as determined under section 50103 of this title;

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

‘‘(3) the Secretary of the Navy has certified to the Secretary

of Transportation that the vessel is suitable for economical

and speedy conversion into a naval or military auxiliary or

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1661

otherwise suitable for use by the United States Government

in time of war or national emergency.

‘‘(b) PRICE.—The price paid for the vessel shall be based on

a fair and reasonable valuation. However, the price may not exceed

by more than 5 percent the cost of the vessel to the owner (excluding

any construction-differential subsidy and the cost of national

defense features paid by the Secretary of Transportation) plus the

actual cost previously expended for reconditioning, less depreciation

based on a 25-year life for a dry-cargo or passenger vessel and

a 20-year life for a tanker or other liquid bulk carrier vessel.

‘‘(c) DOCUMENTATION.—A vessel acquired under this section

that is not documented under the laws of the United States at

the time of acquisition shall be so documented as soon as practicable.

‘‘§ 57106. Maintenance, improvement, and operation of vessels

‘‘(a) IN GENERAL.—The Secretary of Transportation may maintain, repair, recondition, remodel, and improve vessels owned by

the United States Government and in the possession or under

the control of the Secretary, to equip them adequately for competition in the foreign trade of the United States. The Secretary may

operate such a vessel or charter the vessel on terms and conditions

the Secretary considers appropriate to carry out the purposes of

this subtitle.

‘‘(b) DOCUMENTATION AND RESTRICTIONS ON OPERATION.—A

vessel reconditioned, remodeled, or improved under subsection (a)

shall be documented under the laws of the United States and

remain so documented for at least 5 years after completion of

the reconditioning, remodeling, or improvement. During that period,

it shall be operated on voyages that are not exclusively coastwise.

‘‘§ 57107. Vessels for other agencies

‘‘(a) IN GENERAL.—The Secretary of Transportation may construct, reconstruct, repair, equip, and outfit, by contract or otherwise, vessels or parts thereof, for any other department or agency

of the United States Government to the extent the other department

or agency is authorized by law to do so for its own account.

‘‘(b) EFFECT ON CONTRACT AUTHORIZATION.—An obligation

incurred or expenditure made by the Secretary under this section

does not affect any contract authorization of the Secretary, but

instead shall be charged against the existing appropriation or contract authorization of the department or agency.

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

‘‘The Maritime Administration may not sell a vessel until its

ballast and equipment have been inventoried and their value considered in determining the selling price of the vessel.

‘‘§ 57109. Operation of vessels purchased, chartered, or

leased from Secretary of Transportation

‘‘Unless otherwise authorized by the Secretary of Transportation, a vessel purchased, chartered, or leased from the Secretary

may be operated only under a certificate of documentation with

a registry or coastwise endorsement. Such a vessel, while employed

solely as a merchant vessel, is subject to the laws, regulations,

120 STAT. 1662 PUBLIC LAW 109–304—OCT. 6, 2006

and liabilities governing merchant vessels, whether the United

States Government has an interest in the vessel as an owner

or holds a mortgage, lien, or other interest.

‘‘CHAPTER 573—VESSEL TRADE-IN PROGRAM

‘‘Sec.

‘‘57301. Definitions.

‘‘57302. Authority to acquire vessels.

‘‘57303. Utility value and tonnage requirements.

‘‘57304. Eligible acquisition dates.

‘‘57305. Determination of trade-in allowance.

‘‘57306. Payment of trade-in allowance.

‘‘57307. Recognition of gain for tax purposes.

‘‘57308. Use of vessels at least 25 years old.

‘‘§ 57301. Definitions

‘‘In this chapter:

‘‘(1) NEW VESSEL.—The term ‘new vessel’ means a vessel—

‘‘(A) constructed under this subtitle and acquired

within 2 years after the date of completion; or

‘‘(B) constructed in a domestic shipyard on private

account and not under this subtitle, and documented under

the laws of the United States.

‘‘(2) OBSOLETE VESSEL.—The term ‘obsolete vessel’ means

a vessel that—

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

‘‘(B) the Secretary of Transportation believes should,

because of its age, obsolescence, or other reasons, be

replaced in the public interest; and

‘‘(C) has been owned by a citizen of the United States

for at least 3 years immediately before its acquisition under

this chapter.

‘‘§ 57302. Authority to acquire vessels

‘‘To promote the construction of new, safe, and efficient vessels

to carry the domestic and foreign waterborne commerce of the

United States, the Secretary of Transportation may acquire an

obsolete vessel in exchange for an allowance of credit toward the

cost of construction or purchase of a new vessel as provided in

this chapter.

‘‘§ 57303. Utility value and tonnage requirements

‘‘(a) UTILITY VALUE.—The utility value of a new vessel to be

acquired under this chapter for operation in the domestic or foreign

commerce of the United States may not be substantially less than

that of the obsolete vessel acquired in exchange under this chapter.

‘‘(b) TONNAGE.—If the Secretary of Transportation finds that

the new vessel will have a utility value at least equal to that

of the obsolete vessel, the new vessel may be of lesser gross tonnage

than the obsolete vessel. However, the gross tonnage of the new

vessel must be at least one-third the gross tonnage of the obsolete

vessel.

‘‘§ 57304. Eligible acquisition dates

‘‘At the option of the owner, the acquisition of an obsolete

vessel under this chapter shall occur—

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

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1663

‘‘(2) within 5 days of the actual date of delivery of the

new vessel to the owner.

‘‘§ 57305. Determination of trade-in allowance

‘‘(a) IN GENERAL.—The Secretary of Transportation shall determine the trade-in allowance for an obsolete vessel at the time

of acquisition of the vessel. The allowance shall be the fair value

of the vessel. In determining the value, the Secretary shall consider—

‘‘(1) the scrap value of the obsolete vessel in American

and foreign markets;

‘‘(2) the depreciated value based on a 20-year or 25-year

life, whichever applies to the obsolete vessel; and

‘‘(3) the market value of the obsolete vessel for operation

in world commerce or in the domestic or foreign commerce

of the United States.

‘‘(b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete

vessel occurs when the owner contracts for the construction of

the new vessel, and the owner uses the obsolete vessel during

the period of construction of the new vessel, the Secretary shall

reduce the trade-in allowance by an amount representing the fair

value of that use. The Secretary shall establish the rate for use

of the obsolete vessel when the contract for construction of the

new vessel is made.

‘‘§ 57306. Payment of trade-in allowance

‘‘(a) ACQUISITION AT TIME OF CONTRACT.—If acquisition of an

obsolete vessel under this chapter occurs when the owner contracts

for the construction or purchase of the new vessel, the Secretary

of Transportation shall apply the trade-in allowance to the purchase

price of the new vessel rather than paying it to the owner. If

the new vessel is constructed under this subtitle, the Secretary

may apply the trade-in allowance to the required cash payments

on terms and conditions the Secretary may prescribe. If the new

vessel is not constructed under this subtitle, the Secretary shall

pay the trade-in allowance to the builder of the vessel for the

account of the owner when the Secretary acquires the obsolete

vessel.

‘‘(b) ACQUISITION AT TIME OF DELIVERY.—If acquisition of the

obsolete vessel occurs when the new vessel is delivered to the

owner, the Secretary shall deposit the trade-in allowance in the

owner’s capital construction fund.

‘‘§ 57307. Recognition of gain for tax purposes

‘‘The owner of an obsolete vessel does not recognize a gain

under the Federal income tax laws when the vessel is transferred

to the Secretary of Transportation in exchange for a trade-in allowance under this chapter. The basis of the new vessel acquired

with the allowance is the same as the basis of the obsolete vessel—

‘‘(1) increased by the difference between the cost of the

new vessel and the trade-in allowance of the obsolete vessel;

and

‘‘(2) decreased by the amount of loss recognized on the

transfer.

120 STAT. 1664 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 57308. Use of vessels at least 25 years old

‘‘An obsolete vessel acquired under this chapter that is or

becomes at least 25 years old may not be used for commercial

operation. However, the vessel may be used—

‘‘(1) during a period in which vessels may be requisitioned

under chapter 563 of this title; or

‘‘(2) except as otherwise provided in this subtitle, on trade

routes serving only the foreign trade of the United States.

‘‘CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE

OF VESSELS

‘‘SUBCHAPTER I—GENERAL

‘‘Sec.

‘‘57501. Completion of long-range program.

‘‘57502. Construction, reconditioning, and remodeling of vessels.

‘‘57503. Competitive bidding.

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

‘‘57505. Employment of vessels on foreign trade routes.

‘‘57506. Minimum selling price of vessels.

‘‘SUBCHAPTER II—CHARTERS

‘‘57511. Demise charters.

‘‘57512. Competitive bidding.

‘‘57513. Minimum bid.

‘‘57514. Qualifications of bidders.

‘‘57515. Awarding of charters.

‘‘57516. Operating-differential subsidies.

‘‘57517. Recovery of excess profits.

‘‘57518. Performance bond.

‘‘57519. Insurance.

‘‘57520. Vessel maintenance.

‘‘57521. Termination of charter during national emergency.

‘‘SUBCHAPTER III—MISCELLANEOUS

‘‘57531. Construction and charter of vessels for unsuccessful routes.

‘‘57532. Operation of experimental vessels.

‘‘SUBCHAPTER I—GENERAL

‘‘§ 57501. Completion of long-range program

‘‘Whenever the Secretary of Transportation determines that

the objectives and policies declared in sections 50101 and 50102

of this title cannot be fully realized within a reasonable time under

titles V and VI of the Merchant Marine Act, 1936, and the President

approves the determination, the Secretary, in accordance with this

chapter, shall complete the long-range program described in section

50102 of this title.

‘‘§ 57502. Construction, reconditioning, and remodeling of

vessels

‘‘(a) IN GENERAL.—The Secretary of Transportation may have

new vessels constructed, and have old vessels reconditioned or

remodeled, as the Secretary determines necessary to carry out

the objectives of this subtitle.

‘‘(b) PLACE OF WORK.—Construction, reconditioning, and remodeling of vessels under subsection (a) shall take place in shipyards

in the continental United States (including Alaska and Hawaii).

However, if satisfactory contracts cannot be obtained from private

shipbuilders, the Secretary may have the work done in navy yards.

‘‘(c) APPLICABILITY OF CONSTRUCTION-DIFFERENTIAL SUBSIDY

PROVISIONS.—Contracts for the construction, reconstruction, or

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1665

reconditioning of a vessel by a private shipbuilder under this

chapter are subject to the provisions of title V of the Merchant

Marine Act, 1936, applicable to a contract with a private shipbuilder

for the construction of a vessel under title V of that Act.

‘‘§ 57503. Competitive bidding

‘‘(a) ADVERTISEMENT AND BIDDING.—The Secretary of Transportation may make a contract with a private shipbuilder for the

construction of a new vessel, or for the reconstruction or reconditioning of an existing vessel, only after due advertisement and

upon sealed competitive bids.

‘‘(b) OPENING OF BIDS.—Bids required under this section shall

be opened at the time and place stated in the advertisement for

bids. All interested persons, including representatives of the press,

shall be permitted to attend. The results of the bidding shall be

publicly announced.

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

of Transportation

‘‘Vessels transferred to or otherwise acquired by the Department of Transportation in any manner may be chartered or sold

by the Secretary of Transportation as provided in this chapter.

‘‘§ 57505. Employment of vessels on foreign trade routes

‘‘(a) IN GENERAL.—The Secretary of Transportation shall

arrange for the employment of the Department of Transportation’s

vessels in steamship lines on such trade routes, exclusively serving

the foreign trade of the United States, as the Secretary determines

are essential for the development and maintenance of the commerce

of the United States and the national defense. However, the Secretary shall first determine that those routes are not being adequately served by existing steamship lines privately owned and

operated by citizens of the United States and documented under

the laws of the United States.

‘‘(b) POLICY TO ENCOURAGE PRIVATE OPERATION.—The Secretary shall have a policy of encouraging private operation of each

essential steamship line now owned by the United States Government by—

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

‘‘(2) demising the Secretary’s vessels on bareboat charter

to citizens of the United States who agree to maintain the

line in the manner provided in this chapter.

‘‘§ 57506. Minimum selling price of vessels

‘‘(a) IN GENERAL.—A vessel constructed under this subtitle or

the Merchant Marine Act, 1936, may not be sold by the Secretary

of Transportation for less than the price specified in this section.

‘‘(b) OPERATION IN FOREIGN TRADE.—If the vessel is to be

operated in foreign trade, the minimum price is the estimated

foreign construction cost (exclusive of national defense features)

determined as of the date the construction contract is executed,

less depreciation under subsection (d).

‘‘(c) OPERATION IN DOMESTIC TRADE.—If the vessel is to be

operated in domestic trade, the minimum price is the cost of

construction in the United States (exclusive of national defense

features), less depreciation under subsection (d).

120 STAT. 1666 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(d) DEPRECIATION.—Depreciation under subsections (b) and

(c) shall be based on—

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

and

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

vessels.

‘‘SUBCHAPTER II—CHARTERS

‘‘§ 57511. Demise charters

‘‘A charter by the Secretary of Transportation under this

chapter shall demise the vessel to the charterer subject to all

usual conditions contained in a bareboat charter. The charter shall

be for a term the Secretary considers to be in the best interest

of the United States Government and the merchant marine.

‘‘§ 57512. Competitive bidding

‘‘(a) IN GENERAL.—The Secretary of Transportation may charter

a vessel of the Department of Transportation to a private operator

only on the basis of competitive sealed bidding. The bids must

be submitted in strict compliance with the terms and conditions

of a public advertisement soliciting the bids.

‘‘(b) ADVERTISEMENT FOR BIDS.—An advertisement for bids shall

state—

‘‘(1) the number, type, and tonnage of the vessels being

offered for bareboat charter for operation as a steamship line

on a designated trade route;

‘‘(2) the minimum number of sailings required;

‘‘(3) the length of time of the charter;

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

‘‘(5) other information the Secretary considers necessary

for the information of prospective bidders.

‘‘(c) OPENING OF BIDS.—Bids required under this section shall

be opened at the time and place stated in the advertisement for

bids. All interested persons, including representatives of the press,

shall be permitted to attend. The results of the bidding shall be

publicly announced.

‘‘§ 57513. Minimum bid

‘‘The Secretary of Transportation shall reject any bid for the

charter under this subchapter of a vessel constructed under this

subtitle or the Merchant Marine Act, 1936, if the charter hire

offered is lower than the minimum charter hire would be if the

vessel were chartered under section 57531 of this title.

‘‘§ 57514. Qualifications of bidders

‘‘(a) CONSIDERATIONS.—In deciding whether to award a charter

to a bidder, the Secretary of Transportation shall consider—

‘‘(1) the bidder’s financial resources, credit standing, and

practical experience in operating vessels; and

‘‘(2) other factors a prudent business person would consider

in entering into a transaction involving a large capital investment.

‘‘(b) DISQUALIFICATIONS.—The Secretary may not charter a

vessel to a person appearing to lack sufficient capital, credit, and

experience to operate the vessel successfully over the period covered

by the charter.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1667

‘‘§ 57515. Awarding of charters

‘‘(a) IN GENERAL.—The Secretary of Transportation shall award

the charter to the bidder proposing to pay the highest monthly

charter hire. However, the Secretary may reject the highest or

most advantageous or any other bid if the Secretary considers

the charter hire offered too low or determines that the bidder

lacks the qualifications required by section 57514 of this title.

‘‘(b) HIGHEST BID REJECTED.—If the Secretary rejects the

highest bid, the Secretary may—

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

‘‘(2) reject all bids and either readvertise the line or operate

the line until conditions appear more favorable to reoffer the

line for private charter.

‘‘(c) REASON FOR REJECTION.—On request of a bidder, the reason

for rejection shall be stated in writing to the bidder.

‘‘§ 57516. Operating-differential subsidies

‘‘If the Secretary of Transportation considers it necessary, the

Secretary may make a contract with a charterer of a vessel owned

by the Secretary for payment of an operating-differential subsidy,

on the same terms and conditions, and subject to the same limitations and restrictions, as otherwise provided with respect to payment of operating-differential subsidies to operators of privatelyowned vessels.

‘‘§ 57517. Recovery of excess profits

‘‘(a) IN GENERAL.—A charter under this chapter shall provide

that if, at the end of a calendar year subsequent to the execution

of the charter, the cumulative net voyage profit (after payment

of the charter hire reserved in the charter and payment of the

charterer’s fair and reasonable overhead expenses applicable to

operation of the chartered vessel) exceeds 10 percent a year of

the charterer’s capital necessarily employed in the business of the

chartered vessel, the charterer shall pay to the Secretary of

Transportation, as additional charter hire, half the cumulative net

voyage profit in excess of 10 percent a year. However, any cumulative net voyage profit accounted for under this subsection is

not to be included in the calculation of cumulative net voyage

profit in any subsequent year.

‘‘(b) TERMS TO BE DEFINED AND USED.—The Secretary shall

define the terms ‘net voyage profit’, ‘fair and reasonable overhead

expenses’, and ‘capital necessarily employed’ for this section. Each

advertisement for bids and each charter shall contain these definitions, stating the formula for determining each of these three

amounts.

‘‘§ 57518. Performance bond

‘‘The Secretary of Transportation shall require a charterer of

a vessel of the Secretary to deposit with the Secretary an undertaking, with approved sureties, in such amount as the Secretary

may require as security for the faithful performance of the terms

of the charter, including indemnity against liens on the chartered

vessel.

‘‘§ 57519. Insurance

‘‘A charter under this chapter shall require the charterer to

carry, at the charterer’s expense, insurance on the chartered vessel

120 STAT. 1668 PUBLIC LAW 109–304—OCT. 6, 2006

covering all marine and port risks, protection and indemnity risks,

and all other hazards and liabilities, adequate to cover damages

claimed against and losses sustained by the chartered vessel arising

during the term of the charter. The insurance shall be in such

form, in such amount, and with such companies as the Secretary

of Transportation may require. In accordance with law, any of

the insurance risks may be underwritten by the Secretary.

‘‘§ 57520. Vessel maintenance

‘‘(a) IN GENERAL.—A charter under this chapter shall require

the charterer, at the charterer’s expense, to—

‘‘(1) keep the chartered vessel in good repair and efficient

operating condition; and

‘‘(2) make any repairs required by the Secretary of

Transportation.

‘‘(b) INSPECTION.—The charter shall provide that the Secretary

has the right to inspect the vessel at any time to ascertain its

condition.

‘‘§ 57521. Termination of charter during national emergency

‘‘A charter under this chapter shall provide that during a

national emergency proclaimed by the President or a period for

which the President has proclaimed that the security of the national

defense makes it advisable, the Secretary of Transportation may

terminate the charter without cost to the United States Government

on such notice to the charterer as the President determines.

‘‘SUBCHAPTER III—MISCELLANEOUS

‘‘§ 57531. Construction and charter of vessels for unsuccessful routes

‘‘(a) IN GENERAL.—If the Secretary of Transportation finds that

a trade route determined to be essential under section 50103 of

this title cannot be successfully developed and maintained and

the Secretary’s replacement program cannot be achieved under

private operation of the trade route by a citizen of the United

States with vessels documented under chapter 121 of this title,

without further aid by the United States Government in addition

to the financial aid authorized under titles V and VI of the Merchant

Marine Act, 1936, the Secretary, without advertisement or competition, may—

‘‘(1) have constructed, in private shipyards or in navy yards,

vessels of the types necessary for the trade route; and

‘‘(2) demise charter those new vessels to the operator of

vessels of the United States established on the trade route.

‘‘(b) AMOUNT OF CHARTER HIRE.—

‘‘(1) IN GENERAL.—The annual charter hire under subsection (a) shall be at least 4 percent of the price (referred

to in this section as the ‘foreign cost’) at which the vessel

would be sold if constructed under title V of the Merchant

Marine Act, 1936, plus—

‘‘(A) a percentage of the depreciated foreign cost computed annually determined by the Secretary of the

Treasury, taking into consideration the current average

market yield on outstanding marketable obligations of the

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1669

Government with remaining periods to maturity comparable to the term of the charter, adjusted to the nearest

one-eighth percent; and

‘‘(B) an allowance adequate in the judgment of the

Secretary of Transportation to cover administrative costs.

‘‘(2) DEPRECIATION.—Depreciation under paragraph (1)(A)

shall be based on—

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

and

‘‘(B) a 20-year life for tankers and other bulk liquid

carrier vessels.

‘‘(c) OPTION TO PURCHASE.—The charter may contain an option

to the charterer to purchase the vessels from the Secretary of

Transportation within 5 years after delivery under the charter,

on the same terms and conditions as provided in title V of the

Merchant Marine Act, 1936, for the purchase of new vessels from

the Secretary. However—

‘‘(1) the purchase price shall be the foreign cost less depreciation to the date of purchase based on the useful life specified

in subsection (b)(2);

‘‘(2) the required cash payment payable at the time of

the purchase shall be 25 percent of the purchase price;

‘‘(3) the charter may provide that any part of the charter

hire paid in excess of the minimum charter hire provided for

in this section may be credited against the cash payment payable at the time of the purchase;

‘‘(4) the balance of the purchase price shall be paid within

the remaining years of useful life (as specified in subsection

(b)(2)) after the date of delivery of the vessel under the charter

and in approximately equal annual installments, except that

the first installment, which shall be payable on the next ensuing

anniversary date of the delivery under the charter, shall be

a proportionate part of the annual installment; and

‘‘(5) interest shall be payable on the unpaid balances from

the date of purchase, at a rate not less than—

‘‘(A) a rate determined by the Secretary of the

Treasury, taking into consideration the current average

market yield on outstanding marketable obligations of the

Government with remaining periods to maturity comparable to the average maturities of the loans, adjusted

to the nearest one-eighth percent; plus

‘‘(B) an allowance adequate in the judgment of the

Secretary of Transportation to cover administrative costs.

‘‘(d) OPERATION OF VESSEL.—

‘‘(1) PERMISSIBLE VOYAGES.—The charter shall provide for

operation of the vessel exclusively—

‘‘(A) in foreign trade;

‘‘(B) on a round-the-world voyage;

‘‘(C) on a round voyage from the west coast of the

United States to a European port that includes an intercoastal port of the United States;

‘‘(D) on a round voyage from the Atlantic coast of

the United States to the Orient that includes an intercoastal port of the United States; or

‘‘(E) on a voyage in foreign trade on which the vessel

may stop at Hawaii or an island territory or possession

of the United States.

120 STAT. 1670 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) DOMESTIC TRADE.—The charter shall provide if the

vessel is operated in domestic trade on any of the services

specified in paragraph (1), the charterer will pay annually

to the Secretary of Transportation that proportion of 1⁄25 of

the difference between the domestic and foreign cost of the

vessel as the gross revenue derived from the domestic trade

bears to the gross revenue derived from the entire voyages

completed during the preceding year.

‘‘§ 57532. Operation of experimental vessels

‘‘(a) DEFINITION.—In this section, the term ‘experimental vessel’

means a vessel owned by the United States Government (including

a vessel in the National Defense Reserve Fleet) that has been

constructed, reconditioned, or remodeled for experimental or testing

purposes.

‘‘(b) AUTHORITY TO OPERATE.—The Secretary of Transportation,

for the purpose of practical development, trial, and testing, may

operate an experimental vessel under a bareboat charter or general

agency agreement in the foreign or domestic trade of the United

States or for use for the account of a department or agency of

the Government, without regard to other provisions of this subtitle

and other laws related to chartering and general agency operations.

Not more than 10 vessels may be operated and tested under this

section in any one year.

‘‘(c) TERMS OF OPERATION.—Operation of a vessel under this

section shall be on terms the Secretary considers appropriate to

carry out the purposes of this subtitle. A bareboat charter under

this section shall be at reasonable rates and include restrictions

the Secretary considers appropriate to protect the public interest,

including provisions for recapture of profits under section 57517

of this title. A charter or general agency agreement under this

section shall be reviewed annually to determine whether conditions

exist to justify continuance of the charter or agreement.

‘‘(d) RIGHTS OF SEAMEN.—A seaman engaged in vessel operations of the Secretary under this section and employed through

a general agent in connection with a charter or agreement under

this section is entitled to all the rights and remedies provided

in sections 1(a) and (c), 3(c), and 4 of the Act of March 24, 1943

(50 App. U.S.C. 1291(a), (c), 1293(c), 1294).

‘‘PART G—RESTRICTIONS AND PENALTIES

‘‘CHAPTER 581—RESTRICTIONS AND PENALTIES

‘‘Sec.

‘‘58101. Operating in domestic intercoastal or coastwise service.

‘‘58102. Default on payment or maintenance of reserves.

‘‘58103. Employing another person as managing or operating agent.

‘‘58104. Willful violation constitutes breach of contract or charter.

‘‘58105. Preferences for cargo in which charterer has interest.

‘‘58106. Concerted discriminatory activities.

‘‘58107. Discrimination at ports by water common carriers.

‘‘58108. Charges for transportation subject to subtitle IV of title 49.

‘‘58109. Penalties.

‘‘§ 58101. Operating in domestic intercoastal or coastwise

service

‘‘(a) PROHIBITION.—A subsidy may not be awarded or paid

to a contractor under the operating-differential subsidy program,

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1671

and a vessel may not be chartered to a person under chapter

575 of this title, if the contractor or charterer, or a holding company,

subsidiary, affiliate, or associate of the contractor or charterer,

or an officer, director, agent, or executive thereof, directly or

indirectly—

‘‘(1) owns, charters, or operates a vessel engaged in the

domestic intercoastal or coastwise service; or

‘‘(2) owns a pecuniary interest in a person that owns,

charters, or operates a vessel in the domestic intercoastal or

coastwise service.

‘‘(b) WAIVER.—A person may apply to the Secretary of Transportation for a waiver of subsection (a). Before deciding on the waiver,

the Secretary shall give the applicant and other interested persons

an opportunity for a hearing. The Secretary may not grant the

waiver if the Secretary finds it would—

‘‘(1) result in unfair competition to a person operating

exclusively in the domestic intercoastal or coastwise service;

or

‘‘(2) be prejudicial to the objectives and policy of this subtitle.

‘‘(c) CONTINUOUS OPERATION SINCE 1935.—The Secretary shall

grant an application under subsection (b) without requiring further

proof that the public interest and convenience will be served and

without further proceedings as to the competition in the route

or trade, if the contractor or other person, or a predecessor in

interest, was in bona-fide operation as a common carrier by water

in the domestic intercoastal or coastwise trade in 1935 over the

route or in the trade for which the application is made and has

so operated since that time or, if engaged in furnishing seasonal

service only, was in bona-fide operation in 1935 during the season

ordinarily covered by its operation, except in either event as to

interruptions of service over which the applicant or its predecessor

in interest had no control.

‘‘(d) DIVERSION INTO INTERCOASTAL OR COASTWISE OPERATIONS.—If an application under subsection (b) is approved, a person

referred to in this section may not divert, directly or indirectly,

money, property, or any other thing of value, used in a foreigntrade operation for which a subsidy is paid by the United States

Government, into intercoastal or coastwise operations.

‘‘§ 58102. Default on payment or maintenance of reserves

‘‘The Secretary of Transportation may supervise the number

and compensation of all officers and employees of a contractor

under the operating-differential subsidy program or a charterer

under chapter 575 of this title, receiving an operating-differential

subsidy, if the contractor or charterer—

‘‘(1) is in default on a mortgage, note, purchase contract,

or other obligation to the Secretary; or

‘‘(2) has not maintained, in a manner satisfactory to the

Secretary, all of the reserves provided for in this subtitle.

‘‘§ 58103. Employing another person as managing or operating agent

‘‘(a) PROHIBITION.—Except with the written consent of the Secretary of Transportation, a contractor holding a contract under

the operating-differential subsidy program or under chapter 575

of this title may not—

120 STAT. 1672 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(1) employ another person as the managing or operating

agent of the operator; or

‘‘(2) charter a vessel, on which an operating-differential

subsidy is to be paid, for operation by another person.

‘‘(b) APPLICABILITY OF PROVISIONS TO CHARTERER.—If a charter

prohibited by this section is made, the person operating the chartered vessel is subject to all the provisions of this subtitle and

the operating-differential subsidy program, including limitations

of profits and salaries.

‘‘§ 58104. Willful violation constitutes breach of contract or

charter

‘‘A willful violation of any provision of sections 58101–58103

of this title constitutes a breach of the contract or charter. On

determining that a violation has occurred, the Secretary of

Transportation may declare the contract or charter rescinded.

‘‘§ 58105. Preferences for cargo in which charterer has

interest

‘‘A contractor receiving an operating-differential subsidy, or

a charterer under chapter 575 of this title, may not unjustly

discriminate in any manner so as to give preference, directly or

indirectly, to cargo in which the contractor or charterer has a

direct or indirect ownership, purchase, or vending interest.

‘‘§ 58106. Concerted discriminatory activities

‘‘(a) PROHIBITION.—A contractor receiving an operating-differential subsidy, or a charterer under chapter 575 of this title, may

not continue as a party to or conform to an agreement with another

carrier by water, or engage in a practice in concert with another

carrier by water, that is unjustly discriminatory or unfair to any

other citizen of the United States operating a common carrier

by water employing only vessels documented under the laws of

the United States on an established trade route from and to a

United States port.

‘‘(b) GOVERNMENT PAYMENT PROHIBITED.—No payment or subsidy of any kind may be paid, directly or indirectly, out of funds

of the United States Government to a contractor or charterer that

has violated subsection (a).

‘‘(c) CIVIL ACTION.—A person whose business or property is

injured by a violation of subsection (a) may bring a civil action

in the district court of the United States for the district in which

the defendant resides, is found, or has an agent. If the person

prevails, the person shall be awarded—

‘‘(1) 3 times the damages; and

‘‘(2) costs, including reasonable attorney fees.

‘‘§ 58107. Discrimination at ports by water common carriers

‘‘(a) PROHIBITION.—A common carrier by water may not, directly

or indirectly, through an agreement, conference, association, understanding, or otherwise, prevent or attempt to prevent any other

common carrier by water from serving any port described in subsection (b) at the same rates the first carrier charges at the nearest

port already regularly served by it.

‘‘(b) PORTS.—A port referred to in subsection (a) is one that

is—

‘‘(1) designed for the accommodation of ocean-going vessels;

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1673

‘‘(2) located on an improvement project authorized by law

or by a Federal agency; and

‘‘(3) located within the continental limits of the United

States.

‘‘(c) OTHER AUTHORITY NOT LIMITED.—This section does not

limit the authority otherwise vested in the Secretary of Transportation and the Federal Maritime Commission.

‘‘§ 58108. Charges for transportation subject to subtitle IV

of title 49

‘‘(a) PROHIBITION.—A carrier may not 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, that is based

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

are to be transported to, or have been transported from, a port

in a territory or possession of the United States or in a foreign

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

rate, fare, or charge than the carrier charges, collects, or receives

for the transportation of persons or similar property for the same

distance, in the same direction, and over the same route, in commerce wholly within the United States, unless the vessel used

for the transportation is or was at the time of the transportation

documented under the laws of the United States.

‘‘(b) SUSPENSION OF PROHIBITION.—Whenever the Secretary of

Transportation believes that adequate shipping facilities to or from

any port in a territory or possession of the United States or a

foreign country are not being provided by vessels documented under

the laws of the United States, the Secretary shall certify this

fact to the Surface Transportation Board. On receiving the certification, the Board may by order suspend the operation of subsection

(a) with respect to the rates, fares, and charges for the transportation by rail of persons and property transported from or to be

transported to those ports, for such time and under such terms

and conditions as the Secretary may specify in the order or in

any supplemental order.

‘‘(c) TERMINATION OF SUSPENSION.—Whenever the Secretary

believes that adequate shipping facilities are being provided to

those ports by vessels documented under the laws of the United

States, and certifies that fact to the Board, the Board may order

the termination of the suspension.

‘‘§ 58109. Penalties

‘‘(a) INDIVIDUALS.—An individual convicted of violating section

58101(d), 58103, or 58105 of this title shall be fined under title

18, imprisoned for at least one year but not more than 5 years,

or both.

‘‘(b) ORGANIZATIONS.—An organization convicted of committing

an act prohibited by this subtitle shall be fined under title 18.

‘‘(c) INELIGIBILITY TO RECEIVE BENEFITS.—An individual or

organization convicted of violating a section referred to in subsection

(a) is ineligible, at the discretion of the Secretary of Transportation,

to receive any benefit under the construction-differential subsidy

or operating-differential subsidy programs, or a charter under

chapter 575 of this title, for 5 years after the conviction.’’.

Certification.

120 STAT. 1674 PUBLIC LAW 109–304—OCT. 6, 2006

SEC. 9. SUBTITLE VI OF TITLE 46.

(a) REDESIGNATION.—Title 46, United States Code, is amended

by redesignating subtitle VI as subtitle VII.

(b) NEW SUBTITLE.—Title 46, United States Code, is amended

by inserting after subtitle V the following:

‘‘Subtitle VI—Clearance, Tonnage Taxes, and

Duties

‘‘Chapter Sec.

‘‘601. Arrival and Departure Requirements ............................................... 60101

‘‘603. Tonnage Taxes and Light Money ........................................................ 60301

‘‘605. Discriminating Duties and Reciprocal Privileges .......................... 60501

‘‘CHAPTER 601—ARRIVAL AND DEPARTURE

REQUIREMENTS

‘‘Sec.

‘‘60101. Boarding arriving vessels before inspection.

‘‘60102. Production of certificate on entry.

‘‘60103. Oath of ownership on entry.

‘‘60104. Depositing certificates of documentation with consular officers.

‘‘60105. Clearance of vessels.

‘‘60106. State inspection laws.

‘‘60107. Payment of fees on departing vessel.

‘‘60108. Duty to transport tendered cargo.

‘‘60109. Duty to transport money and securities of the United States Government.

‘‘§ 60101. Boarding arriving vessels before inspection

‘‘(a) REGULATIONS.—The Secretary of Homeland Security shall

prescribe and enforce regulations on the boarding of a vessel

arriving at a port of the United States before the vessel has been

inspected and secured.

‘‘(b) CRIMINAL PENALTY.—A person violating a regulation prescribed under this section shall be fined under title 18, imprisoned

for not more than 6 months, or both.

‘‘(c) RELATIONSHIP TO OTHER LAW.—This section shall be construed as supplementary to section 2279 of title 18.

‘‘§ 60102. Production of certificate on entry

‘‘On entry of a vessel documented under chapter 121 of this

title, the master or other individual in charge of the vessel shall

produce the certificate of documentation to the customs officer at

the place where the vessel is entered. If the certificate is not

produced, the vessel is not entitled to the privileges of a documented

vessel.

‘‘§ 60103. Oath of ownership on entry

‘‘(a) REQUIRED STATEMENT.—On entry of a vessel of the United

States from a foreign port, the individual designated under subsection (b) shall state under oath that—

‘‘(1) the vessel’s certificate of documentation contains the

names of all the owners of the vessel; or

‘‘(2) part of the ownership has been transferred since the

certificate was issued and, to the best of the individual’s knowledge and belief, the vessel is still owned only by citizens of

the United States.

‘‘(b) PERSON TO MAKE STATEMENT.—The statement under subsection (a) shall be made by—

‘‘(1) an owner if one resides at the port of entry; or

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1675

‘‘(2) the master if an owner does not reside at the port

of entry.

‘‘(c) CONSEQUENCE OF NOT MAKING STATEMENT.—If the appropriate individual does not make the statement required by this

section, the vessel is not entitled to the privileges of a vessel

of the United States.

‘‘§ 60104. Depositing certificates of documentation with consular officers

‘‘(a) REQUIREMENT OF MASTER.—When a vessel owned by citizens of the United States, on a voyage from a port in the United

States, arrives at a foreign port, the master of the vessel shall

deposit the vessel’s certificate of documentation with a consular

officer at the foreign port if there is a consular officer at that

port.

‘‘(b) RETURN OF CERTIFICATE.—When the master produces a

clearance from the appropriate officer of the foreign port, the consular officer shall return the certificate of documentation to the

master if the master has complied with the provisions of law related

to the discharge of seamen in a foreign country and the payment

of fees of consular officers.

‘‘(c) CIVIL PENALTY AND COLLECTION.—The master of a vessel

failing to deposit the certificate of documentation as required by

subsection (a) is liable to the United States Government for a

civil penalty of $500. The consular officer shall bring an action

to recover the penalty in any court of competent jurisdiction. The

action shall be brought in the name of the consular officer for

the benefit of the United States.

‘‘§ 60105. Clearance of vessels

‘‘(a) VESSELS OF THE UNITED STATES.—Except as otherwise

provided by law, a vessel of the United States shall obtain clearance

from the Secretary of Homeland Security before proceeding from

a port or place in the United States—

‘‘(1) for a foreign port or place;

‘‘(2) for another port or place in the United States if the

vessel has on board foreign merchandise for which entry has

not been made; or

‘‘(3) outside the territorial sea to visit a hovering vessel

or to receive merchandise while outside the territorial sea.

‘‘(b) OTHER VESSELS.—Except as otherwise provided by law,

a vessel that is not a vessel of the United States shall obtain

clearance from the Secretary before proceeding from a port or

place in the United States—

‘‘(1) for a foreign port or place;

‘‘(2) for another port or place in the United States; or

‘‘(3) outside the territorial sea to visit a hovering vessel

or to receive or deliver merchandise while outside the territorial

sea.

‘‘(c) REGULATIONS.—The Secretary may by regulation—

‘‘(1) prescribe the manner in which clearance under this

section is to be obtained, including the documents, data, or

information which shall be submitted or transmitted, pursuant

to an authorized data interchange system, to obtain the clearance;

120 STAT. 1676 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) permit clearance to be obtained before all requirements

for clearance are complied with, but only if the owner or operator of the vessel files a bond in an amount set by the Secretary

conditioned on the compliance by the owner or operator with

all specified requirements for clearance within a time period

(not exceeding 4 business days) established by the Secretary;

and

‘‘(3) permit clearance to be obtained at a place other than

a designated port of entry, under conditions the Secretary may

prescribe.

‘‘§ 60106. State inspection laws

‘‘When State law requires a certificate of inspection for goods

carried on a vessel, a vessel transporting the goods may not be

cleared until the certificate is produced.

‘‘§ 60107. Payment of fees on departing vessel

‘‘A departing vessel may be cleared only when all legal fees

that have accrued on the vessel are paid and proof of payment

is presented to the individual granting the clearance.

‘‘§ 60108. Duty to transport tendered cargo

‘‘Clearance may be refused to a vessel or vehicle transporting

cargo destined for a domestic or foreign port when the owner,

master, or other individual in charge refuses to accept cargo tendered in good condition, with proper charges, for the same or

an intermediate port by a citizen of the United States. This section

does not apply if the vessel or vehicle is already fully loaded

(giving appropriate consideration to its proper loading) or is not

adaptable to transport the tendered cargo.

‘‘§ 60109. Duty to transport money and securities of the

United States Government

‘‘Before being given clearance, a vessel owned by a citizen

of the United States and bound on a voyage from a port in the

United States to another port in the United States or in a foreign

country, or on a voyage from a port in a foreign country to a

port in the United States, shall receive on board any bullion, coin,

notes, bonds, or other securities of the United States Government

that an agency, consular officer, or other agent of the Government

offers. The vessel shall transport the items securely and deliver

them promptly to the proper authorities or consignees on arriving

at the port of destination. Compensation shall be paid for services

provided under this section that is equal to compensation paid

to other carriers in the ordinary transaction of business.

‘‘CHAPTER 603—TONNAGE TAXES AND LIGHT MONEY

‘‘Sec.

‘‘60301. Regular tonnage taxes.

‘‘60302. Special tonnage taxes.

‘‘60303. Light money.

‘‘60304. Presidential suspension of tonnage taxes and light money.

‘‘60305. Vessels in distress.

‘‘60306. Vessels not engaged in trade.

‘‘60307. Vessels engaged in coastwise trade or the fisheries.

‘‘60308. Vessels engaged in Great Lakes trade.

‘‘60309. Passenger vessels making trips between ports of the United States and

foreign ports.

‘‘60310. Vessels making daily trips on interior waters.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1677

‘‘60311. Hospital vessels in time of war.

‘‘60312. Rights under treaties preserved.

‘‘§ 60301. Regular tonnage taxes

‘‘(a) LOWER RATE.—A tax is imposed at the rate of 2 cents

per ton (but not more than a total of 10 cents per ton per year)

at each entry in a port of the United States of—

‘‘(1) a vessel entering from a foreign port or place in North

America, Central America, the West Indies Islands, the Bahama

Islands, the Bermuda Islands, or the coast of South America

bordering the Caribbean Sea; or

‘‘(2) a vessel returning to the same port or place in the

United States from which it departed, and not entering the

United States from another port or place, except—

‘‘(A) a vessel of the United States;

‘‘(B) a recreational vessel (as defined in section 2101

of this title); or

‘‘(C) a barge.

‘‘(b) HIGHER RATE.—A tax is imposed at the rate of 6 cents

per ton (but not more than a total of 30 cents per ton per year)

on a vessel at each entry in a port of the United States from

a foreign port or place not named in subsection (a)(1).

‘‘(c) EXCEPTION FOR VESSELS ENTERING OTHER THAN BY SEA.—

Subsection (a) does not apply to a vessel entering other than by

sea from a foreign port or place at which tonnage, lighthouse,

or other equivalent taxes are not imposed on vessels of the United

States.

‘‘§ 60302. Special tonnage taxes

‘‘(a) ENTRY FROM FOREIGN PORT OR PLACE.—Regardless of

whether a tax is imposed under section 60301 of this title, a

tax is imposed on a vessel at each entry in a port of the United

States from a foreign port or place at the following rates:

‘‘(1) 30 cents per ton on a vessel built in the United States

but owned in any part by a subject of a foreign country.

‘‘(2) 50 cents per ton on other vessels not of the United

States.

‘‘(3) 50 cents per ton on a vessel of the United States

having an officer who is not a citizen of the United States.

‘‘(4) $2 per ton on a foreign vessel entering from a foreign

port or place at which vessels of the United States are not

ordinarily allowed to enter and trade.

‘‘(b) VESSELS NOT OF THE UNITED STATES TRANSPORTING PROPERTY BETWEEN DISTRICTS.—Regardless of whether a tax is imposed

under section 60301 of this title, a tax of 50 cents per ton is

imposed on a vessel not of the United States at each entry in

one customs district from another district when transporting goods

loaded in one district to be delivered in another district.

‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—The

tax of 50 cents per ton under this section does not apply to a

vessel that—

‘‘(1) is owned only by citizens of the United States; and

‘‘(2) after entering a port of the United States, becomes

documented as a vessel of the United States before leaving

that port.

120 STAT. 1678 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 60303. Light money

‘‘(a) IMPOSITION OF TAX.—A tax of 50 cents per ton, to be

called ‘light money’, is imposed on a vessel not of the United

States at each entry in a port of the United States. This tax

shall be imposed and collected under the same regulations that

apply to tonnage taxes.

‘‘(b) EXCEPTION FOR VESSELS OWNED BY CITIZENS.—

‘‘(1) IN GENERAL.—Subsection (a) does not apply to a vessel

owned only by citizens of the United States if—

‘‘(A) the vessel is carrying a regular document issued

by a customhouse of the United States proving the vessel

to be owned only by citizens of the United States; and

‘‘(B) on entry of the vessel from a foreign port, the

individual designated under paragraph (2) states under

oath that—

‘‘(i) the document contains the names of all the

owners of the vessel; or

‘‘(ii) part of the ownership has been transferred

since the document was issued and, to the best of

that individual’s knowledge and belief, the vessel is

still owned only by citizens of the United States.

‘‘(2) PERSON TO MAKE STATEMENT.—The statement under

paragraph (1)(B) shall be made by—

‘‘(A) an owner if one resides at the port of entry;

or

‘‘(B) the master if an owner does not reside at the

port of entry.

‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) section does not apply to a vessel that—

‘‘(1) is owned only by citizens of the United States; and

‘‘(2) after entering a port of the United States, becomes

documented as a vessel of the United States before leaving

that port.

‘‘§ 60304. Presidential suspension of tonnage taxes and light

money

‘‘If the President is satisfied that the government of a foreign

country does not impose discriminating or countervailing duties

to the disadvantage of the United States, the President shall suspend the imposition of special tonnage taxes and light money under

sections 60302 and 60303 of this title on vessels of that country.

‘‘§ 60305. Vessels in distress

‘‘A vessel is exempt from tonnage taxes and light money when

it enters because it is in distress.

‘‘§ 60306. Vessels not engaged in trade

‘‘A vessel is exempt from tonnage taxes and light money when

not engaged in trade.

‘‘§ 60307. Vessels engaged in coastwise trade or the fisheries

‘‘A vessel with a registry endorsement or a coastwise endorsement, trading from one port in the United States to another port

in the United States or employed in the bank, whale, or other

fisheries, is exempt from tonnage taxes and light money.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1679

‘‘§ 60308. Vessels engaged in Great Lakes trade

‘‘A documented vessel with a registry endorsement, engaged

in foreign trade on the Great Lakes or their tributary or connecting

waters in trade with Canada, does not become subject to tonnage

taxes or light money because of that trade.

‘‘§ 60309. Passenger vessels making trips between ports of

the United States and foreign ports

‘‘A passenger vessel making at least 3 trips per week between

a port of the United States and a foreign port is exempt from

tonnage taxes and light money.

‘‘§ 60310. Vessels making daily trips on interior waters

‘‘A vessel making regular daily trips between a port of the

United States and a port of Canada only on interior waters not

navigable to the ocean is exempt from tonnage taxes and light

money, except on its first clearing each year.

‘‘§ 60311. Hospital vessels in time of war

‘‘In time of war, a hospital vessel is exempt from tonnage

taxes, light money, and pilotage charges in the ports of the United

States if the vessel is one for which the conditions of the international convention for the exemption of hospital ships from taxation in time of war, concluded at The Hague on December 21,

1904, are satisfied. The President by proclamation shall name the

vessels for which the conditions are satisfied and state when the

exemption begins and ends.

‘‘§ 60312. Rights under treaties preserved

‘‘This chapter and chapter 605 of this title do not affect a

right or privilege of a foreign country relating to tonnage taxes

or other duties on vessels under a law or treaty of the United

States.

‘‘CHAPTER 605—DISCRIMINATING DUTIES AND

RECIPROCAL PRIVILEGES

‘‘Sec.

‘‘60501. Vessels allowed to import.

‘‘60502. Discriminating duty on goods imported in foreign vessels or from contiguous countries.

‘‘60503. Reciprocal suspension of discriminating duties.

‘‘60504. Reciprocal privileges for recreational vessels.

‘‘60505. Retaliatory suspension of commercial privileges.

‘‘60506. Retaliation against British dominions of North America.

‘‘60507. Suspension of free passage through Saint Marys Falls Canal.

‘‘§ 60501. Vessels allowed to import

‘‘(a) IN GENERAL.—Except as otherwise provided by treaty,

goods may be imported into the United States from a foreign

port or place only in—

‘‘(1) a vessel of the United States; or

‘‘(2) a foreign vessel owned only by citizens or subjects

of the country—

‘‘(A) in which the goods are grown, produced, or manufactured; or

‘‘(B) from which the goods can only be, or most usually

are, first shipped for transportation.

President.

120 STAT. 1680 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) EXCEPTION FOR VESSELS OF COUNTRIES NOT MAINTAINING

SIMILAR RESTRICTIONS.—Subsection (a) does not apply to a vessel

of a foreign country that does not maintain a similar restriction

against United States documented vessels.

‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) does not apply to a vessel that—

‘‘(1) is owned only by citizens of the United States; and

‘‘(2) after entering a port of the United States, becomes

documented as a vessel of the United States before leaving

that port.

‘‘(d) SEIZURE AND FORFEITURE.—If goods are imported in violation of this section, the goods and the vessel in which they are

imported, along with its equipment and other cargo, may be seized

by and forfeited to the United States Government.

‘‘§ 60502. Discriminating duty on goods imported in foreign

vessels or from contiguous countries

‘‘(a) IMPOSITION OF DUTY.—A discriminating duty of 10 percent

ad valorem (in addition to other duties imposed by law) is imposed

on goods—

‘‘(1) imported in a vessel not of the United States unless

the vessel—

‘‘(A) is entitled by law or treaty to enter the ports

of the United States on payment of the same duties as

are payable on goods imported in a vessel of the United

States; or

‘‘(B)(i) is owned only by citizens of the United States;

and

‘‘(ii) after entering a port of the United States, becomes

documented as a vessel of the United States before leaving

that port; or

‘‘(2) produced or manufactured in a foreign country not

contiguous to the United States and imported from a country

contiguous to the United States, unless imported in the usual

course of strictly retail trade.

‘‘(b) SEIZURE AND FORFEITURE.—If goods are imported without

payment of the duty required by this section, the goods and the

vessel in which they are imported may be seized by, and forfeited

to, the United States Government.

‘‘§ 60503. Reciprocal suspension of discriminating duties

‘‘(a) GENERAL AUTHORITY.—On receiving satisfactory proof from

the government of a foreign country that it has suspended, in

any part, the imposition of discriminating duties for any class

of vessels owned by citizens of the United States or goods imported

in those vessels, the President may proclaim a reciprocal suspension

of discriminating duties for the same class of vessels owned by

citizens of that country or goods imported in those vessels.

‘‘(b) EFFECTIVE AND EXPIRATION DATES.—A suspension under

this section takes effect retroactively from the date the President

received the proof from the foreign government, and expires when

that government stops granting the reciprocal suspension.

‘‘§ 60504. Reciprocal privileges for recreational vessels

‘‘When the President is satisfied that yachts owned by residents

of the United States and used only for pleasure are allowed to

arrive at, depart from, and cruise in the waters of a foreign port

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1681

without entering, clearing, or paying any duties or fees (including

cruising license fees), the Secretary of Homeland Security may

allow yachts from that foreign port used only for pleasure to arrive

at and depart from the ports of the United States and to cruise

in the waters of the United States without paying any duties

or fees. However, the Secretary may require foreign yachts to obtain

a license to cruise in the waters of the United States. The license

shall be in the form prescribed by the Secretary and contain limitations about length of time, direction, place of cruising and action,

and other matters the Secretary considers appropriate. The license

shall be issued without cost to the yacht.

‘‘§ 60505. Retaliatory suspension of commercial privileges

‘‘(a) GENERAL AUTHORITY.—The President may proclaim a

suspension of commercial privileges to vessels of a foreign country

when—

‘‘(1) vessels of that country have been given the same

commercial privileges in the ports and waters of the United

States given to vessels of the United States (except the privilege

of engaging in coastwise commerce); and

‘‘(2) vessels of the United States are denied commercial

privileges in the ports or waters of that country given to vessels

of that country.

‘‘(b) APPLICATION.—A suspension under this section shall apply

to the same commercial privileges denied to vessels of the United

States in the ports or waters of the foreign country, and to the

same class of vessels of that country as the class of vessels of

the United States denied the privileges.

‘‘(c) EFFECTIVE DATE.—The President shall designate the effective date of the suspension in the proclamation.

‘‘(d) PENALTIES.—

‘‘(1) SEIZURE AND FORFEITURE.—If the master, officer, or

agent of a vessel of a foreign country does an act for the

vessel in the ports or waters of the United States in violation

of a proclamation issued under this section, the vessel and

the goods on the vessel may be seized by, and forfeited to,

the United States Government.

‘‘(2) FINE OR IMPRISONMENT.—A person opposing an official

of the Government enforcing this section shall be fined under

title 18, imprisoned for not more than 2 years, or both.

‘‘§ 60506. Retaliation against British dominions of North

America

‘‘(a) GENERAL AUTHORITY.—The President by proclamation may

prohibit vessels of the British dominions of North America, their

masters and crews, and products of or coming from those dominions,

from entering waters, ports, or places of the United States when

the President is satisfied that—

‘‘(1) fishermen or fishing vessels of the United States in

waters, ports, or places of the British dominions of North

America are being or recently have been—

‘‘(A) denied rights provided by law or treaty;

‘‘(B) subjected to unreasonable restrictions in the exercise of those rights; or

‘‘(C) otherwise harassed;

‘‘(2) fishermen or fishing vessels of the United States,

having a permit under the laws of the United States to dock

President.

Licensing.

120 STAT. 1682 PUBLIC LAW 109–304—OCT. 6, 2006

or trade at a port or place in the British dominions of North

America, are being or recently have been—

‘‘(A) denied the privilege of entering the port or place

in the same manner and under the same regulations

applicable to trading vessels of the most-favored-nation;

‘‘(B) prevented from buying supplies allowed to be sold

to trading vessels of the most-favored-nation; or

‘‘(C) otherwise harassed; or

‘‘(3) other vessels of the United States or their masters

or crews in waters, ports, or places of the British dominions

of North America are being or recently have been—

‘‘(A) denied privileges given to vessels of the mostfavored-nation or their masters or crews; or

‘‘(B) otherwise harassed.

‘‘(b) COVERAGE AND EXCEPTIONS.—The President may apply

a proclamation under this section to any of the subjects named,

and may include exceptions for vessels in distress or need of supplies. The President may change, revoke, and renew the proclamation.

‘‘(c) PENALTIES.—A person violating a proclamation issued

under this section shall be fined under title 18, imprisoned for

not more than 2 years, or both. A vessel or goods found in waters,

ports, or places of the United States in violation of the proclamation

may be seized by, and forfeited to, the United States Government.

‘‘§ 60507. Suspension of free passage through Saint Marys

Falls Canal

‘‘(a) PURPOSE.—The purpose of this section is to secure reciprocal advantages for the citizens, ports, and vessels of the United

States.

‘‘(b) GENERAL AUTHORITY.—When the President is satisfied that

vessels of the United States, or passengers or cargo being transported to a port of the United States, are prohibited from passing

through a canal or lock connected with the navigation of the Saint

Lawrence River, the Great Lakes, or their connecting waterways,

or burdened in that passage by tolls or other means that are

unreasonable in view of the free passage through the Saint Marys

Falls Canal allowed to vessels of all countries, the President by

proclamation may suspend the right of free passage through the

Saint Marys Falls Canal for vessels owned by subjects of the country

imposing the prohibition, tolls, or other burdens and for passengers

and cargo being transported to the ports of that country, even

when carried in vessels of the United States. The suspension shall

apply to the extent and for the time the President considers appropriate.

‘‘(c) IMPOSITION OF TOLL.—

‘‘(1) IN GENERAL.—During a suspension under this section,

the President shall impose a toll of not more than $2 per

ton on cargo and not more than $5 on each passenger.

‘‘(2) EXCEPTIONS.—Notwithstanding paragraph (1), a toll

may not be imposed on passengers or cargo landed at

Ogdensburg, New York, or any port west of Ogdensburg and

south of a line drawn from the northern boundary of New

York through the Saint Lawrence River, the Great Lakes, and

their connecting channels to the northern boundary of Minnesota.

‘‘(d) COLLECTION OF TOLL.—

President.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1683

‘‘(1) IN GENERAL.—A toll imposed under this section shall

be collected under regulations prescribed by the Secretary of

Homeland Security. The Secretary may require the master

of a vessel to provide a sworn statement of the amount and

kind of cargo, the number of passengers, and the destination

of the passengers and cargo.

‘‘(2) PROOF OF LANDING.—When applicable, the Secretary

also may require satisfactory proof that the passengers and

cargo were landed at a port described in subsection (c)(2).

Until that proof is provided, the Secretary may assume the

passengers and cargo were not landed at such a port, and

the amount of a toll that otherwise would be imposed is a

lien enforceable against the vessel when found in the waters

of the United States.’’.

SEC. 10. SUBTITLE VII OF TITLE 46.

Subtitle VII of title 46, United States Code, as redesignated

by section 9(a) of this Act, is amended as follows:

(1) The subtitle heading and analysis are amended to read

as follows:

‘‘Subtitle VII—Security and Drug Enforcement

‘‘Chapter Sec.

‘‘701. Port Security ...........................................................................................70101

‘‘703. Maritime Security ..................................................................................70301

‘‘705. Maritime Drug Law Enforcement ......................................................70501’’.

(2) Add after chapter 701 the following:

‘‘CHAPTER 703—MARITIME SECURITY

‘‘Sec.

‘‘70301. Definitions.

‘‘70302. International measures for seaport and vessel security.

‘‘70303. Security standards at foreign ports.

‘‘70304. Travel advisories on security at foreign ports.

‘‘70305. Suspension of passenger services.

‘‘70306. Report on terrorist threats.

‘‘§ 70301. Definitions

‘‘In this chapter:

‘‘(1) COMMON CARRIER.—The term ‘common carrier’ has

the meaning given that term in section 40102 of this title.

‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ has

the meaning given that term in section 2101 of this title.

‘‘(3) SECRETARY.—The term ‘Secretary’ means the Secretary

of the department in which the Coast Guard is operating.

‘‘§ 70302. International measures for seaport and vessel security

‘‘Congress encourages the President to continue to seek agreement on international seaport and vessel security through the International Maritime Organization. In developing an agreement, each

member country of the International Maritime Organization should

consult with appropriate private sector interests in that country.

The agreement would establish seaport and vessel security measures and could include—

‘‘(1) seaport screening of cargo and baggage similar to that

done at airports;

120 STAT. 1684 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(2) security measures to restrict access to cargo, vessels,

and dockside property to authorized personnel only;

‘‘(3) additional security on board vessels;

‘‘(4) licensing or certification of compliance with appropriate

security standards; and

‘‘(5) other appropriate measures to prevent unlawful acts

against passengers and crews on vessels.

‘‘§ 70303. Security standards at foreign ports

‘‘(a) GENERAL REQUIREMENTS.—The Secretary shall develop and

implement a plan to assess the effectiveness of the security measures maintained at foreign ports that the Secretary, in consultation

with the Secretary of State, determines pose a high risk of acts

of terrorism against passenger vessels. In carrying out this subsection, the Secretary shall consult with the Secretary of State

about the terrorist threat that exists in each country and poses

a high risk of acts of terrorism against passenger vessels.

‘‘(b) NOTICE AND RECOMMENDATIONS TO OTHER COUNTRIES.—

If the Secretary, after implementing the plan under subsection

(a), determines that a port does not maintain and administer effective security measures, the Secretary of State (after being informed

by the Secretary) shall—

‘‘(1) notify the appropriate government authorities of the

country in which the port is located of the determination;

and

‘‘(2) recommend steps necessary to bring the security measures at that port up to the standard used by the Secretary

in making the assessment under subsection (a).

‘‘(c) ANTITERRORISM ASSISTANCE.—The President is encouraged

to provide antiterrorism assistance related to maritime security

under chapter 8 of part II of the Foreign Assistance Act of 1961

(22 U.S.C. 2349aa et seq.) to foreign countries, especially for a

port that the Secretary determines under subsection (b) does not

maintain and administer effective security measures.

‘‘§ 70304. Travel advisories on security at foreign ports

‘‘(a) GENERAL REQUIREMENTS.—On being notified by the Secretary that the Secretary has determined that a condition exists

that threatens the safety or security of passengers, passenger vessels, or crew traveling to or from a foreign port that the Secretary

has determined under section 70303(b) of this title does not maintain and administer effective security measures, the Secretary of

State immediately shall issue a travel advisory for that port. The

Secretary of State shall take the necessary steps to widely publicize

the travel advisory.

‘‘(b) LIFTING ADVISORIES.—A travel advisory issued under subsection (a) may be lifted only if the Secretary, in consultation

with the Secretary of State, has determined that effective security

measures are maintained and administered at the port.

‘‘(c) NOTICE TO CONGRESS.—The Secretary of State shall notify

Congress immediately of any change in the status of a travel

advisory issued under this section.

‘‘§ 70305. Suspension of passenger services

‘‘(a) GENERAL AUTHORITY.—Whenever the President determines

that a foreign nation permits the use of territory under its jurisdiction as a base of operations or training for, or as a sanctuary

Notification.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1685

for, or in any way arms, aids, or abets, a terrorist or terrorist

group that knowingly uses the illegal seizure of passenger vessels

or the threat thereof as an instrument of policy, the President

may suspend the right of any passenger vessel common carrier

to operate to or from, and the right of any passenger vessel of

the United States to use, a port in that foreign nation for passenger

service. The suspension may be without notice or hearing and

for as long as the President determines is necessary to ensure

the security of passenger vessels against unlawful seizure.

‘‘(b) PROHIBITION.—A passenger vessel common carrier, or a

passenger vessel of the United States, may not operate in violation

of a suspension under this section.

‘‘(c) PENALTIES.— ‘‘(1) DENIAL OF ENTRY.—If a person operates a vessel in

violation of this section, the Secretary may deny the vessels

of that person entry to ports of the United States.

‘‘(2) CIVIL PENALTY.—A person violating this section is liable

to the United States Government for a civil penalty of not

more than $50,000. Each day a vessel uses a prohibited port

is a separate violation.

‘‘§ 70306. Report on terrorist threats

‘‘(a) CONTENT.—Not later than February 28 of each year, the

Secretary shall submit a report to Congress on the threat from

acts of terrorism to United States ports and vessels operating

from those ports. The Secretary shall include a description of activities undertaken under title I of the Maritime Transportation Security Act of 2002 (Public Law 107–295, 116 Stat. 2066) and an

analysis of the effect of those activities on port security against

acts of terrorism.

‘‘(b) SUBMISSION.—The report shall be submitted to the Committee on International Relations and the Committee on Transportation and Infrastructure of the House of Representatives and the

Committee on Foreign Relations and the Committee on Commerce,

Science, and Transportation of the Senate. Any classified information in the report shall be submitted separately as an addendum.

‘‘CHAPTER 705—MARITIME DRUG LAW ENFORCEMENT

‘‘Sec.

‘‘70501. Findings and declarations.

‘‘70502. Definitions.

‘‘70503. Manufacture, distribution, or possession of controlled substances on vessels.

‘‘70504. Jurisdiction and venue.

‘‘70505. Failure to comply with international law as a defense.

‘‘70506. Penalties.

‘‘70507. Forfeitures.

‘‘§ 70501. Findings and declarations

‘‘Congress finds and declares that trafficking in controlled substances aboard vessels is a serious international problem, is universally condemned, and presents a specific threat to the security

and societal well-being of the United States.

‘‘§ 70502. Definitions

‘‘(a) APPLICATION OF OTHER DEFINITIONS.—The definitions in

section 102 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 802) apply to this chapter.

Confidential

information.

120 STAT. 1686 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(b) VESSEL OF THE UNITED STATES.—In this chapter, the term

‘vessel of the United States’ means—

‘‘(1) a vessel documented under chapter 121 of this title

or numbered as provided in chapter 123 of this title;

‘‘(2) a vessel owned in any part by an individual who

is a citizen of the United States, the United States Government,

the government of a State or political subdivision of a State,

or a corporation incorporated under the laws of the United

States or of a State, unless—

‘‘(A) the vessel has been granted the nationality of

a foreign nation under article 5 of the 1958 Convention

on the High Seas; and

‘‘(B) a claim of nationality or registry for the vessel

is made by the master or individual in charge at the

time of the enforcement action by an officer or employee

of the United States who is authorized to enforce applicable

provisions of United States law; and

‘‘(3) a vessel that was once documented under the laws

of the United States and, in violation of the laws of the United

States, was sold to a person not a citizen of the United States,

placed under foreign registry, or operated under the authority

of a foreign nation, whether or not the vessel has been granted

the nationality of a foreign nation.

‘‘(c) VESSEL SUBJECT TO THE JURISDICTION OF THE UNITED

STATES.—

‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel subject

to the jurisdiction of the United States’ includes—

‘‘(A) a vessel without nationality;

‘‘(B) a vessel assimilated to a vessel without nationality

under paragraph (2) of article 6 of the 1958 Convention

on the High Seas;

‘‘(C) a vessel registered in a foreign nation if that

nation has consented or waived objection to the enforcement of United States law by the United States;

‘‘(D) a vessel in the customs waters of the United

States;

‘‘(E) a vessel in the territorial waters of a foreign

nation if the nation consents to the enforcement of United

States law by the United States; and

‘‘(F) a vessel in the contiguous zone of the United

States, as defined in Presidential Proclamation 7219 of

September 2, 1999 (43 U.S.C. 1331 note), that—

‘‘(i) is entering the United States;

‘‘(ii) has departed the United States; or

‘‘(iii) is a hovering vessel as defined in section

401 of the Tariff Act of 1930 (19 U.S.C. 1401).

‘‘(2) CONSENT OR WAIVER OF OBJECTION.—Consent or waiver

of objection by a foreign nation to the enforcement of United

States law by the United States under paragraph (1)(C) or

(E)—

‘‘(A) may be obtained by radio, telephone, or similar

oral or electronic means; and

‘‘(B) is proved conclusively by certification of the Secretary of State or the Secretary’s designee.

‘‘(d) VESSEL WITHOUT NATIONALITY.— ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel without

nationality’ includes—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1687

‘‘(A) a vessel aboard which the master or individual

in charge makes a claim of registry that is denied by

the nation whose registry is claimed;

‘‘(B) a vessel aboard which the master or individual

in charge fails, on request of an officer of the United

States authorized to enforce applicable provisions of United

States law, to make a claim of nationality or registry for

that vessel; and

‘‘(C) a vessel aboard which the master or individual

in charge makes a claim of registry and for which the

claimed nation of registry does not affirmatively and

unequivocally assert that the vessel is of its nationality.

‘‘(2) VERIFICATION OR DENIAL.—A claim of registry under

paragraph (1)(A) or (C) may be verified or denied by radio,

telephone, or similar oral or electronic means. The denial of

such a claim is proved conclusively by certification of the Secretary of State or the Secretary’s designee.

‘‘(e) CLAIM OF NATIONALITY OR REGISTRY.—A claim of nationality or registry under this section includes only—

‘‘(1) possession on board the vessel and production of documents evidencing the vessel’s nationality as provided in article

5 of the 1958 Convention on the High Seas;

‘‘(2) flying its nation’s ensign or flag; or

‘‘(3) a verbal claim of nationality or registry by the master

or individual in charge of the vessel.

‘‘§ 70503. Manufacture, distribution, or possession of controlled substances on vessels

‘‘(a) PROHIBITIONS.—An individual may not knowingly or intentionally manufacture or distribute, or possess with intent to manufacture or distribute, a controlled substance on board—

‘‘(1) a vessel of the United States or a vessel subject to

the jurisdiction of the United States; or

‘‘(2) any vessel if the individual is a citizen of the United

States or a resident alien of the United States.

‘‘(b) EXTENSION BEYOND TERRITORIAL JURISDICTION.—Subsection (a) applies even though the act is committed outside the

territorial jurisdiction of the United States.

‘‘(c) NONAPPLICATION.—

‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection (a)

does not apply to—

‘‘(A) a common or contract carrier or an employee of

the carrier who possesses or distributes a controlled substance in the lawful and usual course of the carrier’s business; or

‘‘(B) a public vessel of the United States or an individual on board the vessel who possesses or distributes

a controlled substance in the lawful course of the individual’s duties.

‘‘(2) ENTERED IN MANIFEST.—Paragraph (1) applies only

if the controlled substance is part of the cargo entered in

the vessel’s manifest and is intended to be imported lawfully

into the country of destination for scientific, medical, or other

lawful purposes.

‘‘(d) BURDEN OF PROOF.—The United States Government is

not required to negative a defense provided by subsection (c) in

a complaint, information, indictment, or other pleading or in a

120 STAT. 1688 PUBLIC LAW 109–304—OCT. 6, 2006

trial or other proceeding. The burden of going forward with the

evidence supporting the defense is on the person claiming its benefit.

‘‘§ 70504. Jurisdiction and venue

‘‘(a) JURISDICTION.—Jurisdiction of the United States with

respect to a vessel subject to this chapter is not an element of

an offense. Jurisdictional issues arising under this chapter are

preliminary questions of law to be determined solely by the trial

judge.

‘‘(b) VENUE.—A person violating section 70503 of this title shall

be tried in the district court of the United States for—

‘‘(1) the district at which the person enters the United

States; or

‘‘(2) the District of Columbia.

‘‘§ 70505. Failure to comply with international law as a

defense

‘‘A person charged with violating section 70503 of this title

does not have standing to raise a claim of failure to comply with

international law as a basis for a defense. A claim of failure to

comply with international law in the enforcement of this chapter

may be made only by a foreign nation. A failure to comply with

international law does not divest a court of jurisdiction and is

not a defense to a proceeding under this chapter.

‘‘§ 70506. Penalties

‘‘(a) VIOLATIONS.—A person violating section 70503 of this title

shall be punished as provided in section 1010 of the Comprehensive

Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 960).

However, if the offense is a second or subsequent offense as provided

in section 1012(b) of that Act (21 U.S.C. 962(b)), the person shall

be punished as provided in section 1012 of that Act (21 U.S.C.

962).

‘‘(b) ATTEMPTS AND CONSPIRACIES.—A person attempting or

conspiring to violate section 70503 of this title is subject to the

same penalties as provided for violating section 70503.

‘‘§ 70507. Forfeitures

‘‘(a) IN GENERAL.—Property described in section 511(a) of the

Comprehensive Drug Abuse Prevention and Control Act of 1970

(21 U.S.C. 881(a)) that is used or intended for use to commit,

or to facilitate the commission of, an offense under section 70503

of this title may be seized and forfeited in the same manner that

similar property may be seized and forfeited under section 511

of that Act (21 U.S.C. 881).

‘‘(b) PRIMA FACIE EVIDENCE OF VIOLATION.—Practices commonly

recognized as smuggling tactics may provide prima facie evidence

of intent to use a vessel to commit, or to facilitate the commission

of, an offense under section 70503 of this title, and may support

seizure and forfeiture of the vessel, even in the absence of controlled

substances aboard the vessel. The following indicia, among others,

may be considered, in the totality of the circumstances, to be prima

facie evidence that a vessel is intended to be used to commit,

or to facilitate the commission of, such an offense:

‘‘(1) The construction or adaptation of the vessel in a

manner that facilitates smuggling, including—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1689

‘‘(A) the configuration of the vessel to ride low in the

water or present a low hull profile to avoid being detected

visually or by radar;

‘‘(B) the presence of any compartment or equipment

that is built or fitted out for smuggling, not including

items such as a safe or lock-box reasonably used for the

storage of personal valuables;

‘‘(C) the presence of an auxiliary tank not installed

in accordance with applicable law or installed in such a

manner as to enhance the vessel’s smuggling capability;

‘‘(D) the presence of engines that are excessively overpowered in relation to the design and size of the vessel;

‘‘(E) the presence of materials used to reduce or alter

the heat or radar signature of the vessel and avoid detection;

‘‘(F) the presence of a camouflaging paint scheme, or

of materials used to camouflage the vessel, to avoid detection; or

‘‘(G) the display of false vessel registration numbers,

false indicia of vessel nationality, false vessel name, or

false vessel homeport.

‘‘(2) The presence or absence of equipment, personnel, or

cargo inconsistent with the type or declared purpose of the

vessel.

‘‘(3) The presence of excessive fuel, lube oil, food, water,

or spare parts, inconsistent with legitimate vessel operation,

inconsistent with the construction or equipment of the vessel,

or inconsistent with the character of the vessel’s stated purpose.

‘‘(4) The operation of the vessel without lights during times

lights are required to be displayed under applicable law or

regulation and in a manner of navigation consistent with smuggling tactics used to avoid detection by law enforcement authorities.

‘‘(5) The failure of the vessel to stop or respond or heave

to when hailed by government authority, especially where the

vessel conducts evasive maneuvering when hailed.

‘‘(6) The declaration to government authority of apparently

false information about the vessel, crew, or voyage or the failure

to identify the vessel by name or country of registration when

requested to do so by government authority.

‘‘(7) The presence of controlled substance residue on the

vessel, on an item aboard the vessel, or on an individual aboard

the vessel, of a quantity or other nature that reasonably

indicates manufacturing or distribution activity.

‘‘(8) The use of petroleum products or other substances

on the vessel to foil the detection of controlled substance residue.

‘‘(9) The presence of a controlled substance in the water

in the vicinity of the vessel, where given the currents, weather

conditions, and course and speed of the vessel, the quantity

or other nature is such that it reasonably indicates manufacturing or distribution activity.’’.

SEC. 11. SUBTITLE VIII OF TITLE 46.

Title 46, United States Code, is amended by adding after subtitle VII the following:

120 STAT. 1690 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘Subtitle VIII—Miscellaneous

‘‘Chapter Sec.

‘‘801. Wrecks and Salvage ............................................................................... 80101

‘‘803. Ice and Derelicts ..................................................................................... 80301

‘‘805. Safe Containers for International Cargo .......................................... 80501

‘‘CHAPTER 801—WRECKS AND SALVAGE

‘‘Sec.

‘‘80101. Vessel stranded on foreign coast.

‘‘80102. License to salvage on Florida coast.

‘‘80103. Property on Florida coast to be taken to port of entry.

‘‘80104. Salvaging operations by foreign vessels.

‘‘80105. Canadian vessels aiding vessels in United States waters.

‘‘80106. International agreement on derelicts.

‘‘80107. Salvors of life to share in remuneration.

‘‘§ 80101. Vessel stranded on foreign coast

‘‘(a) DUTIES OF CONSULAR OFFICER.—When a vessel of the

United States is stranded on a coast of a foreign country, the

consular officer in that country shall take proper measures, to

the extent the laws of that country allow, to—

‘‘(1) save and secure the vessel and property on the vessel;

and

‘‘(2) prepare an inventory of the property that is saved.

‘‘(b) DELIVERY TO OWNER.—After deducting the expenses, the

consular officer shall deliver the property, with an inventory, to

the owner of the property.

‘‘(c) LIMITATION ON TAKING POSSESSION.—A consular officer

may not take possession of property under this section when the

owner, master, or consignee is present or able to take possession

of the property.

‘‘§ 80102. License to salvage on Florida coast

‘‘(a) LICENSING REQUIREMENTS.—To be regularly employed in

the business of salvaging on the coast of Florida, a vessel and

its master each must have a license issued by a judge of the

district court of the United States for a judicial district of Florida.

‘‘(b) JUDICIAL FINDINGS.—Before issuing a license under this

section, the judge must be satisfied, when the license is for—

‘‘(1) a vessel, that the vessel is seaworthy and properly

equipped for the business of saving property shipwrecked and

in distress; or

‘‘(2) a master, that the master is trustworthy and innocent

of any fraud or misconduct related to property shipwrecked

or saved on the coast.

‘‘§ 80103. Property on Florida coast to be taken to port of

entry

‘‘(a) IN GENERAL.—Property taken from a wreck, the sea, or

a key or shoal, on the coast of Florida and within the jurisdiction

of the United States, shall be brought to a port of entry of the

United States.

‘‘(b) SEIZURE AND FORFEITURE.—A vessel transporting property

described in subsection (a) to a foreign port may be seized by,

and forfeited to, the United States Government. A forfeiture under

this subsection accrues half to the informer and half to the Government.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1691

‘‘§ 80104. Salvaging operations by foreign vessels

‘‘(a) PROHIBITION.—Except as provided in this section or section

80105 of this title, a foreign vessel may not, under penalty of

forfeiture, engage in salvaging operations on the Atlantic or Pacific

coast of the United States, in any portion of the Great Lakes

or their connecting or tributary waters, including any portion of

the Saint Lawrence River through which the international boundary

line extends, or in territorial waters of the United States on the

Gulf of Mexico.

‘‘(b) WHEN SUITABLE VESSEL NOT AVAILABLE.—The Secretary

of Homeland Security may authorize a foreign vessel to engage

in salvaging operations in a particular locality if, on investigation,

the Secretary is satisfied that there is not available in that locality

a suitable vessel that is—

‘‘(1) owned only by citizens of the United States (including

a Bowaters corporation under section 12118 of this title); and

‘‘(2) documented under chapter 121 of this title or numbered

under chapter 123 of this title.

‘‘(c) OPERATIONS AUTHORIZED BY TREATY.—This section does

not prohibit or restrict assistance to vessels or salvaging operations

authorized by treaty, including—

‘‘(1) article II of the Treaty between the United States

and Great Britain concerning reciprocal rights for United States

and Canada in the conveyance of prisoners and wrecking and

salvage, signed at Washington, May 18, 1908 (35 Stat. 2036);

or

‘‘(2) the Treaty between the United States of America and

Mexico to facilitate assistance to and salvage of vessels in

territorial waters, signed at Mexico City, June 13, 1935 (49

Stat. 3359).

‘‘§ 80105. Canadian vessels aiding vessels in United States

waters

‘‘(a) IN GENERAL.—Canadian vessels and wrecking equipment

may give aid to Canadian or other vessels and property wrecked,

disabled, or in distress in the waters of the United States contiguous

to Canada, including—

‘‘(1) the canal and improvement of the waters between

Lake Erie and Lake Huron; and

‘‘(2) the Saint Marys River and canal.

‘‘(b) RECIPROCITY.—This section does not apply after the President proclaims that privileges reciprocal to those under subsection

(a) have been withdrawn or rendered inoperative by the Government

of Canada.

‘‘§ 80106. International agreement on derelicts

‘‘The President may make an international agreement with

other governments interested in the navigation of the North Atlantic

Ocean, providing for the reporting, marking, and removal of dangerous wrecks, derelicts, and other menaces to navigation outside

the coast waters of the countries bordering the North Atlantic

Ocean.

‘‘§ 80107. Salvors of life to share in remuneration

‘‘(a) ENTITLEMENT OF SALVORS.—A salvor of human life, who

gave aid following an accident giving rise to salvage, is entitled

to a fair share of the payment awarded to the salvor for salvaging

Mexico.

Great Britain.

120 STAT. 1692 PUBLIC LAW 109–304—OCT. 6, 2006

the vessel or other property or preventing or minimizing damage

to the environment.

‘‘(b) COMMON OWNERSHIP OF VESSELS.—The right to remuneration for aid or salvage services is not affected by common ownership

of the vessels giving and receiving the aid or salvage services.

‘‘(c) TIME LIMIT ON BRINGING ACTIONS.—A civil action to recover

remuneration for giving aid or salvage services must be brought

within 2 years after the date the aid or salvage services were

given, unless the court in which the action is brought is satisfied

that during that 2-year period there had not been a reasonable

opportunity to seize the aided or salvaged vessel within the jurisdiction of the court or within the territorial waters of the country

of the plaintiff’s residence or principal place of business.

‘‘(d) NONAPPLICATION.—This section does not apply to a vessel

of war or a vessel owned by the United States Government appropriated only to a public service.

‘‘CHAPTER 803—ICE AND DERELICTS

‘‘Sec.

‘‘80301. International agreements.

‘‘80302. Patrol services.

‘‘80303. Speed of vessel in ice region.

‘‘§ 80301. International agreements

‘‘(a) GENERAL AUTHORITY.—The President may make agreements with interested maritime countries to—

‘‘(1) maintain in the North Atlantic Ocean a service of

ice patrol, of study and observation of ice and current conditions, and of assistance to vessels and their crews requiring

assistance within the limits of the patrol;

‘‘(2) maintain a service of study and observation of ice

and current conditions in the waters affecting the set and

drift of ice in the North Atlantic Ocean; and

‘‘(3) take all practicable steps to ensure the destruction

or removal of derelicts in the northern part of the Atlantic

Ocean, east of the line drawn from Cape Sable to a point

in latitude 34 degrees north, longitude 70 degrees west, if

the destruction or removal is necessary.

‘‘(b) PAYMENT BETWEEN COUNTRIES.—The President may

include in an agreement under subsection (a) a provision for—

‘‘(1) payment to the United States Government by other

countries for their proportionate share of the expense of

maintaining the services; or

‘‘(2) contribution by the Government for its proportionate

share if the agreement provides for another country to maintain

the services.

‘‘§ 80302. Patrol services

‘‘(a) GENERAL REQUIREMENTS.—Unless the agreements made

under section 80301 of this title provide otherwise, an ice patrol

shall be maintained during the entire ice season in guarding the

southeastern, southern, and southwestern limits of the region of

icebergs in the vicinity of the Grand Banks of Newfoundland. The

patrol shall inform trans-Atlantic and other passing vessels by

radio and other available means of the ice conditions and the

extent of the dangerous region. During the ice season, there shall

be maintained a service of study of ice and current conditions,

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1693

a service of providing assistance to vessels and crews requiring

assistance, and a service of removing and destroying derelicts.

Any of these services may be maintained during the remainder

of the year as may be advisable.

‘‘(b) WARNINGS TO VESSELS.—An ice patrol vessel shall warn

any vessel known to be approaching a dangerous area and recommend safe routes.

‘‘(c) RECORDING AND REPORTING INCIDENTS.— ‘‘(1) RECORDING.—An ice patrol vessel shall record the name

of a vessel and the facts of the case when the patrol observes

or knows that the vessel—

‘‘(A) is on other than a regular recognized or advertised

route crossing the North Atlantic Ocean;

‘‘(B) has crossed the fishing banks of Newfoundland

north of latitude 43 degrees north during the fishing season; or

‘‘(C) has passed through regions known or believed

to be endangered by ice when proceeding to and from

ports of North America.

‘‘(2) REPORTING.—The name of the vessel and all pertinent

information about the incident shall be reported to the government of the country to which the vessel belongs if that government requests.

‘‘(d) ADMINISTRATION.—The Commandant of the Coast Guard,

under the direction of the Secretary of the department in which

the Coast Guard is operating, shall carry out the services provided

for in this section and shall assign necessary vessels, material,

and personnel of the Coast Guard. On request of such Secretary,

the head of an agency may detail personnel, lend or contribute

material or equipment, or otherwise assist in carrying out the

services provided for in this section.

‘‘(e) ANNUAL REPORT.—The Commandant shall publish an

annual report of the activities of the services provided for in this

section. A copy of the report shall be provided to each interested

foreign government and to each agency assisting in the work.

‘‘§ 80303. Speed of vessel in ice region

‘‘(a) REQUIREMENT.—The master of a vessel of the United

States, when ice is reported on or near the vessel’s course, shall

proceed at a moderate speed or change the course of the vessel

to go well clear of the danger zone.

‘‘(b) CIVIL PENALTY.—A master violating this section is liable

to the United States Government for a civil penalty of not more

than $500.

‘‘CHAPTER 805—SAFE CONTAINERS FOR

INTERNATIONAL CARGO

‘‘Sec.

‘‘80501. Definitions.

‘‘80502. Application of Convention.

‘‘80503. General authority of the Secretary.

‘‘80504. Approval and examination.

‘‘80505. Enforcement.

‘‘80506. Delegation of authority.

‘‘80507. Employee protection.

‘‘80508. Amendments to Convention.

‘‘80509. Civil penalty.

120 STAT. 1694 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘§ 80501. Definitions

‘‘In this chapter:

‘‘(1) CONTAINER.—The term ‘container’ has the meaning

given that term in the Convention.

‘‘(2) CONVENTION.—The term ‘Convention’ means the International Convention for Safe Containers, and its annexes, done

at Geneva, Switzerland, December 2, 1972.

‘‘(3) INTERNATIONAL TRANSPORT.—The term ‘international

transport’ means the transportation of a container between—

‘‘(A) a place in a foreign country and a place in the

jurisdiction of the United States; or

‘‘(B) two places outside the United States by United

States carriers.

‘‘(4) OWNER.—The term ‘owner’ includes the lessee or bailee

of a container if a written lease or bailment provides for the

lessee or bailee to exercise the owner’s responsibility for

maintaining and examining the container.

‘‘(5) SAFETY APPROVAL PLATE.—The term ‘safety approval

plate’ has the meaning given that term in annex I of the

Convention.

‘‘§ 80502. Application of Convention

‘‘The Convention applies to an owner of a container used in

international transport if the owner is domiciled or has its principal

office in the United States.

‘‘§ 80503. General authority of the Secretary

‘‘(a) IN GENERAL.—The Secretary of the department in which

the Coast Guard is operating shall carry out the Convention and

this chapter in the United States.

‘‘(b) REGULATIONS.—The Secretary shall prescribe regulations

to carry out this chapter. The regulations shall—

‘‘(1) establish procedures for testing, inspecting, and initially approving containers and designs for containers, including

procedures for attaching, invalidating, and removing safety

approval plates for containers;

‘‘(2) establish procedures to be followed by the owners of

containers for the periodic examination of containers as provided in the Convention; and

‘‘(3) provide a method for developing, collecting, and

disseminating information about container safety and the international transport of containers.

‘‘(c) SAFETY APPROVAL PLATES.—If the owner of a container

without a safety approval plate establishes that the container satisfies the standards of the Convention, the Secretary may authorize

a safety approval plate to be attached to the container.

‘‘(d) SCHEDULE OF FEES.—The Secretary may prescribe a

schedule of fees for services performed by the Secretary, or by

a person delegated authority under section 80506 of this title,

for the testing, inspection, and initial approval of containers and

container designs.

‘‘(e) ENCOURAGING INTERMODAL TRANSPORT.—To the maximum

extent possible, the Secretary shall encourage the development

and use of intermodal transport, using containers built to facilitate

economical, safe, and expeditious handling of containerized cargo

without intermediate reloading when it is being transported over

land, air, and sea areas.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1695

‘‘§ 80504. Approval and examination

‘‘(a) DOMICILE AND PRINCIPAL OFFICE IN UNITED STATES.—

A container owner domiciled and having its principal office in

the United States shall have the container—

‘‘(1) approved initially under procedures prescribed by the

Secretary of the department in which the Coast Guard is operating or by the government of another country that is a party

to the Convention; and

‘‘(2) examined periodically as provided in the Convention

under procedures prescribed by the Secretary.

‘‘(b) DOMICILE OR PRINCIPAL OFFICE IN UNITED STATES.—A

container owner domiciled or having its principal office in the

United States shall have the container—

‘‘(1) approved initially under procedures prescribed by the

Secretary or by the government of another country that is

a party to the Convention; and

‘‘(2) examined periodically as provided in the Convention,

under procedures prescribed by the government of the country

in which the owner is domiciled or has its principal office,

as long as that country is a party to the Convention.

‘‘(c) NEITHER DOMICILE NOR PRINCIPAL OFFICE IN UNITED

STATES.—A container owner neither domiciled nor having its principal office in the United States or another country that is a

party to the Convention may submit a container for initial approval

and periodic examination under procedures prescribed by the Secretary.

‘‘§ 80505. Enforcement

‘‘(a) IN GENERAL.—To enforce the Convention, this chapter,

and regulations prescribed under this chapter, the Secretary of

the department in which the Coast Guard is operating may—

‘‘(1) examine, or require to be examined, containers in

international transport;

‘‘(2) approve designs for containers;

‘‘(3) inspect and test containers being manufactured;

‘‘(4) issue a detention order removing or excluding a container from service until the container owner satisfies the Secretary that the container meets the standards of the Convention, if the container—

‘‘(A) does not have a safety approval plate attached

to it; or

‘‘(B) has a safety approval plate attached but there

is significant evidence that the container is in a condition

that creates an obvious risk to safety;

‘‘(5) take other appropriate action, including issuing necessary orders, to remove a container from service or restrict

its use if the container is not in compliance with the Convention,

this chapter, or regulations prescribed under this chapter, but

does not present an obvious risk to safety; and

‘‘(6) allow a container found to be unsafe or without a

safety approval plate to be moved to another location for repair

or other disposition, under restrictions consistent with the

intent of the Convention.

‘‘(b) PAYMENT OF EXPENSES.—

‘‘(1) EXAMINATION.—The owner of a container involved in

an action by the Secretary under this section related to an

120 STAT. 1696 PUBLIC LAW 109–304—OCT. 6, 2006

examination of the container shall pay or reimburse the Secretary for the expenses arising from that action, except for

the costs of routine examinations of the container or a safety

approval plate.

‘‘(2) TESTING, INSPECTION, AND INITIAL APPROVAL.—The

owner of a container submitted to the procedure established

by the Secretary for testing, inspection, and initial approval,

and the manufacturer of a container that submits a design

to the procedure established by the Secretary for testing, inspection, and initial approval, shall pay or reimburse the Secretary

for the expenses arising from the testing, inspection, or

approval.

‘‘(3) CREDIT TO APPROPRIATION.—Amounts received by the

Secretary as reimbursement shall be credited to the appropriation for operating expenses of the Coast Guard.

‘‘(c) PRESUMPTION BASED ON SAFETY APPROVAL PLATE.—A container bearing a safety approval plate authorized by a country

that is a party to the Convention is presumed to be in a safe

condition unless there is significant evidence that the container

is in a condition that creates an obvious risk to safety.

‘‘(d) NOTICE OF ORDERS.—

‘‘(1) IN GENERAL.—When the Secretary issues a detention

or other order under this section, the Secretary promptly shall

notify in writing—

‘‘(A) the owner of the container;

‘‘(B) the owner’s agent; or

‘‘(C) if the identity of the owner is not apparent from

the container or shipping documents, the custodian.

‘‘(2) INFORMATION TO INCLUDE.—The notification shall identify the container involved, give the location of the container,

and describe the condition or situation giving rise to the order.

‘‘(e) DURATION OF ORDERS.—An order issued by the Secretary

under this section remains in effect until—

‘‘(1) the Secretary declares the container to be in compliance

with the standards of the Convention; or

‘‘(2) the container is removed permanently from service.

‘‘(f) NOTICE OF DEFECTIVE CONTAINER TO COUNTRY ISSUING

SAFETY APPROVAL PLATE.—If the Secretary has reason to believe

that a container bearing a safety approval plate issued by another

country was defective at the time of approval, the Secretary shall

notify that country.

‘‘§ 80506. Delegation of authority

‘‘(a) IN GENERAL.—The Secretary of the department in which

the Coast Guard is operating may delegate to any person, including

a public or private agency or nonprofit organization, authority to

grant initial approval for containers and designs and to attach

safety approval plates.

‘‘(b) REGULATIONS.—Before making a delegation under this section, the Secretary shall prescribe regulations establishing—

‘‘(1) criteria to be followed in selecting a person to whom

authority is to be delegated;

‘‘(2) a detailed description of the duties and powers to

be carried out by the person to whom authority is delegated,

including the records the person shall keep; and

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1697

‘‘(3) the review the Secretary will conduct to decide whether

the person is carrying out the delegated duties and powers

properly.

‘‘(c) INSPECTION OF RECORDS.—A person delegated authority

under this section shall make available to the Secretary for inspection, on request, records the person is required to keep.

‘‘(d) PENALTIES AND ORDERS.—A person delegated authority

under this section may not—

‘‘(1) assess or collect, or attempt to assess or collect, a

penalty for violation of the Convention, this chapter, or an

order issued by the Secretary under this chapter; or

‘‘(2) issue or attempt to issue a detention or other order.

‘‘(e) PUBLICATION.—The Secretary shall publish in the Federal

Register or other appropriate publication—

‘‘(1) the name and address of each person to whom authority

is delegated;

‘‘(2) the duties and powers delegated; and

‘‘(3) the period of the delegation.

‘‘(f) REVOCATION.—The Secretary may revoke a delegation of

authority under this section at any time.

‘‘§ 80507. Employee protection

‘‘(a) PROHIBITION.—A person may not discharge or discriminate

against an employee because the employee has reported the existence of an unsafe container or a violation of this chapter or a

regulation prescribed under this chapter.

‘‘(b) COMPLAINTS.—An employee alleging to have been discharged or discriminated against in violation of subsection (a) may

file a complaint with the Secretary of Labor. The complaint must

be filed within 60 days after the violation.

‘‘(c) ENFORCEMENT.—The Secretary of Labor may investigate

the complaint. If the Secretary of Labor finds there has been a

violation, the Secretary of Labor may bring a civil action in an

appropriate district court of the United States. The court has jurisdiction to restrain violations of subsection (a) and order appropriate

relief, including reinstatement of the employee to the employee’s

former position with back pay.

‘‘(d) NOTICE TO COMPLAINANT.—Within 30 days after receiving

a complaint under this section, the Secretary of Labor shall notify

the complainant of the intended action on the complaint.

‘‘§ 80508. Amendments to Convention

‘‘(a) PROPOSALS BY UNITED STATES.—The Secretary of State,

with the concurrence of the Secretary of the department in which

the Coast Guard is operating, may propose amendments to the

Convention or request a conference for amending the Convention

as provided in article IX of the Convention.

‘‘(b) PROPOSALS BY OTHER COUNTRIES.—An amendment communicated to the United States under article IX(2) of the Convention

may be accepted for the United States by the President, with

the advice and consent of the Senate. The President may declare

that the United States does not accept an amendment.

‘‘(c) AMENDMENTS TO ANNEXES.—

‘‘(1) IN GENERAL.—The Secretary of State, with the concurrence of the Secretary of the department in which the Coast

Guard is operating—

Deadline.

Deadline.

Federal Register,

publication.

120 STAT. 1698 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(A) may propose amendments to the annexes to the

Convention;

‘‘(B) may propose a conference for amending annexes

to the Convention; and

‘‘(C) shall consider and act on amendments to the

annexes to the Convention adopted by the Maritime Safety

Committee of the International Maritime Organization and

communicated to the United States under article X(2) of

the Convention.

‘‘(2) ACTION FOLLOWING APPROVAL OR OBJECTION.—If a proposed amendment to an annex is approved by the United States,

the amendment shall enter into force as provided in article

X of the Convention. If a proposed amendment is objected

to, the Secretary of State promptly shall communicate the

objection as provided in article X(3) of the Convention.

‘‘(d) APPOINTMENT OF ARBITRATOR.—The Secretary of State,

with the concurrence of the Secretary of the department in which

the Coast Guard is operating, shall appoint an arbitrator when

one is required to resolve a dispute within the meaning of article

XIII of the Convention.

‘‘§ 80509. Civil penalty

‘‘(a) IN GENERAL.—An owner, agent, or custodian who has been

notified of an order issued under section 80505 of this title and

fails to take reasonable and prompt action to prevent or stop a

container subject to the order from being moved in violation of

the order is liable to the United States Government for a civil

penalty of not more than $5,000 for each container moved. Each

day the container remains in service while the order is in effect

is a separate violation.

‘‘(b) ASSESSMENT AND COLLECTION.—

‘‘(1) IN GENERAL.—After notice and an opportunity for a

hearing, the Secretary of the department in which the Coast

Guard is operating shall assess and collect any penalty under

this section.

‘‘(2) FACTORS TO CONSIDER.—In determining the amount

of the penalty, the Secretary shall consider the gravity of the

violation, the hazards involved, and the record of the person

charged with respect to violations of the Convention, this

chapter, or regulations prescribed under this chapter.

‘‘(3) REMISSION, MITIGATION, OR COMPROMISE.—The Secretary may remit, mitigate, or compromise a penalty under

this section.

‘‘(4) ENFORCEMENT.—If a person fails to pay a penalty

under this section, the Secretary shall refer the matter to

the Attorney General for collection in an appropriate district

court of the United States.’’.

SEC. 12. MARITIME ADMINISTRATION.

Section 109 of title 49, United States Code, is amended to

read as follows:

‘‘§ 109. Maritime Administration

‘‘(a) ORGANIZATION.—The Maritime Administration is an

administration in the Department of Transportation.

‘‘(b) MARITIME ADMINISTRATOR.—The head of the Maritime

Administration is the Maritime Administrator, who is appointed

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1699

by the President by and with the advice and consent of the Senate.

The Administrator shall report directly to the Secretary of Transportation and carry out the duties prescribed by the Secretary.

‘‘(c) DEPUTY MARITIME ADMINISTRATOR.—The Maritime

Administration shall have a Deputy Maritime Administrator, who

is appointed in the competitive service by the Secretary, after

consultation with the Administrator. The Deputy Administrator

shall carry out the duties prescribed by the Administrator. The

Deputy Administrator shall be Acting Administrator during the

absence or disability of the Administrator and, unless the Secretary

designates another individual, during a vacancy in the office of

Administrator.

‘‘(d) DUTIES AND POWERS VESTED IN SECRETARY.—All duties

and powers of the Maritime Administration are vested in the Secretary.

‘‘(e) REGIONAL OFFICES.—The Maritime Administration shall

have regional offices for the Atlantic, Gulf, Great Lakes, and Pacific

port ranges, and may have other regional offices as necessary.

The Secretary shall appoint a qualified individual as Director of

each regional office. The Secretary shall carry out appropriate activities and programs of the Maritime Administration through the

regional offices.

‘‘(f) INTERAGENCY AND INDUSTRY RELATIONS.—The Secretary

shall establish and maintain liaison with other agencies, and with

representative trade organizations throughout the United States,

concerned with the transportation of commodities by water in the

export and import foreign commerce of the United States, for the

purpose of securing preference to vessels of the United States

for the transportation of those commodities.

‘‘(g) DETAILING OFFICERS FROM ARMED FORCES.—To assist the

Secretary in carrying out duties and powers relating to the Maritime

Administration, not more than five officers of the armed forces

may be detailed to the Secretary at any one time, in addition

to details authorized by any other law. During the period of a

detail, the Secretary shall pay the officer an amount that, when

added to the officer’s pay and allowances as an officer in the

armed forces, makes the officer’s total pay and allowances equal

to the amount that would be paid to an individual performing

work the Secretary considers to be of similar importance, difficulty,

and responsibility as that performed by the officer during the detail.

‘‘(h) CONTRACTS AND AUDITS.—

‘‘(1) CONTRACTS.—In the same manner that a private corporation may make a contract within the scope of its authority

under its charter, the Secretary may make contracts for the

United States Government and disburse amounts to—

‘‘(A) carry out the Secretary’s duties and powers under

this section and subtitle V of title 46; and

‘‘(B) protect, preserve, and improve collateral held by

the Secretary to secure indebtedness.

‘‘(2) AUDITS.—The financial transactions of the Secretary

under paragraph (1) shall be audited by the Comptroller General. The Comptroller General shall allow credit for an expenditure shown to be necessary because of the nature of the business

activities authorized by this section or subtitle V of title 46.

At least once a year, the Comptroller General shall report

to Congress any departure by the Secretary from this section

or subtitle V of title 46.

120 STAT. 1700 PUBLIC LAW 109–304—OCT. 6, 2006

‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— ‘‘(1) IN GENERAL.—Except as otherwise provided in this

subsection, there are authorized to be appropriated such

amounts as may be necessary to carry out the duties and

powers of the Secretary relating to the Maritime Administration.

‘‘(2) LIMITATIONS.—Only those amounts specifically authorized by law may be appropriated for the use of the Maritime

Administration for—

‘‘(A) acquisition, construction, or reconstruction of vessels;

‘‘(B) construction-differential subsidies incident to the

construction, reconstruction, or reconditioning of vessels;

‘‘(C) costs of national defense features;

‘‘(D) payments of obligations incurred for operatingdifferential subsidies;

‘‘(E) expenses necessary for research and development

activities, including reimbursement of the Vessel Operations Revolving Fund for losses resulting from expenses

of experimental vessel operations;

‘‘(F) the Vessel Operations Revolving Fund;

‘‘(G) National Defense Reserve Fleet expenses;

‘‘(H) expenses necessary to carry out part B of subtitle

V of title 46; and

‘‘(I) other operations and training expenses related to

the development of waterborne transportation systems, the

use of waterborne transportation systems, and general

administration.

‘‘(3) TRAINING VESSELS.—Amounts may not be appropriated

for the purchase or construction of training vessels for State

maritime academies unless the Secretary has approved a plan

for sharing training vessels between State maritime academies.’’.

SEC. 13. AMENDMENTS RELATING TO MARITIME SECURITY ACT OF

2003.

(a) AMENDMENTS TO CHAPTER 531.—Chapter 531 of title 46,

United States Code, is amended as follows:

(1) In section 53102—

(A) in the headings of paragraphs (1), (2), and (4)

of subsection (c), strike ‘‘SECTION 2’’ and substitute ‘‘SECTION

50501’’;

(B) in subsection (c)(1), (2)(A)(i) and (ii)(II) and (B),

and (4)(B), strike ‘‘section 2 of the Shipping Act, 1916

(46 U.S.C. App. 802)’’ and substitute ‘‘section 50501 of

this title’’;

(C) in subsection (d), strike ‘‘the first section of Public

Law 81–891 (64 Stat. 1120; 46 U.S.C. App. note prec.

3)’’ and substitute ‘‘section 501 of this title’’; and

(D) in subsection (e)(1)—

(i) strike ‘‘a documented vessel (as that term is

defined in section 12101 of this title)’’ and substitute

‘‘documented under chapter 121 of this title,’’; and

(ii) in subparagraph (B), strike ‘‘a documented

vessel (as defined in that section)’’ and substitute

‘‘documented under chapter 121’’.

(2) In section 53103(c)—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1701

(A) in the heading of paragraph (1)(C), strike ‘‘SECTION

2’’ and substitute ‘‘SECTION 50501’’;

(B) in paragraphs (1)(A)(iii) and (C)(i) and (ii), strike

‘‘section 2 of the Shipping Act, 1916 (46 U.S.C. App. 802)’’

and substitute ‘‘section 50501 of this title’’;

(C) in paragraph (1)(B), strike ‘‘subparagraphs’’ and

substitute ‘‘subparagraph’’; and

(D) in paragraph (3)(B), strike ‘‘agreement’’ and substitute ‘‘agreements’’.

(3) In section 53104—

(A) in subsection (c)(3)(B)(ii)(I) and (II), strike ‘‘section

2 of the Shipping Act, 1916 (46 U.S.C. App. 802)’’ and

substitute ‘‘section 50501 of this title’’;

(B) in subsection (e)(2), strike ‘‘section 9 of the Shipping

Act, 1916 (46 U.S.C. App. 808)’’ and substitute ‘‘section

56101 of this title’’; and

(C) in subsection (e)(3), strike ‘‘section 902 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1242)’’ and ‘‘section

902 of such Act’’ and substitute ‘‘chapter 563 of this title’’

and ‘‘chapter 563’’, respectively.

(4) In section 53105—

(A) in subsection (a)(1)(A), strike ‘‘section 12105’’ and

substitute ‘‘section 12111’’; and

(B) in subsection (f), strike ‘‘approve’’ and substitute

‘‘approves’’.

(5) In section 53106—

(A) in subsection (d)(1), strike ‘‘section 2631 of title

10, United States Code, the Act of March 26, 1934 (46

U.S.C. App. 1241–1), section 901(a), 901(b), or 901b of

the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a),

1241(b), or 1241f)’’ and substitute ‘‘section 55302(a), 55304,

55305, or 55314 of this title, section 2631 of title 10’’;

(B) in subsection (d)(2), strike ‘‘section 901(a), 901(b),

or 901b of the Merchant Marine Act, 1936 (46 U.S.C.

App. 1241(a), 1241(b), or 1241f),’’ and substitute ‘‘section

55302(a), 55305, or 55314 of this title’’; and

(C) in subsection (e)(2), strike ‘‘section 2(c) of the Shipping Act, 1916 (46 U.S.C. App. 802(c))’’ and substitute

‘‘section 50501 of this title, applying the 75 percent ownership requirement of that section’’.

(6) In section 53107(f)—

(A) strike ‘‘section 2631 of title 10, United States Code,

the Act of March 26, 1934 (46 U.S.C. App. 1241–1), section

901(a), 901(b), or 901b of the Merchant Marine Act, 1936

(46 U.S.C. App. 1241(a), 1241(b), or 1241f)’’ and substitute

‘‘section 55302(a), 55304, 55305, or 55314 of this title,

section 2631 of title 10’’; and

(B) strike ‘‘section 2631 of title 10, United States Code,

the Act of March 26, 1934 (46 U.S.C. App. 1241–1), and

sections 901(a), 901(b), and 901b of the Merchant Marine

Act, 1936 (46 U.S.C. App. 1241(a), 1241(b), and 1241b)’’

and substitute ‘‘sections 55302(a), 55304, 55305, and 55314

of this title and section 2631 of title 10’’.

(7) In section 53108(b), strike ‘‘section 901(b)(1) of the

Merchant Marine Act, 1936 (46 U.S.C. App. 1241(b)(1))’’ and

substitute ‘‘section 55305(a) of this title’’.

120 STAT. 1702 PUBLIC LAW 109–304—OCT. 6, 2006

(b) OTHER CONFORMING PROVISIONS.—If this Act is enacted

prior to October 1, 2005, then—

(1) until that date, the reference in section 12111(c)(3)

of title 46, United States Code, as enacted by this Act, to

‘‘chapter 531 of this title’’ is deemed instead to be a reference

to ‘‘subtitle B of title VI of the Merchant Marine Act, 1936’’;

and

(2) section 3534(b)(1) of the Maritime Security Act of 2003

(Public Law 108–136, 117 Stat. 1818) is repealed.

SEC. 14. AMENDMENTS TO PARTIALLY RESTATED PROVISIONS.

(a) Section 2793 of the Revised Statutes (19 U.S.C. 288, 46

App. U.S.C. 111, 123) is amended by striking ‘‘or tonnage tax’’.

(b) Section 809(a) of the Merchant Marine Act, 1936 (46 App.

U.S.C. 1213(a)), is amended by striking ‘‘and section 211(a)’’.

SEC. 15. ADDITIONAL AMENDMENTS TO TITLE 46.

Title 46, United States Code, is amended as follows:

(1) The analysis of subtitle II is amended as follows:

(A) In each chapter item, capitalize the first letter

of each word containing 4 or more letters.

(B) Strike the item for chapter 39.

(C) The item for chapter 45 is amended to read as

follows:

‘‘45. Uninspected Commercial Fishing Industry Vessels ...................... 4501’’.

(2) Section 2101 is amended as follows:

(A) Paragraphs (2), (3), (3a), (6), (10), (10a), (12), (17b),

(36), (41), (44), (45), and (46) are repealed.

(B) In paragraph (8a), insert ‘‘Prevention’’ after

‘‘Abuse’’.

(C) In paragraph (18), strike ‘‘those’’.

(D) In paragraph (34)—

(i) strike ‘‘, except in part H,’’; and

(ii) strike ‘‘head’’ and substitute ‘‘Secretary’’.

(3) In section 2102(b), strike ‘‘West’’ and ‘‘East’’ and substitute ‘‘west’’ and ‘‘east’’, respectively.

(4) In section 2106, strike ‘‘a district court of the United

States’’ and substitute ‘‘the district court of the United States

for any district’’.

(5) Section 2108 is repealed.

(6) In section 2110—

(A) in subsection (a)(2), strike ‘‘part B of this title’’

and substitute ‘‘part B of this subtitle’’;

(B) in subsection (b)(2)(A)(iii), strike the period at the

end and substitute ‘‘; and’’;

(C) in subsection (b)(5), strike ‘‘fees’’ and substitute

‘‘fee’’;

(D) In subsection (f), strike ‘‘Secretary of the Treasury

shall deny the clearance required by section 4197 of the

Revised Statutes of the United States (46 App. U.S.C.

91)’’ and substitute ‘‘Secretary of Homeland Security shall

deny the clearance required by section 60105 of this title’’;

and

(E) In subsection (j), strike ‘‘state’’ and substitute

‘‘State’’.

(7) In section 2301, strike ‘‘section’’ and substitute ‘‘sections

2304 and’’.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1703

(8) In section 2304—

(A) insert the paragraph designation ‘‘(1)’’ after ‘‘(a)’’;

and

(B) insert at the end of subsection (a) the following

new paragraph:

‘‘(2) Paragraph (1) does not apply to a vessel of war or a

vessel owned by the United States Government appropriated only

to a public service.’’.

(9) In section 2306(a)(2), strike ‘‘section 212(A) of the Merchant Marine Act, 1936 (46 App. U.S.C. 1122a),’’ and substitute

‘‘section 50113 of this title’’.

(10) In section 3205(d), strike ‘‘Secretary of the Treasury

shall withhold or revoke the clearance required by section 4197

of the Revised Statutes (46 App. U.S.C. 91)’’ and substitute

‘‘Secretary of Homeland Security shall withhold or revoke the

clearance required by section 60105 of this title’’.

(11) In section 3302—

(A) in subsection (b), insert a comma after ‘‘fishing

vessel’’;

(B) in subsection (j)(2)(B), strike ‘‘section 1304 of the

Merchant Marine Act, 1936 (46 App. U.S.C. 1295c)’’ and

substitute ‘‘chapter 515 of this title’’; and

(C) in subsection (l)(1)(C), strike ‘‘Inc..’’ and substitute

‘‘Inc.’’.

(12) In section 3306(d), strike ‘‘section 1302(3) of the Merchant Marine Act, 1936 (46 App. U.S.C. 1295a(3))’’ and substitute ‘‘section 51102 of this title’’.

(13) In section 3318(f), strike the period after ‘‘felony’’.

(14) In the analysis of chapter 37, the item for section

3719 is amended to read as follows:

‘‘3719. Reduction of oil spills from single hull non-self-propelled tank vessels.’’.

(15) In paragraphs (1)(C), (2), and (3) of section 3703a(c),

strike ‘‘documentation under section 4136 of the Revised Statutes of the United States (46 App. U.S.C. 14)’’ and substitute

‘‘documentation as a wrecked vessel under section 12112 of

this title’’.

(16) In section 3704, strike ‘‘section 27 of the Merchant

Marine Act, 1920 (46 App. U.S.C. 883),’’ and substitute ‘‘chapter

551 of this title’’.

(17) In section 3718(e)(1), strike ‘‘Secretary of the Treasury’’

and ‘‘section 4197 of the Revised Statutes of the United States

(46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland

Security’’ and ‘‘section 60105 of this title’’, respectively.

(18) In section 4702, strike the subsection ‘‘(a)’’ designation.

(19) In section 4705—

(A) strike ‘‘subcontractor not’’ and substitute ‘‘subcontractor are not’’;

(B) strike ‘‘(a)(1)’’ and substitute ‘‘(a)’’;

(C) strike ‘‘(2) Paragraph (1)’’ and substitute ‘‘(b) Subsection (a)’’;

(D) strike ‘‘(A)’’ and substitute ‘‘(1)’’; and

(E) strike ‘‘(B)’’ and substitute ‘‘(2)’’.

(20) In section 5113(b), strike ‘‘section 4197 of the Revised

Statutes (46 App. U.S.C. 91)’’ and substitute ‘‘section 60105

of this title’’.

120 STAT. 1704 PUBLIC LAW 109–304—OCT. 6, 2006

(21) In section 6101, redesignate the second subsection

(g) and subsection (h) as subsections (h) and (i), respectively.

(22) In section 8103(a), strike ‘‘Only’’ and substitute ‘‘Except

as otherwise provided in this title, only’’.

(23) In section 9307(b)(2)(A), strike ‘‘The’’ and substitute

‘‘the’’.

(24) In section 12503(a), in the matter before paragraph

(1), strike ‘‘delegee’’ and substitute ‘‘delegate’’.

(25) In section 13102(a), insert ‘‘(26 U.S.C. 9504)’’ after

‘‘Internal Revenue Code of 1986’’.

(26) In section 14305(a)—

(A) in paragraph (1), strike ‘‘and sections 12106(c) and

12108(c)’’ and substitute ‘‘of this subtitle and section

12116’’;

(B) in paragraph (5), strike ‘‘section 4283 of the Revised

Statutes of the United States (46 App. U.S.C. 183)’’ and

substitute ‘‘section 30506 of this title’’;

(C) in paragraph (6), strike ‘‘sections 27 and 27A of

the Act of June 5, 1920 (46 App. U.S.C. 883 and 883–

1)’’ and substitute ‘‘sections 12118 and 12132 of this title’’;

and

(D) in paragraph (7), strike ‘‘Act of July 14, 1956 (46

App. U.S.C. 883a)’’ and substitute ‘‘section 12139(b) of this

title’’.

(27) In section 31306(a), strike ‘‘section 9 or 37 of the

Shipping Act, 1916 (46 App. U.S.C. 808, 835)’’ and substitute

‘‘section 56102 or 56103 of this title’’.

(28) In section 31308, strike ‘‘title XI of the Merchant

Marine Act, 1936 (46 App. U.S.C. 1271 et seq.)’’ and substitute

‘‘chapter 537 of this title’’.

(29) In section 31322—

(A) in subsection (a)(4)(A), strike ‘‘section 12102(c)’’

and substitute ‘‘section 12113(c)’’;

(B) in subsection (a)(4)(E), strike ‘‘under section

12102(a)’’ and substitute ‘‘for purposes of documentation

under section 12103’’; and

(C) in subsection (f)(2), strike ‘‘section 12102(c)’’ and

substitute ‘‘section 12113(c)’’.

(30) In section 31325(b)(3)(B), strike ‘‘section 9 or 37 of

the Shipping Act, 1936 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56101 or 56102 of this title’’.

(31) In section 31326(b)—

(A) in paragraph (1), strike ‘‘title XI of the Merchant

Marine Act, 1936 (46 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘chapter 537 of this title,’’; and

(B) in paragraph (2), strike ‘‘title XI of that Act’’ and

substitute ‘‘chapter 537 of this title’’.

(32) In section 31329—

(A) in subsection (a)(1), strike ‘‘section 12102’’ and substitute ‘‘section 12103’’; and

(B) in subsection (b)—

(i) in paragraph (2), strike ‘‘section 902 of the

Merchant Marine Act, 1936 (46 App. U.S.C. 1242)’’

and substitute ‘‘chapter 563 of this title’’; and

(ii) in paragraph (3), strike ‘‘sale foreign within

the terms of the first proviso of section 27 of the

Merchant Marine Act, 1920 (46 App. U.S.C. 883)’’ and

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1705

substitute ‘‘sale to a person not a citizen of the United

States under section 12132 of this title’’.

(33)(A) Sections 70118 and 70119, as added by section

801(a) of the Coast Guard and Maritime Transportation Act

of 2004 (Public Law 108–293, 118 Stat. 1078), are redesignated

as sections 70117 and 70118, respectively, and moved to appear

immediately after section 70116 of title 46, United States Code.

(B) Sections 70117 and 70118, as added by section 802(a)(2)

of such Act, are redesignated as sections 70120 and 70121,

respectively, and moved to appear immediately after section

70119 of title 46, United States Code.

(C) In section 70120(a) (as redesignated by subparagraph

(B)), strike ‘‘section 70120’’ and substitute ‘‘section 70119’’.

(D) In section 70121(a) (as redesignated by subparagraph

(B))—

(i) strike ‘‘section 70120’’ and substitute ‘‘section

70119’’; and

(ii) strike ‘‘section 4197 of the Revised Statutes of

the United States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 of this title’’.

(E) In the analysis of chapter 701, strike the items relating

to sections 70117–70119 and substitute the following:

‘‘70117. Firearms, arrests, and seizure of property.

‘‘70118. Enforcement by State and local officers.

‘‘70119. Civil penalty.

‘‘70120. In rem liability for civil penalties and certain costs.

‘‘70121. Withholding of clearance.’’.

SEC. 16. RECREATIONAL BOATING SAFETY TECHNICAL AMENDMENTS.

(a) SECTION 2102.—Section 2102 of title 46, United States Code,

is amended by—

(1) striking subsection (a); and

(2) striking the subsection (b) designation.

(b) CHAPTER 131.—Chapter 131 of title 46, United States Code,

is amended as follows:

(1) Redesignate sections 13101 to 13106 as sections 13102

to 13107.

(2) Insert as the first section the following:

‘‘§ 13101. Definitions

‘‘In this chapter:

‘‘(1) ELIGIBLE STATE.—The term ‘eligible State’ means a

State that has a State recreational boating safety program

accepted by the Secretary.

‘‘(2) STATE RECREATIONAL BOATING SAFETY PROGRAM.—The

term ‘State recreational boating safety program’ means education, assistance, and enforcement activities conducted for

maritime casualty prevention, reduction, and reporting for recreational boating.’’.

(3) In the chapter analysis, redesignate items 13101 to

13106 as items 13102 to 13107 and insert as the first item

the following:

‘‘13101. Definitions.’’.

(c) CROSS REFERENCES.—

(1) Section 4 of the Dingell-Johnson Sport Fish Restoration

Act (16 U.S.C. 777c) is amended by striking ‘‘13106’’ wherever

appearing and substituting ‘‘13107’’.

120 STAT. 1706 PUBLIC LAW 109–304—OCT. 6, 2006

(2) Section 9504(c) of the Internal Revenue Code of 1986

(26 U.S.C. 9504(c)) is amended by striking ‘‘section 13106’’

and substituting ‘‘section 13107’’.

(3) Section 13102(c) of title 46, United States Code, as

redesignated by subsection (b), is amended by striking ‘‘section

13103’’ and substituting ‘‘section 13104’’.

(4) Section 13103(c) of title 46, United States Code, as

redesignated by subsection (b), is amended by striking ‘‘section

13106’’ and substituting ‘‘section 13107’’.

(5) Section 13107(a)(1) of title 46, United States Code,

as redesignated by subsection (b), is amended by striking ‘‘section 13103’’ and substituting ‘‘section 13104’’.

(6) Section 13108(a) of title 46, United States Code, is

amended by—

(A) striking ‘‘section 13103’’ and substituting ‘‘section

13104’’; and

(B) striking ‘‘section 13105’’ and substituting ‘‘section

13106’’.

(7) Section 31322(d)(1)(A) of title 46, United States Code,

is amended by striking ‘‘section 13106(b)(8)’’ and substituting

‘‘section 13107(b)(8)’’.

SEC. 17. CONFORMING AMENDMENTS TO OTHER LAWS.

(a) TITLE 10.—Title 10, United States Code, is amended as

follows:

(1) In section 374(b)(4)(A)(iv), strike ‘‘The Maritime Drug

Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘Chapter 705 of title 46’’.

(2) In section 2218(d)(2), strike ‘‘sections 508 and 510 of

the Merchant Marine Act of 1936 (46 U.S.C. App. 1158, 1160),

shall be deposited in the Fund’’ and substitute ‘‘sections 57101–

57104 and chapter 573 of title 46’’.

(3) In section 2350b(g)(2), strike ‘‘section 901(b) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(b))’’ and substitute

‘‘section 55305 of title 46’’.

(4) In section 2645—

(A) in subsection (c), strike ‘‘the second sentence of

section 1208(a) of the Merchant Marine Act, 1936 (46

U.S.C. App. 1288(a))’’ and substitute ‘‘section 53909(b) of

title 46’’;

(B) in subsection (h)(1), strike ‘‘title XII of the Merchant

Marine Act, 1936 (46 U.S.C. App. 1281 et seq.),’’ and substitute ‘‘chapter 539 of title 46’’; and

(C) in subsection (h)(2), strike ‘‘the first sentence of

section 1208(a) of the Merchant Marine Act, 1936 (46

U.S.C. App. 1288(a))’’ and substitute ‘‘section 53909(a) of

title 46’’.

(5) In section 5985, strike ‘‘section 1304 of the Merchant

Marine Act, 1936 (46 U.S.C. App. 1295c),’’ and substitute

‘‘chapter 515 of title 46’’.

(6) In section 7721(a), strike ‘‘the Act of March 3, 1925

(commonly referred to as the ‘Public Vessels Act’) (46 U.S.C.

App. 781–790)’’ and substitute ‘‘chapter 311 of title 46’’.

(b) TITLE 11.—Title 11, United States Code, is amended as

follows:

(1) In section 362(b)—

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1707

(A) in paragraph (12), strike ‘‘section 207 or title XI

of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter

537 of title 46 or section 109(h) of title 49’’; and

(B) in paragraph (13), strike ‘‘section 207 or title XI

of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter

537 of title 46’’.

(2) In section 1110(a)(3)(A)(ii), strike ‘‘documented vessel

(as defined in section 30101(1) of title 46)’’ and substitute

‘‘vessel documented under chapter 121 of title 46’’.

(c) TITLE 14.—Sections 821(b) and 823a(b) of title 14, United

States Code, are each amended by striking paragraphs (3)–(5) and

substituting the following:

‘‘(3) Section 30101 of title 46 (popularly known as the

Admiralty Extension Act).

‘‘(4) Chapter 309 of title 46 (known as the Suits in

Admiralty Act).

‘‘(5) Chapter 311 of title 46 (known as the Public Vessels

Act).’’.

(d) TITLE 18.—Title 18, United States Code, is amended as

follows:

(1) In section 229F(9)(C), strike ‘‘section 3(b) of the Maritime Drug Enforcement Act, as amended (46 U.S.C., App. sec.

1903(b))’’ and substitute ‘‘section 70502(b) of title 46, United

States Code’’.

(2) In section 507—

(A) in the first paragraph, strike ‘‘recording, registry,

or enrollment of any vessel, in the office of any collector

of the customs, or a license to any vessel for carrying

on the coasting trade or fisheries of the United States’’

and substitute ‘‘documentation of any vessel’’;

(B) in the first paragraph, strike ‘‘collector or other’’;

and

(C) in the second paragraph, strike ‘‘license,’’.

(3) In section 924—

(A) in subsections (c)(2), (e)(2)(A)(i), (g)(2), and (k)(1),

strike ‘‘the Maritime Drug Law Enforcement Act (46 U.S.C.

App. 1901 et seq.)’’ and substitute ‘‘chapter 705 of title

46’’; and

(B) in subsection (g)(2), strike ‘‘802 et seq.’’ and substitute ‘‘801 et seq.’’.

(4) In section 929(a)(2), strike ‘‘the Maritime Drug Law

Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute

‘‘chapter 705 of title 46’’.

(5) In section 965(a), strike ‘‘section 4197 of the Revised

Statutes of the United States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 of title 46’’.

(6) In section 2277(a), strike ‘‘registered, enrolled, or

licensed’’ and substitute ‘‘documented’’.

(7) In section 3142(e) and (f)(1)(C), strike ‘‘the Maritime

Drug Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’

and substitute ‘‘chapter 705 of title 46’’.

(e) INTERNAL REVENUE CODE OF 1986.—The Internal Revenue

Code of 1986 (26 U.S.C. 1 et seq.) is amended as follows:

(1) In section 56(c)(2)—

(A) strike ‘‘section 607 of the Merchant Marine Act,

1936 (46 U.S.C. 1177)’’ and substitute ‘‘chapter 535 of title

46, United States Code’’; and

120 STAT. 1708 PUBLIC LAW 109–304—OCT. 6, 2006

(B) in subparagraphs (A) and (B), strike ‘‘such section

607’’ substitute ‘‘such chapter 535’’.

(2) In section 140(a)(4), strike ‘‘section 607(d) of the Merchant Marine Act, 1936 (46 U.S.C. 1177)’’ and substitute ‘‘section 53507 of title 46, United States Code’’.

(3) In section 543(a)(1)(B), strike ‘‘section 511 or 607 of

the Merchant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)’’

and substitute ‘‘chapter 533 or 535 of title 46, United States

Code’’.

(4) In section 1023(2), strike ‘‘section 511 of the Merchant

Marine Act, 1936, as amended (46 U.S.C. 1161)’’ and substitute

‘‘chapter 533 of title 46, United States Code’’.

(5) In section 1061—

(A) in paragraph (1), strike ‘‘section 510 of the Merchant Marine Act, 1936, see subsection (e) of that section,

as amended August 4, 1939 (46 U.S.C. App. 1160)’’ and

substitute ‘‘chapter 573 of title 46, United States Code,

see section 57307 of title 46’’;

(B) in paragraph (2), strike ‘‘section 511 of such Act,

as amended (46 U.S.C. App. 1161)’’ and substitute ‘‘chapter

533 of title 46, United States Code’’; and

(C) strike paragraph (3).

(6) In section 7518—

(A) in subsection (a)(1), strike ‘‘section 607 of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter 535 of

title 46 of the United States Code’’;

(B) in subsections (a)(2) and (c)(1)(A) and (D), strike

‘‘section 607 of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter 535 of title 46, United States Code’’; and

(C) in subsection (g)(3)(C)(iii), strike ‘‘Merchant Marine

Act of 1936’’ and substitute ‘‘Merchant Marine Act, 1936,’’.

(f) TITLE 28.—Title 28, United States Code, is amended as

follows:

(1) In section 994(h)(1)(B) and (2)(B), strike ‘‘the Maritime

Drug Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’

and substitute ‘‘chapter 705 of title 46’’.

(2) In section 1605(d), strike ‘‘the Ship Mortgage Act, 1920

(46 U.S.C. 911 and following)’’ and ‘‘that Act’’ and substitute

‘‘section 31301 of title 46’’ and ‘‘chapter 313 of title 46’’, respectively.

(3) In section 2342(3)—

(A) in subparagraph (A), strike ‘‘section 2, 9, 37, or

41 of the Shipping Act, 1916 (46 U.S.C. App. 802, 803,

808, 835, 839, and 841a)’’ and substitute ‘‘section 50501,

50502, 56101–56104, or 57109 of title 46’’; and

(B) strike subparagraph (B) and substitute the following:

‘‘(B) the Federal Maritime Commission issued pursuant

to section 305, 41304, 41308, or 41309 or chapter 421

or 441 of title 46;’’.

(4) In section 2680(d), strike ‘‘sections 741–752, 781–790

of Title 46,’’ and substitute ‘‘chapter 309 or 311 of title 46’’.

(g) TITLE 40.—Title 40, United States Code, is amended as

follows:

(1) In section 548, strike ‘‘the Merchant Marine Act, 1936

(46 App. U.S.C. 1101 et seq.),’’ and substitute ‘‘part F of subtitle

V of title 46’’.

26 USC 140.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1709

(2) In section 3134(b), strike ‘‘the Merchant Marine Act,

1936 (46 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘subtitle

V of title 46’’.

(3) In section 3313(a)—

(A) in the matter before paragraph (1), strike ‘‘Except

for the authority contained in section 3305(b) of this title,

the’’ and substitute ‘‘The’’; and

(B) in paragraph (1), strike ‘‘shall’’ and substitute

‘‘shall, except for the authority contained in section 3305(b)

of this title,’’.

(h) TITLE 49.—Title 49, United States Code, is amended as

follows:

(1) In section 5122(c)(1), strike ‘‘Secretary of the Treasury’’

and ‘‘section 4197 of the Revised Statutes of the United States

(46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland

Security’’ and ‘‘section 60105 of title 46’’, respectively.

(2) In section 5901(3)(B), strike ‘‘section 3 of the Shipping

Act of 1984 (46 App. U.S.C. 1702)’’ and substitute ‘‘section

40102 of title 46’’.

(i) MISCELLANEOUS.—Section 5501(a) of the Oceans Act of 1992

(Public Law 102–587, 106 Stat. 5084) is amended by adding the

following:

‘‘(3) The exceptions provided by paragraph (2) shall apply under

section 55109 of title 46, United States Code, to the same extent

as under former section 1 of the Act of May 28, 1906, as amended

by paragraph (1).’’.

SEC. 18. TRANSITIONAL AND SAVINGS PROVISIONS.

(a) CUTOFF DATE.—This Act replaces certain provisions enacted

on or before April 30, 2005. If a law enacted after that date amends

or repeals a provision replaced by this Act, that law is deemed

to amend or repeal, as the case may be, the corresponding provision

enacted by this Act. If a law enacted after that date is otherwise

inconsistent with this Act, it supersedes this Act to the extent

of the inconsistency.

(b) ORIGINAL DATE OF ENACTMENT UNCHANGED.—For purposes

of determining whether one provision supersedes another based

on enactment later in time, the date of enactment of a provision

enacted by this Act is deemed to be the date of enactment of

the provision it replaced.

(c) REFERENCES TO PROVISIONS REPLACED.—A reference to a

provision replaced by this Act is deemed to refer to the corresponding provision enacted by this Act.

(d) LAWS GOVERNING APPLICABILITY OF PRIOR AMENDMENTS.—

This Act does not affect any law governing the applicability of

an amendment to a provision replaced by this Act, notwithstanding

the repeal by this Act of the provision that was amended. To

the extent that any such law governed the applicability of a provision replaced by this Act, that law governs the applicability of

the corresponding provision enacted by this Act.

(e) REGULATIONS, ORDERS, AND OTHER ADMINISTRATIVE

ACTIONS.—A regulation, order, or other administrative action in

effect under a provision replaced by this Act continues in effect

under the corresponding provision enacted by this Act.

(f) ACTIONS TAKEN AND OFFENSES COMMITTED.—An action

taken or an offense committed under a provision replaced by this

46 USC note

prec. 101.

46 USC

app. 292 note.

120 STAT. 1710 PUBLIC LAW 109–304—OCT. 6, 2006

Act is deemed to have been taken or committed under the corresponding provision enacted by this Act.

SEC. 19. REPEALS.

The following provisions are repealed, except with respect to

rights and duties that matured, penalties that were incurred, or

proceedings that were begun before the date of enactment of this

Act:

Revised Statutes

Revised Statutes Section

United States Code

Title Section

2792 ................................................................. 46 App. 124

4136 ................................................................. 46 App. 14

4173 ................................................................. 46 App. 42

4184 ................................................................. 46 App. 57

4188 ................................................................. 46 App. 59

4197 ................................................................. 46 App. 91

4202 ................................................................. 46 App. 97

4204 ................................................................. 46 App. 98

4206 ................................................................. 46 App. 100

4219 ................................................................. 46 App. 121

4220 ................................................................. 46 App. 122

4221 ................................................................. 46 App. 125

4225 ................................................................. 46 App. 128

4226 ................................................................. 46 App. 129

4227 ................................................................. 46 App. 135

4228 ................................................................. 46 App. 141

4238 ................................................................. 46 App. 721

4239 ................................................................. 46 App. 722

4240 ................................................................. 46 App. 723

4241 ................................................................. 46 App. 724

4281 ................................................................. 46 App. 181

4282 ................................................................. 46 App. 182

4283 ................................................................. 46 App. 183

4283A ............................................................... 46 App. 183b

4283B ............................................................... 46 App. 183c

4284 ................................................................. 46 App. 184

4285 ................................................................. 46 App. 185

4286 ................................................................. 46 App. 186

4287 ................................................................. 46 App. 187

4289 ................................................................. 46 App. 188

4309 ................................................................. 46 App. 354

4310 ................................................................. 46 App. 355

4311 ................................................................. 46 App. 251

4320 ................................................................. 46 App. 262

4336 ................................................................. 46 App. 277

4370 ................................................................. 46 App. 316

4373 ................................................................. 46 App. 321

4374 ................................................................. 46 App. 322

4375 ................................................................. 46 App. 323

4376 ................................................................. 46 App. 324

4378 ................................................................. 46 App. 326

4379 ................................................................. 46 App. 327

4380 ................................................................. 46 App. 328

4493 ................................................................. 46 App. 491

Statutes at Large

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

1874

Apr. 18 110 .......................................................... 18 31 ................ 336

1878

June 19 324 .......................................................... 20 175 .............. 725

1884

June 26 121 14 ..................................................... 23 57 ................ 121

46 USC note

prec. 101.

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1711

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

18 ..................................................... 23 57 ................ 189

July 5 221 3 ....................................................... 23 119 .............. 3

8(c) ................................................... ........ ..................... 9

1886

June 19 421 8 ....................................................... 24 81 ................ 289

9 ....................................................... 24 81 ................ 320

17 ..................................................... 24 82 ................ 142

1887

Mar. 3 339 .......................................................... 24 475 .............. 143

1892

July 26 248 1 ....................................................... 27 267 .............. 144

2 ....................................................... 27 268 .............. 145

1893

Feb. 13 105 1 ....................................................... 27 445 .............. 190

2 ....................................................... 27 445 .............. 191

3 ....................................................... 27 445 .............. 192

4 ....................................................... 27 445 .............. 193

5 ....................................................... 27 446 .............. 194

6 ....................................................... 27 446 .............. 196

7 ....................................................... 27 446 .............. 195

8 ....................................................... 27 446 .............. 190 nt

Oct. 31 No. 13 .......................................................... 28 13 ................ 726

1898

Feb. 17 26 1 ....................................................... 30 248 .............. 290

3 ....................................................... 30 248 .............. 291

1900

Mar. 31 120 1–3 ................................................... 31 58 ................ 163

1906

May 28 2566 1 (except as may be applicable

under section 5501(a)(2) of Pub.

L. 102–587).

34 204 .............. 292

1908

Mar. 24 96 1 ....................................................... 35 46 ................ 133

2 ....................................................... 35 46 ................ 134

May 28 212 5 ....................................................... 35 425 .............. 104

1909

Aug. 5 6 36 ..................................................... 36 111 .............. 121

1910

Mar. 8 86 .......................................................... 36 234 .............. 132

1912

Aug. 1 268 1 ....................................................... 37 242 .............. 727

3 ....................................................... 37 242 .............. 729

4 ....................................................... 37 242 .............. 730

5 ....................................................... 37 242 .............. 731

1913

Oct. 3 16 IV(J)(1)–(3) ...................................... 38 195 .............. 19 U.S.C.

128, 130,

131;

46 App. 146

1915

Mar. 4 153 20 ..................................................... 38 1185 ............ 688

171 .......................................................... 38 1193 ............ 19 U.S.C.

128, 131;

46 App. 121,

128, 146

120 STAT. 1712 PUBLIC LAW 109–304—OCT. 6, 2006

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

1916

Sept. 7 451 1 ....................................................... 39 728 .............. 801

2(a)–(c) ............................................. 39 729 .............. 802

2(d) ................................................... 39 729 .............. 803

9 ....................................................... 39 730 .............. 808

12 ..................................................... 39 732 .............. 811

34 ..................................................... 39 738 .............. 833

36 ..................................................... 39 738 .............. 834

37 ..................................................... ........ ..................... 835

38 ..................................................... ........ ..................... 836

39 ..................................................... ........ ..................... 837

41 ..................................................... ........ ..................... 839

46 ..................................................... ........ ..................... 842

1920

Mar. 9 95 1 ....................................................... 41 525 .............. 741

2 ....................................................... 41 525 .............. 742

3 ....................................................... 41 526 .............. 743

4 ....................................................... 41 526 .............. 744

5 ....................................................... 41 526 .............. 745, 745 nt

6 ....................................................... 41 527 .............. 746

7 ....................................................... 41 527 .............. 747

8 ....................................................... 41 527 .............. 748

9 ....................................................... 41 527 .............. 749

10 ..................................................... 41 528 .............. 750

11 ..................................................... 41 528 .............. 751

12 ..................................................... 41 528 .............. 752

Mar. 30 111 1 ....................................................... 41 537 .............. 761

2 ....................................................... 41 537 .............. 762

4 ....................................................... 41 537 .............. 764

5 ....................................................... 41 537 .............. 765

6 ....................................................... 41 537 .............. 766

7 ....................................................... 41 538 .............. 767

8 ....................................................... 41 538 .............. 768

June 5 250 1 ....................................................... 41 988 .............. 861

6 ....................................................... 41 991 .............. 865

7 ....................................................... 41 991 .............. 866

8 ....................................................... 41 992 .............. 867

9 ....................................................... 41 992 .............. 868

10 ..................................................... 41 992 .............. 869

12 ..................................................... 41 993 .............. 871

13 ..................................................... 41 993 .............. 872

17 ..................................................... 41 994 .............. 875

19 ..................................................... 41 995 .............. 876

21 ..................................................... 41 997 .............. 877

27 ..................................................... 41 999 .............. 883

27A ................................................... ........ ..................... 883–1

28 ..................................................... 41 999 .............. 884

36 ..................................................... 41 1007 ............ 887

37 ..................................................... 41 1008 ............ 888

39 ..................................................... 41 1008 ............ 889

1925

Mar. 3 428 1 ....................................................... 43 1112 ............ 781

2 ....................................................... 43 1112 ............ 782

3 ....................................................... 43 1112 ............ 783

4 ....................................................... 43 1112 ............ 784

5 ....................................................... 43 1113 ............ 785

6 ....................................................... 43 1113 ............ 786

7 ....................................................... 43 1113 ............ 787

8 ....................................................... 43 1113 ............ 788

9 ....................................................... 43 1113 ............ 789

10 ..................................................... 43 1113 ............ 790

1928

May 22 675 1 ....................................................... 45 689 .............. 891

202 ................................................... 45 690 .............. 891b

203 ................................................... 45 690 .............. 891c

703 ................................................... 45 698 .............. 891u

704 ................................................... 45 698 .............. 891v

705 ................................................... 45 698 .............. 891w

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1713

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

706 ................................................... 45 698 .............. 891x

1932

June 30 314 306 ................................................... 47 408 .............. 804a

315 .......................................................... 47 420 .............. 743a, 745

1934

Mar. 26 90 .......................................................... 48 500 .............. 1241–1

June 14 523 .......................................................... 48 963 .............. 48 U.S.C.

1664

1936

June 25 807 1 ....................................................... 49 1922 ............ 738

2 ....................................................... 49 1922 ............ 738a

4 ....................................................... 49 1923 ............ 738c

June 29 858 101 ................................................... 49 1985 ............ 1101

201 ................................................... 49 1985 ............ 1111

202 ................................................... 49 1986 ............ 1112

204 ................................................... 49 1987 ............ 1114

205 ................................................... 49 1987 ............ 1115

206 ................................................... 49 1987 ............ 1116

207 ................................................... 49 1988 ............ 1117

208 ................................................... 49 1988 ............ 1118

209 ................................................... 49 1988 ............ 1119

210 ................................................... 49 1989 ............ 1120

211 ................................................... 49 1989 ............ 1121

212 ................................................... 49 1990 ............ 1122

212(A) .............................................. ........ ..................... 1122a

212(B) .............................................. ........ ..................... 1122b

213 ................................................... 49 1991 ............ 1123

214 ................................................... 49 1991 ............ 1124

215 ................................................... ........ ..................... 1125

302 ................................................... ........ ..................... 1132

508 ................................................... 49 2000 ............ 1158

510 ................................................... ........ ..................... 1160

511 (added by Act Oct. 10, 1940) .. ........ ..................... 1161

607 ................................................... 49 2005 ............ 1177

701 ................................................... 49 2008 ............ 1191

702 ................................................... 49 2008 ............ 1192

703 ................................................... 49 2008 ............ 1193

704 ................................................... 49 2008 ............ 1194

705 ................................................... 49 2009 ............ 1195

706 ................................................... 49 2009 ............ 1196

707 ................................................... 49 2009 ............ 1197

708 ................................................... 49 2009 ............ 1198

709 ................................................... 49 2010 ............ 1199

710 ................................................... 49 2010 ............ 1200

711 ................................................... 49 2010 ............ 1201

712 ................................................... 49 2010 ............ 1202

713 ................................................... 49 2010 ............ 1203

714 ................................................... 49 2011 ............ 1204

715 ................................................... ........ ..................... 1205

805 ................................................... 49 2012 ............ 1223

806(b)–(d) ........................................ 49 2014 ............ 1228

808 ................................................... 49 2015 ............ 1226

809(b) ............................................... ........ ..................... 1213

810 ................................................... 49 2015 ............ 1227

901 ................................................... 49 2015 ............ 1241

901a ................................................. ........ ..................... 1241e

901b ................................................. ........ ..................... 1241f

901c .................................................. ........ ..................... 1241g

901d ................................................. ........ ..................... 1241h

901e ................................................. ........ ..................... 1241i

901f .................................................. ........ ..................... 1241j

901g ................................................. ........ ..................... 1241k

901h ................................................. ........ ..................... 1241l

901i .................................................. ........ ..................... 1241m

901j .................................................. ........ ..................... 1241n

901k ................................................. ........ ..................... 1241o

902 ................................................... 49 2015 ............ 1242

120 STAT. 1714 PUBLIC LAW 109–304—OCT. 6, 2006

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

905 ................................................... 49 2016 ............ 1244

906 (1st sentence) ........................... 49 2016 ............ 1245

908 ................................................... ........ ..................... 1247

1101 ................................................. ........ ..................... 1271

1102 ................................................. ........ ..................... 1272

1103 ................................................. ........ ..................... 1273

1104A ............................................... ........ ..................... 1274

1104B ............................................... ........ ..................... 1274a

1105 ................................................. ........ ..................... 1275

1108 ................................................. ........ ..................... 1279a

1109 ................................................. ........ ..................... 1279b

1110 ................................................. ........ ..................... 1279c

1111 ................................................. ........ ..................... 1279d

1111 ................................................. ........ ..................... 1279f

1112 ................................................. ........ ..................... 1279e

1112 ................................................. ........ ..................... 1279g

1201 ................................................. ........ ..................... 1281

1202 ................................................. ........ ..................... 1282

1203 ................................................. ........ ..................... 1283

1204 ................................................. ........ ..................... 1284

1205 ................................................. ........ ..................... 1285

1206 ................................................. ........ ..................... 1286

1207 ................................................. ........ ..................... 1287

1208 ................................................. ........ ..................... 1288

1209 ................................................. ........ ..................... 1289

1210 ................................................. ........ ..................... 1290

1211 ................................................. ........ ..................... 1291

1212 ................................................. ........ ..................... 1292

1213 ................................................. ........ ..................... 1293

1214 ................................................. ........ ..................... 1294

1301 ................................................. ........ ..................... 1295

1302 ................................................. ........ ..................... 1295a

1303 ................................................. ........ ..................... 1295b

1304 ................................................. ........ ..................... 1295c

1305 ................................................. ........ ..................... 1295d

1306 ................................................. ........ ..................... 1295e

1307 ................................................. ........ ..................... 1295f

1308 ................................................. ........ ..................... 1295g

1938

Apr. 26 174 .......................................................... 52 223 .............. 289a

June 25 681 1st proviso on p. 1119 .................... 52 1119 ............ 1111a

1940

June 29 442 .......................................................... 54 684 .............. 1242a

1941

Feb. 6 5 4 ....................................................... 55 6 .................. 1125a

1947

Mar. 22 20 proviso under heading ‘‘Independent Offices’’.61 18 ................ 1116a

1948

June 19 526 .......................................................... 62 496 .............. 740

June 30 775 101 (last proviso on p. 1199) .......... 62 1199 ............ 864a

1949

June 29 281 1 (proviso) ........................................ 63 349 .............. 864b

1950

Dec. 27 1155 1, 2 ................................................... 64 1120 ............ 3 nt prec.

1951

June 2 121 pars. under heading ‘‘Vessel Operations Revolving Fund’’.65 59 ................ 1241a

Nov. 1 664 par. under heading ‘‘War-Risk Insurance Revolving Fund’’.65 746 .............. 1288a

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1715

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

1956

June 20 415 101 (par. beginning with ‘‘Vessel

operations revolving fund’’).

70 319 .............. 1241b,

1241b nt

July 14 600 2 ....................................................... 70 544 .............. 883a

3 ....................................................... 70 544 .............. 883b

Aug. 1 846 .......................................................... 70 897 .............. 1241c

1957

June 13 85–52 101 (1st proviso on p. 73) ............... 71 73 ................ 1177a

1958

June 25 85–469 101 (par. under heading ‘‘Federal

Ship Mortgage Insurance

Fund’’).

72 231 .............. 1280

1960

June 12 86–518 9 ....................................................... 74 217 .............. 1125 nt

1961

June 30 87–77 .......................................................... 75 196 .............. 289b

Sept. 13 87–220 2 ....................................................... 75 493 .............. 251a

3 ....................................................... 75 493 .............. 251b

1965

June 30 89–56 .......................................................... 79 195 .............. 1111 nt

July 30 89–99 1 ....................................................... 79 424 .............. 441

3 ....................................................... 79 424 .............. 443

4 ....................................................... 79 424 .............. 444

1966

Nov. 6 89–777 2 ....................................................... 80 1356 ............ 817d

3 ....................................................... 80 1357 ............ 817e

1976

July 14 94–361 603 ................................................... 90 929 .............. 1126–1

Oct. 4 94–455 807 ................................................... 90 1606 ............ 1177–1

1977

Dec. 13 95–208 1 ....................................................... 91 1475 ............ 1501 nt

2 ....................................................... 91 1475 ............ 1501

3 ....................................................... 91 1476 ............ 1502

4 ....................................................... 91 1476 ............ 1503

5 ....................................................... 91 1477 ............ 1504

6 ....................................................... 91 1478 ............ 1505

7 ....................................................... 91 1479 ............ 1506

8 ....................................................... 91 1479 ............ 1507

1980

Sept. 15 96–350 1 ....................................................... 94 1159 ............ 1901

2 ....................................................... 94 1160 ............ 1902

3 ....................................................... 94 1160 ............ 1903

4 ....................................................... 94 1160 ............ 1904

Oct. 6 96–382 1 ....................................................... 94 1525 ............ 763a

Oct. 7 96–387 5 ....................................................... 94 1546 ............ 1121–1

1981

Aug. 6 97–31 2 ....................................................... 95 151 .............. 1601

3 ....................................................... 95 151 .............. 1602

4 ....................................................... 95 151 .............. 1603

5 ....................................................... 95 151 .............. 1604

6 ....................................................... 95 151 .............. 1605

8 ....................................................... 95 152 .............. 1607

9 ....................................................... 95 152 .............. 1608

1982

Oct. 15 97–322 201 ................................................... 96 1588 ............ 446 nt

120 STAT. 1716 PUBLIC LAW 109–304—OCT. 6, 2006

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

204 ................................................... 96 1589 ............ 446

205 ................................................... 96 1589 ............ 446a

206 ................................................... 96 1590 ............ 446b

207 ................................................... 96 1590 ............ 446c

1984

Mar. 20 98–237 1 ....................................................... 98 67 ................ 1701 nt

2 ....................................................... 98 67 ................ 1701

3 ....................................................... 98 67 ................ 1702

4 ....................................................... 98 70 ................ 1703

5 ....................................................... 98 70 ................ 1704

6 ....................................................... 98 72 ................ 1705

7 ....................................................... 98 73 ................ 1706

8 ....................................................... 98 74 ................ 1707

9 ....................................................... 98 76 ................ 1708

10 ..................................................... 98 77 ................ 1709

11 ..................................................... 98 80 ................ 1710

12 ..................................................... 98 81 ................ 1711

13 ..................................................... 98 82 ................ 1712

14 ..................................................... 98 83 ................ 1713

15 ..................................................... 98 84 ................ 1714

16 ..................................................... 98 84 ................ 1715

17 ..................................................... 98 84 ................ 1716

19 ..................................................... 98 87 ................ 1718

20(e) ................................................. 98 90 ................ 1719

Oct. 5 98–454 302 ................................................... 98 1734 ............ 808a

Oct. 30 98–563 .......................................................... 98 2916 ............ 289c

1985

Dec. 23 99–198 1141 ................................................. 99 1490 ............ 1241d

1143 ................................................. 99 1496 ............ 1241p

1986

Aug. 27 99–399 902 ................................................... 100 889 .............. 1801

905 ................................................... 100 890 .............. 1802

907 ................................................... 100 891 .............. 1803

908 ................................................... 100 891 .............. 1804

909 ................................................... 100 892 .............. 1805

910 ................................................... 100 892 .............. 1806

911 ................................................... 100 892 .............. 1807

912 ................................................... 100 892 .............. 1808

913 ................................................... 100 892 .............. 1809

1987

Dec. 22 100–202 101(a) [title V (par. under heading

‘‘Ocean Freight Differential’’)].

101 1329, ...........

1329–27 ......

1241h nt

101(a) [title V (4th proviso on p.

1329-28)].

101 1329, ...........

1329–28 ......

1295c–1

1988

May 30 100–324 1 ....................................................... 102 576 .............. 2001 nt

2 ....................................................... 102 576 .............. 2001

3 ....................................................... 102 576 .............. 2002

4 ....................................................... 102 576 .............. 2003

5 ....................................................... 102 576 .............. 2004

6 ....................................................... 102 577 .............. 2005

7 ....................................................... 102 577 .............. 2006

8 ....................................................... 102 577 .............. 2007

Aug. 23 100–418 10002 ............................................... 102 1570 ............ 1710a

1989

Oct. 13 101–115 4 ....................................................... 103 692 .............. 1295c nt

8 ....................................................... 103 694 .............. 1121–2

1990

Nov. 28 101–624 1521 ................................................. 104 3665 ............ 1241q

1522 ................................................. 104 3665 ............ 1241r

1523 ................................................. 104 3666 ............ 1241s

1524 ................................................. 104 3667 ............ 1241t

1526 ................................................. 104 3668 ............ 1241u

PUBLIC LAW 109–304—OCT. 6, 2006 120 STAT. 1717

Statutes at Large—Continued

Date Chapter or

Public Law Section

Statutes at Large U.S. Code

(46 App. unless otherwise specified)

Volume Page

1527 ................................................. 104 3668 ............ 1241v

1993

Nov. 30 103–160 1358 ................................................. 107 1816 ............ 1280a

1996

Oct. 19 104–324 1117 ................................................. 110 3973 ............ 46 U.S.C.

12101 nt

1120(f) .............................................. 110 3978 ............ 883 nt

1998

Oct. 14 105–258 401 ................................................... 112 1916 ............ 1273a

Oct. 21 105–277 203(b)–(e) ......................................... 112 2681–619 .... 46 U.S.C.

12102 nt

Nov. 13 105–383 502–504 ........................................... 112 3445 ............ 46 U.S.C.

12106 nt

2000

Oct. 30 106–398 1 [§ 3506] ......................................... 114 1654, ...........

1654A–494

1118 nt

2002

Nov. 25 107–295 403 ................................................... 116 2114 ............ 46 U.S.C.

12119 nt

404 ................................................... 116 2114 ............ 316a

2003

Nov. 24 108–136 3527 ................................................. 117 1802 ............ 1280b

120 STAT. 1718 PUBLIC LAW 109–304—OCT. 6, 2006

LEGISLATIVE HISTORY—H.R. 1442:

HOUSE REPORTS: No. 109–170 (Comm. on the Judiciary).

CONGRESSIONAL RECORD:

Vol. 151 (2005): Nov. 16, considered and passed House.

Vol. 152 (2006): Sept. 13, considered and passed Senate.

Æ

Reorganization Plans

Year Plan No. Section

Statutes at Large

Volume Page

1949 6 .............. ....................................................................... 63 1069

1950 21 ............ 201, 203, 204 ............................................... 64 1276

1961 7 .............. 101–105, 201, 301, 302 ............................... 75 840, 842

Approved October 6, 2006.