IB 

House Calendar No. 61 

109TH CONGRESS 

1ST SESSION H. R. 1442

[Report No. 109–170] 

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

as positive law. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 17, 2005

Mr. SENSENBRENNER (for himself and Mr. CONYERS) introduced the 

following bill; which was referred to the Committee on the Judiciary 

JULY 14, 2005

Reported with an amendment, referred to the House Calendar, and ordered 

to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill introduced on March 17, 2005] 

A BILL

To complete the codification of title 46, United States Code, 

‘‘Shipping’’, as positive law.

1 Be it enacted by the Senate and House of Representatives of the United 

2 States of America in Congress assembled, 

3 SECTION 1. TABLE OF CONTENTS. 

4 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. 
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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. 

1 SEC. 2. PURPOSE; CONFORMITY WITH ORIGINAL INTENT. 

2 (a) PURPOSE.—The purpose of this Act is to complete the codification of 

3 title 46, United States Code, ‘‘Shipping’’, as positive law, by reorganizing 

4 and restating the laws currently in the appendix to title 46. 

5 (b) CONFORMITY WITH ORIGINAL INTENT.—In the codification of laws by 

6 this Act, the intent is to conform to the understood policy, intent, and purpose 

7 of the Congress in the original enactments, with such amendments and correc8 tions as will remove ambiguities, contradictions, and other imperfections, in 

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

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

11 SEC. 3. TITLE ANALYSIS. 

12 The title analysis of title 46, United States Code, is amended to read as 

13 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

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

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

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

14 SEC. 4. SUBTITLE I OF TITLE 46. 

15 Title 46, United States Code, is amended by inserting after the title anal16 ysis the following: 

17 ‘‘Subtitle I—General 

‘‘Chapter Sec. 

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

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

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

18 ‘‘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. 
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‘‘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. 

1 ‘‘§ 101. Agency 

2 ‘‘In this title, the term ‘agency’ means a department, agency, or instrumen3 tality of the United States Government. 

4 ‘‘§ 102. Barge 

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

6 ‘‘§ 103. Boundary Line 

7 ‘‘In this title, the term ‘Boundary Line’ means a line established under sec8 tion 2(b) of the Act of February 19, 1895 (33 U.S.C. 151). 

9 ‘‘§ 104. Citizen of the United States 

10 ‘‘In this title, the term ‘citizen of the United States’, when used in reference 

11 to a natural person, means an individual who is a national of the United 

12 States as defined in section 101(a)(22) of the Immigration and Nationality 

13 Act (8 U.S.C. 1101(a)(22)). 

14 ‘‘§ 105. Consular officer 

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

16 the United States Government designated under regulations to issue visas. 

17 ‘‘§ 106. Documented vessel 

18 ‘‘In this title, the term ‘documented vessel’ means a vessel for which a cer19 tificate of documentation has been issued under chapter 121 of this title. 

20 ‘‘§ 107. Exclusive economic zone 

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

22 by Presidential Proclamation 5030 of March 10, 1983 (16 U.S.C. 1453 note). 

23 ‘‘§ 108. Fisheries 

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

25 (except in foreign commerce), planting, cultivating, catching, taking, or har26 vesting fish, shellfish, marine animals, pearls, shells, or marine vegetation in 

27 the navigable waters of the United States or in the exclusive economic zone. 

28 ‘‘§ 109. Foreign commerce or trade 

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

30 trade’ mean commerce or trade between a place in the United States and a 

31 place in a foreign country. 

32 ‘‘(b) CAPITAL CONSTRUCTION FUNDS AND CONSTRUCTION-DIFFERENTIAL

33 SUBSIDIES.—In the context of capital construction funds under chapter 535 

34 of this title, and in the context of construction-differential subsidies under 

35 title V of the Merchant Marine Act, 1936, the terms ‘foreign commerce’ and 

36 ‘foreign trade’ also include, in the case of liquid and dry bulk cargo carrying 
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1 services, trading between foreign ports in accordance with normal commercial 

2 bulk shipping practices in a manner that will permit bulk vessels of the 

3 United States to compete freely with foreign bulk vessels in their operation 

4 or competition for charters, subject to regulations prescribed by the Secretary 

5 of Transportation. 

6 ‘‘§ 110. Foreign vessel 

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

8 operated under the authority of a foreign country. 

9 ‘‘§ 111. Numbered vessel 

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

11 has been issued under chapter 123 of this title. 

12 ‘‘§ 112. State 

13 ‘‘In this title, the term ‘State’ means a State of the United States, the Dis14 trict of Columbia, Guam, Puerto Rico, the Virgin Islands, American Samoa, 

15 the Northern Mariana Islands, and any other territory or possession of the 

16 United States. 

17 ‘‘§ 113. Undocumented 

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

19 to have a certificate of documentation issued under chapter 121 of this title. 

20 ‘‘§ 114. United States 

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

22 means the States of the United States, the District of Columbia, Guam, Puer23 to Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands, 

24 and any other territory or possession of the United States. 

25 ‘‘§ 115. Vessel 

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

27 3 of title 1. 

28 ‘‘§ 116. Vessel of the United States 

29 ‘‘In this title, the term ‘vessel of the United States’ means a vessel docu30 mented under chapter 121 of this title (or exempt from documentation under 

31 section 12102(c) of this title), numbered under chapter 123 of this title, or 

32 titled under the law of a State. 

33 ‘‘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. 

34 ‘‘§ 301. General organization 

35 ‘‘(a) ORGANIZATION.—The Federal Maritime Commission is an inde36 pendent establishment of the United States Government. 
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1 ‘‘(b) COMMISSIONERS.— 

2 ‘‘(1) COMPOSITION.—The Commission is composed of 5 Commis3 sioners, appointed by the President by and with the advice and consent 

4 of the Senate. Not more than 3 Commissioners may be appointed from 

5 the same political party. 

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

7 term beginning one year apart. An individual appointed to fill a va8 cancy is appointed only for the unexpired term of the individual being 

9 succeeded. A vacancy shall be filled in the same manner as the original 

10 appointment. When the term of a Commissioner ends, the Commissioner 

11 may continue to serve until a successor is appointed and qualified. 

12 ‘‘(3) REMOVAL.—The President may remove a Commissioner for inef13 ficiency, neglect of duty, or malfeasance in office. 

14 ‘‘(c) CHAIRMAN.— 

15 ‘‘(1) DESIGNATION.—The President shall designate one of the Commis16 sioners as Chairman. 

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

18 administrative officer of the Commission. In carrying out the duties and 

19 powers of the Commission (other than under paragraph (3)), the Chair20 man is subject to the policies, regulatory decisions, findings, and deter21 minations of the Commission. 

22 ‘‘(3) PARTICULAR DUTIES.— 

23 ‘‘(A) IN GENERAL.—The Chairman shall— 

24 ‘‘(i) appoint and supervise officers and employees of the 

25 Commission; 

26 ‘‘(ii) appoint the heads of major organizational units, but 

27 only after consultation with the other Commissioners; 

28 ‘‘(iii) distribute the business of the Commission among per29 sonnel and organizational units; 

30 ‘‘(iv) supervise the expenditure of money for administrative 

31 purposes; and 

32 ‘‘(v) assign Commission personnel, including Commissioners, 

33 to perform duties and powers delegated by the Commission 

34 under section 304 of this title. 

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

36 (v)) does not apply to personnel employed regularly and full-time 

37 in the offices of Commissioners other than the Chairman. 

38 ‘‘(4) DELEGATION.—The Chairman may designate officers and em39 ployees under the Chairman’s jurisdiction to perform duties and powers 

40 of the Chairman, subject to the Chairman’s supervision and direction. 
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1 ‘‘(d) SEAL.—The Commission shall have a seal which shall be judicially 

2 recognized. 

3 ‘‘§ 302. Quorum 

4 ‘‘A vacancy or vacancies in the membership of the Federal Maritime Com5 mission do not impair the power of the Commission to execute its functions. 

6 The affirmative vote of a majority of the Commissioners serving on the Com7 mission is required to dispose of any matter before the Commission. 

8 ‘‘§ 303. Record of meetings and votes 

9 ‘‘The Federal Maritime Commission, through its secretary, shall keep a 

10 record of its meetings and the votes taken on any action, order, contract, or 

11 financial transaction of the Commission. 

12 ‘‘§ 304. Delegation of authority 

13 ‘‘(a) DELEGATION.—The Federal Maritime Commission, by published order 

14 or regulation, may delegate to a division of the Commission, an individual 

15 Commissioner, an employee board, or an officer or employee of the Commis16 sion, any of its duties or powers, including those relating to hearing, deter17 mining, ordering, certifying, reporting, or otherwise acting on any matter. 

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

19 ‘‘(b) REVIEW.—The Commission may review any action taken under a del20 egation of authority under subsection (a). The review may be taken on the 

21 Commission’s own initiative or on the petition of a party to or an intervenor 

22 in the action, within the time and in the manner prescribed by the Commis23 sion. The vote of a majority of the Commission, less one member, is sufficient 

24 to bring an action before the Commission for review. 

25 ‘‘(c) DEEMED ACTION OF COMMISSION.—If the Commission declines review, 

26 or if review is not sought, within the time prescribed under subsection (b), 

27 the action taken under the delegation of authority is deemed to be the action 

28 of the Commission. 

29 ‘‘§ 305. Regulations 

30 ‘‘The Federal Maritime Commission may prescribe regulations to carry out 

31 its duties and powers. 

32 ‘‘§ 306. Annual report 

33 ‘‘(a) IN GENERAL.—Not later than April 1 of each year, the Federal Mari34 time Commission shall submit a report to Congress. The report shall include 

35 the results of its investigations, a summary of its transactions, the purposes 

36 for which all of its expenditures were made, and any recommendations for 

37 legislation. 

38 ‘‘(b) REPORT ON FOREIGN LAWS AND PRACTICES.—The Commission shall 

39 include in its annual report to Congress— 
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1 ‘‘(1) a list of the 20 foreign countries that generated the largest volume 

2 of oceanborne liner cargo for the most recent calendar year in bilateral 

3 trade with the United States; 

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

5 title being investigated or found to exist in foreign countries; 

6 ‘‘(3) any actions being taken by the Commission to offset those condi7 tions; 

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

9 conditions; and 

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

11 the Commission rejected and the reasons for each rejection. 

12 ‘‘§ 307. Expenditures 

13 ‘‘The Federal Maritime Commission may make such expenditures as are 

14 necessary in the performance of its functions from funds appropriated or oth15 erwise made available to it, which appropriations are authorized. 

16 ‘‘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. 

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

18 ‘‘(a) ON REQUEST OF SECRETARY OF DEFENSE.—On request of the Sec19 retary of Defense, the head of an agency responsible for the administration 

20 of the navigation or vessel-inspection laws shall waive compliance with those 

21 laws to the extent the Secretary considers necessary in the interest of national 

22 defense. 

23 ‘‘(b) BY HEAD OF AGENCY.—When the head of an agency responsible for 

24 the administration of the navigation or vessel-inspection laws considers it nec25 essary in the interest of national defense, the individual may waive compli26 ance with those laws to the extent, in the manner, and on the terms the indi27 vidual prescribes. 

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

29 shall terminate at such time as the Congress by concurrent resolution or the 

30 President may designate. 

31 ‘‘§ 502. Cargo exempt from forfeiture 

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

33 ‘‘(1) the cargo is owned in good faith by a person not the owner, mas34 ter, or crewmember of the vessel; and 

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

36 payment as provided by law. 
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1 ‘‘§ 503. Notice of seizure 

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

3 States Government required to give notice of the seizure of the vessel or cargo 

4 shall include in the notice, if they are known to that official, the name and 

5 the place of residence of the owner or consignee at the time of the seizure. 

6 ‘‘§ 504. Remission of fees and penalties 

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

8 law or regulation relating to vessels or seamen may be remitted if— 

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

10 date of the payment or forfeiture; and 

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

12 or excessively imposed. 

13 ‘‘§ 505. Penalty for violating regulation or order 

14 ‘‘A person convicted of knowingly and willfully violating a regulation or 

15 order of the Federal Maritime Commission or the Secretary of Transportation 

16 under subtitle IV or V of this title, for which no penalty is expressly provided, 

17 shall be fined not more than $500. Each day of a continuing violation is a 

18 separate offense.’’. 

19 SEC. 5. SUBTITLE II OF TITLE 46. 

20 Chapter 121 of title 46, United States Code, is amended to read as follows: 

21 ‘‘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. 
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‘‘SUBCHAPTER IV—PENALTIES 

‘‘12151. Penalties. 

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

1 ‘‘SUBCHAPTER I—GENERAL 

2 ‘‘§ 12101. Definitions 

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

4 to have been rebuilt in the United States only if the entire rebuilding, includ5 ing the construction of any major component of the hull or superstructure, 

6 was done in the United States. 

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

8 used in a law, regulation, document, ruling, or other official act referring to 

9 the documentation of a vessel, the following definitions apply: 

10 ‘‘(1) REGISTRY ENDORSEMENT.—The terms ‘certificate of registry’, 

11 ‘register’, and ‘registry’ mean a certificate of documentation with a reg12 istry endorsement issued under this chapter. 

13 ‘‘(2) COASTWISE ENDORSEMENT.—The terms ‘license’, ‘enrollment and 

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

15 and license for the coastwise (or coasting) trade’ mean a certificate of 

16 documentation with a coastwise endorsement issued under this chapter. 

17 ‘‘(3) YACHT.—The term ‘yacht’ means a recreational vessel even if not 

18 documented. 

19 ‘‘§ 12102. Vessels requiring documentation 

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

21 a trade only if the vessel has been issued a certificate of documentation with 

22 an endorsement for that trade under this chapter. 

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

24 may engage in a trade without being documented if the vessel otherwise satis25 fies the requirements to engage in the particular trade. 

26 ‘‘(c) BARGES.—A barge qualified to engage in the coastwise trade may en27 gage in the coastwise trade, without being documented, on rivers, harbors, 

28 lakes (except the Great Lakes), canals, and inland waters. 

29 ‘‘§ 12103. General eligibility requirements 

30 ‘‘(a) IN GENERAL.—Except as otherwise provided, a certificate of docu31 mentation for a vessel may be issued under this chapter only if the vessel is— 

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

33 subsection (b); 

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

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

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

37 are eligible owners: 

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

39 ‘‘(2) An association, trust, joint venture, or other entity if— 
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1 ‘‘(A) each of its members is a citizen of the United States; and 

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

3 the United States or a State. 

4 ‘‘(3) A partnership if— 

5 ‘‘(A) each general partner is a citizen of the United States; and 

6 ‘‘(B) the controlling interest in the partnership is owned by citi7 zens of the United States. 

8 ‘‘(4) A corporation if— 

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

10 a State; 

11 ‘‘(B) its chief executive officer, by whatever title, and the chair12 man of its board of directors are citizens of the United States; and 

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

14 the number necessary to constitute a quorum. 

15 ‘‘(5) The United States Government. 

16 ‘‘(6) The government of a State. 

17 ‘‘(c) TEMPORARY CERTIFICATES PRIOR TO MEASUREMENT.—Notwith18 standing subsection (a)(2), the Secretary may issue a temporary certificate 

19 of documentation for a vessel before it is measured. 

20 ‘‘§ 12104. Applications for documentation 

21 ‘‘(a) IN GENERAL.—An application for a certificate of documentation or 

22 endorsement under this chapter must be filed by the owner of the vessel. The 

23 application must be filed in the manner, be in the form, and contain the in24 formation prescribed by the Secretary. 

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

26 the applicant to provide— 

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

28 number; or 

29 ‘‘(2) if the applicant is an entity— 

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

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

32 the social security number of an individual who is a corporate offi33 cer, general partner, or individual trustee of the entity and who 

34 signs the application. 

35 ‘‘§ 12105. Issuance of documentation 

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

37 Secretary, on receipt of a proper application, shall issue a certificate of docu38 mentation or a temporary certificate of documentation for a vessel satisfying 

39 the requirements of section 12103 of this title. The certificate shall contain 

40 each endorsement under subchapter II of this chapter for which the owner ap41 plies and the vessel is eligible. 
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1 ‘‘(b) TEMPORARY CERTIFICATES FOR RECREATIONAL VESSELS.—The Sec2 retary may delegate, subject to the supervision and control of the Secretary 

3 and under terms prescribed by regulation, to private entities determined and 

4 certified by the Secretary to be qualified, the authority to issue a temporary 

5 certificate of documentation for a recreational vessel eligible under section 

6 12103 of this title. A temporary certificate issued under this subsection is 

7 valid for not more than 30 days. 

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

9 documentation shall— 

10 ‘‘(1) identify and describe the vessel; 

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

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

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

14 shall prescribe procedures to ensure the integrity of, and the accuracy of infor15 mation contained in, certificates of documentation. 

16 ‘‘§ 12106. Surrender of title and number 

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

18 required to display numbers under chapter 123 of this title, and any certifi19 cate of title issued by a State for a documented vessel shall be surrendered 

20 as provided by regulations prescribed by the Secretary. 

21 ‘‘(b) VESSELS COVERED BY PREFERRED MORTGAGE.—The Secretary may 

22 approve the surrender under subsection (a) of a certificate of title for a vessel 

23 covered by a preferred mortgage under section 31322(d) of this title only if 

24 the mortgagee consents. 

25 ‘‘§ 12107. Wrecked vessels 

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

27 it— 

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

29 and 

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

31 to at least 3 times the appraised salvage value of the vessel. 

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

33 to determine whether a vessel satisfies subsection (a)(2). The costs of the ap34 praisal shall be paid by the owner of the vessel. 

35 ‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL 

36 DOCUMENTATION 

37 ‘‘§ 12111. Registry endorsement 

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

39 that satisfies the requirements of section 12103 of this title. 
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1 ‘‘(b) AUTHORIZED ACTIVITY.—A vessel for which a registry endorsement is 

2 issued may engage in foreign trade or trade with Guam, American Samoa, 

3 Wake, Midway, or Kingman Reef. 

4 ‘‘(c) CERTAIN VESSELS OWNED BY TRUSTS.— 

5 ‘‘(1) NONAPPLICATION OF BENEFICIARY CITIZENSHIP REQUIREMENT.— 

6 For the issuance of a certificate of documentation with only a registry 

7 endorsement, the beneficiaries of a trust are not required to be citizens 

8 of the United States if the trust qualifies under paragraph (2) and the 

9 vessel is subject to a charter to a citizen of the United States. 

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

11 ‘‘(A) IN GENERAL.—Subject to subparagraph (B), a trust quali12 fies under this paragraph with respect to a vessel only if— 

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

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

15 the affidavit of each trustee stating that the trustee is not 

16 aware of any reason involving a beneficiary of the trust that 

17 is not a citizen of the United States, or involving any other 

18 person that is not a citizen of the United States, as a result 

19 of which the beneficiary or other person would hold more than 

20 25 percent of the aggregate power to influence or limit the exer21 cise of the authority of the trustee with respect to matters in22 volving any ownership or operation of the vessel that may ad23 versely affect the interests of the United States. 

24 ‘‘(B) AUTHORITY OF NON-CITIZENS.—If any person that is not a 

25 citizen of the United States has authority to direct or participate 

26 in directing a trustee for a trust in matters involving any owner27 ship or operation of the vessel that may adversely affect the interests 

28 of the United States or in removing a trustee for a trust without 

29 cause, either directly or indirectly through the control of another 

30 person, the trust is not qualified under this paragraph unless the 

31 trust instrument provides that persons who are not citizens of the 

32 United States may not hold more than 25 percent of the aggregate 

33 authority to so direct or remove a trustee. 

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

35 (B) do not prohibit a person that is not a citizen of the United 

36 States from holding more than 25 percent of the beneficial interest 

37 in a trust. 

38 ‘‘(3) CITIZENSHIP OF PERSON CHARTERING VESSEL.—If a person 

39 chartering a vessel from a trust that qualifies under paragraph (2) is 

40 a citizen of the United States under section 50501 of this title, the vessel 
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1 is deemed to be owned by a citizen of the United States for purposes of 

2 that section and related laws, except chapter 531 of this title. 

3 ‘‘§ 12112. Coastwise endorsement 

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

5 that— 

6 ‘‘(1) satisfies the requirements of section 12103 of this title; 

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

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

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

10 lawfully condemned as prize; 

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

12 United States; or 

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

14 title; and 

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

16 in the coastwise trade. 

17 ‘‘(b) AUTHORIZED ACTIVITY.—Subject to the laws of the United States reg18 ulating the coastwise trade, a vessel for which a coastwise endorsement is 

19 issued may engage in the coastwise trade. 

20 ‘‘§ 12113. Fishery endorsement 

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

22 that— 

23 ‘‘(1) satisfies the requirements of section 12103 of this title and, if 

24 owned by an entity, the entity satisfies the ownership requirements in 

25 subsection (c); 

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

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

28 ‘‘(4) was not forfeited to the United States Government after July 1, 

29 2001, for a breach of the laws of the United States; and 

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

31 in the fisheries. 

32 ‘‘(b) AUTHORIZED ACTIVITY.— 

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

34 the fisheries, a vessel for which a fishery endorsement is issued may en35 gage in the fisheries. 

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

37 immediately if the vessel for which it is issued is used as a fishing vessel 

38 while it is chartered or leased to an individual who is not a citizen of 

39 the United States or to an entity that is not eligible to own a vessel with 

40 a fishery endorsement. 

41 ‘‘(c) OWNERSHIP REQUIREMENTS FOR ENTITIES.— 
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1 ‘‘(1) IN GENERAL.—A vessel owned by an entity is eligible for a fish2 ery endorsement only if at least 75 percent of the interest in the entity, 

3 at each tier of ownership and in the aggregate, is owned and controlled 

4 by citizens of the United States. 

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

6 at least 75 percent of the interest in the entity is owned and controlled 

7 by citizens of the United States under paragraph (1), the Secretary shall 

8 apply section 50501(d) of this title, except that for this purpose the terms 

9 ‘control’ or ‘controlled’— 

10 ‘‘(A) include the right to— 

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

12 ‘‘(ii) limit the actions of or replace the chief executive officer, 

13 a majority of the board of directors, any general partner, or 

14 any person serving in a management capacity of the entity; or 

15 ‘‘(iii) direct the transfer, operation, or manning of a vessel 

16 with a fishery endorsement; but 

17 ‘‘(B) do not include the right to simply participate in the activi18 ties under subparagraph (A), or the exercise of rights under loan 

19 or mortgage covenants by a mortgagee eligible to be a preferred 

20 mortgagee under section 31322(a) of this title, except that a mort21 gagee not eligible to own a vessel with a fishery endorsement may 

22 only operate such a vessel to the extent necessary for the immediate 

23 safety of the vessel or for repairs, drydocking, or berthing changes. 

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

25 it is engaged in the fisheries in the exclusive economic zone under the 

26 authority of the Western Pacific Fishery Management Council established 

27 under section 302(a)(1)(H) of the Magnuson-Stevens Fishery Conserva28 tion and Management Act (16 U.S.C. 1852(a)(1)(H)) or to a purse seine 

29 vessel when it is engaged in tuna fishing in the Pacific Ocean outside 

30 the exclusive economic zone or pursuant to the South Pacific Regional 

31 Fisheries Treaty, provided that the owner of the vessel continues to com32 ply with the eligibility requirements for a fishery endorsement under the 

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

34 issued pursuant to this paragraph is valid for engaging only in the ac35 tivities described in this paragraph. 

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

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

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

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

40 chapter 145 of this title or 1,900 gross registered tons as measured 

41 under chapter 143 of this title; or 
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1 ‘‘(C) has an engine or engines capable of producing a total of 

2 more than 3,000 shaft horsepower. 

3 ‘‘(2) REQUIREMENTS.—A vessel subject to this subsection is not eligible 

4 for a fishery endorsement unless— 

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

6 and endorsed with a fishery endorsement that was effective on Sep7 tember 25, 1997; 

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

9 21, 1998; and 

10 ‘‘(iii) if the fishery endorsement is invalidated after October 21, 

11 1998, application is made for a new fishery endorsement within 15 

12 business days of the invalidation; or 

13 ‘‘(B) the owner of the vessel demonstrates to the Secretary that 

14 the regional fishery management council of jurisdiction established 

15 under section 302(a)(1) of the Magnuson-Stevens Fishery Conserva16 tion and Management Act (16 U.S.C. 1852(a)(1)) has recommended 

17 after October 21, 1998, and the Secretary of Commerce has ap18 proved, conservation and management measures in accordance with 

19 the American Fisheries Act (Public Law 105–277, div. C, title II) 

20 (16 U.S.C. 1851 note) to allow the vessel to be used in fisheries 

21 under the council’s authority. 

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

23 ‘‘(1) IN GENERAL.—The Administrator of the Maritime Administra24 tion shall administer subsections (c) and (d) with respect to vessels 100 

25 feet or greater in registered length. The owner of each such vessel shall 

26 file a statement of citizenship setting forth all relevant facts regarding 

27 vessel ownership and control with the Administrator on an annual basis 

28 to demonstrate compliance with those provisions. 

29 ‘‘(2) REGULATIONS.—Regulations to implement this subsection shall 

30 conform to the extent practicable with the regulations establishing the 

31 form of citizenship affidavit set forth in part 355 of title 46, Code of 

32 Federal Regulations, as in effect on September 25, 1997, except that the 

33 form of the statement shall be written in a manner to allow the owner 

34 of the vessel to satisfy any annual renewal requirements for a certificate 

35 of documentation for the vessel and to comply with this subsection and 

36 subsections (c) and (d), and shall not be required to be notarized. 

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

38 of vessels subject to subsection (c) or (d), which are 100 feet or greater 

39 in registered length, shall be rigorously scrutinized for violations of those 

40 provisions, with particular attention given to— 
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1 ‘‘(A) leases, charters, mortgages, financing, and similar arrange2 ments; 

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

4 fishery endorsement under subsection (c) or (d), over the manage5 ment, sales, financing, or other operations of an entity; and 

6 ‘‘(C) contracts involving the purchase over extended periods of 

7 time of all, or substantially all, of the living marine resources har8 vested by a fishing vessel. 

9 ‘‘(f) VESSELS MEASURING LESS THAN 100 FEET.—The Secretary shall es10 tablish reasonable and necessary requirements to demonstrate compliance with 

11 subsections (c) and (d), with respect to vessels measuring less than 100 feet 

12 in registered length, and shall seek to minimize the administrative burden on 

13 individuals who own and operate those vessels. 

14 ‘‘(g) VESSELS PURCHASED THROUGH FISHING CAPACITY REDUCTION PRO15 GRAM.—A vessel purchased by the Secretary of Commerce through a fishing 

16 capacity reduction program under the Magnuson-Stevens Fishery Conserva17 tion Management Act (16 U.S.C. 1801 et seq.) or section 308 of the Interjuris18 dictional Fisheries Act of 1986 (16 U.S.C. 4107) is not eligible for a fishery 

19 endorsement, and any fishery endorsement issued for that vessel is invalid. 

20 ‘‘(h) REVOCATION OF ENDORSEMENTS.—The Secretary shall revoke the fish21 ery endorsement of any vessel subject to subsection (c) or (d) whose owner does 

22 not comply with those provisions. 

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

24 sections 12151(c) and 31322(b) of this title shall prohibit impermissible trans25 fers of ownership or control, specify any transactions that require prior ap26 proval of an implementing agency, identify transactions that do not require 

27 prior agency approval, and to the extent practicable, minimize disruptions 

28 to the commercial fishing industry, to the traditional financing arrangements 

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

30 ‘‘§ 12114. Recreational endorsement 

31 ‘‘(a) REQUIREMENTS.—A recreational endorsement may be issued for a ves32 sel that satisfies the requirements of section 12103 of this title. 

33 ‘‘(b) AUTHORIZED ACTIVITY.—A vessel operating under a recreational en34 dorsement may be operated only for pleasure. 

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

36 endorsement is issued may proceed between a port of the United States and 

37 a port of a foreign country without entering or clearing with the Secretary 

38 of Homeland Security. However, a recreational vessel is subject to the require39 ments for reporting arrivals under section 433 of the Tariff Act of 1930 (19 

40 U.S.C. 1433), and individuals on the vessel are subject to applicable customs 

41 regulations. 
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1 ‘‘§ 12115. Temporary endorsement for vessels procured out2 side the United States 

3 ‘‘(a) GENERAL AUTHORITY.—The Secretary and the Secretary of State, act4 ing jointly, may provide for the issuance of a certificate of documentation 

5 with an appropriate endorsement for a vessel procured outside the United 

6 States and meeting the ownership requirements of section 12103 of this title. 

7 ‘‘(b) AUTHORIZED ACTIVITY.—Subject to limitations the Secretary may 

8 prescribe, a vessel documented under this section may proceed to the United 

9 States and engage en route in foreign trade or trade with Guam, American 

10 Samoa, Wake, Midway, or Kingman Reef. 

11 ‘‘(c) APPLICATION OF UNITED STATES JURISDICTION AND LAWS.—A vessel 

12 documented under this section is subject to the jurisdiction and laws of the 

13 United States. However, if the Secretary considers it to be in the public inter14 est, the Secretary may suspend for a period of not more than 6 months the 

15 application of a vessel inspection law carried out by the Secretary or regula16 tions prescribed under that law. 

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

18 States, the certificate of documentation shall be surrendered as provided by 

19 regulations prescribed by the Secretary. 

20 ‘‘§ 12116. Limited endorsements for Guam, American Samoa, 

21 and Northern Mariana Islands 

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

23 (b) may be issued— 

24 ‘‘(1) a coastwise endorsement to engage in the coastwise trade of fish25 eries products between places in Guam, American Samoa, and the North26 ern Mariana Islands; or 

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

28 and fishery conservation zone adjacent to Guam, American Samoa, and 

29 the Northern Mariana Islands. 

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

31 for a vessel that— 

32 ‘‘(1) satisfies the requirements of section 12103 of this title; 

33 ‘‘(2) was not built in the United States, except that for an endorse34 ment under subsection (a)(2), the vessel must not have been built or re35 built in the United States; 

36 ‘‘(3) is less than 200 gross tons as measured under section 14502 of 

37 this title, or an alternate tonnage as measured under section 14302 of 

38 this title as prescribed by the Secretary under section 14104 of this title; 

39 and 

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

41 in the coastwise trade or the fisheries, as the case may be. 
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1 ‘‘§ 12117. Oil spill response vessels 

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

3 that— 

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

5 the ownership requirement otherwise applicable without regard to this 

6 section; 

7 ‘‘(2) is owned by a not-for-profit oil spill response cooperative or by 

8 members of such a cooperative that dedicate the vessel to use by the coop9 erative; 

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

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

12 ‘‘(4) is to be used only for— 

13 ‘‘(i) deploying equipment, supplies, and personnel to recover, con14 tain, or transport oil discharged into the navigable waters of the 

15 United States or the exclusive economic zone; or 

16 ‘‘(ii) training exercises to prepare to respond to such a discharge. 

17 ‘‘(b) DEEMED OWNED BY CITIZENS.—A vessel satisfying subsection (a) is 

18 deemed to be owned only by citizens of the United States under sections 

19 12103, 12132, and 50501 of this title. 

20 ‘‘§ 12118. Owners engaged primarily in manufacturing or 

21 mineral industry 

22 ‘‘(a) DEFINITIONS.—In this section: 

23 ‘‘(1) BOWATERS CORPORATION.—The term ‘Bowaters corporation’ 

24 means a corporation that has filed a certificate under oath with the Sec25 retary, in the form and at the times prescribed by the Secretary, estab26 lishing that— 

27 ‘‘(A) the corporation is incorporated under the laws of the United 

28 States or a State; 

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

30 are individuals who are citizens of the United States; 

31 ‘‘(C) at least 90 percent of the employees of the corporation are 

32 residents of the United States; 

33 ‘‘(D) the corporation is engaged primarily in a manufacturing 

34 or mineral industry in the United States; 

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

36 is not more than 10 percent of the total book value of the assets of 

37 the corporation; and 

38 ‘‘(F) the corporation buys or produces in the United States at 

39 least 75 percent of the raw materials used or sold in its operations. 
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1 ‘‘(2) PARENT.—The term ‘parent’ means a corporation that has filed 

2 a certificate under oath with the Secretary, in the form and at the times 

3 prescribed by the Secretary, establishing that the corporation— 

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

5 State; and 

6 ‘‘(B) controls, directly or indirectly, at least 50 percent of the vot7 ing stock of a Bowaters corporation. 

8 ‘‘(3) SUBSIDIARY.—The term ‘subsidiary’ means a corporation that 

9 has filed a certificate under oath with the Secretary, in the form and 

10 at the times prescribed by the Secretary, establishing that the corpora11 tion— 

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

13 State; and 

14 ‘‘(B) has at least 50 percent of its voting stock controlled, directly 

15 or indirectly, by a Bowaters corporation or its parent. 

16 ‘‘(b) DEEMED CITIZEN.—A Bowaters corporation is deemed to be a citizen 

17 of the United States for purposes of chapters 121, 551, and 561 and section 

18 80104 of this title. 

19 ‘‘(c) ISSUANCE OF DOCUMENTATION.—A certificate of documentation and 

20 appropriate endorsement may be issued for a vessel that— 

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

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

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

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

25 under section 14302 of this title as prescribed by the Secretary under sec26 tion 14104 of this title; or 

27 ‘‘(B) is not self-propelled. 

28 ‘‘(d) EFFECTS OF DOCUMENTATION.— 

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

30 ‘‘(A) a vessel documented under this section may engage in the 

31 coastwise trade; and 

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

33 benefits and are subject to the same requirements and penalties as 

34 if the vessel were otherwise documented or exempt from documenta35 tion under this chapter. 

36 ‘‘(2) TRANSPORTATION OF PASSENGERS OR MERCHANDISE.—A vessel 

37 documented under this section may transport passengers or merchandise 

38 for hire in the coastwise trade only— 

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

40 owning the vessel; or 
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1 ‘‘(B) when under a demise or bareboat charter, at prevailing 

2 rates for use not in the domestic noncontiguous trades, from the cor3 poration owning the vessel to a carrier that— 

4 ‘‘(i) is subject to jurisdiction under subchapter II of chapter 

5 135 of title 49; 

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

7 under section 50501 of this title; and 

8 ‘‘(iii) is not owned or controlled, directly or indirectly, by 

9 the corporation owning the vessel. 

10 ‘‘(e) VALIDITY OF CORPORATE CERTIFICATE.—A certificate filed by a cor11 poration under this section remains valid only as long as the corporation con12 tinues to satisfy the conditions required of the corporation by this section. 

13 When a corporation no longer satisfies those conditions, the corporation loses 

14 its status under this section and immediately shall surrender to the Secretary 

15 any documents issued to it based on that status. 

16 ‘‘(f) PENALTIES.— 

17 ‘‘(1) FALSIFYING MATERIAL FACT.—If a corporation knowingly fal18 sifies a material fact in a certificate filed under subsection (a), the vessel 

19 (or its value) documented or operated under this section shall be forfeited. 

20 ‘‘(2) TRANSPORTING MERCHANDISE.—If a vessel transports merchan21 dise for hire in violation of this section, the merchandise shall be forfeited 

22 to the United States Government. 

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

24 for hire in violation of this section, the vessel is liable for a penalty of 

25 $200 for each passenger so transported. 

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

27 under this subsection may be remitted or mitigated under section 2107(b) 

28 of this title. 

29 ‘‘§ 12119. Owners engaged primarily in leasing or financing 

30 transactions 

31 ‘‘(a) DEFINITIONS.—In this section: 

32 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means, with respect to any per33 son, any other person that is— 

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

35 with, or controlling that person; or 

36 ‘‘(ii) named as being part of the same consolidated group in any 

37 report or other document submitted to the United States Securities 

38 and Exchange Commission or the Internal Revenue Service. 

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

40 is held for non-commercial reasons and primarily for the purpose of 

41 evading the requirements of subsection (c)(3). 
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1 ‘‘(3) OIL.—The term ‘oil’ has the meaning given that term in section 

2 2101(20) of this title. 

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

4 investment in which neither the investor nor any affiliate of the investor 

5 is involved in, or has the power to be involved in, the formulation, deter6 mination, or direction of any activity or function concerning the man7 agement, use, or operation of the asset that is the subject of the invest8 ment. 

9 ‘‘(5) QUALIFIED PROPRIETARY CARGO.—The term ‘qualified propri10 etary cargo’ means— 

11 ‘‘(A) oil, petroleum products, petrochemicals, or liquefied natural 

12 gas cargo that is beneficially owned by the person that submits to 

13 the Secretary an application or annual certification under sub14 section (c)(3), or by an affiliate of that person, immediately before, 

15 during, or immediately after the cargo is carried in coastwise trade 

16 on a vessel owned by that person; 

17 ‘‘(B) oil, petroleum products, petrochemicals, or liquefied natural 

18 gas cargo not beneficially owned by the person that submits to the 

19 Secretary an application or an annual certification under sub20 section (c)(3), or by an affiliate of that person, but which is carried 

21 in coastwise trade by a vessel owned by that person and which is 

22 part of an arrangement in which vessels owned by that person and 

23 at least one other person are operated collectively as one fleet, to the 

24 extent that an equal amount of oil, petroleum products, petrochemi25 cals, or liquefied natural gas cargo beneficially owned by that per26 son, or by an affiliate of that person, is carried in coastwise trade 

27 on one or more other vessels, not owned by that person, or by an 

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

29 of the same arrangement; 

30 ‘‘(C) in the case of a towing vessel associated with a non-self-pro31 pelled tank vessel where both vessels function as a single self-pro32 pelled vessel, oil, petroleum products, petrochemicals, or liquefied 

33 natural gas cargo that is beneficially owned by the person that owns 

34 both the towing vessel and the non-self-propelled tank vessel, or any 

35 United States affiliate of that person, immediately before, during, 

36 or immediately after the cargo is carried in coastwise trade on ei37 ther of those vessels; or 

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

39 natural gas cargo carried on any vessel that is either a self-pro40 pelled tank vessel having a length of at least 210 meters or a tank 

41 vessel that is a liquefied natural gas carrier that— 
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1 ‘‘(i) was delivered by the builder of the vessel to the owner 

2 of the vessel after December 31, 1999; and 

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

4 the reasonable expectation, of transporting on the vessel lique5 fied natural gas or unrefined petroleum beneficially owned by 

6 the owner of the vessel, or an affiliate of the owner, from Alas7 ka to the continental United States. 

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

9 means, with respect to any person, an affiliate the principal place of 

10 business of which is located in the United States. 

11 ‘‘(b) REQUIREMENTS.—A coastwise endorsement may be issued for a vessel 

12 if— 

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

14 except for the ownership requirement otherwise applicable without regard 

15 to this section; 

16 ‘‘(2) the person that owns the vessel (or, if the vessel is owned by a 

17 trust or similar arrangement, the beneficiary of the trust or similar ar18 rangement) meets the requirements of subsection (c); 

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

20 the Secretary that the person is a citizen of the United States under sec21 tion 50501 of this title for engaging in the coastwise trade; and 

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

23 period as may be prescribed by the Secretary. 

24 ‘‘(c) OWNERSHIP CERTIFICATION.— 

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

26 if the person transmits to the Secretary each year the certification re27 quired by paragraph (2) or (3) with respect to a vessel. 

28 ‘‘(2) INVESTMENT CERTIFICATION.—To meet the certification require29 ment of this paragraph, a person shall certify that it— 

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

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

32 a passive investment; 

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

34 of any person that operates any vessel for hire; and 

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

36 of the vessel or any other person that has the right, directly or indi37 rectly, to control or direct the movement or use of the vessel. 

38 ‘‘(3) CERTAIN TANK VESSELS.— 

39 ‘‘(A) IN GENERAL.—To meet the certification requirement of this 

40 paragraph, a person shall certify that— 
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1 ‘‘(i) the aggregate book value of the vessels owned by the per2 son and United States affiliates of the person does not exceed 

3 10 percent of the aggregate book value of all assets owned by 

4 the person and its United States affiliates; 

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

6 the person and its United States affiliates is derived from the 

7 ownership, operation, or management of vessels; 

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

9 cargo carried by all vessels owned by the person and its United 

10 States affiliates and documented with a coastwise endorsement 

11 is qualified proprietary cargo; 

12 ‘‘(iv) any cargo other than qualified proprietary cargo car13 ried by all vessels owned by the person and its United States 

14 affiliates and documented with a coastwise endorsement con15 sists of oil, petroleum products, petrochemicals, or liquified 

16 natural gas; 

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

18 States affiliates and documented with a coastwise endorsement 

19 carries molten sulphur; and 

20 ‘‘(vi) the person owned one or more vessels documented under 

21 this section as of August 9, 2004. 

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

23 make a certification under this paragraph only with respect to— 

24 ‘‘(i) a tank vessel having a tonnage of at least 6,000 gross 

25 tons, as measured under section 14502 of this title (or an alter26 native tonnage measured under section 14302 of this title as 

27 prescribed by the Secretary under section 14104 of this title); 

28 or 

29 ‘‘(ii) a towing vessel associated with a non-self-propelled 

30 tank vessel that meets the requirements of clause (i), where both 

31 vessels function as a single self-propelled vessel. 

32 ‘‘(d) FILING OF DEMISE CHARTER.—The demise charter and any amend33 ments to the charter shall be filed with the certification required by subsection 

34 (b)(3) or within 10 days after filing an amendment to the charter. The char35 ter and amendments shall be made available to the public. 

36 ‘‘(e) CONTINUATION OF ENDORSEMENT AFTER TERMINATION OF CHAR37 TER.—When a charter required by subsection (b)(3) is terminated for default 

38 by the charterer, the Secretary may continue the coastwise endorsement for 

39 not more than 6 months on terms and conditions the Secretary may prescribe. 
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1 ‘‘(f) DEEMED OWNED BY CITIZENS.—A vessel satisfying the requirements 

2 of this section is deemed to be owned only by citizens of the United States 

3 under sections 12103 and 50501 of this title. 

4 ‘‘§ 12120. Liquified gas tankers 

5 ‘‘Notwithstanding any agreement with the United States Government, the 

6 Secretary may issue a certificate of documentation with a coastwise endorse7 ment for a vessel to transport liquified natural gas or liquified petroleum gas 

8 to Puerto Rico from other ports in the United States, if the vessel— 

9 ‘‘(1) is a foreign built vessel that was built before October 19, 1996; 

10 or 

11 ‘‘(2) was documented under this chapter before that date, even if the 

12 vessel is placed under a foreign registry and subsequently redocumented 

13 under this chapter for operation under this section. 

14 ‘‘§ 12121. Small passenger vessels and uninspected passenger 

15 vessels 

16 ‘‘(a) DEFINITIONS.—In this section: 

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

18 that— 

19 ‘‘(A) was not built in the United States and is at least 3 years 

20 old; or 

21 ‘‘(B) if rebuilt, was rebuilt outside the United States at least 3 

22 years before the certificate requested under subsection (b) would take 

23 effect. 

24 ‘‘(2) SMALL PASSENGER VESSEL; UNINSPECTED PASSENGER VESSEL; 

25 PASSENGER FOR HIRE.—The terms ‘small passenger vessel’, ‘uninspected 

26 passenger vessel’, and ‘passenger for hire’ have the meaning given those 

27 terms in section 2101 of this title. 

28 ‘‘(b) ISSUANCE OF CERTIFICATE AND ENDORSEMENT.—Notwithstanding 

29 sections 12112, 12113, 55102, and 55103 of this title, the Secretary may issue 

30 a certificate of documentation with an appropriate endorsement for employ31 ment in the coastwise trade as a small passenger vessel or an uninspected pas32 senger vessel in the case of an eligible vessel authorized to carry no more than 

33 12 passengers for hire if the Secretary of Transportation, after notice and an 

34 opportunity for public comment, determines that the employment of the vessel 

35 in the coastwise trade will not adversely affect— 

36 ‘‘(1) United States vessel builders; or 

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

38 built in the United States in that business. 

39 ‘‘(c) REVOCATION.— 

40 ‘‘(1) FOR FRAUD.—The Secretary shall revoke a certificate or endorse41 ment issued under subsection (b) if the Secretary of Transportation, after 
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1 notice and an opportunity for a hearing, determines that the certificate 

2 or endorsement was obtained by fraud. 

3 ‘‘(2) OTHER PROVISIONS NOT AFFECTED.—Paragraph (1) does not af4 fect— 

5 ‘‘(A) the criminal prohibition on fraud and false statements in 

6 section 1001 of title 18; or 

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

8 or endorsement issued under subsection (b). 

9 ‘‘SUBCHAPTER III—MISCELLANEOUS 

10 ‘‘§ 12131. Command of documented vessels 

11 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), a documented 

12 vessel may be placed under the commmand only of a citizen of the United 

13 States. 

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

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

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

17 the United States. 

18 ‘‘§ 12132. Loss of coastwise trade privileges 

19 ‘‘(a) SOLD FOREIGN OR PLACED UNDER FOREIGN REGISTRY.—A vessel of 

20 more than 200 gross tons (as measured under chapter 143 of this title), eligi21 ble to engage in the coastwise trade, and later sold foreign in whole or in 

22 part or placed under foreign registry may not thereafter engage in the coast23 wise trade. 

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

25 in the coastwise trade and later rebuilt outside the United States may not 

26 thereafter engage in the coastwise trade. 

27 ‘‘§ 12133. Duty to carry certificate on vessel and allow exam28 ination 

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

30 be carried on the vessel unless the vessel is exempt by regulation from carrying 

31 the certificate. 

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

33 to carry its certificate of documentation shall make the certificate available 

34 for examination at the request of an officer enforcing the revenue laws or as 

35 otherwise required by law or regulation. 

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

37 be fined under title 18, imprisoned for not more than one year, or both. 

38 ‘‘§ 12134. Evidentiary uses of documentation 

39 ‘‘A certificate of documentation is— 

40 ‘‘(1) conclusive evidence of nationality for international purposes, but 

41 not in a proceeding conducted under the laws of the United States; 
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1 ‘‘(2) conclusive evidence of qualification to engage in a specified trade; 

2 and 

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

4 ownership is in issue. 

5 ‘‘§ 12135. Invalidation of certificates of documentation 

6 ‘‘A certificate of documentation or an endorsement on the certificate is in7 valid if the vessel for which it is issued— 

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

9 prescribed under this chapter applicable to the certificate or endorsement; 

10 or 

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

12 the United States in violation of section 12131 of this title. 

13 ‘‘§ 12136. Surrender of certificates of documentation 

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

15 with an invalid endorsement, shall be surrendered as provided by regulations 

16 prescribed by the Secretary. 

17 ‘‘(b) CONDITIONS FOR SURRENDER.— 

18 ‘‘(1) VESSELS OVER 1,000 TONS.—The Secretary may condition ap19 proval of the surrender of the certificate of documentation for a vessel 

20 over 1,000 gross tons. 

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

22 the surrender of the certificate of documentation of a vessel covered by 

23 a mortgage filed or recorded under section 31321 of this title only if the 

24 mortgagee consents. 

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

26 surrender of the certificate of documentation for a vessel solely on the 

27 basis that a notice of a claim of a lien on the vessel has been recorded 

28 under section 31343(a) of this title. 

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

30 ‘‘(1) IN GENERAL.—Notwithstanding subsection (a), until the certifi31 cate of documentation is surrendered with the approval of the Secretary, 

32 a documented vessel is deemed to continue to be documented under this 

33 chapter for purposes of— 

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

35 before the date of invalidation and an assignment after that date; 

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

37 title; and 

38 ‘‘(C) any other law of the United States identified by the Sec39 retary by regulation as a law to which the Secretary applies this 

40 subsection. 
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1 ‘‘(2) EXCEPTION.—This subsection does not apply when a vessel is for2 feited or sold by order of a district court of the United States. 

3 ‘‘§ 12137. Recording of vessels built in the United States 

4 ‘‘The Secretary may provide for recording and certifying information about 

5 vessels built in the United States that the Secretary considers to be in the 

6 public interest. 

7 ‘‘§ 12138. List of documented vessels 

8 ‘‘(a) IN GENERAL.—The Secretary shall publish periodically a list of all 

9 documented vessels and information about those vessels that the Secretary con10 siders pertinent or useful. The list shall contain a notation clearly indicating 

11 all vessels classed by the American Bureau of Shipping. 

12 ‘‘(b) VESSELS FOR CABLE LAYING, MAINTENANCE, AND REPAIR.— 

13 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall develop, 

14 maintain, and periodically update an inventory of vessels that are docu15 mented under this chapter, are at least 200 feet in length, and have the 

16 capability to lay, maintain, or repair a submarine cable, without regard 

17 to whether a particular vessel is classed as a cable ship or cable vessel. 

18 ‘‘(2) INFORMATION TO BE INCLUDED.—For each vessel listed in the in19 ventory, the Secretary of Transportation shall include in the inventory— 

20 ‘‘(A) the name, length, beam, depth, and other distinguishing 

21 characteristics of the vessel; 

22 ‘‘(B) the abilities and limitations of the vessel with respect to lay23 ing, maintaining, and repairing a submarine cable; and 

24 ‘‘(C) the name and address of the person to whom inquiries re25 garding the vessel may be made. 

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

27 the Federal Register an updated inventory every 6 months. 

28 ‘‘§ 12139. Reports 

29 ‘‘(a) IN GENERAL.—To ensure compliance with this chapter and laws gov30 erning the qualifications of vessels to engage in the coastwise trade and the 

31 fisheries, the Secretary may require owners, masters, and charterers of docu32 mented vessels to submit reports in any reasonable form and manner the Sec33 retary may prescribe. 

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

35 ‘‘(1) IN GENERAL.—Under regulations prescribed by the Secretary, if 

36 a vessel exceeding the tonnage specified in paragraph (2) and docu37 mented or last documented under the laws of the United States is rebuilt 

38 outside the United States, the owner or master shall submit a report of 

39 the rebuilding to the Secretary. 

40 ‘‘(2) TONNAGE.—The tonnage referred to in paragraph (1) is— 
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1 ‘‘(A) 500 gross tons as measured under section 14502 of this title; 

2 or 

3 ‘‘(B) an alternate tonnage as measured under section 14302 of 

4 this title as prescribed by the Secretary under section 14104 of this 

5 title. 

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

7 United States, the report shall be submitted when the rebuilding is com8 pleted. If the rebuilding is completed outside the United States, the report 

9 shall be submitted when the vessel first arrives at a port in the customs 

10 territory of the United States. 

11 ‘‘SUBCHAPTER IV—PENALTIES 

12 ‘‘§ 12151. Penalties 

13 ‘‘(a) IN GENERAL.—A person that violates this chapter or a regulation pre14 scribed under this chapter is liable to the United States Government for a 

15 civil penalty of not more than $10,000. Each day of a continuing violation 

16 is a separate violation. 

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

18 are liable to seizure by and forfeiture to the Government if— 

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

20 knowingly falsifies or conceals a material fact, or knowingly makes a 

21 false statement or representation, about the documentation of the vessel 

22 or in applying for documentation of the vessel; 

23 ‘‘(2) a certificate of documentation is knowingly and fraudulently used 

24 for the vessel; 

25 ‘‘(3) the vessel is operated after its endorsement has been denied or re26 voked under section 12152 of this title; 

27 ‘‘(4) the vessel is employed in a trade without an appropriate endorse28 ment; 

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

30 other than for pleasure; 

31 ‘‘(6) the vessel is a documented vessel and is placed under the com32 mand of a person not a citizen of the United States, except as authorized 

33 by section 12131(b) of this title; or 

34 ‘‘(7) the vessel is rebuilt outside the United States and a report of the 

35 rebuilding is not submitted as required by section 12139(b) of this title. 

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

37 to other penalties under this section, the owner of a documented vessel for 

38 which a fishery endorsement has been issued is liable to the Government for 

39 a civil penalty of not more than $100,000 for each day the vessel engages in 

40 fishing (as defined in section 3 of the Magnuson-Stevens Fishery Conservation 

41 and Management Act (16 U.S.C. 1802)) within the exclusive economic zone, 
29 

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1 if the owner or the representative or agent of the owner knowingly falsified 

2 or concealed a material fact, or knowingly made a false statement or represen3 tation, about the eligibility of the vessel under section 12113(c) or (d) of this 

4 title in applying for or applying to renew the fishery endorsement. 

5 ‘‘§ 12152. Denial or revocation of endorsement for non-pay6 ment of civil penalty 

7 ‘‘If the owner of a vessel fails to pay a civil penalty imposed by the Sec8 retary, the Secretary may deny the issuance or renewal of an endorsement, 

9 or revoke the endorsement, on a certificate of documentation issued for the ves10 sel under this chapter.’’. 

11 SEC. 6. SUBTITLE III OF TITLE 46. 

12 (a) SUBTITLE ANALYSIS.—The analysis of subtitle III of title 46, United 

13 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’’. 

14 (b) REPEALS.—Title 46, United States Code, is amended by striking chap15 ter 301 and the lines appearing immediately before and immediately after 

16 chapter 313 indicating that certain chapters are reserved. 

17 (c) CHAPTERS 301–311.—Title 46, United States Code, is amended by in18 serting after the analysis of subtitle III the following: 

19 ‘‘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. 

20 ‘‘§ 30101. Extension of jurisdiction to cases of damage or in21 jury on land 

22 ‘‘(a) IN GENERAL.—The admiralty and maritime jurisdiction of the United 

23 States extends to and includes cases of injury or damage, to person or prop24 erty, caused by a vessel on navigable waters, even though the injury or dam25 age is done or consummated on land. 

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

27 brought in rem or in personam according to the principles of law and the 

28 rules of practice applicable in cases where the injury or damage has been done 

29 and consummated on navigable waters. 

30 ‘‘(c) ACTIONS AGAINST UNITED STATES.— 
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1 ‘‘(1) EXCLUSIVE REMEDY.—In a civil action against the United States 

2 for injury or damage done or consummated on land by a vessel on navi3 gable waters, chapter 309 or 311 of this title, as appropriate, provides 

4 the exclusive remedy. 

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

6 (1) may not be brought until the expiration of the 6-month period after 

7 the claim has been presented in writing to the agency owning or oper8 ating the vessel causing the injury or damage. 

9 ‘‘§ 30102. Liability to passengers 

10 ‘‘(a) LIABILITY.—The owner and master of a vessel, and the vessel, are lia11 ble for personal injury to a passenger or damage to a passenger’s baggage 

12 caused by— 

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

14 of this title; or 

15 ‘‘(2) a known defect in the steaming apparatus or hull of the vessel. 

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

17 is not subject to limitation under chapter 305 of this title. 

18 ‘‘§ 30103. Liability of master, mate, engineer, and pilot 

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

20 pilot of a vessel, and recover damages, for personal injury or loss caused by 

21 the master’s, mate’s, engineer’s, or pilot’s— 

22 ‘‘(1) negligence or willful misconduct; or 

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

24 vessels. 

25 ‘‘§ 30104. Personal injury to or death of seamen 

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

27 or, if the seaman dies from the injury, the personal representative of the sea28 man may elect to bring a civil action at law, with the right of trial by jury, 

29 against the employer. Laws of the United States regulating recovery for per30 sonal injury to, or death of, a railway employee apply to an action under 

31 this section. 

32 ‘‘(b) VENUE.—An action under this section shall be brought in the judicial 

33 district in which the employer resides or the employer’s principal office is lo34 cated. 

35 ‘‘§ 30105. Restriction on recovery by non-citizens and non36 resident aliens for incidents in waters of other 

37 countries 

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

39 meaning given that term in article I of the 1958 Convention on the Conti40 nental Shelf. 
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1 ‘‘(b) RESTRICTION.—Except as provided in subsection (c), a civil action for 

2 maintenance and cure or for damages for personal injury or death may not 

3 be brought under a maritime law of the United States if— 

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

5 permanent resident alien of the United States at the time of the incident 

6 giving rise to the action; 

7 ‘‘(2) the incident occurred in the territorial waters or waters over8 laying the continental shelf of a country other than the United States; 

9 and 

10 ‘‘(3) the individual suffering the injury or death was employed at the 

11 time of the incident by a person engaged in the exploration, development, 

12 or production of offshore mineral or energy resources, including drilling, 

13 mapping, surveying, diving, pipelaying, maintaining, repairing, con14 structing, or transporting supplies, equipment, or personnel, but not in15 cluding transporting those resources by a vessel constructed or adapted 

16 primarily to carry oil in bulk in the cargo spaces. 

17 ‘‘(c) NONAPPLICATION.—Subsection (b) does not apply if the individual 

18 bringing the action establishes that a remedy is not available under the laws 

19 of— 

20 ‘‘(1) the country asserting jurisdiction over the area in which the inci21 dent occurred; or 

22 ‘‘(2) the country in which the individual suffering the injury or death 

23 maintained citizenship or residency at the time of the incident. 

24 ‘‘§ 30106. Time limit on bringing maritime action for per25 sonal injury or death 

26 ‘‘Except as otherwise provided by law, a civil action for damages for per27 sonal injury or death arising out of a maritime tort must be brought within 

28 3 years after the cause of action arose. 

29 ‘‘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. 

30 ‘‘§ 30301. Short title 

31 ‘‘This chapter may be cited as the ‘Death on the High Seas Act’. 

32 ‘‘§ 30302. Cause of action 

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

34 default occurring on the high seas beyond 3 nautical miles from the shore of 

35 the United States, the personal representative of the decedent may bring a 
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1 civil action in admiralty against the person or vessel responsible. The action 

2 shall be for the exclusive benefit of the decedent’s spouse, parent, child, or de3 pendent relative. 

4 ‘‘§ 30303. Amount and apportionment of recovery 

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

6 for the pecuniary loss sustained by the individuals for whose benefit the action 

7 is brought. The court shall apportion the recovery among those individuals 

8 in proportion to the loss each has sustained. 

9 ‘‘§ 30304. Contributory negligence 

10 ‘‘In an action under this chapter, contributory negligence of the decedent 

11 is not a bar to recovery. The court shall consider the degree of negligence of 

12 the decedent and reduce the recovery accordingly. 

13 ‘‘§ 30305. Death of plaintiff in pending action 

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

15 to recover for personal injury caused by wrongful act, neglect, or default de16 scribed in section 30302 of this title, and the individual dies during the ac17 tion as a result of the wrongful act, neglect, or default, the personal represent18 ative of the decedent may be substituted as the plaintiff and the action may 

19 proceed under this chapter for the recovery authorized by this chapter. 

20 ‘‘§ 30306. Foreign cause of action 

21 ‘‘When a cause of action exists under the law of a foreign country for death 

22 by wrongful act, neglect, or default on the high seas, a civil action in admi23 ralty may be brought in a court of the United States based on the foreign 

24 cause of action, without abatement of the amount for which recovery is au25 thorized. 

26 ‘‘§ 30307. Commercial aviation accidents 

27 ‘‘(a) DEFINITION.—In this section, the term ‘nonpecuniary damages’ means 

28 damages for loss of care, comfort, and companionship. 

29 ‘‘(b) BEYOND 12 NAUTICAL MILES.—In an action under this chapter, if the 

30 death resulted from a commercial aviation accident occurring on the high seas 

31 beyond 12 nautical miles from the shore of the United States, additional com32 pensation is recoverable for nonpecuniary damages, but punitive damages are 

33 not recoverable. 

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

35 death resulted from a commercial aviation accident occurring on the high seas 

36 12 nautical miles or less from the shore of the United States. 

37 ‘‘§ 30308. Nonapplication 

38 ‘‘(a) STATE LAW.—This chapter does not affect the law of a State regu39 lating the right to recover for death. 

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

41 or waters within the territorial limits of a State. 
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1 ‘‘CHAPTER 305—EXONERATION AND LIMITATION OF 

2 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. 

3 ‘‘§ 30501. Definition 

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

5 and navigates a vessel at the charterer’s own expense or by the charterer’s own 

6 procurement. 

7 ‘‘§ 30502. Application 

8 ‘‘Except as otherwise provided, this chapter (except section 30503) applies 

9 to seagoing vessels and vessels used on lakes or rivers or in inland navigation, 

10 including canal boats, barges, and lighters. 

11 ‘‘§ 30503. Declaration of nature and value of goods 

12 ‘‘(a) IN GENERAL.—If a shipper of an item named in subsection (b), con13 tained in a parcel, package, or trunk, loads the item as freight or baggage 

14 on a vessel, without at the time of loading giving to the person receiving the 

15 item a written notice of the true character and value of the item and having 

16 that information entered on the bill of lading, the owner and master of the 

17 vessel are not liable as carriers. The owner and master are not liable beyond 

18 the value entered on the bill of lading. 

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

20 gold or silver plated articles, precious stones, jewelry, trinkets, watches, clocks, 

21 glass, china, coins, bills, securities, printings, engravings, pictures, stamps, 

22 maps, papers, silks, furs, lace, and similar items of high value and small size. 

23 ‘‘§ 30504. Loss by fire 

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

25 the vessel caused by a fire on the vessel unless the fire resulted from the design 

26 or neglect of the owner. 

27 ‘‘§ 30505. General limit of liability 

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

29 liability of the owner of a vessel for any claim, debt, or liability described 

30 in subsection (b) shall not exceed the value of the vessel and pending freight. 

31 If the vessel has more than one owner, the proportionate share of the liability 

32 of any one owner shall not exceed that owner’s proportionate interest in the 

33 vessel and pending freight. 
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1 ‘‘(b) CLAIMS SUBJECT TO LIMITATION.—Unless otherwise excluded by law, 

2 claims, debts, and liabilities subject to limitation under subsection (a) are 

3 those arising from any embezzlement, loss, or destruction of any property, 

4 goods, or merchandise shipped or put on board the vessel, any loss, damage, 

5 or injury by collision, or any act, matter, or thing, loss, damage, or forfeiture, 

6 done, occasioned, or incurred, without the privity or knowledge of the owner. 

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

8 ‘‘§ 30506. Limit of liability for personal injury or death 

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

10 not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fish11 ing vessels, fish tender vessels, canal boats, scows, car floats, barges, lighters, 

12 or nondescript vessels. 

13 ‘‘(b) MINIMUM LIABILITY.—If the amount of the vessel owner’s liability de14 termined under section 30505 of this title is insufficient to pay all losses in 

15 full, and the portion available to pay claims for personal injury or death is 

16 less than $420 times the tonnage of the vessel, that portion shall be increased 

17 to $420 times the tonnage of the vessel. That portion may be used only to 

18 pay claims for personal injury or death. 

19 ‘‘(c) CALCULATION OF TONNAGE.—Under subsection (b), the tonnage of a 

20 self-propelled vessel is the gross tonnage without deduction for engine room, 

21 and the tonnage of a sailing vessel is the tonnage for documentation. However, 

22 space for the use of seamen is excluded. 

23 ‘‘(d) CLAIMS ARISING ON DISTINCT OCCASIONS.—Separate limits of liabil24 ity apply to claims for personal injury or death arising on distinct occasions. 

25 ‘‘(e) PRIVITY OR KNOWLEDGE.—In a claim for personal injury or death, 

26 the privity or knowledge of the master or the owner’s superintendent or man27 aging agent, at or before the beginning of each voyage, is imputed to the 

28 owner. 

29 ‘‘§ 30507. Apportionment of losses 

30 ‘‘If the amounts determined under sections 30505 and 30506 of this title 

31 are insufficient to pay all claims— 

32 ‘‘(1) all claimants shall be paid in proportion to their respective losses 

33 out of the amount determined under section 30505 of this title; and 

34 ‘‘(2) personal injury and death claimants, if any, shall be paid an ad35 ditional amount in proportion to their respective losses out of the addi36 tional amount determined under section 30506(b) of this title. 

37 ‘‘§ 30508. Provisions requiring notice of claim or limiting 

38 time for bringing action 

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

40 not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fish-
35 

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1 ing vessels, fish tender vessels, canal boats, scows, car floats, barges, lighters, 

2 or nondescript vessels. 

3 ‘‘(b) MINIMUM TIME LIMITS.—The owner, master, manager, or agent of a 

4 vessel transporting passengers or property between ports in the United States, 

5 or between a port in the United States and a port in a foreign country, may 

6 not limit by regulation, contract, or otherwise the period for— 

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

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

9 ‘‘(2) bringing a civil action for personal injury or death to less than 

10 one year after the date of the injury or death. 

11 ‘‘(c) EFFECT OF FAILURE TO GIVE NOTICE.—When notice of a claim for 

12 personal injury or death is required by a contract, the failure to give the no13 tice is not a bar to recovery if— 

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

15 knowledge of the injury or death and the owner has not been prejudiced 

16 by the failure; 

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

18 could not have been given; or 

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

20 notice. 

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

22 mental incompetent, or if a claim is for wrongful death, any period provided 

23 by a contract for giving notice of the claim is tolled until the earlier of— 

24 ‘‘(1) the date a legal representative is appointed for the minor, incom25 petent, or decedent’s estate; or 

26 ‘‘(2) 3 years after the injury or death. 

27 ‘‘§ 30509. Provisions limiting liability for personal injury or 

28 death 

29 ‘‘(a) PROHIBITION.— 

30 ‘‘(1) IN GENERAL.—The owner, master, manager, or agent of a vessel 

31 transporting passengers between ports in the United States, or between 

32 a port in the United States and a port in a foreign country, may not 

33 include in a regulation or contract a provision limiting— 

34 ‘‘(A) the liability of the owner, master, or agent for personal in35 jury or death caused by the negligence or fault of the owner or the 

36 owner’s employees or agents; or 

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

38 trial by court of competent jurisdiction. 

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

40 ‘‘(b) EMOTIONAL DISTRESS, MENTAL SUFFERING, AND PSYCHOLOGICAL IN41 JURY.— 
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1 ‘‘(1) IN GENERAL.—Subsection (a) does not prohibit a provision in a 

2 contract or in ticket conditions of carriage with a passenger that relieves 

3 an owner, master, manager, agent, operator, or crewmember of a vessel 

4 from liability for infliction of emotional distress, mental suffering, or 

5 psychological injury so long as the provision does not limit such liability 

6 when the emotional distress, mental suffering, or psychological injury 

7 is— 

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

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

10 agent, or operator; 

11 ‘‘(B) the result of the claimant having been at actual risk of phys12 ical injury, and the risk was caused by the negligence or fault of 

13 a crewmember or the owner, master, manager, agent, or operator; 

14 or 

15 ‘‘(C) intentionally inflicted by a crewmember or the owner, mas16 ter, manager, agent, or operator. 

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

18 of a crewmember or the owner, master, manager, agent, or operator of 

19 a vessel in a case involving sexual harassment, sexual assault, or rape. 

20 ‘‘§ 30510. Vicarious liability for medical malpractice with re21 gard to crew 

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

23 or employer of a crewmember is claimed to have vicarious liability for med24 ical malpractice with regard to a crewmember occurring at a shoreside facil25 ity, and to the extent the damages resulted from the conduct of any shoreside 

26 doctor, hospital, medical facility, or other health care provider, the owner, op27 erator, or employer is entitled to rely on any statutory limitations of liability 

28 applicable to the doctor, hospital, medical facility, or other health care pro29 vider in the State of the United States in which the shoreside medical care 

30 was provided. 

31 ‘‘§ 30511. Action by owner for limitation 

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

33 district court of the United States for limitation of liability under this chap34 ter. The action must be brought within 6 months after a claimant gives the 

35 owner written notice of a claim. 

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

37 owner’s option) shall— 

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

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

40 vessel and pending freight, or approved security; and 
37 

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

2 from time to time as necessary to carry out this chapter; or 

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

4 claimants— 

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

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

7 from time to time as necessary to carry out this chapter. 

8 ‘‘(c) CESSATION OF OTHER ACTIONS.—When an action has been brought 

9 under this section and the owner has complied with subsection (b), all claims 

10 and proceedings against the owner related to the matter in question shall 

11 cease. 

12 ‘‘§ 30512. Liability as master, officer, or seaman not affected 

13 ‘‘This chapter does not affect the liability of an individual as a master, 

14 officer, or seaman, even though the individual is also an owner of the vessel. 

15 ‘‘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. 

16 ‘‘§ 30701. Definition 

17 ‘‘In this chapter, the term ‘carrier’ means the owner, manager, charterer, 

18 agent, or master of a vessel. 

19 ‘‘§ 30702. Application 

20 ‘‘(a) IN GENERAL.—Except as otherwise provided, this chapter applies to 

21 a carrier engaged in the carriage of goods to or from any port in the United 

22 States. 

23 ‘‘(b) LIVE ANIMALS.—Sections 30703 and 30704 of this title do not apply 

24 to the carriage of live animals. 

25 ‘‘§ 30703. Bills of lading 

26 ‘‘(a) ISSUANCE.—On demand of a shipper, the carrier shall issue a bill of 

27 lading or shipping document. 

28 ‘‘(b) CONTENTS.—The bill of lading or shipping document shall include a 

29 statement of— 

30 ‘‘(1) the marks necessary to identify the goods; 

31 ‘‘(2) the number of packages, or the quantity or weight, and whether 

32 it is carrier’s or shipper’s weight; and 

33 ‘‘(3) the apparent condition of the goods. 

34 ‘‘(c) PRIMA FACIE EVIDENCE OF RECEIPT.—A bill of lading or shipping 

35 document issued under this section is prima facie evidence of receipt of the 

36 goods described. 
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1 ‘‘§ 30704. Loading, stowage, custody, care, and delivery 

2 ‘‘A carrier may not insert in a bill of lading or shipping document a pro3 vision avoiding its liability for loss or damage arising from negligence or 

4 fault in loading, stowage, custody, care, or proper delivery. Any such provi5 sion is void. 

6 ‘‘§ 30705. Seaworthiness 

7 ‘‘(a) PROHIBITION.—A carrier may not insert in a bill of lading or ship8 ping document a provision lessening or avoiding its obligation to exercise due 

9 diligence to— 

10 ‘‘(1) make the vessel seaworthy; and 

11 ‘‘(2) properly man, equip, and supply the vessel. 

12 ‘‘(b) VOIDNESS.—A provision described in subsection (a) is void. 

13 ‘‘§ 30706. Defenses 

14 ‘‘(a) DUE DILIGENCE.—If a carrier has exercised due diligence to make the 

15 vessel in all respects seaworthy and to properly man, equip, and supply the 

16 vessel, the carrier and the vessel are not liable for loss or damage arising from 

17 an error in the navigation or management of the vessel. 

18 ‘‘(b) OTHER DEFENSES.—A carrier and the vessel are not liable for loss 

19 or damage arising from— 

20 ‘‘(1) dangers of the sea or other navigable waters; 

21 ‘‘(2) acts of God; 

22 ‘‘(3) public enemies; 

23 ‘‘(4) seizure under legal process; 

24 ‘‘(5) inherent defect, quality, or vice of the goods; 

25 ‘‘(6) insufficiency of package; 

26 ‘‘(7) act or omission of the shipper or owner of the goods or their 

27 agent; or 

28 ‘‘(8) saving or attempting to save life or property at sea, including 

29 a deviation in rendering such a service. 

30 ‘‘§ 30707. Criminal penalty 

31 ‘‘(a) IN GENERAL.—A carrier that violates this chapter shall be fined under 

32 title 18. 

33 ‘‘(b) LIEN.—The amount of the fine and costs for the violation constitute 

34 a lien on the vessel engaged in the carriage. A civil action in rem to enforce 

35 the lien may be brought in the district court of the United States for any 

36 district in which the vessel is found. 

37 ‘‘(c) DISPOSITION OF FINE.—Half of the fine shall go to the person injured 

38 by the violation and half to the United States Government. 

39 ‘‘CHAPTER 309—SUITS IN ADMIRALTY AGAINST THE 

40 UNITED STATES 

‘‘Sec. 

‘‘30901. Short title. 
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‘‘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. 

1 ‘‘§ 30901. Short title 

2 ‘‘This chapter may be cited as the ‘Suits in Admiralty Act’. 

3 ‘‘§ 30902. Definition 

4 ‘‘In this chapter, the term ‘federally-owned corporation’ means a corpora5 tion in which the United States owns all the outstanding capital stock. 

6 ‘‘§ 30903. Waiver of immunity 

7 ‘‘(a) IN GENERAL.—In a case in which, if a vessel were privately owned 

8 or operated, or if cargo were privately owned or possessed, or if a private per9 son or property were involved, a civil action in admiralty could be main10 tained, a civil action in admiralty in personam may be brought against the 

11 United States or a federally-owned corporation. In a civil action in admi12 ralty brought by the United States or a federally-owned corporation, an ad13 miralty claim in personam may be filed or a setoff claimed against the 

14 United States or corporation. 

15 ‘‘(b) NON-JURY.—A claim against the United States or a federally-owned 

16 corporation under this section shall be tried without a jury. 

17 ‘‘§ 30904. Exclusive remedy 

18 ‘‘If a remedy is provided by this chapter, it shall be exclusive of any other 

19 action arising out of the same subject matter against the officer, employee, 

20 or agent of the United States or the federally-owned corporation whose act 

21 or omission gave rise to the claim. 

22 ‘‘§ 30905. Period for bringing action 

23 ‘‘A civil action under this chapter must be brought within 2 years after 

24 the cause of action arose. 

25 ‘‘§ 30906. Venue 

26 ‘‘(a) IN GENERAL.—A civil action under this chapter shall be brought in 

27 the district court of the United States for the district in which— 

28 ‘‘(1) any plaintiff resides or has its principal place of business; or 

29 ‘‘(2) the vessel or cargo is found. 
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1 ‘‘(b) TRANSFER.—On a motion by a party, the court may transfer the ac2 tion to any other district court of the United States. 

3 ‘‘§ 30907. Procedure for hearing and determination 

4 ‘‘(a) IN GENERAL.—A civil action under this chapter shall proceed and be 

5 heard and determined according to the principles of law and the rules of 

6 practice applicable in like cases between private parties. 

7 ‘‘(b) IN REM.— 

8 ‘‘(1) REQUIREMENTS.—The action may proceed according to the prin9 ciples of an action in rem if— 

10 ‘‘(A) the plaintiff elects in the complaint; and 

11 ‘‘(B) it appears that an action in rem could have been main12 tained had the vessel or cargo been privately owned and possessed. 

13 ‘‘(2) EFFECT ON RELIEF IN PERSONAM.—An election under paragraph 

14 (1) does not prevent the plaintiff from seeking relief in personam in the 

15 same action. 

16 ‘‘§ 30908. Exemption from arrest or seizure 

17 ‘‘The following are not subject to arrest or seizure by judicial process in 

18 the United States: 

19 ‘‘(1) A vessel owned by, possessed by, or operated by or for the United 

20 States or a federally-owned corporation. 

21 ‘‘(2) Cargo owned or possessed by the United States or a federally22 owned corporation. 

23 ‘‘§ 30909. Security 

24 ‘‘Neither the United States nor a federally-owned corporation may be re25 quired to give a bond or admiralty stipulation in a civil action under this 

26 chapter. 

27 ‘‘§ 30910. Exoneration and limitation 

28 ‘‘The United States is entitled to the exemptions from and limitations of 

29 liability provided by law to an owner, charterer, operator, or agent of a ves30 sel. 

31 ‘‘§ 30911. Costs and interest 

32 ‘‘(a) IN GENERAL.—A judgment against the United States or a federally33 owned corporation under this chapter may include costs and interest at the 

34 rate of 4 percent per year until satisfied. Interest shall run as ordered by the 

35 court, except that interest is not allowable for the period before the action is 

36 filed. 

37 ‘‘(b) CONTRACT PROVIDING FOR INTEREST.—Notwithstanding subsection 

38 (a), if the claim is based on a contract providing for interest, interest may 

39 be awarded at the rate and for the period provided in the contract. 
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1 ‘‘§ 30912. Arbitration, compromise, or settlement 

2 ‘‘The Secretary of a department of the United States Government, or the 

3 board of trustees of a federally-owned corporation, may arbitrate, compromise, 

4 or settle a claim under this chapter. 

5 ‘‘§ 30913. Payment of judgment or settlement 

6 ‘‘(a) IN GENERAL.—The proper accounting officer of the United States 

7 shall pay a final judgment, arbitration award, or settlement under this chap8 ter on presentation of an authenticated copy. 

9 ‘‘(b) SOURCE OF PAYMENT.—Payment shall be made from an appropria10 tion or fund available specifically for the purpose. If no appropriation or 

11 fund is specifically available, there is hereby appropriated, out of money in 

12 the Treasury not otherwise appropriated, an amount sufficient to pay the 

13 judgment, award, or settlement. 

14 ‘‘§ 30914. Release of privately owned vessel after arrest or at15 tachment 

16 ‘‘If a privately owned vessel not in the possession of the United States or 

17 a federally-owned corporation is arrested or attached in a civil action arising 

18 or alleged to have arisen from prior ownership, possession, or operation by 

19 the United States or corporation, the vessel shall be released without bond or 

20 stipulation on a statement by the United States, through the Attorney General 

21 or other authorized law officer, that the United States is interested in the ac22 tion, desires release of the vessel, and assumes liability for the satisfaction of 

23 any judgment obtained by the plaintiff. After the vessel is released, the action 

24 shall proceed against the United States in accordance with this chapter. 

25 ‘‘§ 30915. Seizures and other proceedings in foreign jurisdic26 tions 

27 ‘‘(a) IN GENERAL.—If a vessel or cargo described in section 30908 or 30914 

28 of this title is arrested, attached, or otherwise seized by judicial process in 

29 a foreign country, or if an action is brought in a court of a foreign country 

30 against the master of such a vessel for a claim arising from the ownership, 

31 possession, or operation of the vessel, or the ownership, possession, or carriage 

32 of such cargo, the Secretary of State, on request of the Attorney General or 

33 another officer authorized by the Attorney General, may direct the United 

34 States consul residing at or nearest the place at which the action was 

35 brought— 

36 ‘‘(1) to claim the vessel or cargo as immune from arrest, attachment, 

37 or other seizure, and to execute an agreement, stipulation, bond, or un38 dertaking, for the United States or federally-owned corporation, for the 

39 release of the vessel or cargo and the prosecution of any appeal; or 

40 ‘‘(2) if an action has been brought against the master of such a vessel, 

41 to enter the appearance of the United States or corporation and to pledge 
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1 the credit of the United States or corporation to the payment of any 

2 judgment and costs in the action. 

3 ‘‘(b) ARRANGING BOND OR STIPULATION.—The Attorney General may— 

4 ‘‘(1) arrange with a bank, surety company, or other person, whether 

5 in the United States or a foreign country, to execute a bond or stipula6 tion; and 

7 ‘‘(2) pledge the credit of the United States to secure the bond or stipu8 lation. 

9 ‘‘(c) PAYMENT OF JUDGMENT.—The appropriate accounting officer of the 

10 United States or corporation may pay a judgment in an action described in 

11 subsection (a) on presentation of a copy of the judgment if certified by the 

12 clerk of the court and authenticated by— 

13 ‘‘(1) the certificate and seal of the United States consul claiming the 

14 vessel or cargo, or by the consul’s successor; and 

15 ‘‘(2) the certificate of the Secretary as to the official capacity of the 

16 consul. 

17 ‘‘(d) RIGHT TO CLAIM IMMUNITY NOT AFFECTED.—This section does not 

18 affect the right of the United States to claim immunity of a vessel or cargo 

19 from foreign jurisdiction. 

20 ‘‘§ 30916. Recovery by the United States for salvage services 

21 ‘‘(a) CIVIL ACTION.—The United States, and the crew of a merchant vessel 

22 owned or operated by the United States, or a federally-owned corporation, 

23 may bring a civil action to recover for salvage services provided by the vessel 

24 and crew. 

25 ‘‘(b) DEPOSIT OF AMOUNTS RECOVERED.—Any amount recovered under 

26 this section by the United States for its own benefit, and not for the benefit 

27 of the crew, shall be deposited in the Treasury to the credit of the department 

28 of the United States Government, or the corporation, having control of the 

29 possession or operation of the vessel. 

30 ‘‘§ 30917. Disposition of amounts recovered by the United 

31 States 

32 ‘‘Amounts recovered in a civil action brought by the United States on a 

33 claim arising from the ownership, possession, or operation of a merchant ves34 sel, or the ownership, possession, or carriage of cargo, shall be deposited in 

35 the Treasury to the credit of the department of the United States Government, 

36 or the federally-owned corporation, having control of the vessel or cargo, for 

37 reimbursement of the appropriation, insurance fund, or other fund from 

38 which the compensation for which the judgment was recovered was or will be 

39 paid. 
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1 ‘‘§ 30918. Reports 

2 ‘‘The Secretary of each department of the United States Government, and 

3 the board of trustees of each federally-owned corporation, shall report to Con4 gress at each session thereof all arbitration awards and settlements agreed to 

5 under this chapter since the previous session, for which the time to appeal 

6 has expired or been waived. 

7 ‘‘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. 

8 ‘‘§ 31101. Short title 

9 ‘‘This chapter may be cited as the ‘Public Vessels Act’. 

10 ‘‘§ 31102. Waiver of immunity 

11 ‘‘(a) IN GENERAL.—A civil action in personam in admiralty may be 

12 brought, or an impleader filed, against the United States for— 

13 ‘‘(1) damages caused by a public vessel of the United States; or 

14 ‘‘(2) compensation for towage and salvage services, including contract 

15 salvage, rendered to a public vessel of the United States. 

16 ‘‘(b) COUNTERCLAIM OR SETOFF.—If the United States brings a civil ac17 tion in admiralty for damages caused by a privately owned vessel, the owner 

18 of the vessel, or the successor in interest, may file a counterclaim in personam, 

19 or claim a setoff, against the United States for damages arising out of the 

20 same subject matter. 

21 ‘‘§ 31103. Applicable procedure 

22 ‘‘A civil action under this chapter is subject to the provisions of chapter 

23 309 of this title except to the extent inconsistent with this chapter. 

24 ‘‘§ 31104. Venue 

25 ‘‘(a) IN GENERAL.—A civil action under this chapter shall be brought in 

26 the district court of the United States for the district in which the vessel or 

27 cargo is found within the United States. 

28 ‘‘(b) VESSEL OR CARGO OUTSIDE TERRITORIAL WATERS.—If the vessel or 

29 cargo is outside the territorial waters of the United States— 

30 ‘‘(1) the action shall be brought in the district court of the United 

31 States for any district in which any plaintiff resides or has an office 

32 for the transaction of business; or 
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1 ‘‘(2) if no plaintiff resides or has an office for the transaction of busi2 ness in the United States, the action may be brought in the district court 

3 of the United States for any district. 

4 ‘‘§ 31105. Security when counterclaim filed 

5 ‘‘If a counterclaim is filed for a cause of action for which the original ac6 tion is filed under this chapter, the respondent to the counterclaim shall give 

7 security in the usual amount and form to respond to the counterclaim, unless 

8 the court for cause shown orders otherwise. The proceedings in the original 

9 action shall be stayed until the security is given. 

10 ‘‘§ 31106. Exoneration and limitation 

11 ‘‘The United States is entitled to the exemptions from and limitations of 

12 liability provided by law to an owner, charterer, operator, or agent of a ves13 sel. 

14 ‘‘§ 31107. Interest 

15 ‘‘A judgment in a civil action under this chapter may not include interest 

16 for the period before the judgment is issued unless the claim is based on a 

17 contract providing for interest. 

18 ‘‘§ 31108. Arbitration, compromise, or settlement 

19 ‘‘The Attorney General may arbitrate, compromise, or settle a claim under 

20 this chapter if a civil action based on the claim has been commenced. 

21 ‘‘§ 31109. Payment of judgment or settlement 

22 ‘‘The proper accounting officer of the United States shall pay a final judg23 ment, arbitration award, or settlement under this chapter on presentation of 

24 an authenticated copy. Payment shall be made from any money in the Treas25 ury appropriated for the purpose. 

26 ‘‘§ 31110. Subpoenas to officers or members of crew 

27 ‘‘An officer or member of the crew of a public vessel may not be subpoenaed 

28 in a civil action under this chapter without the consent of— 

29 ‘‘(1) the Secretary of the department or the head of the independent 

30 establishment having control of the vessel at the time the cause of action 

31 arose; or 

32 ‘‘(2) the master or commanding officer of the vessel at the time the 

33 subpoena is issued. 

34 ‘‘§ 31111. Claims by nationals of foreign countries 

35 ‘‘A national of a foreign country may not maintain a civil action under 

36 this chapter unless it appears to the satisfaction of the court in which the 

37 action is brought that the government of that country, in similar cir38 cumstances, allows nationals of the United States to sue in its courts. 

39 ‘‘§ 31112. Lien not recognized or created 

40 ‘‘This chapter shall not be construed as recognizing the existence of or as 

41 creating a lien against a public vessel of the United States. 
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1 ‘‘§ 31113. Reports 

2 ‘‘The Attorney General shall report to Congress at each session thereof all 

3 claims settled under this chapter.’’. 

4 SEC. 7. SUBTITLE IV OF TITLE 46. 

5 Title 46, United States Code, is amended by inserting after subtitle III the 

6 following: 

7 ‘‘Subtitle IV—Regulation of Ocean Shipping 

8 ‘‘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 

9 ‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

‘‘421. Regulations Affecting Shipping in Foreign Trade ......................... 42101 

‘‘423. Foreign Shipping Practices ........................................................................ 42301 

10 ‘‘PART C—MISCELLANEOUS

‘‘441. Evidence of Financial Responsibility for Passenger Transportation.44101 

11 ‘‘PART A—OCEAN SHIPPING

12 ‘‘CHAPTER 401—GENERAL 

‘‘Sec. 

‘‘40101. Purposes. 

‘‘40102. Definitions. 

‘‘40103. Administrative exemptions. 

‘‘40104. Reports filed with the Commission. 

13 ‘‘§ 40101. Purposes 

14 ‘‘The purposes of this part are to— 

15 ‘‘(1) establish a nondiscriminatory regulatory process for the common 

16 carriage of goods by water in the foreign commerce of the United States 

17 with a minimum of government intervention and regulatory costs; 

18 ‘‘(2) provide an efficient and economic transportation system in the 

19 ocean commerce of the United States that is, insofar as possible, in har20 mony with, and responsive to, international shipping practices; 

21 ‘‘(3) encourage the development of an economically sound and efficient 

22 liner fleet of vessels of the United States capable of meeting national se23 curity needs; and 

24 ‘‘(4) promote the growth and development of United States exports 

25 through competitive and efficient ocean transportation and by placing a 

26 greater reliance on the marketplace. 

27 ‘‘§ 40102. Definitions 

28 ‘‘In this part: 

29 ‘‘(1) AGREEMENT.—The term ‘agreement’— 
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1 ‘‘(A) means a written or oral understanding, arrangement, or as2 sociation, and any modification or cancellation thereof; but 

3 ‘‘(B) does not include a maritime labor agreement. 

4 ‘‘(2) ANTITRUST LAWS.—The term ‘antitrust laws’ means— 

5 ‘‘(A) the Sherman Act (15 U.S.C. 1 et seq.); 

6 ‘‘(B) sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8, 

7 9); 

8 ‘‘(C) the Clayton Act (15 U.S.C. 12 et seq.); 

9 ‘‘(D) the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a); 

10 ‘‘(E) the Federal Trade Commission Act (15 U.S.C. 41 et seq.); 

11 ‘‘(F) the Antitrust Civil Process Act (15 U.S.C. 1311 et seq.); and 

12 ‘‘(G) Acts supplementary to those Acts. 

13 ‘‘(3) ASSESSMENT AGREEMENT.—The term ‘assessment agreement’ 

14 means an agreement, whether part of a collective bargaining agreement 

15 or negotiated separately, to the extent the agreement provides for the 

16 funding of collectively bargained fringe-benefit obligations on other than 

17 a uniform worker-hour basis, regardless of the cargo handled or type of 

18 vessel or equipment used. 

19 ‘‘(4) BULK CARGO.—The term ‘bulk cargo’ means cargo that is loaded 

20 and carried in bulk without mark or count. 

21 ‘‘(5) CHEMICAL PARCEL-TANKER.—The term ‘chemical parcel-tanker’ 

22 means a vessel that has— 

23 ‘‘(A) a cargo-carrying capability consisting of individual cargo 

24 tanks for bulk chemicals that— 

25 ‘‘(i) are a permanent part of the vessel; and 

26 ‘‘(ii) have segregation capability with piping systems to per27 mit simultaneous carriage of several bulk chemical cargoes with 

28 minimum risk of cross-contamination; and 

29 ‘‘(B) a valid certificate of fitness under the International Mari30 time Organization Code for the Construction and Equipment of 

31 Ships Carrying Dangerous Chemicals in Bulk. 

32 ‘‘(6) COMMON CARRIER.—The term ‘common carrier’— 

33 ‘‘(A) means a person that— 

34 ‘‘(i) holds itself out to the general public to provide transpor35 tation by water of passengers or cargo between the United 

36 States and a foreign country for compensation; 

37 ‘‘(ii) assumes responsibility for the transportation from the 

38 port or point of receipt to the port or point of destination; and 

39 ‘‘(iii) uses, for all or part of that transportation, a vessel op40 erating on the high seas or the Great Lakes between a port in 

41 the United States and a port in a foreign country; but 
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1 ‘‘(B) does not include a carrier engaged in ocean transportation 

2 by ferry boat, ocean tramp, or chemical parcel-tanker, or by vessel 

3 when primarily engaged in the carriage of perishable agricultural 

4 commodities— 

5 ‘‘(i) if the carrier and the owner of those commodities are 

6 wholly-owned, directly or indirectly, by a person primarily en7 gaged in the marketing and distribution of those commodities; 

8 and 

9 ‘‘(ii) only with respect to the carriage of those commodities. 

10 ‘‘(7) CONFERENCE.—The term ‘conference’— 

11 ‘‘(A) means an association of ocean common carriers permitted, 

12 pursuant to an approved or effective agreement, to engage in con13 certed activity and to use a common tariff; but 

14 ‘‘(B) does not include a joint service, consortium, pooling, sailing, 

15 or transshipment agreement. 

16 ‘‘(8) CONTROLLED CARRIER.—The term ‘controlled carrier’ means an 

17 ocean common carrier that is, or whose operating assets are, directly or 

18 indirectly, owned or controlled by a government, with ownership or con19 trol by a government being deemed to exist for a carrier if— 

20 ‘‘(A) a majority of the interest in the carrier is owned or con21 trolled in any manner by that government, an agency of that gov22 ernment, or a public or private person controlled by that govern23 ment; or 

24 ‘‘(B) that government has the right to appoint or disapprove the 

25 appointment of a majority of the directors, the chief operating offi26 cer, or the chief executive officer of the carrier. 

27 ‘‘(9) DEFERRED REBATE.—The term ‘deferred rebate’ means a return 

28 by a common carrier of any freight money to a shipper, where the return 

29 is— 

30 ‘‘(A) consideration for the shipper giving all or any portion of 

31 its shipments to that or any other common carrier over a fixed pe32 riod of time; 

33 ‘‘(B) deferred beyond the completion of the service for which it 

34 was paid; and 

35 ‘‘(C) made only if the shipper has agreed to make a further ship36 ment with that or any other common carrier. 

37 ‘‘(10) FOREST PRODUCTS.—The term ‘forest products’ includes lumber 

38 in bundles, rough timber, ties, poles, piling, laminated beams, bundled 

39 siding, bundled plywood, bundled core stock or veneers, bundled particle 

40 or fiber boards, bundled hardwood, wood pulp in rolls, wood pulp in 
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1 unitized bales, and paper and paper board in rolls or in pallet or skid2 sized sheets. 

3 ‘‘(11) INLAND DIVISION.—The term ‘inland division’ means the 

4 amount paid by a common carrier to an inland carrier for the inland 

5 portion of through transportation offered to the public by the common 

6 carrier. 

7 ‘‘(12) INLAND PORTION.—The term ‘inland portion’ means the charge 

8 to the public by a common carrier for the non-ocean portion of through 

9 transportation. 

10 ‘‘(13) LOYALTY CONTRACT.—The term ‘loyalty contract’ means a con11 tract with an ocean common carrier or agreement providing for— 

12 ‘‘(A) a shipper to obtain lower rates by committing all or a fixed 

13 portion of its cargo to that carrier or agreement; and 

14 ‘‘(B) a deferred rebate arrangement. 

15 ‘‘(14) MARINE TERMINAL OPERATOR.—The term ‘marine terminal op16 erator’ means a person engaged in the United States in the business of 

17 providing wharfage, dock, warehouse, or other terminal facilities in con18 nection with a common carrier, or in connection with a common carrier 

19 and a water carrier subject to subchapter II of chapter 135 of title 49. 

20 ‘‘(15) MARITIME LABOR AGREEMENT.—The term ‘maritime labor 

21 agreement’— 

22 ‘‘(A) means— 

23 ‘‘(i) a collective bargaining agreement between an employer 

24 subject to this part, or a group of such employers, and a labor 

25 organization representing employees in the maritime or steve26 doring industry; 

27 ‘‘(ii) an agreement preparatory to such a collective bar28 gaining agreement among members of a multi-employer bar29 gaining group; or 

30 ‘‘(iii) an agreement specifically implementing provisions of 

31 such a collective bargaining agreement or providing for the for32 mation, financing, or administration of a multi-employer bar33 gaining group; but 

34 ‘‘(B) does not include an assessment agreement. 

35 ‘‘(16) NON-VESSEL-OPERATING COMMON CARRIER.—The term ‘non-ves36 sel-operating common carrier’ means a common carrier that— 

37 ‘‘(A) does not operate the vessels by which the ocean transpor38 tation is provided; and 

39 ‘‘(B) is a shipper in its relationship with an ocean common car40 rier. 
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1 ‘‘(17) OCEAN COMMON CARRIER.—The term ‘ocean common carrier’ 

2 means a vessel-operating common carrier. 

3 ‘‘(18) OCEAN FREIGHT FORWARDER.—The term ‘ocean freight for4 warder’ means a person that— 

5 ‘‘(A) in the United States, dispatches shipments from the United 

6 States via a common carrier and books or otherwise arranges space 

7 for those shipments on behalf of shippers; and 

8 ‘‘(B) processes the documentation or performs related activities 

9 incident to those shipments. 

10 ‘‘(19) OCEAN TRANSPORTATION INTERMEDIARY.—The term ‘ocean 

11 transportation intermediary’ means an ocean freight forwarder or a non12 vessel-operating common carrier. 

13 ‘‘(20) SERVICE CONTRACT.—The term ‘service contract’ means a writ14 ten contract, other than a bill of lading or receipt, between one or more 

15 shippers, on the one hand, and an individual ocean common carrier or 

16 an agreement between or among ocean common carriers, on the other, 

17 in which— 

18 ‘‘(A) the shipper or shippers commit to providing a certain vol19 ume or portion of cargo over a fixed time period; and 

20 ‘‘(B) the ocean common carrier or the agreement commits to a 

21 certain rate or rate schedule and a defined service level, such as as22 sured space, transit time, port rotation, or similar service features. 

23 ‘‘(21) SHIPMENT.—The term ‘shipment’ means all of the cargo carried 

24 under the terms of a single bill of lading. 

25 ‘‘(22) SHIPPER.—The term ‘shipper’ means— 

26 ‘‘(A) a cargo owner; 

27 ‘‘(B) the person for whose account the ocean transportation of 

28 cargo is provided; 

29 ‘‘(C) the person to whom delivery is to be made; 

30 ‘‘(D) a shippers’ association; or 

31 ‘‘(E) a non-vessel-operating common carrier that accepts respon32 sibility for payment of all charges applicable under the tariff or 

33 service contract. 

34 ‘‘(23) SHIPPERS’ ASSOCIATION.—The term ‘shippers’ association’ 

35 means a group of shippers that consolidates or distributes freight on a 

36 nonprofit basis for the members of the group to obtain carload, truckload, 

37 or other volume rates or service contracts. 

38 ‘‘(24) THROUGH RATE.—The term ‘through rate’ means the single 

39 amount charged by a common carrier in connection with through trans40 portation. 
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1 ‘‘(25) THROUGH TRANSPORTATION.—The term ‘through transpor2 tation’ means continuous transportation between origin and destination 

3 for which a through rate is assessed and which is offered or performed 

4 by one or more carriers, at least one of which is a common carrier, be5 tween a United States port or point and a foreign port or point. 

6 ‘‘§ 40103. Administrative exemptions 

7 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on application or 

8 its own motion, may by order or regulation exempt for the future any class 

9 of agreements between persons subject to this part or any specified activity 

10 of those persons from any requirement of this part if the Commission finds 

11 that the exemption will not result in substantial reduction in competition or 

12 be detrimental to commerce. The Commission may attach conditions to an ex13 emption and may, by order, revoke an exemption. 

14 ‘‘(b) OPPORTUNITY FOR HEARING.—An order or regulation of exemption or 

15 revocation of an exemption may be issued only if the Commission has pro16 vided an opportunity for a hearing to interested persons and departments and 

17 agencies of the United States Government. 

18 ‘‘§ 40104. Reports filed with the Commission 

19 ‘‘(a) IN GENERAL.—The Federal Maritime Commission may require a com20 mon carrier or an officer, receiver, trustee, lessee, agent, or employee of the 

21 carrier to file with the Commission a periodical or special report, an account, 

22 record, rate, or charge, or a memorandum of facts and transactions related 

23 to the business of the carrier. The report, account, record, rate, charge, or 

24 memorandum shall be made under oath if the Commission requires, and shall 

25 be filed in the form and within the time prescribed by the Commission. 

26 ‘‘(b) CONFERENCE MINUTES.—Conference minutes required to be filed with 

27 the Commission under this section may not be released to third parties or 

28 published by the Commission. 

29 ‘‘CHAPTER 403—AGREEMENTS 

‘‘Sec. 

‘‘40301. Application. 

‘‘40302. Filing requirements. 

‘‘40303. Content requirements. 

‘‘40304. Commission action. 

‘‘40305. Assessment agreements. 

‘‘40306. Nondisclosure of information. 

‘‘40307. Exemption from antitrust laws. 

30 ‘‘§ 40301. Application 

31 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.—This part applies to an 

32 agreement between or among ocean common carriers to— 

33 ‘‘(1) discuss, fix, or regulate transportation rates, including through 

34 rates, cargo space accommodations, and other conditions of service; 

35 ‘‘(2) pool or apportion traffic, revenues, earnings, or losses; 
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1 ‘‘(3) allot ports or regulate the number and character of voyages be2 tween ports; 

3 ‘‘(4) regulate the volume or character of cargo or passenger traffic to 

4 be carried; 

5 ‘‘(5) engage in an exclusive, preferential, or cooperative working ar6 rangement between themselves or with a marine terminal operator; 

7 ‘‘(6) control, regulate, or prevent competition in international ocean 

8 transportation; or 

9 ‘‘(7) discuss and agree on any matter related to a service contract. 

10 ‘‘(b) MARINE TERMINAL OPERATOR AGREEMENTS.—This part applies to 

11 an agreement between or among marine terminal operators, or between or 

12 among one or more marine terminal operators and one or more ocean com13 mon carriers, to— 

14 ‘‘(1) discuss, fix, or regulate rates or other conditions of service; or 

15 ‘‘(2) engage in exclusive, preferential, or cooperative working arrange16 ments, to the extent the agreement involves ocean transportation in the 

17 foreign commerce of the United States. 

18 ‘‘(c) ACQUISITIONS.—This part does not apply to an acquisition by any 

19 person, directly or indirectly, of any voting security or assets of any other 

20 person. 

21 ‘‘(d) MARITIME LABOR AGREEMENTS.—This part does not apply to a mar22 itime labor agreement. However, this subsection does not exempt from this 

23 part any rate, charge, regulation, or practice of a common carrier that is re24 quired to be set forth in a tariff or is an essential term of a service contract, 

25 whether or not the rate, charge, regulation, or practice arises out of, or is oth26 erwise related to, a maritime labor agreement. 

27 ‘‘(e) ASSESSMENT AGREEMENTS.—This part (except sections 40305 and 

28 40307(a)) does not apply to an assessment agreement. 

29 ‘‘§ 40302. Filing requirements 

30 ‘‘(a) IN GENERAL.—A true copy of every agreement referred to in section 

31 40301(a) or (b) of this title shall be filed with the Federal Maritime Commis32 sion. If the agreement is oral, a complete memorandum specifying in detail 

33 the substance of the agreement shall be filed. 

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

35 ‘‘(1) an agreement related to transportation to be performed within or 

36 between foreign countries; or 

37 ‘‘(2) an agreement among common carriers to establish, operate, or 

38 maintain a marine terminal in the United States. 

39 ‘‘(c) REGULATIONS.—The Commission may by regulation prescribe the 

40 form and manner in which an agreement shall be filed and any additional 

41 information and documents necessary to evaluate the agreement. 
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1 ‘‘§ 40303. Content requirements 

2 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.— 

3 ‘‘(1) RESTRICTIONS.—An ocean common carrier agreement may not— 

4 ‘‘(A) prohibit or restrict a member of the agreement from engag5 ing in negotiations for a service contract with a shipper; 

6 ‘‘(B) require a member of the agreement to disclose a negotiation 

7 on a service contract, or the terms of a service contract, other than 

8 those terms required to be published under section 40502(d) of this 

9 title; or 

10 ‘‘(C) adopt mandatory rules or requirements affecting the right 

11 of an agreement member to negotiate and enter into a service con12 tract. 

13 ‘‘(2) VOLUNTARY GUIDELINES.—An ocean common carrier agreement 

14 may provide authority to adopt voluntary guidelines relating to the 

15 terms and procedures of an agreement member’s service contracts if the 

16 guidelines explicitly state the right of members of the agreement not to 

17 follow the guidelines. Any guidelines adopted shall be submitted confiden18 tially to the Federal Maritime Commission. 

19 ‘‘(b) CONFERENCE AGREEMENTS.—Each conference agreement must— 

20 ‘‘(1) state its purpose; 

21 ‘‘(2) provide reasonable and equal terms for admission and readmis22 sion to conference membership for any ocean common carrier willing to 

23 serve the particular trade or route; 

24 ‘‘(3) permit any member to withdraw from conference membership on 

25 reasonable notice without penalty; 

26 ‘‘(4) at the request of any member, require an independent neutral 

27 body to police fully the obligations of the conference and its members; 

28 ‘‘(5) prohibit the conference from engaging in conduct prohibited by 

29 section 41105(1) or (3) of this title; 

30 ‘‘(6) provide for a consultation process designed to promote— 

31 ‘‘(A) commercial resolution of disputes; and 

32 ‘‘(B) cooperation with shippers in preventing and eliminating 

33 malpractices; 

34 ‘‘(7) establish procedures for promptly and fairly considering requests 

35 and complaints of shippers; and 

36 ‘‘(8) provide that— 

37 ‘‘(A) any member of the conference may take independent action 

38 on a rate or service item on not more than 5 days’ notice to the 

39 conference; and 

40 ‘‘(B) except for an exempt commodity not published in the con41 ference tariff, the conference will include the new rate or service 
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1 item in its tariff for use by that member, effective no later than 5 

2 days after receipt of the notice, and by any other member that noti3 fies the conference that it elects to adopt the independent rate or 

4 service item on or after its effective date, in lieu of the existing con5 ference tariff provision for that rate or service item. 

6 ‘‘(c) INTERCONFERENCE AGREEMENTS.—Each agreement between carriers 

7 not members of the same conference must provide the right of independent ac8 tion for each carrier. Each agreement between conferences must provide the 

9 right of independent action for each conference. 

10 ‘‘(d) VESSEL SHARING AGREEMENTS.— 

11 ‘‘(1) IN GENERAL.—An ocean common carrier that is the owner, oper12 ator, or bareboat, time, or slot charterer of a liner vessel documented 

13 under section 12103 or 12111(c) of this title may agree with an ocean 

14 common carrier described in paragraph (2) to which it charters or sub15 charters the vessel or space on the vessel that the charterer or 

16 subcharterer may not use or make available space on the vessel for the 

17 carriage of cargo reserved by law for vessels of the United States. 

18 ‘‘(2) CARRIER DESCRIBED.—An ocean common carrier described in 

19 this paragraph is one that is not the owner, operator, or bareboat 

20 charterer for at least one year of liner vessels of the United States that 

21 are eligible to be included in the Maritime Security Fleet Program and 

22 are enrolled in an Emergency Preparedness Program under chapter 531 

23 of this title. 

24 ‘‘§ 40304. Commission action 

25 ‘‘(a) NOTICE OF FILING.—Within 7 days after an agreement is filed, the 

26 Federal Maritime Commission shall transmit a notice of the filing to the Fed27 eral Register for publication. 

28 ‘‘(b) PRELIMINARY REVIEW AND REJECTION.—After preliminary review, 

29 the Commission shall reject an agreement that it finds does not meet the re30 quirements of sections 40302 and 40303 of this title. The Commission shall 

31 notify in writing the person filing the agreement of the reason for rejection. 

32 ‘‘(c) REVIEW AND EFFECTIVE DATE.—Unless rejected under subsection (b), 

33 an agreement (other than an assessment agreement) is effective— 

34 ‘‘(1) on the 45th day after filing, or on the 30th day after notice of 

35 the filing is published in the Federal Register, whichever is later; or 

36 ‘‘(2) if additional information or documents are requested under sub37 section (d)— 

38 ‘‘(A) on the 45th day after the Commission receives all the addi39 tional information and documents; or 

40 ‘‘(B) if the request is not fully complied with, on the 45th day 

41 after the Commission receives the information and documents sub-
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1 mitted and a statement of the reasons for noncompliance with the 

2 request. 

3 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.—Before the expiration of 

4 the period specified in subsection (c)(1), the Commission may request from 

5 the person filing the agreement any additional information and documents 

6 the Commission considers necessary to make the determinations required by 

7 this section. 

8 ‘‘(e) MODIFICATION OF REVIEW PERIOD.— 

9 ‘‘(1) SHORTENING.—On request of the party filing an agreement, the 

10 Commission may shorten a period specified in subsection (c), but not to 

11 a date that is less than 14 days after notice of the filing of the agreement 

12 is published in the Federal Register. 

13 ‘‘(2) EXTENSION.—The period specified in subsection (c)(2) may be ex14 tended only by the United States District Court for the District of Co15 lumbia in a civil action brought by the Commission under section 

16 41307(c) of this title. 

17 ‘‘(f) FIXED TERMS.—The Commission may not limit the effectiveness of an 

18 agreement to a fixed term. 

19 ‘‘§ 40305. Assessment agreements 

20 ‘‘(a) FILING REQUIREMENT.—An assessment agreement shall be filed with 

21 the Federal Maritime Commission and is effective on filing. 

22 ‘‘(b) COMPLAINTS.—If a complaint is filed with the Commission within 2 

23 years after the date of an assessment agreement, the Commission shall dis24 approve, cancel, or modify the agreement, or an assessment or charge pursu25 ant to the agreement, that the Commission finds, after notice and opportunity 

26 for a hearing, to be unjustly discriminatory or unfair as between carriers, 

27 shippers, or ports. The Commission shall issue its final decision in the pro28 ceeding within one year after the date the complaint is filed. 

29 ‘‘(c) ADJUSTMENTS OF ASSESSMENTS AND CHARGES.—To the extent that 

30 the Commission finds under subsection (b) that an assessment or charge is 

31 unjustly discriminatory or unfair as between carriers, shippers, or ports, the 

32 Commission shall adjust the assessment or charge for the period between the 

33 filing of the complaint and the final decision by awarding prospective credits 

34 or debits to future assessments and charges. However, if the complainant has 

35 ceased activities subject to the assessment or charge, the Commission may 

36 award reparations. 

37 ‘‘§ 40306. Nondisclosure of information 

38 ‘‘Information and documents (other than an agreement) filed with the Fed39 eral Maritime Commission under this chapter are exempt from disclosure 

40 under section 552 of title 5 and may not be made public except as may be 

41 relevant to an administrative or judicial proceeding. This section does not 
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1 prevent disclosure to either House of Congress or to a duly authorized com2 mittee or subcommittee of Congress. 

3 ‘‘§ 40307. Exemption from antitrust laws 

4 ‘‘(a) IN GENERAL.—The antitrust laws do not apply to— 

5 ‘‘(1) an agreement (including an assessment agreement) that has been 

6 filed and is effective under this chapter; 

7 ‘‘(2) an agreement that is exempt under section 40103 of this title 

8 from any requirement of this part; 

9 ‘‘(3) an agreement or activity within the scope of this part, whether 

10 permitted under or prohibited by this part, undertaken or entered into 

11 with a reasonable basis to conclude that it is— 

12 ‘‘(A) pursuant to an agreement on file with the Federal Maritime 

13 Commission and in effect when the activity takes place; or 

14 ‘‘(B) exempt under section 40103 of this title from any filing or 

15 publication requirement of this part; 

16 ‘‘(4) an agreement or activity relating to transportation services with17 in or between foreign countries, whether or not via the United States, 

18 unless the agreement or activity has a direct, substantial, and reasonably 

19 foreseeable effect on the commerce of the United States; 

20 ‘‘(5) an agreement or activity relating to the foreign inland segment 

21 of through transportation that is part of transportation provided in a 

22 United States import or export trade; 

23 ‘‘(6) an agreement or activity to provide wharfage, dock, warehouse, 

24 or other terminal facilities outside the United States; or 

25 ‘‘(7) an agreement, modification, or cancellation approved before June 

26 18, 1984, by the Commission under section 15 of the Shipping Act, 1916, 

27 or permitted under section 14b of that Act, and any properly published 

28 tariff, rate, fare, or charge, or classification, rule, or regulation explana29 tory thereof implementing that agreement, modification, or cancellation. 

30 ‘‘(b) EXCEPTIONS.—This part does not extend antitrust immunity to— 

31 ‘‘(1) an agreement with or among air carriers, rail carriers, motor 

32 carriers, or common carriers by water not subject to this part relating 

33 to transportation within the United States; 

34 ‘‘(2) a discussion or agreement among common carriers subject to this 

35 part relating to the inland divisions (as opposed to the inland portions) 

36 of through rates within the United States; 

37 ‘‘(3) an agreement among common carriers subject to this part to es38 tablish, operate, or maintain a marine terminal in the United States; 

39 or 

40 ‘‘(4) a loyalty contract. 
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1 ‘‘(c) RETROACTIVE EFFECT OF DETERMINATIONS.—A determination by an 

2 agency or court that results in the denial or removal of the immunity to the 

3 antitrust laws under subsection (a) does not remove or alter the antitrust im4 munity for the period before the determination. 

5 ‘‘(d) RELIEF UNDER CLAYTON ACT.—A person may not recover damages 

6 under section 4 of the Clayton Act (15 U.S.C. 15), or obtain injunctive relief 

7 under section 16 of that Act (15 U.S.C. 26), for conduct prohibited by this 

8 part. 

9 ‘‘CHAPTER 405—TARIFFS, SERVICE CONTRACTS, 

10 REFUNDS, AND WAIVERS 

‘‘Sec. 

‘‘40501. General rate and tariff requirements. 

‘‘40502. Service contracts. 

‘‘40503. Refunds and waivers. 

11 ‘‘§ 40501. General rate and tariff requirements 

12 ‘‘(a) AUTOMATED TARIFF SYSTEM.— 

13 ‘‘(1) IN GENERAL.—Each common carrier and conference shall keep 

14 open to public inspection in an automated tariff system, tariffs showing 

15 all its rates, charges, classifications, rules, and practices between all 

16 points or ports on its own route and on any through transportation 

17 route that has been established. However, a common carrier is not re18 quired to state separately or otherwise reveal in tariffs the inland divi19 sions of a through rate. 

20 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply with respect to bulk 

21 cargo, forest products, recycled metal scrap, new assembled motor vehi22 cles, waste paper, or paper waste. 

23 ‘‘(b) CONTENTS OF TARIFFS.—A tariff under subsection (a) shall— 

24 ‘‘(1) state the places between which cargo will be carried; 

25 ‘‘(2) list each classification of cargo in use; 

26 ‘‘(3) state the level of compensation, if any, of any ocean freight for27 warder by a carrier or conference; 

28 ‘‘(4) state separately each terminal or other charge, privilege, or facil29 ity under the control of the carrier or conference and any rules that in 

30 any way change, affect, or determine any part or the total of the rates 

31 or charges; 

32 ‘‘(5) include sample copies of any bill of lading, contract of affreight33 ment, or other document evidencing the transportation agreement; and 

34 ‘‘(6) include copies of any loyalty contract, omitting the shipper’s 

35 name. 

36 ‘‘(c) ELECTRONIC ACCESS.—A tariff under subsection (a) shall be made 

37 available electronically to any person, without time, quantity, or other limita38 tion, through appropriate access from remote locations. A reasonable fee may 
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1 be charged for such access, except that no fee may be charged for access by 

2 a Federal agency. 

3 ‘‘(d) TIME-VOLUME RATES.—A rate contained in a tariff under subsection 

4 (a) may vary with the volume of cargo offered over a specified period of time. 

5 ‘‘(e) EFFECTIVE DATES.— 

6 ‘‘(1) INCREASES.—A new or initial rate or change in an existing rate 

7 that results in an increased cost to a shipper may not become effective 

8 earlier than 30 days after publication. However, for good cause, the Fed9 eral Maritime Commission may allow the rate to become effective sooner. 

10 ‘‘(2) DECREASES.—A change in an existing rate that results in a de11 creased cost to a shipper may become effective on publication. 

12 ‘‘(f) MARINE TERMINAL OPERATOR SCHEDULES.—A marine terminal oper13 ator may make available to the public a schedule of rates, regulations, and 

14 practices, including limitations of liability for cargo loss or damage, per15 taining to receiving, delivering, handling, or storing property at its marine 

16 terminal. Any such schedule made available to the public is enforceable by 

17 an appropriate court as an implied contract without proof of actual knowl18 edge of its provisions. 

19 ‘‘(g) REGULATIONS.— 

20 ‘‘(1) IN GENERAL.—The Commission shall by regulation prescribe the 

21 requirements for the accessibility and accuracy of automated tariff sys22 tems established under this section. The Commission, after periodic re23 view, may prohibit the use of any automated tariff system that fails to 

24 meet the requirements established under this section. 

25 ‘‘(2) REMOTE TERMINALS.—The Commission may not require a com26 mon carrier to provide a remote terminal for electronic access under sub27 section (c). 

28 ‘‘(3) MARINE TERMINAL OPERATOR SCHEDULES.—The Commission 

29 shall by regulation prescribe the form and manner in which marine ter30 minal operator schedules authorized by this section shall be published. 

31 ‘‘§ 40502. Service contracts 

32 ‘‘(a) IN GENERAL.—An individual ocean common carrier or an agreement 

33 between or among ocean common carriers may enter into a service contract 

34 with one or more shippers subject to the requirements of this part. 

35 ‘‘(b) FILING REQUIREMENTS.— 

36 ‘‘(1) IN GENERAL.—Each service contract entered into under this sec37 tion by an individual ocean common carrier or an agreement shall be 

38 filed confidentially with the Federal Maritime Commission. 

39 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply to contracts regard40 ing bulk cargo, forest products, recycled metal scrap, new assembled 

41 motor vehicles, waste paper, or paper waste. 
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1 ‘‘(c) ESSENTIAL TERMS.—Each service contract shall include— 

2 ‘‘(1) the origin and destination port ranges; 

3 ‘‘(2) the origin and destination geographic areas in the case of through 

4 intermodal movements; 

5 ‘‘(3) the commodities involved; 

6 ‘‘(4) the minimum volume or portion; 

7 ‘‘(5) the line-haul rate; 

8 ‘‘(6) the duration; 

9 ‘‘(7) service commitments; and 

10 ‘‘(8) the liquidated damages for nonperformance, if any. 

11 ‘‘(d) PUBLICATION OF CERTAIN TERMS.—When a service contract is filed 

12 confidentially with the Commission, a concise statement of the essential terms 

13 specified in paragraphs (1), (3), (4), and (6) of subsection (c) shall be pub14 lished and made available to the general public in tariff format. 

15 ‘‘(e) DISCLOSURE OF CERTAIN TERMS.— 

16 ‘‘(1) DEFINITIONS.—In this subsection, the terms ‘dock area’ and 

17 ‘within the port area’ have the same meaning and scope as in the appli18 cable collective bargaining agreement between the requesting labor orga19 nization and the carrier. 

20 ‘‘(2) DISCLOSURE.—An ocean common carrier that is a party to or 

21 is otherwise subject to a collective bargaining agreement with a labor or22 ganization shall, in response to a written request by the labor organiza23 tion, state whether it is responsible for the following work at a dock area 

24 or within a port area in the United States with respect to cargo trans25 portation under a service contract: 

26 ‘‘(A) The movement of the shipper’s cargo on a dock area or with27 in the port area or to or from railroad cars on a dock area or with28 in the port area. 

29 ‘‘(B) The assignment of intraport carriage of the shipper’s cargo 

30 between areas on a dock or within the port area. 

31 ‘‘(C) The assignment of the carriage of the shipper’s cargo be32 tween a container yard on a dock area or within the port area and 

33 a rail yard adjacent to the container yard. 

34 ‘‘(D) The assignment of container freight station work and con35 tainer maintenance and repair work performed at a dock area or 

36 within the port area. 

37 ‘‘(3) WITHIN REASONABLE TIME.—The common carrier shall provide 

38 the information described in paragraph (2) to the requesting labor orga39 nization within a reasonable period of time. 

40 ‘‘(4) EXISTENCE OF COLLECTIVE BARGAINING AGREEMENT.—This sub41 section does not require the disclosure of information by an ocean com-
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1 mon carrier unless there exists an applicable and otherwise lawful collec2 tive bargaining agreement pertaining to that carrier. A disclosure by an 

3 ocean common carrier may not be deemed an admission or an agreement 

4 that any work is covered by a collective bargaining agreement. A dispute 

5 about whether any work is covered by a collective bargaining agreement 

6 and the responsibility of an ocean common carrier under a collective bar7 gaining agreement shall be resolved solely in accordance with the dispute 

8 resolution procedures contained in the collective bargaining agreement 

9 and the National Labor Relations Act (29 U.S.C. 151 et seq.), and with10 out reference to this subsection. 

11 ‘‘(5) EFFECT UNDER OTHER LAWS.—This subsection does not affect the 

12 lawfulness or unlawfulness under this part or any other Federal or State 

13 law of any collective bargaining agreement or element thereof, including 

14 any element that constitutes an essential term of a service contract. 

15 ‘‘(f) REMEDY FOR BREACH.—Unless the parties agree otherwise, the exclu16 sive remedy for a breach of a service contract is an action in an appropriate 

17 court. The contract dispute resolution forum may not be controlled by or in 

18 any way affiliated with a controlled carrier or by the government that owns 

19 or controls the carrier. 

20 ‘‘§ 40503. Refunds and waivers 

21 ‘‘The Federal Maritime Commission, on application of a carrier or shipper, 

22 may permit a common carrier or conference to refund a portion of the freight 

23 charges collected from a shipper, or to waive collection of a portion of the 

24 charges from a shipper, if— 

25 ‘‘(1) there is an error in a tariff, a failure to publish a new tariff, 

26 or an error in quoting a tariff, and the refund or waiver will not result 

27 in discrimination among shippers, ports, or carriers; 

28 ‘‘(2) the common carrier or conference, before filing an application for 

29 authority to refund or waive any charges for an error in a tariff or a 

30 failure to publish a tariff, has published a new tariff setting forth the 

31 rate on which the refund or waiver would be based; and 

32 ‘‘(3) the application for the refund or waiver is filed with the Commis33 sion within 180 days from the date of shipment. 

34 ‘‘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. 

35 ‘‘§ 40701. Rates 

36 ‘‘(a) IN GENERAL.—A controlled carrier may not— 
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1 ‘‘(1) maintain a rate or charge in a tariff or service contract, or 

2 charge or assess a rate, that is below a just and reasonable level; or 

3 ‘‘(2) establish, maintain, or enforce in a tariff or service contract a 

4 classification, rule, or regulation that results, or is likely to result, in 

5 the carriage or handling of cargo at a rate or charge that is below a 

6 just and reasonable level. 

7 ‘‘(b) COMMISSION PROHIBITION.—The Federal Maritime Commission, at 

8 any time after notice and opportunity for a hearing, may prohibit the publi9 cation or use of a rate, charge, classification, rule, or regulation that a con10 trolled carrier has failed to demonstrate is just and reasonable. 

11 ‘‘(c) BURDEN OF PROOF.—In a proceeding under this section, the burden 

12 of proof is on the controlled carrier to demonstrate that its rate, charge, classi13 fication, rule, or regulation is just and reasonable. 

14 ‘‘(d) VOIDNESS.—A rate, charge, classification, rule, or regulation that has 

15 been suspended or prohibited by the Commission is void and its use is unlaw16 ful. 

17 ‘‘§ 40702. Rate standards 

18 ‘‘(a) DEFINITION.—In this section, the term ‘constructive costs’ means the 

19 costs of another carrier, other than a controlled carrier, operating similar ves20 sels and equipment in the same or a similar trade. 

21 ‘‘(b) STANDARDS.—In determining whether a rate, charge, classification, 

22 rule, or regulation of a controlled carrier is just and reasonable, the Federal 

23 Maritime Commission— 

24 ‘‘(1) shall take into account whether the rate or charge that has been 

25 published or assessed, or that would result from the pertinent classifica26 tion, rule, or regulation, is below a level that is fully compensatory to 

27 the controlled carrier based on the carrier’s actual costs or constructive 

28 costs; and 

29 ‘‘(2) may take into account other appropriate factors, including 

30 whether the rate, charge, classification, rule, or regulation is— 

31 ‘‘(A) the same as, or similar to, those published or assessed by 

32 other carriers in the same trade; 

33 ‘‘(B) required to ensure movement of particular cargo in the same 

34 trade; or 

35 ‘‘(C) required to maintain acceptable continuity, level, or quality 

36 of common carrier service to or from affected ports. 

37 ‘‘§ 40703. Effective date of rates 

38 ‘‘Notwithstanding section 40501(e) of this title and except for service con39 tracts, a rate, charge, classification, rule, or regulation of a controlled carrier 

40 may not become effective, without special permission of the Federal Maritime 

41 Commission, until the 30th day after publication. 
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1 ‘‘§ 40704. Commission review 

2 ‘‘(a) REQUEST FOR JUSTIFICATION.—On request of the Federal Maritime 

3 Commission, a controlled carrier shall file with the Commission, within 20 

4 days of the request, a statement of justification that sufficiently details the 

5 carrier’s need and purpose for an existing or proposed rate, charge, classifica6 tion, rule, or regulation and upon which the Commission may reasonably 

7 base a determination of its lawfulness. 

8 ‘‘(b) DETERMINATION.—Within 120 days after receipt of information re9 quested under subsection (a), the Commission shall determine whether the 

10 rate, charge, classification, rule, or regulation may be unjust and unreason11 able. 

12 ‘‘(c) SHOW CAUSE ORDER.—Whenever the Commission is of the opinion 

13 that a rate, charge, classification, rule, or regulation published or assessed by 

14 a controlled carrier may be unjust and unreasonable, the Commission shall 

15 issue an order to the controlled carrier to show cause why the rate, charge, 

16 classification, rule, or regulation should not be prohibited. 

17 ‘‘(d) SUSPENSION PENDING DETERMINATION.— 

18 ‘‘(1) NOT YET EFFECTIVE.—Pending a determination of the lawfulness 

19 of a rate, charge, classification, rule, or regulation in a proceeding under 

20 subsection (c), the Commission may suspend the rate, charge, classifica21 tion, rule, or regulation at any time before its effective date. 

22 ‘‘(2) ALREADY EFFECTIVE.—If a rate, charge, classification, rule, or 

23 regulation has already become effective, the Commission, on issuance of 

24 an order to show cause, may suspend the rate, charge, classification, rule, 

25 or regulation on at least 30 days’ notice to the controlled carrier. 

26 ‘‘(3) MAXIMUM SUSPENSION.—A period of suspension under this sub27 section may not exceed 180 days. 

28 ‘‘(e) REPLACEMENT DURING SUSPENSION.—Whenever the Commission has 

29 suspended a rate, charge, classification, rule, or regulation under this section, 

30 the controlled carrier may publish a new rate, charge, classification, rule, or 

31 regulation to take effect immediately during the suspension in lieu of the sus32 pended rate, charge, classification, rule, or regulation. However, the Commis33 sion may reject the new rate, charge, classification, rule, or regulation if the 

34 Commission believes it is unjust and unreasonable. 

35 ‘‘§ 40705. Presidential review of Commission orders 

36 ‘‘(a) TRANSMISSION TO PRESIDENT.—The Federal Maritime Commission 

37 shall transmit to the President, concurrently with publication thereof, each 

38 order of suspension or final order of prohibition issued under section 40704 

39 of this title. 

40 ‘‘(b) PRESIDENTIAL REQUEST AND COMMISSION ACTION.—Within 10 days 

41 after receipt or the effective date of a Commission order referred to in sub-
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1 section (a), the President, in writing, may request the Commission to stay 

2 the effect of the order if the President finds that the stay is required for rea3 sons of national defense or foreign policy. The reasons shall be specified in 

4 the request. The Commission shall immediately grant the request by issuing 

5 an order in which the President’s request shall be described. During a stay, 

6 the President shall, whenever practicable, attempt to resolve the matter by ne7 gotiating with representatives of the applicable foreign governments. 

8 ‘‘§ 40706. Exceptions 

9 ‘‘This chapter does not apply to— 

10 ‘‘(1) a controlled carrier of a foreign country whose vessels are entitled 

11 by a treaty of the United States to receive national or most-favored-na12 tion treatment; or 

13 ‘‘(2) a trade served only by controlled carriers. 

14 ‘‘CHAPTER 409—OCEAN TRANSPORTATION 

15 INTERMEDIARIES 

‘‘Sec. 

‘‘40901. License requirement. 

‘‘40902. Financial responsibility. 

‘‘40903. Suspension or revocation of license. 

‘‘40904. Compensation by common carriers. 

16 ‘‘§ 40901. License requirement 

17 ‘‘(a) IN GENERAL.—A person in the United States may not act as an ocean 

18 transportation intermediary unless the person holds an ocean transportation 

19 intermediary’s license issued by the Federal Maritime Commission. The Com20 mission shall issue a license to a person that the Commission determines to 

21 be qualified by experience and character to act as an ocean transportation 

22 intermediary. 

23 ‘‘(b) EXCEPTION.—A person whose primary business is the sale of merchan24 dise may forward shipments of the merchandise for its own account without 

25 an ocean transportation intermediary’s license. 

26 ‘‘§ 40902. Financial responsibility 

27 ‘‘(a) IN GENERAL.—A person may not act as an ocean transportation 

28 intermediary unless the person furnishes a bond, proof of insurance, or other 

29 surety— 

30 ‘‘(1) in a form and amount determined by the Federal Maritime Com31 mission to insure financial responsibility; and 

32 ‘‘(2) issued by a surety company found acceptable by the Secretary of 

33 the Treasury. 

34 ‘‘(b) SCOPE OF FINANCIAL RESPONSIBILITY.—A bond, insurance, or other 

35 surety obtained under this section— 

36 ‘‘(1) shall be available to pay any penalty assessed under section 

37 41109 of this title or any order for reparation issued under section 41305 

38 of this title; 
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1 ‘‘(2) may be available to pay any claim against an ocean transpor2 tation intermediary arising from its transportation-related activities— 

3 ‘‘(A) with the consent of the insured ocean transportation inter4 mediary and subject to review by the surety company; or 

5 ‘‘(B) when the claim is deemed valid by the surety company after 

6 the ocean transportation intermediary has failed to respond to ade7 quate notice to address the validity of the claim; and 

8 ‘‘(3) shall be available to pay any judgment for damages against an 

9 ocean transportation intermediary arising from its transportation-re10 lated activities, if the claimant has first attempted to resolve the claim 

11 under paragraph (2) and the claim has not been resolved within a rea12 sonable period of time. 

13 ‘‘(c) REGULATIONS ON COURT JUDGMENTS.—The Commission shall pre14 scribe regulations for the purpose of protecting the interests of claimants, 

15 ocean transportation intermediaries, and surety companies with respect to the 

16 process of pursuing claims against ocean transportation intermediary bonds, 

17 insurance, or sureties through court judgments. The regulations shall provide 

18 that a judgment for monetary damages may not be enforced except to the ex19 tent that the damages claimed arise from the transportation-related activities 

20 of the insured ocean transportation intermediary, as defined by the Commis21 sion. 

22 ‘‘(d) RESIDENT AGENT.—An ocean transportation intermediary not domi23 ciled in the United States shall designate a resident agent in the United 

24 States for receipt of service of judicial and administrative process, including 

25 subpoenas. 

26 ‘‘§ 40903. Suspension or revocation of license 

27 ‘‘(a) FAILURE TO MAINTAIN QUALIFICATIONS OR TO COMPLY.—The Fed28 eral Maritime Commission, after notice and opportunity for a hearing, shall 

29 suspend or revoke an ocean transportation intermediary’s license if the Com30 mission finds that the ocean transportation intermediary— 

31 ‘‘(1) is not qualified to provide intermediary services; or 

32 ‘‘(2) willfully failed to comply with a provision of this part or with 

33 an order or regulation of the Commission. 

34 ‘‘(b) FAILURE TO MAINTAIN BOND, PROOF OF INSURANCE, OR OTHER

35 SURETY.—The Commission may revoke an ocean transportation 

36 intermediary’s license for failure to maintain a bond, proof of insurance, or 

37 other surety as required by section 40902(a) of this title. 

38 ‘‘§ 40904. Compensation by common carriers 

39 ‘‘(a) CERTIFICATION OF LICENSE AND SERVICES.—A common carrier may 

40 compensate an ocean freight forwarder for a shipment dispatched for others 

41 only when the ocean freight forwarder has certified in writing that it holds 
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1 an ocean transportation intermediary’s license (if required under section 

2 40901 of this title) and has— 

3 ‘‘(1) engaged, booked, secured, reserved, or contracted directly with the 

4 carrier or its agent for space aboard a vessel or confirmed the avail5 ability of the space; and 

6 ‘‘(2) prepared and processed the ocean bill of lading, dock receipt, or 

7 other similar document for the shipment. 

8 ‘‘(b) DUAL COMPENSATION.—A common carrier may not pay compensation 

9 for services described in subsection (a) more than once on the same shipment. 

10 ‘‘(c) BENEFICIAL INTEREST SHIPMENTS.—An ocean freight forwarder may 

11 not receive compensation from a common carrier for a shipment in which the 

12 ocean freight forwarder has a direct or indirect beneficial interest. A common 

13 carrier may not knowingly pay compensation on that shipment. 

14 ‘‘(d) LIMITS ON AUTHORITY OF CONFERENCE OR GROUP.—A conference or 

15 group of two or more ocean common carriers in the foreign commerce of the 

16 United States that is authorized to agree on the level of compensation paid 

17 to an ocean freight forwarder may not— 

18 ‘‘(1) deny a member of the conference or group the right, upon notice 

19 of not more than 5 days, to take independent action on any level of com20 pensation paid to an ocean freight forwarder; or 

21 ‘‘(2) agree to limit the payment of compensation to an ocean freight 

22 forwarder to less than 1.25 percent of the aggregate of all rates and 

23 charges applicable under a tariff and assessed against the cargo on which 

24 the services of the ocean freight forwarder are provided. 

25 ‘‘CHAPTER 411—PROHIBITIONS AND PENALTIES 

‘‘Sec. 

‘‘41101. Joint ventures and consortiums. 

‘‘41102. General prohibitions. 

‘‘41103. Disclosure of information. 

‘‘41104. Common carriers. 

‘‘41105. Concerted action. 

‘‘41106. Marine terminal operators. 

‘‘41107. Monetary penalties. 

‘‘41108. Additional penalties. 

‘‘41109. Assessment of penalties. 

26 ‘‘§ 41101. Joint ventures and consortiums 

27 ‘‘In this chapter, a joint venture or consortium of two or more common 

28 carriers operating as a single entity is deemed to be a single common carrier. 

29 ‘‘§ 41102. General prohibitions 

30 ‘‘(a) OBTAINING TRANSPORTATION AT LESS THAN APPLICABLE RATES.— 

31 A person may not knowingly and willfully, directly or indirectly, by means 

32 of false billing, false classification, false weighing, false report of weight, false 

33 measurement, or any other unjust or unfair device or means, obtain or at34 tempt to obtain ocean transportation for property at less than the rates or 

35 charges that would otherwise apply. 
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1 ‘‘(b) OPERATING CONTRARY TO AGREEMENT.—A person may not operate 

2 under an agreement required to be filed under section 40302 or 40305 of this 

3 title if— 

4 ‘‘(1) the agreement has not become effective under section 40304 of this 

5 title or has been rejected, disapproved, or canceled; or 

6 ‘‘(2) the operation is not in accordance with the terms of the agree7 ment or any modifications to the agreement made by the Federal Mari8 time Commission. 

9 ‘‘(c) PRACTICES IN HANDLING PROPERTY.—A common carrier, marine ter10 minal operator, or ocean transportation intermediary may not fail to estab11 lish, observe, and enforce just and reasonable regulations and practices relat12 ing to or connected with receiving, handling, storing, or delivering property. 

13 ‘‘§ 41103. Disclosure of information 

14 ‘‘(a) PROHIBITION.—A common carrier, marine terminal operator, or 

15 ocean freight forwarder, either alone or in conjunction with any other person, 

16 directly or indirectly, may not knowingly disclose, offer, solicit, or receive any 

17 information concerning the nature, kind, quantity, destination, consignee, or 

18 routing of any property tendered or delivered to a common carrier, without 

19 the consent of the shipper or consignee, if the information— 

20 ‘‘(1) may be used to the detriment or prejudice of the shipper, the con21 signee, or any common carrier; or 

22 ‘‘(2) may improperly disclose its business transaction to a competitor. 

23 ‘‘(b) EXCEPTIONS.—Subsection (a) does not prevent providing the informa24 tion— 

25 ‘‘(1) in response to legal process; 

26 ‘‘(2) to the Federal Maritime Commission or an agency of the United 

27 States Government; or 

28 ‘‘(3) to an independent neutral body operating within the scope of its 

29 authority to fulfill the policing obligations of the parties to an agreement 

30 effective under this part. 

31 ‘‘(c) DISCLOSURE FOR DETERMINING BREACH OR COMPILING STATIS32 TICS.—An ocean common carrier that is a party to a conference agreement 

33 approved under this part, a receiver, trustee, lessee, agent, or employee of the 

34 carrier, or any other person authorized by the carrier to receive informa35 tion— 

36 ‘‘(1) may give information to the conference or any person or agency 

37 designated by the conference, for the purpose of— 

38 ‘‘(A) determining whether a shipper or consignee has breached an 

39 agreement with the conference or its member lines; 

40 ‘‘(B) determining whether a member of the conference has 

41 breached the conference agreement; or 
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1 ‘‘(C) compiling statistics of cargo movement; and 

2 ‘‘(2) may not prevent the conference or its designee from soliciting or 

3 receiving information for any of those purposes. 

4 ‘‘§ 41104. Common carriers 

5 ‘‘A common carrier, either alone or in conjunction with any other person, 

6 directly or indirectly, may not— 

7 ‘‘(1) allow a person to obtain transportation for property at less than 

8 the rates or charges established by the carrier in its tariff or service con9 tract by means of false billing, false classification, false weighing, false 

10 measurement, or any other unjust or unfair device or means; 

11 ‘‘(2) provide service in the liner trade that is— 

12 ‘‘(A) not in accordance with the rates, charges, classifications, 

13 rules, and practices contained in a tariff published or a service con14 tract entered into under chapter 405 of this title, unless excepted or 

15 exempted under section 40103 or 40501(a)(2) of this title; or 

16 ‘‘(B) under a tariff or service contract that has been suspended 

17 or prohibited by the Federal Maritime Commission under chapter 

18 407 or 423 of this title; 

19 ‘‘(3) retaliate against a shipper by refusing, or threatening to refuse, 

20 cargo space accommodations when available, or resort to other unfair or 

21 unjustly discriminatory methods because the shipper has patronized an22 other carrier, or has filed a complaint, or for any other reason; 

23 ‘‘(4) for service pursuant to a tariff, engage in any unfair or unjustly 

24 discriminatory practice in the matter of— 

25 ‘‘(A) rates or charges; 

26 ‘‘(B) cargo classifications; 

27 ‘‘(C) cargo space accommodations or other facilities, with due re28 gard being given to the proper loading of the vessel and the avail29 able tonnage; 

30 ‘‘(D) loading and landing of freight; or 

31 ‘‘(E) adjustment and settlement of claims; 

32 ‘‘(5) for service pursuant to a service contract, engage in any unfair 

33 or unjustly discriminatory practice in the matter of rates or charges 

34 with respect to any port; 

35 ‘‘(6) use a vessel in a particular trade for the purpose of excluding, 

36 preventing, or reducing competition by driving another ocean common 

37 carrier out of that trade; 

38 ‘‘(7) offer or pay any deferred rebates; 

39 ‘‘(8) for service pursuant to a tariff, give any undue or unreasonable 

40 preference or advantage or impose any undue or unreasonable prejudice 

41 or disadvantage; 
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1 ‘‘(9) for service pursuant to a service contract, give any undue or un2 reasonable preference or advantage or impose any undue or unreasonable 

3 prejudice or disadvantage with respect to any port; 

4 ‘‘(10) unreasonably refuse to deal or negotiate; 

5 ‘‘(11) knowingly and willfully accept cargo from or transport cargo 

6 for the account of an ocean transportation intermediary that does not 

7 have a tariff as required by section 40501 of this title and a bond, insur8 ance, or other surety as required by section 40902 of this title; or 

9 ‘‘(12) knowingly and willfully enter into a service contract with an 

10 ocean transportation intermediary that does not have a tariff as required 

11 by section 40501 of this title and a bond, insurance, or other surety as 

12 required by section 40902 of this title, or with an affiliate of such an 

13 ocean transportation intermediary. 

14 ‘‘§ 41105. Concerted action 

15 ‘‘A conference or group of two or more common carriers may not— 

16 ‘‘(1) boycott or take any other concerted action resulting in an unrea17 sonable refusal to deal; 

18 ‘‘(2) engage in conduct that unreasonably restricts the use of inter19 modal services or technological innovations; 

20 ‘‘(3) engage in any predatory practice designed to eliminate the par21 ticipation, or deny the entry, in a particular trade of a common carrier 

22 not a member of the conference, a group of common carriers, an ocean 

23 tramp, or a bulk carrier; 

24 ‘‘(4) negotiate with a non-ocean carrier or group of non-ocean carriers 

25 (such as truck, rail, or air operators) on any matter relating to rates 

26 or services provided to ocean common carriers within the United States 

27 by those non-ocean carriers, unless the negotiations and any resulting 

28 agreements are not in violation of the antitrust laws and are consistent 

29 with the purposes of this part, except that this paragraph does not pro30 hibit the setting and publishing of a joint through rate by a conference, 

31 joint venture, or association of ocean common carriers; 

32 ‘‘(5) deny in the export foreign commerce of the United States com33 pensation to an ocean freight forwarder or limit that compensation to 

34 less than a reasonable amount; 

35 ‘‘(6) allocate shippers among specific carriers that are parties to the 

36 agreement or prohibit a carrier that is a party to the agreement from 

37 soliciting cargo from a particular shipper, except as— 

38 ‘‘(A) authorized by section 40303(d) of this title; 

39 ‘‘(B) required by the law of the United States or the importing 

40 or exporting country; or 

41 ‘‘(C) agreed to by a shipper in a service contract; 
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1 ‘‘(7) for service pursuant to a service contract, engage in any unjustly 

2 discriminatory practice in the matter of rates or charges with respect to 

3 any locality, port, or person due to the person’s status as a shippers’ as4 sociation or ocean transportation intermediary; or 

5 ‘‘(8) for service pursuant to a service contract, give any undue or un6 reasonable preference or advantage or impose any undue or unreasonable 

7 prejudice or disadvantage with respect to any locality, port, or person 

8 due to the person’s status as a shippers’ association or ocean transpor9 tation intermediary. 

10 ‘‘§ 41106. Marine terminal operators 

11 ‘‘A marine terminal operator may not— 

12 ‘‘(1) agree with another marine terminal operator or with a common 

13 carrier to boycott, or unreasonably discriminate in the provision of ter14 minal services to, a common carrier or ocean tramp; 

15 ‘‘(2) give any undue or unreasonable preference or advantage or im16 pose any undue or unreasonable prejudice or disadvantage with respect 

17 to any person; or 

18 ‘‘(3) unreasonably refuse to deal or negotiate. 

19 ‘‘§ 41107. Monetary penalties 

20 ‘‘(a) IN GENERAL.—A person that violates this part or a regulation or 

21 order of the Federal Maritime Commission issued under this part is liable 

22 to the United States Government for a civil penalty. Unless otherwise pro23 vided in this part, the amount of the penalty may not exceed $5,000 for each 

24 violation or, if the violation was willfully and knowingly committed, $25,000 

25 for each violation. Each day of a continuing violation is a separate violation. 

26 ‘‘(b) LIEN ON CARRIER’S VESSELS.—The amount of a civil penalty im27 posed on a common carrier under this section constitutes a lien on the vessels 

28 operated by the carrier. Any such vessel is subject to an action in rem to en29 force the lien in the district court of the United States for the district in 

30 which it is found. 

31 ‘‘§ 41108. Additional penalties 

32 ‘‘(a) SUSPENSION OF TARIFFS.—For a violation of section 41104(1), (2), 

33 or (7) of this title, the Federal Maritime Commission may suspend any or 

34 all tariffs of the common carrier, or that common carrier’s right to use any 

35 or all tariffs of conferences of which it is a member, for a period not to exceed 

36 12 months. 

37 ‘‘(b) OPERATING UNDER SUSPENDED TARIFF.—A common carrier that ac38 cepts or handles cargo for carriage under a tariff that has been suspended, 

39 or after its right to use that tariff has been suspended, is liable to the United 

40 States Government for a civil penalty of not more than $50,000 for each ship41 ment. 
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1 ‘‘(c) FAILURE TO PROVIDE INFORMATION.— 

2 ‘‘(1) PENALTIES.—If the Commission finds, after notice and oppor3 tunity for a hearing, that a common carrier has failed to supply infor4 mation ordered to be produced or compelled by subpoena under section 

5 41303 of this title, the Commission may— 

6 ‘‘(A) suspend any or all tariffs of the carrier or the carrier’s right 

7 to use any or all tariffs of conferences of which it is a member; and 

8 ‘‘(B) request the Secretary of Homeland Security to refuse or re9 voke any clearance required for a vessel operated by the carrier, and 

10 when so requested, the Secretary shall refuse or revoke the clearance. 

11 ‘‘(2) DEFENSE BASED ON FOREIGN LAW.—If, in defense of its failure 

12 to comply with a subpoena or discovery order, a common carrier alleges 

13 that information or documents located in a foreign country cannot be 

14 produced because of the laws of that country, the Commission shall im15 mediately notify the Secretary of State of the failure to comply and of 

16 the allegation relating to foreign laws. On receiving the notification, the 

17 Secretary of State shall promptly consult with the government of the na18 tion within which the information or documents are alleged to be located 

19 for the purpose of assisting the Commission in obtaining the information 

20 or documents. 

21 ‘‘(d) IMPAIRING ACCESS TO FOREIGN TRADE.—If the Commission finds, 

22 after notice and opportunity for a hearing, that the action of a common car23 rier, acting alone or in concert with another person, or a foreign government 

24 has unduly impaired access of a vessel documented under the laws of the 

25 United States to ocean trade between foreign ports, the Commission shall take 

26 action that it finds appropriate, including imposing any of the penalties au27 thorized by this section. The Commission also may take any of the actions 

28 authorized by sections 42304 and 42305 of this title. 

29 ‘‘(e) SUBMISSION OF ORDER TO PRESIDENT.—Before an order under this 

30 section becomes effective, it shall be submitted immediately to the President. 

31 The President, within 10 days after receiving it, may disapprove it if the 

32 President finds that disapproval is required for reasons of national defense 

33 or foreign policy. 

34 ‘‘§ 41109. Assessment of penalties 

35 ‘‘(a) GENERAL AUTHORITY.—Until a matter is referred to the Attorney 

36 General, the Federal Maritime Commission may, after notice and opportunity 

37 for a hearing, assess a civil penalty provided for in this part. The Commis38 sion may compromise, modify, or remit, with or without conditions, a civil 

39 penalty. 

40 ‘‘(b) FACTORS IN DETERMINING AMOUNT.—In determining the amount of 

41 a civil penalty, the Commission shall take into account the nature, cir-
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1 cumstances, extent, and gravity of the violation committed and, with respect 

2 to the violator, the degree of culpability, history of prior offenses, ability to 

3 pay, and other matters justice may require. 

4 ‘‘(c) EXCEPTION.—A civil penalty may not be imposed for conspiracy to 

5 violate section 41102(a) or 41104(1) or (2) of this title or to defraud the Com6 mission by concealing such a violation. 

7 ‘‘(d) PROHIBITED BASIS OF PENALTY.—The Commission or a court may 

8 not order a person to pay the difference between the amount billed and agreed 

9 upon in writing with a common carrier or its agent and the amount set forth 

10 in a tariff or service contract by that common carrier for the transportation 

11 service provided. 

12 ‘‘(e) TIME LIMIT.—A proceeding to assess a civil penalty under this section 

13 must be commenced within 5 years after the date of the violation. 

14 ‘‘(f) REVIEW OF CIVIL PENALTY.—A person against whom a civil penalty 

15 is assessed under this section may obtain review under chapter 158 of title 

16 28. 

17 ‘‘(g) CIVIL ACTIONS TO COLLECT.—If a person does not pay an assessment 

18 of a civil penalty after it has become final or after the appropriate court has 

19 entered final judgment in favor of the Commission, the Attorney General at 

20 the request of the Commission may seek to collect the amount assessed in an 

21 appropriate district court of the United States. The court shall enforce the 

22 order of the Commission unless it finds that the order was not regularly made 

23 and duly issued. 

24 ‘‘CHAPTER 413—ENFORCEMENT 

‘‘Sec. 

‘‘41301. Complaints. 

‘‘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. 

25 ‘‘§ 41301. Complaints 

26 ‘‘(a) IN GENERAL.—A person may file with the Federal Maritime Commis27 sion a sworn complaint alleging a violation of this part, except section 

28 41307(b)(1). If the complaint is filed within 3 years after the claim accrues, 

29 the complainant may seek reparations for an injury to the complainant 

30 caused by the violation. 

31 ‘‘(b) NOTICE AND RESPONSE.—The Commission shall provide a copy of the 

32 complaint to the person named in the complaint. Within a reasonable time 

33 specified by the Commission, the person shall satisfy the complaint or answer 

34 it in writing. 
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1 ‘‘(c) IF COMPLAINT NOT SATISFIED.—If the complaint is not satisfied, the 

2 Commission shall investigate the complaint in an appropriate manner and 

3 make an appropriate order. 

4 ‘‘§ 41302. Investigations 

5 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on complaint or 

6 its own motion, may investigate any conduct or agreement that the Commis7 sion believes may be in violation of this part. The Commission may by order 

8 disapprove, cancel, or modify any agreement that operates in violation of this 

9 part. 

10 ‘‘(b) EFFECTIVENESS OF AGREEMENT DURING INVESTIGATION.—Unless an 

11 injunction is issued under section 41306 or 41307 of this title, an agreement 

12 under investigation by the Commission remains in effect until the Commis13 sion issues its order. 

14 ‘‘(c) DATE FOR DECISION.—Within 10 days after the initiation of a pro15 ceeding under this section or section 41301 of this title, the Commission shall 

16 set a date by which it will issue its final decision. The Commission by order 

17 may extend the date for good cause. 

18 ‘‘(d) SANCTIONS FOR DELAY.—If, within the period for final decision under 

19 subsection (c), the Commission determines that it is unable to issue a final 

20 decision because of undue delay caused by a party to the proceeding, the Com21 mission may impose sanctions, including issuing a decision adverse to the de22 laying party. 

23 ‘‘(e) REPORT.—The Commission shall make a written report of every inves24 tigation under this part in which a hearing was held, stating its conclusions, 

25 decisions, findings of fact, and order. The Commission shall provide a copy 

26 of the report to all parties and publish the report for public information. A 

27 published report is competent evidence in a court of the United States. 

28 ‘‘§ 41303. Discovery and subpoenas 

29 ‘‘(a) IN GENERAL.—In an investigation or adjudicatory proceeding under 

30 this part— 

31 ‘‘(1) the Federal Maritime Commission may subpoena witnesses and 

32 evidence; and 

33 ‘‘(2) a party may use depositions, written interrogatories, and dis34 covery procedures under regulations prescribed by the Commission that, 

35 to the extent practicable, shall conform to the Federal Rules of Civil Pro36 cedure (28 App. U.S.C.). 

37 ‘‘(b) WITNESS FEES.—Unless otherwise prohibited by law, a witness is en38 titled to the same fees and mileage as in the courts of the United States. 
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1 ‘‘§ 41304. Hearings and orders 

2 ‘‘(a) OPPORTUNITY FOR HEARING.—The Federal Maritime Commission 

3 shall provide an opportunity for a hearing before issuing an order relating 

4 to a violation of this part or a regulation prescribed under this part. 

5 ‘‘(b) MODIFICATION OF ORDER.—The Commission may reverse, suspend, or 

6 modify any of its orders. 

7 ‘‘(c) REHEARING.—On application of a party to a proceeding, the Commis8 sion may grant a rehearing of the same or any matter determined in the pro9 ceeding. Except by order of the Commission, a rehearing does not operate as 

10 a stay of an order. 

11 ‘‘(d) PERIOD OF EFFECTIVENESS.—An order of the Commission remains 

12 in effect for the period specified in the order or until suspended, modified, 

13 or set aside by the Commission or a court of competent jurisdiction. 

14 ‘‘§ 41305. Award of reparations 

15 ‘‘(a) DEFINITION.—In this section, the term ‘actual injury’ includes the loss 

16 of interest at commercial rates compounded from the date of injury. 

17 ‘‘(b) BASIC AMOUNT.—If the complaint was filed within the period speci18 fied in section 41301(a) of this title, the Federal Maritime Commission shall 

19 direct the payment of reparations to the complainant for actual injury caused 

20 by a violation of this part, plus reasonable attorney fees. 

21 ‘‘(c) ADDITIONAL AMOUNTS.—On a showing that the injury was caused by 

22 an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) or 

23 (3) of this title, the Commission may order the payment of additional 

24 amounts, but the total recovery of a complainant may not exceed twice the 

25 amount of the actual injury. 

26 ‘‘(d) DIFFERENCE BETWEEN RATES.—If the injury was caused by an ac27 tivity prohibited by section 41104(4)(A) or (B) of this title, the amount of 

28 the injury shall be the difference between the rate paid by the injured shipper 

29 and the most favorable rate paid by another shipper. 

30 ‘‘§ 41306. Injunctive relief sought by complainants 

31 ‘‘(a) IN GENERAL.—After filing a complaint with the Federal Maritime 

32 Commission under section 41301 of this title, the complainant may bring a 

33 civil action in a district court of the United States to enjoin conduct in viola34 tion of this part. 

35 ‘‘(b) VENUE.—The action must be brought in the judicial district in 

36 which— 

37 ‘‘(1) the Commission has brought a civil action against the defendant 

38 under section 41307(a) of this title; or 

39 ‘‘(2) the defendant resides or transacts business, if the Commission has 

40 not brought such an action. 
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1 ‘‘(c) REMEDIES BY COURT.—After notice to the defendant, and a showing 

2 that the standards for granting injunctive relief by courts of equity are met, 

3 the court may grant a temporary restraining order or preliminary injunction 

4 for a period not to exceed 10 days after the Commission has issued an order 

5 disposing of the complaint. 

6 ‘‘(d) ATTORNEY FEES.—A defendant prevailing in a civil action under this 

7 section shall be allowed reasonable attorney fees to be assessed and collected 

8 as part of the costs of the action. 

9 ‘‘§ 41307. Injunctive relief sought by the Commission 

10 ‘‘(a) GENERAL VIOLATIONS.—In connection with an investigation under 

11 section 41301 or 41302 of this title, the Federal Maritime Commission may 

12 bring a civil action to enjoin conduct in violation of this part. The action 

13 must be brought in the district court of the United States for any judicial 

14 district in which the defendant resides or transacts business. After notice to 

15 the defendant, and a showing that the standards for granting injunctive relief 

16 by courts of equity are met, the court may grant a temporary restraining 

17 order or preliminary injunction for a period not to exceed 10 days after the 

18 Commission has issued an order disposing of the issues under investigation. 

19 ‘‘(b) REDUCTION IN COMPETITION.— 

20 ‘‘(1) ACTION BY COMMISSION.—If, at any time after the filing or effec21 tive date of an agreement under chapter 403 of this title, the Commission 

22 determines that the agreement is likely, by a reduction in competition, 

23 to produce an unreasonable reduction in transportation service or an un24 reasonable increase in transportation cost, the Commission, after notice 

25 to the person filing the agreement, may bring a civil action in the 

26 United States District Court for the District of Columbia to enjoin the 

27 operation of the agreement. The Commission’s sole remedy with respect 

28 to an agreement likely to have such an effect is an action under this sub29 section. 

30 ‘‘(2) REMEDIES BY COURT.—In an action under this subsection, the 

31 court may issue— 

32 ‘‘(A) a temporary restraining order or a preliminary injunction; 

33 and 

34 ‘‘(B) a permanent injunction after a showing that the agreement 

35 is likely to have the effect described in paragraph (1). 

36 ‘‘(3) BURDEN OF PROOF AND THIRD PARTIES.—In an action under 

37 this subsection, the burden of proof is on the Commission. The court may 

38 not allow a third party to intervene. 

39 ‘‘(c) FAILURE TO PROVIDE INFORMATION.—If a person filing an agree40 ment, or an officer, director, partner, agent, or employee of the person, fails 

41 substantially to comply with a request for the submission of additional infor-
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1 mation or documents within the period provided in section 40304(c) of this 

2 title, the Commission may bring a civil action in the United States District 

3 Court for the District of Columbia. At the request of the Commission, the 

4 Court— 

5 ‘‘(1) may order compliance; 

6 ‘‘(2) shall extend the period specified in section 40304(c)(2) of this title 

7 until there has been substantial compliance; and 

8 ‘‘(3) may grant other equitable relief that the court decides is appro9 priate. 

10 ‘‘(d) REPRESENTATION.—The Commission may represent itself in a pro11 ceeding under this section in— 

12 ‘‘(1) a district court of the United States, on notice to the Attorney 

13 General; and 

14 ‘‘(2) a court of appeals of the United States, with the approval of the 

15 Attorney General. 

16 ‘‘§ 41308. Enforcement of subpoenas and orders 

17 ‘‘(a) CIVIL ACTION.—If a person does not comply with a subpoena or order 

18 of the Federal Maritime Commission, the Attorney General, at the request of 

19 the Commission, or an injured party, may seek enforcement in a district 

20 court of the United States having jurisdiction over the parties. If, after hear21 ing, the court determines that the subpoena or order was regularly made and 

22 duly issued, the court shall enforce the subpoena or order. 

23 ‘‘(b) TIME LIMIT ON BRINGING ACTIONS.—An action under this section to 

24 enforce an order of the Commission must be brought within 3 years after the 

25 date the order was violated. 

26 ‘‘§ 41309. Enforcement of reparation orders 

27 ‘‘(a) CIVIL ACTION.—If a person does not comply with an order of the Fed28 eral Maritime Commission for the payment of reparation, the person to whom 

29 the award was made may seek enforcement of the order in a district court 

30 of the United States having jurisdiction over the parties. 

31 ‘‘(b) PARTIES AND SERVICE OF PROCESS.—All parties in whose favor the 

32 Commission has made an award of reparation by a single order may be 

33 joined as plaintiffs, and all other parties in the order may be joined as de34 fendants, in a single action in a judicial district in which any one plaintiff 

35 could maintain an action against any one defendant. Service of process 

36 against a defendant not found in that district may be made in a district in 

37 which any office of that defendant is located or in which any port of call on 

38 a regular route operated by that defendant is located. Judgment may be en39 tered for any plaintiff against the defendant liable to that plaintiff. 
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1 ‘‘(c) NATURE OF REVIEW.—In an action under this section, the findings 

2 and order of the Commission are prima facie evidence of the facts stated in 

3 the findings and order. 

4 ‘‘(d) COSTS AND ATTORNEY FEES.—The plaintiff is not liable for costs of 

5 the action or for costs of any subsequent stage of the proceedings unless they 

6 accrue on the plaintiff’s appeal. A prevailing plaintiff shall be allowed rea7 sonable attorney fees to be assessed and collected as part of the costs of the 

8 action. 

9 ‘‘(e) TIME LIMIT ON BRINGING ACTIONS.—An action under this section to 

10 enforce an order of the Commission must be brought within 3 years after the 

11 date the order was violated. 

12 ‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

13 ‘‘CHAPTER 421—REGULATIONS AFFECTING SHIPPING IN 

14 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. 

15 ‘‘§ 42101. Regulations of the Commission 

16 ‘‘(a) UNFAVORABLE CONDITIONS.—To further the objectives and policy set 

17 forth in section 50101 of this title, the Federal Maritime Commission shall 

18 prescribe regulations affecting shipping in foreign trade, not in conflict with 

19 law, to adjust or meet general or special conditions unfavorable to shipping 

20 in foreign trade, whether in a particular trade or on a particular route or 

21 in commerce generally, including intermodal movements, terminal operations, 

22 cargo solicitation, agency services, ocean transportation intermediary services 

23 and operations, and other activities and services integral to transportation 

24 systems, and which arise out of or result from laws or regulations of a foreign 

25 country or competitive methods, pricing practices, or other practices employed 

26 by owners, operators, agents, or masters of vessels of a foreign country. 

27 ‘‘(b) INITIATION OF REGULATION.—A regulation under subsection (a) may 

28 be initiated by the Commission on its own motion or on the petition of any 

29 person, including another component of the United States Government. 

30 ‘‘§ 42102. Regulations of other agencies 

31 ‘‘(a) REQUEST TO AGENCY.—To further the objectives and policy set forth 

32 in section 50101 of this title, the Federal Maritime Commission shall request 

33 the head of a department, agency, or instrumentality of the United States 

34 Government to suspend, modify, or annul any existing regulations, or to make 

35 new regulations, affecting shipping in the foreign trade, except regulations re-
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1 lating to the Public Health Service, the Consular Service, or the inspection 

2 of vessels. 

3 ‘‘(b) PRIOR REVIEW AND APPROVAL.—A department, agency, or instrumen4 tality of the Government may not prescribe a regulation affecting shipping 

5 in the foreign trade (except a regulation affecting the Public Health Service, 

6 the Consular Service, or the inspection of vessels) until the regulation has been 

7 submitted to the Commission for its approval and final action has been taken 

8 by the Commission or the President. 

9 ‘‘(c) SUBMISSION TO PRESIDENT.—If the head of a department, agency, or 

10 instrumentality of the Government refuses to comply with a request under 

11 subsection (a) or objects to a decision of the Commission under subsection (b), 

12 the Commission or the head of the department, agency, or instrumentality 

13 may submit the facts to the President. The President may establish, suspend, 

14 modify, or annul the regulation. 

15 ‘‘§ 42103. No preference to Government-owned vessels 

16 ‘‘A regulation may not give a vessel owned by the United States Govern17 ment a preference over a vessel owned by citizens of the United States and 

18 documented under the laws of the United States. 

19 ‘‘§ 42104. Information, witnesses, and evidence 

20 ‘‘(a) ORDER TO SUPPLY INFORMATION.—In carrying out section 42101 of 

21 this title, the Federal Maritime Commission may order any person (including 

22 a common carrier, tramp operator, bulk operator, shipper, shippers’ associa23 tion, ocean transportation intermediary, or marine terminal operator, or an 

24 officer, receiver, trustee, lessee, agent, or employee thereof) to file with the 

25 Commission a report, answers to questions, documentary material, or other 

26 information the Commission considers necessary or appropriate. The Commis27 sion may require the response to any such order to be made under oath. The 

28 response shall be provided in the form and within the time specified by the 

29 Commission. 

30 ‘‘(b) SUBPOENAS AND DISCOVERY.—In carrying out section 42101 of this 

31 title, the Commission may— 

32 ‘‘(1) subpoena witnesses and evidence; and 

33 ‘‘(2) authorize a party to use depositions, written interrogatories, and 

34 discovery procedures that, to the extent practicable, conform to the Fed35 eral Rules of Civil Procedure (28 App. U.S.C.). 

36 ‘‘(c) WITNESS FEES.—Unless otherwise prohibited by law, and subject to 

37 funds being appropriated, a witness in a proceeding under section 42101 of 

38 this title is entitled to the same fees and mileage as in the courts of the United 

39 States. 

40 ‘‘(d) PENALTIES.—For failure to supply information ordered to be pro41 duced or compelled by subpoena under this section, the Commission may— 
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1 ‘‘(1) after notice and opportunity for a hearing, suspend tariffs and 

2 service contracts of a common carrier or the common carrier’s right to 

3 use tariffs of conferences and service contracts of agreements of which it 

4 is a member; or 

5 ‘‘(2) assess a civil penalty of not more than $5,000 for each day that 

6 the information is not provided. 

7 ‘‘(e) ENFORCEMENT.—If a person does not comply with an order or sub8 poena of the Commission under this section, the Commission may seek en9 forcement in a district court of the United States having jurisdiction over the 

10 parties. If, after hearing, the court determines that the order or subpoena was 

11 regularly made and duly issued, the court shall enforce the order or subpoena. 

12 ‘‘§ 42105. Disclosure to public 

13 ‘‘Notwithstanding any other provision of law, the Federal Maritime Com14 mission may refuse to disclose to the public a response or other information 

15 submitted to it under this chapter. 

16 ‘‘§ 42106. Other actions to remedy unfavorable conditions 

17 ‘‘If the Federal Maritime Commission finds that conditions unfavorable to 

18 shipping in foreign trade as described in section 42101 of this title exist, the 

19 Commission may— 

20 ‘‘(1) limit voyages to and from United States ports or the amount or 

21 type of cargo carried; 

22 ‘‘(2) suspend, in whole or in part, tariffs and service contracts for car23 riage to or from United States ports, including a common carrier’s right 

24 to use tariffs of conferences and service contracts of agreements in United 

25 States trades of which it is a member for any period the Commission 

26 specifies; 

27 ‘‘(3) suspend, in whole or in part, an ocean common carrier’s right 

28 to operate under any agreement filed with the Commission, including 

29 any agreement authorizing preferential treatment at terminals, pref30 erential terminal leases, space chartering, or pooling of cargo or revenue 

31 with other ocean common carriers; 

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

33 ‘‘(5) take any other action the Commission finds necessary and appro34 priate to adjust or meet any condition unfavorable to shipping in the 

35 foreign trade of the United States. 

36 ‘‘§ 42107. Refusal of clearance and entry 

37 ‘‘At the request of the Federal Maritime Commission— 

38 ‘‘(1) the Secretary of Homeland Security shall— 

39 ‘‘(A) refuse the clearance required by section 60105 of this title 

40 to a vessel of a country that is named in a regulation prescribed 

41 by the Commission under section 42101 of this title; and 
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1 ‘‘(B) collect any fees imposed by the Commission under section 

2 42106(4) of this title; and 

3 ‘‘(2) the Secretary of the department in which the Coast Guard is op4 erating shall— 

5 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel of 

6 a country that is named in a regulation prescribed by the Commis7 sion under section 42101 of this title, to a port or place in the 

8 United States or the navigable waters of the United States; or 

9 ‘‘(B) detain the vessel at the port or place in the United States 

10 from which it is about to depart for another port or place in the 

11 United States. 

12 ‘‘§ 42108. Penalty for operating under suspended tariff or 

13 service contract 

14 ‘‘A common carrier that accepts or handles cargo for carriage under a tar15 iff or service contract that has been suspended under section 42104(d)(1) or 

16 42106(2) of this title, or after its right to use another tariff or service contract 

17 has been suspended under those provisions, is liable to the United States Gov18 ernment for a civil penalty of not more than $50,000 for each day that it 

19 is found to be operating under a suspended tariff or service contract. 

20 ‘‘§ 42109. Consultation with other agencies 

21 ‘‘The Federal Maritime Commission may consult with, seek the cooperation 

22 of, or make recommendations to other appropriate agencies of the United 

23 States Government prior to taking any action under this chapter. 

24 ‘‘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. 

25 ‘‘§ 42301. Definitions 

26 ‘‘(a) DEFINED IN PART A.—In this chapter, the terms ‘common carrier’, 

27 ‘marine terminal operator’, ‘ocean common carrier’, ‘ocean transportation 

28 intermediary’, ‘shipper’, and ‘shippers’ association’ have the meaning given 

29 those terms in section 40102 of this title. 

30 ‘‘(b) OTHER DEFINITIONS.—In this chapter: 

31 ‘‘(1) FOREIGN CARRIER.—The term ‘foreign carrier’ means an ocean 

32 common carrier a majority of whose vessels are documented under the 

33 laws of a foreign country. 

34 ‘‘(2) MARITIME SERVICES.—The term ‘maritime services’ means port35 to-port transportation of cargo by vessels operated by an ocean common 

36 carrier. 
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1 ‘‘(3) MARITIME-RELATED SERVICES.—The term ‘maritime-related serv2 ices’ means intermodal operations, terminal operations, cargo solicita3 tion, agency services, ocean transportation intermediary services and op4 erations, and all other activities and services integral to total transpor5 tation systems of ocean common carriers and their foreign domiciled af6 filiates for themselves and others. 

7 ‘‘(4) UNITED STATES CARRIER.—The term ‘United States carrier’ 

8 means an ocean common carrier operating vessels documented under the 

9 laws of the United States. 

10 ‘‘(5) UNITED STATES OCEANBORNE TRADE.—The term ‘United States 

11 oceanborne trade’ means the carriage of cargo between the United States 

12 and a foreign country, whether directly or indirectly, by an ocean com13 mon carrier. 

14 ‘‘§ 42302. Investigations 

15 ‘‘(a) IN GENERAL.—The Federal Maritime Commission shall investigate 

16 whether any laws, rules, regulations, policies, or practices of a foreign govern17 ment, or any practices of a foreign carrier or other person providing mari18 time or maritime-related services in a foreign country, result in the existence 

19 of conditions that— 

20 ‘‘(1) adversely affect the operations of United States carriers in United 

21 States oceanborne trade; and 

22 ‘‘(2) do not exist for foreign carriers of that country in the United 

23 States under the laws of the United States or as a result of acts of 

24 United States carriers or other persons providing maritime or maritime25 related services in the United States. 

26 ‘‘(b) INITIATION OF INVESTIGATION.—An investigation under subsection (a) 

27 may be initiated by the Commission on its own motion or on the petition 

28 of any person, including another component of the United States Government. 

29 ‘‘(c) TIME FOR DECISION.—The Commission shall complete an investiga30 tion under this section and render a decision within 120 days after it is initi31 ated. However, the Commission may extend this 120-day period for an addi32 tional 90 days if the Commission is unable to obtain sufficient information 

33 to determine whether a condition specified in subsection (a) exists. A notice 

34 providing an extension shall state clearly the reasons for the extension. 

35 ‘‘§ 42303. Information requests 

36 ‘‘(a) IN GENERAL.—To further the purposes of section 42302(a) of this title, 

37 the Federal Maritime Commission may order any person (including a com38 mon carrier, shipper, shippers’ association, ocean transportation inter39 mediary, or marine terminal operator, or an officer, receiver, trustee, lessee, 

40 agent or employee thereof) to file with the Commission any periodic or special 

41 report, answers to questions, documentary material, or other information the 
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1 Commission considers necessary or appropriate. The Commission may require 

2 the response to any such order to be made under oath. The response shall be 

3 provided in the form and within the time specified by the Commission. 

4 ‘‘(b) SUBPOENAS.—In an investigation under section 42302 of this title, the 

5 Commission may subpoena witnesses and evidence. 

6 ‘‘(c) NONDISCLOSURE.—Notwithstanding any other provision of law, the 

7 Commission may determine that any information submitted to it in response 

8 to a request under this section, or otherwise, shall not be disclosed to the pub9 lic. 

10 ‘‘§ 42304. Action against foreign carriers 

11 ‘‘(a) IN GENERAL.—Subject to section 42306 of this title, whenever the Fed12 eral Maritime Commission, after notice and opportunity for comment or 

13 hearing, determines that the conditions specified in section 42302(a) of this 

14 title exist, the Commission shall take such action to offset those conditions as 

15 it considers necessary and appropriate against any foreign carrier that is a 

16 contributing cause, or whose government is a contributing cause, to those con17 ditions. The action may include— 

18 ‘‘(1) limitations on voyages to and from United States ports or on the 

19 amount or type of cargo carried; 

20 ‘‘(2) suspension, in whole or in part, of any or all tariffs and service 

21 contracts, including an ocean common carrier’s right to use any or all 

22 tariffs and service contracts of conferences in United States trades of 

23 which it is a member for any period the Commission specifies; 

24 ‘‘(3) suspension, in whole or in part, of an ocean common carrier’s 

25 right to operate under any agreement filed with the Commission, includ26 ing any agreement authorizing preferential treatment at terminals, pref27 erential terminal leases, space chartering, or pooling of cargo or revenue 

28 with other ocean common carriers; and 

29 ‘‘(4) a fee not to exceed $1,000,000 per voyage. 

30 ‘‘(b) CONSULTATION.—The Commission may consult with, seek the coopera31 tion of, or make recommendations to other appropriate agencies of the United 

32 States Government prior to taking any action under subsection (a). 

33 ‘‘§ 42305. Refusal of clearance and entry 

34 ‘‘Subject to section 42306 of this title, whenever the Federal Maritime Com35 mission determines that the conditions specified in section 42302(a) of this 

36 title exist, then at the request of the Commission— 

37 ‘‘(1) the Secretary of Homeland Security shall refuse the clearance re38 quired by section 60105 of this title to a vessel of a foreign carrier that 

39 is identified by the Commission under section 42304 of this title; and 

40 ‘‘(2) the Secretary of the department in which the Coast Guard is op41 erating shall— 
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1 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel of 

2 a foreign carrier that is identified by the Commission under section 

3 42304 of this title, to a port or place in the United States or the 

4 navigable waters of the United States; or 

5 ‘‘(B) detain the vessel at the port or place in the United States 

6 from which it is about to depart for another port or place in the 

7 United States. 

8 ‘‘§ 42306. Submission of determinations to President 

9 ‘‘Before a determination under section 42304 of this title becomes effective 

10 or a request is made under section 42305 of this title, the determination shall 

11 be submitted immediately to the President. The President, within 10 days 

12 after receiving it, may disapprove it in writing, setting forth the reasons for 

13 the disapproval, if the President finds that disapproval is required for reasons 

14 of national defense or foreign policy. 

15 ‘‘§ 42307. Review of regulations and orders 

16 ‘‘A regulation or final order of the Federal Maritime Commission under 

17 this chapter is reviewable exclusively in the same forum and in the same 

18 manner as provided in section 2342(3)(B) of title 28. 

19 ‘‘PART C—MISCELLANEOUS

20 ‘‘CHAPTER 441—EVIDENCE OF FINANCIAL 

21 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. 

22 ‘‘§ 44101. Application 

23 ‘‘This chapter applies to a vessel that— 

24 ‘‘(1) has berth or stateroom accommodations for at least 50 passengers; 

25 and 

26 ‘‘(2) boards passengers at a port in the United States. 

27 ‘‘§ 44102. Financial responsibility to indemnify passengers 

28 for nonperformance of transportation 

29 ‘‘(a) FILING REQUIREMENT.—A person in the United States may not ar30 range, offer, advertise, or provide transportation on a vessel to which this 

31 chapter applies unless the person has filed with the Federal Maritime Com32 mission evidence of financial responsibility to indemnify passengers for non33 performance of the transportation. 

34 ‘‘(b) SATISFACTORY EVIDENCE.—To satisfy subsection (a), a person must 

35 file— 

36 ‘‘(1) information the Commission considers necessary; or 
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1 ‘‘(2) a copy of a bond or other security, in such form as the Commis2 sion by regulation may require. 

3 ‘‘(c) AUTHORIZED ISSUER OF BOND.—If a bond is filed, it must be issued 

4 by a bonding company authorized to do business in the United States. 

5 ‘‘§ 44103. Financial responsibility to pay liability for death 

6 or injury 

7 ‘‘(a) GENERAL REQUIREMENT.—The owner or charterer of a vessel to which 

8 this chapter applies shall establish, under regulations prescribed by the Fed9 eral Maritime Commission, financial responsibility to meet liability for death 

10 or injury to passengers or other individuals on a voyage to or from a port 

11 in the United States. 

12 ‘‘(b) AMOUNTS.— 

13 ‘‘(1) IN GENERAL.—The amount of financial responsibility required 

14 under subsection (a) shall be based on the number of passenger accom15 modations as follows: 

16 ‘‘(A) $20,000 for each of the first 500 passenger accommodations. 

17 ‘‘(B) $15,000 for each additional passenger accommodation be18 tween 501 and 1,000. 

19 ‘‘(C) $10,000 for each additional passenger accommodation be20 tween 1,001 and 1,500. 

21 ‘‘(D) $5,000 for each additional passenger accommodation over 

22 1,500. 

23 ‘‘(2) MULTIPLE VESSELS.—If the owner or charterer is operating more 

24 than one vessel subject to this chapter, the amount of financial responsi25 bility shall be based on the number of passenger accommodations on the 

26 vessel with the largest number of passenger accommodations. 

27 ‘‘(c) AVAILABILITY TO PAY JUDGMENT.—The amount determined under 

28 subsection (b) shall be available to pay a judgment for damages (whether less 

29 than or more than $20,000) for death or injury to a passenger or other indi30 vidual on a voyage to or from a port in the United States. 

31 ‘‘(d) MEANS OF ESTABLISHING.—Financial responsibility under this sec32 tion may be established by one or more of the following if acceptable to the 

33 Commission: 

34 ‘‘(1) Insurance. 

35 ‘‘(2) Surety bond issued by a bonding company authorized to do busi36 ness in the United States. 

37 ‘‘(3) Qualification as a self-insurer. 

38 ‘‘(4) Other evidence of financial responsibility. 

39 ‘‘§ 44104. Civil penalty 

40 ‘‘A person that violates section 44102 or 44103 of this title is liable to the 

41 United States Government for a civil penalty of not more than $5,000, plus 
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1 $200 for each passage sold, to be assessed by the Federal Maritime Commis2 sion. The Commission may remit or mitigate the penalty on terms the Com3 mission considers proper. 

4 ‘‘§ 44105. Refusal of clearance 

5 ‘‘The Secretary of Homeland Security shall refuse the clearance required by 

6 section 60105 of this title, at the port or place of departure from the United 

7 States, of a vessel that is subject to this chapter and does not have evidence 

8 issued by the Federal Maritime Commission of compliance with sections 

9 44102 and 44103 of this title. 

10 ‘‘§ 44106. Conduct of proceedings 

11 ‘‘Part A of this subtitle applies to proceedings conducted by the Federal 

12 Maritime Commission under this chapter.’’. 

13 SEC. 8. SUBTITLE V OF TITLE 46. 

14 (a) SUBTITLE ANALYSIS.—The analysis of subtitle V of title 46, United 

15 States Code, is amended to read as follows: 

16 ‘‘PART A—GENERAL

‘‘Chapter Sec. 

‘‘501. Policy, Studies, and Reports ....................................................................... 50101 

‘‘503. Administrative ................................................................................................... 50301 

‘‘505. Other General Provisions ............................................................................ 50501 

17 ‘‘PART B—MERCHANT MARINE SERVICE

‘‘511. General .................................................................................................................. 51101 

‘‘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 

18 ‘‘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 

19 ‘‘PART D—PROMOTIONAL PROGRAMS

‘‘551. Coastwise Trade ............................................................................................... 55101 

‘‘553. Passenger and Cargo Preferences ........................................................... 55301 

‘‘555. Miscellaneous ..................................................................................................... 55501 

20 ‘‘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 

21 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

‘‘571. General Authority ............................................................................................ 57101 

‘‘573. Vessel Trade-In Program ............................................................................. 57301 

‘‘575. Construction, Charter, and Sale of Vessels ........................................ 57501 

22 ‘‘PART G—RESTRICTIONS AND PENALTIES

‘‘581. Restrictions and Penalties .......................................................................... 58101’’. 
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1 (b) CHAPTERS PRECEDING CHAPTER 531.—Subtitle V of title 46, United 

2 States Code, is amended by inserting after the subtitle analysis the following: 

3 ‘‘PART A—GENERAL

4 ‘‘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. 

5 ‘‘§ 50101. Objectives and policy 

6 ‘‘(a) OBJECTIVES.—It is necessary for the national defense and the develop7 ment of the domestic and foreign commerce of the United States that the 

8 United States have a merchant marine— 

9 ‘‘(1) sufficient to carry the waterborne domestic commerce and a sub10 stantial part of the waterborne export and import foreign commerce of 

11 the United States and to provide shipping service essential for maintain12 ing the flow of the waterborne domestic and foreign commerce at all 

13 times; 

14 ‘‘(2) capable of serving as a naval and military auxiliary in time of 

15 war or national emergency; 

16 ‘‘(3) owned and operated as vessels of the United States by citizens 

17 of the United States; 

18 ‘‘(4) composed of the best-equipped, safest, and most suitable types of 

19 vessels and manned with a trained and efficient citizen personnel; and 

20 ‘‘(5) supplemented by efficient facilities for building and repairing 

21 vessels. 

22 ‘‘(b) POLICY.—It is the policy of the United States to encourage and aid 

23 the development and maintenance of a merchant marine satisfying the objec24 tives described in subsection (a). 

25 ‘‘§ 50102. Survey of merchant marine 

26 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall survey the mer27 chant marine of the United States to determine whether replacements and ad28 ditions are required to carry out the objectives and policy of section 50101 

29 of this title. The Secretary shall study, perfect, and adopt a long-range pro30 gram for replacements and additions that will result, as soon as practicable, 

31 in— 
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1 ‘‘(1) an adequate and well-balanced merchant fleet, including vessels 

2 of all types, that will provide shipping service essential for maintaining 

3 the flow of foreign commerce by vessels designed to be readily and quickly 

4 convertible into transport and supply vessels in a time of national emer5 gency; 

6 ‘‘(2) ownership and operation of the fleet by citizens of the United 

7 States insofar as practicable; 

8 ‘‘(3) vessels designed to afford the best and most complete protection 

9 for passengers and crew against fire and all marine perils; and 

10 ‘‘(4) an efficient capacity for building and repairing vessels in the 

11 United States with an adequate number of skilled personnel to provide 

12 an adequate mobilization base. 

13 ‘‘(b) COOPERATION WITH SECRETARY OF NAVY.—In carrying out sub14 section (a)(1), the Secretary of Transportation shall cooperate closely with the 

15 Secretary of the Navy as to national defense requirements. 

16 ‘‘§ 50103. Determinations of essential services 

17 ‘‘(a) ESSENTIAL SERVICES, ROUTES, AND LINES.— 

18 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall investigate, 

19 determine, and keep current records of the ocean services, routes, and 

20 lines from ports in the United States, or in the territories and posses21 sions of the United States, to foreign markets, which the Secretary deter22 mines to be essential for the promotion, development, expansion, and 

23 maintenance of the foreign commerce of the United States. In making 

24 such a determination, the Secretary shall consider and give due weight 

25 to— 

26 ‘‘(A) the cost of maintaining each line; 

27 ‘‘(B) the probability that a line cannot be maintained except at 

28 a heavy loss disproportionate to the benefit to foreign trade; 

29 ‘‘(C) the number of voyages and types of vessels that should be 

30 employed in a line; 

31 ‘‘(D) the intangible benefit of maintaining a line to the foreign 

32 commerce of the United States, the national defense, and other na33 tional requirements; and 

34 ‘‘(E) any other facts and conditions a prudent business person 

35 would consider when dealing with the person’s own business. 

36 ‘‘(2) SAINT LAWRENCE SEAWAY.—For purposes of paragraph (1), the 

37 Secretary shall establish services, routes, and lines that reflect the sea38 sonal closing of the Saint Lawrence Seaway and provide for alternate 

39 routing of vessels through a different range of ports during that closing 

40 to maintain continuity of service on a year-round basis. 
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1 ‘‘(b) BULK CARGO CARRYING SERVICES.—The Secretary shall investigate, 

2 determine, and keep current records of the bulk cargo carrying services that 

3 should be provided by vessels of the United States (whether or not operating 

4 on particular services, routes, or lines) for the promotion, development, expan5 sion, and maintenance of the foreign commerce of the United States and the 

6 national defense or other national requirements. 

7 ‘‘(c) TYPES OF VESSELS.—The Secretary shall investigate, determine, and 

8 keep current records of the type, size, speed, method of propulsion, and other 

9 requirements of the vessels, including express-liner or super-liner vessels, that 

10 should be employed in— 

11 ‘‘(1) the services, routes, or lines described in subsection (a), and the 

12 frequency and regularity of the voyages of the vessels, with a view to fur13 nishing adequate, regular, certain, and permanent service; and 

14 ‘‘(2) the bulk cargo carrying services described in subsection (b). 

15 ‘‘§ 50104. Studies of general maritime problems 

16 ‘‘The Secretary of Transportation shall study all maritime problems aris17 ing in carrying out the policy in section 50101 of this title. 

18 ‘‘§ 50105. Studies and cooperation relating to the construc19 tion of vessels 

20 ‘‘(a) RELATIVE COSTS AND NEW DESIGNS.—The Secretary of Transpor21 tation shall investigate, determine, and keep current records of— 

22 ‘‘(1) the relative cost of construction of comparable vessels in the 

23 United States and in foreign countries; and 

24 ‘‘(2) new designs, new methods of construction, and new types of 

25 equipment for vessels. 

26 ‘‘(b) RULES, CLASSIFICATIONS, AND RATINGS.—The Secretary shall exam27 ine the rules under which vessels are constructed abroad and in the United 

28 States and the methods of classifying and rating the vessels. 

29 ‘‘(c) COLLABORATION WITH OWNERS AND BUILDERS.—The Secretary shall 

30 collaborate with vessel owners and shipbuilders in developing plans for the ec31 onomical construction of vessels and their propelling machinery, of most mod32 ern economical types, giving thorough consideration to all well-recognized 

33 means of propulsion and taking into account the benefits from standardized 

34 production where practicable and desirable. 

35 ‘‘(d) EXPRESS-LINER AND SUPER-LINER VESSELS.—The Secretary shall 

36 study and cooperate with vessel owners in devising means by which there may 

37 be constructed, by or with the aid of the United States Government, express38 liner or super-liner vessels comparable to those of other nations, especially 

39 with a view to their use in a national emergency, and the use of transoceanic 

40 aircraft service in connection with or in lieu of those vessels. 
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1 ‘‘§ 50106. Studies on the operation of vessels 

2 ‘‘(a) RELATIVE COSTS.—The Secretary of Transportation shall investigate, 

3 determine, and keep current records of the relative cost of marine insurance, 

4 maintenance, repairs, wages and subsistence of officers and crews, and all 

5 other items of expense, in the operation of comparable vessels under the laws 

6 and regulations of the United States and those of the foreign countries whose 

7 vessels are substantial competitors of American vessels. 

8 ‘‘(b) SHIPYARDS.—The Secretary shall investigate, determine, and keep cur9 rent records of the number, location, and efficiency of shipyards in the United 

10 States. 

11 ‘‘(c) NAVIGATION LAWS.—The Secretary shall examine the navigation laws 

12 and regulations of the United States and make such recommendations to Con13 gress as the Secretary considers proper for the amendment, improvement, and 

14 revision of those laws and for the development of the merchant marine of the 

15 United States. 

16 ‘‘§ 50107. Studies on marine insurance 

17 ‘‘The Secretary of Transportation shall— 

18 ‘‘(1) examine into the subject of marine insurance, the number of com19 panies in the United States, domestic and foreign, engaging in marine 

20 insurance, the extent of the insurance on hulls and cargoes placed or 

21 written in the United States, and the extent of reinsurance of American 

22 maritime risks in foreign companies; and 

23 ‘‘(2) ascertain what steps may be necessary to develop an ample ma24 rine insurance system as an aid in the development of the merchant ma25 rine of the United States. 

26 ‘‘§ 50108. Studies on cargo carriage and cargo containers 

27 ‘‘(a) STUDIES.—The Secretary of Transportation shall study— 

28 ‘‘(1) the methods of encouraging the development and implementation 

29 of new concepts for the carriage of cargo in the domestic and foreign 

30 commerce of the United States; and 

31 ‘‘(2) the economic and technological aspects of the use of cargo con32 tainers as a method of carrying out the policy in section 50101 of this 

33 title. 

34 ‘‘(b) RESTRICTION.—In carrying out subsection (a) and the policy in sec35 tion 50101 of this title, the United States Government may not give preference 

36 as between carriers based on the length, height, or width of cargo containers 

37 or the length, height, or width of cargo container cells. This restriction applies 

38 to all existing container vessels and any container vessel to be constructed or 

39 rebuilt. 
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1 ‘‘§ 50109. Miscellaneous studies 

2 ‘‘(a) FOREIGN SUBSIDIES.—The Secretary of Transportation shall inves3 tigate, determine, and keep current records of the extent and character of the 

4 governmental aid and subsidies granted by foreign governments to their mer5 chant marine. 

6 ‘‘(b) LAWS APPLICABLE TO AIRCRAFT.—The Secretary shall investigate, de7 termine, and keep current records of the provisions of law relating to shipping 

8 that should be made applicable to aircraft engaged in foreign commerce to 

9 further the policy in section 50101 of this title, and any appropriate legisla10 tion in this regard. 

11 ‘‘(c) AID FOR COTTON, COAL, LUMBER, AND CEMENT.—The Secretary shall 

12 investigate, determine, and keep current records of the advisability of enact13 ment of suitable legislation authorizing the Secretary, in an economic or com14 mercial emergency, to aid farmers and producers of cotton, coal, lumber, and 

15 cement in any section of the United States in the transportation and landing 

16 of their products in any foreign port, which products can be carried in dry17 cargo vessels by reducing rates, by supplying additional tonnage to any 

18 American operator, or by operation of vessels directly by the Secretary, until 

19 the Secretary considers the special rate reduction and operation unnecessary 

20 for the benefit of those farmers and producers. 

21 ‘‘(d) INTERCOASTAL AND INLAND WATER TRANSPORTATION.—The Sec22 retary shall investigate, determine, and keep current records of intercoastal 

23 and inland water transportation, including their relation to transportation 

24 by land and air. 

25 ‘‘(e) OBSOLETE TONNAGE AND TRAMP SERVICE.—The Secretary shall make 

26 studies and reports to Congress on— 

27 ‘‘(1) the scrapping or removal from service of old or obsolete merchant 

28 tonnage owned by the United States Government or in use in the mer29 chant marine; and 

30 ‘‘(2) tramp shipping service and the advisability of citizens of the 

31 United States participating in that service with vessels under United 

32 States registry. 

33 ‘‘(f) MORTGAGE LOANS.—The Secretary shall investigate the legal status of 

34 mortgage loans on vessel property, with a view to the means of improving 

35 the security of those loans and of encouraging investment in American ship36 ping. 

37 ‘‘§ 50110. Securing preference to vessels of the United States 

38 ‘‘(a) POSSIBILITIES OF PROMOTING CARRIAGE.—The Secretary of Trans39 portation shall investigate, determine, and keep current records of the possi40 bilities of promoting the carriage of United States foreign trade in vessels of 

41 the United States. 
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1 ‘‘(b) INDUCEMENTS TO IMPORTERS AND EXPORTERS.—The Secretary shall 

2 study and cooperate with vessel owners in devising means by which the im3 porters and exporters of the United States can be induced to give preference 

4 to vessels of the United States. 

5 ‘‘(c) LIAISON WITH AGENCIES AND ORGANIZATIONS.—The Secretary shall 

6 establish and maintain liaison with such other agencies of the United States 

7 Government, and with such representative trade organizations throughout the 

8 United States, as may be concerned, directly or indirectly, with any move9 ment of commodities in the waterborne export and import foreign commerce 

10 of the United States, for the purpose of securing preference to vessels of the 

11 United States in the shipment of those commodities. 

12 ‘‘§ 50111. Reports to Congress 

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

14 Transportation shall submit a report to Congress. The report shall include, 

15 with respect to activities of the Secretary under this subtitle, the results of 

16 investigations, a summary of transactions, a statement of all expenditures 

17 and receipts, the purposes for which all expenditures were made, and any rec18 ommendations for legislation. 

19 ‘‘(b) ADMINISTERED AND OVERSIGHT FUNDS.—The Secretary, in the report 

20 under subsection (a) and in the annual budget estimate for the Maritime Ad21 ministration submitted to Congress, shall state separately the amount, source, 

22 intended use, and nature of any funds (other than funds appropriated to the 

23 Administration or to the Secretary of Transportation for use by the Adminis24 tration) administered, or subject to oversight, by the Administration. 

25 ‘‘(c) ADDITIONAL RECOMMENDATIONS FOR LEGISLATION.—The Secretary, 

26 from time to time, shall make recommendations to Congress for legislation the 

27 Secretary considers necessary to better achieve the objectives and policy of sec28 tion 50101 of this title. 

29 ‘‘§ 50112. National Maritime Enhancement Institutes 

30 ‘‘(a) DESIGNATION.—The Secretary of Transportation may designate Na31 tional Maritime Enhancement Institutes. 

32 ‘‘(b) ACTIVITIES.—Activities undertaken by an institute may include— 

33 ‘‘(1) conducting research about methods to improve the performance of 

34 maritime industries; 

35 ‘‘(2) enhancing the competitiveness of domestic maritime industries in 

36 international trade; 

37 ‘‘(3) forecasting trends in maritime trade; 

38 ‘‘(4) assessing technological advancements; 

39 ‘‘(5) developing management initiatives and training; 
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1 ‘‘(6) analyzing economic and operational impacts of regulatory poli2 cies and international negotiations or agreements pending before inter3 national bodies; 

4 ‘‘(7) assessing the compatibility of domestic maritime infrastructure 

5 systems with overseas transport systems; 

6 ‘‘(8) fostering innovations in maritime transportation pricing; and 

7 ‘‘(9) improving maritime economics and finance. 

8 ‘‘(c) APPLICATION FOR DESIGNATION.—An institution seeking designation 

9 as a National Maritime Enhancement Institute shall submit an application 

10 under regulations prescribed by the Secretary. 

11 ‘‘(d) CRITERIA FOR DESIGNATION.—The Secretary shall designate an insti12 tute under this section on the basis of the following criteria: 

13 ‘‘(1) The demonstrated research and extension resources available to 

14 the applicant for carrying out the activities specified in subsection (b). 

15 ‘‘(2) The ability of the applicant to provide leadership in making na16 tional and regional contributions to the solution of both long-range and 

17 immediate problems of the domestic maritime industry. 

18 ‘‘(3) The existence of an established program of the applicant encom19 passing research and training directed to enhancing maritime industries. 

20 ‘‘(4) The demonstrated ability of the applicant to assemble and evalu21 ate pertinent information from national and international sources and 

22 to disseminate results of maritime industry research and educational 

23 programs through a continuing education program. 

24 ‘‘(5) The qualification of the applicant as a nonprofit institution of 

25 higher learning. 

26 ‘‘(e) FINANCIAL AWARDS.—The Secretary may make awards on an equal 

27 matching basis to an institute designated under subsection (a) from amounts 

28 appropriated. The aggregate annual amount of the Federal share of the 

29 awards by the Secretary may not exceed $500,000. 

30 ‘‘(f) UNIVERSITY TRANSPORTATION RESEARCH FUNDS.—The Secretary 

31 may make a grant under section 5505 of title 49 to an institute designated 

32 under subsection (a) for maritime and maritime intermodal research under 

33 that section as if the institute were a university transportation center. In 

34 making a grant, the Secretary, through the Research and Innovative Tech35 nology Administration, shall advise the Maritime Administration on the 

36 availability of funds for the grants and consult with the Administration on 

37 making the grants. 

38 ‘‘§ 50113. Use and performance reports by operators of vessels 

39 ‘‘(a) FILING REQUIREMENT.—The Secretary of Transportation by regula40 tion may require the operator of a vessel in the waterborne foreign commerce 

41 of the United States to file such report, account, record, or memorandum on 
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1 the use and performance of the vessel as the Secretary considers desirable to 

2 assist in carrying out this subtitle. The report, account, record, or memo3 randum shall be signed and verified, and be filed at the times and in the 

4 manner, as provided by regulation. 

5 ‘‘(b) CIVIL PENALTY.—An operator not filing a report, account, record, or 

6 memorandum required by the Secretary under this section is liable to the 

7 United States Government for a civil penalty of $50 for each day of the viola8 tion. A penalty imposed under this section on the operator of a vessel con9 stitutes a lien on the vessel involved in the violation. A civil action in rem 

10 to enforce the lien may be brought in the district court of the United States 

11 for any district in which the vessel is found. The Secretary may remit or 

12 mitigate any penalty imposed under this section. 

13 ‘‘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. 

14 ‘‘§ 50301. Vessel Operations Revolving Fund 

15 ‘‘(a) IN GENERAL.—There is a ‘Vessel Operations Revolving Fund’ for use 

16 by the Secretary of Transportation in carrying out duties and powers related 

17 to vessel operations, including charter, operation, maintenance, repair, recon18 ditioning, and improvement of merchant vessels under the jurisdiction of the 

19 Secretary. The Fund has a working capital of $20,000,000, to remain avail20 able until expended. 

21 ‘‘(b) RELATIONSHIP TO OTHER LAWS.—Notwithstanding any other law, 

22 rates for shipping services provided under the Fund shall be prescribed by the 

23 Secretary and the Fund shall be credited with receipts from vessel operations 

24 conducted under the Fund. Sections 1(a) and (c), 3(c), and 4 of the Act of 

25 March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294), apply to those 

26 operations and to seamen employed through general agents as employees of 

27 the United States Government. Notwithstanding any other law on the employ28 ment of persons by the Government, the seamen may be employed in accord29 ance with customary commercial practices in the maritime industry. 

30 ‘‘(c) ADVANCEMENTS.—With the approval of the Director of the Office of 

31 Management and Budget, the Secretary may advance amounts the Secretary 

32 considers necessary, but not more than 2 percent of vessel operating expenses, 

33 from the Fund to the appropriation ‘Salaries and Expenses’ in carrying out 

34 duties and powers related to vessel operations, without regard to the limita35 tions on amounts stated in that appropriation. 

36 ‘‘(d) TRANSFERS.—The unexpended balances of working funds or of alloca37 tion accounts established after January 1, 1951, for the activities provided 
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1 for in subsection (a), and receipts received from those activities, may be trans2 ferred to the Fund, which shall be available for the purposes of those working 

3 funds or allocation accounts. 

4 ‘‘(e) LIMITATION.— 

5 ‘‘(1) IN GENERAL.—Amounts made available to the Secretary for mar6 itime activities by this section or any other law may not be used to pay 

7 for a vessel described in paragraph (2) unless the compensation to be 

8 paid is computed under section 56303 of this title as that section is in9 terpreted by the Comptroller General. 

10 ‘‘(2) APPLICABLE VESSELS.—Paragraph (1) applies to a vessel— 

11 ‘‘(A) the title to which is acquired by the Government by requisi12 tion or purchase; 

13 ‘‘(B) the use of which is taken by requisition or agreement; or 

14 ‘‘(C) lost while insured by the Government. 

15 ‘‘(3) NONAPPLICABLE VESSELS.—Paragraph (1) does not apply to a 

16 vessel under a construction-differential subsidy contract. 

17 ‘‘(f) AVAILABILITY FOR ADDITIONAL PURPOSES.—The Fund is available 

18 for— 

19 ‘‘(1) necessary expenses incurred in the protection, preservation, main20 tenance, acquisition, or use of vessels involved in mortgage foreclosure or 

21 forfeiture proceedings instituted by the Government, including payment 

22 of prior claims and liens, expenses of sale, or other related charges; 

23 ‘‘(2) necessary expenses incident to the redelivery and lay-up, in the 

24 United States, of vessels chartered as of June 20, 1956, under agreements 

25 not calling for their return to the Government; 

26 ‘‘(3) the activation, repair, and deactivation of merchant vessels char27 tered for limited emergency purposes during fiscal year 1957 under the 

28 jurisdiction of the Secretary; and 

29 ‘‘(4) payment of expenses of custody and maintenance of Government30 owned vessels not in the National Defense Reserve Fleet. 

31 ‘‘(g) EXPENSES AND RECEIPTS RELATED TO CHARTER OPERATIONS.—The 

32 Fund is available for expenses incurred in activating, repairing, and deacti33 vating merchant vessels chartered under the jurisdiction of the Secretary. Re34 ceipts from charter operations of Government-owned vessels under the juris35 diction of the Secretary shall be credited to the Fund. 

36 ‘‘§ 50302. Port development 

37 ‘‘(a) GENERAL REQUIREMENTS.—With the objective of promoting, encour38 aging, and developing ports and transportation facilities in connection with 

39 water commerce over which the Secretary of Transportation has jurisdiction, 

40 the Secretary, in cooperation with the Secretary of the Army, shall— 
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1 ‘‘(1) investigate territorial regions and zones tributary to ports, taking 

2 into consideration the economies of transportation by rail, water, and 

3 highway and the natural direction of the flow of commerce; 

4 ‘‘(2) investigate the causes of congestion of commerce at ports and ap5 plicable remedies; 

6 ‘‘(3) investigate the subject of water terminals, including the necessary 

7 docks, warehouses, and equipment, to devise and suggest the types most 

8 appropriate for different locations and for the most expeditious and eco9 nomical transfer or interchange of passengers or property between water 

10 carriers and rail carriers; 

11 ‘‘(4) consult with communities on the appropriate location and plan 

12 of construction of wharves, piers, and water terminals; 

13 ‘‘(5) investigate the practicability and advantages of harbor, river, 

14 and port improvements in connection with foreign and coastwise trade; 

15 and 

16 ‘‘(6) investigate any other matter that may tend to promote and en17 courage the use by vessels of ports adequate to care for the freight that 

18 naturally would pass through those ports. 

19 ‘‘(b) SUBMISSION OF FINDINGS TO SURFACE TRANSPORTATION BOARD.— 

20 After an investigation under subsection (a), if the Secretary of Transportation 

21 believes that the rates or practices of a rail carrier subject to the jurisdiction 

22 of the Surface Transportation Board are detrimental to the objective specified 

23 in subsection (a), or that new rates or practices, new or additional port ter24 minal facilities, or affirmative action by a rail carrier is necessary to pro25 mote that objective, the Secretary may submit findings to the Board for action 

26 the Board considers appropriate under existing law. 

27 ‘‘§ 50303. Operating property and extending term of notes 

28 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may— 

29 ‘‘(1) operate or lease docks, wharves, piers, or real property under the 

30 Secretary’s control; and 

31 ‘‘(2) make extensions and accept renewals of— 

32 ‘‘(A) promissory notes and other evidences of indebtedness on 

33 property; and 

34 ‘‘(B) mortgages and other contracts securing the property. 

35 ‘‘(b) TERMS OF TRANSACTIONS.—A transaction under subsection (a) shall 

36 be on terms the Secretary considers necessary to carry out the purposes of this 

37 subtitle, but consistent with sound business practice. 

38 ‘‘(c) AVAILABILITY OF AMOUNTS.—Amounts received by the Secretary from 

39 a transaction under this section are available for expenditure by the Secretary 

40 as provided in this subtitle. 
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1 ‘‘§ 50304. Sale and transfer of property 

2 ‘‘(a) AUTHORITY TO SELL.—The Secretary of Transportation may sell 

3 property (other than vessels transferred under section 4 of the Merchant Ma4 rine Act, 1920 (ch. 250, 41 Stat. 990)) on terms the Secretary considers ap5 propriate. 

6 ‘‘(b) TRANSFERS FROM MILITARY TO CIVILIAN CONTROL.—When the Presi7 dent considers it in the interest of the United States, the President may trans8 fer to the Secretary of Transportation possession and control of property de9 scribed in the second paragraph of section 17 of the Merchant Marine Act, 

10 1920 (ch. 250, 41 Stat. 994), as originally enacted, that is possessed and con11 trolled by the Secretary of a military department. 

12 ‘‘(c) TRANSFERS FROM CIVILIAN TO MILITARY CONTROL.—When the Presi13 dent considers it necessary, the President by executive order may transfer to 

14 the Secretary of a military department possession and control of property de15 scribed in section 17 of the Merchant Marine Act, 1920 (ch. 250, 41 Stat. 

16 994), as originally enacted, that is possessed and controlled by the Secretary 

17 of Transportation. The President’s order shall state the need for the transfer 

18 and the period of the need. When the President decides that the need has 

19 ended, the possession and control shall revert to the Secretary of Transpor20 tation. The property may not be sold except as provided by law. 

21 ‘‘§ 50305. Appointment of trustee or receiver and operation of 

22 vessels 

23 ‘‘(a) APPOINTMENT OF TRUSTEES AND RECEIVERS.— 

24 ‘‘(1) APPOINTMENT OF SECRETARY.—In a proceeding in a court of the 

25 United States in which a trustee or receiver may be appointed for a cor26 poration operating a vessel of United States registry between the United 

27 States and a foreign country, on which the United States Government 

28 holds a mortgage, the court may appoint the Secretary of Transportation 

29 as the sole trustee or receiver (subject to the direction of the court) if— 

30 ‘‘(A) the court finds that the appointment will— 

31 ‘‘(i) inure to the advantage of the estate and the parties in 

32 interest; and 

33 ‘‘(ii) tend to carry out the purposes of this subtitle; and 

34 ‘‘(B) the Secretary expressly consents to the appointment. 

35 ‘‘(2) APPOINTMENT OF OTHER PERSON.—The appointment of another 

36 person as trustee or receiver without a hearing becomes effective when 

37 ratified by the Secretary, but the Secretary may demand a hearing. 

38 ‘‘(b) OPERATION OF VESSELS.— 

39 ‘‘(1) IN GENERAL.—If the court is unwilling to allow the trustee or 

40 receiver to operate the vessel in foreign commerce without financial aid 

41 from the Government pending termination of the proceeding, and the 
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1 Secretary certifies to the court that the continued operation of the vessel 

2 is essential to the foreign commerce of the United States and is reason3 ably calculated to carry out the purposes of this subtitle, the court may 

4 allow the Secretary to operate the vessel, either directly or through a 

5 managing agent or operator employed by the Secretary. The Secretary 

6 must agree to comply with terms imposed by the court sufficient to pro7 tect the parties in interest. The Secretary also must agree to pay all op8 erating losses resulting from the operation. The operation shall be for the 

9 account of the trustee or receiver. 

10 ‘‘(2) PAYMENT OF OPERATING LOSSES AND OTHER AMOUNTS.—The 

11 Secretary has no claim against the corporation, its estate, or its assets 

12 for operating losses paid by the Secretary, but the Secretary may pay 

13 amounts for depreciation the Secretary considers reasonable and other 

14 amounts the court considers just. The payment of operating losses and 

15 the other amounts and compliance with terms imposed by the court shall 

16 be in satisfaction of any claim against the Secretary resulting from the 

17 operation of the vessel. 

18 ‘‘(3) DEEMED OPERATION BY GOVERNMENT.—A vessel operated by the 

19 Secretary under this subsection is deemed to be a vessel operated by the 

20 United States under chapter 309 of this title. 

21 ‘‘§ 50306. Requiring testimony and records in investigations 

22 ‘‘(a) IN GENERAL.—In conducting an investigation that the Secretary of 

23 Transportation considers necessary and proper to carry out this subtitle, the 

24 Secretary may administer oaths, take evidence, and subpoena persons to tes25 tify and produce documents relevant to the matter under investigation. Per26 sons may be required to attend or produce documents from any place in the 

27 United States at any designated place of hearing. 

28 ‘‘(b) FEES AND MILEAGE.—Persons subpoenaed by the Secretary under sub29 section (a) shall be paid the same fees and mileage paid to witnesses in the 

30 courts of the United States. 

31 ‘‘(c) ENFORCEMENT OF SUBPOENAS.—If a person disobeys a subpoena 

32 issued under subsection (a), the Secretary may seek an order enforcing the 

33 subpoena from the district court of the United States for the district in which 

34 the person resides or does business. Process may be served in the judicial dis35 trict in which the person resides or is found. The court may issue an order 

36 to obey the subpoena and punish a refusal to obey as a contempt of court. 

37 ‘‘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. 
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1 ‘‘§ 50501. Entities deemed citizens of the United States 

2 ‘‘(a) IN GENERAL.—In this subtitle, a corporation, partnership, or associa3 tion is deemed to be a citizen of the United States only if the controlling in4 terest is owned by citizens of the United States. However, if the corporation, 

5 partnership, or association is operating a vessel in the coastwise trade, at 

6 least 75 percent of the interest must be owned by citizens of the United States. 

7 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CORPORATIONS.—In this subtitle, a 

8 corporation is deemed to be a citizen of the United States only if, in addition 

9 to satisfying the requirements in subsection (a)— 

10 ‘‘(1) it is incorporated under the laws of the United States or a State; 

11 ‘‘(2) its chief executive officer, by whatever title, and the chairman of 

12 its board of directors are citizens of the United States; and 

13 ‘‘(3) no more of its directors are noncitizens than a minority of the 

14 number necessary to constitute a quorum. 

15 ‘‘(c) DETERMINATION OF CONTROLLING CORPORATE INTEREST.—The con16 trolling interest in a corporation is owned by citizens of the United States 

17 under subsection (a) only if— 

18 ‘‘(1) title to the majority of the stock in the corporation is vested in 

19 citizens of the United States free from any trust or fiduciary obligation 

20 in favor of a person not a citizen of the United States; 

21 ‘‘(2) the majority of the voting power in the corporation is vested in 

22 citizens of the United States; 

23 ‘‘(3) there is no contract or understanding by which the majority of 

24 the voting power in the corporation may be exercised, directly or indi25 rectly, in behalf of a person not a citizen of the United States; and 

26 ‘‘(4) there is no other means by which control of the corporation is 

27 given to or permitted to be exercised by a person not a citizen of the 

28 United States. 

29 ‘‘(d) DETERMINATION OF 75 PERCENT CORPORATE INTEREST.—At least 75 

30 percent of the interest in a corporation is owned by citizens of the United 

31 States under subsection (a) only if— 

32 ‘‘(1) title to at least 75 percent of the stock in the corporation is vested 

33 in citizens of the United States free from any trust or fiduciary obliga34 tion in favor of a person not a citizen of the United States; 

35 ‘‘(2) at least 75 percent of the voting power in the corporation is vest36 ed in citizens of the United States; 

37 ‘‘(3) there is no contract or understanding by which more than 25 per38 cent of the voting power in the corporation may be exercised, directly 

39 or indirectly, in behalf of a person not a citizen of the United States; 

40 and 
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1 ‘‘(4) there is no other means by which control of more than 25 percent 

2 of any interest in the corporation is given to or permitted to be exercised 

3 by a person not a citizen of the United States. 

4 ‘‘§ 50502. Applicability to receivers, trustees, successors, and 

5 assigns 

6 ‘‘This subtitle applies to receivers, trustees, successors, and assigns of any 

7 person to whom this subtitle applies. 

8 ‘‘§ 50503. Oceanographic research vessels 

9 ‘‘An oceanographic research vessel (as defined in section 2101 of this title) 

10 is deemed not to be engaged in trade or commerce. 

11 ‘‘§ 50504. Sailing school vessels 

12 ‘‘(a) DEFINITIONS.—In this section, the terms ‘sailing school instructor’, 

13 ‘sailing school student’, and ‘sailing school vessel’ have the meaning given 

14 those terms in section 2101 of this title. 

15 ‘‘(b) NOT SEAMEN.—A sailing school student or sailing school instructor 

16 is deemed not to be a seaman under— 

17 ‘‘(1) parts B, F, and G of subtitle II of this title; or 

18 ‘‘(2) the maritime law doctrines of maintenance and cure or warranty 

19 of seaworthiness. 

20 ‘‘(c) NOT MERCHANT VESSEL OR ENGAGED IN TRADE OR COMMERCE.— 

21 A sailing school vessel is deemed not to be— 

22 ‘‘(1) a merchant vessel under section 11101(a)–(c) of this title; or 

23 ‘‘(2) a vessel engaged in trade or commerce. 

24 ‘‘(d) EVIDENCE OF FINANCIAL RESPONSIBILITY.—The owner or charterer 

25 of a sailing school vessel shall maintain evidence of financial responsibility 

26 to meet liability for death or injury to sailing school students and sailing 

27 school instructors on a voyage on the vessel. The amount of financial responsi28 bility shall be at least $50,000 for each student and instructor. Financial re29 sponsibility under this subsection may be evidenced by insurance or other 

30 adequate financial resources. 

31 ‘‘PART B—MERCHANT MARINE SERVICE

32 ‘‘CHAPTER 511—GENERAL 

‘‘Sec. 

‘‘51101. Policy. 

‘‘51102. Definitions. 

‘‘51103. General authority of Secretary of Transportation. 

‘‘51104. General authority of Secretary of the Navy. 

33 ‘‘§ 51101. Policy 

34 ‘‘It is the policy of the United States that merchant marine vessels of the 

35 United States should be operated by highly trained and efficient citizens of 

36 the United States and that the United States Navy and the merchant marine 

37 of the United States should work closely together to promote the maximum 

38 integration of the total seapower forces of the United States. 
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1 ‘‘§ 51102. Definitions 

2 ‘‘In this part: 

3 ‘‘(1) ACADEMY.—The term ‘Academy’ means the United States Mer4 chant Marine Academy located at Kings Point, New York, and main5 tained under chapter 513 of this title. 

6 ‘‘(2) COST OF EDUCATION PROVIDED.—The term ‘cost of education 

7 provided’ means the financial costs incurred by the United States Gov8 ernment for providing training or financial assistance to students at the 

9 Academy and the State maritime academies, including direct financial 

10 assistance, room, board, classroom academics, and other training activi11 ties. 

12 ‘‘(3) MERCHANT MARINE OFFICER.—The term ‘merchant marine offi13 cer’ means an individual issued a license by the Coast Guard author14 izing service as— 

15 ‘‘(A) a master, mate, or pilot on a documented vessel that— 

16 ‘‘(i) is of at least 1,000 gross tons as measured under section 

17 14502 of this title or an alternate tonnage measured under sec18 tion 14302 of this title as prescribed by the Secretary under 

19 section 14104 of this title; and 

20 ‘‘(ii) operates on the oceans or the Great Lakes; or 

21 ‘‘(B) an engineer officer on a documented vessel propelled by ma22 chinery of at least 4,000 horsepower. 

23 ‘‘(4) STATE MARITIME ACADEMY.—The term ‘State maritime academy’ 

24 means— 

25 ‘‘(A) a State maritime academy or college sponsored by a State 

26 and assisted under chapter 515 of this title; and 

27 ‘‘(B) a regional maritime academy or college sponsored by a 

28 group of States and assisted under chapter 515 of this title. 

29 ‘‘§ 51103. General authority of Secretary of Transportation 

30 ‘‘(a) EDUCATION AND TRAINING.—The Secretary of Transportation may 

31 provide for the education and training of citizens of the United States for the 

32 safe and efficient operation of the merchant marine of the United States at 

33 all times, including operation as a naval and military auxiliary in time of 

34 war or national emergency. 

35 ‘‘(b) SURPLUS PROPERTY FOR INSTRUCTIONAL PURPOSES.— 

36 ‘‘(1) IN GENERAL.—The Secretary may cooperate with and assist the 

37 institutions named in paragraph (2) by making vessels, shipboard equip38 ment, and other marine equipment, owned by the United States Govern39 ment and determined to be excess or surplus, available to those institu40 tions for instructional purposes, by gift, loan, sale, lease, or charter on 

41 terms the Secretary considers appropriate. 
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1 ‘‘(2) INSTITUTIONS.—The institutions referred to in paragraph (1) 

2 are— 

3 ‘‘(A) the United States Merchant Marine Academy; 

4 ‘‘(B) a State maritime academy; and 

5 ‘‘(C) a nonprofit training institution jointly approved by the Sec6 retary of Transportation and the Secretary of the department in 

7 which the Coast Guard is operating as offering training courses that 

8 meet Federal regulations for maritime training. 

9 ‘‘(c) ASSISTANCE FROM OTHER AGENCIES.— 

10 ‘‘(1) IN GENERAL.—The Secretary of Transportation may secure di11 rectly from an agency, on a reimbursable basis, information, facilities, 

12 and equipment necessary to carry out this part. 

13 ‘‘(2) DETAILING PERSONNEL.—At the request of the Secretary, the 

14 head of an agency (including a military department) may detail, on a 

15 reimbursable basis, personnel from the agency to the Secretary to assist 

16 in carrying out this part. 

17 ‘‘(d) ACADEMY PERSONNEL.—To carry out this part, the Secretary may— 

18 ‘‘(1) employ an individual as a professor, lecturer, or instructor at the 

19 Academy, without regard to the provisions of title 5 governing appoint20 ments in the competitive service; and 

21 ‘‘(2) pay the individual without regard to chapter 51 and subchapter 

22 III of chapter 53 of title 5. 

23 ‘‘§ 51104. General authority of Secretary of the Navy 

24 ‘‘The Secretary of the Navy, in cooperation with the Maritime Adminis25 trator and the head of each State maritime academy, shall ensure that— 

26 ‘‘(1) the training of future merchant marine officers at the United 

27 States Merchant Marine Academy and at State maritime academies in28 cludes programs for naval science training in the operation of merchant 

29 vessels as a naval and military auxiliary; and 

30 ‘‘(2) naval officer training programs for future officers, insofar as pos31 sible, are maintained at designated maritime academies consistent with 

32 Navy standards and needs. 

33 ‘‘CHAPTER 513—UNITED STATES MERCHANT MARINE 

34 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. 
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‘‘51311. Midshipman status in the Naval Reserve. 

‘‘51312. Board of Visitors. 

‘‘51313. Advisory Board. 

‘‘51314. Limitation on charges and fees for attendance. 

1 ‘‘§ 51301. Maintenance of the Academy 

2 ‘‘The Secretary of Transportation shall maintain the United States Mer3 chant Marine Academy to provide instruction to individuals to prepare them 

4 for service in the merchant marine of the United States. 

5 ‘‘§ 51302. Nomination and competitive appointment of cadets 

6 ‘‘(a) REQUIREMENTS.—An individual may be nominated for a competitive 

7 appointment as a cadet at the United States Merchant Marine Academy only 

8 if the individual— 

9 ‘‘(1) is a citizen or national of the United States; and 

10 ‘‘(2) meets the minimum requirements that the Secretary of Transpor11 tation shall establish. 

12 ‘‘(b) NOMINATORS.—Nominations for competitive appointments for the po13 sitions allocated under subsection (c) may be made as follows: 

14 ‘‘(1) A Senator may nominate residents of the State represented by 

15 that Senator. 

16 ‘‘(2) A Member of the House of Representatives may nominate resi17 dents of the State in which the congressional district represented by that 

18 Member is located. 

19 ‘‘(3) A Delegate to the House of Representatives from the District of 

20 Columbia, the Virgin Islands, Guam, or American Samoa may nominate 

21 residents of the jurisdiction represented by that Delegate. 

22 ‘‘(4) The Resident Commissioner to the United States from Puerto 

23 Rico may nominate residents of Puerto Rico. 

24 ‘‘(5) The Governor of the Northern Mariana Islands may nominate 

25 residents of the Northern Mariana Islands. 

26 ‘‘(6) The Panama Canal Commission may nominate— 

27 ‘‘(A) residents, or sons or daughters of residents, of an area or 

28 installation in Panama and made available to the United States 

29 under the Panama Canal Treaty of 1977, the agreements relating 

30 to and implementing that Treaty, signed September 7, 1977, and 

31 the Agreement Between the United States of America and the Re32 public of Panama Concerning Air Traffic Control and Related 

33 Services, concluded January 8, 1979; and 

34 ‘‘(B) sons or daughters of personnel of the United States Govern35 ment and the Panama Canal Commission residing in Panama. 

36 ‘‘(c) ALLOCATION OF POSITIONS.—Positions for competitive appointments 

37 shall be allocated each year as follows: 
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1 ‘‘(1) Positions shall be allocated for residents of each State nominated 

2 by the Members of Congress from that State in proportion to the rep3 resentation in Congress from that State. 

4 ‘‘(2) Four positions shall be allocated for residents of the District of 

5 Columbia nominated by the Delegate to the House of Representatives 

6 from the District of Columbia. 

7 ‘‘(3) One position each shall be allocated for residents of the Virgin 

8 Islands, Guam, and American Samoa nominated by the Delegates to the 

9 House of Representatives from the Virgin Islands, Guam, and American 

10 Samoa, respectively. 

11 ‘‘(4) One position shall be allocated for a resident of Puerto Rico nom12 inated by the Resident Commissioner to the United States from Puerto 

13 Rico. 

14 ‘‘(5) One position shall be allocated for a resident of the Northern 

15 Mariana Islands nominated by the Governor of the Northern Mariana 

16 Islands. 

17 ‘‘(6) Two positions shall be allocated for individuals nominated by the 

18 Panama Canal Commission. 

19 ‘‘(d) COMPETITIVE SYSTEM FOR APPOINTMENT.— 

20 ‘‘(1) ESTABLISHMENT OF SYSTEM.—The Secretary shall establish a 

21 competitive system for selecting individuals nominated under subsection 

22 (b) to fill the positions allocated under subsection (c). The system must 

23 determine the relative merit of each individual based on competitive ex24 aminations, an assessment of the individual’s academic background, and 

25 other effective indicators of motivation and probability of successful com26 pletion of training at the Academy. 

27 ‘‘(2) APPOINTMENTS BY JURISDICTION.—The Secretary shall appoint 

28 individuals to fill the positions allocated under subsection (c) for each 

29 jurisdiction in the order of merit of the individuals nominated from that 

30 jurisdiction. 

31 ‘‘(3) REMAINING UNFILLED POSITIONS.—If positions remain unfilled 

32 after the appointments are made under paragraph (2), the Secretary 

33 shall appoint individuals to fill the positions in the order of merit of 

34 the remaining individuals nominated from all jurisdictions. 

35 ‘‘§ 51303. Non-competitive appointments 

36 ‘‘The Secretary of Transportation may appoint each year without competi37 tion as cadets at the United States Merchant Marine Academy not more than 

38 40 qualified individuals with qualities the Secretary considers to be of special 

39 value to the Academy. In making these appointments, the Secretary shall try 

40 to achieve a national demographic balance at the Academy. 
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1 ‘‘§ 51304. Additional appointments from particular areas 

2 ‘‘(a) OTHER COUNTRIES IN WESTERN HEMISPHERE.—The President may 

3 appoint individuals from countries in the Western Hemisphere other than the 

4 United States to receive instruction at the United States Merchant Marine 

5 Academy. Not more than 12 individuals may receive instruction under this 

6 subsection at the same time, and not more than 2 individuals from the same 

7 country may receive instruction under this subsection at the same time. 

8 ‘‘(b) OTHER COUNTRIES GENERALLY.— 

9 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap10 proval of the Secretary of State, may appoint individuals from countries 

11 other than the United States to receive instruction at the Academy. Not 

12 more than 30 individuals may receive instruction under this subsection 

13 at the same time. 

14 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall ensure 

15 that the country from which an individual comes under this subsection 

16 will reimburse the Secretary for the cost (as determined by the Secretary) 

17 of the instruction and allowances received by the individual. 

18 ‘‘(c) PANAMA.— 

19 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap20 proval of the Secretary of State, may appoint individuals from Panama 

21 to receive instruction at the Academy. Individuals appointed under this 

22 subsection are in addition to those appointed under any other provision 

23 of this chapter. 

24 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall be re25 imbursed for the cost (as determined by the Secretary) of the instruction 

26 and allowances received by an individual appointed under this sub27 section. 

28 ‘‘(d) ALLOWANCES AND REGULATIONS.—Individuals receiving instruction 

29 under this section are entitled to the same allowances and are subject to the 

30 same regulations on admission, attendance, discipline, resignation, discharge, 

31 dismissal, and graduation, as cadets at the Academy appointed from the 

32 United States. 

33 ‘‘§ 51305. Prohibited basis for appointment 

34 ‘‘Preference may not be given to an individual for appointment as a cadet 

35 at the United States Merchant Marine Academy because one or more members 

36 of the individual’s immediate family are alumni of the Academy. 

37 ‘‘§ 51306. Cadet commitment agreements 

38 ‘‘(a) AGREEMENT REQUIREMENTS.—A citizen of the United States ap39 pointed as a cadet at the United States Merchant Marine Academy must sign, 

40 as a condition of the appointment, an agreement to— 

41 ‘‘(1) complete the course of instruction at the Academy; 
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1 ‘‘(2) fulfill the requirements for a license as an officer in the merchant 

2 marine of the United States before graduation from the Academy; 

3 ‘‘(3) maintain a valid license as an officer in the merchant marine 

4 of the United States for at least 6 years after graduation from the Acad5 emy, accompanied by the appropriate national and international en6 dorsements and certification required by the Coast Guard for service 

7 aboard vessels on domestic and international voyages; 

8 ‘‘(4) apply for, and accept if tendered, an appointment as a commis9 sioned officer in the Naval Reserve (including the Merchant Marine Re10 serve, Naval Reserve), the Coast Guard Reserve, or any other reserve unit 

11 of an armed force of the United States, and, if tendered the appointment, 

12 to serve for at least 6 years after graduation from the Academy; 

13 ‘‘(5) serve the foreign and domestic commerce and the national defense 

14 of the United States for at least 5 years after graduation from the Acad15 emy— 

16 ‘‘(A) as a merchant marine officer on a documented vessel or a 

17 vessel owned and operated by the United States Government or by 

18 a State; 

19 ‘‘(B) as an employee in a United States maritime-related indus20 try, profession, or marine science (as determined by the Secretary 

21 of Transportation), if the Secretary determines that service under 

22 subparagraph (A) is not available to the individual; 

23 ‘‘(C) as a commissioned officer on active duty in an armed force 

24 of the United States, as a commissioned officer in the National Oce25 anic and Atmospheric Administration, or in other maritime-related 

26 Federal employment which serves the national security interests of 

27 the United States, as determined by the Secretary; or 

28 ‘‘(D) by a combination of the service alternatives referred to in 

29 subparagraphs (A)–(C); and 

30 ‘‘(6) report to the Secretary on compliance with this subsection. 

31 ‘‘(b) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

32 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

33 that an individual who has attended the Academy for at least 2 years 

34 has failed to fulfill the part of the agreement described in subsection 

35 (a)(1), the individual may be ordered by the Secretary of Defense to serve 

36 on active duty in one of the armed forces of the United States for a pe37 riod of not more than 2 years. In cases of hardship as determined by 

38 the Secretary of Transportation, the Secretary of Transportation may 

39 waive this paragraph in whole or in part. 

40 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un41 willing to order an individual to serve on active duty under paragraph 
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1 (1), or if the Secretary of Transportation determines that reimbursement 

2 of the cost of education provided would better serve the interests of the 

3 United States, the Secretary of Transportation may recover from the in4 dividual the cost of education provided by the Government. 

5 ‘‘(c) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

6 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

7 that an individual has failed to fulfill any part of the agreement de8 scribed in subsection (a)(2)–(6), the individual may be ordered to serve 

9 on active duty for a period of at least 3 years but not more than the 

10 unexpired period (as determined by the Secretary) of the service required 

11 by subsection (a)(5). The Secretary of Transportation, in consultation 

12 with the Secretary of Defense, shall determine in which service the indi13 vidual shall serve. In cases of hardship as determined by the Secretary 

14 of Transportation, the Secretary of Transportation may waive this para15 graph in whole or in part. 

16 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un17 willing to order an individual to serve on active duty under paragraph 

18 (1), or if the Secretary of Transportation determines that reimbursement 

19 of the cost of education provided would better serve the interests of the 

20 United States, the Secretary of Transportation may recover from the in21 dividual the cost of education provided. The Secretary may reduce the 

22 amount to be recovered to reflect partial performance of service obliga23 tions and other factors the Secretary determines merit a reduction. 

24 ‘‘(d) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost of 

25 education provided by the Government under a commitment agreement under 

26 this section, the Secretary of Transportation may— 

27 ‘‘(1) request the Attorney General to bring a civil action against the 

28 individual; and 

29 ‘‘(2) make use of the Federal debt collection procedures in chapter 176 

30 of title 28 or other applicable administrative remedies. 

31 ‘‘§ 51307. Places of training 

32 ‘‘The Secretary of Transportation may provide for the training of cadets 

33 at the United States Merchant Marine Academy— 

34 ‘‘(1) on vessels owned or subsidized by the United States Government; 

35 ‘‘(2) on other documented vessels, with the permission of the owner; 

36 and 

37 ‘‘(3) in shipyards or plants and with industrial or educational organi38 zations. 
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1 ‘‘§ 51308. Uniforms, textbooks, and transportation allow2 ances 

3 ‘‘The Secretary of Transportation shall provide cadets at the United States 

4 Merchant Marine Academy— 

5 ‘‘(1) all required uniforms and textbooks; and 

6 ‘‘(2) allowances for transportation (including reimbursement of trav7 eling expenses) when traveling under orders as a cadet. 

8 ‘‘§ 51309. Academic degree 

9 ‘‘(a) BACHELOR’S DEGREE.— 

10 ‘‘(1) IN GENERAL.—The Superintendent of the United States Merchant 

11 Marine Academy may confer the degree of bachelor of science on an indi12 vidual who— 

13 ‘‘(A) has met the conditions prescribed by the Secretary of Trans14 portation; and 

15 ‘‘(B) if a citizen of the United States, has passed the examination 

16 for a merchant marine officer’s license. 

17 ‘‘(2) EFFECT OF PHYSICAL DISQUALIFICATION.—An individual not al18 lowed to take the examination for a merchant marine officer’s license 

19 only because of physical disqualification may not be denied a degree for 

20 not taking the examination. 

21 ‘‘(b) MASTER’S DEGREE.—The Superintendent of the Academy may confer 

22 a master’s degree on an individual who has met the conditions prescribed by 

23 the Secretary. A master’s degree program may be funded through non-appro24 priated funds. To maintain the appropriate academic standards, the program 

25 shall be accredited by the appropriate accreditation body. The Secretary may 

26 prescribe regulations necessary to administer such a program. 

27 ‘‘(c) GRADUATION NOT ENTITLEMENT TO HOLD LICENSE.—Graduation 

28 from the Academy does not entitle an individual to hold a license authorizing 

29 service on a merchant vessel. 

30 ‘‘§ 51310. Deferment of service obligation under cadet com31 mitment agreements 

32 ‘‘The Secretary of Transportation may defer the service commitment of an 

33 individual under section 51306(a)(5) of this title (as specified in the cadet 

34 commitment agreement) for not more than 2 years if the individual is en35 gaged in a graduate course of study approved by the Secretary. However, 

36 deferment of service as a commissioned officer under section 51306(a)(5) must 

37 be approved by the Secretary of the military department that has jurisdiction 

38 over the service or by the Secretary of Commerce for service with the National 

39 Oceanic and Atmospheric Administration. 
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1 ‘‘§ 51311. Midshipman status in the Naval Reserve 

2 ‘‘(a) APPLICATION REQUIREMENT.—Before being appointed as a cadet at 

3 the United States Merchant Marine Academy, a citizen of the United States 

4 must agree to apply for midshipman status in the Naval Reserve (including 

5 the Merchant Marine Reserve, Naval Reserve). 

6 ‘‘(b) APPOINTMENT.— 

7 ‘‘(1) IN GENERAL.—A citizen of the United States appointed as a 

8 cadet at the Academy shall be appointed by the Secretary of the Navy 

9 as a midshipman in the Naval Reserve (including the Merchant Marine 

10 Reserve, Naval Reserve). 

11 ‘‘(2) RIGHTS AND PRIVILEGES.—The Secretary of the Navy shall pro12 vide for cadets of the Academy who are midshipmen in the United States 

13 Naval Reserve to be— 

14 ‘‘(A) issued an identification card (referred to as a ‘military ID 

15 card’); and 

16 ‘‘(B) entitled to all rights and privileges in accordance with the 

17 same eligibility criteria as apply to other members of the Ready Re18 serve of the reserve components of the armed forces. 

19 ‘‘(3) COORDINATION.—The Secretary of the Navy shall carry out para20 graphs (1) and (2) in coordination with the Secretary of Transportation. 

21 ‘‘§ 51312. Board of Visitors 

22 ‘‘(a) IN GENERAL.—A Board of Visitors to the United States Merchant Ma23 rine Academy shall be established, for a term of 2 years commencing at the 

24 beginning of each Congress, to visit the Academy annually on a date deter25 mined by the Secretary of Transportation and to make recommendations on 

26 the operation of the Academy. 

27 ‘‘(b) APPOINTMENT.— 

28 ‘‘(1) IN GENERAL.—The Board shall be composed of— 

29 ‘‘(A) 2 Senators appointed by the chairman of the Committee on 

30 Commerce, Science, and Transportation of the Senate; 

31 ‘‘(B) 3 Members of the House of Representatives appointed by the 

32 chairman of the Committee on Armed Services of the House of Rep33 resentatives; 

34 ‘‘(C) 1 Senator appointed by the Vice President; 

35 ‘‘(D) 2 Members of the House of Representatives appointed by the 

36 Speaker of the House of Representatives; and 

37 ‘‘(E) the chairmen of the Committee on Commerce, Science, and 

38 Transportation of the Senate and the Committee on Armed Services 

39 of the House of Representatives, as ex officio members. 

40 ‘‘(2) SUBSTITUTE APPOINTMENT.—If an appointed member of the 

41 Board is unable to visit the Academy as provided in subsection (a), an-
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1 other individual may be appointed as a substitute in the manner pro2 vided in paragraph (1). 

3 ‘‘(c) STAFF.—The chairmen of the Committee on Commerce, Science, and 

4 Transportation of the Senate and the Committee on Armed Services of the 

5 House of Representatives may designate staff members of their committees to 

6 serve without reimbursement as staff for the Board. 

7 ‘‘(d) TRAVEL EXPENSES.—When serving away from home or regular place 

8 of business, a member of the Board or a staff member designated under sub9 section (c) shall be allowed travel expenses, including per diem in lieu of sub10 sistence, as authorized by section 5703 of title 5. 

11 ‘‘§ 51313. Advisory Board 

12 ‘‘(a) IN GENERAL.—An Advisory Board to the United States Merchant Ma13 rine Academy shall be established to visit the Academy at least once during 

14 each academic year, for the purpose of examining the course of instruction 

15 and management of the Academy and advising the Maritime Administrator 

16 and the Superintendent of the Academy. 

17 ‘‘(b) APPOINTMENT AND TERMS.—The Board shall be composed of not more 

18 than 7 individuals appointed by the Secretary of Transportation. The indi19 viduals must be distinguished in education and other fields related to the 

20 Academy. Members of the Board shall be appointed for terms of not more than 

21 3 years and may be reappointed. The Secretary shall designate one of the 

22 members as chairman. 

23 ‘‘(c) TRAVEL EXPENSES.—When serving away from home or regular place 

24 of business, a member of the Board shall be allowed travel expenses, including 

25 per diem in lieu of subsistence, as authorized by section 5703 of title 5. 

26 ‘‘(d) RELATIONSHIP TO OTHER LAW.—The Federal Advisory Committee 

27 Act (5 App. U.S.C.) does not apply to the Board. 

28 ‘‘§ 51314. Limitation on charges and fees for attendance 

29 ‘‘(a) PROHIBITION.—Except as provided in subsection (b), no charge or fee 

30 for tuition, room, or board for attendance at the United States Merchant Ma31 rine Academy may be imposed unless the charge or fee is specifically author32 ized by a law enacted after October 5, 1994. 

33 ‘‘(b) EXCEPTION.—The prohibition specified in subsection (a) does not 

34 apply with respect to any item or service provided to cadets for which a 

35 charge or fee is imposed as of October 5, 1994. The Secretary of Transpor36 tation shall notify Congress of any change made by the Academy in the 

37 amount of a charge or fee authorized under this subsection. 

38 ‘‘CHAPTER 515—STATE MARITIME ACADEMY SUPPORT 

39 PROGRAM 

‘‘Sec. 

‘‘51501. General support program. 

‘‘51502. Detailing of personnel. 
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‘‘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. 

1 ‘‘§ 51501. General support program 

2 ‘‘(a) ASSISTANCE TO STATE MARITIME ACADEMIES.—The Secretary of 

3 Transportation shall cooperate with and assist State maritime academies in 

4 providing instruction to individuals to prepare them for service in the mer5 chant marine of the United States. 

6 ‘‘(b) COURSE DEVELOPMENT.—The Secretary shall provide to each State 

7 maritime academy guidance and assistance in developing courses on the oper8 ation and maintenance of new vessels, on equipment, and on innovations 

9 being introduced to the merchant marine of the United States. 

10 ‘‘§ 51502. Detailing of personnel 

11 ‘‘At the request of the Governor of a State, the President may detail, with12 out reimbursement, personnel of the Navy, the Coast Guard, and the Maritime 

13 Service to a State maritime academy to serve as a superintendent, professor, 

14 lecturer, or instructor at the academy. 

15 ‘‘§ 51503. Regional maritime academies 

16 ‘‘The Governors of the States cooperating to sponsor a regional maritime 

17 academy shall designate in writing one of those States to conduct the affairs 

18 of that academy. A regional maritime academy is eligible for assistance from 

19 the United States Government on the same basis as a State maritime acad20 emy sponsored by a single State. 

21 ‘‘§ 51504. Use of training vessels 

22 ‘‘(a) APPLICATIONS TO USE VESSELS.—The Governor of a State spon23 soring a State maritime academy (or the Governor of the State designated 

24 to conduct the affairs of a regional maritime academy) may apply in writing 

25 to the Secretary of Transportation to obtain the use of a training vessel for 

26 the academy. A vessel provided under this section remains the property of the 

27 United States Government. 

28 ‘‘(b) GENERAL AUTHORITY.—Subject to subsection (c), the Secretary may 

29 provide to a State maritime academy, for use as a training vessel, a suitable 

30 vessel under the control of the Secretary or made available to the Secretary 

31 under subsection (e). If a suitable vessel is not available, the Secretary may 

32 build and provide a suitable vessel. 

33 ‘‘(c) APPROVAL REQUIREMENTS.—The Secretary may provide a vessel 

34 under this section only if— 

35 ‘‘(1) an application has been made under subsection (a); 
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1 ‘‘(2) the State maritime academy satisfies section 51506(a) of this 

2 title; and 

3 ‘‘(3) a suitable port will be available for the safe mooring of the vessel 

4 while the academy is using the vessel. 

5 ‘‘(d) PREPARATION AND MAINTENANCE.—A vessel provided under this sec6 tion shall be— 

7 ‘‘(1) repaired, reconditioned, and equipped (with all apparel, charts, 

8 books, and instruments of navigation) as necessary for use as a training 

9 vessel; and 

10 ‘‘(2) maintained in good repair by the Secretary. 

11 ‘‘(e) AGENCY VESSELS.—An agency may provide to the Secretary, for use 

12 by a State maritime academy, a vessel (including equipment) that— 

13 ‘‘(1) is suitable for training purposes; and 

14 ‘‘(2) can be provided without detriment to the service to which the ves15 sel is assigned. 

16 ‘‘(f) FUEL COSTS.—The Secretary may pay to a State maritime academy 

17 the costs of fuel used by a vessel provided under this section while used for 

18 training. 

19 ‘‘(g) REMOVING VESSELS FROM SERVICE AND VESSEL SHARING.—The Sec20 retary may not— 

21 ‘‘(1) take a vessel, currently in use as a training vessel under this sec22 tion, out of service to implement an alternative program (including ves23 sel sharing) unless the vessel is incapable of being maintained in good 

24 repair as required by subsection (d); or 

25 ‘‘(2) implement a program requiring a State maritime academy to 

26 share its training vessel with another State maritime academy, except 

27 with the express consent of Congress. 

28 ‘‘§ 51505. Annual payments for maintenance and support 

29 ‘‘(a) PAYMENT AGREEMENTS.—The Secretary of Transportation may make 

30 an agreement (effective for not more than 4 years) with the following acad31 emies to provide annual payments to those academies for their maintenance 

32 and support: 

33 ‘‘(1) One State maritime academy in each State that satisfies section 

34 51506(a) of this title. 

35 ‘‘(2) Each regional maritime academy that satisfies section 51506(a) 

36 of this title. 

37 ‘‘(b) PAYMENTS.— 

38 ‘‘(1) IN GENERAL.—Subject to paragraph (2), an annual payment to 

39 an academy under subsection (a) shall be at least equal to the amount 

40 given to the academy for its maintenance and support by the State in 
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1 which it is located, or, for a regional maritime academy, by all States 

2 cooperating to sponsor the academy. 

3 ‘‘(2) MAXIMUM.—The amount under paragraph (1) may not be more 

4 than $25,000. However, if the academy satisfies section 51506(b) of this 

5 title, the amount shall be— 

6 ‘‘(A) $100,000 for a State maritime academy; and 

7 ‘‘(B) $200,000 for a regional maritime academy. 

8 ‘‘§ 51506. Conditions to receiving payments and use of vessels 

9 ‘‘(a) GENERAL CONDITIONS.—As conditions of receiving an annual pay10 ment or the use of a vessel under this chapter, a State maritime academy 

11 must— 

12 ‘‘(1) provide courses of instruction on navigation, marine engineering 

13 (including steam and diesel propulsion), the operation and maintenance 

14 of new vessels and equipment, and innovations being introduced to the 

15 merchant marine of the United States; 

16 ‘‘(2) agree in writing to conform to the standards for courses, training 

17 facilities, admissions, and instruction that the Secretary of Transpor18 tation may establish after consultation with the superintendents of State 

19 maritime academies; and 

20 ‘‘(3) agree in writing to require, as a condition for graduation, that 

21 each individual who is a citizen of the United States and who is attend22 ing the academy in a merchant marine officer preparation program pass 

23 the examination required for the issuance of a license under section 7101 

24 of this title. 

25 ‘‘(b) ADDITIONAL CONDITION TO PAYMENTS OF MORE THAN $25,000.—As 

26 a condition of receiving an annual payment of more than $25,000 under sec27 tion 51505 of this title, a State maritime academy also must agree to admit 

28 each year a number of citizens of the United States who meet its admission 

29 requirements and reside in a State not supporting that academy. The Sec30 retary shall determine the number of individuals to be admitted by each acad31 emy under this subsection. The number may not be more than one-third of 

32 the total number of individuals attending the academy at any time. 

33 ‘‘§ 51507. Places of training 

34 ‘‘The Secretary of Transportation may provide for the training of students 

35 attending a State maritime academy— 

36 ‘‘(1) on vessels owned or subsidized by the United States Government; 

37 ‘‘(2) on other documented vessels, with the permission of the owner; 

38 and 

39 ‘‘(3) in shipyards or plants and with industrial or educational organi40 zations. 
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1 ‘‘§ 51508. Allowances for students 

2 ‘‘Under regulations prescribed by the Secretary of Transportation, a stu3 dent at a State maritime academy shall receive from the Secretary allowances 

4 for transportation (including reimbursement of traveling expenses) when trav5 eling under orders to receive training under section 51507 of this title. 

6 ‘‘§ 51509. Student incentive payment agreements 

7 ‘‘(a) GENERAL AUTHORITY.—If a State maritime academy has an agree8 ment with the Secretary of Transportation under section 51505 of this title, 

9 the Secretary may make an agreement with a student at the academy who 

10 is a citizen of the United States to make student incentive payments to the 

11 individual. An agreement with a student may not be effective for more than 

12 4 academic years. The Secretary shall allocate payments under this section 

13 among the various State maritime academies in an equitable manner. 

14 ‘‘(b) PAYMENTS.—Payments under an agreement under this section shall 

15 be equal to $4,000 each academic year and be paid, as prescribed by the Sec16 retary, while the individual is attending the academy. The payments shall be 

17 used for uniforms, books, and subsistence. 

18 ‘‘(c) MIDSHIPMAN AND ENLISTED RESERVE STATUS.—An agreement under 

19 this section shall require the student to accept midshipman and enlisted re20 serve status in the Naval Reserve (including the Merchant Marine Reserve, 

21 Naval Reserve) before receiving any payments under the agreement. 

22 ‘‘(d) AGREEMENT REQUIREMENTS.—An agreement under this section shall 

23 require the student to— 

24 ‘‘(1) complete the course of instruction at the academy the individual 

25 is attending; 

26 ‘‘(2) take the examination for a license as an officer in the merchant 

27 marine of the United States before graduation from the academy and ful28 fill the requirements for such a license within 3 months after graduation 

29 from the academy; 

30 ‘‘(3) maintain a valid license as an officer in the merchant marine 

31 of the United States for at least 6 years after graduation from the acad32 emy, accompanied by the appropriate national and international en33 dorsements and certification required by the Coast Guard for service 

34 aboard vessels on domestic and international voyages; 

35 ‘‘(4) accept, if tendered, an appointment as a commissioned officer in 

36 the Naval Reserve (including the Merchant Marine Reserve, Naval Re37 serve), the Coast Guard Reserve, or any other reserve unit of an armed 

38 force of the United States, and, if tendered the appointment, to serve for 

39 at least 6 years after graduation from the academy; 
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1 ‘‘(5) serve the foreign and domestic commerce and the national defense 

2 of the United States for at least 3 years after graduation from the acad3 emy— 

4 ‘‘(A) as a merchant marine officer on a documented vessel or a 

5 vessel owned and operated by the United States Government or by 

6 a State; 

7 ‘‘(B) as an employee in a United States maritime-related indus8 try, profession, or marine science (as determined by the Secretary), 

9 if the Secretary determines that service under subparagraph (A) is 

10 not available to the individual; 

11 ‘‘(C) as a commissioned officer on active duty in an armed force 

12 of the United States, as a commissioned officer in the National Oce13 anic and Atmospheric Administration, or in other maritime-related 

14 Federal employment which serves the national security interests of 

15 the United States, as determined by the Secretary; or 

16 ‘‘(D) by a combination of the service alternatives referred to in 

17 subparagraphs (A)–(C); and 

18 ‘‘(6) report to the Secretary on compliance with this subsection. 

19 ‘‘(e) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

20 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

21 that an individual who has accepted the payments described in sub22 section (b) for a minimum of 2 academic years has failed to fulfill the 

23 part of the agreement described in subsection (d)(1), the individual may 

24 be ordered by the Secretary of Defense to serve on active duty in the 

25 armed forces of the United States for a period of not more than 2 years. 

26 In cases of hardship as determined by the Secretary of Transportation, 

27 the Secretary of Transportation may waive this paragraph in whole or 

28 in part. 

29 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un30 willing to order an individual to serve on active duty under paragraph 

31 (1), or if the Secretary of Transportation determines that reimbursement 

32 of the cost of education provided would better serve the interests of the 

33 United States, the Secretary of Transportation may recover from the in34 dividual the amount of student incentive payments, plus interest and at35 torney fees. The Secretary may reduce the amount to be recovered to re36 flect partial performance of service obligations and other factors the Sec37 retary determines merit a reduction. 

38 ‘‘(f) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

39 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

40 that an individual has failed to fulfill any part of the agreement de41 scribed in subsection (d)(2)–(6), the individual may be ordered to serve 
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1 on active duty for a period of at least 2 years but not more than the 

2 unexpired period (as determined by the Secretary) of the service required 

3 by subsection (d)(5). The Secretary of Transportation, in consultation 

4 with the Secretary of Defense, shall determine in which service the indi5 vidual shall serve. In cases of hardship as determined by the Secretary 

6 of Transportation, the Secretary of Transportation may waive this para7 graph in whole or in part. 

8 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un9 willing to order an individual to serve on active duty under paragraph 

10 (1), or if the Secretary of Transportation determines that reimbursement 

11 of the cost of education provided would better serve the interests of the 

12 United States, the Secretary of Transportation may recover from the in13 dividual the amount of student incentive payments, plus interest and at14 torney fees. The Secretary may reduce the amount to be recovered to re15 flect partial performance of service obligations and other factors the Sec16 retary determines merit a reduction. 

17 ‘‘(g) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost of 

18 education provided by the Government under a commitment agreement under 

19 this section, the Secretary of Transportation may— 

20 ‘‘(1) request the Attorney General to bring a civil action against the 

21 individual; and 

22 ‘‘(2) make use of the Federal debt collection procedures in chapter 176 

23 of title 28 or other applicable administrative remedies. 

24 ‘‘§ 51510. Deferment of service obligation under student in25 centive payment agreements 

26 ‘‘The Secretary of Transportation may defer the service commitment of an 

27 individual under section 51509(d)(5) of this title (as specified in the agree28 ment under section 51509) for not more than 2 years if the individual is en29 gaged in a graduate course of study approved by the Secretary. However, 

30 deferment of service as a commissioned officer on active duty must be ap31 proved by the Secretary of the affected military department (or the Secretary 

32 of Commerce, for service with the National Oceanic and Atmospheric Admin33 istration). 

34 ‘‘§ 51511. Midshipman status in the Naval Reserve 

35 ‘‘A citizen of the United States attending a State maritime academy may 

36 be appointed by the Secretary of the Navy as a midshipman in the Naval 

37 Reserve (including the Merchant Marine Reserve, Naval Reserve). 

38 ‘‘CHAPTER 517—OTHER SUPPORT FOR MERCHANT 

39 MARINE TRAINING 

‘‘Sec. 

‘‘51701. United States Maritime Service. 

‘‘51702. Civilian nautical schools. 
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‘‘51703. Additional training. 

‘‘51704. Training for maritime oil pollution prevention, response, and clean-up. 

1 ‘‘§ 51701. United States Maritime Service 

2 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may estab3 lish and maintain a voluntary organization, to be known as the United 

4 States Maritime Service, for the training of citizens of the United States to 

5 serve on merchant vessels of the United States. 

6 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may— 

7 ‘‘(1) determine the number of individuals to be enrolled for training 

8 and reserve purposes in the Service; 

9 ‘‘(2) fix the rates of pay and allowances of the individuals without re10 gard to chapter 51 or subchapter III of chapter 53 of title 5; 

11 ‘‘(3) prescribe the course of study and the periods of training for the 

12 Service; and 

13 ‘‘(4) prescribe the uniform of the Service and the rules on providing 

14 and wearing the uniform. 

15 ‘‘(c) RANKS, GRADES, AND RATINGS.—The ranks, grades, and ratings for 

16 personnel of the Service shall be the same as those prescribed for personnel 

17 of the Coast Guard. 

18 ‘‘(d) MEDALS AND AWARDS.—The Secretary may establish and maintain 

19 a medals and awards program to recognize distinguished service, superior 

20 achievement, professional performance, and other commendable achievement 

21 by personnel of the Service. 

22 ‘‘§ 51702. Civilian nautical schools 

23 ‘‘(a) DEFINITION.—In this section, the term ‘civilian nautical school’ 

24 means a school operated in the United States (except the United States Mer25 chant Marine Academy, a State maritime academy, or another school oper26 ated by the United States Government) that offers instruction to individuals 

27 quartered on a vessel primarily to train them for service in the merchant ma28 rine. 

29 ‘‘(b) INSPECTION.—Each civilian nautical school is subject to inspection by 

30 the Secretary of Transportation. 

31 ‘‘(c) RATING AND CERTIFICATION.—The Secretary may, under regulations 

32 the Secretary may prescribe, provide for the rating and certification of civil33 ian nautical schools as to the adequacy of their course of instruction, the com34 petence of their instructors, and the suitability of the equipment used in their 

35 course of instruction. 

36 ‘‘§ 51703. Additional training 

37 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may provide 

38 additional training on maritime subjects to supplement other training oppor39 tunities and make the training available to the personnel of the merchant ma-
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1 rine of the United States and individuals preparing for a career in the mer2 chant marine of the United States. 

3 ‘‘(b) EQUIPMENT, SUPPLIES, AND CONTRACTS.—The Secretary may— 

4 ‘‘(1) prepare or buy equipment or supplies required for the additional 

5 training; and 

6 ‘‘(2) without regard to section 3709 of the Revised Statutes (41 U.S.C. 

7 5), make contracts for services the Secretary considers necessary to pre8 pare the equipment and supplies and to supervise and administer the 

9 additional training. 

10 ‘‘§ 51704. Training for maritime oil pollution prevention, re11 sponse, and clean-up 

12 ‘‘(a) ASSISTANCE IN ESTABLISHING PROGRAM.—The Secretary of Trans13 portation shall assist maritime training institutions approved by the Sec14 retary in establishing a training program for maritime oil pollution preven15 tion, response, and clean-up. 

16 ‘‘(b) PROVIDING TRAINING VESSELS.—Subject to subsection (c), the Sec17 retary may provide, with title free of all liens, to maritime training institu18 tions that have a program established under subsection (a), offshore supply 

19 vessels and tug/supply vessels that were built in the United States and are 

20 in the possession of the Maritime Administration because of a default on a 

21 loan guaranteed under chapter 537 of this title. 

22 ‘‘(c) REQUIREMENTS.—In addition to any other requirements the Secretary 

23 considers appropriate, the following requirements apply to vessels provided 

24 under this section: 

25 ‘‘(1) The vessel shall be offered to the institution at a location selected 

26 by the Secretary. 

27 ‘‘(2) The institution shall use the vessel to train students and appro28 priate maritime industry personnel in oil spill prevention, response, 

29 clean-up, and related skills. 

30 ‘‘(3) The institution shall make the vessel and qualified students avail31 able to appropriate Federal, State, and local oil spill response authorities 

32 when there is a maritime oil spill. 

33 ‘‘(4) The institution may not sell, trade, charter, donate, scrap, or in 

34 any way alter or dispose of the vessel without prior approval of the Sec35 retary. 

36 ‘‘(5) The institution may not use the vessel in competition with a pri37 vately-owned vessel documented under chapter 121 of this title or titled 

38 under the law of a State, unless necessary to carry out this section. 

39 ‘‘(6) When the institution can no longer use the vessel for its training 

40 program, the institution shall return the vessel to the Secretary. The Sec-
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1 retary shall take possession at the institution and thereafter may provide 

2 the vessel to another institution under this section or dispose of the vessel. 

3 ‘‘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. 

4 ‘‘§ 51901. Awards for individual acts or service 

5 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may award 

6 decorations and medals of appropriate design (including ribbons, ribbon bars, 

7 emblems, rosettes, miniature facsimiles, plaques, citations, or other suitable 

8 devices or insignia) for individual acts or service in the merchant marine of 

9 the United States. The design may be similar to the design of a decoration 

10 or medal authorized for members of the armed forces for similar acts or serv11 ice. 

12 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may award— 

13 ‘‘(1) a Merchant Marine Distinguished Service Medal to an individual 

14 for outstanding acts, conduct, or valor beyond the line of duty; 

15 ‘‘(2) a Merchant Marine Meritorious Service Medal to an individual 

16 for meritorious acts, conduct, or valor in the line of duty, but not of the 

17 outstanding character that would warrant the award of the Merchant 

18 Marine Distinguished Service Medal; 

19 ‘‘(3) a decoration or medal to an individual for service during a war, 

20 national emergency proclaimed by the President or Congress, or oper21 ations by the armed forces outside the continental United States under 

22 conditions of danger to life and property; and 

23 ‘‘(4) a decoration or medal to an individual for other acts or service 

24 of conspicuous gallantry, intrepidity, and extraordinary heroism under 

25 conditions of danger to life and property that would warrant a similar 

26 decoration or medal for a member of the armed forces. 

27 ‘‘§ 51902. Gallant Ship Award 

28 ‘‘(a) AWARDS TO VESSELS.—The Secretary of Transportation may award 

29 a Gallant Ship Award and a citation to a vessel (including a foreign vessel) 

30 participating in outstanding or gallant action in a marine disaster or other 

31 emergency to save life or property at sea. The Secretary may award a plaque 

32 to the vessel, and a replica of the plaque may be preserved as a permanent 

33 historical record. 
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1 ‘‘(b) AWARDS TO CREWS.—The Secretary of Transportation may award an 

2 appropriate citation ribbon bar to the master and each individual serving, 

3 at the time of the action, on a vessel issued an award under subsection (a). 

4 ‘‘(c) CONSULTATION.—The Secretary of Transportation shall consult with 

5 the Secretary of State before awarding an award or citation to a foreign ves6 sel or its crew under this section. 

7 ‘‘§ 51903. Multiple awards 

8 ‘‘An individual may not be awarded more than one of any type of decora9 tion or medal under this chapter. For each succeeding act or service justifying 

10 the same decoration or medal, a suitable device may be awarded to be worn 

11 with the decoration or medal. 

12 ‘‘§ 51904. Presentation to representatives 

13 ‘‘If an individual to be issued an award under this chapter is unable to 

14 accept the award personally, the Secretary of Transportation may present the 

15 award to an appropriate representative. 

16 ‘‘§ 51905. Flags and grave markers 

17 ‘‘Except as authorized under another law, the Secretary of Transportation 

18 may issue, at no cost, a flag of the United States and a grave marker to the 

19 family or personal representative of a deceased individual who served in the 

20 merchant marine of the United States in support of the armed forces of the 

21 United States or its allies during a war or national emergency. 

22 ‘‘§ 51906. Special certificates for civilian service to armed 

23 forces 

24 ‘‘(a) GENERAL AUTHORITY.—The Maritime Administrator may issue a 

25 special certificate to an individual, or the personal representative of an indi26 vidual, in recognition of service of that individual in the merchant marine 

27 of the United States, if the service has been determined to be active duty 

28 under section 401 of the GI Bill Improvement Act of 1977 (Public Law 95– 

29 202; 38 U.S.C. 106 note). 

30 ‘‘(b) RELATIONSHIP TO OTHER LAWS.—Issuance of a certificate under sub31 section (a) does not entitle an individual to any rights, privileges, or benefits 

32 under a law of the United States. 

33 ‘‘§ 51907. Manufacture and sale of awards and replacements 

34 ‘‘The Secretary of Transportation may— 

35 ‘‘(1) authorize private persons to manufacture decorations and medals 

36 authorized under this chapter or a prior law; and 

37 ‘‘(2) provide at cost, or authorize private persons to sell at reasonable 

38 prices, replacements for those decorations and medals. 
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1 ‘‘§ 51908. Prohibition against unauthorized manufacture, 

2 sale, possession, or display of awards 

3 ‘‘(a) PROHIBITION.—Except as authorized under this chapter, a person 

4 may not manufacture, sell, possess, or display a decoration or medal provided 

5 for in this chapter. 

6 ‘‘(b) CIVIL PENALTY.—A person violating this section is liable to the 

7 United States Government for a civil penalty of not more than $2,000. 

8 ‘‘CHAPTER 521—MISCELLANEOUS 

‘‘Sec. 

‘‘52101. Reemployment rights for certain merchant seamen. 

9 ‘‘§ 52101. Reemployment rights for certain merchant seamen 

10 ‘‘(a) IN GENERAL.—An individual who is certified by the Secretary of 

11 Transportation under subsection (c) shall be entitled to reemployment rights 

12 and other benefits substantially equivalent to the rights and benefits provided 

13 for by chapter 43 of title 38 for any member of a reserve component of the 

14 armed forces of the United States who is ordered to active duty. 

15 ‘‘(b) TIME FOR APPLICATION.—An individual may submit an application 

16 for certification under subsection (c) to the Secretary not later than 45 days 

17 after the date the individual completes a period of employment described in 

18 subsection (c)(1)(A) with respect to which the application is submitted. 

19 ‘‘(c) CERTIFICATION DETERMINATION.—Not later than 20 days after the 

20 date the Secretary receives from an individual an application for certification 

21 under this subsection, the Secretary shall— 

22 ‘‘(1) determine whether the individual— 

23 ‘‘(A) was employed in the activation or operation of a vessel— 

24 ‘‘(i) in the National Defense Reserve Fleet maintained under 

25 section 11 of the Merchant Ship Sales Act of 1946 (50 App. 

26 U.S.C. 1744) in a period in which the vessel was in use or 

27 being activated for use under subsection (b) of that section; 

28 ‘‘(ii) requisitioned or purchased under chapter 563 of this 

29 title; or 

30 ‘‘(iii) owned, chartered, or controlled by the United States 

31 Government and used by the Government for a war, armed 

32 conflict, national emergency, or maritime mobilization need 

33 (including for training purposes or testing for readiness and 

34 suitability for mission performance); and 

35 ‘‘(B) during the period of that employment, possessed a valid li36 cense, certificate of registry, or merchant mariner’s document issued 

37 under chapter 71 or 73 of this title; and 

38 ‘‘(2) if the Secretary makes affirmative determinations under subpara39 graphs (A) and (B) of paragraph (1), certify that individual under this 

40 subsection. 
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1 ‘‘(d) EQUIVALENCE TO MILITARY SELECTIVE SERVICE ACT CERTIFI2 CATE.—For purposes of reemployment rights and benefits provided by this 

3 section, a certification under subsection (c) shall be considered to be the equiv4 alent of a certificate described in section 9(a) of the Military Selective Service 

5 Act (50 App. U.S.C. 459(a)). 

6 ‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS’’. 

7 (c) CHAPTERS FOLLOWING CHAPTER 531.—Subtitle V of title 46, United 

8 States Code, is amended by adding at the end the following: 

9 ‘‘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. 

‘‘53311. Taxation of deposits on failure of conditions. 

‘‘53312. Assessment and collection of deficiency tax. 

10 ‘‘§ 53301. Definitions 

11 ‘‘(a) IN GENERAL.—In this chapter: 

12 ‘‘(1) CONSTRUCTION CONTRACT.—The term ‘construction contract’ in13 cludes, for a taxpayer constructing a new vessel in a shipyard owned by 

14 that taxpayer, an agreement between the taxpayer and the Secretary of 

15 Transportation for that construction containing provisions the Secretary 

16 considers advisable to carry out this chapter. 

17 ‘‘(2) NEW VESSEL.—The term ‘new vessel’ means— 

18 ‘‘(A) a vessel— 

19 ‘‘(i) constructed in the United States after December 31, 

20 1939, constructed with a construction-differential subsidy 

21 under title V of the Merchant Marine Act, 1936, or constructed 

22 with financing or a financing guarantee under chapter 537 or 

23 575 of this title; 

24 ‘‘(ii) documented or agreed with the Secretary to be docu25 mented under the laws of the United States; and 

26 ‘‘(iii)(I) of a type, size, and speed that the Secretary deter27 mines is suitable for use on the high seas or Great Lakes in 

28 carrying out this subtitle, but not less than 2,000 gross tons or 

29 less than 12 knots speed unless the Secretary certifies in each 

30 case that a vessel of lesser tonnage or speed is desirable for use 

31 by the United States Government in case of war or national 

32 emergency; or 
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1 ‘‘(II) constructed to replace a vessel bought or requisitioned 

2 by the Government; and 

3 ‘‘(B) a vessel reconstructed or reconditioned for use only on the 

4 Great Lakes, including the Saint Lawrence River and Gulf, if the 

5 Secretary finds that the reconstruction or reconditioning will pro6 mote the objectives of this subtitle. 

7 ‘‘(b) ADDITIONAL TAX-RELATED TERMS.—Other terms used in this chapter 

8 have the same meaning as in chapter 1 of the Internal Revenue Code of 1986 

9 (26 U.S.C. ch. 1). 

10 ‘‘§ 53302. Authority for construction reserve funds 

11 ‘‘(a) GENERAL AUTHORITY.—An eligible person under section 53303 of this 

12 title may establish a construction reserve fund for the construction, recon13 struction, reconditioning, or acquisition of a new vessel or for other purposes 

14 authorized by this chapter. 

15 ‘‘(b) APPLICATION OF CERTAIN LAWS AND REGULATIONS.—The fund shall 

16 be established, maintained, expended, and used as provided by this chapter 

17 and regulations prescribed jointly by the Secretary of Transportation and the 

18 Secretary of the Treasury. 

19 ‘‘§ 53303. Persons eligible to establish funds 

20 ‘‘A construction reserve fund may be established by a citizen of the United 

21 States that— 

22 ‘‘(1) is operating a vessel in the foreign or domestic commerce of the 

23 United States or in the fisheries; 

24 ‘‘(2) owns, in whole or in part, a vessel being operated in the foreign 

25 or domestic commerce of the United States or in the fisheries; 

26 ‘‘(3) was operating a vessel in the foreign or domestic commerce of the 

27 United States or in the fisheries when it was bought or requisitioned by 

28 the United States Government; 

29 ‘‘(4) owned, in whole or in part, a vessel being operated in the foreign 

30 or domestic commerce of the United States or in the fisheries when it 

31 was bought or requisitioned by the Government; or 

32 ‘‘(5) had acquired or was having constructed a vessel to operate in the 

33 foreign or domestic commerce of the United States or in the fisheries 

34 when it was bought or requisitioned by the Government. 

35 ‘‘§ 53304. Vessel ownership 

36 ‘‘In this chapter, a vessel is deemed to be constructed or acquired by a tax37 payer if constructed or acquired by a corporation when the taxpayer owns 

38 at least 95 percent of each class of stock of the corporation. 

39 ‘‘§ 53305. Eligible fund deposits 

40 ‘‘A construction reserve fund may include deposits of— 

41 ‘‘(1) the proceeds from the sale of a vessel; 
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1 ‘‘(2) indemnities for the loss of a vessel; 

2 ‘‘(3) earnings from the operation of a documented vessel and from 

3 services incident to the operation; and 

4 ‘‘(4) interest or other amounts accrued on deposits in the fund. 

5 ‘‘§ 53306. Recognition of gain for tax purposes 

6 ‘‘(a) DEFINITIONS.—In this section, the terms ‘net proceeds’ and ‘net in7 demnity’ mean the sum of— 

8 ‘‘(1) the adjusted basis of the vessel; and 

9 ‘‘(2) the amount of gain the taxpayer would recognize without regard 

10 to this section. 

11 ‘‘(b) RECOGNITION OF GAIN.—In computing net income under the income 

12 or excess profits tax laws of the United States, a taxpayer does not recognize 

13 a gain on the sale or the actual or constructive total loss of a vessel if the 

14 taxpayer— 

15 ‘‘(1) deposits an amount equal to the net proceeds of the sale or the 

16 net indemnity for the loss in a construction reserve fund within 60 days 

17 after receiving the payment of proceeds or indemnity; and 

18 ‘‘(2) elects under this section not to recognize the gain. 

19 ‘‘(c) WHEN ELECTION MUST BE MADE.— 

20 ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the taxpayer 

21 must make the election referred to in subsection (b) in the taxpayer’s in22 come tax return for the taxable year in which the gain was realized. 

23 ‘‘(2) RECEIPT AFTER TAXABLE YEAR.—If the vessel is bought or requi24 sitioned by the United States Government, or is lost, and the taxpayer 

25 receives payment for the vessel or indemnity for the loss from the Govern26 ment after the end of the taxable year in which it was bought, requi27 sitioned, or lost, the taxpayer must make the election referred to in sub28 section (b) within 60 days after receiving the payment or indemnity, on 

29 a form prescribed by the Secretary of the Treasury. 

30 ‘‘(d) EFFECT OF STATUTE OF LIMITATION.—If the taxpayer makes an elec31 tion under subsection (c)(2), and computation or recomputation under this 

32 section is otherwise allowable but is prevented by a statute of limitation on 

33 the date the election is made or within 6 months thereafter, the computation 

34 or recomputation nevertheless shall be made notwithstanding the statute if the 

35 taxpayer files a claim for the computation or recomputation within 6 months 

36 after the date of making the election. 

37 ‘‘§ 53307. Basis for determining gain or loss and for depre38 ciating new vessels 

39 ‘‘Under the income or excess profits tax laws of the United States, the basis 

40 for determining a gain or loss and for depreciation of a new vessel con41 structed, reconstructed, reconditioned, or acquired by the taxpayer, or for 
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1 which purchase-money indebtedness is liquidated as provided in section 53310 

2 of this title, with amounts from a construction reserve fund, shall be reduced 

3 by that part of the deposits in the fund expended in the construction, recon4 struction, reconditioning, acquisition, or liquidation of purchase-money in5 debtedness of the new vessel that represents a gain not recognized for tax pur6 poses under section 53306 of this title. 

7 ‘‘§ 53308. Order and proportions of deposits and withdrawals 

8 ‘‘In this chapter— 

9 ‘‘(1) if the net proceeds of a sale or the net indemnity for a loss is 

10 deposited in more than one deposit, the amount consisting of the gain 

11 shall be deemed to be deposited first; 

12 ‘‘(2) amounts expended, obligated, or otherwise withdrawn shall be ap13 plied against the amounts deposited in the fund in the order of deposit; 

14 and 

15 ‘‘(3) if a deposit consists in part of a gain not recognized under sec16 tion 53306 of this title, any expenditure, obligation, or withdrawal ap17 plied against that deposit shall be deemed to be a gain in the proportion 

18 that the part of the deposit consisting of a gain bears to the total amount 

19 of the deposit. 

20 ‘‘§ 53309. Accumulation of deposits 

21 ‘‘For any taxable year, amounts on deposit in a construction reserve fund 

22 on the last day of the taxable year, for which the requirements of section 

23 53310 of this title have been satisfied (to the extent they apply on the last 

24 day of the taxable year), are deemed to have been retained for the reasonable 

25 needs of the business within the meaning of section 537(a) of the Internal 

26 Revenue Code of 1986 (26 U.S.C. 537(a)). 

27 ‘‘§ 53310. Obligation of deposits and period for construction 

28 of certain vessels 

29 ‘‘(a) APPLICATION OF SECTIONS 53306 AND 53309.—Sections 53306 and 

30 53309 of this title apply to a deposit in a construction reserve fund only if, 

31 within 3 years after the date of the deposit (and any extension under sub32 section (c))— 

33 ‘‘(1)(A) a contract is made for the construction or acquisition of a new 

34 vessel or, with the approval of the Secretary of Transportation, for a 

35 part interest in a new vessel or for the reconstruction or reconditioning 

36 of a new vessel; 

37 ‘‘(B) the deposit is expended or obligated for expenditure under that 

38 contract; 

39 ‘‘(C) at least 12.5 percent of the construction or contract price of the 

40 vessel is paid or irrevocably committed for payment; and 
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1 ‘‘(D) the plans and specifications for the vessel are approved by the 

2 Secretary to the extent the Secretary considers necessary; or 

3 ‘‘(2) the deposit is expended or obligated for expenditure for the liq4 uidation of existing or subsequently incurred purchase-money indebted5 ness to a person not a parent company of, or a company affiliated or 

6 associated with, the mortgagor on a new vessel. 

7 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CERTAIN VESSELS.—In addition to 

8 the requirements of subsection (a)(1), for a vessel not constructed under a con9 struction-differential subsidy contract or not bought from the Secretary of 

10 Transportation— 

11 ‘‘(1) at least 5 percent of the construction (or, if the contract covers 

12 more than one vessel, at least 5 percent of the construction of the first 

13 vessel) must be completed within 6 months after the date of the construc14 tion contract (or within the period of an extension under subsection (c)), 

15 as estimated by the Secretary and certified by the Secretary to the Sec16 retary of the Treasury; and 

17 ‘‘(2) construction under the contract must be completed with reason18 able dispatch thereafter. 

19 ‘‘(c) EXTENSIONS.—The Secretary of Transportation may grant extensions 

20 of the period within which the deposits must be expended or obligated or with21 in which the construction must have progressed to the extent of 5 percent com22 pletion under this section. However, the extensions may not be for a total of 

23 more than 2 years for the expenditure or obligation of deposits or one year 

24 for the progress of construction. 

25 ‘‘§ 53311. Taxation of deposits on failure of conditions 

26 ‘‘A deposited gain, if otherwise taxable income under the law applicable to 

27 the taxable year in which the gain was realized, shall be included in gross 

28 income for that taxable year, except for purposes of the declared value excess 

29 profits tax and the capital stock tax, if— 

30 ‘‘(1) the deposited gain is not expended or obligated within the appro31 priate period under section 53310 of this title; 

32 ‘‘(2) the deposited gain is withdrawn before the end of that period; 

33 ‘‘(3) the construction related to that deposited gain has not progressed 

34 to the extent of 5 percent of completion within the appropriate period 

35 under section 53310 of this title; or 

36 ‘‘(4) the Secretary of Transportation finds and certifies to the Sec37 retary of the Treasury that, for causes within the control of the taxpayer, 

38 the entire construction related to that deposited gain is not completed 

39 with reasonable dispatch. 
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1 ‘‘§ 53312. Assessment and collection of deficiency tax 

2 ‘‘Notwithstanding any other provision of law, a deficiency in tax for a tax3 able year resulting from the inclusion of an amount in gross income as pro4 vided by section 53311 of this title, and the amount to be treated as a defi5 ciency under section 53311 instead of as an adjustment for the declared value 

6 excess profits tax, may be assessed or a civil action may be brought to collect 

7 the deficiency without assessment, at any time. Interest on a deficiency or 

8 amount to be treated as a deficiency does not begin until the date the depos9 ited gain or part of the deposited gain in question is required to be included 

10 in gross income under section 51111. 

11 ‘‘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. 

12 ‘‘§ 53501. Definitions 

13 ‘‘In this chapter: 

14 ‘‘(1) AGREEMENT VESSEL.—The term ‘agreement vessel’ means— 

15 ‘‘(A) an eligible vessel or a qualified vessel that is subject to an 

16 agreement under this chapter; and 

17 ‘‘(B) a barge or container that is part of the complement of a 

18 vessel described in subparagraph (A) if provided for in the agree19 ment. 

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

21 ‘‘(A) a vessel— 

22 ‘‘(i) constructed in the United States (and, if reconstructed, 

23 reconstructed in the United States), constructed outside the 

24 United States but documented under the laws of the United 

25 States on April 15, 1970, or constructed outside the United 

26 States for use in the United States foreign trade pursuant to 

27 a contract made before April 15, 1970; 

28 ‘‘(ii) documented under the laws of the United States; and 

29 ‘‘(iii) operated in the foreign or domestic trade of the United 

30 States or in the fisheries of the United States; and 
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1 ‘‘(B) a commercial fishing vessel— 

2 ‘‘(i) constructed in the United States and, if reconstructed, 

3 reconstructed in the United States; 

4 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

5 ‘‘(iii) owned by a citizen of the United States; 

6 ‘‘(iv) having its home port in the United States; and 

7 ‘‘(v) operated in the commercial fisheries of the United 

8 States. 

9 ‘‘(3) JOINT REGULATIONS.—The term ‘joint regulations’ means regula10 tions prescribed jointly by the Secretary and the Secretary of the Treas11 ury under section 53502(b) of this title. 

12 ‘‘(4) NONCONTIGUOUS TRADE.—The term ‘noncontiguous trade’ 

13 means— 

14 ‘‘(A) trade between— 

15 ‘‘(i) one of the contiguous 48 States; and 

16 ‘‘(ii) Alaska, Hawaii, Puerto Rico, or an insular territory 

17 or possession of the United States; and 

18 ‘‘(B) trade between— 

19 ‘‘(i) a place in Alaska, Hawaii, Puerto Rico, or an insular 

20 territory or possession of the United States; and 

21 ‘‘(ii) another place in Alaska, Hawaii, Puerto Rico, or an 

22 insular territory or possession of the United States. 

23 ‘‘(5) QUALIFIED VESSEL.—The term ‘qualified vessel’ means— 

24 ‘‘(A) a vessel— 

25 ‘‘(i) constructed in the United States (and, if reconstructed, 

26 reconstructed in the United States), constructed outside the 

27 United States but documented under the laws of the United 

28 States on April 15, 1970, or constructed outside the United 

29 States for use in the United States foreign trade pursuant to 

30 a contract made before April 15, 1970; 

31 ‘‘(ii) documented under the laws of the United States; and 

32 ‘‘(iii) agreed, between the Secretary and the person main33 taining the capital construction fund established under section 

34 53503 of this title, to be operated in the United States foreign, 

35 Great Lakes, or noncontiguous domestic trade or in the fish36 eries of the United States; and 

37 ‘‘(B) a commercial fishing vessel— 

38 ‘‘(i) constructed in the United States and, if reconstructed, 

39 reconstructed in the United States; 

40 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

41 ‘‘(iii) owned by a citizen of the United States; 
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1 ‘‘(iv) having its home port in the United States; and 

2 ‘‘(v) operated in the commercial fisheries of the United 

3 States. 

4 ‘‘(6) SECRETARY.—The term ‘Secretary’ means— 

5 ‘‘(A) the Secretary of Commerce with respect to an eligible vessel 

6 or a qualified vessel operated or to be operated in the fisheries of 

7 the United States; and 

8 ‘‘(B) the Secretary of Transportation with respect to other vessels. 

9 ‘‘(7) UNITED STATES FOREIGN TRADE.—The term ‘United States for10 eign trade’ includes those areas in domestic trade in which a vessel built 

11 with a construction-differential subsidy is allowed to operate under the 

12 first sentence of section 506 of the Merchant Marine Act, 1936. 

13 ‘‘(8) VESSEL.—The term ‘vessel’ includes— 

14 ‘‘(A) cargo handling equipment that the Secretary determines is 

15 intended for use primarily on the vessel; and 

16 ‘‘(B) an ocean-going towing vessel, an ocean-going barge, or a 

17 comparable towing vessel or barge operated on the Great Lakes. 

18 ‘‘§ 53502. Regulations 

19 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the Secretary 

20 shall prescribe regulations to carry out this chapter. 

21 ‘‘(b) TAX LIABILITY.—The Secretary and the Secretary of the Treasury 

22 shall prescribe joint regulations for the determination of tax liability under 

23 this chapter. 

24 ‘‘§ 53503. Establishing a capital construction fund 

25 ‘‘(a) IN GENERAL.—A citizen of the United States owning or leasing an 

26 eligible vessel may make an agreement with the Secretary under this chapter 

27 to establish a capital construction fund for the vessel. 

28 ‘‘(b) ALLOWABLE PURPOSE.—The purpose of the agreement shall be to pro29 vide replacement vessels, additional vessels, or reconstructed vessels, built in 

30 the United States and documented under the laws of the United States, for 

31 operation in the United States foreign, Great Lakes, or noncontiguous domes32 tic trade or in the fisheries of the United States. 

33 ‘‘§ 53504. Deposits and withdrawals 

34 ‘‘(a) REQUIRED DEPOSITS.—An agreement to establish a capital construc35 tion fund shall provide for the deposit in the fund of the amounts agreed to 

36 be appropriate to provide for qualified withdrawals under section 53509 of 

37 this title. 

38 ‘‘(b) APPLICABLE REQUIREMENTS.—Deposits in and withdrawals from the 

39 fund are subject to the requirements included in the agreement or prescribed 

40 by the Secretary by regulation. However, the Secretary may not require a 

41 person to deposit in the fund for a taxable year more than 50 percent of that 
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1 portion of the person’s taxable income for that year (as determined under sec2 tion 53505(a)(1) of this title) that is attributable to the operation of an agree3 ment vessel. 

4 ‘‘§ 53505. Ceiling on deposits 

5 ‘‘(a) MAXIMUM DEPOSITS.—The amount deposited in a capital construc6 tion fund for a taxable year may not exceed the sum of— 

7 ‘‘(1) that portion of the taxable income of the owner or lessee for the 

8 taxable year (computed under chapter 1 of the Internal Revenue Code 

9 of 1986 (26 U.S.C. ch. 1) but without regard to the carryback of net op10 erating loss or net capital loss or this chapter) that is attributable to the 

11 operation of agreement vessels in the foreign or domestic trade of the 

12 United States or in the fisheries of the United States; 

13 ‘‘(2) the amount allowable as a deduction under section 167 of such 

14 Code (26 U.S.C. 167) for the taxable year for agreement vessels; 

15 ‘‘(3) if the transaction is not taken into account for purposes of para16 graph (1), the net proceeds (as defined in joint regulations) from the dis17 position of an agreement vessel or from insurance or indemnity attrib18 utable to an agreement vessel; and 

19 ‘‘(4) the receipts from the investment or reinvestment of amounts held 

20 in the fund. 

21 ‘‘(b) REDUCTIONS FOR LESSEES.—For a lessee, the maximum amount that 

22 may be deposited for an agreement vessel under subsection (a)(2) for any pe23 riod shall be reduced by any amount the owner is required or permitted, 

24 under the capital construction fund agreement, to deposit for that period for 

25 the vessel under subsection (a)(2). 

26 ‘‘§ 53506. Investment and fiduciary requirements 

27 ‘‘(a) IN GENERAL.—Amounts in a capital construction fund shall be kept 

28 in the depository specified in the agreement and shall be subject to trustee 

29 and other fiduciary requirements prescribed by the Secretary. Except as pro30 vided in subsection (b), amounts in the fund may be invested only in interest31 bearing securities approved by the Secretary. 

32 ‘‘(b) STOCK INVESTMENTS.— 

33 ‘‘(1) IN GENERAL.—With the approval of the Secretary, an agreed per34 centage (but not more than 60 percent) of the assets of the fund may be 

35 invested in the stock of domestic corporations that— 

36 ‘‘(A) is fully listed and registered on an exchange registered with 

37 the Securities and Exchange Commission as a national securities 

38 exchange; and 

39 ‘‘(B) would be acquired by a prudent investor seeking a reason40 able income and the preservation of capital. 
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1 ‘‘(2) PREFERRED STOCK.—The preferred stock of a corporation is 

2 deemed to satisfy the requirements of this subsection, even though it may 

3 not be registered and listed because it is nonvoting stock, if the common 

4 stock of the corporation satisfies the requirements and the preferred stock 

5 otherwise would satisfy the requirements. 

6 ‘‘(c) MAINTAINING AGREED PERCENTAGE.—If at any time the fair market 

7 value of the stock in the fund is more than the agreed percentage of the assets 

8 in the fund, any subsequent investment of amounts deposited in the fund, and 

9 any subsequent withdrawal from the fund, shall be made in a way that tends 

10 to restore the fair market value of the stock to not more than the agreed per11 centage. 

12 ‘‘§ 53507. Nontaxation of deposits 

13 ‘‘(a) TAX TREATMENT.—Subject to subsection (b), under the Internal Rev14 enue Code of 1986 (26 U.S.C. 1 et seq.)— 

15 ‘‘(1) taxable income (determined without regard to this chapter and 

16 section 7518 of such Code (26 U.S.C. 7518)) for the taxable year shall 

17 be reduced by the amount deposited for the taxable year out of amounts 

18 referred to in section 53505(a)(1) of this title; 

19 ‘‘(2) a gain from a transaction referred to in section 53505(a)(3) of 

20 this title shall not be taken into account if an amount equal to the net 

21 proceeds (as defined in joint regulations) from the transaction is depos22 ited in the fund; 

23 ‘‘(3) the earnings (including gains and losses) from the investment and 

24 reinvestment of amounts held in the fund shall not be taken into account; 

25 ‘‘(4) the earnings and profits of a corporation (within the meaning 

26 of section 316 of such Code (26 U.S.C. 316)) shall be determined without 

27 regard to this chapter and section 7518 of such Code (26 U.S.C. 7518); 

28 and 

29 ‘‘(5) in applying the tax imposed by section 531 of such Code (26 

30 U.S.C. 531), amounts held in the fund shall not be taken into account. 

31 ‘‘(b) CONDITION.—This section applies to an amount only if the amount 

32 is deposited in the fund under the agreement within the time provided in 

33 joint regulations. 

34 ‘‘§ 53508. Separate accounts within a fund 

35 ‘‘(a) IN GENERAL.—A capital construction fund shall have three accounts: 

36 ‘‘(1) The capital account. 

37 ‘‘(2) The capital gain account. 

38 ‘‘(3) The ordinary income account. 

39 ‘‘(b) CAPITAL ACCOUNT.—The capital account shall consist of— 

40 ‘‘(1) amounts referred to in section 53505(a)(2) of this title; 
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1 ‘‘(2) amounts referred to in section 53505(a)(3) of this title, except 

2 that portion representing a gain not taken into account because of sec3 tion 53507(a)(2) of this title; 

4 ‘‘(3) the percentage applicable under section 243(a)(1) of the Internal 

5 Revenue Code of 1986 (26 U.S.C. 243(a)(1)) of any dividend received by 

6 the fund for which the person maintaining the fund would be allowed 

7 (were it not for section 53507(a)(3) of this title) a deduction under sec8 tion 243 of such Code (26 U.S.C. 243); and 

9 ‘‘(4) interest income exempt from taxation under section 103 of such 

10 Code (26 U.S.C. 103). 

11 ‘‘(c) CAPITAL GAIN ACCOUNT.—The capital gain account shall consist of— 

12 ‘‘(1) amounts representing capital gains on assets held for more than 

13 6 months and referred to in section 53505(a)(3) or (4) of this title; 

14 minus 

15 ‘‘(2) amounts representing capital losses on assets held in the fund for 

16 more than 6 months. 

17 ‘‘(d) ORDINARY INCOME ACCOUNT.—The ordinary income account shall 

18 consist of— 

19 ‘‘(1) amounts referred to in section 53505(a)(1) of this title; 

20 ‘‘(2)(A) amounts representing capital gains on assets held for not more 

21 than 6 months and referred to in section 53505(a)(3) or (4) of this title; 

22 minus 

23 ‘‘(B) amounts representing capital losses on assets held in the fund for 

24 not more than 6 months; 

25 ‘‘(3) interest (except tax-exempt interest referred to in subsection 

26 (b)(4)) and other ordinary income (except any dividend referred to in 

27 paragraph (5)) received on assets held in the fund; 

28 ‘‘(4) ordinary income from a transaction described in section 

29 53505(a)(3) of this title; and 

30 ‘‘(5) that portion of any dividend referred to in subsection (b)(3) not 

31 taken into account under subsection (b)(3). 

32 ‘‘(e) WHEN LOSSES ALLOWED.—Except on termination of a fund, capital 

33 losses referred to in subsection (c) or (d)(2) shall be allowed only as an offset 

34 to gains referred to in subsection (c) or (d)(2), respectively. 

35 ‘‘§ 53509. Qualified withdrawals 

36 ‘‘(a) IN GENERAL.—Subject to subsection (b), a withdrawal from a capital 

37 construction fund is a qualified withdrawal if it is made under the terms of 

38 the agreement and is for— 

39 ‘‘(1) the acquisition, construction, or reconstruction of a qualified ves40 sel or a barge or container that is part of the complement of a qualified 

41 vessel; or 
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1 ‘‘(2) the payment of the principal on indebtedness incurred in the ac2 quisition, construction, or reconstruction of a qualified vessel or a barge 

3 or container that is part of the complement of a qualified vessel. 

4 ‘‘(b) BARGES AND CONTAINERS.—Except as provided in regulations pre5 scribed by the Secretary, subsection (a) applies to a barge or container only 

6 if it is constructed in the United States. 

7 ‘‘(c) TREATMENT AS NONQUALIFIED WITHDRAWAL.—Under joint regula8 tions, if the Secretary determines that a substantial obligation under an 

9 agreement is not being fulfilled, the Secretary, after notice and opportunity 

10 for a hearing to the person maintaining the fund, may treat any amount in 

11 the fund as an amount withdrawn from the fund in a nonqualified with12 drawal. 

13 ‘‘§ 53510. Tax treatment of qualified withdrawals and basis 

14 of property 

15 ‘‘(a) ORDER OF WITHDRAWALS.—A qualified withdrawal from a capital 

16 construction fund shall be treated as made— 

17 ‘‘(1) first from the capital account; 

18 ‘‘(2) second from the capital gain account; and 

19 ‘‘(3) third from the ordinary income account. 

20 ‘‘(b) ORDINARY INCOME ACCOUNT WITHDRAWALS.—If a portion of a quali21 fied withdrawal for a vessel, barge, or container is made from the ordinary 

22 income account, the basis of the vessel, barge, or container shall be reduced 

23 by an amount equal to that portion. 

24 ‘‘(c) CAPITAL GAIN ACCOUNT WITHDRAWALS.—If a portion of a qualified 

25 withdrawal for a vessel, barge, or container is made from the capital gain 

26 account, the basis of the vessel, barge, or container shall be reduced by an 

27 amount equal to that portion. 

28 ‘‘(d) WITHDRAWALS TO PAY PRINCIPAL.—If a portion of a qualified with29 drawal to pay the principal on indebtedness is made from the ordinary in30 come account or the capital gain account, an amount equal to the total reduc31 tion that would be required by subsections (b) and (c) if the withdrawal were 

32 a qualified withdrawal for a purpose described in those subsections shall be 

33 applied, in the order provided in joint regulations, to reduce the basis of ves34 sels, barges, and containers owned by the person maintaining the fund. The 

35 remaining amount of the withdrawal shall be treated as a nonqualified with36 drawal. 

37 ‘‘(e) GAIN ON PROPERTY WITH REDUCED BASIS.—If property, the basis of 

38 which was reduced under subsection (b), (c), or (d), is disposed of, any gain 

39 realized on the disposition, to the extent it does not exceed the total reduction 

40 in the basis of the property under those subsections, shall be treated as an 

41 amount referred to in section 53511(c)(1) of this title withdrawn on the date 
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1 of disposition of the property. Subject to conditions prescribed in joint regula2 tions, this subsection does not apply to a disposition if there is a redeposit, 

3 in an amount determined under joint regulations, that restores the fund as 

4 far as practicable to the position it was in before the withdrawal. 

5 ‘‘§ 53511. Tax treatment of nonqualified withdrawals 

6 ‘‘(a) IN GENERAL.—Except as provided in section 53513 of this title, a 

7 withdrawal from a fund that is not a qualified withdrawal shall be treated 

8 as a nonqualified withdrawal. 

9 ‘‘(b) ORDER OF WITHDRAWALS.—A nonqualified withdrawal shall be treat10 ed as made— 

11 ‘‘(1) first from the ordinary income account; 

12 ‘‘(2) second from the capital gain account; and 

13 ‘‘(3) third from the capital account. 

14 ‘‘(c) TAX TREATMENT.—For purposes of the Internal Revenue Code of 1986 

15 (26 U.S.C. 1 et seq.)— 

16 ‘‘(1) a nonqualified withdrawal from the ordinary income account 

17 shall be included in income as an item of ordinary income for the tax18 able year in which the withdrawal is made; 

19 ‘‘(2) a nonqualified withdrawal from the capital gain account shall 

20 be included in income for the taxable year in which the withdrawal is 

21 made as an item of gain realized during that year from the disposition 

22 of an asset held for more than 6 months; and 

23 ‘‘(3) for the period through the last date prescribed for payment of tax 

24 for the taxable year in which the withdrawal is made— 

25 ‘‘(A) no interest shall be payable under section 6601 of such Code 

26 (26 U.S.C. 6601) and no addition to the tax shall be payable under 

27 section 6651 of such Code (26 U.S.C. 6651); 

28 ‘‘(B) interest on the amount of the additional tax attributable to 

29 an amount treated as a nonqualified withdrawal from the ordinary 

30 income account or the capital gain account shall be paid at the rate 

31 determined under subsection (d) from the last date prescribed for 

32 payment of the tax for the taxable year for which the amount was 

33 deposited in the fund; and 

34 ‘‘(C) no interest shall be payable on amounts treated as with35 drawn on a last-in-first-out basis under section 53512 of this title. 

36 ‘‘(d) INTEREST RATE.—The rate of interest under subsection (c)(3)(B) for 

37 a nonqualified withdrawal made in a taxable year beginning after 1971 shall 

38 be determined and published jointly by the Secretary and the Secretary of the 

39 Treasury. The rate shall be such that its relationship to 8 percent is com40 parable, as determined by the Secretaries under joint regulations, to the rela41 tionship between— 
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1 ‘‘(1) the money rates and investment yields for the calendar year im2 mediately before the beginning of the taxable year; and 

3 ‘‘(2) the money rates and investment yields for the calendar year 1970. 

4 ‘‘(e) NONQUALIFIED WITHDRAWALS.— 

5 ‘‘(1) IN GENERAL.—The following applicable percentage of any 

6 amount that remains in a capital construction fund at the close of the 

7 following specified taxable year following the taxable year for which the 

8 amount was deposited shall be treated as a nonqualified withdrawal: 

‘‘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. 

9 ‘‘(2) EARNINGS.—The earnings of a capital construction fund for any 

10 taxable year (except net gains) shall be treated under this subsection as 

11 an amount deposited for the taxable year. 

12 ‘‘(3) CONTRACT FOR QUALIFIED WITHDRAWAL.—Under paragraph (1), 

13 an amount shall not be treated as remaining in a capital construction 

14 fund at the close of a taxable year to the extent there is a binding con15 tract at the close of the taxable year for a qualified withdrawal of the 

16 amount for an identified item for which the withdrawal may be made. 

17 ‘‘(4) EXCESS EARNINGS.—If the Secretary determines that the balance 

18 in a capital construction fund exceeds the amount appropriate to meet 

19 the vessel construction program objectives of the person that established 

20 the fund, the amount of the excess shall be treated as a nonqualified 

21 withdrawal under paragraph (1) unless the person develops appropriate 

22 program objectives within 3 years to dissipate the excess. 

23 ‘‘(5) AMOUNTS IN FUND ON JANUARY 1, 1987.—Under this subsection, 

24 amounts in a capital construction fund on January 1, 1987, shall be 

25 treated as having been deposited in that fund on that date. 

26 ‘‘(f) TAX DETERMINATIONS.— 

27 ‘‘(1) IN GENERAL.—For a taxable year for which there is a non28 qualified withdrawal (including an amount treated as a nonqualified 

29 withdrawal under subsection (e)), the tax imposed by chapter 1 of the 

30 Internal Revenue Code of 1986 (26 U.S.C. ch. 1) shall be determined 

31 by— 

32 ‘‘(A) excluding the withdrawal from gross income; and 

33 ‘‘(B) increasing the tax imposed by chapter 1 of such Code by the 

34 product of the amount of the withdrawal and the highest tax rate 

35 specified in section 1 (or section 11 for a corporation) of such Code 

36 (26 U.S.C. 1, 11). 
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1 ‘‘(2) MAXIMUM TAX RATE.—For that portion of a nonqualified with2 drawal made from the capital gain account during a taxable year to 

3 which section 1(h) or 1201(a) of such Code (26 U.S.C. 1(h), 1201(a)) ap4 plies, the tax rate used under paragraph (1)(B) may not exceed 15 per5 cent (or 34 percent for a corporation). 

6 ‘‘(3) TAX BENEFIT RULE.—If any portion of a nonqualified with7 drawal is properly attributable to deposits (except earnings on deposits) 

8 made by the taxpayer in a taxable year that did not reduce the tax9 payer’s liability for tax under chapter 1 of such Code (26 U.S.C. ch. 1) 

10 for a taxable year before the taxable year in which the withdrawal oc11 curs— 

12 ‘‘(A) that portion shall not be taken into account under para13 graph (1); and 

14 ‘‘(B) an amount equal to that portion shall be allowed as a de15 duction under section 172 of such Code (26 U.S.C. 172) for the tax16 able year in which the withdrawal occurs. 

17 ‘‘(4) COORDINATION WITH DEDUCTION FOR NET OPERATING LOSSES.— 

18 A nonqualified withdrawal excluded from gross income under paragraph 

19 (1) shall be excluded in determining taxable income under section 

20 172(b)(2) of such Code (26 U.S.C. 172(b)(2)). 

21 ‘‘§ 53512. FIFO and LIFO withdrawals 

22 ‘‘(a) FIFO.—Except as provided in subsection (b), an amount withdrawn 

23 from an account under this chapter shall be treated as withdrawn on a first24 in-first-out basis. 

25 ‘‘(b) LIFO.—An amount withdrawn from an account under this chapter 

26 shall be treated as withdrawn on a last-in-first-out basis if it is— 

27 ‘‘(1) a nonqualified withdrawal for research, development, and design 

28 expenses incident to new and advanced vessel design, machinery, and 

29 equipment; or 

30 ‘‘(2) an amount treated as a nonqualified withdrawal under section 

31 53510(d) of this title. 

32 ‘‘§ 53513. Corporate reorganizations and partnership 

33 changes 

34 ‘‘Under joint regulations— 

35 ‘‘(1) a transfer of a capital construction fund from one person to an36 other person in a transaction to which section 381 of the Internal Rev37 enue Code of 1986 (26 U.S.C. 381) applies may be treated as if the 

38 transaction is not a nonqualified withdrawal; and 

39 ‘‘(2) a similar rule shall be applied to a continuation of a partnership 

40 (within the meaning of subchapter K of chapter 1 of such Code (26 

41 U.S.C. 701 et seq.)). 
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1 ‘‘§ 53514. Relationship of old fund to new fund 

2 ‘‘(a) DEFINITION.—In this section, the term ‘old fund’ means a capital con3 struction fund maintained before October 21, 1970. 

4 ‘‘(b) ELECTION TO MAINTAIN OLD FUND.—A person maintaining an old 

5 fund may elect to continue the old fund, but may not— 

6 ‘‘(1) hold amounts in the old fund beyond the expiration date provided 

7 in the agreement under which the old fund is maintained (determined 

8 without regard to an extension or renewal made after April 14, 1970); 

9 or 

10 ‘‘(2) maintain simultaneously the old fund and a new fund established 

11 under this chapter. 

12 ‘‘(c) APPLICATION OF NEW FUND AGREEMENT TO OLD FUND AMOUNTS.— 

13 If a person makes an agreement under this chapter to establish a new fund, 

14 the person may agree to extend the agreement to some or all of the amounts 

15 in an old fund. Each item in the old fund to be transferred shall be trans16 ferred in a nontaxable transaction to the appropriate account in the new 

17 fund. For purposes of section 53511(c)(3) of this title, the date of the deposit 

18 of an item so transferred shall be July 1, 1971, or the date of the deposit 

19 in the old fund, whichever is later. 

20 ‘‘§ 53515. Records and reports 

21 ‘‘A person maintaining a fund under this chapter shall keep records and 

22 make reports as required by the Secretary or the Secretary of the Treasury. 

23 ‘‘§ 53516. Termination of agreement after change in regula24 tions 

25 ‘‘If, after an agreement has been made under this chapter, a change is made 

26 either in the joint regulations or in the regulations prescribed by the Sec27 retary under this chapter that could have a substantial effect on the rights 

28 or duties of a person maintaining a fund under this chapter, that person may 

29 terminate the agreement. 

30 ‘‘§ 53517. Reports 

31 ‘‘(a) IN GENERAL.—Within 120 days after the close of each calendar year, 

32 the Secretary of Transportation and the Secretary of Commerce each shall 

33 provide the Secretary of the Treasury a written report on the capital con34 struction funds under the particular Secretary’s jurisdiction for the calendar 

35 year. 

36 ‘‘(b) CONTENTS.—The report shall state the name and taxpayer identifica37 tion number of each person— 

38 ‘‘(1) establishing a capital construction fund during the calendar year; 

39 ‘‘(2) maintaining a capital construction fund on the last day of the 

40 calendar year; 
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1 ‘‘(3) terminating a capital construction fund during the calendar 

2 year; 

3 ‘‘(4) making a deposit to or withdrawal from a capital construction 

4 fund during the calendar year, and the amount of the deposit or with5 drawal; or 

6 ‘‘(5) having been determined during the calendar year to have failed 

7 to fulfill a substantial obligation under a capital construction fund 

8 agreement to which the person is a party. 

9 ‘‘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. 

‘‘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. 

10 ‘‘SUBCHAPTER I—GENERAL 

11 ‘‘§ 53701. Definitions 

12 ‘‘In this chapter: 

13 ‘‘(1) ACTUAL COST.—The term ‘actual cost’ means the sum of— 

14 ‘‘(A) all amounts paid by or for the account of the obligor as of 

15 the date on which a determination is made under section 

16 53715(d)(1) of this title; and 

17 ‘‘(B) all amounts that the Secretary reasonably estimates the obli18 gor will become obligated to pay from time to time thereafter, for 

19 the construction, reconstruction, or reconditioning of the vessel, in20 cluding guarantee fees that will become payable under section 53714 
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1 of this title in connection with all obligations issued for construc2 tion, reconstruction, or reconditioning of the vessel or equipment to 

3 be delivered, and all obligations issued for the delivered vessel or 

4 equipment. 

5 ‘‘(2) CONSTRUCTION, RECONSTRUCTION, AND RECONDITIONING.—The 

6 terms ‘construction’, ‘reconstruction’, and ‘reconditioning’ include de7 signing, inspecting, outfitting, and equipping. 

8 ‘‘(3) DEPRECIATED ACTUAL COST.—The term ‘depreciated actual cost’ 

9 of a vessel means— 

10 ‘‘(A) if the vessel was not reconstructed or reconditioned, the ac11 tual cost of the vessel depreciated on a straight line basis over the 

12 useful life of the vessel as determined by the Secretary, not to exceed 

13 25 years from the date of delivery by the builder; or 

14 ‘‘(B) if the vessel was reconstructed or reconditioned, the sum of— 

15 ‘‘(i) the actual cost of the vessel depreciated on a straight 

16 line basis from the date of delivery by the builder to the date 

17 of the reconstruction or reconditioning, using the original use18 ful life of the vessel, and from the date of the reconstruction or 

19 reconditioning, using a useful life of the vessel determined by 

20 the Secretary; and 

21 ‘‘(ii) any amount paid or obligated to be paid for the recon22 struction or reconditioning, depreciated on a straight line basis 

23 using a useful life of the vessel determined by the Secretary. 

24 ‘‘(4) ELIGIBLE EXPORT VESSEL.—The term ‘eligible export vessel’ 

25 means a vessel that— 

26 ‘‘(A) is constructed, reconstructed, or reconditioned in the United 

27 States for use in world-wide trade; and 

28 ‘‘(B) will, on delivery or redelivery, become or remain docu29 mented under the laws of a country other than the United States. 

30 ‘‘(5) FISHERY FACILITY.— 

31 ‘‘(A) IN GENERAL.—Subject to subparagraph (B), the term ‘fish32 ery facility’ means— 

33 ‘‘(i) for operations on land— 

34 ‘‘(I) a structure or appurtenance thereto designed for 

35 the unloading and receiving from vessels, the processing, 

36 the holding pending processing, the distribution after 

37 processing, or the holding pending distribution, of fish 

38 from a fishery; 

39 ‘‘(II) the land necessary for the structure or appur40 tenance; and 
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1 ‘‘(III) equipment that is for use with the structure or 

2 appurtenance and that is necessary for performing a func3 tion referred to in subclause (I); 

4 ‘‘(ii) for operations not on land, a vessel built in the United 

5 States and used for, equipped to be used for, or of a type nor6 mally used for, the processing of fish; or 

7 ‘‘(iii) for aquaculture, including operations on land or else8 where— 

9 ‘‘(I) a structure or appurtenance thereto designed for 

10 aquaculture; 

11 ‘‘(II) the land necessary for the structure or appur12 tenance; 

13 ‘‘(III) equipment that is for use with the structure or 

14 appurtenance and that is necessary for performing a func15 tion referred to in subclause (I); and 

16 ‘‘(IV) a vessel built in the United States and used for, 

17 equipped to be used for, or of a type normally used for, 

18 aquaculture. 

19 ‘‘(B) REQUIRED OWNERSHIP.—Under subparagraph (A), the 

20 structure, appurtenance, land, equipment, or vessel must be owned 

21 by— 

22 ‘‘(i) an individual who is a citizen of the United States; or 

23 ‘‘(ii) an entity that is a citizen of the United States under 

24 section 50501 of this title and that is at least 75 percent owned 

25 (as determined under that section) by citizens of the United 

26 States. 

27 ‘‘(6) FISHING VESSEL.—The term ‘fishing vessel’ has the meaning 

28 given that term in section 3 of the Magnuson-Stevens Fishery Conserva29 tion and Management Act (16 U.S.C. 1802), and any reference in this 

30 chapter to a vessel designed principally for commercial use in the fishing 

31 trade or industry is deemed to be a reference to a fishing vessel. 

32 ‘‘(7) MORTGAGE.—The term ‘mortgage’ includes— 

33 ‘‘(A) a preferred mortgage as defined in section 31301 of this 

34 title; and 

35 ‘‘(B) a mortgage on a vessel that will become a preferred mort36 gage when filed or recorded under chapter 313 of this title. 

37 ‘‘(8) OBLIGATION.—The term ‘obligation’ means an instrument of in38 debtedness issued for a purpose described in section 53706 of this title, 

39 except— 

40 ‘‘(A) an obligation issued by the Secretary under section 53723 

41 of this title; and 
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1 ‘‘(B) an obligation eligible for investment of funds under section 

2 53715(f) or 53717 of this title. 

3 ‘‘(9) OBLIGEE.—The term ‘obligee’ means the holder of an obligation. 

4 ‘‘(10) OBLIGOR.—The term ‘obligor’ means a party primarily liable 

5 for payment of the principal of or interest on an obligation. 

6 ‘‘(11) OCEAN THERMAL ENERGY CONVERSION FACILITY OR

7 PLANTSHIP.—The term ‘ocean thermal energy conversion facility or 

8 plantship’ means an at-sea facility or vessel, whether mobile, floating 

9 unmoored, moored, or standing on the seabed, that uses temperature dif10 ferences in ocean water to produce electricity or another form of energy 

11 capable of being used directly to perform work, and includes— 

12 ‘‘(A) equipment installed on the facility or vessel to use the elec13 tricity or other form of energy to produce, process, refine, or manu14 facture a product; 

15 ‘‘(B) a cable or pipeline used to deliver the electricity, freshwater, 

16 or product to shore; and 

17 ‘‘(C) other associated equipment and appurtenances of the facility 

18 or vessel to the extent they are located seaward of the high water 

19 mark. 

20 ‘‘(12) SECRETARY.—The term ‘Secretary’ means— 

21 ‘‘(A) the Secretary of Commerce with respect to fishing vessels 

22 and fishery facilities; and 

23 ‘‘(B) the Secretary of Transportation with respect to other vessels 

24 and general shipyard facilities (as defined in section 53733(a) of 

25 this title). 

26 ‘‘(13) VESSEL.—The term ‘vessel’ means any type of vessel, whether 

27 in existence or under construction, including— 

28 ‘‘(A) a cargo vessel; 

29 ‘‘(B) a passenger vessel; 

30 ‘‘(C) a combination cargo and passenger vessel; 

31 ‘‘(D) a tanker; 

32 ‘‘(E) a tug or towboat; 

33 ‘‘(F) a barge; 

34 ‘‘(G) a dredge; 

35 ‘‘(H) a floating drydock with a capacity of at least 35,000 lifting 

36 tons and a beam of at least 125 feet between the wing walls; 

37 ‘‘(I) an oceanographic research vessel; 

38 ‘‘(J) an instruction vessel; 

39 ‘‘(K) a pollution treatment, abatement, or control vessel; 
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1 ‘‘(L) a fishing vessel whose ownership meets the citizenship re2 quirements under section 50501 of this title for documenting vessels 

3 to operate in the coastwise trade; and 

4 ‘‘(M) an ocean thermal energy conversion facility or plantship 

5 that is or will be documented under the laws of the United States. 

6 ‘‘§ 53702. General authority 

7 ‘‘(a) IN GENERAL.—The Secretary, on terms the Secretary may prescribe, 

8 may guarantee or make a commitment to guarantee the payment of the prin9 cipal of and interest on an obligation eligible to be guaranteed under this 

10 chapter. A guarantee or commitment to guarantee shall cover 100 percent of 

11 the principal and interest. 

12 ‘‘(b) DIRECT LOANS FOR FISHERIES.— 

13 ‘‘(1) IN GENERAL.—Notwithstanding any other provision of this chap14 ter, any obligation involving a fishing vessel, fishery facility, aquaculture 

15 facility, individual fishing quota, or fishing capacity reduction program 

16 issued under this chapter after October 11, 1996, shall be a direct loan 

17 obligation for which the Secretary shall be the obligee, rather than an 

18 obligation issued to an obligee other than the Secretary and guaranteed 

19 by the Secretary. A direct loan obligation under this subsection shall be 

20 treated in the same manner and to the same extent as an obligation 

21 guaranteed under this chapter except with respect to provisions of this 

22 chapter that by their nature can only be applied to obligations guaran23 teed under this chapter. 

24 ‘‘(2) INTEREST RATE.—Notwithstanding any other provision of this 

25 chapter, the annual rate of interest an obligor shall pay on a direct loan 

26 obligation under this subsection is 2 percent plus the additional percent 

27 the Secretary must pay as interest to borrow from the Treasury the funds 

28 to make the loan. 

29 ‘‘§ 53703. Application procedures 

30 ‘‘(a) TIME FOR DECISION.— 

31 ‘‘(1) IN GENERAL.—The Secretary shall approve or deny an applica32 tion for a loan guarantee under this chapter within 270 days after the 

33 date on which the signed application is received by the Secretary. 

34 ‘‘(2) EXTENSION.—On request by an applicant, the Secretary may ex35 tend the 270-day period in paragraph (1) to a date not later than 2 

36 years after the date on which the signed application was received by the 

37 Secretary. 

38 ‘‘(b) CERTIFICATION OF REVIEW.—The Secretary may not guarantee or 

39 make a commitment to guarantee an obligation under this chapter unless the 

40 Secretary certifies that a full and fair consideration of all the regulatory re41 quirements, including economic soundness and financial requirements appli-
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1 cable to the obligor and related parties, and a thorough assessment of the tech2 nical, economic, and financial aspects of the loan application, has been made. 

3 ‘‘§ 53704. Funding limits 

4 ‘‘(a) GENERAL LIMITATIONS.—The total unpaid principal amount of obli5 gations guaranteed under this chapter and outstanding at one time may not 

6 exceed $12,000,000,000. Of that amount— 

7 ‘‘(1) $850,000,000 shall be limited to obligations related to fishing ves8 sels and fishery facilities; and 

9 ‘‘(2) $3,000,000,000 shall be limited to obligations related to eligible 

10 export vessels. 

11 ‘‘(b) ADDITIONAL LIMITATIONS.—Additional limitations may not be im12 posed on new commitments to guarantee loans for any fiscal year, except in 

13 amounts established in advance by annual authorization laws. A vessel eligi14 ble for a guarantee under this chapter may not be denied eligibility because 

15 of its type. 

16 ‘‘(c) LIMITS BASED ON RISK FACTORS.— 

17 ‘‘(1) DEFINITION.—In this subsection, the term ‘cost’ has the meaning 

18 given that term in section 502 of the Federal Credit Reform Act of 1990 

19 (2 U.S.C. 661a). 

20 ‘‘(2) SYSTEM OF RISK CATEGORIES.—The Secretary shall— 

21 ‘‘(A) establish, and update annually, a system of risk categories 

22 for obligations guaranteed under this chapter that categorizes the 

23 relative risk of guarantees based on the risk factors set forth in 

24 paragraph (4); 

25 ‘‘(B) determine annually for each risk category a subsidy rate 

26 equivalent to the cost of obligations in the category, expressed as a 

27 percentage of the amount guaranteed for obligations in the category; 

28 and 

29 ‘‘(C) ensure that each risk category is comprised of loans that are 

30 relatively homogeneous in cost and share characteristics predictive 

31 of defaults and other costs, given the facts known at the time of obli32 gation or commitment, using a risk category system that is based 

33 on historical analysis of program data and statistical evidence con34 cerning the likely costs of defaults or other costs that are expected 

35 to be associated with the loans in the category. 

36 ‘‘(3) USE OF SYSTEM.— 

37 ‘‘(A) PLACING OBLIGATION IN CATEGORY.—Before making a 

38 guarantee under this chapter for an obligation, and annually for 

39 projects subject to a guarantee, the Secretary shall apply the risk 

40 factors specified in paragraph (4) to place the obligation in a risk 

41 category established under paragraph (2). 
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1 ‘‘(B) REDUCTION OF AVAILABLE AMOUNT.—The Secretary shall 

2 consider the total amount available to the Secretary for making 

3 guarantees under this chapter to be reduced by the amount deter4 mined by multiplying— 

5 ‘‘(i) the amount guaranteed under this chapter for an obliga6 tion; by 

7 ‘‘(ii) the subsidy rate for the category in which the obligation 

8 is placed under subparagraph (A). 

9 ‘‘(C) ESTIMATED COST.—The estimated cost to the United States 

10 Government of a guarantee under this chapter for an obligation is 

11 deemed to be the amount determined under subparagraph (B) for 

12 the obligation. 

13 ‘‘(D) RESTRICTION ON FURTHER GUARANTEES.—The Secretary 

14 may not guarantee obligations under this chapter after the total 

15 amount available to the Secretary under appropriations laws for the 

16 cost of loan guarantees is considered to be reduced to zero under sub17 paragraph (B). 

18 ‘‘(4) RISK FACTORS.—The risk factors referred to in this subsection 

19 are— 

20 ‘‘(A) if applicable, the country risk for each eligible export vessel 

21 financed or to be financed by an obligation; 

22 ‘‘(B) the period for which an obligation is guaranteed or to be 

23 guaranteed; 

24 ‘‘(C) the amount of an obligation guaranteed or to be guaranteed 

25 in relation to the total cost of the project financed or to be financed 

26 by the obligation; 

27 ‘‘(D) the financial condition of an obligor or applicant for a 

28 guarantee; 

29 ‘‘(E) if applicable, other guarantees related to the project; 

30 ‘‘(F) if applicable, the projected employment of each vessel or 

31 equipment to be financed with an obligation; 

32 ‘‘(G) if applicable, the projected market that will be served by 

33 each vessel or equipment to be financed with an obligation; 

34 ‘‘(H) the collateral provided for a guarantee for an obligation; 

35 ‘‘(I) the management and operating experience of an obligor or 

36 applicant for a guarantee; 

37 ‘‘(J) whether a guarantee under this chapter is or will be in effect 

38 during the construction period of the project; and 

39 ‘‘(K) the concentration risk presented by an unduly large percent40 age of loans outstanding by any one borrower or group of affiliated 

41 borrowers. 
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1 ‘‘§ 53705. Pledge of United States Government 

2 ‘‘(a) FULL FAITH AND CREDIT.—The full faith and credit of the United 

3 States Government is pledged to the payment of a guarantee made under this 

4 chapter, for both principal and interest, including interest (as may be pro5 vided for in the guarantee) accruing between the date of default under a guar6 anteed obligation and the date of payment in full of the guarantee. 

7 ‘‘(b) INCONTESTABILITY.—A guarantee or commitment to guarantee made 

8 under this chapter is conclusive evidence of the eligibility of the obligation for 

9 the guarantee. The validity of a guarantee or commitment to guarantee made 

10 under this chapter is incontestable. 

11 ‘‘§ 53706. Eligible purposes of obligations 

12 ‘‘(a) IN GENERAL.—To be eligible for a guarantee under this chapter, an 

13 obligation must aid in any of the following: 

14 ‘‘(1)(A) Financing (including reimbursement of an obligor for expend15 itures previously made for) the construction, reconstruction, or recondi16 tioning of a vessel (including an eligible export vessel) designed prin17 cipally for research, or for commercial use— 

18 ‘‘(i) in the coastwise or intercoastal trade; 

19 ‘‘(ii) on the Great Lakes, or on bays, sounds, rivers, harbors, or 

20 inland lakes of the United States; 

21 ‘‘(iii) in foreign trade as defined in section 109(b) of this title; 

22 ‘‘(iv) as an ocean thermal energy conversion facility or plantship; 

23 ‘‘(v) as a floating drydock in the construction, reconstruction, re24 conditioning, or repair of vessels; or 

25 ‘‘(vi) as an eligible export vessel in worldwide trade. 

26 ‘‘(B) A guarantee under subparagraph (A) may not be made more 

27 than one year after delivery of the vessel (or redelivery if the vessel was 

28 reconstructed or reconditioned) unless the proceeds of the obligation are 

29 used to finance the construction, reconstruction, or reconditioning of a 

30 vessel or of facilities or equipment related to marine operations. 

31 ‘‘(2) Financing (including reimbursement of an obligor for expendi32 tures previously made for) the construction, reconstruction, recondi33 tioning, or purchase of a vessel owned by citizens of the United States 

34 and designed principally for research, or for commercial use in the fish35 ing industry. 

36 ‘‘(3) Financing the purchase, reconstruction, or reconditioning of a 

37 vessel or fishery facility— 

38 ‘‘(A) for which an obligation was guaranteed under this chapter; 

39 and 

40 ‘‘(B) that, under subchapter II of this chapter— 
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1 ‘‘(i) is a vessel or fishery facility for which an obligation 

2 was accelerated and paid; 

3 ‘‘(ii) was acquired by the Federal Ship Financing Fund or 

4 successor account under section 53717 of this title; or 

5 ‘‘(iii) was sold at foreclosure begun or intervened in by the 

6 Secretary. 

7 ‘‘(4) Financing any part of the repayment to the United States Gov8 ernment of any amount of a construction-differential subsidy paid for 

9 a vessel. 

10 ‘‘(5) Refinancing an existing obligation (regardless of whether guaran11 teed under this chapter) issued for a purpose described in paragraphs 

12 (1)–(4), including a short-term obligation incurred to obtain temporary 

13 funds with the intention of refinancing. 

14 ‘‘(6) Financing or refinancing (including reimbursement of an obligor 

15 for expenditures previously made for) the construction, reconstruction, re16 conditioning, or purchase of a fishery facility. 

17 ‘‘(7) Financing or refinancing (including reimbursement of an obligor 

18 for expenditures previously made for) the purchase of an individual fish19 ing quota in accordance with section 303(d)(4) of the Magnuson-Stevens 

20 Fishery Conservation and Management Act (16 U.S.C. 1853(d)(4)). 

21 ‘‘(b) NON-VESSELS TREATED AS VESSELS.—An obligation guaranteed 

22 under subsection (a)(6) or (7) shall be treated, for purposes of this chapter, 

23 in the same manner and to the same extent as an obligation that aids in 

24 financing the construction, reconstruction, reconditioning, or purchase of a 

25 vessel, except with respect to provisions that by their nature can only be ap26 plied to vessels. 

27 ‘‘(c) PRIORITIES FOR CERTAIN VESSELS.—In guaranteeing or making a 

28 commitment to guarantee an obligation under this chapter, the Secretary 

29 shall give priority to— 

30 ‘‘(1) a vessel that is otherwise eligible for a guarantee and is con31 structed with assistance under subtitle D of the Maritime Security Act 

32 of 2003 (46 U.S.C. 53101 note); and 

33 ‘‘(2) after applying paragraph (1), a vessel that is otherwise eligible 

34 for a guarantee and that the Secretary of Defense determines— 

35 ‘‘(A) is suitable for service as a naval auxiliary in time of war 

36 or national emergency; and 

37 ‘‘(B) meets a shortfall in sealift capacity or capability. 

38 ‘‘§ 53707. Findings related to obligors and operators 

39 ‘‘(a) RESPONSIBLE OBLIGOR.—The Secretary may not guarantee or make 

40 a commitment to guarantee an obligation under this chapter unless the Sec41 retary finds that the obligor is responsible and has the ability, experience, fi-
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1 nancial resources, and other qualifications necessary for the adequate oper2 ation and maintenance of each vessel that will serve as security for the guar3 antee. 

4 ‘‘(b) OPERATORS OF LINER VESSELS.—The Secretary of Transportation 

5 may not guarantee or make a commitment to guarantee a loan for the con6 struction, reconstruction, or reconditioning of a liner vessel under this chapter 

7 unless the Chairman of the Federal Maritime Commission certifies that the 

8 operator of the vessel has not been found by the Commission to have com9 mitted, within the previous 5 years— 

10 ‘‘(1) a violation of part A of subtitle IV of this title that involves un11 just or unfair discriminatory treatment or undue or unreasonable preju12 dice or disadvantage with respect to a United States shipper, ocean 

13 transportation intermediary, ocean common carrier, or port; or 

14 ‘‘(2) a violation of part B of subtitle IV of this title. 

15 ‘‘(c) OPERATORS OF FISHING VESSELS.—The Secretary of Commerce may 

16 not guarantee or make a commitment to guarantee a loan for the construc17 tion, reconstruction, or reconditioning of a fishing vessel under this chapter 

18 if the operator of the vessel has been— 

19 ‘‘(1) held liable, or the vessel has been held liable in rem, for a civil 

20 penalty under section 308 of the Magnuson-Stevens Fishery Conservation 

21 and Management Act (16 U.S.C. 1858) and the operator has not paid 

22 the penalty; 

23 ‘‘(2) found guilty of an offense under section 309 of the Magnuson-Ste24 vens Fishery Conservation and Management Act (16 U.S.C. 1859) and 

25 not paid the assessed fine or served the assessed sentence; 

26 ‘‘(3) held liable for a civil or criminal penalty under section 105 of 

27 the Marine Mammal Protection Act of 1972 (16 U.S.C. 1375) and not 

28 paid the assessed fine or served the assessed sentence; or 

29 ‘‘(4) held liable for a civil penalty by the Coast Guard under this title 

30 or title 33 and not paid the assessed fine. 

31 ‘‘(d) WAIVERS CONCERNING FINANCIAL CONDITION.—The Secretary shall 

32 prescribe regulations concerning circumstances under which waivers of, or ex33 ceptions to, otherwise applicable regulatory requirements concerning financial 

34 condition can be made. The regulations shall require that— 

35 ‘‘(1) the economic soundness requirements in section 53708(a) of this 

36 title are met after the waiver of the financial condition requirement; and 

37 ‘‘(2) the waiver shall provide for the imposition of other requirements 

38 on the obligor designed to compensate for the increased risk associated 

39 with the obligor’s failure to meet regulatory requirements applicable to 

40 financial condition. 
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1 ‘‘§ 53708. Findings related to economic soundness 

2 ‘‘(a) BY SECRETARY OF TRANSPORTATION.—The Secretary of Transpor3 tation may not guarantee or make a commitment to guarantee an obligation 

4 under this chapter unless the Secretary finds that the property or project for 

5 which the obligation will be executed will be economically sound. In making 

6 that finding, the Secretary shall consider— 

7 ‘‘(1) the need in the particular segment of the maritime industry for 

8 new or additional capacity, including any impact on existing equipment 

9 for which a guarantee under this chapter is in effect; 

10 ‘‘(2) the market potential for employment of the vessel over the life of 

11 the guarantee; 

12 ‘‘(3) projected revenues and expenses associated with employment of 

13 the vessel; 

14 ‘‘(4) any charter, contract of affreightment, transportation agreement, 

15 or similar agreement or undertaking relevant to the employment of the 

16 vessel; 

17 ‘‘(5) other relevant criteria; and 

18 ‘‘(6) for inland waterways, the need for technical improvements, in19 cluding increased fuel efficiency or improved safety. 

20 ‘‘(b) BY SECRETARY OF COMMERCE.—The Secretary of Commerce may not 

21 guarantee or make a commitment to guarantee an obligation under this chap22 ter unless the Secretary finds, at or prior to the time the commitment is made 

23 or the guarantee becomes effective, that— 

24 ‘‘(1) the property or project for which the obligation will be executed 

25 will be economically sound; and 

26 ‘‘(2) for a fishing vessel, the purpose of the financing or refinancing 

27 is consistent with— 

28 ‘‘(A) the wise use of the fisheries resources and the development, 

29 advancement, management, conservation, and protection of the fish30 eries resources; or 

31 ‘‘(B) the need for technical improvements, including increased 

32 fuel efficiency or improved safety. 

33 ‘‘(c) USED FISHING VESSELS AND FACILITIES.—The Secretary of Com34 merce may not guarantee or make a commitment to guarantee an obligation 

35 under this chapter for the purchase of a used fishing vessel or used fishery 

36 facility unless the vessel or facility will be— 

37 ‘‘(1) reconstructed or reconditioned in the United States and will con38 tribute to the development of the United States fishing industry; or 

39 ‘‘(2) used— 

40 ‘‘(A) in the harvesting of fish from an underused fishery; or 
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1 ‘‘(B) for a purpose described in the definition of ‘fishery facility’ 

2 in section 53701 of this title with respect to an underused fishery. 

3 ‘‘(d) INDEPENDENT ANALYSIS.—The Secretary may make a determination 

4 that aspects of an application under this chapter require independent anal5 ysis to be conducted by third party experts due to risk factors associated with 

6 markets, technology, financial structures, or other risk factors identified by the 

7 Secretary. Any independent analysis conducted under this subsection shall be 

8 performed by a party chosen by the Secretary. 

9 ‘‘(e) ADDITIONAL EQUITY BECAUSE OF INCREASED RISKS.—Notwith10 standing any other provision of this chapter, the Secretary may make a deter11 mination that an application under this title requires additional equity be12 cause of increased risk factors associated with markets, technology, financial 

13 structures, or other risk factors identified by the Secretary. 

14 ‘‘§ 53709. Amount of obligations 

15 ‘‘(a) IN GENERAL.—The principal of an obligation may not be guaranteed 

16 in an amount greater than the amount determined by multiplying the per17 centage applicable under subsection (b) by— 

18 ‘‘(1) the amount paid by or for the account of the obligor (as deter19 mined by the Secretary, which determination shall be conclusive) for the 

20 construction, reconstruction, or reconditioning of the vessel used as secu21 rity for the guarantee; or 

22 ‘‘(2) if the obligor creates an escrow fund under section 53715 of this 

23 title, the actual cost of the vessel. 

24 ‘‘(b) LIMITATIONS ON AMOUNT BORROWED.— 

25 ‘‘(1) IN GENERAL.—Except as otherwise provided, the principal 

26 amount of an obligation guaranteed under this chapter may not exceed 

27 75 percent of the actual cost or depreciated actual cost, as determined 

28 by the Secretary, of the vessel used as security for the guarantee. 

29 ‘‘(2) CERTAIN APPROVED VESSELS.—The principal amount may not 

30 exceed 87.5 percent of the actual cost or depreciated actual cost if— 

31 ‘‘(A) the size and speed of the vessel are approved by the Sec32 retary; 

33 ‘‘(B) the vessel is or would have been eligible for mortgage aid 

34 for construction under section 509 of the Merchant Marine Act, 

35 1936, or would have been eligible except that the vessel was built 

36 with a construction-differential subsidy and the subsidy has been re37 paid; and 

38 ‘‘(C) the vessel is of a type described in that section for which 

39 the minimum down payment required by that section is 12.5 per40 cent of the cost of the vessel. 
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1 ‘‘(3) BARGES.—For a barge constructed without a construction-dif2 ferential subsidy or for which the subsidy has been repaid, the principal 

3 amount may not exceed 87.5 percent of the actual cost or depreciated ac4 tual cost. 

5 ‘‘(4) FISHING VESSELS AND FISHERY FACILITIES.—For a fishing vessel 

6 or fishery facility, the principal amount may not exceed 80 percent of 

7 the actual cost or depreciated actual cost. However, debt for the vessel 

8 or facility may not be placed through the Federal Financing Bank. 

9 ‘‘(5) OTEC.—For an ocean thermal energy conversion facility or 

10 plantship constructed without a construction-differential subsidy, the 

11 principal amount may not exceed 87.5 percent of the actual cost or de12 preciated actual cost of the facility or plantship. 

13 ‘‘(6) ELIGIBLE EXPORT VESSELS.—For an eligible export vessel, the 

14 principal amount may not exceed 87.5 percent of the actual cost or de15 preciated actual cost. 

16 ‘‘(c) SECURITY INVOLVING MULTIPLE VESSELS.—The principal amount of 

17 an obligation having more than one vessel as security for the guarantee may 

18 not exceed the sum of the principal amounts allowable for all the vessels. 

19 ‘‘(d) PROHIBITION ON UNIFORM PERCENTAGE LIMITATIONS.—The Sec20 retary may not establish a percentage under any provision of subsection (b) 

21 that is to be applied uniformly to all guarantees or commitments to guarantee 

22 made under that provision. 

23 ‘‘(e) PROHIBITION ON MINIMUM PRINCIPAL AMOUNT.—The Secretary may 

24 not establish, as a condition of eligibility for a guarantee under this chapter, 

25 a minimum principal amount for an obligation covering the reconstruction 

26 or reconditioning of a fishing vessel or fishery facility. For purposes of this 

27 chapter, the reconstruction or reconditioning of a fishing vessel or fishery fa28 cility does not include the routine minor repair or maintenance of the vessel 

29 or facility. 

30 ‘‘§ 53710. Contents of obligations 

31 ‘‘(a) IN GENERAL.—An obligation guaranteed under this chapter must— 

32 ‘‘(1) provide for payments by the obligor satisfactory to the Secretary; 

33 ‘‘(2) provide for interest (exclusive of guarantee fees and other fees) at 

34 a rate not more than the annual rate on the unpaid principal that the 

35 Secretary determines is reasonable, considering the range of interest rates 

36 prevailing in the private market for similar loans and the risks assumed 

37 by the Secretary; 

38 ‘‘(3) have a maturity date satisfactory to the Secretary, but— 

39 ‘‘(A) not more than 25 years after the date of delivery of the ves40 sel used as security for the guarantee; or 
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1 ‘‘(B) if the vessel has been reconstructed or reconditioned, not 

2 more than the later of— 

3 ‘‘(i) 25 years after the date of delivery of the vessel; or 

4 ‘‘(ii) the remaining years of useful life of the vessel as deter5 mined by the Secretary; and 

6 ‘‘(4) provide, or a related agreement must provide, that if the vessel 

7 used as security for the guarantee is a delivered vessel, the vessel shall 

8 be— 

9 ‘‘(A) in class A–1, American Bureau of Shipping, or meet other 

10 standards acceptable to the Secretary, with all required certificates, 

11 including marine inspection certificates of the Coast Guard or, in 

12 the case of an eligible export vessel, of the appropriate foreign au13 thorities under a treaty, convention, or other international agree14 ment to which the United States is a party, and with all out15 standing requirements and recommendations necessary for class re16 tention accomplished, unless the Secretary permits a deferment of 

17 repairs necessary to meet these requirements; and 

18 ‘‘(B) well equipped, in good repair, and in every respect sea19 worthy and fit for service. 

20 ‘‘(b) PROVISIONS FOR CERTAIN PASSENGER VESSELS.— 

21 ‘‘(1) IN GENERAL.—With the Secretary’s approval, if the vessel used 

22 as security for the guarantee is a passenger vessel having the tonnage, 

23 speed, passenger accommodations, and other characteristics described in 

24 section 503 of the Merchant Marine Act, 1936, an obligation guaranteed 

25 under this chapter or a related agreement may provide that— 

26 ‘‘(A) the only recourse by the United States Government against 

27 the obligor for payments under the guarantee will be repossession 

28 of the vessel and assignment of insurance claims; and 

29 ‘‘(B) the obligor’s liability for payments under the guarantee will 

30 be satisfied and discharged by the surrender of the vessel and all 

31 interest in the vessel to the Government in the condition described 

32 in paragraph (2). 

33 ‘‘(2) SURRENDER OF VESSEL.— 

34 ‘‘(A) IN GENERAL.—On surrender, the vessel must be— 

35 ‘‘(i) free and clear of all liens and encumbrances except the 

36 security interest conveyed to the Secretary under this chapter; 

37 ‘‘(ii) in class; and 

38 ‘‘(iii) in as good order and condition (ordinary wear and 

39 tear excepted) as when acquired by the obligor. 

40 ‘‘(B) COVERING DEFICIENCIES BY INSURANCE.—To the extent cov41 ered by insurance, a deficiency related to a requirement in subpara-
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1 graph (A) may be satisfied by assignment of the obligor’s insurance 

2 claims to the Government. 

3 ‘‘(c) OTHER PROVISIONS TO PROTECT SECURITY INTERESTS.—An obliga4 tion guaranteed under this chapter and any related agreement must contain 

5 other provisions for the protection of the security interests of the Government 

6 (including acceleration, assumption, and subrogation provisions and the 

7 issuance of notes by the obligor to the Secretary), liens and releases of liens, 

8 payment of taxes, and other matters that the Secretary may prescribe. 

9 ‘‘§ 53711. Security interest 

10 ‘‘(a) IN GENERAL.—The Secretary may guarantee an obligation under this 

11 chapter only if the obligor conveys or agrees to convey to the Secretary a secu12 rity interest the Secretary considers necessary to protect the interest of the 

13 United States Government. 

14 ‘‘(b) MULTIPLE VESSELS AND TYPES OF SECURITY.—The security interest 

15 may relate to more than one vessel and may consist of more than one type 

16 of security. If the security interest relates to more than one vessel, the obliga17 tion may have the latest maturity date allowable under section 53710(a)(3) 

18 of this title for any of the vessels used as security for the guarantee. However, 

19 the Secretary may require such payments of principal prior to maturity, with 

20 respect to all related obligations, as the Secretary considers necessary to main21 tain adequate security for the guarantee. 

22 ‘‘§ 53712. Monitoring financial condition and operations of 

23 obligor 

24 ‘‘(a) IN GENERAL.—The Secretary shall monitor the financial condition 

25 and operations of the obligor on a regular basis during the term of the guar26 antee. The Secretary shall document the results of the monitoring on an an27 nual or quarterly basis depending on the condition of the obligor. If the Sec28 retary determines that the financial condition of the obligor warrants addi29 tional protections to the Secretary, the Secretary shall take appropriate action 

30 under subsection (b). If the Secretary determines that the financial condition 

31 of the obligor jeopardizes its continued ability to perform its responsibilities 

32 in connection with the guarantee of an obligation by the Secretary, the Sec33 retary shall make an immediate determination whether default should take 

34 place and whether further measures described in subsection (b) should be 

35 taken to protect the interests of the Secretary while ensuring that program 

36 objectives are met. 

37 ‘‘(b) CONTRACT PROVISIONS TO PROTECT SECRETARY.—The Secretary 

38 shall include provisions in a loan agreement with an obligor that provides 

39 additional authority to the Secretary to take action to limit potential losses 

40 in connection with a defaulted loan or a loan that is in jeopardy due to the 

41 deteriorating financial condition of the obligor. These provisions include re-
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1 quirements for additional collateral or greater equity contributions that are 

2 effective upon the occurrence of verifiable conditions relating to the obligor’s 

3 financial condition or the status of the vessel or shipyard project. 

4 ‘‘§ 53713. Administrative fees 

5 ‘‘(a) IN GENERAL.—The Secretary shall charge and collect from the obligor 

6 fees the Secretary considers reasonable for— 

7 ‘‘(1) investigating an application for a guarantee; 

8 ‘‘(2) appraising property offered as security for a guarantee; 

9 ‘‘(3) issuing a commitment; 

10 ‘‘(4) providing services related to an escrow fund under section 53715 

11 of this title; and 

12 ‘‘(5) inspecting property during construction, reconstruction, or recon13 ditioning. 

14 ‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection (a) may not 

15 exceed 0.5 percent of the original principal amount of the obligations to be 

16 guaranteed. 

17 ‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may charge and 

18 collect fees to cover the costs of independent analysis under section 53708(d) 

19 of this title. Notwithstanding section 3302 of title 31, any fee collected under 

20 this subsection shall— 

21 ‘‘(1) be credited as an offsetting collection to the account that finances 

22 the administration of the loan guarantee program; 

23 ‘‘(2) be available for expenditure only to pay the costs of activities and 

24 services for which the fee is imposed; and 

25 ‘‘(3) remain available until expended. 

26 ‘‘§ 53714. Guarantee fees 

27 ‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall prescribe 

28 regulations to assess a fee for guaranteeing an obligation under this chapter. 

29 ‘‘(b) COMPUTATION OF FEE.— 

30 ‘‘(1) IN GENERAL.—The amount of the fee for a guarantee under this 

31 chapter shall be equal to the sum of the amounts determined under para32 graph (2) for the years in which the guarantee is in effect. 

33 ‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred to in 

34 paragraph (1) for a year in which the guarantee is in effect is the 

35 present value of the amount calculated under paragraph (3). To deter36 mine the present value, the Secretary shall apply a discount rate deter37 mined by the Secretary of the Treasury, considering current market 

38 yields on outstanding obligations of the United States Government hav39 ing periods to maturity comparable to the period to maturity for the 

40 guaranteed obligation. 
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1 ‘‘(3) CALCULATION OF AMOUNT.—The amount referred to in para2 graph (2) shall be calculated by multiplying— 

3 ‘‘(A) the estimated average unpaid principal amount of the obli4 gation that will be outstanding during the year (excluding the aver5 age amount, other than interest, on deposit during the year in an 

6 escrow fund under section 53715 of this title); by 

7 ‘‘(B) the fee rate set under paragraph (4). 

8 ‘‘(4) SETTING FEE RATES.—To set the fee rate referred to in para9 graph (3)(B), the Secretary shall establish a formula that— 

10 ‘‘(A) takes into account the security provided for the guaranteed 

11 obligation; and 

12 ‘‘(B) is a sliding scale based on the creditworthiness of the obli13 gor, using— 

14 ‘‘(i) the lowest allowable rate under paragraph (5) for the 

15 most creditworthy obligors; and 

16 ‘‘(ii) the highest allowable rate under paragraph (5) for the 

17 least creditworthy obligors. 

18 ‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under para19 graph (4) shall be— 

20 ‘‘(A) for a delivered vessel or equipment, at least 0.5 percent and 

21 not more than 1 percent; and 

22 ‘‘(B) for a vessel to be constructed, reconstructed, or reconditioned 

23 or equipment to be delivered, at least 0.25 percent and not more 

24 than 0.5 percent. 

25 ‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an obligation 

26 under this chapter shall be collected not later than the date on which an 

27 amount is first paid on the obligation. 

28 ‘‘(d) FINANCING THE FEE.—A fee paid under this section is eligible to be 

29 financed under this chapter and shall be included in the actual cost of the 

30 obligation guaranteed. 

31 ‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not refundable. 

32 However, an obligor shall receive credit for the amount paid for the remain33 ing term of the obligation if the obligation is refinanced and guaranteed 

34 under this chapter after the refinancing. 

35 ‘‘§ 53715. Escrow fund 

36 ‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed under this 

37 chapter are to be used to finance the construction, reconstruction, or recondi38 tioning of a vessel that will serve as security for a guarantee under this chap39 ter, the Secretary may accept and hold in escrow, under an escrow agreement 

40 with the obligor, a portion of the proceeds of all obligations guaranteed under 

41 this chapter whose proceeds are to be so used which is equal to— 
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1 ‘‘(1) the excess of— 

2 ‘‘(A) the principal amount of all obligations whose proceeds are 

3 to be so used; over 

4 ‘‘(B) 75 percent or 87.5 percent, whichever is applicable under 

5 section 53709(b) of this title, of the amount paid by or for the ac6 count of the obligor for the construction, reconstruction, or recondi7 tioning of the vessel; plus 

8 ‘‘(2) any interest the Secretary may require on the amount described 

9 in paragraph (1). 

10 ‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VES11 SELS.—If the security for the guarantee of an obligation relates both to a ves12 sel to be constructed, reconstructed, or reconditioned and to a delivered vessel, 

13 the principal amount of the obligation shall be prorated for purposes of sub14 section (a) under regulations prescribed by the Secretary. 

15 ‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— 

16 ‘‘(1) PURPOSES.—The Secretary shall disburse amounts in the escrow 

17 fund, as specified in the escrow agreement, to— 

18 ‘‘(A) pay amounts the obligor is obligated to pay for— 

19 ‘‘(i) the construction, reconstruction, or reconditioning of a 

20 vessel used as security for the guarantee; and 

21 ‘‘(ii) interest on the obligations; 

22 ‘‘(B) redeem the obligations under a refinancing guaranteed 

23 under this chapter; and 

24 ‘‘(C) pay any excess interest deposits to the obligor at times pro25 vided for in the escrow agreement. 

26 ‘‘(2) MANNER OF PAYMENT.—If a payment becomes due under the 

27 guarantee before the termination of the escrow agreement, the amount in 

28 the escrow fund at the time the payment becomes due, including realized 

29 income not yet paid to the obligor, shall be paid into the appropriate 

30 account under section 53717 of this title. The amount shall be credited 

31 against amounts due or to become due from the obligor to the Secretary 

32 on the guaranteed obligations or, to the extent not so required, be paid 

33 to the obligor. 

34 ‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— 

35 ‘‘(1) IN GENERAL.—No disbursement shall be made under subsection 

36 (c) to any person until the total amount paid by or for the account of 

37 the obligor from sources other than the proceeds of the obligation equals 

38 at least 25 percent or 12.5 percent, whichever is applicable under section 

39 53709(b) of this title, of the aggregate actual cost of the vessel, as pre40 viously approved by the Secretary. If the aggregate actual cost of the ves41 sel has increased since the Secretary’s initial approval or if it increases 
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1 after the first disbursement is permitted under this subsection, then no 

2 further disbursements shall be made under subsection (c) until the total 

3 amount paid by or for the account of the obligor from sources other than 

4 the proceeds of the obligation equals at least 25 percent or 12.5 percent, 

5 as applicable, of the increase, as determined by the Secretary, in the ag6 gregate actual cost of the vessel. This paragraph does not require the Sec7 retary to consent to finance any increase in actual cost unless the Sec8 retary determines that such an increase in the obligation meets all the 

9 terms and conditions of this chapter or other applicable law. 

10 ‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The Sec11 retary shall, by regulation, establish a transparent, independent, and 

12 risk-based process for verifying and documenting the progress of projects 

13 under construction before disbursing guaranteed loan funds. At a min14 imum, the process shall require documented proof of progress in connec15 tion with the construction, reconstruction, or reconditioning of a vessel 

16 or vessels before disbursements are made from the escrow fund. The Sec17 retary may require that the obligor provide a certificate from an inde18 pendent party certifying that the requisite progress in construction, re19 construction, or reconditioning has taken place. 

20 ‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.— 

21 ‘‘(1) IN GENERAL.—If a payment has not become due under the guar22 antee before the termination of the escrow agreement, the balance of the 

23 escrow fund at the time of termination shall be disbursed to— 

24 ‘‘(A) prepay the excess of— 

25 ‘‘(i) the principal amount of all obligations whose proceeds 

26 are to be used to finance the construction, reconstruction, or re27 conditioning of the vessel used or to be used as security for the 

28 guarantee; over 

29 ‘‘(ii) 75 percent or 87.5 percent, whichever is applicable 

30 under section 53709(b) of this title, of the actual cost of the ves31 sel to the extent paid; and 

32 ‘‘(B) pay interest on that prepaid amount of principal. 

33 ‘‘(2) REMAINING BALANCE.—Any remaining balance of the escrow 

34 fund shall be paid to the obligor. 

35 ‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any part of an 

36 escrow fund in obligations of the United States Government with maturities 

37 such that the escrow fund will be available as required for purposes of the 

38 escrow agreement. Investment income shall be paid to the obligor when re39 ceived. 
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1 ‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement shall con2 tain other terms the Secretary considers necessary to protect fully the interests 

3 of the Government. 

4 ‘‘§ 53716. Deposit fund 

5 ‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury for purposes 

6 of this section. The Secretary, in accordance with an agreement under sub7 section (b), may deposit into and hold in the fund cash belonging to an obli8 gor to serve as collateral for a guarantee made under this chapter with respect 

9 to the obligor. 

10 ‘‘(b) AGREEMENT.—The Secretary and an obligor shall make a reserve fund 

11 or other collateral account agreement to govern the deposit, withdrawal, reten12 tion, use, and reinvestment of cash of the obligor held in the fund. The agree13 ment shall contain— 

14 ‘‘(1) terms and conditions required by this section; 

15 ‘‘(2) terms that grant to the United States Government a security in16 terest in all amounts deposited into the fund; and 

17 ‘‘(3) any additional terms considered by the Secretary to be necessary 

18 to protect fully the interests of the Government. 

19 ‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any part of the 

20 amounts in the fund in obligations of the Government with maturities such 

21 that amounts in the fund will be available as required for purposes of the 

22 agreement under subsection (b). Cash balances in the fund in excess of current 

23 requirements shall be maintained in a form of uninvested funds, and the Sec24 retary of the Treasury shall pay interest on these funds. 

25 ‘‘(d) WITHDRAWALS.— 

26 ‘‘(1) IN GENERAL.—Cash deposited into the fund may not be with27 drawn without the consent of the Secretary. 

28 ‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may 

29 pay any income earned on cash of an obligor deposited into the fund 

30 in accordance with the agreement with the obligor under subsection (b). 

31 ‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may retain and 

32 offset any or all of the cash of an obligor in the fund, and any income 

33 realized thereon, as part of the Secretary’s recovery against the obligor 

34 in case of a default by the obligor on an obligation. 

35 ‘‘§ 53717. Management of funds in the Treasury 

36 ‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the Federal 

37 Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). 

38 ‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.— 

39 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Transportation 

40 shall account for payments and disbursements involving obligations 

41 guaranteed under this chapter and not subject to FCRA in an account 
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1 in the Treasury entitled the Federal Ship Financing Fund Liquidating 

2 Account (a liquidating account as defined in FCRA). 

3 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation shall 

4 account for payments and disbursements involving obligations guaran5 teed under this chapter and subject to FCRA in a separate account in 

6 the Treasury entitled the Federal Ship Financing Guaranteed Loan Fi7 nancing Account (a financing account as defined in FCRA). 

8 ‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.— 

9 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce shall 

10 account for payments and disbursements involving obligations guaran11 teed under this chapter and not subject to FCRA in a separate account 

12 in the Treasury established for this purpose. 

13 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce shall ac14 count for payments and disbursements involving obligations guaranteed 

15 under this chapter and subject to FCRA in a separate account in the 

16 Treasury established for this purpose. 

17 ‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of 

18 Commerce shall account for payments and disbursements involving direct 

19 loans made under this chapter in a separate account in the Treasury estab20 lished for this purpose. 

21 ‘‘§ 53718. Annual report to Congress 

22 ‘‘The Secretary of Transportation shall report to Congress annually on the 

23 loan guarantee program under this chapter. Each report shall include— 

24 ‘‘(1) the size, in dollars, of the portfolio of loans guaranteed; 

25 ‘‘(2) the size, in dollars, of projects in the portfolio facing financial 

26 difficulties; 

27 ‘‘(3) the number and type of projects covered; 

28 ‘‘(4) a profile of pending loan applications; 

29 ‘‘(5) the amount of appropriations available for new guarantees; 

30 ‘‘(6) a profile of each project approved since the last report; and 

31 ‘‘(7) a profile of any defaults since the last report. 

32 ‘‘SUBCHAPTER II—DEFAULT PROVISIONS 

33 ‘‘§ 53721. Rights of obligee 

34 ‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection (c), if an 

35 obligor has continued in default for 30 days in the payment of principal or 

36 interest on an obligation guaranteed under this chapter, the obligee or the 

37 obligee’s agent may demand that the Secretary pay the unpaid principal 

38 amount of the obligation and the unpaid interest on the obligation to the date 

39 of payment. The demand must be made within the earlier of— 

40 ‘‘(1) a period that may be specified in the guarantee or a related 

41 agreement; or 
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1 ‘‘(2) 90 days from the date of the default. 

2 ‘‘(b) PAYMENTS BY SECRETARY.— 

3 ‘‘(1) IN GENERAL.—If a demand is made under subsection (a), the 

4 Secretary shall pay to the obligee or the obligee’s agent the unpaid prin5 cipal amount of the obligation and the unpaid interest on the obligation 

6 to the date of payment. Payment shall be made within the earlier of— 

7 ‘‘(A) a period that may be specified in the guarantee or a related 

8 agreement; or 

9 ‘‘(B) 30 days from the date of the demand. 

10 ‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not required to 

11 make payment under this subsection if, within the appropriate period 

12 under paragraph (1), the Secretary finds that the obligor was not in de13 fault or that the default was remedied before the demand. 

14 ‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE DEMAND.—An 

15 obligee or the obligee’s agent may not demand payment under this section if 

16 the Secretary, before the demand and on terms that may be provided in the 

17 obligation or a related agreement, has assumed the obligor’s rights and duties 

18 under the obligation and any related agreement and made any payment in 

19 default. However, the guarantee of the obligation remains in effect after the 

20 Secretary’s assumption. 

21 ‘‘§ 53722. Actions by Secretary 

22 ‘‘(a) GENERAL AUTHORITY.—On default under an obligation or related 

23 agreement between the Secretary and the obligor, the Secretary, on terms that 

24 may be provided in the obligation or agreement, may— 

25 ‘‘(1) assume the obligor’s rights and duties under the obligation or 

26 agreement, make any payment in default, and notify the obligee or the 

27 obligee’s agent of the default and the Secretary’s assumption; or 

28 ‘‘(2) notify the obligee or the obligee’s agent of the default. 

29 ‘‘(b) DEMANDS BY OBLIGEES.— 

30 ‘‘(1) DEMAND.—If the Secretary proceeds under subsection (a)(2), the 

31 obligee or the obligee’s agent may demand that the Secretary pay the un32 paid principal amount of the obligation and the unpaid interest on the 

33 obligation. The demand must be made within the earlier of— 

34 ‘‘(A) a period that may be specified in the guarantee or a related 

35 agreement; or 

36 ‘‘(B) 60 days from the date of the Secretary’s notice. 

37 ‘‘(2) PAYMENT.—If a demand is made under paragraph (1), the Sec38 retary shall pay to the obligee or the obligee’s agent the unpaid principal 

39 amount of the obligation and the unpaid interest on the obligation to 

40 the date of payment. Payment shall be made within the earlier of— 
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1 ‘‘(A) a period that may be specified in the guarantee or a related 

2 agreement; or 

3 ‘‘(B) 30 days from the date of the demand. 

4 ‘‘(c) CONTINUED EFFECT OF GUARANTEE.—A guarantee of an obligation 

5 remains in effect after an assumption of the obligation by the Secretary. 

6 ‘‘(d) ADDITIONAL RESPONSES.—If there is a default on an obligation, the 

7 Secretary shall conduct operations under this chapter in a manner that— 

8 ‘‘(1) maximizes the net present value return from the sale or disposi9 tion of assets associated with the obligation, including prompt referral 

10 to the Attorney General for collection as appropriate; 

11 ‘‘(2) minimizes the amount of any loss realized in the resolution of 

12 the guarantee; 

13 ‘‘(3) ensures adequate competition and fair and consistent treatment 

14 of offerors; and 

15 ‘‘(4) requires appraisal of assets by an independent appraiser. 

16 ‘‘§ 53723. Payments by Secretary and issuance of obligations 

17 ‘‘(a) CASH PAYMENT.—Amounts required to be paid by the Secretary under 

18 section 53721 or 53722 of this title shall be paid in cash. 

19 ‘‘(b) ISSUANCE OF OBLIGATIONS.—If amounts in the appropriate account 

20 under section 53717 of this title are not sufficient to make a payment re21 quired under section 53721 or 53722 of this title, the Secretary may issue 

22 obligations to the Secretary of the Treasury. The Secretary, with the approval 

23 of the Secretary of the Treasury, shall prescribe the form, denomination, ma24 turity, and other terms (except the interest rate) of the obligations. The Sec25 retary of the Treasury shall set the interest rate for the obligations, consid26 ering the current average market yield on outstanding marketable obligations 

27 of the United States Government of comparable maturities during the month 

28 before the obligations are issued. 

29 ‘‘(c) PURCHASE OF OBLIGATIONS.—The Secretary of the Treasury shall 

30 purchase the obligations issued under this section. To purchase the obliga31 tions, the Secretary of the Treasury may use as a public debt transaction the 

32 proceeds from the sale of securities issued under chapter 31 of title 31. The 

33 purposes for which securities may be issued under that chapter are extended 

34 to include the purchase of obligations under this subsection. The Secretary of 

35 the Treasury may sell obligations purchased under this section. A redemption, 

36 purchase, or sale of the obligations by the Secretary of the Treasury is a pub37 lic debt transaction of the Government. 

38 ‘‘(d) DEPOSITS AND REDEMPTIONS.—The Secretary shall deposit amounts 

39 borrowed under this section in the appropriate account under section 53717 

40 of this title and make redemptions of the obligations from that account. 
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1 ‘‘§ 53724. Rights to secured property 

2 ‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary makes a 

3 payment on, or assumes, an obligation under section 53721 or 53722 of this 

4 title, the Secretary acquires the rights under the security agreement with the 

5 obligor in the security held by the Secretary to guarantee the obligation. 

6 ‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding 

7 any other law relating to the acquisition, handling, or disposal of property 

8 by the United States Government, the Secretary has the right, in the Sec9 retary’s discretion, to complete, reconstruct, recondition, renovate, repair, 

10 maintain, operate, charter, or sell any property acquired under a security 

11 agreement with an obligor, or to place a vessel so acquired in the National 

12 Defense Reserve Fleet. The terms of a sale under this subsection shall be as 

13 approved by the Secretary. 

14 ‘‘§ 53725. Actions against obligor 

15 ‘‘(a) IN GENERAL.—For a default under a guaranteed obligation or related 

16 agreement, the Secretary may take any action against the obligor or another 

17 liable party that the Secretary considers necessary to protect the interests of 

18 the United States Government. A civil action may be brought in the name 

19 of the United States or the obligee. The obligee shall make available to the 

20 Government all records and evidence necessary to prosecute the action. 

21 ‘‘(b) TITLE, POSSESSION, AND PURCHASE.— 

22 ‘‘(1) IN GENERAL.—The Secretary may— 

23 ‘‘(A) accept a conveyance of title to and possession of property 

24 from the obligor or another party liable to the Secretary; and 

25 ‘‘(B) purchase the property for an amount not greater than the 

26 unpaid principal amount of the obligation and interest thereon. 

27 ‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property, the Sec28 retary receives an amount of cash greater than the unpaid principal 

29 amount of the obligation, the unpaid interest on the obligation, and the 

30 expenses of collecting those amounts, the Secretary shall pay the excess 

31 to the obligor. 

32 ‘‘SUBCHAPTER III—PARTICULAR PROJECTS 

33 ‘‘§ 53731. Commercial demonstration ocean thermal energy 

34 conversion facilities and plantships 

35 ‘‘(a) IN GENERAL.—Under subchapter I of this chapter, the Secretary may 

36 guarantee or make a commitment to guarantee the payment of the principal 

37 of and interest on an obligation that aids in financing (including reimburse38 ment of an obligor for expenditures previously made for) the construction, re39 construction, or reconditioning of a commercial demonstration ocean thermal 

40 energy conversion facility or plantship. This section may be used to guarantee 
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1 obligations for a total of not more than 5 separate facilities and plantships 

2 or a demonstrated 400 megawatt capacity, whichever comes first. 

3 ‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 

4 in this section, a guarantee or commitment to guarantee under this section 

5 is subject to all the provisions applicable to a guarantee or commitment to 

6 guarantee under subchapter I of this chapter. 

7 ‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic 

8 soundness under section 53708 of this title applies to a guarantee or commit9 ment to guarantee for that portion of a facility or plantship not to be sup10 ported with appropriated Federal funds. 

11 ‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment to guar12 antee may not be made under this section unless the Secretary of Energy, in 

13 consultation with the Secretary, certifies to the Secretary that, for the facility 

14 or plantship for which the guarantee or commitment to guarantee is sought, 

15 there is sufficient guarantee of performance and payment to lower the risk 

16 to the United States Government to a reasonable level. In deciding whether 

17 to issue such a certification, the Secretary of Energy shall consider— 

18 ‘‘(1) the successful demonstration of the technology to be used in the 

19 facility at a scale sufficient to establish the likelihood of technical and 

20 economic viability in the proposed market; and 

21 ‘‘(2) the need of the United States to develop new and renewable 

22 sources of energy and the benefits to be realized from the construction 

23 and successful operation of the facility or plantship. 

24 ‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of an obliga25 tion guaranteed under this section may not exceed 87.5 percent of— 

26 ‘‘(1) the actual cost or depreciated actual cost of the facility or 

27 plantship; or 

28 ‘‘(2) if the facility or plantship is supported with appropriated Fed29 eral funds, the total principal amount of that portion of the actual cost 

30 or depreciated actual cost for which the obligor is obligated to secure fi31 nancing under the agreement between the obligor and the Department of 

32 Energy or other Federal agency. 

33 ‘‘(f) OTEC DEMONSTRATION FUND.— 

34 ‘‘(1) IN GENERAL.—There is a special subaccount, known as the OTEC 

35 Demonstration Fund, in the account established under section 

36 53717(b)(1) of this title. 

37 ‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund shall be 

38 used for obligation guarantees authorized under this section that do not 

39 qualify under subchapter I of this chapter. Except as otherwise provided 

40 in this section, the OTEC Demonstration Fund shall be operated in the 

41 same manner as the parent account. However— 
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1 ‘‘(A) amounts received by the Secretary under subchapter I of this 

2 chapter related to guarantees or commitments to guarantee made 

3 under this section shall be deposited only in the OTEC Demonstra4 tion Fund; and 

5 ‘‘(B) when obligations issued by the Secretary under section 

6 53723 of this title related to the OTEC Demonstration Fund are 

7 outstanding, any amount received by the Secretary under sub8 chapter I of this chapter related to ocean thermal energy conversion 

9 facilities or plantships shall be deposited in the OTEC Demonstra10 tion Fund. 

11 ‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund may be 

12 transferred to the parent account when and to the extent the balance in 

13 the OTEC Demonstration Fund exceeds the total guarantees or commit14 ments to guarantee made under this section then outstanding, plus obli15 gations issued by the Secretary under section 53723 of this title related 

16 to the OTEC Demonstration Fund. 

17 ‘‘(4) LIABILITY.—The parent account is not liable for a guarantee or 

18 commitment to guarantee made under this section. 

19 ‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total unpaid prin20 cipal amount of the obligations guaranteed with the backing of the 

21 OTEC Demonstration Fund and outstanding at any one time may not 

22 exceed $1,650,000,000. 

23 ‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723 of this title 

24 applies to the OTEC Demonstration Fund. However, obligations issued by the 

25 Secretary under that section related to the OTEC Demonstration Fund shall 

26 be payable only from proceeds realized by the OTEC Demonstration Fund. 

27 ‘‘(h) TAXATION OF INTEREST.—Interest on an obligation guaranteed under 

28 this section shall be included in gross income under chapter 1 of the Internal 

29 Revenue Code of 1986 (26 U.S.C. ch. 1). 

30 ‘‘§ 53732. Eligible export vessels 

31 ‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an obligation for 

32 an eligible export vessel in accordance with— 

33 ‘‘(1) the terms applicable under this chapter for vessels documented 

34 under the laws of the United States; or 

35 ‘‘(2) other terms the Secretary determines are more favorable than 

36 those terms and compatible with export credit terms offered by foreign 

37 governments for the sale of vessels built in foreign shipyards. 

38 ‘‘(b) INTERAGENCY COUNCIL.— 

39 ‘‘(1) ESTABLISHMENT.—There is an interagency council to carry out 

40 this section. 
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1 ‘‘(2) COMPOSITION.—The council is composed of the following individ2 uals or their designees: 

3 ‘‘(A) The Secretary of Transportation, who is the chairman of the 

4 council. 

5 ‘‘(B) The Secretary of the Treasury. 

6 ‘‘(C) The Secretary of State. 

7 ‘‘(D) The Assistant to the President for Economic Policy. 

8 ‘‘(E) The United States Trade Representative. 

9 ‘‘(F) The President and Chairman of the Export-Import Bank of 

10 the United States. 

11 ‘‘(3) FUNCTIONS.—The council shall— 

12 ‘‘(A) obtain information on shipbuilding loan guarantees, direct 

13 and indirect subsidies, and other favorable treatment of shipyards 

14 provided by foreign governments to shipyards in competition with 

15 United States shipyards; 

16 ‘‘(B) consult regularly with United States shipbuilders to obtain 

17 the essential information about international shipbuilding competi18 tion on which to set terms for loan guarantees under subsection 

19 (a)(2); and 

20 ‘‘(C) provide guidance to the Secretary in establishing terms for 

21 loan guarantees under subsection (a)(2). 

22 ‘‘(4) ANNUAL REPORT.—Not later than January 31 of each year, the 

23 Secretary shall submit to Congress a report on activities of the Secretary 

24 under this section during the preceding year. The report shall include— 

25 ‘‘(A) documentation of sources of information about assistance by 

26 governments of other countries to shipyards in those countries; and 

27 ‘‘(B) a summary of recommendations made to the Secretary dur28 ing the preceding year about applications submitted to the Sec29 retary during that year for loan guarantees to construct eligible ex30 port vessels. 

31 ‘‘(c) REQUIRED FINDINGS.— 

32 ‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary may not 

33 guarantee or make a commitment to guarantee an obligation for an eli34 gible export vessel unless the Secretary finds that the construction, recon35 struction, or reconditioning of the vessel will aid in the transition of 

36 United States shipyards to commercial activities or will preserve ship37 building assets that would be essential in time of war or national emer38 gency. 

39 ‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary may not 

40 make a commitment to guarantee an obligation for an eligible export ves41 sel unless the Secretary determines that making the commitment will not 
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1 result in denial of an economically sound application for a commitment 

2 to guarantee an obligation for a vessel documented under the laws of the 

3 United States and operating in the domestic or foreign commerce of the 

4 United States. The Secretary has sole discretion in making the deter5 mination. In making the determination, the Secretary shall consider— 

6 ‘‘(A) the status and economic soundness of pending applications 

7 for commitments to guarantee obligations for vessels documented 

8 under the laws of the United States that are operating or will be 

9 operating in the domestic or foreign commerce of the United States; 

10 and 

11 ‘‘(B) the amount of guarantee authority available. 

12 ‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may not 

13 guarantee or make a commitment to guarantee an obligation for an eligible 

14 export vessel unless the owner of the vessel agrees with the Secretary that the 

15 vessel will not be transferred to a country designated by the Secretary of De16 fense as a country whose interests are hostile to the interests of the United 

17 States. 

18 ‘‘(e) REVIEW BY SECRETARY OF DEFENSE.— 

19 ‘‘(1) NOTIFICATION.—The Secretary shall promptly notify the Sec20 retary of Defense of the receipt of an application for a loan guarantee 

21 for an eligible export vessel. 

22 ‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30 days after 

23 receiving the notice, may disapprove the guarantee based on an assess24 ment of the potential use of the vessel in a manner that may harm the 

25 national security interests of the United States. The Secretary may not 

26 disapprove a guarantee solely because of the type of vessel to be con27 structed. 

28 ‘‘(3) DELEGATION.—The authority of the Secretary of Defense to dis29 approve a guarantee under this subsection may be delegated only to a 

30 civilian officer of the Department of Defense appointed by the President 

31 by and with the advice and consent of the Senate. 

32 ‘‘(4) PROHIBITION.—The Secretary may not make a loan guarantee 

33 disapproved by the Secretary of Defense under this subsection. 

34 ‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue a commit35 ment to guarantee an obligation for an eligible export vessel under this chap36 ter after the last date on which such a commitment may be issued under any 

37 treaty or convention entered into after November 30, 1993, that prohibits 

38 guarantee of such an obligation. 

39 ‘‘§ 53733. Shipyard modernization and improvement 

40 ‘‘(a) DEFINITIONS.—In this section: 
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1 ‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term ‘advanced 

2 shipbuilding technology’ includes— 

3 ‘‘(A) numerically controlled machine tools, robots, automated 

4 process control equipment, computerized flexible manufacturing sys5 tems, associated computer software, and other technology for im6 proving shipbuilding and related industrial production that ad7 vance the state-of-the-art; and 

8 ‘‘(B) novel techniques and processes designed to improve ship9 building quality, productivity, and practice, and to promote sus10 tainable development, including engineering design, quality assur11 ance, concurrent engineering, continuous process production tech12 nology, energy efficiency, waste minimization, design for 

13 recyclability or parts reuse, inventory management, upgraded work14 er skills, and communications with customers and suppliers. 

15 ‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard facil16 ity’ means— 

17 ‘‘(A) for operations on land— 

18 ‘‘(i) a structure or appurtenance thereto designed for the 

19 construction, reconstruction, repair, rehabilitation, or refur20 bishment of a vessel, including a graving dock, building way, 

21 ship lift, wharf, or pier crane; 

22 ‘‘(ii) the land necessary for the structure or appurtenance; 

23 and 

24 ‘‘(iii) equipment that is for use with the structure or appur25 tenance and that is necessary for performing a function re26 ferred to in clause (i); and 

27 ‘‘(B) for operations not on land, a vessel, floating drydock, or 

28 barge built in the United States and used for, equipped to be used 

29 for, or of a type normally used for, performing a function referred 

30 to in subparagraph (A)(i). 

31 ‘‘(3) MODERN SHIPBUILDING TECHNOLOGY.—The term ‘modern ship32 building technology’ means the best available proven technology, tech33 niques, and processes appropriate to enhancing the productivity of ship34 yards. 

35 ‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter, the Sec36 retary may guarantee or make a commitment to guarantee the payment of 

37 the principal of and interest on an obligation for advanced shipbuilding tech38 nology and modern shipbuilding technology of a general shipyard facility in 

39 the United States. Only a private shipyard is eligible to receive a guarantee. 

40 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 

41 in this section, a guarantee or commitment to guarantee under this section 
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1 is subject to all the provisions applicable to a guarantee or commitment to 

2 guarantee under subchapter I of this chapter. 

3 ‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an obligation 

4 guaranteed under this chapter may not exceed 87.5 percent of the actual cost 

5 of the advanced shipbuilding technology or modern shipbuilding technology. 

6 ‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the transfer of 

7 amounts from a department, agency, or instrumentality of the United States 

8 Government and may use those amounts to cover the cost (as defined in sec9 tion 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of making 

10 guarantees or commitments to guarantee under this section. 

11 ‘‘§ 53734. Replacement of vessels because of changes in oper12 ating standards 

13 ‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this 

14 chapter, the Secretary, on terms the Secretary may prescribe, may guarantee 

15 or make a commitment to guarantee the payment of the principal of and in16 terest on an obligation that aids in financing or refinancing (including reim17 bursement of an obligor for expenditures previously made for) a contract for 

18 the construction or reconstruction of a vessel if— 

19 ‘‘(1) the vessel is designed and to be used for commercial use in coast20 wise, intercoastal, or foreign trade; 

21 ‘‘(2) the construction or reconstruction is necessary to replace a vessel 

22 that cannot continue to be operated because of a change required by law 

23 in the standards for the operation of vessels, and the applicant for the 

24 guarantee or commitment would not otherwise legally be able to continue 

25 operating vessels in the trades in which the applicant operated vessels 

26 before the change; 

27 ‘‘(3) the applicant is presently engaged in transporting cargoes in ves28 sels of the type and class that will be constructed or reconstructed under 

29 this section and agrees to employ vessels constructed or reconstructed 

30 under this section as replacements only for vessels made obsolete by the 

31 change in operating standards; 

32 ‘‘(4) the capacity of the vessels to be constructed or reconstructed under 

33 this section will not increase the cargo carrying capacity of the vessels 

34 being replaced; 

35 ‘‘(5) the Secretary has not determined that the market demand for the 

36 vessel over its useful life will diminish so as to make granting the guar37 antee fiduciarily imprudent; 

38 ‘‘(6) the vessel, if to be reconstructed, will have a useful life of at least 

39 15 years after the reconstruction; and 

40 ‘‘(7) the Secretary has considered the criteria specified in section 

41 53708(a)(3)–(5) of this title. 
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1 ‘‘(b) TERM AND AMOUNT OF OBLIGATION.— 

2 ‘‘(1) TERM.—The term of an obligation guaranteed under this section 

3 may not exceed 25 years. 

4 ‘‘(2) AMOUNT.—The amount of an obligation guaranteed under this 

5 section may not exceed 87.5 percent of the actual cost or depreciated ac6 tual cost to the applicant for the construction or reconstruction of the 

7 vessel. The Secretary may not establish a percentage under this para8 graph that is to be applied uniformly to all guarantees or commitments 

9 to guarantee made under this section. 

10 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—A guarantee or commitment 

11 to guarantee under this section is also subject to sections 53701, 53702(a), 

12 53704, 53705, 53707(a), 53708(d) and (e), 53709(a), 53710(a)(1), (2), and 

13 (4) and (c), 53711(a), 53713, 53714, 53717, and 53721–53725 of this title. 

14 ‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by regula15 tion that an applicant under this section provide adequate security against 

16 default. 

17 ‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for the guar18 antee of an obligation under this section that is in addition to the fee estab19 lished under section 53714 of this title. The fee may be— 

20 ‘‘(1) an annual fee of not more than an additional 1 percent added 

21 to the fee established under section 53714 of this title; or 

22 ‘‘(2) a fee based on the amount of the obligation versus the percentage 

23 of the obligor’s fleet being replaced by vessels constructed or reconstructed 

24 under this section. 

25 ‘‘§ 53735. Fisheries financing and capacity reduction 

26 ‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing ca27 pacity reduction program established under section 312 of the Magnuson-Ste28 vens Fishery Conservation and Management Act (16 U.S.C. 1861a). 

29 ‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee the repay30 ment of debt obligations issued by entities under this section. Debt obligations 

31 to be guaranteed may be issued by any entity that has been approved by the 

32 Secretary and has agreed with the Secretary to conditions the Secretary con33 siders necessary for this section to achieve the objective of the program and 

34 to protect the interest of the United States. 

35 ‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed 

36 under this section shall— 

37 ‘‘(1) be treated in the same manner and to the same extent as other 

38 obligations guaranteed under this chapter, except with respect to provi39 sions of this chapter that by their nature cannot be applied to obligations 

40 guaranteed under this section; 
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1 ‘‘(2) have the fishing fees established under the program paid into a 

2 separate subaccount of the fishing capacity reduction fund established 

3 under this section; 

4 ‘‘(3) not exceed $100,000,000 in an unpaid principal amount out5 standing at any one time for a program; 

6 ‘‘(4) have such maturity (not to exceed 20 years), take such form, and 

7 contain such conditions as the Secretary determines necessary for the 

8 program to which they relate; 

9 ‘‘(5) have as the exclusive source of repayment (subject to the second 

10 sentence of subsection (d)(2)) and as the exclusive payment security, the 

11 fishing fees established under the program; and 

12 ‘‘(6) at the discretion of the Secretary be issued in the public market 

13 or sold to the Federal Financing Bank. 

14 ‘‘(d) FISHING CAPACITY REDUCTION FUND.— 

15 ‘‘(1) IN GENERAL.—There is a separate account in the Treasury, 

16 known as the Fishing Capacity Reduction Fund. Within the Fund, at 

17 least one subaccount shall be established for each program into which 

18 shall be paid all fishing fees established under the program and other 

19 amounts authorized for the program. 

20 ‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall be 

21 available, without appropriation or fiscal year limitation, to the Sec22 retary to pay the cost of the program, including payments to financial 

23 institutions to pay debt obligations incurred by entities under this sec24 tion. Funds available for this purpose from other amounts available for 

25 the program may also be used to pay those debt obligations. 

26 ‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently need27 ed for the purpose of this section shall be kept on deposit or invested in 

28 obligations of the United States Government. 

29 ‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations the Sec30 retary considers necessary to carry out this section. 

31 ‘‘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. 

32 ‘‘§ 53901. Definitions 

33 ‘‘In this chapter: 
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1 ‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’ includes— 

2 ‘‘(A) a documented vessel with a registry or coastwise endorse3 ment under chapter 121 of this title; 

4 ‘‘(B) an undocumented vessel owned or chartered by or made 

5 available to the United States Government; and 

6 ‘‘(C) a tug, barge, or other watercraft (whether or not docu7 mented) owned by a citizen of the United States and used in essen8 tial water transportation or in the fisheries, except only for sport 

9 fishing. 

10 ‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty container 

11 on a vessel. 

12 ‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF THE

13 UNITED STATES.—The term ‘transportation in the waterborne commerce 

14 of the United States’ includes the operation of a vessel in the fisheries, 

15 except only for sport fishing. 

16 ‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the Sec17 retary of Transportation determines— 

18 ‘‘(A) any part of a loss excluded from marine insurance coverage 

19 under a ‘free of capture or seizure’ clause or analogous clause; and 

20 ‘‘(B) any other loss from a hostile act, including confiscation, ex21 propriation, nationalization, or deprivation. 

22 ‘‘§ 53902. Authority to provide insurance 

23 ‘‘(a) IN GENERAL.—With the approval of the President, and after such con24 sultation with interested agencies of United States Government as the Presi25 dent may require, the Secretary of Transportation may provide insurance 

26 and reinsurance against loss or damage from war risks as provided by this 

27 chapter whenever it appears to the Secretary that insurance adequate for the 

28 needs of the waterborne commerce of the United States cannot be obtained on 

29 reasonable terms and conditions from companies authorized to do insurance 

30 business in a State of the United States. 

31 ‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under this chap32 ter shall be based, insofar as practicable, on consideration of the risk involved. 

33 ‘‘(c) AVAILABILITY OF VESSEL DURING WAR OR NATIONAL EMERGENCY.— 

34 Insurance or reinsurance for a vessel may be provided under this chapter only 

35 on the condition that the vessel will be available to the Government in time 

36 of war or national emergency. 

37 ‘‘§ 53903. Insurable interests 

38 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur39 ance and reinsurance under this chapter for— 

40 ‘‘(1) an American vessel, including a vessel under construction; 

41 ‘‘(2) a foreign vessel— 
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1 ‘‘(A) owned by a citizen of the United States; or 

2 ‘‘(B) engaged in transportation in the waterborne commerce of 

3 the United States or in such other transportation by water or such 

4 other services as the Secretary considers to be in the interest of the 

5 national defense or national economy of the United States, when so 

6 engaged; 

7 ‘‘(3) cargo— 

8 ‘‘(A) shipped or to be shipped on a vessel insurable under this 

9 section, including by express or registered mail; 

10 ‘‘(B) owned by a citizen or resident of the United States; 

11 ‘‘(C) imported to or exported from the United States, or sold or 

12 purchased by a citizen or resident of the United States, under a con13 tract of sale or purchase the terms of which provide that the risk 

14 of loss by war risks or the obligation to provide insurance against 

15 war risks is on a citizen or resident of the United States; or 

16 ‘‘(D) shipped between ports in the United States; 

17 ‘‘(4) disbursements, including advances to masters and general average 

18 disbursements, and freight and passage money of a vessel insurable under 

19 this section; 

20 ‘‘(5) personal effects of an individual on a vessel insurable under this 

21 section; 

22 ‘‘(6) loss of life, injury, or detention by an enemy of the United States 

23 after capture, with respect to an individual on a vessel insurable under 

24 this section; and 

25 ‘‘(7) statutory or contractual obligations or other liabilities of a vessel 

26 insurable under this section or of the owner or charterer of such a vessel, 

27 of a nature customarily covered by insurance. 

28 ‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining whether to 

29 provide insurance or reinsurance for a foreign vessel, the Secretary shall con30 sider the characteristics, employment, and general management of the vessel 

31 by the owner or charterer. 

32 ‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection (a)(5)–(7), in33 sofar as it involves a liability related to an individual on the vessel, may in34 clude risks other than war risks to the extent the Secretary considers advis35 able. 

36 ‘‘§ 53904. Liability insurance for persons involved in war or 

37 defense efforts 

38 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur39 ance under this chapter against legal liability that a person may incur in 

40 providing services or facilities for a vessel if, in the opinion of the Secretary, 

41 the insurance— 
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1 ‘‘(1) is required in prosecuting a war or for national defense; and 

2 ‘‘(2) cannot be obtained at reasonable rates or on reasonable terms and 

3 conditions from approved companies authorized to do insurance business 

4 in a State of the United States. 

5 ‘‘(b) LIMITATIONS.—Employer liability insurance and worker compensa6 tion insurance against legal liability to employees may not be provided under 

7 this section. 

8 ‘‘§ 53905. Agency insurance 

9 ‘‘(a) IN GENERAL.—With the approval of the President, an agency of the 

10 United States Government may obtain insurance provided for by this chapter 

11 from the Secretary of Transportation, except as provided in sections 17302 

12 and 17303 of title 40. 

13 ‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec14 retary of Transportation may provide insurance under this chapter at the re15 quest of the Secretary of Defense and other agencies the President may pre16 scribe, without payment of an insurance premium if the Secretary of Defense 

17 or agency agrees to indemnify the Secretary of Transportation against loss 

18 covered by the insurance. The Secretary of Defense and agencies may make 

19 such an indemnity agreement. 

20 ‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President (or an offi21 cial designated by the President) on the agreement shall be treated as the ap22 proval required by section 53902(a) of this title. 

23 ‘‘§ 53906. Hull insurance valuation 

24 ‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for ac25 tual or constructive total loss of the insured vessel shall be a stated valuation 

26 determined by the Secretary of Transportation. The stated valuation— 

27 ‘‘(1) shall exclude national defense features paid for by the United 

28 States Government; and 

29 ‘‘(2) may not exceed the amount that would be payable if the owner30 ship of the vessel had been requisitioned under chapter 563 of this title 

31 at the time the insurance attached under the policy. 

32 ‘‘(b) REJECTING STATED VALUATION.—Within 60 days after the insurance 

33 attaches under a policy referred to in subsection (a) or within 60 days after 

34 the Secretary determines the valuation, whichever is later, the insured may 

35 reject the valuation and pay, at the rate provided in the policy, premiums 

36 based on the asserted valuation the insured specifies at the time of rejection. 

37 However, the asserted valuation is not binding on the Government in any 

38 subsequent action on the policy. 

39 ‘‘(c) AMOUNT OF CLAIM.—If a vessel is actually or constructively totally 

40 lost and the insured under a policy referred to in subsection (a) has not re41 jected the stated valuation determined by the Secretary, the amount of a claim 
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1 adjusted, compromised, settled, adjudged, or paid may not exceed the stated 

2 valuation. However, if the insured has rejected the valuation, the insured— 

3 ‘‘(1) shall be paid, as a tentative advance only, 75 percent of the stated 

4 valuation; and 

5 ‘‘(2) may bring a civil action against the United States in a court 

6 having jurisdiction of the claim to recover a valuation equal to the just 

7 compensation the court determines would have been payable if the owner8 ship of the vessel had been requisitioned under chapter 563 of this title 

9 at the time the insurance attached under the policy. 

10 ‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination as pro11 vided under subsection (c)(2), premiums paid under the policy shall be ad12 justed based on the court’s determination and the rates provided for in the 

13 policy. 

14 ‘‘§ 53907. Reinsurance 

15 ‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is au16 thorized to provide insurance under this chapter, the Secretary may provide 

17 reinsurance to a company authorized to do insurance business in a State of 

18 the United States. The Secretary may obtain reinsurance from such a com19 pany for any insurance provided by the Secretary under this chapter. 

20 ‘‘(b) RATES.—The Secretary may not provide reinsurance at rates less 

21 than, nor obtain reinsurance at rates more than, the rates established by the 

22 Secretary on the same or similar risks or the rates charged by the insurance 

23 company for the insurance reinsured, whichever is more advantageous to the 

24 Secretary. However, the Secretary may provide an allowance to the insurance 

25 company for the costs of services and facilities the company provides, in an 

26 amount the Secretary considers reasonable according to good business prac27 tice. The allowance to the company may not include any amount for solic28 iting or stimulating insurance business. 

29 ‘‘§ 53908. Additional insurance privately obtained 

30 ‘‘With the approval of the Secretary of Transportation, a person having an 

31 insurable interest in a vessel may obtain insurance on the vessel with other 

32 underwriting agents in addition to the insurance with the Secretary. The Sec33 retary is not entitled to the benefit of the additional insurance. 

34 ‘‘§ 53909. War risk insurance revolving fund 

35 ‘‘(a) IN GENERAL.—There is a war risk insurance revolving fund in the 

36 Treasury. 

37 ‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts appro38 priated to carry out this chapter and amounts received in carrying out this 

39 chapter. 
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1 ‘‘(c) PAYMENTS.—There shall be paid from the fund amounts for return 

2 premiums, losses, settlements, judgments, and all liabilities incurred by the 

3 United States Government under this chapter. 

4 ‘‘(d) INVESTMENT.—The Secretary of Transportation may request the Sec5 retary of the Treasury to invest such portion of the fund as is not, in the 

6 judgment of the Secretary of Transportation, required to meet the current 

7 needs of the fund. These investments shall be made by the Secretary of the 

8 Treasury in public debt securities of the Government, with maturities suitable 

9 to the needs of the fund, and bearing interest rates determined by the Sec10 retary of the Treasury, taking into consideration current market yields on 

11 outstanding marketable obligations of the Government of comparable matu12 rity. Interest and benefits from the securities shall be deposited in the fund. 

13 ‘‘§ 53910. Administrative 

14 ‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 

15 chapter, the Secretary of Transportation may act in accordance with commer16 cial practice in the marine insurance business. 

17 ‘‘(b) REGULATIONS.—The Secretary may prescribe regulations the Sec18 retary considers appropriate to carry out this chapter. 

19 ‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may prescribe 

20 and change forms and policies, and fix and change the amounts insured and 

21 rates of premium, under this chapter. 

22 ‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an annual fee 

23 in an amount calculated to cover the expenses of processing applications for 

24 insurance, employing underwriting agents, and appointing experts under this 

25 chapter. 

26 ‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may settle and 

27 pay claims, and pay judgments against the United States, related to insur28 ance under this chapter. 

29 ‘‘(f) UNDERWRITING AGENTS.— 

30 ‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary finds 

31 it practical to do so shall, employ a domestic company or group of do32 mestic companies, authorized to do marine insurance business in a State 

33 of the United States, to act as underwriting agent for the Secretary. The 

34 services of an underwriting agent may be used in adjusting claims, but 

35 a claim may not be paid until approved by the Secretary. 

36 ‘‘(2) COMPENSATION.—The Secretary may allow the company or 

37 group of companies reasonable compensation for services as the under38 writing agent. The compensation may include an allowance for expenses 

39 reasonably incurred by the agent, but may not include any amount for 

40 soliciting or stimulating business. 
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1 ‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in subsection 

2 (f)(2), the Secretary may not pay an insurance broker or other person acting 

3 in a similar intermediary capacity a fee or other consideration for partici4 pating in arranging insurance when the Secretary directly insures any of the 

5 risk. 

6 ‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, 

7 without regard to the laws and regulations on the employment of Federal em8 ployees, may appoint and prescribe the duties of experts in marine insurance 

9 as the Secretary considers necessary to carry out this chapter. 

10 ‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the consent of 

11 another agency of the United States Government, the Secretary may use infor12 mation, services, facilities, officers, and employees of the agency in carrying 

13 out this chapter. 

14 ‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by regu15 lation vessel location reporting requirements for a vessel insured under this 

16 chapter. 

17 ‘‘§ 53911. Civil actions for losses 

18 ‘‘(a) IN GENERAL.—If there is a disagreement about a loss insured under 

19 this chapter, a civil action in admiralty may be brought against the United 

20 States in the district court of the United States for the district in which the 

21 plaintiff or the plaintiff’s agent resides. If the plaintiff has no residence in 

22 the United States, the action may be brought in the United States District 

23 Court for the District of Columbia or in the district court for any district 

24 in which the Attorney General agrees to accept service. Any person who may 

25 have an interest in the insurance may be made a party, either initially or 

26 on the motion of either party. 

27 ‘‘(b) EXCLUSIVE REMEDY.—A civil action against the United States under 

28 this section is exclusive of any other action by reason of the same subject mat29 ter against an officer, employee, or agent employed or retained by the Govern30 ment under this chapter. 

31 ‘‘(c) PROCEDURE.—A civil action under this section shall be heard and de32 termined under chapter 309 of this title. 

33 ‘‘(d) TOLLING OF LIMITATIONS PERIOD.—If a claim is filed with the Sec34 retary of Transportation, the running of the limitations period for bringing 

35 a civil action is suspended until the Secretary denies the claim, and for 60 

36 days thereafter. The Secretary is deemed to have denied the claim if the Sec37 retary does not act on the claim within 6 months after the claim is filed, un38 less the Secretary for good cause shown agrees with the claimant on a dif39 ferent period for the Secretary to act on the claim. 

40 ‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of the 

41 Government under the insurance and there is a dispute about the persons en-
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1 titled to receive payment, the Government may bring a civil action inter2 pleading those persons. The action shall be brought in the United States Dis3 trict Court for the District of Columbia or in the district court for the district 

4 in which any of those persons resides. A person not residing or found in the 

5 district may be made a party by service in any reasonable manner the court 

6 directs. If the court is satisfied that unknown persons might make a claim 

7 under the insurance, the court may direct service on those unknown persons 

8 by publication in the Federal Register. Judgment after service by publication 

9 in the Federal Register discharges the Government from further liability to 

10 all persons. 

11 ‘‘§ 53912. Expiration date 

12 ‘‘The authority of the Secretary of Transportation to provide insurance and 

13 reinsurance under this chapter expires on December 31, 2010. 

14 ‘‘PART D—PROMOTIONAL PROGRAMS

15 ‘‘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. 

16 ‘‘§ 55101. Application of coastwise laws 

17 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the coastwise 

18 laws apply to the United States, including the island territories and posses19 sions of the United States. 

20 ‘‘(b) EXCEPTIONS.—The coastwise laws do not apply to— 

21 ‘‘(1) American Samoa; 

22 ‘‘(2) the Northern Mariana Islands, except as provided in section 

23 502(b) of the Covenant To Establish a Commonwealth of the Northern 

24 Mariana Islands in Political Union With the United States of America 

25 (48 U.S.C. 1801 note); 

26 ‘‘(3) Canton Island until the President declares by proclamation that 

27 the coastwise laws apply to Canton Island; or 
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1 ‘‘(4) the Virgin Islands until the President declares by proclamation 

2 that the coastwise laws apply to the Virgin Islands. 

3 ‘‘§ 55102. Transportation of merchandise 

4 ‘‘(a) DEFINITION.—In this section, the term ‘merchandise’ includes— 

5 ‘‘(1) merchandise owned by the United States Government, a State, or 

6 a subdivision of a State; and 

7 ‘‘(2) valueless material. 

8 ‘‘(b) REQUIREMENTS.—Except as otherwise provided in this chapter or 

9 chapter 121 of this title, a vessel may not provide any part of the transpor10 tation of merchandise by water, or by land and water, between points in the 

11 United States to which the coastwise laws apply, either directly or via a for12 eign port, unless the vessel— 

13 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

14 engaging in the coastwise trade; and 

15 ‘‘(2) has been issued a certificate of documentation with a coastwise 

16 endorsement under chapter 121 or is exempt from documentation but 

17 would otherwise be eligible for such a certificate and endorsement. 

18 ‘‘(c) PENALTY.—Merchandise transported in violation of subsection (b) is 

19 liable to seizure by and forfeiture to the Government. Alternatively, an 

20 amount equal to the value of the merchandise (as determined by the Secretary 

21 of Homeland Security) or the actual cost of the transportation, whichever is 

22 greater, may be recovered from any person transporting the merchandise or 

23 causing the merchandise to be transported. 

24 ‘‘§ 55103. Transportation of passengers 

25 ‘‘(a) IN GENERAL.—Except as otherwise provided in this chapter or chap26 ter 121 of this title, a vessel may not transport passengers between ports or 

27 places in the United States to which the coastwise laws apply, either directly 

28 or via a foreign port, unless the vessel— 

29 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

30 engaging in the coastwise trade; and 

31 ‘‘(2) has been issued a certificate of documentation with a coastwise 

32 endorsement under chapter 121 or is exempt from documentation but 

33 would otherwise be eligible for such a certificate and endorsement. 

34 ‘‘(b) PENALTY.—The penalty for violating subsection (a) is $300 for each 

35 passenger transported and landed. 

36 ‘‘§ 55104. Transportation of passengers between Puerto Rico 

37 and other ports in the United States 

38 ‘‘(a) DEFINITIONS.—In this section: 

39 ‘‘(1) CERTIFICATE.—The term ‘certificate’ means a certificate of finan40 cial responsibility for indemnification of passengers for nonperformance 
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1 of transportation issued by the Federal Maritime Commission under sec2 tion 44102 of this title. 

3 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ means a vessel 

4 of similar size, or offering similar service, as any other vessel trans5 porting passengers under subsection (b). 

6 ‘‘(b) EXEMPTION.—Except as otherwise provided in this section, a vessel 

7 not qualified to engage in the coastwise trade may transport passengers be8 tween a port in Puerto Rico and another port in the United States. 

9 ‘‘(c) EXPIRATION OF EXEMPTION.— 

10 ‘‘(1) WHEN COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.—On a 

11 showing to the Secretary of the department in which the Coast Guard 

12 is operating, by the vessel owner or charterer, that a United States pas13 senger vessel qualified to engage in the coastwise trade is offering or ad14 vertising passenger service between a port in Puerto Rico and another 

15 port in the United States pursuant to a certificate, the Secretary shall 

16 notify the owner or operator of each vessel transporting passengers under 

17 subsection (b) to terminate that transportation within 270 days after the 

18 Secretary’s notification. Except as provided in subsection (d), the author19 ity to transport passengers under subsection (b) expires at the end of that 

20 270-day period. 

21 ‘‘(2) WHEN NON-COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.— 

22 On a showing to the Secretary, by the vessel owner or charterer, that a 

23 United States passenger vessel not qualified to engage in the coastwise 

24 trade is offering or advertising passenger service between a port in Puer25 to Rico and another port in the United States pursuant to a certificate, 

26 the Secretary shall notify the owner or operator of each foreign vessel 

27 transporting passengers under subsection (b) to terminate that transpor28 tation within 270 days after the Secretary’s notification. Except as pro29 vided in subsection (d), the authority of a foreign vessel to transport pas30 sengers under subsection (b) expires at the end of that 270-day period. 

31 ‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising the serv32 ice described in subsection (c) has not begun that service within 270 days 

33 after the Secretary’s notification, the expiration provided by subsection (c) is 

34 delayed until 90 days after the vessel offering or advertising the service begins 

35 that service. 

36 ‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that the serv37 ice on which an expiration was based is no longer available, the expired au38 thority to transport passengers is reinstated. 

39 ‘‘§ 55105. Transportation of hazardous waste 

40 ‘‘(a) IN GENERAL.—The transportation of hazardous waste, as defined in 

41 section 1004(5) of the Resource Conservation and Recovery Act of 1976 (42 
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1 U.S.C. 6903(5)), from a point in the United States to sea for incineration 

2 is deemed to be transportation of merchandise under section 55102 of this 

3 title. 

4 ‘‘(b) NONAPPLICATION TO CERTAIN FOREIGN VESSELS.— 

5 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to transportation 

6 performed by a foreign ocean incineration vessel owned by or under con7 struction on May 1, 1982, for a corporation wholly owned by citizens 

8 of the United States under section 50501(a)–(c) of this title. 

9 ‘‘(2) STANDARDS FOR INCINERATION EQUIPMENT.—Incineration equip10 ment on a vessel described in paragraph (1) must meet standards of the 

11 Coast Guard and the Environmental Protection Agency. 

12 ‘‘(3) INSPECTION.—A vessel described in paragraph (1) shall be in13 spected by the Coast Guard, regardless of whether inspected by the nation 

14 in which it is registered. The inspection shall be the same as would be 

15 required of a vessel of the United States, including drydock inspection 

16 and internal examination of tanks and void spaces. The inspection may 

17 be made concurrently with an inspection by that nation or within one 

18 year after the initial issuance or next scheduled issuance of the Safety 

19 of Life at Sea Safety Construction Certificate. In making the inspection, 

20 the Coast Guard shall refer to the condition of the hull and super21 structure established by the initial foreign certification as the basis for 

22 evaluating the current condition of the hull and superstructure. The 

23 Coast Guard shall allow the substitution of fittings, material, apparatus, 

24 equipment, and appliances different from those required for vessels of the 

25 United States if satisfied they are equivalent and at least as effective as 

26 those required for vessels of the United States. A satisfactory inspection 

27 under this paragraph shall be certified in writing by the Secretary of 

28 the department in which the Coast Guard is operating. 

29 ‘‘(c) EFFECTIVE DATE.—Subsection (a) is not effective until an appro30 priate vessel has been built and documented under chapter 121 of this title. 

31 ‘‘§ 55106. Merchandise transferred between barges 

32 ‘‘(a) IN GENERAL.—On terms and conditions the Secretary of Homeland 

33 Security may prescribe by regulation, the Secretary may suspend the applica34 tion of section 55102 of this title to the transportation of merchandise that 

35 is transferred, when moving in the foreign trade of the United States, from 

36 a barge certified by the owner or operator as designed specifically for carriage 

37 on a vessel and carried regularly on a vessel in foreign trade, to another such 

38 barge owned or leased by the same owner or operator. However, this sub39 section does not apply to transportation between the continental United States 

40 and noncontiguous States, territories, or possessions to which the coastwise 

41 laws apply. 
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1 ‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

2 applies to a vessel of foreign registry only if the Secretary of Homeland Secu3 rity finds, based on information from the Secretary of State, that the govern4 ment of the nation of registry extends reciprocal privileges to vessels of the 

5 United States. 

6 ‘‘§ 55107. Empty cargo containers and barges 

7 ‘‘(a) IN GENERAL.—Subject to subsections (b) and (c), and on terms and 

8 conditions the Secretary of Homeland Security may prescribe by regulation, 

9 section 55102 of this title does not apply to the transportation of— 

10 ‘‘(1) empty cargo vans, empty lift vans, or empty shipping tanks; 

11 ‘‘(2) equipment for use with cargo vans, lift vans, or shipping tanks; 

12 ‘‘(3) empty barges specifically designed for carriage aboard a vessel 

13 and equipment (except propulsion equipment) for use with those barges; 

14 ‘‘(4) empty instruments for international traffic exempted from the 

15 customs laws under section 322(a) of the Tariff Act of 1930 (19 U.S.C. 

16 1322(a)); or 

17 ‘‘(5) stevedoring equipment and material. 

18 ‘‘(b) CONDITIONS.— 

19 ‘‘(1) PARAGRAPHS (1)–(4).—Paragraphs (1)–(4) of subsection (a) apply 

20 only if the items named are owned or leased by the owner or operator 

21 of the vessel and transported for its use in handling its cargo in foreign 

22 trade. 

23 ‘‘(2) PARAGRAPH (5).—Paragraph (5) of subsection (a) applies only if 

24 the items named are— 

25 ‘‘(A) owned or leased by the owner or operator of the vessel or 

26 by the stevedoring company having the contract for the loading or 

27 unloading of the vessel; and 

28 ‘‘(B) transported without charge for use in the handling of cargo 

29 in foreign trade. 

30 ‘‘(c) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

31 applies to a vessel of foreign registry only if the Secretary of Homeland Secu32 rity finds, based on information from the Secretary of State, that the govern33 ment of the nation of registry extends reciprocal privileges to vessels of the 

34 United States. 

35 ‘‘§ 55108. Platform jackets 

36 ‘‘(a) DEFINITIONS.—In this section: 

37 ‘‘(1) COASTWISE QUALIFIED VESSEL.—The term ‘coastwise qualified 

38 vessel’ means a vessel that has been issued a certificate of documentation 

39 with a coastwise endorsement under chapter 121 of this title. 
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1 ‘‘(2) PLATFORM JACKET.—The term ‘platform jacket’ refers to a single 

2 physical component and includes any type of offshore exploration, devel3 opment, or production structure or component thereof, including— 

4 ‘‘(A) platform jackets; 

5 ‘‘(B) tension leg or SPAR platform superstructures (including the 

6 deck, drilling rig and support utilities, and supporting structure); 

7 ‘‘(C) hull (including vertical legs and connecting pontoons or 

8 vertical cylinder); 

9 ‘‘(D) tower and base sections of a platform jacket; 

10 ‘‘(E) jacket structures; and 

11 ‘‘(F) deck modules (known as ‘topsides’). 

12 ‘‘(b) AUTHORIZED TRANSPORTATION.—Section 55102 of this title does not 

13 apply to the transportation of a platform jacket in or on a non-coastwise 

14 qualified launch barge between two points in the United States, at one of 

15 which there is an installation or other device within the meaning of section 

16 4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), if— 

17 ‘‘(1) the launch barge was built before December 31, 2000, and has a 

18 launch capacity of at least 12,000 long tons; and 

19 ‘‘(2) the Secretary of Transportation makes a determination, in ac20 cordance with procedures established under subsection (c), that a suitable 

21 coastwise qualified vessel is not available for use in the transportation 

22 and, if needed, launch or installation of a platform jacket. 

23 ‘‘(c) PROCEDURES TO MAXIMIZE USE OF COASTWISE QUALIFIED VES24 SELS.—The Secretary of Transportation shall adopt procedures implementing 

25 this section that are reasonably designed to provide timely information so as 

26 to maximize the use of coastwise qualified vessels. The procedures shall, among 

27 other things, establish that for purposes of this section, a coastwise qualified 

28 vessel shall be deemed to be not available only if— 

29 ‘‘(1) on application by an owner or operator for the use of a non30 coastwise qualified launch barge for transportation of a platform jacket 

31 under this section (which application shall include all relevant informa32 tion, including engineering details and timing requirements), the Sec33 retary promptly publishes a notice in the Federal Register— 

34 ‘‘(A) describing the project and the platform jacket involved; 

35 ‘‘(B) advising that all relevant information reasonably needed to 

36 assess the transportation requirements for the platform jacket will 

37 be made available to interested parties on request; and 

38 ‘‘(C) requesting that information on the availability of coastwise 

39 qualified vessels be submitted within 30 days after publication of 

40 that notice; and 
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1 ‘‘(2)(A) no information is submitted to the Secretary within that 30 

2 day period; or 

3 ‘‘(B) the owner or operator of a coastwise qualified vessel submits in4 formation to the Secretary asserting that the owner or operator has a 

5 suitable coastwise qualified vessel available for the transportation, but 

6 the Secretary determines, within 90 days after the notice is first pub7 lished, that the coastwise qualified vessel is not suitable or reasonably 

8 available for the transportation. 

9 ‘‘§ 55109. Dredging 

10 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel may en11 gage in dredging in the navigable waters of the United States only if— 

12 ‘‘(1) the vessel is wholly owned by citizens of the United States for 

13 purposes of engaging in the coastwise trade; 

14 ‘‘(2) the charterer, if any, is a citizen of the United States for purposes 

15 of engaging in the coastwise trade; and 

16 ‘‘(3) the vessel has been issued a certificate of documentation with a 

17 coastwise endorsement under chapter 121 of this title or is exempt from 

18 documentation but would otherwise be eligible for such a certificate and 

19 endorsement. 

20 ‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with a registry 

21 endorsement may engage in the dredging of gold in Alaska. 

22 ‘‘(c) PENALTY.—If a vessel is operated in knowing violation of this section, 

23 the vessel and its equipment are liable to seizure by and forfeiture to the 

24 United States Government. 

25 ‘‘§ 55110. Transportation of dredged material 

26 ‘‘Section 55102 of this title applies to the transportation of valueless mate27 rial or dredged material, regardless of whether it has commercial value, from 

28 a point in the United States or on the high seas within the exclusive economic 

29 zone, to another point in the United States or on the high seas within the 

30 exclusive economic zone. 

31 ‘‘§ 55111. Towing 

32 ‘‘(a) IN GENERAL.—Except when towing a vessel in distress, a vessel may 

33 not do any part of any towing described in subsection (b) unless the towing 

34 vessel— 

35 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

36 engaging in the coastwise trade; and 

37 ‘‘(2) has been issued a certificate of documentation with a coastwise 

38 endorsement under chapter 121 of this title or is exempt from docu39 mentation but would otherwise be eligible for such a certificate and en40 dorsement. 

41 ‘‘(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of— 
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1 ‘‘(1) a vessel between ports or places in the United States to which 

2 the coastwise laws apply, either directly or via a foreign port or place; 

3 ‘‘(2) a vessel from point to point within the harbors of ports or places 

4 to which the coastwise laws apply; or 

5 ‘‘(3) a vessel transporting valueless material or dredged material, re6 gardless of whether it has commercial value, from a point in the United 

7 States or on the high seas within the exclusive economic zone, to another 

8 point in the United States or on the high seas within the exclusive eco9 nomic zone. 

10 ‘‘(c) PENALTIES.— 

11 ‘‘(1) OWNER AND MASTER.—The owner and master of a vessel towing 

12 another vessel in violation of this section are each liable for a penalty 

13 of at least $350 but not more than $1,100. A penalty under this para14 graph constitutes a lien on the vessel. The lien is enforceable in a district 

15 court of the United States for any district in which the vessel is found. 

16 Clearance may not be granted to the vessel until the penalties have been 

17 paid. 

18 ‘‘(2) VESSEL.—In addition to the penalties under paragraph (1), the 

19 towing vessel is liable for a penalty of $60 per ton based on the tonnage 

20 of each towed vessel. 

21 ‘‘§ 55112. Vessel escort operations and towing assistance 

22 ‘‘(a) IN GENERAL.—Except in the case of a vessel in distress, only a vessel 

23 of the United States may perform the following escort vessel operations within 

24 the navigable waters of the United States: 

25 ‘‘(1) Operations that commence or terminate at a port or place in the 

26 United States. 

27 ‘‘(2) Operations required by United States law or regulation. 

28 ‘‘(3) Operations provided in whole or in part within or through navi29 gation facilities owned, maintained, or operated by the United States 

30 Government or the approaches to those facilities, other than facilities op31 erated by the St. Lawrence Seaway Development Corporation on the St. 

32 Lawrence River portion of the Seaway. 

33 ‘‘(b) ESCORT VESSELS.—For purposes of this section, an escort vessel is— 

34 ‘‘(1) any vessel that is assigned and dedicated to assist another vessel, 

35 whether or not tethered to that vessel, solely as a safety precaution to 

36 assist in controlling the speed or course of the assisted vessel in the event 

37 of a steering or propulsion equipment failure, or any other similar emer38 gency circumstance, or in restricted waters where additional assistance 

39 in maneuvering the vessel is required to ensure its safe operation; and 
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1 ‘‘(2) in the case of a vessel being towed under section 55111 of this 

2 title, any vessel that is assigned and dedicated to the vessel being towed 

3 in addition to any towing vessel required under that section. 

4 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section does not affect section 

5 55111 of this title. 

6 ‘‘(d) PENALTY.—A person violating this section is liable to the Government 

7 for a civil penalty of not more than $10,000 for each day during which the 

8 violation occurs. 

9 ‘‘§ 55113. Use of foreign documented oil spill response vessels 

10 ‘‘Notwithstanding any other provision of law, an oil spill response vessel 

11 documented under the laws of a foreign country may operate in waters of the 

12 United States on an emergency and temporary basis, for the purpose of recov13 ering, transporting, and unloading in a United States port oil discharged as 

14 a result of an oil spill in or near those waters, if— 

15 ‘‘(1) an adequate number and type of oil spill response vessels docu16 mented under the laws of the United States cannot be engaged to recover 

17 oil from an oil spill in or near those waters in a timely manner, as de18 termined by the Federal On-Scene Coordinator for a discharge or threat 

19 of a discharge of oil; and 

20 ‘‘(2) the foreign country has by its laws accorded to vessels of the 

21 United States the same privileges accorded to vessels of the foreign coun22 try under this section. 

23 ‘‘§ 55114. Unloading fish from foreign vessels 

24 ‘‘(a) PROHIBITIONS.—Except as otherwise provided by this section or a 

25 treaty or convention to which the United States is a party, a foreign vessel 

26 may not unload, in a port of the United States— 

27 ‘‘(1) its catch of fish taken on board on the high seas or fish products 

28 processed from that catch of fish; or 

29 ‘‘(2) fish or fish products taken on board that vessel on the high seas 

30 from a vessel engaged in fishing operations or the processing of fish or 

31 fish products. 

32 ‘‘(b) REGULATIONS ON OBTAINING INFORMATION.—The Secretary of Com33 merce may prescribe regulations the Secretary considers necessary to obtain 

34 information on the transportation of fish products by vessels of the United 

35 States for foreign fish processing vessels to points in the United States. 

36 ‘‘(c) VIRGIN ISLANDS.— 

37 ‘‘(1) IN GENERAL.—A foreign vessel of not more than 50 feet overall 

38 in length may unload its catch of fresh fish (whole or with the heads, 

39 viscera, or fins removed, but not frozen, otherwise processed, or further 

40 advanced) in a port of the Virgin Islands for immediate consumption 

41 in those islands. Fish unloaded under this paragraph may be sold or 
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1 transferred only for immediate consumption. In the absence of satisfac2 tory evidence that a sale or transfer to an agent, representative, or em3 ployee of a freezer or cannery is for immediate consumption, the sale or 

4 transfer is deemed not to be for immediate consumption. This paragraph 

5 does not prohibit the freezing, smoking, or other processing of fresh fish 

6 by the ultimate consumer of the fish. 

7 ‘‘(2) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded in the 

8 Virgin Islands that are retained, sold, or transferred, except as allowed 

9 by paragraph (1), are liable to seizure by and forfeiture to the United 

10 States Government. A person retaining, selling, transferring, buying, or 

11 receiving the fish is liable to the Government for a civil penalty of not 

12 more than $1,000 for each violation. A penalty or forfeiture under this 

13 paragraph may be compromised, modified, or remitted under section 

14 2107(b) of this title. 

15 ‘‘(d) NORTHERN MARIANA ISLANDS.—Subsection (a) does not apply to the 

16 Northern Mariana Islands. 

17 ‘‘§ 55115. Supplies on fish processing vessels 

18 ‘‘Section 55102 of this title does not apply to supplies aboard a United 

19 States documented fish processing vessel that are necessary and used for proc20 essing or assembling fishery products aboard such a vessel. 

21 ‘‘§ 55116. Canadian rail lines 

22 ‘‘Section 55102 of this title does not apply to the transportation of mer23 chandise between points in the continental United States, including Alaska, 

24 over through routes in part over Canadian rail lines and connecting water 

25 facilities if the routes are recognized by the Surface Transportation Board 

26 and rate tariffs for the routes have been filed with the Board. 

27 ‘‘§ 55117. Great Lakes rail route 

28 ‘‘Section 55102 of this title does not apply to the transportation of mer29 chandise loaded on a railroad car or to a motor vehicle with or without a 

30 trailer, and with its passengers or contents when accompanied by the oper31 ator, when the railroad car or motor vehicle is transported in a railroad car 

32 ferry operated between fixed terminals on the Great Lakes as part of a rail 

33 route, if— 

34 ‘‘(1) the car ferry is owned by a common carrier by water and oper35 ated as part of a rail route with the approval of the Surface Transpor36 tation Board; 

37 ‘‘(2) the stock of the common carrier by water, or its predecessor, was 

38 owned or controlled by a common carrier by rail prior to June 5, 1920; 

39 ‘‘(3) the stock of the common carrier owning the car ferry is, with the 

40 approval of the Board, now owned or controlled by a common carrier 

41 by rail; and 
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1 ‘‘(4) the car ferry is built in and documented under the laws of the 

2 United States. 

3 ‘‘§ 55118. Foreign railroads whose road enters by ferry, tug4 boat, or towboat 

5 ‘‘A foreign railroad, whose road enters the United States by ferry, tugboat, 

6 or towboat, may own and operate a vessel not having a coastwise endorsement 

7 in connection with the water transportation of the passenger, freight, express, 

8 baggage, and mail cars used by that road, together with the passengers, 

9 freight, express matter, baggage, and mails transported in those cars. How10 ever, the foreign railroad is subject to the same restrictions imposed by law 

11 on a vessel of the United States entering a port of the United States from 

12 the same foreign country. Except as otherwise authorized by this chapter, the 

13 ferry, tugboat, or towboat may not, under penalty of forfeiture, be used in 

14 the transportation of merchandise between ports or places in the United 

15 States to which the coastwise laws apply. 

16 ‘‘§ 55119. Yukon River 

17 ‘‘Section 55102 of this title does not apply to the transportation of mer18 chandise on the Yukon River until the Alaska Railroad is completed and the 

19 Secretary of Transportation finds that proper facilities will be available for 

20 transportation by citizens of the United States to properly handle the traffic. 

21 ‘‘§ 55120. Transshipment of imported merchandise intended 

22 for immediate exportation 

23 ‘‘The Secretary of Homeland Security may prescribe regulations for the 

24 transshipment and transportation of merchandise that is imported into the 

25 United States by sea for immediate exportation to a foreign port by sea, or 

26 by a river, the right to ascend or descend which for the purposes of commerce 

27 is secured by treaty to the citizens of the United States and the subjects of 

28 a foreign power. 

29 ‘‘§ 55121. Transportation of merchandise and passengers on 

30 Canadian vessels 

31 ‘‘(a) BETWEEN ROCHESTER AND ALEXANDRIA BAY.—Until passenger serv32 ice is established by vessels of the United States between the port of Rochester, 

33 New York, and the port of Alexandria Bay, New York, the Secretary of Home34 land Security may issue annually permits to Canadian passenger vessels to 

35 transport passengers between those ports. Canadian vessels holding such a per36 mit are not subject to section 55103 of this title. 

37 ‘‘(b) WITHIN ALASKA OR BETWEEN ALASKA AND OTHER POINTS IN THE

38 UNITED STATES.—Until the Secretary of Transportation determines that 

39 service by vessels of the United States is available to provide the transpor40 tation described in paragraph (1) or (2), sections 55102 and 55103 of this 

41 title do not apply to the transportation on Canadian vessels of— 
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1 ‘‘(1) passengers between ports in southeastern Alaska; or 

2 ‘‘(2) passengers or merchandise between Hyder, Alaska, and other 

3 points in southeastern Alaska or in the United States outside Alaska. 

4 ‘‘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. 

5 ‘‘SUBCHAPTER I—GENERAL 

6 ‘‘§ 55301. Priority loading for coal 

7 ‘‘A vessel engaged in the coastwise transportation of coal produced in the 

8 United States, from a port in the United States to another port in the United 

9 States, shall be given priority in loading at any of those ports ahead of a 

10 waiting vessel engaged in the export transportation of coal produced in the 

11 United States. However, if the Secretary of Transportation finds that it is 

12 in the national interest, the Secretary may eliminate this priority loading at 

13 any port. The Secretary shall report to Congress within 30 days an action 

14 eliminating priority loading under this section. 

15 ‘‘§ 55302. Transportation of United States Government per16 sonnel 

17 ‘‘(a) IN GENERAL.—An officer or employee of the United States Govern18 ment traveling by sea on official business overseas or to or from a territory 

19 or possession of the United States shall travel and transport personal effects 

20 on a vessel documented under the laws of the United Sates if such a vessel 

21 is available, unless the necessity of the mission requires the use of a foreign 

22 vessel. 

23 ‘‘(b) REGULATIONS.—The Administrator of General Services shall prescribe 

24 regulations under which agencies may not pay for or reimburse an officer or 
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1 employee for travel or transportation expenses incurred on a foreign vessel in 

2 the absence of satisfactory proof of the necessity of using the vessel. 

3 ‘‘§ 55303. Motor vehicles owned by United States Government 

4 personnel 

5 ‘‘Notwithstanding any other law, privately-owned American shipping serv6 ices may be used to transport motor vehicles owned by personnel of the United 

7 States Government whenever transportation of those vehicles at Government 

8 expense is otherwise authorized by law. 

9 ‘‘§ 55304. Exports financed by the United States Government 

10 ‘‘It is the sense of Congress that any loans made by an instrumentality of 

11 the United States Government to foster the exporting of agricultural or other 

12 products shall provide that the products may be transported only on vessels 

13 of the United States unless, as to any or all of those products, the Secretary 

14 of Transportation, after investigation, certifies to the instrumentality that 

15 vessels of the United States are not available in sufficient number, in suffi16 cient tonnage capacity, on necessary schedules, or at reasonable rates. 

17 ‘‘§ 55305. Cargoes procured, furnished, or financed by the 

18 United States Government 

19 ‘‘(a) DEFINITION.—In this section, the term ‘privately-owned commercial 

20 vessel of the United States’ does not include a vessel that, after September 21, 

21 1961, was built or rebuilt outside the United States or documented under the 

22 laws of a foreign country, until the vessel has been documented under the laws 

23 of the United States for at least 3 years. 

24 ‘‘(b) MINIMUM TONNAGE.—When the United States Government procures, 

25 contracts for, or otherwise obtains for its own account, or furnishes to or for 

26 the account of a foreign country without provision for reimbursement, any 

27 equipment, materials, or commodities, within or without the United States, 

28 or advances funds or credits, or guarantees the convertibility of foreign cur29 rencies in connection with the furnishing of the equipment, materials, or com30 modities, the appropriate agencies shall take steps necessary and practicable 

31 to ensure that at least 50 percent of the gross tonnage of the equipment, mate32 rials, or commodities (computed separately for dry bulk carriers, dry cargo 

33 liners, and tankers) which may be transported on ocean vessels is transported 

34 on privately-owned commercial vessels of the United States, to the extent those 

35 vessels are available at fair and reasonable rates for commercial vessels of the 

36 United States, in a manner that will ensure a fair and reasonable participa37 tion of commercial vessels of the United States in those cargoes by geographic 

38 areas. 

39 ‘‘(c) WAIVERS.—The President, the Secretary of Defense, or Congress (by 

40 concurrent resolution or otherwise) may waive this section temporarily by— 

41 ‘‘(1) declaring the existence of an emergency justifying a waiver; and 
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1 ‘‘(2) notifying the appropriate agencies of the waiver. 

2 ‘‘(d) PROGRAMS OF OTHER AGENCIES.—An agency having responsibility 

3 under this section shall administer its programs with respect to this section 

4 under regulations prescribed by the Secretary of Transportation. The Sec5 retary shall review the administration of those programs and report annually 

6 to Congress on their administration. 

7 ‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF AGRICULTURAL 

8 COMMODITIES 

9 ‘‘§ 55311. Findings and purposes 

10 ‘‘(a) FINDINGS.—Congress finds that— 

11 ‘‘(1) a productive and healthy agricultural industry and a strong and 

12 active United States maritime industry are vitally important to the eco13 nomic well-being and security of the United States; 

14 ‘‘(2) both industries must compete in international markets increas15 ingly dominated by foreign trade barriers and the subsidization practices 

16 of foreign governments; and 

17 ‘‘(3) increased agricultural exports and the use of merchant vessels of 

18 the United States contribute positively to the United States balance of 

19 trade and generate employment opportunities in the United States. 

20 ‘‘(b) PURPOSES.—The purposes of this subchapter are to— 

21 ‘‘(1) enable the Secretary of Agriculture to plan export programs effec22 tively, by clarifying the ocean transportation requirements applicable to 

23 those programs; 

24 ‘‘(2) take immediate and positive steps to promote the growth of the 

25 cargo-carrying capacity of the United States merchant marine; 

26 ‘‘(3) expand international trade in United States agricultural com27 modities and products and develop, maintain, and expand markets for 

28 United States agricultural exports; 

29 ‘‘(4) improve the efficiency of administration of both the commodity 

30 purchasing and selling activities and the ocean transportation activities 

31 associated with export programs sponsored by the Secretary; 

32 ‘‘(5) stimulate and promote the agricultural and maritime industries 

33 of the United States and encourage cooperative efforts by both industries 

34 to address their common problems; and 

35 ‘‘(6) provide for the appropriate disposition of these findings and pur36 poses. 

37 ‘‘§ 55312. Determining prevailing world market price 

38 ‘‘(a) AGRICULTURAL COMMODITIES AND PRODUCTS.—The prevailing world 

39 market price for agricultural commodities or their products shall be deter40 mined under this subchapter under procedures prescribed by the Secretary of 
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1 Agriculture. The Secretary shall prescribe the procedures by regulation, with 

2 notice and opportunity for public comment under section 553 of title 5. 

3 ‘‘(b) SERVICES AND NON-AGRICULTURAL COMMODITIES AND PRODUCTS.— 

4 If a determination of the prevailing world market price of any other type of 

5 materials, goods, equipment, or service is required to determine whether a 

6 barter or exchange transaction is subject to section 55314(b)(6) or (7) of this 

7 title, the determination shall be made by the Secretary of Agriculture in con8 sultation with the heads of other appropriate agencies. 

9 ‘‘§ 55313. Exemption of certain agricultural exports from 

10 cargo preference provisions 

11 ‘‘Sections 55304 and 55305 of this title do not apply to export activities 

12 of the Secretary of Agriculture or the Commodity Credit Corporation under 

13 which— 

14 ‘‘(1) agricultural commodities or their products acquired by the Cor15 poration are made available to United States exporters, users, processors, 

16 or foreign purchasers for the purpose of developing, maintaining, or ex17 panding export markets for United States agricultural commodities or 

18 their products at prevailing world market prices; 

19 ‘‘(2) payments are made available to United States exporters, users, 

20 or processors or, except as provided in section 55314 of this title, cash 

21 grants are made available to foreign purchasers, for the purpose de22 scribed in paragraph (1); 

23 ‘‘(3) commercial credit guarantees are blended with direct credits from 

24 the Corporation to reduce the effective rate of interest on export sales of 

25 United States agricultural commodities or their products; 

26 ‘‘(4) credit or credit guarantees for not more than 3 years are extended 

27 by the Corporation to finance or guarantee export sales of United States 

28 agricultural commodities or their products; or 

29 ‘‘(5) agricultural commodities or their products owned or controlled by 

30 or under loan from the Corporation are exchanged or bartered for mate31 rials, goods, equipment, or services at least equal in value to the agricul32 tural commodities or their products for which they are exchanged or 

33 bartered (determined on the basis of prevailing world market prices at 

34 the time of the exchange or barter), but this paragraph does not exempt 

35 from the cargo preference provisions referred to in section 55314(b) of 

36 this title any requirement otherwise applicable to the materials, goods, 

37 equipment, or services imported under the transaction. 

38 ‘‘§ 55314. Transportation requirements for certain exports 

39 sponsored by the Secretary of Agriculture 

40 ‘‘(a) MINIMUM TONNAGE.— 
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1 ‘‘(1) IN GENERAL.—In addition to the requirement under section 

2 55305 of this title for the transportation of a percentage of gross tonnage 

3 on commercial vessels of the United States, 25 percent of the gross ton4 nage of agricultural commodities or their products specified in subsection 

5 (b) shall be transported each calendar year on commercial vessels of the 

6 United States that— 

7 ‘‘(A) are necessary for national security; and 

8 ‘‘(B) if more than 25 years old, were rebuilt within the last 5 

9 years and certified by the Secretary of Transportation as having a 

10 useful life of at least 5 years after that rebuilding. 

11 ‘‘(2) CALENDAR YEAR.—To provide for effective and equitable admin12 istration of the cargo preference laws, the calendar year for the purpose 

13 of compliance with minimum percentage requirements is the 12-month 

14 period beginning October 1 of each year. 

15 ‘‘(b) APPLICABLE EXPORT ACTIVITY.—This section applies to export activ16 ity (except inspection or weighing activities, other activities carried out for 

17 health or safety, or technical assistance provided in the handling of commer18 cial transactions) of the Secretary of Agriculture or the Commodity Credit 

19 Corporation— 

20 ‘‘(1) carried out under the Agricultural Trade Development and As21 sistance Act of 1954 (7 U.S.C. 1691 et seq.); 

22 ‘‘(2) carried out under section 416 of the Agricultural Act of 1949 (7 

23 U.S.C. 1431); 

24 ‘‘(3) carried out under the Bill Emerson Humanitarian Trust Act (7 

25 U.S.C. 1736f–1); 

26 ‘‘(4) under which agricultural commodities or their products are— 

27 ‘‘(A) donated through foreign governments or private or public 

28 agencies, including intergovernmental organizations; or 

29 ‘‘(B) sold for foreign currencies or for dollars on credit terms of 

30 more than 10 years; 

31 ‘‘(5) under which agricultural commodities or their products are made 

32 available for emergency food relief at less than prevailing world market 

33 prices; 

34 ‘‘(6) under which a cash grant is made directly or through an inter35 mediary to a foreign purchaser to enable the purchaser to obtain United 

36 States agricultural commodities or their products in an amount greater 

37 than the difference between the prevailing world market price and the 

38 United States market price, free along side vessel at a United States 

39 port; or 

40 ‘‘(7) under which agricultural commodities owned or controlled by or 

41 under loan from the Corporation are exchanged or bartered for materials, 
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1 goods, equipment, or services produced in foreign countries, except export 

2 activities described in section 55313(5) of this title. 

3 ‘‘(c) ADDITIONAL REQUIREMENTS.— 

4 ‘‘(1) APPLICATION OF SECTION 55305.—The requirement for transpor5 tation on vessels of the United States under subsection (a) is subject to 

6 the same terms and conditions as provided in section 55305 of this title. 

7 ‘‘(2) ALLOCATION OF COMMODITIES.—Subject to paragraph (3), in 

8 carrying out this section and section 55305 of this title, the Corporation 

9 shall take steps necessary and practicable, and consistent with this sec10 tion and section 55305, without detriment to any port range to allocate, 

11 on the principle of lowest landed cost without regard to the country of 

12 registry of the vessel, 25 percent of the bagged, processed, or fortified com13 modities provided under title II of the Agricultural Trade Development 

14 and Assistance Act of 1954 (7 U.S.C. 1721 et seq.). 

15 ‘‘(3) CALCULATIONS.—In carrying out paragraph (2), first there shall 

16 be calculated the allocation of 100 percent of the quantity to be procured 

17 on an overall lowest landed cost basis without regard to the country of 

18 registry of the vessel, and then there shall be allocated to the Great Lakes 

19 port range any cargoes for which it has the lowest landed cost under that 

20 calculation. The requirements for transportation on vessels of the United 

21 States under this section and section 55305 of this title do not apply to 

22 commodities allocated to the Great Lakes port range under paragraph 

23 (2). Commodities allocated to the Great Lakes port range under para24 graph (2) may not be reallocated or diverted to another port range to 

25 meet those requirements to the extent that the total tonnage of commod26 ities to which paragraph (2) applies that is furnished and transported 

27 from the Great Lakes port range is less than 25 percent of the total an28 nual tonnage of the commodities furnished. 

29 ‘‘(4) AWARDING CONTRACTS.—In awarding a contract for the trans30 portation by vessel of commodities from the Great Lakes port range pur31 suant to an export activity referred to in subsection (b), an agency— 

32 ‘‘(A) shall consider expressions of freight interest for any vessel 

33 from a vessel operator who meets reasonable requirements for finan34 cial and operational integrity; and 

35 ‘‘(B) may not deny award of the contract to a person based on 

36 the type of vessel on which the transportation would be provided 

37 (including on the basis that the transportation would not be pro38 vided on a liner vessel, as that term is used in the Shipping Act 

39 of 1984, as in effect on November 14, 1995), if the person otherwise 

40 satisfies reasonable requirements for financial and operational in41 tegrity. 
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1 ‘‘(5) NONAVAILABILITY OF VESSELS.—A determination of nonavail2 ability of vessels of the United States resulting from the application of 

3 this subsection may not reduce the gross tonnage of commodities required 

4 by this section and section 55305 of this title to be transported on vessels 

5 of the United States. 

6 ‘‘§ 55315. Minimum tonnage 

7 ‘‘(a) DEFINITION.—In this section, the term ‘base period’ means the 5-year 

8 period running from the sixth through the second prior fiscal years. 

9 ‘‘(b) REQUIREMENT.—For each fiscal year, the minimum quantity of agri10 cultural commodities to be exported under programs subject to section 55314 

11 of this title is the average of the tonnage exported under those programs dur12 ing the base period, discarding the high and low years. 

13 ‘‘(c) WAIVERS.—The President may waive the minimum quantity for a fis14 cal year under this section if the President determines and reports to Con15 gress, together with reasons, that the quantity cannot be used effectively for 

16 the purposes of those programs or, based on a certification by the Secretary 

17 of Agriculture, that the commodities are not available for reasons that include 

18 the unavailability of funds. 

19 ‘‘§ 55316. Financing the transportation of agricultural com20 modities 

21 ‘‘(a) FINANCING OF INCREASED CHARGES.—The Secretary of Transpor22 tation shall finance any increased ocean freight charges incurred in any fiscal 

23 year that result from the application of section 55314 of this title. 

24 ‘‘(b) REIMBURSEMENT OF INCREASED CHARGES.— 

25 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall reimburse 

26 the Secretary of Agriculture and the Commodity Credit Corporation for 

27 the amount by which, in any fiscal year— 

28 ‘‘(A) the total cost of ocean freight and ocean freight differential 

29 for which obligations are incurred by the Secretary of Agriculture 

30 and the Corporation on exports of agricultural commodities and 

31 their products under the agricultural export programs specified in 

32 section 55314(b) of this title; exceeds 

33 ‘‘(B) 20 percent of the value of the commodities and their prod34 ucts and the cost of the ocean freight and ocean freight differential 

35 on which obligations are incurred by the Secretary of Agriculture 

36 and the Corporation during that fiscal year. 

37 ‘‘(2) COMMODITIES SHIPPED FROM INVENTORY.—For purposes of this 

38 subsection, commodities shipped from the inventory of the Corporation 

39 shall be valued as provided in section 412(d) of the Agricultural Trade 

40 Development and Assistance Act of 1954 (7 U.S.C. 1736f(d)). 

41 ‘‘(c) ISSUANCE AND PURCHASE OF OBLIGATIONS.— 
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1 ‘‘(1) ISSUANCE.—To meet the expenses required to be assumed under 

2 subsections (a) and (b), the Secretary of Transportation shall issue obli3 gations to the Secretary of the Treasury. The Secretary of Transpor4 tation, with the approval of the Secretary of the Treasury, shall prescribe 

5 the form, denomination, maturity, and other terms (except the interest 

6 rate) of the obligations. The Secretary of the Treasury shall set the inter7 est rate for the obligations, considering the average market yield on out8 standing marketable obligations of the United States Government of com9 parable maturities during the month before the obligations are issued. 

10 ‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the ob11 ligations issued under this subsection. To purchase the obligations, the 

12 Secretary of the Treasury may use as a public debt transaction the pro13 ceeds from the sale of securities issued under chapter 31 of title 31. The 

14 purposes for which securities may be issued under that chapter are ex15 tended to include the purchase of obligations under this subsection. A re16 demption or purchase of the obligations by the Secretary of the Treasury 

17 is a public debt transaction of the Government. 

18 ‘‘(d) SOURCE OF FUNDS FOR REIMBURSEMENT.—Reimbursement of the 

19 Secretary of Transportation for costs incurred under this section shall be 

20 made with appropriated funds rather than through cancellation of notes. 

21 ‘‘(e) APPROPRIATIONS.— 

22 ‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized to be ap23 propriated an amount sufficient to reimburse the Secretary of Transpor24 tation for the costs incurred under this section, including administrative 

25 expenses and the principal and interest due on obligations issued to the 

26 Secretary of the Treasury. 

27 ‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each fiscal 

28 year, such amounts as may be necessary are hereby appropriated to pay 

29 interest and to liquidate debt on obligations issued to the Secretary of 

30 the Treasury under this section. 

31 ‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary of 

32 Transportation is unable to obtain the funds necessary to finance the in33 creased ocean freight charges resulting from the requirements of subsections 

34 (a) and (b) and section 55314(a) of this title, the Secretary shall notify Con35 gress within 10 working days of the discovery of the insufficiency. 

36 ‘‘§ 55317. Termination of subchapter 

37 ‘‘This subchapter terminates 90 days after the date on which a notification 

38 is made under section 55316(f) of this title, except for shipments of agricul39 tural commodities and their products subject to contracts made before the end 

40 of that 90-day period, unless within that 90-day period the Secretary of 

41 Transportation proclaims that funds are available to finance increased freight 
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1 charges resulting from the requirements of sections 55314(a) and 55316(a) 

2 and (b) of this title. On the termination of this subchapter under this sec3 tion— 

4 ‘‘(1) this subchapter does not exempt export activities from, or subject 

5 export activities to, the cargo preference laws; and 

6 ‘‘(2) the 50-percent requirement in section 55305 of this title remains 

7 in effect. 

8 ‘‘§ 55318. Effect on other law 

9 ‘‘This subchapter does not affect chapter 5 of title 5. 

10 ‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 

11 ‘‘§ 55331. Definitions 

12 ‘‘In this subchapter: 

13 ‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American Great 

14 Lakes vessel’ means a vessel so designated under section 55332 of this 

15 title, but only during the period the designation is in effect. 

16 ‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake Superior, 

17 Lake Michigan, Lake Huron, Lake Erie, Lake Ontario, the Saint Law18 rence River west of Saint Regis, New York, and their connecting and 

19 tributary waters. 

20 ‘‘(3) GREAT LAKES SHIPPING SEASON.—The term ‘Great Lakes ship21 ping season’ means the period each year during which the Saint Law22 rence Seaway is open for navigation by vessels, as declared by the Saint 

23 Lawrence Seaway Development Corporation. 

24 ‘‘§ 55332. Designating American Great Lakes vessels 

25 ‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a 

26 vessel as an American Great Lakes vessel if— 

27 ‘‘(1) an application for designation is submitted to the Secretary 

28 under regulations prescribed by the Secretary; 

29 ‘‘(2) the vessel is documented under the laws of the United States; 

30 ‘‘(3) the vessel, on the effective date of the designation, is— 

31 ‘‘(A) at least 1, but not more than 6, years old; or 

32 ‘‘(B) at least 1, but not more than 11, years old if the Secretary 

33 finds that suitable vessels are not available to provide the type of 

34 service for which the vessel will be used after the designation; 

35 ‘‘(4) the vessel has not previously been designated as an American 

36 Great Lakes vessel; and 

37 ‘‘(5) the owner makes an agreement as provided under subsection (b). 

38 ‘‘(b) AGREEMENTS.—A vessel may be designated as an American Great 

39 Lakes vessel only if the person that will be the owner of the vessel at the time 

40 of the designation makes an agreement with the Secretary providing that if 

41 the Secretary determines that the vessel is necessary to the defense of the 
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1 United States, the United States Government will have an exclusive right, 

2 during the 120-day period following the date of a revocation of the designa3 tion under section 55335 of this title, to purchase the vessel for a price equal 

4 to the greater of— 

5 ‘‘(1) the approximate world market value of the vessel; or 

6 ‘‘(2) the cost of the vessel to the owner less a reasonable amount for 

7 depreciation. 

8 ‘‘(c) CERTAIN FOREIGN DOCUMENTATION AND SALE NOT PROHIBITED.— 

9 Notwithstanding any other law, if the Government does not exercise its right 

10 of purchase under an agreement under subsection (b), the owner of the vessel 

11 is not prohibited from— 

12 ‘‘(1) documenting the vessel under the laws of a foreign country; or 

13 ‘‘(2) selling the vessel to a person not a citizen of the United States. 

14 ‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations establishing 

15 requirements for submitting applications under this section. 

16 ‘‘§ 55333. Exemption from restriction on transporting certain 

17 cargo 

18 ‘‘The 3-year documentation requirement of section 55305(a) of this title 

19 does not apply to a vessel designated as an American Great Lakes vessel dur20 ing the period of its designation. 

21 ‘‘§ 55334. Restrictions on operations 

22 ‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an American 

23 Great Lakes vessel may not be used to— 

24 ‘‘(1) engage in trade— 

25 ‘‘(A) from a port in the United States that is not located on the 

26 Great Lakes; or 

27 ‘‘(B) between ports in the United States; 

28 ‘‘(2) transport bulk cargo (as defined in section 40102 of this title) 

29 that is subject to section 55305 or 55314 of this title or section 2631 of 

30 title 10; or 

31 ‘‘(3) provide a service (except ocean freight service) as— 

32 ‘‘(A) a contract carrier; or 

33 ‘‘(B) a common carrier on a fixed advertised schedule offering fre34 quent sailings at regular intervals in the foreign trade of the United 

35 States. 

36 ‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel may be 

37 used for not more than 90 days during any 12-month period to engage in 

38 trade prohibited by subsection (a)(1)(A), except during the Great Lakes ship39 ping season. 
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1 ‘‘§ 55335. Revocations and terminations of designations 

2 ‘‘(a) REVOCATIONS.—After notice and an opportunity for a hearing, the 

3 Secretary of Transportation may revoke a designation of a vessel as an Amer4 ican Great Lakes vessel if the Secretary finds that— 

5 ‘‘(1) the vessel does not meet a requirement for the designation; 

6 ‘‘(2) the vessel has been operated in violation of this subchapter; or 

7 ‘‘(3) the owner or operator of the vessel has violated an agreement 

8 made under section 55332(b) of this title. 

9 ‘‘(b) TERMINATIONS.—On petition and a showing of good cause by the 

10 owner of a vessel, the Secretary may terminate the designation of a vessel as 

11 an American Great Lakes vessel. The Secretary may impose conditions in a 

12 termination order to prevent significant adverse effects on other operators of 

13 vessels of the United States. 

14 ‘‘§ 55336. Civil penalty 

15 ‘‘After notice and an opportunity for a hearing, the Secretary of Transpor16 tation may impose a civil penalty of not more than $1,000,000 on the owner 

17 of an American Great Lakes vessel for any act for which the designation may 

18 be revoked under section 55335 of this title. 

19 ‘‘CHAPTER 555—MISCELLANEOUS 

‘‘Sec. 

‘‘55501. Mobile trade fairs. 

20 ‘‘§ 55501. Mobile trade fairs 

21 ‘‘(a) IN GENERAL.—The Secretary of Commerce shall encourage and pro22 mote the development and use of mobile trade fairs designed to show and sell 

23 the products of United States business and agriculture at foreign ports and 

24 at other commercial centers throughout the world where the operators of the 

25 fairs use, insofar as practicable, vessels and aircraft of the United States in 

26 transporting their exhibits. 

27 ‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary deter28 mines that a mobile trade fair provides an economical and effective means 

29 of promoting export sales, the Secretary may provide to the operator of the 

30 fair— 

31 ‘‘(1) technical assistance and support; and 

32 ‘‘(2) financial assistance to defray certain expenses incurred outside 

33 the United States, except the cost of transportation on foreign vessels and 

34 aircraft. 

35 ‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section, the Presi36 dent may use, in addition to amounts appropriated to carry out trade pro37 motion activities, foreign currencies owned by or owed to the United States 

38 Government. 
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1 ‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES

2 ‘‘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. 

3 ‘‘§ 56101. Approval required to transfer vessel to noncitizen 

4 ‘‘(a) RESTRICTIONS.— 

5 ‘‘(1) IN GENERAL.—Except as otherwise provided in this section, sec6 tion 12119 of this title, or section 611 of the Merchant Marine Act, 1936, 

7 a person may not, without the approval of the Secretary of Transpor8 tation— 

9 ‘‘(A) sell, lease, charter, deliver, or in any other manner transfer, 

10 or agree to sell, lease, charter, deliver, or in any other manner 

11 transfer, to a person not a citizen of the United States, an interest 

12 in or control of— 

13 ‘‘(i) a documented vessel owned by a citizen of the United 

14 States; or 

15 ‘‘(ii) a vessel last documented under the laws of the United 

16 States; or 

17 ‘‘(B) place under foreign registry, or operate under the authority 

18 of a foreign country, a documented vessel or a vessel last docu19 mented under the laws of the United States. 

20 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) does not apply to a vessel that 

21 has been operated only for pleasure or only as a fishing vessel, fish proc22 essing vessel, or fish tender vessel (as defined in section 2101 of this 

23 title). 

24 ‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing with re25 spect to a vessel to be documented under chapter 121 of this title, the Sec26 retary may grant approval under subsection (a) before the vessel is docu27 mented. 

28 ‘‘(c) EXCEPTIONS.—Notwithstanding any other provision of this subtitle, 

29 the Merchant Marine Act, 1936, or any contract with the Secretary made 

30 under this subtitle or that Act, a person may place a vessel under foreign reg31 istry without the approval of the Secretary if— 

32 ‘‘(1)(A) the Secretary, in conjunction with the Secretary of Defense, 

33 determines that at least one replacement vessel of equal or greater mili34 tary capability and of a capacity that is equivalent or greater, as meas35 ured by deadweight tons, gross tons, or container equivalent units, as ap36 propriate, is documented under chapter 121 of this title by the owner 

37 of the vessel placed under foreign registry; and 
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1 ‘‘(B) the replacement vessel is not more than 10 years old on the date 

2 of that documentation; or 

3 ‘‘(2) an operating agreement covering the vessel under chapter 531 of 

4 this title has expired. 

5 ‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or transfer 

6 of a vessel, or of an interest in or control of a vessel, in violation of this sec7 tion is void. 

8 ‘‘(e) PENALTIES.— 

9 ‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells, charters, or 

10 transfers a vessel, or an interest in or control of a vessel, in violation 

11 of this section shall be fined under title 18, imprisoned for not more than 

12 5 years, or both. 

13 ‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a ves14 sel, or an interest in or control of a vessel, in violation of this section 

15 is liable to the United States Government for a civil penalty of not more 

16 than $10,000 for each violation. 

17 ‘‘(3) FORFEITURE.—A documented vessel may be seized by and for18 feited to the Government if, in violation of this section, a person— 

19 ‘‘(A) knowingly sells, charters, or transfers the vessel or an inter20 est in or control of the vessel; or 

21 ‘‘(B) places the vessel under foreign registry or operates the vessel 

22 under the authority of a foreign country. 

23 ‘‘§ 56102. Additional controls during war or national emer24 gency 

25 ‘‘(a) IN GENERAL.—During war, or a national emergency declared by 

26 Presidential proclamation, a person may not, without the approval of the Sec27 retary of Transportation— 

28 ‘‘(1) place under foreign registry a vessel owned in whole or in part 

29 by a citizen of the United States or a corporation incorporated under 

30 the laws of the United States or of a State; 

31 ‘‘(2) sell, mortgage, lease, charter, deliver, or in any other manner 

32 transfer, or agree to sell, mortgage, lease, charter, deliver, or in any other 

33 manner transfer, to a person not a citizen of the United States— 

34 ‘‘(A) a vessel owned as described in paragraph (1), or an interest 

35 therein; 

36 ‘‘(B) a vessel documented under the laws of the United States, or 

37 an interest therein; or 

38 ‘‘(C) a facility for building or repairing vessels, or an interest 

39 therein; 

40 ‘‘(3) issue, assign, or transfer to a person not a citizen of the United 

41 States an instrument of indebtedness secured by a mortgage of a vessel 
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1 to a trustee, by an assignment of an owner’s interest in a vessel under 

2 construction to a trustee, or by a mortgage of a facility for building or 

3 repairing vessels to a trustee, unless the trustee or a substitute trustee 

4 is approved by the Secretary under subsection (b); 

5 ‘‘(4) enter into an agreement or understanding to construct a vessel 

6 in the United States for, or to be delivered to, a person not a citizen 

7 of the United States without expressly stipulating that construction will 

8 not begin until after the war or national emergency has ended; 

9 ‘‘(5) enter into an agreement or understanding whereby there is vested 

10 in, or for the benefit of, a person not a citizen of the United States the 

11 controlling interest in a corporation that is incorporated under the laws 

12 of the United States or a State and that owns a vessel or facility for 

13 building or repairing vessels; or 

14 ‘‘(6) cause or procure a vessel, constructed in whole or in part in the 

15 United States and never cleared for a foreign port, to depart from a port 

16 of the United States before it has been documented under the laws of the 

17 United States. 

18 ‘‘(b) TRUSTEES.— 

19 ‘‘(1) APPROVAL.—The Secretary shall approve a trustee or substitute 

20 trustee under subsection (a)(3) if and only if the trustee is a bank or 

21 trust company that— 

22 ‘‘(A) is organized as a corporation, and is doing business, under 

23 the laws of the United States or a State; 

24 ‘‘(B) is authorized under those laws to exercise corporate trust 

25 powers; 

26 ‘‘(C) is a citizen of the United States; 

27 ‘‘(D) is subject to supervision or examination by Federal or State 

28 authority; and 

29 ‘‘(E) has a combined capital and surplus (as set forth in its most 

30 recent published report of condition) of at least $3,000,000. 

31 ‘‘(2) DISAPPROVAL.—If a trustee or substitute trustee ceases to meet 

32 the conditions in paragraph (1), the Secretary shall disapprove the trust33 ee or substitute trustee. After the disapproval, the restrictions on transfer 

34 or assignment without the Secretary’s approval in subsection (a)(3) 

35 apply. 

36 ‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) 

37 applies, a trustee referred to in subsection (a)(3), even though approved 

38 as a trustee by the Secretary, may not operate the vessel under the mort39 gage or assignment without the Secretary’s approval. 

40 ‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in violation of 

41 this section is void. 
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1 ‘‘(d) RECOVERY OF CONSIDERATION.— 

2 ‘‘(1) IN GENERAL.—A person that deposited or paid consideration in 

3 connection with a transaction prohibited by this section may recover the 

4 consideration after tender of the vessel, facility, stock, or other security, 

5 or interest therein, to the person entitled to it, or the forfeiture thereof 

6 to the United States Government. 

7 ‘‘(2) EXCEPTION.—Paragraph (1) does not apply if the person in 

8 whose interest the consideration was deposited, or to whom it was paid, 

9 entered into the transaction in the belief that the person depositing or 

10 paying the consideration was a citizen of the United States. 

11 ‘‘(e) PENALTIES.— 

12 ‘‘(1) CRIMINAL PENALTY.—A person that violates, or attempts or con13 spires to violate, this section shall be fined under title 18, imprisoned 

14 for not more than 5 years, or both. 

15 ‘‘(2) FORFEITURE.—The following shall be forfeited to the Government: 

16 ‘‘(A) A vessel, a facility for building or repairing vessels, or an 

17 interest in a vessel or such a facility, that is sold, mortgaged, leased, 

18 chartered, delivered, transferred, or documented, or agreed to be sold, 

19 mortgaged, leased, chartered, delivered, transferred, or documented, 

20 in violation of this section. 

21 ‘‘(B) Stock and other securities sold or transferred, or agreed to 

22 be sold or transferred, in violation of this section. 

23 ‘‘(C) A vessel departing in violation of subsection (a)(6). 

24 ‘‘§ 56103. Conditional approvals 

25 ‘‘(a) IN GENERAL.—In approving an act or transaction under section 

26 56101 or 56102 of this title, the Secretary of Transportation may do so abso27 lutely or upon conditions the Secretary considers advisable. The Secretary 

28 shall state the conditions in the notice of approval. 

29 ‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the 

30 same penalties as a violation resulting from an act done without the required 

31 approval. The violation occurs at the time the condition is violated. 

32 ‘‘§ 56104. Penalty for false statements 

33 ‘‘A person that knowingly makes a false statement of a material fact to the 

34 Secretary of Transportation or another officer, employee, or agent of the De35 partment of Transportation, to obtain the Secretary’s approval under section 

36 56101 or 56102 of this title, shall be fined under title 18, imprisoned for not 

37 more than 5 years, or both. 

38 ‘‘§ 56105. Forfeiture procedure 

39 ‘‘(a) IN GENERAL.—A forfeiture under this chapter may be enforced in the 

40 same way as a forfeiture under the laws on the collection of duties. However, 

41 such a forfeiture may be remitted without seizure of the vessel. 
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1 ‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter to enforce 

2 a forfeiture, a prior criminal conviction of a person for a violation of this 

3 chapter with respect to the subject matter of the forfeiture is prima facie evi4 dence of the violation against the person convicted. 

5 ‘‘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. 

6 ‘‘§ 56301. General authority 

7 ‘‘During a national emergency declared by Presidential proclamation, or 

8 a period for which the President has proclaimed that the security of the na9 tional defense makes it advisable, the Secretary of Transportation may req10 uisition or purchase, or requisition or charter the use of, a vessel owned by 

11 citizens of the United States, a documented vessel, or a vessel under construc12 tion in the United States. 

13 ‘‘§ 56302. Charter terms 

14 ‘‘(a) IN GENERAL.—If a vessel is requisitioned for use but not ownership 

15 under this chapter, the Secretary of Transportation, at the time of requisition 

16 or as soon thereafter as the situation allows, shall offer the person entitled 

17 to possession of the vessel a charter containing— 

18 ‘‘(1) the terms the Secretary believes should govern the relationship be19 tween the United States Government and the person; and 

20 ‘‘(2) the rate of hire the Secretary considers just compensation for the 

21 use of the vessel and the services required under the charter. 

22 ‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the charter and 

23 rate of hire, the parties shall proceed as provided in section 56304 of this title. 

24 ‘‘§ 56303. Compensation 

25 ‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of Transportation 

26 shall determine and pay just compensation for a vessel requisitioned under 

27 this chapter. 

28 ‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel may not be 

29 considered enhanced by the circumstances requiring its requisition. Con30 sequential damages arising from the requisition may not be paid. 

31 ‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.— 

32 ‘‘(1) IF PAID.—If a construction-differential subsidy has been paid for 

33 the vessel, the value of the vessel at the time of requisition shall be deter34 mined under section 802 of the Merchant Marine Act, 1936. 
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1 ‘‘(2) IF NOT PAID.—If a construction-differential subsidy has not been 

2 paid for the vessel, the value of any national defense features previously 

3 paid for by the United States Government shall be excluded. 

4 ‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost or damaged 

5 by a risk assumed by the Government under the charter, but a valuation for 

6 the vessel or a means of compensation has not been agreed to, the Secretary 

7 shall pay just compensation for the loss or damage, to the extent the person 

8 is not reimbursed through insurance. 

9 ‘‘§ 56304. Disputed compensation 

10 ‘‘If the person entitled to compensation disputes the amount of just com11 pensation determined by the Secretary of Transportation under this chapter, 

12 the Secretary shall pay the person, as a tentative advance, 75 percent of the 

13 amount determined. The person may bring a civil action against the United 

14 States to recover just compensation. If the tentative advance paid under this 

15 section is greater than the amount of the court’s judgment, the person shall 

16 refund the difference. 

17 ‘‘§ 56305. Vessel encumbrances 

18 ‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel does not 

19 prevent the requisition of the vessel under this chapter. 

20 ‘‘(b) DEPOSIT IN TREASURY.— 

21 ‘‘(1) IN GENERAL.—If an encumbrance exists, the Secretary of Trans22 portation may deposit part of the compensation or advance of compensa23 tion to be paid under this chapter (but not more than the total amount 

24 of all encumbrances) in a fund in the Treasury. The Secretary shall pub25 lish notice of the creation of the fund in the Federal Register. 

26 ‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts deposited in 

27 the fund shall be available to pay the compensation or any of the encum28 brances (including encumbrances stipulated to in a court of the United 

29 States or a State) existing at the time the vessel was requisitioned. 

30 ‘‘(c) CIVIL ACTION.— 

31 ‘‘(1) IN GENERAL.—Within 6 months after publication of notice under 

32 subsection (b), the holder of an encumbrance may bring a civil action 

33 in admiralty, according to the principles of libels in rem, against the 

34 fund. 

35 ‘‘(2) VENUE.—The action must be brought in the district court of the 

36 United States— 

37 ‘‘(A) from whose custody the vessel was or may be requisitioned; 

38 or 

39 ‘‘(B) in whose district the vessel was located when it was requi40 sitioned. 
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1 ‘‘(3) SERVICE OF PROCESS.—Service of process shall be made on the 

2 appropriate United States Attorney, the Attorney General, and the Sec3 retary, in the manner provided by the Federal Rules of Civil Procedure 

4 (28 App. U.S.C.). Notice of the action shall be given to all interested per5 sons as ordered by the court. 

6 ‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and 

7 be determined according to the principles of law and the rules of practice 

8 applicable in like cases between private parties. 

9 ‘‘§ 56306. Use and transfer of vessels 

10 ‘‘(a) IN GENERAL.—The Secretary of Transportation may repair, recondi11 tion, reconstruct, operate, or charter for operation, a vessel acquired under 

12 this chapter. 

13 ‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may transfer the 

14 possession or control of a vessel acquired under this chapter to another depart15 ment or agency of the United States Government on terms and conditions ap16 proved by the President. The department or agency shall promptly reimburse 

17 the Secretary for expenditures for just compensation, purchase price, charter 

18 hire, repairs, reconditioning, or reconstruction. 

19 ‘‘§ 56307. Return of vessels 

20 ‘‘When a vessel requisitioned for use but not ownership is returned to the 

21 owner, the Secretary of Transportation shall— 

22 ‘‘(1) return the vessel in a condition at least as good as when taken, 

23 less ordinary wear and tear; or 

24 ‘‘(2) pay the owner an amount sufficient to recondition the vessel to 

25 that condition, less ordinary wear and tear. 

26 ‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY 

27 NEUTRALITY ACT 

‘‘Sec. 

‘‘56501. Definition. 

‘‘56502. Adjusting obligations and arranging maintenance. 

‘‘56503. Types of adjustments and arrangements. 

‘‘56504. Changes in adjustments and arrangements. 

28 ‘‘§ 56501. Definition 

29 ‘‘In this chapter, the term ‘essential vessel’ means a vessel that is— 

30 ‘‘(1)(A) security for a mortgage indebtedness to the United States Gov31 ernment; or 

32 ‘‘(B) constructed under this subtitle or required by a contract under 

33 this subtitle to be operated on a certain essential foreign trade route; and 

34 ‘‘(2) necessary in the interests of commerce and national defense to be 

35 maintained in condition for prompt use. 

36 ‘‘§ 56502. Adjusting obligations and arranging maintenance 

37 ‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of 

38 Transportation may adjust obligations and arrange for maintenance of an es-
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1 sential vessel as provided in this chapter if the Secretary determines, after 

2 any investigation or proceeding the Secretary considers desirable, that— 

3 ‘‘(1) the operation of the vessel in the service, route, or line to which 

4 it is assigned under this subtitle, or in which it otherwise would be oper5 ated, is not— 

6 ‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 et 

7 seq.) or a proclamation issued under that Act; or 

8 ‘‘(B) compatible with maintaining the availability of the vessel 

9 for national defense and commerce; 

10 ‘‘(2) it is not feasible under existing law to employ the vessel in any 

11 other service or operation in foreign or domestic trade (except temporary 

12 or emergency operation under section 56503(b)(5) of this title); and 

13 ‘‘(3) the applicant, because of the restrictions of the Neutrality Act of 

14 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for national 

15 defense under paragraph (1), is not earning or will not earn a reason16 able return on the capital necessarily employed in its business. 

17 ‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under subsection 

18 (a) shall continue in effect only as long as the circumstances described in sub19 section (a) continue to exist. 

20 ‘‘§ 56503. Types of adjustments and arrangements 

21 ‘‘(a) SUSPENSION REQUIREMENTS.—An adjustment or arrangement under 

22 this chapter shall include suspension of— 

23 ‘‘(1) the requirement to operate the vessel in foreign trade under the 

24 applicable operating-differential or construction-differential subsidy con25 tract or mortgage or other agreement; and 

26 ‘‘(2) the right to operating-differential subsidy for the vessel. 

27 ‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To the extent 

28 the Secretary of Transportation considers appropriate to carry out the pur29 poses of this subtitle, an adjustment or arrangement under this chapter may 

30 include any of the following: 

31 ‘‘(1) Lay-up of the vessel by the owner or in the custody of the Sec32 retary, with payment or reimbursement by the Secretary of necessary 

33 and proper expenses (including reasonable overhead and insurance) or 

34 a fixed periodic allowance instead of payment or reimbursement. 

35 ‘‘(2) Postponement, for not more than the total period of the lay-up, 

36 of the maturity date of each installment of the principal of obligations 

37 to the United States Government for the vessel (regardless of whether the 

38 maturity date is during a lay-up period), or rearrangement of those ma39 turities. 

40 ‘‘(3) Postponement or cancellation of interest accruing on the obliga41 tions during a lay-up period. 
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1 ‘‘(4) Extension, for not more than the total period of the lay-up, of 

2 the 20-year life limitation for the vessel and other limitations and provi3 sions of this subtitle based on a 20-year life. 

4 ‘‘(5) Provision for temporary or emergency employment of the vessel 

5 (instead of lay-up) as may be practicable, with such arrangements for 

6 management of the vessel, payment of expenses, and application of the 

7 proceeds of the employment, as the Secretary may approve, with any pe8 riod of operation being included as part of the lay-up period. 

9 ‘‘(6) Payment to the Secretary, on termination of the arrangements 

10 with the applicant, of the applicant’s net profits (earned while the ar11 rangements were in effect) in excess of 10 percent a year on the capital 

12 necessarily employed in the applicant’s business, as reimbursement for 

13 obligations postponed or canceled and expenses incurred or paid by the 

14 Secretary under this section. 

15 ‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the applicant 

16 represented by a vessel of the applicant laid-up or operated under this section 

17 shall be included in capital necessarily employed in the applicant’s business. 

18 The Secretary may require a vessel laid-up or operated under this section to 

19 be security for reimbursement. 

20 ‘‘§ 56504. Changes in adjustments and arrangements 

21 ‘‘The Secretary of Transportation may change an adjustment or arrange22 ment made under this chapter as the Secretary considers necessary to carry 

23 out this chapter. 

24 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

25 ‘‘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. 

26 ‘‘§ 57101. Placement of vessels in National Defense Reserve 

27 Fleet 

28 ‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime Administration 

29 shall be placed in the National Defense Reserve Fleet maintained under sec30 tion 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744). 

31 ‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under subsection 

32 (a) may not be traded out or sold from the Fleet, except as provided in section 

33 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this title. 
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1 ‘‘§ 57102. Disposition of vessels not worth preserving 

2 ‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that a 

3 vessel owned by the Maritime Administration is of insufficient value for com4 mercial or military operation to warrant its further preservation, the Sec5 retary may scrap the vessel or sell the vessel for cash. 

6 ‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection (a) shall 

7 be made on the basis of competitive sealed bids, after an appraisal and due 

8 advertisement. The purchaser does not have to be a citizen of the United 

9 States. The purchaser shall provide a surety bond, with a surety approved 

10 by the Secretary, to ensure that the vessel will not be operated in the foreign 

11 trade of the United States at any time within 10 years after the sale, in com12 petition with a vessel owned by a citizen of the United States and documented 

13 under the laws of the United States. 

14 ‘‘§ 57103. Sale of obsolete vessels in National Defense Reserve 

15 Fleet 

16 ‘‘(a) IN GENERAL.—The Secretary of Transportation may convey the right, 

17 title, and interest of the United States Government in any vessel of the Na18 tional Defense Reserve Fleet that has been identified by the Secretary as an 

19 obsolete vessel of insufficient value to warrant its further preservation, if the 

20 recipient— 

21 ‘‘(1) is a non-profit organization, a State, or a municipal corporation 

22 or political subdivision of a State; 

23 ‘‘(2) agrees not to use, or allow others to use, the vessel for commercial 

24 transportation purposes; 

25 ‘‘(3) agrees to make the vessel available to the Government whenever 

26 the Secretary indicates that it is needed by the Government; 

27 ‘‘(4) agrees to hold the Government harmless for any claims arising 

28 from exposure to asbestos, polychlorinated biphenyls, lead paint, or other 

29 hazardous substances after conveyance of the vessel, except for claims 

30 arising from use of the vessel by the Government; 

31 ‘‘(5) has a conveyance plan and a business plan that describes the in32 tended use of the vessel, each of which has been submitted to and ap33 proved by the Secretary; 

34 ‘‘(6) has provided proof, as determined by the Secretary, of resources 

35 sufficient to accomplish the transfer, necessary repairs and modifica36 tions, and initiation of the intended use of the vessel; and 

37 ‘‘(7) agrees that when the recipient no longer requires the vessel for 

38 use as described in the business plan required under paragraph (5)— 

39 ‘‘(A) the recipient will, at the discretion of the Secretary, re40 convey the vessel to the Government in good condition except for or41 dinary wear and tear; or 
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1 ‘‘(B) if the Board of Trustees of the recipient has decided to dis2 solve the recipient according to the laws of the State in which the 

3 recipient is incorporated, then— 

4 ‘‘(i) the recipient shall distribute the vessel, as an asset of 

5 the recipient, to a person that has been determined exempt 

6 from taxation under section 501(c)(3) of the Internal Revenue 

7 Code of 1986 (26 U.S.C. 501(c)(3)), or to the Federal Govern8 ment or a State or local government for a public purpose; and 

9 ‘‘(ii) the vessel shall be disposed of by a court of competent 

10 jurisdiction of the county in which the principal office of the 

11 recipient is located, for such purposes as the court shall deter12 mine, or to such organizations as the court shall determine are 

13 organized exclusively for public purposes. 

14 ‘‘(b) OTHER EQUIPMENT.—At the Secretary’s discretion, additional equip15 ment from other obsolete vessels of the Fleet may be conveyed to assist the re16 cipient with maintenance, repairs, or modifications. 

17 ‘‘(c) ADDITIONAL TERMS.—The Secretary may require any additional 

18 terms the Secretary considers appropriate. 

19 ‘‘(d) DELIVERY OF VESSEL.—If conveyance is made under this section, the 

20 vessel shall be delivered to the recipient at a time and place to be determined 

21 by the Secretary. The vessel shall be conveyed in an ‘as is’ condition. 

22 ‘‘(e) LIMITATIONS.—If at any time prior to delivery of the vessel to the re23 cipient, the Secretary determines that a different disposition of the vessel 

24 would better serve the interests of the Government, the Secretary shall pursue 

25 the more favorable disposition of the obsolete vessel and shall not be liable for 

26 any damages that may result from an intended recipient’s reliance upon a 

27 proposed transfer. 

28 ‘‘(f) REVERSION.—The Secretary shall include in any conveyance under 

29 this section terms under which all right, title, and interest conveyed by the 

30 Secretary shall revert to the Government if the Secretary determines the vessel 

31 has been used other than as described in the business plan required under sub32 section (a)(5). 

33 ‘‘§ 57104. Acquisition of vessels from sale of obsolete vessels 

34 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire suitable 

35 documented vessels with amounts in the Vessel Operations Revolving Fund de36 rived from the sale of obsolete vessels in the National Defense Reserve Fleet. 

37 ‘‘(b) VALUATION.—The acquired and obsolete vessels shall be valued at their 

38 scrap value in domestic or foreign markets as of the date of the acquisition 

39 for or sale from the Fleet. However, the value assigned to those vessels shall 

40 be determined on the same basis, with consideration given to the fair value 

41 of the cost of moving the vessel sold from the Fleet to the place of scrapping. 
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1 ‘‘(c) COSTS INCIDENT TO LAY-UP.—Costs incident to the lay-up of the ves2 sel acquired under this section may be paid from amounts in the Fund. 

3 ‘‘(d) TRANSFERS TO NON-CITIZENS.—A vessel sold from the Fleet under 

4 this section may be scrapped in an approved foreign market without obtain5 ing additional separate approval from the Secretary to transfer the vessel to 

6 a person not a citizen of the United States. 

7 ‘‘§ 57105. Acquisition of vessels for essential services, routes, 

8 or lines 

9 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire a vessel, 

10 by purchase or otherwise, if— 

11 ‘‘(1) the Secretary considers the vessel necessary to establish, maintain, 

12 improve, or serve as a replacement on an essential service, route, or line 

13 in the foreign commerce of the United States, as determined under sec14 tion 50103 of this title; 

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

16 ‘‘(3) the Secretary of the Navy has certified to the Secretary of Trans17 portation that the vessel is suitable for economical and speedy conversion 

18 into a naval or military auxiliary or otherwise suitable for use by the 

19 United States Government in time of war or national emergency. 

20 ‘‘(b) PRICE.—The price paid for the vessel shall be based on a fair and rea21 sonable valuation. However, the price may not exceed by more than 5 percent 

22 the cost of the vessel to the owner (excluding any construction-differential sub23 sidy and the cost of national defense features paid by the Secretary of Trans24 portation) plus the actual cost previously expended for reconditioning, less de25 preciation based on a 25-year life for a dry-cargo or passenger vessel and a 

26 20-year life for a tanker or other liquid bulk carrier vessel. 

27 ‘‘(c) DOCUMENTATION.—A vessel acquired under this section that is not 

28 documented under the laws of the United States at the time of acquisition 

29 shall be so documented as soon as practicable. 

30 ‘‘§ 57106. Maintenance, improvement, and operation of ves31 sels 

32 ‘‘(a) IN GENERAL.—The Secretary of Transportation may maintain, re33 pair, recondition, remodel, and improve vessels owned by the United States 

34 Government and in the possession or under the control of the Secretary, to 

35 equip them adequately for competition in the foreign trade of the United 

36 States. The Secretary may operate such a vessel or charter the vessel on terms 

37 and conditions the Secretary considers appropriate to carry out the purposes 

38 of this subtitle. 

39 ‘‘(b) DOCUMENTATION AND RESTRICTIONS ON OPERATION.—A vessel recon40 ditioned, remodeled, or improved under subsection (a) shall be documented 

41 under the laws of the United States and remain so documented for at least 
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1 5 years after completion of the reconditioning, remodeling, or improvement. 

2 During that period, it shall be operated on voyages that are not exclusively 

3 coastwise. 

4 ‘‘§ 57107. Vessels for other agencies 

5 ‘‘(a) IN GENERAL.—The Secretary of Transportation may construct, recon6 struct, repair, equip, and outfit, by contract or otherwise, vessels or parts 

7 thereof, for any other department or agency of the United States Government 

8 to the extent the other department or agency is authorized by law to do so 

9 for its own account. 

10 ‘‘(b) EFFECT ON CONTRACT AUTHORIZATION.—An obligation incurred or 

11 expenditure made by the Secretary under this section does not affect any con12 tract authorization of the Secretary, but instead shall be charged against the 

13 existing appropriation or contract authorization of the department or agency. 

14 ‘‘§ 57108. Consideration of ballast and equipment in deter15 mining selling price 

16 ‘‘The Maritime Administration may not sell a vessel until its ballast and 

17 equipment have been inventoried and their value considered in determining 

18 the selling price of the vessel. 

19 ‘‘§ 57109. Operation of vessels purchased, chartered, or 

20 leased from Secretary of Transportation 

21 ‘‘Unless otherwise authorized by the Secretary of Transportation, a vessel 

22 purchased, chartered, or leased from the Secretary may be operated only 

23 under a certificate of documentation with a registry or coastwise endorsement. 

24 Such a vessel, while employed solely as a merchant vessel, is subject to the 

25 laws, regulations, and liabilities governing merchant vessels, whether the 

26 United States Government has an interest in the vessel as an owner or holds 

27 a mortgage, lien, or other interest. 

28 ‘‘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. 

29 ‘‘§ 57301. Definitions 

30 ‘‘In this chapter: 

31 ‘‘(1) NEW VESSEL.—The term ‘new vessel’ means a vessel— 

32 ‘‘(A) constructed under this subtitle and acquired within 2 years 

33 after the date of completion; or 
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1 ‘‘(B) constructed in a domestic shipyard on private account and 

2 not under this subtitle, and documented under the laws of the 

3 United States. 

4 ‘‘(2) OBSOLETE VESSEL.—The term ‘obsolete vessel’ means a vessel 

5 that— 

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

7 ‘‘(B) the Secretary of Transportation believes should, because of 

8 its age, obsolescence, or other reasons, be replaced in the public in9 terest; and 

10 ‘‘(C) has been owned by a citizen of the United States for at least 

11 3 years immediately before its acquisition under this chapter. 

12 ‘‘§ 57302. Authority to acquire vessels 

13 ‘‘To promote the construction of new, safe, and efficient vessels to carry the 

14 domestic and foreign waterborne commerce of the United States, the Secretary 

15 of Transportation may acquire an obsolete vessel in exchange for an allowance 

16 of credit toward the cost of construction or purchase of a new vessel as pro17 vided in this chapter. 

18 ‘‘§ 57303. Utility value and tonnage requirements 

19 ‘‘(a) UTILITY VALUE.—The utility value of a new vessel to be acquired 

20 under this chapter for operation in the domestic or foreign commerce of the 

21 United States may not be substantially less than that of the obsolete vessel 

22 acquired in exchange under this chapter. 

23 ‘‘(b) TONNAGE.—If the Secretary of Transportation finds that the new ves24 sel will have a utility value at least equal to that of the obsolete vessel, the 

25 new vessel may be of lesser gross tonnage than the obsolete vessel. However, 

26 the gross tonnage of the new vessel must be at least one-third the gross tonnage 

27 of the obsolete vessel. 

28 ‘‘§ 57304. Eligible acquisition dates 

29 ‘‘At the option of the owner, the acquisition of an obsolete vessel under this 

30 chapter shall occur— 

31 ‘‘(1) when the owner contracts for the construction or purchase of a 

32 new vessel; or 

33 ‘‘(2) within 5 days of the actual date of delivery of the new vessel to 

34 the owner. 

35 ‘‘§ 57305. Determination of trade-in allowance 

36 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall determine the 

37 trade-in allowance for an obsolete vessel at the time of acquisition of the ves38 sel. The allowance shall be the fair value of the vessel. In determining the 

39 value, the Secretary shall consider— 

40 ‘‘(1) the scrap value of the obsolete vessel in American and foreign 

41 markets; 
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1 ‘‘(2) the depreciated value based on a 20-year or 25-year life, which2 ever applies to the obsolete vessel; and 

3 ‘‘(3) the market value of the obsolete vessel for operation in world com4 merce or in the domestic or foreign commerce of the United States. 

5 ‘‘(b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete vessel oc6 curs when the owner contracts for the construction of the new vessel, and the 

7 owner uses the obsolete vessel during the period of construction of the new ves8 sel, the Secretary shall reduce the trade-in allowance by an amount rep9 resenting the fair value of that use. The Secretary shall establish the rate for 

10 use of the obsolete vessel when the contract for construction of the new vessel 

11 is made. 

12 ‘‘§ 57306. Payment of trade-in allowance 

13 ‘‘(a) ACQUISITION AT TIME OF CONTRACT.—If acquisition of an obsolete 

14 vessel under this chapter occurs when the owner contracts for the construction 

15 or purchase of the new vessel, the Secretary of Transportation shall apply the 

16 trade-in allowance to the purchase price of the new vessel rather than paying 

17 it to the owner. If the new vessel is constructed under this subtitle, the Sec18 retary may apply the trade-in allowance to the required cash payments on 

19 terms and conditions the Secretary may prescribe. If the new vessel is not 

20 constructed under this subtitle, the Secretary shall pay the trade-in allowance 

21 to the builder of the vessel for the account of the owner when the Secretary 

22 acquires the obsolete vessel. 

23 ‘‘(b) ACQUISITION AT TIME OF DELIVERY.—If acquisition of the obsolete 

24 vessel occurs when the new vessel is delivered to the owner, the Secretary shall 

25 deposit the trade-in allowance in the owner’s capital construction fund. 

26 ‘‘§ 57307. Recognition of gain for tax purposes 

27 ‘‘The owner of an obsolete vessel does not recognize a gain under the Federal 

28 income tax laws when the vessel is transferred to the Secretary of Transpor29 tation in exchange for a trade-in allowance under this chapter. The basis of 

30 the new vessel acquired with the allowance is the same as the basis of the obso31 lete vessel— 

32 ‘‘(1) increased by the difference between the cost of the new vessel and 

33 the trade-in allowance of the obsolete vessel; and 

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

35 ‘‘§ 57308. Use of vessels at least 25 years old 

36 ‘‘An obsolete vessel acquired under this chapter that is or becomes at least 

37 25 years old may not be used for commercial operation. However, the vessel 

38 may be used— 

39 ‘‘(1) during a period in which vessels may be requisitioned under 

40 chapter 563 of this title; or 
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1 ‘‘(2) except as otherwise provided in this subtitle, on trade routes serv2 ing only the foreign trade of the United States. 

3 ‘‘CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE 

4 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. 

5 ‘‘SUBCHAPTER I—GENERAL 

6 ‘‘§ 57501. Completion of long-range program 

7 ‘‘Whenever the Secretary of Transportation determines that the objectives 

8 and policies declared in sections 50101 and 50102 of this title cannot be fully 

9 realized within a reasonable time under titles V and VI of the Merchant Ma10 rine Act, 1936, and the President approves the determination, the Secretary, 

11 in accordance with this chapter, shall complete the long-range program de12 scribed in section 50102 of this title. 

13 ‘‘§ 57502. Construction, reconditioning, and remodeling of 

14 vessels 

15 ‘‘(a) IN GENERAL.—The Secretary of Transportation may have new vessels 

16 constructed, and have old vessels reconditioned or remodeled, as the Secretary 

17 determines necessary to carry out the objectives of this subtitle. 

18 ‘‘(b) PLACE OF WORK.—Construction, reconditioning, and remodeling of 

19 vessels under subsection (a) shall take place in shipyards in the continental 

20 United States (including Alaska and Hawaii). However, if satisfactory con21 tracts cannot be obtained from private shipbuilders, the Secretary may have 

22 the work done in navy yards. 

23 ‘‘(c) APPLICABILITY OF CONSTRUCTION-DIFFERENTIAL SUBSIDY PROVI24 SIONS.—Contracts for the construction, reconstruction, or reconditioning of a 

25 vessel by a private shipbuilder under this chapter are subject to the provisions 
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1 of title V of the Merchant Marine Act, 1936, applicable to a contract with 

2 a private shipbuilder for the construction of a vessel under title V of that Act. 

3 ‘‘§ 57503. Competitive bidding 

4 ‘‘(a) ADVERTISEMENT AND BIDDING.—The Secretary of Transportation 

5 may make a contract with a private shipbuilder for the construction of a new 

6 vessel, or for the reconstruction or reconditioning of an existing vessel, only 

7 after due advertisement and upon sealed competitive bids. 

8 ‘‘(b) OPENING OF BIDS.—Bids required under this section shall be opened 

9 at the time and place stated in the advertisement for bids. All interested per10 sons, including representatives of the press, shall be permitted to attend. The 

11 results of the bidding shall be publicly announced. 

12 ‘‘§ 57504. Charter or sale of vessels acquired by Department 

13 of Transportation 

14 ‘‘Vessels transferred to or otherwise acquired by the Department of Trans15 portation in any manner may be chartered or sold by the Secretary of Trans16 portation as provided in this chapter. 

17 ‘‘§ 57505. Employment of vessels on foreign trade routes 

18 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall arrange for the 

19 employment of the Department of Transportation’s vessels in steamship lines 

20 on such trade routes, exclusively serving the foreign trade of the United States, 

21 as the Secretary determines are essential for the development and mainte22 nance of the commerce of the United States and the national defense. How23 ever, the Secretary shall first determine that those routes are not being ade24 quately served by existing steamship lines privately owned and operated by 

25 citizens of the United States and documented under the laws of the United 

26 States. 

27 ‘‘(b) POLICY TO ENCOURAGE PRIVATE OPERATION.—The Secretary shall 

28 have a policy of encouraging private operation of each essential steamship 

29 line now owned by the United States Government by— 

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

31 ‘‘(2) demising the Secretary’s vessels on bareboat charter to citizens of 

32 the United States who agree to maintain the line in the manner provided 

33 in this chapter. 

34 ‘‘§ 57506. Minimum selling price of vessels 

35 ‘‘(a) IN GENERAL.—A vessel constructed under this subtitle or the Merchant 

36 Marine Act, 1936, may not be sold by the Secretary of Transportation for 

37 less than the price specified in this section. 

38 ‘‘(b) OPERATION IN FOREIGN TRADE.—If the vessel is to be operated in for39 eign trade, the minimum price is the estimated foreign construction cost (ex40 clusive of national defense features) determined as of the date the construction 

41 contract is executed, less depreciation under subsection (d). 
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1 ‘‘(c) OPERATION IN DOMESTIC TRADE.—If the vessel is to be operated in 

2 domestic trade, the minimum price is the cost of construction in the United 

3 States (exclusive of national defense features), less depreciation under sub4 section (d). 

5 ‘‘(d) DEPRECIATION.—Depreciation under subsections (b) and (c) shall be 

6 based on— 

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

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

9 ‘‘SUBCHAPTER II—CHARTERS 

10 ‘‘§ 57511. Demise charters 

11 ‘‘A charter by the Secretary of Transportation under this chapter shall de12 mise the vessel to the charterer subject to all usual conditions contained in 

13 a bareboat charter. The charter shall be for a term the Secretary considers 

14 to be in the best interest of the United States Government and the merchant 

15 marine. 

16 ‘‘§ 57512. Competitive bidding 

17 ‘‘(a) IN GENERAL.—The Secretary of Transportation may charter a vessel 

18 of the Department of Transportation to a private operator only on the basis 

19 of competitive sealed bidding. The bids must be submitted in strict compliance 

20 with the terms and conditions of a public advertisement soliciting the bids. 

21 ‘‘(b) ADVERTISEMENT FOR BIDS.—An advertisement for bids shall state— 

22 ‘‘(1) the number, type, and tonnage of the vessels being offered for 

23 bareboat charter for operation as a steamship line on a designated trade 

24 route; 

25 ‘‘(2) the minimum number of sailings required; 

26 ‘‘(3) the length of time of the charter; 

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

28 ‘‘(5) other information the Secretary considers necessary for the infor29 mation of prospective bidders. 

30 ‘‘(c) OPENING OF BIDS.—Bids required under this section shall be opened 

31 at the time and place stated in the advertisement for bids. All interested per32 sons, including representatives of the press, shall be permitted to attend. The 

33 results of the bidding shall be publicly announced. 

34 ‘‘§ 57513. Minimum bid 

35 ‘‘The Secretary of Transportation shall reject any bid for the charter under 

36 this subchapter of a vessel constructed under this subtitle or the Merchant Ma37 rine Act, 1936, if the charter hire offered is lower than the minimum charter 

38 hire would be if the vessel were chartered under section 57531 of this title. 

39 ‘‘§ 57514. Qualifications of bidders 

40 ‘‘(a) CONSIDERATIONS.—In deciding whether to award a charter to a bid41 der, the Secretary of Transportation shall consider— 
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1 ‘‘(1) the bidder’s financial resources, credit standing, and practical ex2 perience in operating vessels; and 

3 ‘‘(2) other factors a prudent business person would consider in enter4 ing into a transaction involving a large capital investment. 

5 ‘‘(b) DISQUALIFICATIONS.—The Secretary may not charter a vessel to a 

6 person appearing to lack sufficient capital, credit, and experience to operate 

7 the vessel successfully over the period covered by the charter. 

8 ‘‘§ 57515. Awarding of charters 

9 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall award the char10 ter to the bidder proposing to pay the highest monthly charter hire. However, 

11 the Secretary may reject the highest or most advantageous or any other bid 

12 if the Secretary considers the charter hire offered too low or determines that 

13 the bidder lacks the qualifications required by section 57514 of this title. 

14 ‘‘(b) HIGHEST BID REJECTED.—If the Secretary rejects the highest bid, the 

15 Secretary may— 

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

17 ‘‘(2) reject all bids and either readvertise the line or operate the line 

18 until conditions appear more favorable to reoffer the line for private 

19 charter. 

20 ‘‘(c) REASON FOR REJECTION.—On request of a bidder, the reason for rejec21 tion shall be stated in writing to the bidder. 

22 ‘‘§ 57516. Operating-differential subsidies 

23 ‘‘If the Secretary of Transportation considers it necessary, the Secretary 

24 may make a contract with a charterer of a vessel owned by the Secretary for 

25 payment of an operating-differential subsidy, on the same terms and condi26 tions, and subject to the same limitations and restrictions, as otherwise pro27 vided with respect to payment of operating-differential subsidies to operators 

28 of privately-owned vessels. 

29 ‘‘§ 57517. Recovery of excess profits 

30 ‘‘(a) IN GENERAL.—A charter under this chapter shall provide that if, at 

31 the end of a calendar year subsequent to the execution of the charter, the cu32 mulative net voyage profit (after payment of the charter hire reserved in the 

33 charter and payment of the charterer’s fair and reasonable overhead expenses 

34 applicable to operation of the chartered vessel) exceeds 10 percent a year of 

35 the charterer’s capital necessarily employed in the business of the chartered 

36 vessel, the charterer shall pay to the Secretary of Transportation, as addi37 tional charter hire, half the cumulative net voyage profit in excess of 10 per38 cent a year. However, any cumulative net voyage profit accounted for under 

39 this subsection is not to be included in the calculation of cumulative net voy40 age profit in any subsequent year. 
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1 ‘‘(b) TERMS TO BE DEFINED AND USED.—The Secretary shall define the 

2 terms ‘net voyage profit’, ‘fair and reasonable overhead expenses’, and ‘capital 

3 necessarily employed’ for this section. Each advertisement for bids and each 

4 charter shall contain these definitions, stating the formula for determining 

5 each of these three amounts. 

6 ‘‘§ 57518. Performance bond 

7 ‘‘The Secretary of Transportation shall require a charterer of a vessel of 

8 the Secretary to deposit with the Secretary an undertaking, with approved 

9 sureties, in such amount as the Secretary may require as security for the 

10 faithful performance of the terms of the charter, including indemnity against 

11 liens on the chartered vessel. 

12 ‘‘§ 57519. Insurance 

13 ‘‘A charter under this chapter shall require the charterer to carry, at the 

14 charterer’s expense, insurance on the chartered vessel covering all marine and 

15 port risks, protection and indemnity risks, and all other hazards and liabil16 ities, adequate to cover damages claimed against and losses sustained by the 

17 chartered vessel arising during the term of the charter. The insurance shall 

18 be in such form, in such amount, and with such companies as the Secretary 

19 of Transportation may require. In accordance with law, any of the insurance 

20 risks may be underwritten by the Secretary. 

21 ‘‘§ 57520. Vessel maintenance 

22 ‘‘(a) IN GENERAL.—A charter under this chapter shall require the 

23 charterer, at the charterer’s expense, to— 

24 ‘‘(1) keep the chartered vessel in good repair and efficient operating 

25 condition; and 

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

27 ‘‘(b) INSPECTION.—The charter shall provide that the Secretary has the 

28 right to inspect the vessel at any time to ascertain its condition. 

29 ‘‘§ 57521. Termination of charter during national emergency 

30 ‘‘A charter under this chapter shall provide that during a national emer31 gency proclaimed by the President or a period for which the President has 

32 proclaimed that the security of the national defense makes it advisable, the 

33 Secretary of Transportation may terminate the charter without cost to the 

34 United States Government on such notice to the charterer as the President 

35 determines. 

36 ‘‘SUBCHAPTER III—MISCELLANEOUS 

37 ‘‘§ 57531. Construction and charter of vessels for unsuccess38 ful routes 

39 ‘‘(a) IN GENERAL.—If the Secretary of Transportation finds that a trade 

40 route determined to be essential under section 50103 of this title cannot be 

41 successfully developed and maintained and the Secretary’s replacement pro-
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1 gram cannot be achieved under private operation of the trade route by a cit2 izen of the United States with vessels documented under chapter 121 of this 

3 title, without further aid by the United States Government in addition to the 

4 financial aid authorized under titles V and VI of the Merchant Marine Act, 

5 1936, the Secretary, without advertisement or competition, may— 

6 ‘‘(1) have constructed, in private shipyards or in navy yards, vessels 

7 of the types necessary for the trade route; and 

8 ‘‘(2) demise charter those new vessels to the operator of vessels of the 

9 United States established on the trade route. 

10 ‘‘(b) AMOUNT OF CHARTER HIRE.— 

11 ‘‘(1) IN GENERAL.—The annual charter hire under subsection (a) shall 

12 be at least 4 percent of the price (referred to in this section as the ‘for13 eign cost’) at which the vessel would be sold if constructed under title 

14 V of the Merchant Marine Act, 1936, plus— 

15 ‘‘(A) a percentage of the depreciated foreign cost computed annu16 ally determined by the Secretary of the Treasury, taking into con17 sideration the current average market yield on outstanding market18 able obligations of the Government with remaining periods to matu19 rity comparable to the term of the charter, adjusted to the nearest 

20 one-eighth percent; and 

21 ‘‘(B) an allowance adequate in the judgment of the Secretary of 

22 Transportation to cover administrative costs. 

23 ‘‘(2) DEPRECIATION.—Depreciation under paragraph (1)(A) shall be 

24 based on— 

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

26 ‘‘(B) a 20-year life for tankers and other bulk liquid carrier ves27 sels. 

28 ‘‘(c) OPTION TO PURCHASE.—The charter may contain an option to the 

29 charterer to purchase the vessels from the Secretary of Transportation within 

30 5 years after delivery under the charter, on the same terms and conditions 

31 as provided in title V of the Merchant Marine Act, 1936, for the purchase 

32 of new vessels from the Secretary. However— 

33 ‘‘(1) the purchase price shall be the foreign cost less depreciation to 

34 the date of purchase based on the useful life specified in subsection (b)(2); 

35 ‘‘(2) the required cash payment payable at the time of the purchase 

36 shall be 25 percent of the purchase price; 

37 ‘‘(3) the charter may provide that any part of the charter hire paid 

38 in excess of the minimum charter hire provided for in this section may 

39 be credited against the cash payment payable at the time of the purchase; 

40 ‘‘(4) the balance of the purchase price shall be paid within the remain41 ing years of useful life (as specified in subsection (b)(2)) after the date 
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1 of delivery of the vessel under the charter and in approximately equal 

2 annual installments, except that the first installment, which shall be 

3 payable on the next ensuing anniversary date of the delivery under the 

4 charter, shall be a proportionate part of the annual installment; and 

5 ‘‘(5) interest shall be payable on the unpaid balances from the date 

6 of purchase, at a rate not less than— 

7 ‘‘(A) a rate determined by the Secretary of the Treasury, taking 

8 into consideration the current average market yield on outstanding 

9 marketable obligations of the Government with remaining periods to 

10 maturity comparable to the average maturities of the loans, adjusted 

11 to the nearest one-eighth percent; plus 

12 ‘‘(B) an allowance adequate in the judgment of the Secretary of 

13 Transportation to cover administrative costs. 

14 ‘‘(d) OPERATION OF VESSEL.— 

15 ‘‘(1) PERMISSIBLE VOYAGES.—The charter shall provide for operation 

16 of the vessel exclusively— 

17 ‘‘(A) in foreign trade; 

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

19 ‘‘(C) on a round voyage from the west coast of the United States 

20 to a European port that includes an intercoastal port of the United 

21 States; 

22 ‘‘(D) on a round voyage from the Atlantic coast of the United 

23 States to the Orient that includes an intercoastal port of the United 

24 States; or 

25 ‘‘(E) on a voyage in foreign trade on which the vessel may stop 

26 at Hawaii or an island territory or possession of the United States. 

27 ‘‘(2) DOMESTIC TRADE.—The charter shall provide if the vessel is op28 erated in domestic trade on any of the services specified in paragraph 

29 (1), the charterer will pay annually to the Secretary of Transportation 

that proportion of 1 30 ⁄25 of the difference between the domestic and foreign 

31 cost of the vessel as the gross revenue derived from the domestic trade 

32 bears to the gross revenue derived from the entire voyages completed dur33 ing the preceding year. 

34 ‘‘§ 57532. Operation of experimental vessels 

35 ‘‘(a) DEFINITION.—In this section, the term ‘experimental vessel’ means a 

36 vessel owned by the United States Government (including a vessel in the Na37 tional Defense Reserve Fleet) that has been constructed, reconditioned, or re38 modeled for experimental or testing purposes. 

39 ‘‘(b) AUTHORITY TO OPERATE.—The Secretary of Transportation, for the 

40 purpose of practical development, trial, and testing, may operate an experi41 mental vessel under a bareboat charter or general agency agreement in the 
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1 foreign or domestic trade of the United States or for use for the account of 

2 a department or agency of the Government, without regard to other provisions 

3 of this subtitle and other laws related to chartering and general agency oper4 ations. Not more than 10 vessels may be operated and tested under this sec5 tion in any one year. 

6 ‘‘(c) TERMS OF OPERATION.—Operation of a vessel under this section shall 

7 be on terms the Secretary considers appropriate to carry out the purposes of 

8 this subtitle. A bareboat charter under this section shall be at reasonable rates 

9 and include restrictions the Secretary considers appropriate to protect the 

10 public interest, including provisions for recapture of profits under section 

11 57517 of this title. A charter or general agency agreement under this section 

12 shall be reviewed annually to determine whether conditions exist to justify 

13 continuance of the charter or agreement. 

14 ‘‘(d) RIGHTS OF SEAMEN.—A seaman engaged in vessel operations of the 

15 Secretary under this section and employed through a general agent in connec16 tion with a charter or agreement under this section is entitled to all the rights 

17 and remedies provided in sections 1(a) and (c), 3(c), and 4 of the Act of 

18 March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294). 

19 ‘‘PART G—RESTRICTIONS AND PENALTIES

20 ‘‘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. 

21 ‘‘§ 58101. Operating in domestic intercoastal or coastwise 

22 service 

23 ‘‘(a) PROHIBITION.—A subsidy may not be awarded or paid to a contractor 

24 under the operating-differential subsidy program, and a vessel may not be 

25 chartered to a person under chapter 575 of this title, if the contractor or 

26 charterer, or a holding company, subsidiary, affiliate, or associate of the con27 tractor or charterer, or an officer, director, agent, or executive thereof, directly 

28 or indirectly— 

29 ‘‘(1) owns, charters, or operates a vessel engaged in the domestic inter30 coastal or coastwise service; or 

31 ‘‘(2) owns a pecuniary interest in a person that owns, charters, or op32 erates a vessel in the domestic intercoastal or coastwise service. 

33 ‘‘(b) WAIVER.—A person may apply to the Secretary of Transportation for 

34 a waiver of subsection (a). Before deciding on the waiver, the Secretary shall 
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1 give the applicant and other interested persons an opportunity for a hearing. 

2 The Secretary may not grant the waiver if the Secretary finds it would— 

3 ‘‘(1) result in unfair competition to a person operating exclusively in 

4 the domestic intercoastal or coastwise service; or 

5 ‘‘(2) be prejudicial to the objectives and policy of this subtitle. 

6 ‘‘(c) CONTINUOUS OPERATION SINCE 1935.—The Secretary shall grant an 

7 application under subsection (b) without requiring further proof that the pub8 lic interest and convenience will be served and without further proceedings 

9 as to the competition in the route or trade, if the contractor or other person, 

10 or a predecessor in interest, was in bona-fide operation as a common carrier 

11 by water in the domestic intercoastal or coastwise trade in 1935 over the route 

12 or in the trade for which the application is made and has so operated since 

13 that time or, if engaged in furnishing seasonal service only, was in bona-fide 

14 operation in 1935 during the season ordinarily covered by its operation, ex15 cept in either event as to interruptions of service over which the applicant 

16 or its predecessor in interest had no control. 

17 ‘‘(d) DIVERSION INTO INTERCOASTAL OR COASTWISE OPERATIONS.—If an 

18 application under subsection (b) is approved, a person referred to in this sec19 tion may not divert, directly or indirectly, money, property, or any other 

20 thing of value, used in a foreign-trade operation for which a subsidy is paid 

21 by the United States Government, into intercoastal or coastwise operations. 

22 ‘‘§ 58102. Default on payment or maintenance of reserves 

23 ‘‘The Secretary of Transportation may supervise the number and com24 pensation of all officers and employees of a contractor under the operating25 differential subsidy program or a charterer under chapter 575 of this title, 

26 receiving an operating-differential subsidy, if the contractor or charterer— 

27 ‘‘(1) is in default on a mortgage, note, purchase contract, or other obli28 gation to the Secretary; or 

29 ‘‘(2) has not maintained, in a manner satisfactory to the Secretary, 

30 all of the reserves provided for in this subtitle. 

31 ‘‘§ 58103. Employing another person as managing or oper32 ating agent 

33 ‘‘(a) PROHIBITION.—Except with the written consent of the Secretary of 

34 Transportation, a contractor holding a contract under the operating-differen35 tial subsidy program or under chapter 575 of this title may not— 

36 ‘‘(1) employ another person as the managing or operating agent of the 

37 operator; or 

38 ‘‘(2) charter a vessel, on which an operating-differential subsidy is to 

39 be paid, for operation by another person. 

40 ‘‘(b) APPLICABILITY OF PROVISIONS TO CHARTERER.—If a charter prohib41 ited by this section is made, the person operating the chartered vessel is sub-
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1 ject to all the provisions of this subtitle and the operating-differential subsidy 

2 program, including limitations of profits and salaries. 

3 ‘‘§ 58104. Willful violation constitutes breach of contract or 

4 charter 

5 ‘‘A willful violation of any provision of sections 58101–58103 of this title 

6 constitutes a breach of the contract or charter. On determining that a viola7 tion has occurred, the Secretary of Transportation may declare the contract 

8 or charter rescinded. 

9 ‘‘§ 58105. Preferences for cargo in which charterer has inter10 est 

11 ‘‘A contractor receiving an operating-differential subsidy, or a charterer 

12 under chapter 575 of this title, may not unjustly discriminate in any manner 

13 so as to give preference, directly or indirectly, to cargo in which the con14 tractor or charterer has a direct or indirect ownership, purchase, or vending 

15 interest. 

16 ‘‘§ 58106. Concerted discriminatory activities 

17 ‘‘(a) PROHIBITION.—A contractor receiving an operating-differential sub18 sidy, or a charterer under chapter 575 of this title, may not continue as a 

19 party to or conform to an agreement with another carrier by water, or engage 

20 in a practice in concert with another carrier by water, that is unjustly dis21 criminatory or unfair to any other citizen of the United States operating a 

22 common carrier by water employing only vessels documented under the laws 

23 of the United States on an established trade route from and to a United 

24 States port. 

25 ‘‘(b) GOVERNMENT PAYMENT PROHIBITED.—No payment or subsidy of any 

26 kind may be paid, directly or indirectly, out of funds of the United States 

27 Government to a contractor or charterer that has violated subsection (a). 

28 ‘‘(c) CIVIL ACTION.—A person whose business or property is injured by a 

29 violation of subsection (a) may bring a civil action in the district court of 

30 the United States for the district in which the defendant resides, is found, or 

31 has an agent. If the person prevails, the person shall be awarded— 

32 ‘‘(1) 3 times the damages; and 

33 ‘‘(2) costs, including reasonable attorney fees. 

34 ‘‘§ 58107. Discrimination at ports by water common carriers 

35 ‘‘(a) PROHIBITION.—A common carrier by water may not, directly or indi36 rectly, through an agreement, conference, association, understanding, or other37 wise, prevent or attempt to prevent any other common carrier by water from 

38 serving any port described in subsection (b) at the same rates the first carrier 

39 charges at the nearest port already regularly served by it. 

40 ‘‘(b) PORTS.—A port referred to in subsection (a) is one that is— 

41 ‘‘(1) designed for the accommodation of ocean-going vessels; 
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1 ‘‘(2) located on an improvement project authorized by law or by a 

2 Federal agency; and 

3 ‘‘(3) located within the continental limits of the United States. 

4 ‘‘(c) OTHER AUTHORITY NOT LIMITED.—This section does not limit the au5 thority otherwise vested in the Secretary of Transportation and the Federal 

6 Maritime Commission. 

7 ‘‘§ 58108. Charges for transportation subject to subtitle IV of 

8 title 49 

9 ‘‘(a) PROHIBITION.—A carrier may not charge, collect, or receive for trans10 portation subject to subtitle IV of title 49 of persons or property, under any 

11 joint rate, fare, or charge, or under any export, import, or other proportional 

12 rate, fare, or charge, that is based in whole or in part on the fact that the 

13 persons or property affected are to be transported to, or have been transported 

14 from, a port in a territory or possession of the United States or in a foreign 

15 country, by a carrier by water in foreign commerce, any lower rate, fare, or 

16 charge than the carrier charges, collects, or receives for the transportation of 

17 persons or similar property for the same distance, in the same direction, and 

18 over the same route, in commerce wholly within the United States, unless the 

19 vessel used for the transportation is or was at the time of the transportation 

20 documented under the laws of the United States. 

21 ‘‘(b) SUSPENSION OF PROHIBITION.—Whenever the Secretary of Transpor22 tation believes that adequate shipping facilities to or from any port in a terri23 tory or possession of the United States or a foreign country are not being pro24 vided by vessels documented under the laws of the United States, the Secretary 

25 shall certify this fact to the Surface Transportation Board. On receiving the 

26 certification, the Board may by order suspend the operation of subsection (a) 

27 with respect to the rates, fares, and charges for the transportation by rail of 

28 persons and property transported from or to be transported to those ports, for 

29 such time and under such terms and conditions as the Secretary may specify 

30 in the order or in any supplemental order. 

31 ‘‘(c) TERMINATION OF SUSPENSION.—Whenever the Secretary believes that 

32 adequate shipping facilities are being provided to those ports by vessels docu33 mented under the laws of the United States, and certifies that fact to the 

34 Board, the Board may order the termination of the suspension. 

35 ‘‘§ 58109. Penalties 

36 ‘‘(a) INDIVIDUALS.—An individual convicted of violating section 58101(d), 

37 58103, or 58105 of this title shall be fined under title 18, imprisoned for at 

38 least one year but not more than 5 years, or both. 

39 ‘‘(b) ORGANIZATIONS.—An organization convicted of committing an act 

40 prohibited by this subtitle shall be fined under title 18. 
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1 ‘‘(c) INELIGIBILITY TO RECEIVE BENEFITS.—An individual or organiza2 tion convicted of violating a section referred to in subsection (a) is ineligible, 

3 at the discretion of the Secretary of Transportation, to receive any benefit 

4 under the construction-differential subsidy or operating-differential subsidy 

5 programs, or a charter under chapter 575 of this title, for 5 years after the 

6 conviction.’’. 

7 SEC. 9. SUBTITLE VI OF TITLE 46. 

8 (a) REDESIGNATION.—Title 46, United States Code, is amended by redesig9 nating subtitle VI as subtitle VII. 

10 (b) NEW SUBTITLE.—Title 46, United States Code, is amended by inserting 

11 after subtitle V the following: 

12 ‘‘Subtitle VI—Clearance, Tonnage Taxes, and 

13 Duties 

‘‘Chapter Sec. 

‘‘601. Arrival and Departure Requirements ................................................... 60101 

‘‘603. Tonnage Taxes and Light Money ............................................................. 60301 

‘‘605. Discriminating Duties and Reciprocal Privileges .......................... 60501 

14 ‘‘CHAPTER 601—ARRIVAL AND DEPARTURE 

15 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. 

16 ‘‘§ 60101. Boarding arriving vessels before inspection 

17 ‘‘(a) REGULATIONS.—The Secretary of Homeland Security shall prescribe 

18 and enforce regulations on the boarding of a vessel arriving at a port of the 

19 United States before the vessel has been inspected and secured. 

20 ‘‘(b) CRIMINAL PENALTY.—A person violating a regulation prescribed 

21 under this section shall be fined under title 18, imprisoned for not more than 

22 6 months, or both. 

23 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section shall be construed as 

24 supplementary to section 2279 of title 18. 

25 ‘‘§ 60102. Production of certificate on entry 

26 ‘‘On entry of a vessel documented under chapter 121 of this title, the master 

27 or other individual in charge of the vessel shall produce the certificate of docu28 mentation to the customs officer at the place where the vessel is entered. If 

29 the certificate is not produced, the vessel is not entitled to the privileges of 

30 a documented vessel. 
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1 ‘‘§ 60103. Oath of ownership on entry 

2 ‘‘(a) REQUIRED STATEMENT.—On entry of a vessel of the United States 

3 from a foreign port, the individual designated under subsection (b) shall state 

4 under oath that— 

5 ‘‘(1) the vessel’s certificate of documentation contains the names of all 

6 the owners of the vessel; or 

7 ‘‘(2) part of the ownership has been transferred since the certificate 

8 was issued and, to the best of the individual’s knowledge and belief, the 

9 vessel is still owned only by citizens of the United States. 

10 ‘‘(b) PERSON TO MAKE STATEMENT.—The statement under subsection (a) 

11 shall be made by— 

12 ‘‘(1) an owner if one resides at the port of entry; or 

13 ‘‘(2) the master if an owner does not reside at the port of entry. 

14 ‘‘(c) CONSEQUENCE OF NOT MAKING STATEMENT.—If the appropriate indi15 vidual does not make the statement required by this section, the vessel is not 

16 entitled to the privileges of a vessel of the United States. 

17 ‘‘§ 60104. Depositing certificates of documentation with con18 sular officers 

19 ‘‘(a) REQUIREMENT OF MASTER.—When a vessel owned by citizens of the 

20 United States, on a voyage from a port in the United States, arrives at a 

21 foreign port, the master of the vessel shall deposit the vessel’s certificate of doc22 umentation with a consular officer at the foreign port if there is a consular 

23 officer at that port. 

24 ‘‘(b) RETURN OF CERTIFICATE.—When the master produces a clearance 

25 from the appropriate officer of the foreign port, the consular officer shall re26 turn the certificate of documentation to the master if the master has complied 

27 with the provisions of law related to the discharge of seamen in a foreign 

28 country and the payment of fees of consular officers. 

29 ‘‘(c) CIVIL PENALTY AND COLLECTION.—The master of a vessel failing to 

30 deposit the certificate of documentation as required by subsection (a) is liable 

31 to the United States Government for a civil penalty of $500. The consular 

32 officer shall bring an action to recover the penalty in any court of competent 

33 jurisdiction. The action shall be brought in the name of the consular officer 

34 for the benefit of the United States. 

35 ‘‘§ 60105. Clearance of vessels 

36 ‘‘(a) VESSELS OF THE UNITED STATES.—Except as otherwise provided by 

37 law, a vessel of the United States shall obtain clearance from the Secretary 

38 of Homeland Security before proceeding from a port or place in the United 

39 States— 

40 ‘‘(1) for a foreign port or place; 
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1 ‘‘(2) for another port or place in the United States if the vessel has 

2 on board foreign merchandise for which entry has not been made; or 

3 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

4 merchandise while outside the territorial sea. 

5 ‘‘(b) OTHER VESSELS.—Except as otherwise provided by law, a vessel that 

6 is not a vessel of the United States shall obtain clearance from the Secretary 

7 before proceeding from a port or place in the United States— 

8 ‘‘(1) for a foreign port or place; 

9 ‘‘(2) for another port or place in the United States; or 

10 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

11 or deliver merchandise while outside the territorial sea. 

12 ‘‘(c) REGULATIONS.—The Secretary may by regulation— 

13 ‘‘(1) prescribe the manner in which clearance under this section is to 

14 be obtained, including the documents, data, or information which shall 

15 be submitted or transmitted, pursuant to an authorized data interchange 

16 system, to obtain the clearance; 

17 ‘‘(2) permit clearance to be obtained before all requirements for clear18 ance are complied with, but only if the owner or operator of the vessel 

19 files a bond in an amount set by the Secretary conditioned on the com20 pliance by the owner or operator with all specified requirements for 

21 clearance within a time period (not exceeding 4 business days) estab22 lished by the Secretary; and 

23 ‘‘(3) permit clearance to be obtained at a place other than a des24 ignated port of entry, under conditions the Secretary may prescribe. 

25 ‘‘§ 60106. State inspection laws 

26 ‘‘When State law requires a certificate of inspection for goods carried on 

27 a vessel, a vessel transporting the goods may not be cleared until the certifi28 cate is produced. 

29 ‘‘§ 60107. Payment of fees on departing vessel 

30 ‘‘A departing vessel may be cleared only when all legal fees that have ac31 crued on the vessel are paid and proof of payment is presented to the indi32 vidual granting the clearance. 

33 ‘‘§ 60108. Duty to transport tendered cargo 

34 ‘‘Clearance may be refused to a vessel or vehicle transporting cargo destined 

35 for a domestic or foreign port when the owner, master, or other individual 

36 in charge refuses to accept cargo tendered in good condition, with proper 

37 charges, for the same or an intermediate port by a citizen of the United 

38 States. This section does not apply if the vessel or vehicle is already fully 

39 loaded (giving appropriate consideration to its proper loading) or is not 

40 adaptable to transport the tendered cargo. 
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1 ‘‘§ 60109. Duty to transport money and securities of the 

2 United States Government 

3 ‘‘Before being given clearance, a vessel owned by a citizen of the United 

4 States and bound on a voyage from a port in the United States to another 

5 port in the United States or in a foreign country, or on a voyage from a 

6 port in a foreign country to a port in the United States, shall receive on 

7 board any bullion, coin, notes, bonds, or other securities of the United States 

8 Government that an agency, consular officer, or other agent of the Govern9 ment offers. The vessel shall transport the items securely and deliver them 

10 promptly to the proper authorities or consignees on arriving at the port of 

11 destination. Compensation shall be paid for services provided under this sec12 tion that is equal to compensation paid to other carriers in the ordinary 

13 transaction of business. 

14 ‘‘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. 

‘‘60311. Hospital vessels in time of war. 

‘‘60312. Rights under treaties preserved. 

15 ‘‘§ 60301. Regular tonnage taxes 

16 ‘‘(a) LOWER RATE.—A tax is imposed at the rate of 2 cents per ton (but 

17 not more than a total of 10 cents per ton per year) at each entry in a port 

18 of the United States of— 

19 ‘‘(1) a vessel entering from a foreign port or place in North America, 

20 Central America, the West Indies Islands, the Bahama Islands, the Ber21 muda Islands, or the coast of South America bordering the Caribbean 

22 Sea; or 

23 ‘‘(2) a vessel returning to the same port or place in the United States 

24 from which it departed, and not entering the United States from another 

25 port or place, except— 

26 ‘‘(A) a vessel of the United States; 

27 ‘‘(B) a recreational vessel (as defined in section 2101 of this title); 

28 or 

29 ‘‘(C) a barge. 

30 ‘‘(b) HIGHER RATE.—A tax is imposed at the rate of 6 cents per ton (but 

31 not more than a total of 30 cents per ton per year) on a vessel at each entry 

32 in a port of the United States from a foreign port or place not named in 

33 subsection (a)(1). 
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1 ‘‘(c) EXCEPTION FOR VESSELS ENTERING OTHER THAN BY SEA.—Sub2 section (a) does not apply to a vessel entering other than by sea from a for3 eign port or place at which tonnage, lighthouse, or other equivalent taxes are 

4 not imposed on vessels of the United States. 

5 ‘‘§ 60302. Special tonnage taxes 

6 ‘‘(a) ENTRY FROM FOREIGN PORT OR PLACE.—Regardless of whether a tax 

7 is imposed under section 60301 of this title, a tax is imposed on a vessel at 

8 each entry in a port of the United States from a foreign port or place at 

9 the following rates: 

10 ‘‘(1) 30 cents per ton on a vessel built in the United States but owned 

11 in any part by a subject of a foreign country. 

12 ‘‘(2) 50 cents per ton on other vessels not of the United States. 

13 ‘‘(3) 50 cents per ton on a vessel of the United States having an officer 

14 who is not a citizen of the United States. 

15 ‘‘(4) $2 per ton on a foreign vessel entering from a foreign port or 

16 place at which vessels of the United States are not ordinarily allowed 

17 to enter and trade. 

18 ‘‘(b) VESSELS NOT OF THE UNITED STATES TRANSPORTING PROPERTY BE19 TWEEN DISTRICTS.—Regardless of whether a tax is imposed under section 

20 60301 of this title, a tax of 50 cents per ton is imposed on a vessel not of 

21 the United States at each entry in one customs district from another district 

22 when transporting goods loaded in one district to be delivered in another dis23 trict. 

24 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—The tax of 50 

25 cents per ton under this section does not apply to a vessel that— 

26 ‘‘(1) is owned only by citizens of the United States; and 

27 ‘‘(2) after entering a port of the United States, becomes documented 

28 as a vessel of the United States before leaving that port. 

29 ‘‘§ 60303. Light money 

30 ‘‘(a) IMPOSITION OF TAX.—A tax of 50 cents per ton, to be called ‘light 

31 money’, is imposed on a vessel not of the United States at each entry in a 

32 port of the United States. This tax shall be imposed and collected under the 

33 same regulations that apply to tonnage taxes. 

34 ‘‘(b) EXCEPTION FOR VESSELS OWNED BY CITIZENS.— 

35 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to a vessel owned 

36 only by citizens of the United States if— 

37 ‘‘(A) the vessel is carrying a regular document issued by a cus38 tomhouse of the United States proving the vessel to be owned only 

39 by citizens of the United States; and 

40 ‘‘(B) on entry of the vessel from a foreign port, the individual 

41 designated under paragraph (2) states under oath that— 
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1 ‘‘(i) the document contains the names of all the owners of 

2 the vessel; or 

3 ‘‘(ii) part of the ownership has been transferred since the 

4 document was issued and, to the best of that individual’s 

5 knowledge and belief, the vessel is still owned only by citizens 

6 of the United States. 

7 ‘‘(2) PERSON TO MAKE STATEMENT.—The statement under paragraph 

8 (1)(B) shall be made by— 

9 ‘‘(A) an owner if one resides at the port of entry; or 

10 ‘‘(B) the master if an owner does not reside at the port of entry. 

11 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) 

12 section does not apply to a vessel that— 

13 ‘‘(1) is owned only by citizens of the United States; and 

14 ‘‘(2) after entering a port of the United States, becomes documented 

15 as a vessel of the United States before leaving that port. 

16 ‘‘§ 60304. Presidential suspension of tonnage taxes and light 

17 money 

18 ‘‘If the President is satisfied that the government of a foreign country does 

19 not impose discriminating or countervailing duties to the disadvantage of the 

20 United States, the President shall suspend the imposition of special tonnage 

21 taxes and light money under sections 60302 and 60303 of this title on vessels 

22 of that country. 

23 ‘‘§ 60305. Vessels in distress 

24 ‘‘A vessel is exempt from tonnage taxes and light money when it enters be25 cause it is in distress. 

26 ‘‘§ 60306. Vessels not engaged in trade 

27 ‘‘A vessel is exempt from tonnage taxes and light money when not engaged 

28 in trade. 

29 ‘‘§ 60307. Vessels engaged in coastwise trade or the fisheries 

30 ‘‘A vessel with a registry endorsement or a coastwise endorsement, trading 

31 from one port in the United States to another port in the United States or 

32 employed in the bank, whale, or other fisheries, is exempt from tonnage taxes 

33 and light money. 

34 ‘‘§ 60308. Vessels engaged in Great Lakes trade 

35 ‘‘A documented vessel with a registry endorsement, engaged in foreign trade 

36 on the Great Lakes or their tributary or connecting waters in trade with Can37 ada, does not become subject to tonnage taxes or light money because of that 

38 trade. 
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1 ‘‘§ 60309. Passenger vessels making trips between ports of the 

2 United States and foreign ports 

3 ‘‘A passenger vessel making at least 3 trips per week between a port of the 

4 United States and a foreign port is exempt from tonnage taxes and light 

5 money. 

6 ‘‘§ 60310. Vessels making daily trips on interior waters 

7 ‘‘A vessel making regular daily trips between a port of the United States 

8 and a port of Canada only on interior waters not navigable to the ocean is 

9 exempt from tonnage taxes and light money, except on its first clearing each 

10 year. 

11 ‘‘§ 60311. Hospital vessels in time of war 

12 ‘‘In time of war, a hospital vessel is exempt from tonnage taxes, light 

13 money, and pilotage charges in the ports of the United States if the vessel 

14 is one for which the conditions of the international convention for the exemp15 tion of hospital ships from taxation in time of war, concluded at The Hague 

16 on December 21, 1904, are satisfied. The President by proclamation shall 

17 name the vessels for which the conditions are satisfied and state when the ex18 emption begins and ends. 

19 ‘‘§ 60312. Rights under treaties preserved 

20 ‘‘This chapter and chapter 605 of this title do not affect a right or privilege 

21 of a foreign country relating to tonnage taxes or other duties on vessels under 

22 a law or treaty of the United States. 

23 ‘‘CHAPTER 605—DISCRIMINATING DUTIES AND 

24 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. 

25 ‘‘§ 60501. Vessels allowed to import 

26 ‘‘(a) IN GENERAL.—Except as otherwise provided by treaty, goods may be 

27 imported into the United States from a foreign port or place only in— 

28 ‘‘(1) a vessel of the United States; or 

29 ‘‘(2) a foreign vessel owned only by citizens or subjects of the coun30 try— 

31 ‘‘(A) in which the goods are grown, produced, or manufactured; 

32 or 

33 ‘‘(B) from which the goods can only be, or most usually are, first 

34 shipped for transportation. 

35 ‘‘(b) EXCEPTION FOR VESSELS OF COUNTRIES NOT MAINTAINING SIMILAR

36 RESTRICTIONS.—Subsection (a) does not apply to a vessel of a foreign coun-
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1 try that does not maintain a similar restriction against United States docu2 mented vessels. 

3 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) 

4 does not apply to a vessel that— 

5 ‘‘(1) is owned only by citizens of the United States; and 

6 ‘‘(2) after entering a port of the United States, becomes documented 

7 as a vessel of the United States before leaving that port. 

8 ‘‘(d) SEIZURE AND FORFEITURE.—If goods are imported in violation of 

9 this section, the goods and the vessel in which they are imported, along with 

10 its equipment and other cargo, may be seized by and forfeited to the United 

11 States Government. 

12 ‘‘§ 60502. Discriminating duty on goods imported in foreign 

13 vessels or from contiguous countries 

14 ‘‘(a) IMPOSITION OF DUTY.—A discriminating duty of 10 percent ad valo15 rem (in addition to other duties imposed by law) is imposed on goods— 

16 ‘‘(1) imported in a vessel not of the United States unless the vessel— 

17 ‘‘(A) is entitled by law or treaty to enter the ports of the United 

18 States on payment of the same duties as are payable on goods im19 ported in a vessel of the United States; or 

20 ‘‘(B)(i) is owned only by citizens of the United States; and 

21 ‘‘(ii) after entering a port of the United States, becomes docu22 mented as a vessel of the United States before leaving that port; or 

23 ‘‘(2) produced or manufactured in a foreign country not contiguous 

24 to the United States and imported from a country contiguous to the 

25 United States, unless imported in the usual course of strictly retail trade. 

26 ‘‘(b) SEIZURE AND FORFEITURE.—If goods are imported without payment 

27 of the duty required by this section, the goods and the vessel in which they 

28 are imported may be seized by, and forfeited to, the United States Govern29 ment. 

30 ‘‘§ 60503. Reciprocal suspension of discriminating duties 

31 ‘‘(a) GENERAL AUTHORITY.—On receiving satisfactory proof from the gov32 ernment of a foreign country that it has suspended, in any part, the imposi33 tion of discriminating duties for any class of vessels owned by citizens of the 

34 United States or goods imported in those vessels, the President may proclaim 

35 a reciprocal suspension of discriminating duties for the same class of vessels 

36 owned by citizens of that country or goods imported in those vessels. 

37 ‘‘(b) EFFECTIVE AND EXPIRATION DATES.—A suspension under this section 

38 takes effect retroactively from the date the President received the proof from 

39 the foreign government, and expires when that government stops granting the 

40 reciprocal suspension. 
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1 ‘‘§ 60504. Reciprocal privileges for recreational vessels 

2 ‘‘When the President is satisfied that yachts owned by residents of the 

3 United States and used only for pleasure are allowed to arrive at, depart 

4 from, and cruise in the waters of a foreign port without entering, clearing, 

5 or paying any duties or fees (including cruising license fees), the Secretary 

6 of Homeland Security may allow yachts from that foreign port used only for 

7 pleasure to arrive at and depart from the ports of the United States and to 

8 cruise in the waters of the United States without paying any duties or fees. 

9 However, the Secretary may require foreign yachts to obtain a license to 

10 cruise in the waters of the United States. The license shall be in the form 

11 prescribed by the Secretary and contain limitations about length of time, di12 rection, place of cruising and action, and other matters the Secretary con13 siders appropriate. The license shall be issued without cost to the yacht. 

14 ‘‘§ 60505. Retaliatory suspension of commercial privileges 

15 ‘‘(a) GENERAL AUTHORITY.—The President may proclaim a suspension of 

16 commercial privileges to vessels of a foreign country when— 

17 ‘‘(1) vessels of that country have been given the same commercial 

18 privileges in the ports and waters of the United States given to vessels 

19 of the United States (except the privilege of engaging in coastwise com20 merce); and 

21 ‘‘(2) vessels of the United States are denied commercial privileges in 

22 the ports or waters of that country given to vessels of that country. 

23 ‘‘(b) APPLICATION.—A suspension under this section shall apply to the 

24 same commercial privileges denied to vessels of the United States in the ports 

25 or waters of the foreign country, and to the same class of vessels of that coun26 try as the class of vessels of the United States denied the privileges. 

27 ‘‘(c) EFFECTIVE DATE.—The President shall designate the effective date of 

28 the suspension in the proclamation. 

29 ‘‘(d) PENALTIES.— 

30 ‘‘(1) SEIZURE AND FORFEITURE.—If the master, officer, or agent of 

31 a vessel of a foreign country does an act for the vessel in the ports or 

32 waters of the United States in violation of a proclamation issued under 

33 this section, the vessel and the goods on the vessel may be seized by, and 

34 forfeited to, the United States Government. 

35 ‘‘(2) FINE OR IMPRISONMENT.—A person opposing an official of the 

36 Government enforcing this section shall be fined under title 18, impris37 oned for not more than 2 years, or both. 

38 ‘‘§ 60506. Retaliation against British dominions of North 

39 America 

40 ‘‘(a) GENERAL AUTHORITY.—The President by proclamation may prohibit 

41 vessels of the British dominions of North America, their masters and crews, 
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1 and products of or coming from those dominions, from entering waters, ports, 

2 or places of the United States when the President is satisfied that— 

3 ‘‘(1) fishermen or fishing vessels of the United States in waters, ports, 

4 or places of the British dominions of North America are being or recently 

5 have been— 

6 ‘‘(A) denied rights provided by law or treaty; 

7 ‘‘(B) subjected to unreasonable restrictions in the exercise of those 

8 rights; or 

9 ‘‘(C) otherwise harassed; 

10 ‘‘(2) fishermen or fishing vessels of the United States, having a permit 

11 under the laws of the United States to dock or trade at a port or place 

12 in the British dominions of North America, are being or recently have 

13 been— 

14 ‘‘(A) denied the privilege of entering the port or place in the same 

15 manner and under the same regulations applicable to trading ves16 sels of the most-favored-nation; 

17 ‘‘(B) prevented from buying supplies allowed to be sold to trading 

18 vessels of the most-favored-nation; or 

19 ‘‘(C) otherwise harassed; or 

20 ‘‘(3) other vessels of the United States or their masters or crews in wa21 ters, ports, or places of the British dominions of North America are being 

22 or recently have been— 

23 ‘‘(A) denied privileges given to vessels of the most-favored-nation 

24 or their masters or crews; or 

25 ‘‘(B) otherwise harassed. 

26 ‘‘(b) COVERAGE AND EXCEPTIONS.—The President may apply a proclama27 tion under this section to any of the subjects named, and may include excep28 tions for vessels in distress or need of supplies. The President may change, 

29 revoke, and renew the proclamation. 

30 ‘‘(c) PENALTIES.—A person violating a proclamation issued under this sec31 tion shall be fined under title 18, imprisoned for not more than 2 years, or 

32 both. A vessel or goods found in waters, ports, or places of the United States 

33 in violation of the proclamation may be seized by, and forfeited to, the United 

34 States Government. 

35 ‘‘§ 60507. Suspension of free passage through Saint Marys 

36 Falls Canal 

37 ‘‘(a) PURPOSE.—The purpose of this section is to secure reciprocal advan38 tages for the citizens, ports, and vessels of the United States. 

39 ‘‘(b) GENERAL AUTHORITY.—When the President is satisfied that vessels of 

40 the United States, or passengers or cargo being transported to a port of the 

41 United States, are prohibited from passing through a canal or lock connected 
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1 with the navigation of the Saint Lawrence River, the Great Lakes, or their 

2 connecting waterways, or burdened in that passage by tolls or other means 

3 that are unreasonable in view of the free passage through the Saint Marys 

4 Falls Canal allowed to vessels of all countries, the President by proclamation 

5 may suspend the right of free passage through the Saint Marys Falls Canal 

6 for vessels owned by subjects of the country imposing the prohibition, tolls, 

7 or other burdens and for passengers and cargo being transported to the ports 

8 of that country, even when carried in vessels of the United States. The suspen9 sion shall apply to the extent and for the time the President considers appro10 priate. 

11 ‘‘(c) IMPOSITION OF TOLL.— 

12 ‘‘(1) IN GENERAL.—During a suspension under this section, the Presi13 dent shall impose a toll of not more than $2 per ton on cargo and not 

14 more than $5 on each passenger. 

15 ‘‘(2) EXCEPTIONS.—Notwithstanding paragraph (1), a toll may not be 

16 imposed on passengers or cargo landed at Ogdensburg, New York, or any 

17 port west of Ogdensburg and south of a line drawn from the northern 

18 boundary of New York through the Saint Lawrence River, the Great 

19 Lakes, and their connecting channels to the northern boundary of Min20 nesota. 

21 ‘‘(d) COLLECTION OF TOLL.— 

22 ‘‘(1) IN GENERAL.—A toll imposed under this section shall be collected 

23 under regulations prescribed by the Secretary of Homeland Security. The 

24 Secretary may require the master of a vessel to provide a sworn state25 ment of the amount and kind of cargo, the number of passengers, and 

26 the destination of the passengers and cargo. 

27 ‘‘(2) PROOF OF LANDING.—When applicable, the Secretary also may 

28 require satisfactory proof that the passengers and cargo were landed at 

29 a port described in subsection (c)(2). Until that proof is provided, the 

30 Secretary may assume the passengers and cargo were not landed at such 

31 a port, and the amount of a toll that otherwise would be imposed is a 

32 lien enforceable against the vessel when found in the waters of the United 

33 States.’’. 

34 SEC. 10. SUBTITLE VII OF TITLE 46. 

35 Subtitle VII of title 46, United States Code, as redesignated by section 9(a) 

36 of this Act, is amended as follows: 

37 (1) The subtitle heading and analysis are amended to read as follows: 

38 ‘‘Subtitle VII—Security and Drug Enforcement 

‘‘Chapter Sec.

‘‘701. Port Security ....................................................................................................... 70101

‘‘703. Maritime Security ............................................................................................ 70301

‘‘705. Maritime Drug Law Enforcement ............................................................ 70501’’. 
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1 (2) Add after chapter 701 the following: 

2 ‘‘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. 

3 ‘‘§ 70301. Definitions 

4 ‘‘In this chapter: 

5 ‘‘(1) COMMON CARRIER.—The term ‘common carrier’ has the meaning 

6 given that term in section 40102 of this title. 

7 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ has the mean8 ing given that term in section 2101 of this title. 

9 ‘‘(3) SECRETARY.—The term ‘Secretary’ means the Secretary of the de10 partment in which the Coast Guard is operating. 

11 ‘‘§ 70302. International measures for seaport and vessel secu12 rity 

13 ‘‘Congress encourages the President to continue to seek agreement on inter14 national seaport and vessel security through the International Maritime Or15 ganization. In developing an agreement, each member country of the Inter16 national Maritime Organization should consult with appropriate private sec17 tor interests in that country. The agreement would establish seaport and vessel 

18 security measures and could include— 

19 ‘‘(1) seaport screening of cargo and baggage similar to that done at 

20 airports; 

21 ‘‘(2) security measures to restrict access to cargo, vessels, and dockside 

22 property to authorized personnel only; 

23 ‘‘(3) additional security on board vessels; 

24 ‘‘(4) licensing or certification of compliance with appropriate security 

25 standards; and 

26 ‘‘(5) other appropriate measures to prevent unlawful acts against pas27 sengers and crews on vessels. 

28 ‘‘§ 70303. Security standards at foreign ports 

29 ‘‘(a) GENERAL REQUIREMENTS.—The Secretary shall develop and imple30 ment a plan to assess the effectiveness of the security measures maintained 

31 at foreign ports that the Secretary, in consultation with the Secretary of 

32 State, determines pose a high risk of acts of terrorism against passenger ves33 sels. In carrying out this subsection, the Secretary shall consult with the Sec34 retary of State about the terrorist threat that exists in each country and poses 

35 a high risk of acts of terrorism against passenger vessels. 

36 ‘‘(b) NOTICE AND RECOMMENDATIONS TO OTHER COUNTRIES.—If the Sec37 retary, after implementing the plan under subsection (a), determines that a 
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1 port does not maintain and administer effective security measures, the Sec2 retary of State (after being informed by the Secretary) shall— 

3 ‘‘(1) notify the appropriate government authorities of the country in 

4 which the port is located of the determination; and 

5 ‘‘(2) recommend steps necessary to bring the security measures at that 

6 port up to the standard used by the Secretary in making the assessment 

7 under subsection (a). 

8 ‘‘(c) ANTITERRORISM ASSISTANCE.—The President is encouraged to provide 

9 antiterrorism assistance related to maritime security under chapter 8 of part 

10 II of the Foreign Assistance Act of 1961 (22 U.S.C. 2349aa et seq.) to foreign 

11 countries, especially for a port that the Secretary determines under subsection 

12 (b) does not maintain and administer effective security measures. 

13 ‘‘§ 70304. Travel advisories on security at foreign ports 

14 ‘‘(a) GENERAL REQUIREMENTS.—On being notified by the Secretary that 

15 the Secretary has determined that a condition exists that threatens the safety 

16 or security of passengers, passenger vessels, or crew traveling to or from a for17 eign port that the Secretary has determined under section 70303(b) of this 

18 title does not maintain and administer effective security measures, the Sec19 retary of State immediately shall issue a travel advisory for that port. The 

20 Secretary of State shall take the necessary steps to widely publicize the travel 

21 advisory. 

22 ‘‘(b) LIFTING ADVISORIES.—A travel advisory issued under subsection (a) 

23 may be lifted only if the Secretary, in consultation with the Secretary of 

24 State, has determined that effective security measures are maintained and ad25 ministered at the port. 

26 ‘‘(c) NOTICE TO CONGRESS.—The Secretary of State shall notify Congress 

27 immediately of any change in the status of a travel advisory issued under 

28 this section. 

29 ‘‘§ 70305. Suspension of passenger services 

30 ‘‘(a) GENERAL AUTHORITY.—Whenever the President determines that a for31 eign nation permits the use of territory under its jurisdiction as a base of 

32 operations or training for, or as a sanctuary for, or in any way arms, aids, 

33 or abets, a terrorist or terrorist group that knowingly uses the illegal seizure 

34 of passenger vessels or the threat thereof as an instrument of policy, the Presi35 dent may suspend the right of any passenger vessel common carrier to operate 

36 to or from, and the right of any passenger vessel of the United States to use, 

37 a port in that foreign nation for passenger service. The suspension may be 

38 without notice or hearing and for as long as the President determines is nec39 essary to ensure the security of passenger vessels against unlawful seizure. 
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1 ‘‘(b) PROHIBITION.—A passenger vessel common carrier, or a passenger ves2 sel of the United States, may not operate in violation of a suspension under 

3 this section. 

4 ‘‘(c) PENALTIES.— 

5 ‘‘(1) DENIAL OF ENTRY.—If a person operates a vessel in violation of 

6 this section, the Secretary may deny the vessels of that person entry to 

7 ports of the United States. 

8 ‘‘(2) CIVIL PENALTY.—A person violating this section is liable to the 

9 United States Government for a civil penalty of not more than $50,000. 

10 Each day a vessel uses a prohibited port is a separate violation. 

11 ‘‘§ 70306. Report on terrorist threats 

12 ‘‘(a) CONTENT.—Not later than February 28 of each year, the Secretary 

13 shall submit a report to Congress on the threat from acts of terrorism to 

14 United States ports and vessels operating from those ports. The Secretary 

15 shall include a description of activities undertaken under title I of the Mari16 time Transportation Security Act of 2002 (Public Law 107–295, 116 Stat. 

17 2066) and an analysis of the effect of those activities on port security against 

18 acts of terrorism. 

19 ‘‘(b) SUBMISSION.—The report shall be submitted to the Committee on 

20 International Relations and the Committee on Transportation and Infra21 structure of the House of Representatives and the Committee on Foreign Rela22 tions and the Committee on Commerce, Science, and Transportation of the 

23 Senate. Any classified information in the report shall be submitted separately 

24 as an addendum. 

25 ‘‘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. 

26 ‘‘§ 70501. Findings and declarations 

27 ‘‘Congress finds and declares that trafficking in controlled substances 

28 aboard vessels is a serious international problem, is universally condemned, 

29 and presents a specific threat to the security and societal well-being of the 

30 United States. 

31 ‘‘§ 70502. Definitions 

32 ‘‘(a) APPLICATION OF OTHER DEFINITIONS.—The definitions in section 102 

33 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 

34 U.S.C. 802) apply to this chapter. 

35 ‘‘(b) VESSEL OF THE UNITED STATES.—In this chapter, the term ‘vessel 

36 of the United States’ means— 
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1 ‘‘(1) a vessel documented under chapter 121 of this title or numbered 

2 as provided in chapter 123 of this title; 

3 ‘‘(2) a vessel owned in any part by an individual who is a citizen 

4 of the United States, the United States Government, the government of 

5 a State or political subdivision of a State, or a corporation incorporated 

6 under the laws of the United States or of a State, unless— 

7 ‘‘(A) the vessel has been granted the nationality of a foreign na8 tion under article 5 of the 1958 Convention on the High Seas; and 

9 ‘‘(B) a claim of nationality or registry for the vessel is made by 

10 the master or individual in charge at the time of the enforcement 

11 action by an officer or employee of the United States who is author12 ized to enforce applicable provisions of United States law; and 

13 ‘‘(3) a vessel that was once documented under the laws of the United 

14 States and, in violation of the laws of the United States, was sold to 

15 a person not a citizen of the United States, placed under foreign registry, 

16 or operated under the authority of a foreign nation, whether or not the 

17 vessel has been granted the nationality of a foreign nation. 

18 ‘‘(c) VESSEL SUBJECT TO THE JURISDICTION OF THE UNITED STATES.— 

19 ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel subject to the ju20 risdiction of the United States’ includes— 

21 ‘‘(A) a vessel without nationality; 

22 ‘‘(B) a vessel assimilated to a vessel without nationality under 

23 paragraph (2) of article 6 of the 1958 Convention on the High Seas; 

24 ‘‘(C) a vessel registered in a foreign nation if that nation has con25 sented or waived objection to the enforcement of United States law 

26 by the United States; 

27 ‘‘(D) a vessel in the customs waters of the United States; 

28 ‘‘(E) a vessel in the territorial waters of a foreign nation if the 

29 nation consents to the enforcement of United States law by the 

30 United States; and 

31 ‘‘(F) a vessel in the contiguous zone of the United States, as de32 fined in Presidential Proclamation 7219 of September 2, 1999 (43 

33 U.S.C. 1331 note), that— 

34 ‘‘(i) is entering the United States; 

35 ‘‘(ii) has departed the United States; or 

36 ‘‘(iii) is a hovering vessel as defined in section 401 of the 

37 Tariff Act of 1930 (19 U.S.C. 1401). 

38 ‘‘(2) CONSENT OR WAIVER OF OBJECTION.—Consent or waiver of objec39 tion by a foreign nation to the enforcement of United States law by the 

40 United States under paragraph (1)(C) or (E)— 
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1 ‘‘(A) may be obtained by radio, telephone, or similar oral or elec2 tronic means; and 

3 ‘‘(B) is proved conclusively by certification of the Secretary of 

4 State or the Secretary’s designee. 

5 ‘‘(d) VESSEL WITHOUT NATIONALITY.— 

6 ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel without nation7 ality’ includes— 

8 ‘‘(A) a vessel aboard which the master or individual in charge 

9 makes a claim of registry that is denied by the nation whose reg10 istry is claimed; 

11 ‘‘(B) a vessel aboard which the master or individual in charge 

12 fails, on request of an officer of the United States authorized to en13 force applicable provisions of United States law, to make a claim 

14 of nationality or registry for that vessel; and 

15 ‘‘(C) a vessel aboard which the master or individual in charge 

16 makes a claim of registry and for which the claimed nation of reg17 istry does not affirmatively and unequivocally assert that the vessel 

18 is of its nationality. 

19 ‘‘(2) VERIFICATION OR DENIAL.—A claim of registry under paragraph 

20 (1)(A) or (C) may be verified or denied by radio, telephone, or similar 

21 oral or electronic means. The denial of such a claim is proved conclu22 sively by certification of the Secretary of State or the Secretary’s des23 ignee. 

24 ‘‘(e) CLAIM OF NATIONALITY OR REGISTRY.—A claim of nationality or reg25 istry under this section includes only— 

26 ‘‘(1) possession on board the vessel and production of documents evi27 dencing the vessel’s nationality as provided in article 5 of the 1958 Con28 vention on the High Seas; 

29 ‘‘(2) flying its nation’s ensign or flag; or 

30 ‘‘(3) a verbal claim of nationality or registry by the master or indi31 vidual in charge of the vessel. 

32 ‘‘§ 70503. Manufacture, distribution, or possession of con33 trolled substances on vessels 

34 ‘‘(a) PROHIBITIONS.—An individual may not knowingly or intentionally 

35 manufacture or distribute, or possess with intent to manufacture or distribute, 

36 a controlled substance on board— 

37 ‘‘(1) a vessel of the United States or a vessel subject to the jurisdiction 

38 of the United States; or 

39 ‘‘(2) any vessel if the individual is a citizen of the United States or 

40 a resident alien of the United States. 
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1 ‘‘(b) EXTENSION BEYOND TERRITORIAL JURISDICTION.—Subsection (a) ap2 plies even though the act is committed outside the territorial jurisdiction of 

3 the United States. 

4 ‘‘(c) NONAPPLICATION.— 

5 ‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection (a) does not 

6 apply to— 

7 ‘‘(A) a common or contract carrier or an employee of the carrier 

8 who possesses or distributes a controlled substance in the lawful and 

9 usual course of the carrier’s business; or 

10 ‘‘(B) a public vessel of the United States or an individual on 

11 board the vessel who possesses or distributes a controlled substance 

12 in the lawful course of the individual’s duties. 

13 ‘‘(2) ENTERED IN MANIFEST.—Paragraph (1) applies only if the con14 trolled substance is part of the cargo entered in the vessel’s manifest and 

15 is intended to be imported lawfully into the country of destination for 

16 scientific, medical, or other lawful purposes. 

17 ‘‘(d) BURDEN OF PROOF.—The United States Government is not required 

18 to negative a defense provided by subsection (c) in a complaint, information, 

19 indictment, or other pleading or in a trial or other proceeding. The burden 

20 of going forward with the evidence supporting the defense is on the person 

21 claiming its benefit. 

22 ‘‘§ 70504. Jurisdiction and venue 

23 ‘‘(a) JURISDICTION.—Jurisdiction of the United States with respect to a 

24 vessel subject to this chapter is not an element of an offense. Jurisdictional 

25 issues arising under this chapter are preliminary questions of law to be deter26 mined solely by the trial judge. 

27 ‘‘(b) VENUE.—A person violating section 70503 of this title shall be tried 

28 in the district court of the United States for— 

29 ‘‘(1) the district at which the person enters the United States; or 

30 ‘‘(2) the District of Columbia. 

31 ‘‘§ 70505. Failure to comply with international law as a de32 fense 

33 ‘‘A person charged with violating section 70503 of this title does not have 

34 standing to raise a claim of failure to comply with international law as a 

35 basis for a defense. A claim of failure to comply with international law in 

36 the enforcement of this chapter may be made only by a foreign nation. A fail37 ure to comply with international law does not divest a court of jurisdiction 

38 and is not a defense to a proceeding under this chapter. 

39 ‘‘§ 70506. Penalties 

40 ‘‘(a) VIOLATIONS.—A person violating section 70503 of this title shall be 

41 punished as provided in section 1010 of the Comprehensive Drug Abuse Pre-
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1 vention and Control Act of 1970 (21 U.S.C. 960). However, if the offense is 

2 a second or subsequent offense as provided in section 1012(b) of that Act (21 

3 U.S.C. 962(b)), the person shall be punished as provided in section 1012 of 

4 that Act (21 U.S.C. 962). 

5 ‘‘(b) ATTEMPTS AND CONSPIRACIES.—A person attempting or conspiring to 

6 violate section 70503 of this title is subject to the same penalties as provided 

7 for violating section 70503. 

8 ‘‘§ 70507. Forfeitures 

9 ‘‘(a) IN GENERAL.—Property described in section 511(a) of the Comprehen10 sive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 881(a)) that 

11 is used or intended for use to commit, or to facilitate the commission of, an 

12 offense under section 70503 of this title may be seized and forfeited in the 

13 same manner that similar property may be seized and forfeited under section 

14 511 of that Act (21 U.S.C. 881). 

15 ‘‘(b) PRIMA FACIE EVIDENCE OF VIOLATION.—Practices commonly recog16 nized as smuggling tactics may provide prima facie evidence of intent to use 

17 a vessel to commit, or to facilitate the commission of, an offense under section 

18 70503 of this title, and may support seizure and forfeiture of the vessel, even 

19 in the absence of controlled substances aboard the vessel. The following indi20 cia, among others, may be considered, in the totality of the circumstances, to 

21 be prima facie evidence that a vessel is intended to be used to commit, or 

22 to facilitate the commission of, such an offense: 

23 ‘‘(1) The construction or adaptation of the vessel in a manner that 

24 facilitates smuggling, including— 

25 ‘‘(A) the configuration of the vessel to ride low in the water or 

26 present a low hull profile to avoid being detected visually or by 

27 radar; 

28 ‘‘(B) the presence of any compartment or equipment that is built 

29 or fitted out for smuggling, not including items such as a safe or 

30 lock-box reasonably used for the storage of personal valuables; 

31 ‘‘(C) the presence of an auxiliary tank not installed in accordance 

32 with applicable law or installed in such a manner as to enhance 

33 the vessel’s smuggling capability; 

34 ‘‘(D) the presence of engines that are excessively over-powered in 

35 relation to the design and size of the vessel; 

36 ‘‘(E) the presence of materials used to reduce or alter the heat or 

37 radar signature of the vessel and avoid detection; 

38 ‘‘(F) the presence of a camouflaging paint scheme, or of materials 

39 used to camouflage the vessel, to avoid detection; or 

40 ‘‘(G) the display of false vessel registration numbers, false indicia 

41 of vessel nationality, false vessel name, or false vessel homeport. 
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1 ‘‘(2) The presence or absence of equipment, personnel, or cargo incon2 sistent with the type or declared purpose of the vessel. 

3 ‘‘(3) The presence of excessive fuel, lube oil, food, water, or spare parts, 

4 inconsistent with legitimate vessel operation, inconsistent with the con5 struction or equipment of the vessel, or inconsistent with the character 

6 of the vessel’s stated purpose. 

7 ‘‘(4) The operation of the vessel without lights during times lights are 

8 required to be displayed under applicable law or regulation and in a 

9 manner of navigation consistent with smuggling tactics used to avoid de10 tection by law enforcement authorities. 

11 ‘‘(5) The failure of the vessel to stop or respond or heave to when 

12 hailed by government authority, especially where the vessel conducts eva13 sive maneuvering when hailed. 

14 ‘‘(6) The declaration to government authority of apparently false in15 formation about the vessel, crew, or voyage or the failure to identify the 

16 vessel by name or country of registration when requested to do so by gov17 ernment authority. 

18 ‘‘(7) The presence of controlled substance residue on the vessel, on an 

19 item aboard the vessel, or on an individual aboard the vessel, of a quan20 tity or other nature that reasonably indicates manufacturing or distribu21 tion activity. 

22 ‘‘(8) The use of petroleum products or other substances on the vessel 

23 to foil the detection of controlled substance residue. 

24 ‘‘(9) The presence of a controlled substance in the water in the vicinity 

25 of the vessel, where given the currents, weather conditions, and course 

26 and speed of the vessel, the quantity or other nature is such that it rea27 sonably indicates manufacturing or distribution activity.’’. 

28 SEC. 11. SUBTITLE VIII OF TITLE 46. 

29 Title 46, United States Code, is amended by adding after subtitle VII the 

30 following: 

31 ‘‘Subtitle VIII—Miscellaneous 

‘‘Chapter Sec. 

‘‘801. Wrecks and Salvage ........................................................................................ 80101 

‘‘803. Ice and Derelicts .............................................................................................. 80301 

‘‘805. Safe Containers for International Cargo ............................................ 80501 

32 ‘‘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. 
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1 ‘‘§ 80101. Vessel stranded on foreign coast 

2 ‘‘(a) DUTIES OF CONSULAR OFFICER.—When a vessel of the United States 

3 is stranded on a coast of a foreign country, the consular officer in that coun4 try shall take proper measures, to the extent the laws of that country allow, 

5 to— 

6 ‘‘(1) save and secure the vessel and property on the vessel; and 

7 ‘‘(2) prepare an inventory of the property that is saved. 

8 ‘‘(b) DELIVERY TO OWNER.—After deducting the expenses, the consular offi9 cer shall deliver the property, with an inventory, to the owner of the property. 

10 ‘‘(c) LIMITATION ON TAKING POSSESSION.—A consular officer may not take 

11 possession of property under this section when the owner, master, or consignee 

12 is present or able to take possession of the property. 

13 ‘‘§ 80102. License to salvage on Florida coast 

14 ‘‘(a) LICENSING REQUIREMENTS.—To be regularly employed in the busi15 ness of salvaging on the coast of Florida, a vessel and its master each must 

16 have a license issued by a judge of the district court of the United States for 

17 a judicial district of Florida. 

18 ‘‘(b) JUDICIAL FINDINGS.—Before issuing a license under this section, the 

19 judge must be satisfied, when the license is for— 

20 ‘‘(1) a vessel, that the vessel is seaworthy and properly equipped for 

21 the business of saving property shipwrecked and in distress; or 

22 ‘‘(2) a master, that the master is trustworthy and innocent of any 

23 fraud or misconduct related to property shipwrecked or saved on the 

24 coast. 

25 ‘‘§ 80103. Property on Florida coast to be taken to port of 

26 entry 

27 ‘‘(a) IN GENERAL.—Property taken from a wreck, the sea, or a key or 

28 shoal, on the coast of Florida and within the jurisdiction of the United States, 

29 shall be brought to a port of entry of the United States. 

30 ‘‘(b) SEIZURE AND FORFEITURE.—A vessel transporting property described 

31 in subsection (a) to a foreign port may be seized by, and forfeited to, the 

32 United States Government. A forfeiture under this subsection accrues half to 

33 the informer and half to the Government. 

34 ‘‘§ 80104. Salvaging operations by foreign vessels 

35 ‘‘(a) PROHIBITION.—Except as provided in this section or section 80105 of 

36 this title, a foreign vessel may not, under penalty of forfeiture, engage in sal37 vaging operations on the Atlantic or Pacific coast of the United States, in 

38 any portion of the Great Lakes or their connecting or tributary waters, in39 cluding any portion of the Saint Lawrence River through which the inter40 national boundary line extends, or in territorial waters of the United States 

41 on the Gulf of Mexico. 
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1 ‘‘(b) WHEN SUITABLE VESSEL NOT AVAILABLE.—The Secretary of Home2 land Security may authorize a foreign vessel to engage in salvaging oper3 ations in a particular locality if, on investigation, the Secretary is satisfied 

4 that there is not available in that locality a suitable vessel that is— 

5 ‘‘(1) owned only by citizens of the United States (including a 

6 Bowaters corporation under section 12118 of this title); and 

7 ‘‘(2) documented under chapter 121 of this title or numbered under 

8 chapter 123 of this title. 

9 ‘‘(c) OPERATIONS AUTHORIZED BY TREATY.—This section does not prohibit 

10 or restrict assistance to vessels or salvaging operations authorized by treaty, 

11 including— 

12 ‘‘(1) article II of the Treaty between the United States and Great Brit13 ain concerning reciprocal rights for United States and Canada in the 

14 conveyance of prisoners and wrecking and salvage, signed at Washington, 

15 May 18, 1908 (35 Stat. 2036); or 

16 ‘‘(2) the Treaty between the United States of America and Mexico to 

17 facilitate assistance to and salvage of vessels in territorial waters, signed 

18 at Mexico City, June 13, 1935 (49 Stat. 3359). 

19 ‘‘§ 80105. Canadian vessels aiding vessels in United States 

20 waters 

21 ‘‘(a) IN GENERAL.—Canadian vessels and wrecking equipment may give 

22 aid to Canadian or other vessels and property wrecked, disabled, or in distress 

23 in the waters of the United States contiguous to Canada, including— 

24 ‘‘(1) the canal and improvement of the waters between Lake Erie and 

25 Lake Huron; and 

26 ‘‘(2) the Saint Marys River and canal. 

27 ‘‘(b) RECIPROCITY.—This section does not apply after the President pro28 claims that privileges reciprocal to those under subsection (a) have been with29 drawn or rendered inoperative by the Government of Canada. 

30 ‘‘§ 80106. International agreement on derelicts 

31 ‘‘The President may make an international agreement with other govern32 ments interested in the navigation of the North Atlantic Ocean, providing for 

33 the reporting, marking, and removal of dangerous wrecks, derelicts, and other 

34 menaces to navigation outside the coast waters of the countries bordering the 

35 North Atlantic Ocean. 

36 ‘‘§ 80107. Salvors of life to share in remuneration 

37 ‘‘(a) ENTITLEMENT OF SALVORS.—A salvor of human life, who gave aid 

38 following an accident giving rise to salvage, is entitled to a fair share of the 

39 payment awarded to the salvor for salvaging the vessel or other property or 

40 preventing or minimizing damage to the environment. 
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1 ‘‘(b) COMMON OWNERSHIP OF VESSELS.—The right to remuneration for 

2 aid or salvage services is not affected by common ownership of the vessels giv3 ing and receiving the aid or salvage services. 

4 ‘‘(c) TIME LIMIT ON BRINGING ACTIONS.—A civil action to recover remu5 neration for giving aid or salvage services must be brought within 2 years 

6 after the date the aid or salvage services were given, unless the court in which 

7 the action is brought is satisfied that during that 2-year period there had not 

8 been a reasonable opportunity to seize the aided or salvaged vessel within the 

9 jurisdiction of the court or within the territorial waters of the country of the 

10 plaintiff’s residence or principal place of business. 

11 ‘‘(d) NONAPPLICATION.—This section does not apply to a vessel of war or 

12 a vessel owned by the United States Government appropriated only to a pub13 lic service. 

14 ‘‘CHAPTER 803—ICE AND DERELICTS 

‘‘Sec. 

‘‘80301. International agreements. 

‘‘80302. Patrol services. 

‘‘80303. Speed of vessel in ice region. 

15 ‘‘§ 80301. International agreements 

16 ‘‘(a) GENERAL AUTHORITY.—The President may make agreements with in17 terested maritime countries to— 

18 ‘‘(1) maintain in the North Atlantic Ocean a service of ice patrol, of 

19 study and observation of ice and current conditions, and of assistance 

20 to vessels and their crews requiring assistance within the limits of the 

21 patrol; 

22 ‘‘(2) maintain a service of study and observation of ice and current 

23 conditions in the waters affecting the set and drift of ice in the North 

24 Atlantic Ocean; and 

25 ‘‘(3) take all practicable steps to ensure the destruction or removal of 

26 derelicts in the northern part of the Atlantic Ocean, east of the line 

27 drawn from Cape Sable to a point in latitude 34 degrees north, longitude 

28 70 degrees west, if the destruction or removal is necessary. 

29 ‘‘(b) PAYMENT BETWEEN COUNTRIES.—The President may include in an 

30 agreement under subsection (a) a provision for— 

31 ‘‘(1) payment to the United States Government by other countries for 

32 their proportionate share of the expense of maintaining the services; or 

33 ‘‘(2) contribution by the Government for its proportionate share if the 

34 agreement provides for another country to maintain the services. 

35 ‘‘§ 80302. Patrol services 

36 ‘‘(a) GENERAL REQUIREMENTS.—Unless the agreements made under sec37 tion 80301 of this title provide otherwise, an ice patrol shall be maintained 

38 during the entire ice season in guarding the southeastern, southern, and 
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1 southwestern limits of the region of icebergs in the vicinity of the Grand 

2 Banks of Newfoundland. The patrol shall inform trans-Atlantic and other 

3 passing vessels by radio and other available means of the ice conditions and 

4 the extent of the dangerous region. During the ice season, there shall be main5 tained a service of study of ice and current conditions, a service of providing 

6 assistance to vessels and crews requiring assistance, and a service of removing 

7 and destroying derelicts. Any of these services may be maintained during the 

8 remainder of the year as may be advisable. 

9 ‘‘(b) WARNINGS TO VESSELS.—An ice patrol vessel shall warn any vessel 

10 known to be approaching a dangerous area and recommend safe routes. 

11 ‘‘(c) RECORDING AND REPORTING INCIDENTS.— 

12 ‘‘(1) RECORDING.—An ice patrol vessel shall record the name of a ves13 sel and the facts of the case when the patrol observes or knows that the 

14 vessel— 

15 ‘‘(A) is on other than a regular recognized or advertised route 

16 crossing the North Atlantic Ocean; 

17 ‘‘(B) has crossed the fishing banks of Newfoundland north of lati18 tude 43 degrees north during the fishing season; or 

19 ‘‘(C) has passed through regions known or believed to be endan20 gered by ice when proceeding to and from ports of North America. 

21 ‘‘(2) REPORTING.—The name of the vessel and all pertinent informa22 tion about the incident shall be reported to the government of the country 

23 to which the vessel belongs if that government requests. 

24 ‘‘(d) ADMINISTRATION.—The Commandant of the Coast Guard, under the 

25 direction of the Secretary of the department in which the Coast Guard is op26 erating, shall carry out the services provided for in this section and shall as27 sign necessary vessels, material, and personnel of the Coast Guard. On request 

28 of such Secretary, the head of an agency may detail personnel, lend or con29 tribute material or equipment, or otherwise assist in carrying out the services 

30 provided for in this section. 

31 ‘‘(e) ANNUAL REPORT.—The Commandant shall publish an annual report 

32 of the activities of the services provided for in this section. A copy of the re33 port shall be provided to each interested foreign government and to each agen34 cy assisting in the work. 

35 ‘‘§ 80303. Speed of vessel in ice region 

36 ‘‘(a) REQUIREMENT.—The master of a vessel of the United States, when ice 

37 is reported on or near the vessel’s course, shall proceed at a moderate speed 

38 or change the course of the vessel to go well clear of the danger zone. 

39 ‘‘(b) CIVIL PENALTY.—A master violating this section is liable to the 

40 United States Government for a civil penalty of not more than $500. 
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1 ‘‘CHAPTER 805—SAFE CONTAINERS FOR 

2 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. 

3 ‘‘§ 80501. Definitions 

4 ‘‘In this chapter: 

5 ‘‘(1) CONTAINER.—The term ‘container’ has the meaning given that 

6 term in the Convention. 

7 ‘‘(2) CONVENTION.—The term ‘Convention’ means the International 

8 Convention for Safe Containers, and its annexes, done at Geneva, Swit9 zerland, December 2, 1972. 

10 ‘‘(3) INTERNATIONAL TRANSPORT.—The term ‘international transport’ 

11 means the transportation of a container between— 

12 ‘‘(A) a place in a foreign country and a place in the jurisdiction 

13 of the United States; or 

14 ‘‘(B) two places outside the United States by United States car15 riers. 

16 ‘‘(4) OWNER.—The term ‘owner’ includes the lessee or bailee of a con17 tainer if a written lease or bailment provides for the lessee or bailee to 

18 exercise the owner’s responsibility for maintaining and examining the 

19 container. 

20 ‘‘(5) SAFETY APPROVAL PLATE.—The term ‘safety approval plate’ has 

21 the meaning given that term in annex I of the Convention. 

22 ‘‘§ 80502. Application of Convention 

23 ‘‘The Convention applies to an owner of a container used in international 

24 transport if the owner is domiciled or has its principal office in the United 

25 States. 

26 ‘‘§ 80503. General authority of the Secretary 

27 ‘‘(a) IN GENERAL.—The Secretary of the department in which the Coast 

28 Guard is operating shall carry out the Convention and this chapter in the 

29 United States. 

30 ‘‘(b) REGULATIONS.—The Secretary shall prescribe regulations to carry out 

31 this chapter. The regulations shall— 

32 ‘‘(1) establish procedures for testing, inspecting, and initially approv33 ing containers and designs for containers, including procedures for at34 taching, invalidating, and removing safety approval plates for con35 tainers; 
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1 ‘‘(2) establish procedures to be followed by the owners of containers for 

2 the periodic examination of containers as provided in the Convention; 

3 and 

4 ‘‘(3) provide a method for developing, collecting, and disseminating in5 formation about container safety and the international transport of con6 tainers. 

7 ‘‘(c) SAFETY APPROVAL PLATES.—If the owner of a container without a 

8 safety approval plate establishes that the container satisfies the standards of 

9 the Convention, the Secretary may authorize a safety approval plate to be at10 tached to the container. 

11 ‘‘(d) SCHEDULE OF FEES.—The Secretary may prescribe a schedule of fees 

12 for services performed by the Secretary, or by a person delegated authority 

13 under section 80506 of this title, for the testing, inspection, and initial ap14 proval of containers and container designs. 

15 ‘‘(e) ENCOURAGING INTERMODAL TRANSPORT.—To the maximum extent 

16 possible, the Secretary shall encourage the development and use of intermodal 

17 transport, using containers built to facilitate economical, safe, and expedi18 tious handling of containerized cargo without intermediate reloading when it 

19 is being transported over land, air, and sea areas. 

20 ‘‘§ 80504. Approval and examination 

21 ‘‘(a) DOMICILE AND PRINCIPAL OFFICE IN UNITED STATES.—A container 

22 owner domiciled and having its principal office in the United States shall 

23 have the container— 

24 ‘‘(1) approved initially under procedures prescribed by the Secretary 

25 of the department in which the Coast Guard is operating or by the gov26 ernment of another country that is a party to the Convention; and 

27 ‘‘(2) examined periodically as provided in the Convention under pro28 cedures prescribed by the Secretary. 

29 ‘‘(b) DOMICILE OR PRINCIPAL OFFICE IN UNITED STATES.—A container 

30 owner domiciled or having its principal office in the United States shall have 

31 the container— 

32 ‘‘(1) approved initially under procedures prescribed by the Secretary 

33 or by the government of another country that is a party to the Conven34 tion; and 

35 ‘‘(2) examined periodically as provided in the Convention, under pro36 cedures prescribed by the government of the country in which the owner 

37 is domiciled or has its principal office, as long as that country is a 

38 party to the Convention. 

39 ‘‘(c) NEITHER DOMICILE NOR PRINCIPAL OFFICE IN UNITED STATES.—A 

40 container owner neither domiciled nor having its principal office in the 

41 United States or another country that is a party to the Convention may sub-
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1 mit a container for initial approval and periodic examination under proce2 dures prescribed by the Secretary. 

3 ‘‘§ 80505. Enforcement 

4 ‘‘(a) IN GENERAL.—To enforce the Convention, this chapter, and regula5 tions prescribed under this chapter, the Secretary of the department in which 

6 the Coast Guard is operating may— 

7 ‘‘(1) examine, or require to be examined, containers in international 

8 transport; 

9 ‘‘(2) approve designs for containers; 

10 ‘‘(3) inspect and test containers being manufactured; 

11 ‘‘(4) issue a detention order removing or excluding a container from 

12 service until the container owner satisfies the Secretary that the con13 tainer meets the standards of the Convention, if the container— 

14 ‘‘(A) does not have a safety approval plate attached to it; or 

15 ‘‘(B) has a safety approval plate attached but there is significant 

16 evidence that the container is in a condition that creates an obvious 

17 risk to safety; 

18 ‘‘(5) take other appropriate action, including issuing necessary orders, 

19 to remove a container from service or restrict its use if the container is 

20 not in compliance with the Convention, this chapter, or regulations pre21 scribed under this chapter, but does not present an obvious risk to safety; 

22 and 

23 ‘‘(6) allow a container found to be unsafe or without a safety approval 

24 plate to be moved to another location for repair or other disposition, 

25 under restrictions consistent with the intent of the Convention. 

26 ‘‘(b) PAYMENT OF EXPENSES.— 

27 ‘‘(1) EXAMINATION.—The owner of a container involved in an action 

28 by the Secretary under this section related to an examination of the con29 tainer shall pay or reimburse the Secretary for the expenses arising from 

30 that action, except for the costs of routine examinations of the container 

31 or a safety approval plate. 

32 ‘‘(2) TESTING, INSPECTION, AND INITIAL APPROVAL.—The owner of a 

33 container submitted to the procedure established by the Secretary for test34 ing, inspection, and initial approval, and the manufacturer of a con35 tainer that submits a design to the procedure established by the Secretary 

36 for testing, inspection, and initial approval, shall pay or reimburse the 

37 Secretary for the expenses arising from the testing, inspection, or ap38 proval. 

39 ‘‘(3) CREDIT TO APPROPRIATION.—Amounts received by the Secretary 

40 as reimbursement shall be credited to the appropriation for operating ex41 penses of the Coast Guard. 
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1 ‘‘(c) PRESUMPTION BASED ON SAFETY APPROVAL PLATE.—A container 

2 bearing a safety approval plate authorized by a country that is a party to 

3 the Convention is presumed to be in a safe condition unless there is signifi4 cant evidence that the container is in a condition that creates an obvious risk 

5 to safety. 

6 ‘‘(d) NOTICE OF ORDERS.— 

7 ‘‘(1) IN GENERAL.—When the Secretary issues a detention or other 

8 order under this section, the Secretary promptly shall notify in writ9 ing— 

10 ‘‘(A) the owner of the container; 

11 ‘‘(B) the owner’s agent; or 

12 ‘‘(C) if the identity of the owner is not apparent from the con13 tainer or shipping documents, the custodian. 

14 ‘‘(2) INFORMATION TO INCLUDE.—The notification shall identify the 

15 container involved, give the location of the container, and describe the 

16 condition or situation giving rise to the order. 

17 ‘‘(e) DURATION OF ORDERS.—An order issued by the Secretary under this 

18 section remains in effect until— 

19 ‘‘(1) the Secretary declares the container to be in compliance with the 

20 standards of the Convention; or 

21 ‘‘(2) the container is removed permanently from service. 

22 ‘‘(f) NOTICE OF DEFECTIVE CONTAINER TO COUNTRY ISSUING SAFETY AP23 PROVAL PLATE.—If the Secretary has reason to believe that a container bear24 ing a safety approval plate issued by another country was defective at the 

25 time of approval, the Secretary shall notify that country. 

26 ‘‘§ 80506. Delegation of authority 

27 ‘‘(a) IN GENERAL.—The Secretary of the department in which the Coast 

28 Guard is operating may delegate to any person, including a public or private 

29 agency or nonprofit organization, authority to grant initial approval for con30 tainers and designs and to attach safety approval plates. 

31 ‘‘(b) REGULATIONS.—Before making a delegation under this section, the 

32 Secretary shall prescribe regulations establishing— 

33 ‘‘(1) criteria to be followed in selecting a person to whom authority 

34 is to be delegated; 

35 ‘‘(2) a detailed description of the duties and powers to be carried out 

36 by the person to whom authority is delegated, including the records the 

37 person shall keep; and 

38 ‘‘(3) the review the Secretary will conduct to decide whether the person 

39 is carrying out the delegated duties and powers properly. 
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1 ‘‘(c) INSPECTION OF RECORDS.—A person delegated authority under this 

2 section shall make available to the Secretary for inspection, on request, 

3 records the person is required to keep. 

4 ‘‘(d) PENALTIES AND ORDERS.—A person delegated authority under this 

5 section may not— 

6 ‘‘(1) assess or collect, or attempt to assess or collect, a penalty for vio7 lation of the Convention, this chapter, or an order issued by the Sec8 retary under this chapter; or 

9 ‘‘(2) issue or attempt to issue a detention or other order. 

10 ‘‘(e) PUBLICATION.—The Secretary shall publish in the Federal Register or 

11 other appropriate publication— 

12 ‘‘(1) the name and address of each person to whom authority is dele13 gated; 

14 ‘‘(2) the duties and powers delegated; and 

15 ‘‘(3) the period of the delegation. 

16 ‘‘(f) REVOCATION.—The Secretary may revoke a delegation of authority 

17 under this section at any time. 

18 ‘‘§ 80507. Employee protection 

19 ‘‘(a) PROHIBITION.—A person may not discharge or discriminate against 

20 an employee because the employee has reported the existence of an unsafe con21 tainer or a violation of this chapter or a regulation prescribed under this 

22 chapter. 

23 ‘‘(b) COMPLAINTS.—An employee alleging to have been discharged or dis24 criminated against in violation of subsection (a) may file a complaint with 

25 the Secretary of Labor. The complaint must be filed within 60 days after the 

26 violation. 

27 ‘‘(c) ENFORCEMENT.—The Secretary of Labor may investigate the com28 plaint. If the Secretary of Labor finds there has been a violation, the Sec29 retary of Labor may bring a civil action in an appropriate district court of 

30 the United States. The court has jurisdiction to restrain violations of sub31 section (a) and order appropriate relief, including reinstatement of the em32 ployee to the employee’s former position with back pay. 

33 ‘‘(d) NOTICE TO COMPLAINANT.—Within 30 days after receiving a com34 plaint under this section, the Secretary of Labor shall notify the complainant 

35 of the intended action on the complaint. 

36 ‘‘§ 80508. Amendments to Convention 

37 ‘‘(a) PROPOSALS BY UNITED STATES.—The Secretary of State, with the 

38 concurrence of the Secretary of the department in which the Coast Guard is 

39 operating, may propose amendments to the Convention or request a conference 

40 for amending the Convention as provided in article IX of the Convention. 
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1 ‘‘(b) PROPOSALS BY OTHER COUNTRIES.—An amendment communicated to 

2 the United States under article IX(2) of the Convention may be accepted for 

3 the United States by the President, with the advice and consent of the Senate. 

4 The President may declare that the United States does not accept an amend5 ment. 

6 ‘‘(c) AMENDMENTS TO ANNEXES.— 

7 ‘‘(1) IN GENERAL.—The Secretary of State, with the concurrence of the 

8 Secretary of the department in which the Coast Guard is operating— 

9 ‘‘(A) may propose amendments to the annexes to the Convention; 

10 ‘‘(B) may propose a conference for amending annexes to the Con11 vention; and 

12 ‘‘(C) shall consider and act on amendments to the annexes to the 

13 Convention adopted by the Maritime Safety Committee of the Inter14 national Maritime Organization and communicated to the United 

15 States under article X(2) of the Convention. 

16 ‘‘(2) ACTION FOLLOWING APPROVAL OR OBJECTION.—If a proposed 

17 amendment to an annex is approved by the United States, the amend18 ment shall enter into force as provided in article X of the Convention. 

19 If a proposed amendment is objected to, the Secretary of State promptly 

20 shall communicate the objection as provided in article X(3) of the Con21 vention. 

22 ‘‘(d) APPOINTMENT OF ARBITRATOR.—The Secretary of State, with the con23 currence of the Secretary of the department in which the Coast Guard is oper24 ating, shall appoint an arbitrator when one is required to resolve a dispute 

25 within the meaning of article XIII of the Convention. 

26 ‘‘§ 80509. Civil penalty 

27 ‘‘(a) IN GENERAL.—An owner, agent, or custodian who has been notified 

28 of an order issued under section 80505 of this title and fails to take reasonable 

29 and prompt action to prevent or stop a container subject to the order from 

30 being moved in violation of the order is liable to the United States Govern31 ment for a civil penalty of not more than $5,000 for each container moved. 

32 Each day the container remains in service while the order is in effect is a 

33 separate violation. 

34 ‘‘(b) ASSESSMENT AND COLLECTION.— 

35 ‘‘(1) IN GENERAL.—After notice and an opportunity for a hearing, the 

36 Secretary of the department in which the Coast Guard is operating shall 

37 assess and collect any penalty under this section. 

38 ‘‘(2) FACTORS TO CONSIDER.—In determining the amount of the pen39 alty, the Secretary shall consider the gravity of the violation, the hazards 

40 involved, and the record of the person charged with respect to violations 
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1 of the Convention, this chapter, or regulations prescribed under this 

2 chapter. 

3 ‘‘(3) REMISSION, MITIGATION, OR COMPROMISE.—The Secretary may 

4 remit, mitigate, or compromise a penalty under this section. 

5 ‘‘(4) ENFORCEMENT.—If a person fails to pay a penalty under this 

6 section, the Secretary shall refer the matter to the Attorney General for 

7 collection in an appropriate district court of the United States.’’. 

8 SEC. 12. MARITIME ADMINISTRATION. 

9 Section 109 of title 49, United States Code, is amended to read as follows: 

10 ‘‘§ 109. Maritime Administration 

11 ‘‘(a) ORGANIZATION.—The Maritime Administration is an administration 

12 in the Department of Transportation. 

13 ‘‘(b) MARITIME ADMINISTRATOR.—The head of the Maritime Administra14 tion is the Maritime Administrator, who is appointed by the President by 

15 and with the advice and consent of the Senate. The Administrator shall report 

16 directly to the Secretary of Transportation and carry out the duties pre17 scribed by the Secretary. 

18 ‘‘(c) DEPUTY MARITIME ADMINISTRATOR.—The Maritime Administration 

19 shall have a Deputy Maritime Administrator, who is appointed in the com20 petitive service by the Secretary, after consultation with the Administrator. 

21 The Deputy Administrator shall carry out the duties prescribed by the Ad22 ministrator. The Deputy Administrator shall be Acting Administrator during 

23 the absence or disability of the Administrator and, unless the Secretary des24 ignates another individual, during a vacancy in the office of Administrator. 

25 ‘‘(d) DUTIES AND POWERS VESTED IN SECRETARY.—All duties and powers 

26 of the Maritime Administration are vested in the Secretary. 

27 ‘‘(e) REGIONAL OFFICES.—The Maritime Administration shall have re28 gional offices for the Atlantic, Gulf, Great Lakes, and Pacific port ranges, and 

29 may have other regional offices as necessary. The Secretary shall appoint a 

30 qualified individual as Director of each regional office. The Secretary shall 

31 carry out appropriate activities and programs of the Maritime Administra32 tion through the regional offices. 

33 ‘‘(f) INTERAGENCY AND INDUSTRY RELATIONS.—The Secretary shall estab34 lish and maintain liaison with other agencies, and with representative trade 

35 organizations throughout the United States, concerned with the transportation 

36 of commodities by water in the export and import foreign commerce of the 

37 United States, for the purpose of securing preference to vessels of the United 

38 States for the transportation of those commodities. 

39 ‘‘(g) DETAILING OFFICERS FROM ARMED FORCES.—To assist the Secretary 

40 in carrying out duties and powers relating to the Maritime Administration, 

41 not more than five officers of the armed forces may be detailed to the Sec-
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1 retary at any one time, in addition to details authorized by any other law. 

2 During the period of a detail, the Secretary shall pay the officer an amount 

3 that, when added to the officer’s pay and allowances as an officer in the 

4 armed forces, makes the officer’s total pay and allowances equal to the amount 

5 that would be paid to an individual performing work the Secretary considers 

6 to be of similar importance, difficulty, and responsibility as that performed 

7 by the officer during the detail. 

8 ‘‘(h) CONTRACTS AND AUDITS.— 

9 ‘‘(1) CONTRACTS.—In the same manner that a private corporation 

10 may make a contract within the scope of its authority under its charter, 

11 the Secretary may make contracts for the United States Government and 

12 disburse amounts to— 

13 ‘‘(A) carry out the Secretary’s duties and powers under this sec14 tion and subtitle V of title 46; and 

15 ‘‘(B) protect, preserve, and improve collateral held by the Sec16 retary to secure indebtedness. 

17 ‘‘(2) AUDITS.—The financial transactions of the Secretary under 

18 paragraph (1) shall be audited by the Comptroller General. The Comp19 troller General shall allow credit for an expenditure shown to be nec20 essary because of the nature of the business activities authorized by this 

21 section or subtitle V of title 46. At least once a year, the Comptroller 

22 General shall report to Congress any departure by the Secretary from 

23 this section or subtitle V of title 46. 

24 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 

25 ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, 

26 there are authorized to be appropriated such amounts as may be nec27 essary to carry out the duties and powers of the Secretary relating to 

28 the Maritime Administration. 

29 ‘‘(2) LIMITATIONS.—Only those amounts specifically authorized by 

30 law may be appropriated for the use of the Maritime Administration 

31 for— 

32 ‘‘(A) acquisition, construction, or reconstruction of vessels; 

33 ‘‘(B) construction-differential subsidies incident to the construc34 tion, reconstruction, or reconditioning of vessels; 

35 ‘‘(C) costs of national defense features; 

36 ‘‘(D) payments of obligations incurred for operating-differential 

37 subsidies; 

38 ‘‘(E) expenses necessary for research and development activities, 

39 including reimbursement of the Vessel Operations Revolving Fund 

40 for losses resulting from expenses of experimental vessel operations; 

41 ‘‘(F) the Vessel Operations Revolving Fund; 
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1 ‘‘(G) National Defense Reserve Fleet expenses; 

2 ‘‘(H) expenses necessary to carry out part B of subtitle V of title 

3 46; and 

4 ‘‘(I) other operations and training expenses related to the develop5 ment of waterborne transportation systems, the use of waterborne 

6 transportation systems, and general administration. 

7 ‘‘(3) TRAINING VESSELS.—Amounts may not be appropriated for the 

8 purchase or construction of training vessels for State maritime academies 

9 unless the Secretary has approved a plan for sharing training vessels be10 tween State maritime academies.’’. 

11 SEC. 13. AMENDMENTS RELATING TO MARITIME SECURITY ACT OF 

12 2003. 

13 (a) AMENDMENTS TO CHAPTER 531.—Chapter 531 of title 46, United 

14 States Code, is amended as follows: 

15 (1) In section 53102— 

16 (A) in the headings of paragraphs (1), (2), and (4) of subsection 

17 (c), strike ‘‘SECTION 2’’ and substitute ‘‘SECTION 50501’’; 

18 (B) in subsection (c)(1), (2)(A)(i) and (ii)(II) and (B), and 

19 (4)(B), strike ‘‘section 2 of the Shipping Act, 1916 (46 U.S.C. App. 

20 802)’’ and substitute ‘‘section 50501 of this title’’; 

21 (C) in subsection (d), strike ‘‘the first section of Public Law 81– 

22 891 (64 Stat. 1120; 46 U.S.C. App. note prec. 3)’’ and substitute 

23 ‘‘section 501 of this title’’; and 

24 (D) in subsection (e)(1)— 

25 (i) strike ‘‘a documented vessel (as that term is defined in 

26 section 12101 of this title)’’ and substitute ‘‘documented under 

27 chapter 121 of this title,’’; and 

28 (ii) in subparagraph (B), strike ‘‘a documented vessel (as de29 fined in that section)’’ and substitute ‘‘documented under chap30 ter 121’’. 

31 (2) In section 53103(c)— 

32 (A) in the heading of paragraph (1)(C), strike ‘‘SECTION 2’’ and 

33 substitute ‘‘SECTION 50501’’; 

34 (B) in paragraphs (1)(A)(iii) and (C)(i) and (ii), strike ‘‘section 

35 2 of the Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute 

36 ‘‘section 50501 of this title’’; 

37 (C) in paragraph (1)(B), strike ‘‘subparagraphs’’ and substitute 

38 ‘‘subparagraph’’; and 

39 (D) in paragraph (3)(B), strike ‘‘agreement’’ and substitute 

40 ‘‘agreements’’. 

41 (3) In section 53104— 
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1 (A) in subsection (c)(3)(B)(ii)(I) and (II), strike ‘‘section 2 of the 

2 Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute ‘‘section 

3 50501 of this title’’; 

4 (B) in subsection (e)(2), strike ‘‘section 9 of the Shipping Act, 

5 1916 (46 U.S.C. App. 808)’’ and substitute ‘‘section 56101 of this 

6 title’’; and 

7 (C) in subsection (e)(3), strike ‘‘section 902 of the Merchant Ma8 rine Act, 1936 (46 U.S.C. App. 1242)’’ and ‘‘section 902 of such 

9 Act’’ and substitute ‘‘chapter 563 of this title’’ and ‘‘chapter 563’’, 

10 respectively. 

11 (4) In section 53105— 

12 (A) in subsection (a)(1)(A), strike ‘‘section 12105’’ and substitute 

13 ‘‘section 12111’’; and 

14 (B) in subsection (f), strike ‘‘approve’’ and substitute ‘‘approves’’. 

15 (5) In section 53106— 

16 (A) in subsection (d)(1), strike ‘‘section 2631 of title 10, United 

17 States Code, the Act of March 26, 1934 (46 U.S.C. App. 1241–1), 

18 section 901(a), 901(b), or 901b of the Merchant Marine Act, 1936 

19 (46 U.S.C. App. 1241(a), 1241(b), or 1241f)’’ and substitute ‘‘sec20 tion 55302(a), 55304, 55305, or 55314 of this title, section 2631 of 

21 title 10’’; 

22 (B) in subsection (d)(2), strike ‘‘section 901(a), 901(b), or 901b 

23 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a), 

24 1241(b), or 1241f),’’ and substitute ‘‘section 55302(a), 55305, or 

25 55314 of this title’’; and 

26 (C) in subsection (e)(2), strike ‘‘section 2(c) of the Shipping Act, 

27 1916 (46 U.S.C. App. 802(c))’’ and substitute ‘‘section 50501 of this 

28 title, applying the 75 percent ownership requirement of that sec29 tion’’. 

30 (6) In section 53107(f)— 

31 (A) strike ‘‘section 2631 of title 10, United States Code, the Act 

32 of March 26, 1934 (46 U.S.C. App. 1241–1), section 901(a), 901(b), 

33 or 901b of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a), 

34 1241(b), or 1241f)’’ and substitute ‘‘section 55302(a), 55304, 55305, 

35 or 55314 of this title, section 2631 of title 10’’; and 

36 (B) strike ‘‘section 2631 of title 10, United States Code, the Act 

37 of March 26, 1934 (46 U.S.C. App. 1241–1), and sections 901(a), 

38 901(b), and 901b of the Merchant Marine Act, 1936 (46 U.S.C. App. 

39 1241(a), 1241(b), and 1241b)’’ and substitute ‘‘sections 55302(a), 

40 55304, 55305, and 55314 of this title and section 2631 of title 10’’. 
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1 (7) In section 53108(b), strike ‘‘section 901(b)(1) of the Merchant Ma2 rine Act, 1936 (46 U.S.C. App. 1241(b)(1))’’ and substitute ‘‘section 

3 55305(a) of this title’’. 

4 (b) OTHER CONFORMING PROVISIONS.—If this Act is enacted prior to Octo5 ber 1, 2005, then— 

6 (1) until that date, the reference in section 12111(c)(3) of title 46, 

7 United States Code, as enacted by this Act, to ‘‘chapter 531 of this title’’ 

8 is deemed instead to be a reference to ‘‘subtitle B of title VI of the Mer9 chant Marine Act, 1936’’; and 

10 (2) section 3534(b)(1) of the Maritime Security Act of 2003 (Public 

11 Law 108–136, 117 Stat. 1818) is repealed. 

12 SEC. 14. AMENDMENTS TO PARTIALLY RESTATED PROVISIONS. 

13 (a) Section 2793 of the Revised Statutes (19 U.S.C. 288, 46 App. U.S.C. 

14 111, 123) is amended by striking ‘‘or tonnage tax’’. 

15 (b) Section 809(a) of the Merchant Marine Act, 1936 (46 App. U.S.C. 

16 1213(a)), is amended by striking ‘‘and section 211(a)’’. 

17 SEC. 15. ADDITIONAL AMENDMENTS TO TITLE 46. 

18 Title 46, United States Code, is amended as follows: 

19 (1) The analysis of subtitle II is amended as follows: 

20 (A) In each chapter item, capitalize the first letter of each word 

21 containing 4 or more letters. 

22 (B) Strike the item for chapter 39. 

23 (C) The item for chapter 45 is amended to read as follows: 

‘‘45. Uninspected Commercial Fishing Industry Vessels ....................... 4501’’. 

24 (2) Section 2101 is amended as follows: 

25 (A) Paragraphs (2), (3), (3a), (6), (10), (10a), (12), (17b), (36), 

26 (41), (44), (45), and (46) are repealed. 

27 (B) In paragraph (8a), insert ‘‘Prevention’’ after ‘‘Abuse’’. 

28 (C) In paragraph (18), strike ‘‘those’’. 

29 (D) In paragraph (34)— 

30 (i) strike ‘‘, except in part H,’’; and 

31 (ii) strike ‘‘head’’ and substitute ‘‘Secretary’’. 

32 (3) In section 2102(b), strike ‘‘West’’ and ‘‘East’’ and substitute 

33 ‘‘west’’ and ‘‘east’’, respectively. 

34 (4) In section 2106, strike ‘‘a district court of the United States’’ and 

35 substitute ‘‘the district court of the United States for any district’’. 

36 (5) Section 2108 is repealed. 

37 (6) In section 2110— 

38 (A) in subsection (a)(2), strike ‘‘part B of this title’’ and sub39 stitute ‘‘part B of this subtitle’’; 
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1 (B) in subsection (b)(2)(A)(iii), strike the period at the end and 

2 substitute ‘‘; and’’; 

3 (C) in subsection (b)(5), strike ‘‘fees’’ and substitute ‘‘fee’’; 

4 (D) In subsection (f), strike ‘‘Secretary of the Treasury shall deny 

5 the clearance required by section 4197 of the Revised Statutes of the 

6 United States (46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of 

7 Homeland Security shall deny the clearance required by section 

8 60105 of this title’’; and 

9 (E) In subsection (j), strike ‘‘state’’ and substitute ‘‘State’’. 

10 (7) In section 2301, strike ‘‘section’’ and substitute ‘‘sections 2304 

11 and’’. 

12 (8) In section 2304— 

13 (A) insert the paragraph designation ‘‘(1)’’ after ‘‘(a)’’; and 

14 (B) insert at the end of subsection (a) the following new para15 graph: 

16 ‘‘(2) Paragraph (1) does not apply to a vessel of war or a vessel owned 

17 by the United States Government appropriated only to a public service.’’. 

18 (9) In section 2306(a)(2), strike ‘‘section 212(A) of the Merchant Ma19 rine Act, 1936 (46 App. U.S.C. 1122a),’’ and substitute ‘‘section 50113 

20 of this title’’. 

21 (10) In section 3205(d), strike ‘‘Secretary of the Treasury shall with22 hold or revoke the clearance required by section 4197 of the Revised Stat23 utes (46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Secu24 rity shall withhold or revoke the clearance required by section 60105 of 

25 this title’’. 

26 (11) In section 3302— 

27 (A) in subsection (b), insert a comma after ‘‘fishing vessel’’; 

28 (B) in subsection (j)(2)(B), strike ‘‘section 1304 of the Merchant 

29 Marine Act, 1936 (46 App. U.S.C. 1295c)’’ and substitute ‘‘chapter 

30 515 of this title’’; and 

31 (C) in subsection (l)(1)(C), strike ‘‘Inc..’’ and substitute ‘‘Inc.’’. 

32 (12) In section 3306(d), strike ‘‘section 1302(3) of the Merchant Ma33 rine Act, 1936 (46 App. U.S.C. 1295a(3))’’ and substitute ‘‘section 51102 

34 of this title’’. 

35 (13) In section 3318(f), strike the period after ‘‘felony’’. 

36 (14) In the analysis of chapter 37, the item for section 3719 is amend37 ed to read as follows: 

‘‘3719. Reduction of oil spills from single hull non-self-propelled tank vessels.’’. 

38 (15) In paragraphs (1)(C), (2), and (3) of section 3703a(c), strike 

39 ‘‘documentation under section 4136 of the Revised Statutes of the United 
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1 States (46 App. U.S.C. 14)’’ and substitute ‘‘documentation as a wrecked 

2 vessel under section 12112 of this title’’. 

3 (16) In section 3704, strike ‘‘section 27 of the Merchant Marine Act, 

4 1920 (46 App. U.S.C. 883),’’ and substitute ‘‘chapter 551 of this title’’. 

5 (17) In section 3718(e)(1), strike ‘‘Secretary of the Treasury’’ and 

6 ‘‘section 4197 of the Revised Statutes of the United States (46 App. 

7 U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and ‘‘sec8 tion 60105 of this title’’, respectively. 

9 (18) In section 4702, strike the subsection ‘‘(a)’’ designation. 

10 (19) In section 4705— 

11 (A) strike ‘‘subcontractor not’’ and substitute ‘‘subcontractor are 

12 not’’; 

13 (B) strike ‘‘(a)(1)’’ and substitute ‘‘(a)’’; 

14 (C) strike ‘‘(2) Paragraph (1)’’ and substitute ‘‘(b) Subsection 

15 (a)’’; 

16 (D) strike ‘‘(A)’’ and substitute ‘‘(1)’’; and 

17 (E) strike ‘‘(B)’’ and substitute ‘‘(2)’’. 

18 (20) In section 5113(b), strike ‘‘section 4197 of the Revised Statutes 

19 (46 App. U.S.C. 91)’’ and substitute ‘‘section 60105 of this title’’. 

20 (21) In section 6101, redesignate the second subsection (g) and sub21 section (h) as subsections (h) and (i), respectively. 

22 (22) In section 8103(a), strike ‘‘Only’’ and substitute ‘‘Except as oth23 erwise provided in this title, only’’. 

24 (23) In section 9307(b)(2)(A), strike ‘‘The’’ and substitute ‘‘the’’. 

25 (24) In section 12503(a), in the matter before paragraph (1), strike 

26 ‘‘delegee’’ and substitute ‘‘delegate’’. 

27 (25) In section 13102(a), insert ‘‘(26 U.S.C. 9504)’’ after ‘‘Internal 

28 Revenue Code of 1986’’. 

29 (26) In section 14305(a)— 

30 (A) in paragraph (1), strike ‘‘and sections 12106(c) and 

31 12108(c)’’ and substitute ‘‘of this subtitle and section 12116’’; 

32 (B) in paragraph (5), strike ‘‘section 4283 of the Revised Statutes 

33 of the United States (46 App. U.S.C. 183)’’ and substitute ‘‘section 

34 30506 of this title’’; 

35 (C) in paragraph (6), strike ‘‘sections 27 and 27A of the Act of 

36 June 5, 1920 (46 App. U.S.C. 883 and 883–1)’’ and substitute ‘‘sec37 tions 12118 and 12132 of this title’’; and 

38 (D) in paragraph (7), strike ‘‘Act of July 14, 1956 (46 App. 

39 U.S.C. 883a)’’ and substitute ‘‘section 12139(b) of this title’’. 
257 

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1 (27) In section 31306(a), strike ‘‘section 9 or 37 of the Shipping Act, 

2 1916 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56102 or 56103 

3 of this title’’. 

4 (28) In section 31308, strike ‘‘title XI of the Merchant Marine Act, 

5 1936 (46 App. U.S.C. 1271 et seq.)’’ and substitute ‘‘chapter 537 of this 

6 title’’. 

7 (29) In section 31322— 

8 (A) in subsection (a)(4)(A), strike ‘‘section 12102(c)’’ and sub9 stitute ‘‘section 12113(c)’’; 

10 (B) in subsection (a)(4)(E), strike ‘‘under section 12102(a)’’ and 

11 substitute ‘‘for purposes of documentation under section 12103’’; 

12 and 

13 (C) in subsection (f)(2), strike ‘‘section 12102(c)’’ and substitute 

14 ‘‘section 12113(c)’’. 

15 (30) In section 31325(b)(3)(B), strike ‘‘section 9 or 37 of the Shipping 

16 Act, 1936 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56101 or 

17 56102 of this title’’. 

18 (31) In section 31326(b)— 

19 (A) in paragraph (1), strike ‘‘title XI of the Merchant Marine 

20 Act, 1936 (46 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘chapter 

21 537 of this title,’’; and 

22 (B) in paragraph (2), strike ‘‘title XI of that Act’’ and substitute 

23 ‘‘chapter 537 of this title’’. 

24 (32) In section 31329— 

25 (A) in subsection (a)(1), strike ‘‘section 12102’’ and substitute 

26 ‘‘section 12103’’; and 

27 (B) in subsection (b)— 

28 (i) in paragraph (2), strike ‘‘section 902 of the Merchant 

29 Marine Act, 1936 (46 App. U.S.C. 1242)’’ and substitute 

30 ‘‘chapter 563 of this title’’; and 

31 (ii) in paragraph (3), strike ‘‘sale foreign within the terms 

32 of the first proviso of section 27 of the Merchant Marine Act, 

33 1920 (46 App. U.S.C. 883)’’ and substitute ‘‘sale to a person 

34 not a citizen of the United States under section 12132 of this 

35 title’’. 

36 (33)(A) Sections 70118 and 70119, as added by section 801(a) of the 

37 Coast Guard and Maritime Transportation Act of 2004 (Public Law 

38 108–293, 118 Stat. 1078), are redesignated as sections 70117 and 70118, 

39 respectively, and moved to appear immediately after section 70116 of 

40 title 46, United States Code. 
258 

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1 (B) Sections 70117 and 70118, as added by section 802(a)(2) of such 

2 Act, are redesignated as sections 70120 and 70121, respectively, and 

3 moved to appear immediately after section 70119 of title 46, United 

4 States Code. 

5 (C) In section 70120(a) (as redesignated by subparagraph (B)), strike 

6 ‘‘section 70120’’ and substitute ‘‘section 70119’’. 

7 (D) In section 70121(a) (as redesignated by subparagraph (B))— 

8 (i) strike ‘‘section 70120’’ and substitute ‘‘section 70119’’; and 

9 (ii) strike ‘‘section 4197 of the Revised Statutes of the United 

10 States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 of this 

11 title’’. 

12 (E) In the analysis of chapter 701, strike the items relating to sections 

13 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.’’. 

14 SEC. 16. RECREATIONAL BOATING SAFETY TECHNICAL AMENDMENTS. 

15 (a) SECTION 2102.—Section 2102 of title 46, United States Code, is 

16 amended by— 

17 (1) striking subsection (a); and 

18 (2) striking the subsection (b) designation. 

19 (b) CHAPTER 131.—Chapter 131 of title 46, United States Code, is amend20 ed as follows: 

21 (1) Redesignate sections 13101 to 13106 as sections 13102 to 13107. 

22 (2) Insert as the first section the following: 

23 ‘‘§ 13101. Definitions 

24 ‘‘In this chapter: 

25 ‘‘(1) ELIGIBLE STATE.—The term ‘eligible State’ means a State that 

26 has a State recreational boating safety program accepted by the Sec27 retary. 

28 ‘‘(2) STATE RECREATIONAL BOATING SAFETY PROGRAM.—The term 

29 ‘State recreational boating safety program’ means education, assistance, 

30 and enforcement activities conducted for maritime casualty prevention, 

31 reduction, and reporting for recreational boating.’’. 

32 (3) In the chapter analysis, redesignate items 13101 to 13106 as items 

33 13102 to 13107 and insert as the first item the following: 

‘‘13101. Definitions.’’. 

34 (c) CROSS REFERENCES.— 

35 (1) Section 4 of the Dingell-Johnson Sport Fish Restoration Act (16 

36 U.S.C. 777c) is amended by striking ‘‘13106’’ wherever appearing and 

37 substituting ‘‘13107’’. 
259 

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1 (2) Section 9504(c) of the Internal Revenue Code of 1986 (26 U.S.C. 

2 9504(c)) is amended by striking ‘‘section 13106’’ and substituting ‘‘sec3 tion 13107’’. 

4 (3) Section 13102(c) of title 46, United States Code, as redesignated 

5 by subsection (b), is amended by striking ‘‘section 13103’’ and sub6 stituting ‘‘section 13104’’. 

7 (4) Section 13103(c) of title 46, United States Code, as redesignated 

8 by subsection (b), is amended by striking ‘‘section 13106’’ and sub9 stituting ‘‘section 13107’’. 

10 (5) Section 13107(a)(1) of title 46, United States Code, as redesig11 nated by subsection (b), is amended by striking ‘‘section 13103’’ and sub12 stituting ‘‘section 13104’’. 

13 (6) Section 13108(a) of title 46, United States Code, is amended by— 

14 (A) striking ‘‘section 13103’’ and substituting ‘‘section 13104’’; 

15 and 

16 (B) striking ‘‘section 13105’’ and substituting ‘‘section 13106’’. 

17 (7) Section 31322(d)(1)(A) of title 46, United States Code, is amended 

18 by striking ‘‘section 13106(b)(8)’’ and substituting ‘‘section 13107(b)(8)’’. 

19 SEC. 17. CONFORMING AMENDMENTS TO OTHER LAWS. 

20 (a) TITLE 10.—Title 10, United States Code, is amended as follows: 

21 (1) In section 374(b)(4)(A)(iv), strike ‘‘The Maritime Drug Law En22 forcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘Chapter 

23 705 of title 46’’. 

24 (2) In section 2218(d)(2), strike ‘‘sections 508 and 510 of the Merchant 

25 Marine Act of 1936 (46 U.S.C. App. 1158, 1160), shall be deposited in 

26 the Fund’’ and substitute ‘‘sections 57101–57104 and chapter 573 of title 

27 46’’. 

28 (3) In section 2350b(g)(2), strike ‘‘section 901(b) of the Merchant Ma29 rine Act, 1936 (46 U.S.C. App. 1241(b))’’ and substitute ‘‘section 55305 

30 of title 46’’. 

31 (4) In section 2645— 

32 (A) in subsection (c), strike ‘‘the second sentence of section 

33 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

34 1288(a))’’ and substitute ‘‘section 53909(b) of title 46’’; 

35 (B) in subsection (h)(1), strike ‘‘title XII of the Merchant Marine 

36 Act, 1936 (46 U.S.C. App. 1281 et seq.),’’ and substitute ‘‘chapter 

37 539 of title 46’’; and 

38 (C) in subsection (h)(2), strike ‘‘the first sentence of section 

39 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

40 1288(a))’’ and substitute ‘‘section 53909(a) of title 46’’. 
260 

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1 (5) In section 5985, strike ‘‘section 1304 of the Merchant Marine Act, 

2 1936 (46 U.S.C. App. 1295c),’’ and substitute ‘‘chapter 515 of title 46’’. 

3 (6) In section 7721(a), strike ‘‘the Act of March 3, 1925 (commonly 

4 referred to as the ‘Public Vessels Act’) (46 U.S.C. App. 781–790)’’ and 

5 substitute ‘‘chapter 311 of title 46’’. 

6 (b) TITLE 11.—Title 11, United States Code, is amended as follows: 

7 (1) In section 362(b)— 

8 (A) in paragraph (12), strike ‘‘section 207 or title XI of the Mer9 chant Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 46 or 

10 section 109(h) of title 49’’; and 

11 (B) in paragraph (13), strike ‘‘section 207 or title XI of the Mer12 chant Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 46’’. 

13 (2) In section 1110(a)(3)(A)(ii), strike ‘‘documented vessel (as defined 

14 in section 30101(1) of title 46)’’ and substitute ‘‘vessel documented under 

15 chapter 121 of title 46’’. 

16 (c) TITLE 14.—Sections 821(b) and 823a(b) of title 14, United States Code, 

17 are each amended by striking paragraphs (3)–(5) and substituting the fol18 lowing: 

19 ‘‘(3) Section 30101 of title 46 (popularly known as the Admiralty Ex20 tension Act). 

21 ‘‘(4) Chapter 309 of title 46 (known as the Suits in Admiralty Act). 

22 ‘‘(5) Chapter 311 of title 46 (known as the Public Vessels Act).’’. 

23 (d) TITLE 18.—Title 18, United States Code, is amended as follows: 

24 (1) In section 229F(9)(C), strike ‘‘section 3(b) of the Maritime Drug 

25 Enforcement Act, as amended (46 U.S.C., App. sec. 1903(b))’’ and sub26 stitute ‘‘section 70502(b) of title 46, United States Code’’. 

27 (2) In section 507— 

28 (A) in the first paragraph, strike ‘‘recording, registry, or enroll29 ment of any vessel, in the office of any collector of the customs, or 

30 a license to any vessel for carrying on the coasting trade or fisheries 

31 of the United States’’ and substitute ‘‘documentation of any vessel’’; 

32 (B) in the first paragraph, strike ‘‘collector or other’’; and 

33 (C) in the second paragraph, strike ‘‘license,’’. 

34 (3) In section 924— 

35 (A) in subsections (c)(2), (e)(2)(A)(i), (g)(2), and (k)(1), strike 

36 ‘‘the Maritime Drug Law Enforcement Act (46 U.S.C. App. 1901 

37 et seq.)’’ and substitute ‘‘chapter 705 of title 46’’; and 

38 (B) in subsection (g)(2), strike ‘‘802 et seq.’’ and substitute ‘‘801 

39 et seq.’’. 
261 

•HR 1442 RH 

1 (4) In section 929(a)(2), strike ‘‘the Maritime Drug Law Enforcement 

2 Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chapter 705 of title 

3 46’’. 

4 (5) In section 965(a), strike ‘‘section 4197 of the Revised Statutes of 

5 the United States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 

6 of title 46’’. 

7 (6) In section 2277(a), strike ‘‘registered, enrolled, or licensed’’ and 

8 substitute ‘‘documented’’. 

9 (7) In section 3142(e) and (f)(1)(C), strike ‘‘the Maritime Drug Law 

10 Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chapter 

11 705 of title 46’’. 

12 (e) INTERNAL REVENUE CODE OF 1986.—The Internal Revenue Code of 

13 1986 (26 U.S.C. 1 et seq.) is amended as follows: 

14 (1) In section 56(c)(2)— 

15 (A) strike ‘‘section 607 of the Merchant Marine Act, 1936 (46 

16 U.S.C. 1177)’’ and substitute ‘‘chapter 535 of title 46, United States 

17 Code’’; and 

18 (B) in subparagraphs (A) and (B), strike ‘‘such section 607’’ sub19 stitute ‘‘such chapter 535’’. 

20 (2) In section 140(a)(4), strike ‘‘section 607(d) of the Merchant Marine 

21 Act, 1936 (46 U.S.C. 1177)’’ and substitute ‘‘section 53507 of title 46, 

22 United States Code’’. 

23 (3) In section 543(a)(1)(B), strike ‘‘section 511 or 607 of the Merchant 

24 Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)’’ and substitute ‘‘chap25 ter 533 or 535 of title 46, United States Code’’. 

26 (4) In section 1023(2), strike ‘‘section 511 of the Merchant Marine Act, 

27 1936, as amended (46 U.S.C. 1161)’’ and substitute ‘‘chapter 533 of title 

28 46, United States Code’’. 

29 (5) In section 1061— 

30 (A) in paragraph (1), strike ‘‘section 510 of the Merchant Marine 

31 Act, 1936, see subsection (e) of that section, as amended August 4, 

32 1939 (46 U.S.C. App. 1160)’’ and substitute ‘‘chapter 573 of title 

33 46, United States Code, see section 57307 of title 46’’; 

34 (B) in paragraph (2), strike ‘‘section 511 of such Act, as amended 

35 (46 U.S.C. App. 1161)’’ and substitute ‘‘chapter 533 of title 46, 

36 United States Code’’; and 

37 (C) strike paragraph (3). 

38 (6) In section 7518— 

39 (A) in subsection (a)(1), strike ‘‘section 607 of the Merchant Ma40 rine Act, 1936’’ and substitute ‘‘chapter 535 of title 46 of the United 

41 States Code’’; 
262 

•HR 1442 RH 

1 (B) in subsections (a)(2) and (c)(1)(A) and (D), strike ‘‘section 

2 607 of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter 535 

3 of title 46, United States Code’’; and 

4 (C) in subsection (g)(3)(C)(iii), strike ‘‘Merchant Marine Act of 

5 1936’’ and substitute ‘‘Merchant Marine Act, 1936,’’. 

6 (f) TITLE 28.—Title 28, United States Code, is amended as follows: 

7 (1) In section 994(h)(1)(B) and (2)(B), strike ‘‘the Maritime Drug 

8 Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute 

9 ‘‘chapter 705 of title 46’’. 

10 (2) In section 1605(d), strike ‘‘the Ship Mortgage Act, 1920 (46 U.S.C. 

11 911 and following)’’ and ‘‘that Act’’ and substitute ‘‘section 31301 of title 

12 46’’ and ‘‘chapter 313 of title 46’’, respectively. 

13 (3) In section 2342(3)— 

14 (A) in subparagraph (A), strike ‘‘section 2, 9, 37, or 41 of the 

15 Shipping Act, 1916 (46 U.S.C. App. 802, 803, 808, 835, 839, and 

16 841a)’’ and substitute ‘‘section 50501, 50502, 56101–56104, or 

17 57109 of title 46’’; and 

18 (B) strike subparagraph (B) and substitute the following: 

19 ‘‘(B) the Federal Maritime Commission issued pursuant to sec20 tion 305, 41304, 41308, or 41309 or chapter 421 or 441 of title 

21 46;’’. 

22 (4) In section 2680(d), strike ‘‘sections 741–752, 781–790 of Title 46,’’ 

23 and substitute ‘‘chapter 309 or 311 of title 46’’. 

24 (g) TITLE 40.—Title 40, United States Code, is amended as follows: 

25 (1) In section 548, strike ‘‘the Merchant Marine Act, 1936 (46 App. 

26 U.S.C. 1101 et seq.),’’ and substitute ‘‘part F of subtitle V of title 46’’. 

27 (2) In section 3134(b), strike ‘‘the Merchant Marine Act, 1936 (46 

28 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘subtitle V of title 46’’. 

29 (3) In section 3313(a)— 

30 (A) in the matter before paragraph (1), strike ‘‘Except for the au31 thority contained in section 3305(b) of this title, the’’ and substitute 

32 ‘‘The’’; and 

33 (B) in paragraph (1), strike ‘‘shall’’ and substitute ‘‘shall, except 

34 for the authority contained in section 3305(b) of this title,’’. 

35 (h) TITLE 49.—Title 49, United States Code, is amended as follows: 

36 (1) In section 5122(c)(1), strike ‘‘Secretary of the Treasury’’ and ‘‘sec37 tion 4197 of the Revised Statutes of the United States (46 App. U.S.C. 

38 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and ‘‘section 

39 60105 of title 46’’, respectively. 

40 (2) In section 5901(3)(B), strike ‘‘section 3 of the Shipping Act of 

41 1984 (46 App. U.S.C. 1702)’’ and substitute ‘‘section 40102 of title 46’’. 
263 

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1 (i) MISCELLANEOUS.—Section 5501(a) of the Oceans Act of 1992 (Public 

2 Law 102–587, 106 Stat. 5084) is amended by adding the following: 

3 ‘‘(3) The exceptions provided by paragraph (2) shall apply under section 

4 55109 of title 46, United States Code, to the same extent as under former sec5 tion 1 of the Act of May 28, 1906, as amended by paragraph (1).’’ 

6 SEC. 18. TRANSITIONAL AND SAVINGS PROVISIONS. 

7 (a) CUTOFF DATE.—This Act replaces certain provisions enacted on or be8 fore April 30, 2005. If a law enacted after that date amends or repeals a pro9 vision replaced by this Act, that law is deemed to amend or repeal, as the 

10 case may be, the corresponding provision enacted by this Act. If a law enacted 

11 after that date is otherwise inconsistent with this Act, it supersedes this Act 

12 to the extent of the inconsistency. 

13 (b) ORIGINAL DATE OF ENACTMENT UNCHANGED.—For purposes of deter14 mining whether one provision supersedes another based on enactment later in 

15 time, the date of enactment of a provision enacted by this Act is deemed to 

16 be the date of enactment of the provision it replaced. 

17 (c) REFERENCES TO PROVISIONS REPLACED.—A reference to a provision 

18 replaced by this Act is deemed to refer to the corresponding provision enacted 

19 by this Act. 

20 (d) LAWS GOVERNING APPLICABILITY OF PRIOR AMENDMENTS.—This Act 

21 does not affect any law governing the applicability of an amendment to a 

22 provision replaced by this Act, notwithstanding the repeal by this Act of the 

23 provision that was amended. To the extent that any such law governed the 

24 applicability of a provision replaced by this Act, that law governs the appli25 cability of the corresponding provision enacted by this Act. 

26 (e) REGULATIONS, ORDERS, AND OTHER ADMINISTRATIVE ACTIONS.—A 

27 regulation, order, or other administrative action in effect under a provision 

28 replaced by this Act continues in effect under the corresponding provision en29 acted by this Act. 

30 (f) ACTIONS TAKEN AND OFFENSES COMMITTED.—An action taken or an 

31 offense committed under a provision replaced by this Act is deemed to have 

32 been taken or committed under the corresponding provision enacted by this 

33 Act. 

34 SEC. 19. REPEALS. 

35 The following provisions are repealed, except with respect to rights and du36 ties that matured, penalties that were incurred, or proceedings that were 

37 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 
264 

•HR 1442 RH 

Revised Statutes—Continued 

Revised Statutes Section 

United States Code 

Title Section 

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 

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 
265 

•HR 1442 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 

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 
266 

•HR 1442 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 

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 
267 

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(46 App. unless otherwise 

specified) 

Volume Page 

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 

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 
268 

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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 

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 
269 

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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 

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 
270 

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Volume Page 

2003 Nov. 24 108–136 3527 .......................................................... 117 1802 ............... 1280b 

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 

House Calendar No. 61 

109TH CONGRESS 

1ST SESSION H. R. 1442 

[Report No. 109–170] 

A BILL 

To complete the codification of title 46, United 

States Code, ‘‘Shipping’’, as positive law. 

JULY 14, 2005 

Reported with an amendment, referred to the House 

Calendar, and ordered to be printed