II 

Calendar No. 594 

109TH CONGRESS 

2D SESSION H. R. 1442 

IN THE SENATE OF THE UNITED STATES 

NOVEMBER 17, 2005 

Received; read twice and referred to the Committee on the Judiciary 

SEPTEMBER 7 (legislative day, SEPTEMBER 6), 2006 

Reported by Mr. SPECTER, without amendment 

AN ACT 

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. 

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. 


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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 

3 of 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 

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

7 purpose of the Congress in the original enactments, with such amendments 

8 and corrections as will remove ambiguities, contradictions, and other imper9 fections, in accordance with section 205(c)(1) of House Resolution No. 988, 

10 93d Congress, as enacted into law by Public Law 93–554 (2 U.S.C. 

11 285b(1)). 

12 SEC. 3. TITLE ANALYSIS. 

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

14 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’’. 

15 SEC. 4. SUBTITLE I OF TITLE 46. 

16 Title 46, United States Code, is amended by inserting after the title anal17 ysis the following: 

18 ‘‘Subtitle I—General 

‘‘Chapter Sec. 

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

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

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

19 ‘‘CHAPTER 1—DEFINITIONS 

‘‘Sec. 

‘‘101. Agency. 

‘‘102. Barge. 

‘‘103. Boundary Line. 

‘‘104. Citizen of the United States. 

‘‘105. Consular officer. 

‘‘106. Documented vessel. 

‘‘107. Exclusive economic zone. 

‘‘108. Fisheries. 

‘‘109. Foreign commerce or trade. 

‘‘110. Foreign vessel. 

‘‘111. Numbered vessel. 

‘‘112. State. 

‘‘113. Undocumented. 

‘‘114. United States. 

‘‘115. Vessel. 

‘‘116. Vessel of the United States. 


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1 ‘‘§ 101. Agency 

2 ‘‘In this title, the term ‘agency’ means a department, agency, or instru3 mentality 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 

8 section 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 ref11 erence to a natural person, means an individual who is a national of the 

12 United States as defined in section 101(a)(22) of the Immigration and Na13 tionality 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 

19 certificate 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 estab22 lished by Presidential Proclamation 5030 of March 10, 1983 (16 U.S.C. 

23 1453 note). 

24 ‘‘§ 108. Fisheries 

25 ‘‘In this title, the term ‘fisheries’ includes processing, storing, trans26 porting (except in foreign commerce), planting, cultivating, catching, taking, 

27 or harvesting fish, shellfish, marine animals, pearls, shells, or marine vege28 tation in the navigable waters of the United States or in the exclusive eco29 nomic zone. 

30 ‘‘§ 109. Foreign commerce or trade 

31 ‘‘(a) IN GENERAL.—In this title, the terms ‘foreign commerce’ and ‘for32 eign trade’ mean commerce or trade between a place in the United States 

33 and a place in a foreign country. 

34 ‘‘(b) CAPITAL CONSTRUCTION FUNDS AND CONSTRUCTION-DIFFEREN35 TIAL SUBSIDIES.—In the context of capital construction funds under chap36 ter 535 of this title, and in the context of construction-differential subsidies 

37 under title V of the Merchant Marine Act, 1936, the terms ‘foreign com38 merce’ and ‘foreign trade’ also include, in the case of liquid and dry bulk 

39 cargo carrying services, trading between foreign ports in accordance with 

40 normal commercial bulk shipping practices in a manner that will permit 

41 bulk vessels of the United States to compete freely with foreign bulk vessels 


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1 in their operation or competition for charters, subject to regulations pre2 scribed by the Secretary of Transportation. 

3 ‘‘§ 110. Foreign vessel 

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

5 or operated under the authority of a foreign country. 

6 ‘‘§ 111. Numbered vessel 

7 ‘‘In this title, the term ‘numbered vessel’ means a vessel for which a num8 ber has been issued under chapter 123 of this title. 

9 ‘‘§ 112. State 

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

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

12 Samoa, the Northern Mariana Islands, and any other territory or possession 

13 of the United States. 

14 ‘‘§ 113. Undocumented 

15 ‘‘In this title, the term ‘undocumented’ means not having and not re16 quired to have a certificate of documentation issued under chapter 121 of 

17 this title. 

18 ‘‘§ 114. United States 

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

20 means the States of the United States, the District of Columbia, Guam, 

21 Puerto Rico, the Virgin Islands, American Samoa, the Northern Mariana 

22 Islands, and any other territory or possession of the United States. 

23 ‘‘§ 115. Vessel 

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

25 3 of title 1. 

26 ‘‘§ 116. Vessel of the United States 

27 ‘‘In this title, the term ‘vessel of the United States’ means a vessel docu28 mented under chapter 121 of this title (or exempt from documentation 

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

30 title, or titled under the law of a State. 

31 ‘‘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. 

32 ‘‘§ 301. General organization 

33 ‘‘(a) ORGANIZATION.—The Federal Maritime Commission is an inde34 pendent establishment of the United States Government. 

35 ‘‘(b) COMMISSIONERS.— 


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1 ‘‘(1) COMPOSITION.—The Commission is composed of 5 Commis2 sioners, appointed by the President by and with the advice and consent 

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

4 the same political party. 

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

6 term beginning one year apart. An individual appointed to fill a va7 cancy is appointed only for the unexpired term of the individual being 

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

9 appointment. When the term of a Commissioner ends, the Commis10 sioner may continue to serve until a successor is appointed and quali11 fied. 

12 ‘‘(3) REMOVAL.—The President may remove a Commissioner for in13 efficiency, neglect of duty, or malfeasance in office. 

14 ‘‘(c) CHAIRMAN.— 

15 ‘‘(1) DESIGNATION.—The President shall designate one of the Com16 missioners as Chairman. 

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

18 and administrative officer of the Commission. In carrying out the du19 ties and powers of the Commission (other than under paragraph (3)), 

20 the Chairman is subject to the policies, regulatory decisions, findings, 

21 and determinations 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 Commis33 sioners, to perform duties and powers delegated by the Com34 mission 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 

5 Commission do not impair the power of the Commission to execute its func6 tions. The affirmative vote of a majority of the Commissioners serving on 

7 the Commission 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, 

11 or financial transaction of the Commission. 

12 ‘‘§ 304. Delegation of authority 

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

14 order or regulation, may delegate to a division of the Commission, an indi15 vidual Commissioner, an employee board, or an officer or employee of the 

16 Commission, any of its duties or powers, including those relating to hearing, 

17 determining, ordering, certifying, reporting, or otherwise acting on any mat18 ter. This subsection does not affect section 556(b) of title 5. 

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

20 delegation of authority under subsection (a). The review may be taken on 

21 the Commission’s own initiative or on the petition of a party to or an inter22 venor in the action, within the time and in the manner prescribed by the 

23 Commission. The vote of a majority of the Commission, less one member, 

24 is sufficient to bring an action before the Commission for review. 

25 ‘‘(c) DEEMED ACTION OF COMMISSION.—If the Commission declines re26 view, or if review is not sought, within the time prescribed under subsection 

27 (b), the action taken under the delegation of authority is deemed to be the 

28 action of the Commission. 

29 ‘‘§ 305. Regulations 

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

31 out its duties and powers. 

32 ‘‘§ 306. Annual report 

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

34 Maritime Commission shall submit a report to Congress. The report shall 

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

36 purposes for which all of its expenditures were made, and any recommenda37 tions for legislation. 

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

39 shall include in its annual report to Congress— 


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1 ‘‘(1) a list of the 20 foreign countries that generated the largest vol2 ume of oceanborne liner cargo for the most recent calendar year in bi3 lateral 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 con7 ditions; 

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 

15 otherwise 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 na22 tional 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 

25 necessary in the interest of national defense, the individual may waive com26 pliance with those laws to the extent, in the manner, and on the terms the 

27 individual prescribes. 

28 ‘‘(c) TERMINATION OF AUTHORITY.—The authority granted by this sec29 tion shall terminate at such time as the Congress by concurrent resolution 

30 or the 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, 

34 master, 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 

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

5 and the place of residence of the owner or consignee at the time of the sei6 zure. 

7 ‘‘§ 504. Remission of fees and penalties 

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

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

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

11 date of the payment or forfeiture; and 

12 ‘‘(2) it is found that the fee, tax, penalty, or forfeiture was improp13 erly or excessively imposed. 

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

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

16 order of the Federal Maritime Commission or the Secretary of Transpor17 tation under subtitle IV or V of this title, for which no penalty is expressly 

18 provided, shall be fined not more than $500. Each day of a continuing viola19 tion is a separate offense.’’. 

20 SEC. 5. SUBTITLE II OF TITLE 46. 

21 Chapter 121 of title 46, United States Code, is amended to read as fol22 lows: 

23 ‘‘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. 


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

‘‘12138. List of documented vessels. 

‘‘12139. Reports. 

‘‘SUBCHAPTER IV—PENALTIES 

‘‘12151. Penalties. 

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

1 ‘‘SUBCHAPTER I—GENERAL 

2 ‘‘§ 12101. Definitions 

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

4 deemed to have been rebuilt in the United States only if the entire rebuild5 ing, including the construction of any major component of the hull or super6 structure, 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 

9 to 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 

14 and license’, ‘license for the coastwise (or coasting) trade’, and ‘enroll15 ment and license for the coastwise (or coasting) trade’ mean a certifi16 cate of documentation with a coastwise endorsement issued under this 

17 chapter. 

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

19 not documented. 

20 ‘‘§ 12102. Vessels requiring documentation 

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

22 in a trade only if the vessel has been issued a certificate of documentation 

23 with an endorsement for that trade under this chapter. 

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

25 may engage in a trade without being documented if the vessel otherwise sat26 isfies the requirements to engage in the particular trade. 

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

28 engage in the coastwise trade, without being documented, on rivers, harbors, 

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

30 ‘‘§ 12103. General eligibility requirements 

31 ‘‘(a) IN GENERAL.—Except as otherwise provided, a certificate of docu32 mentation for a vessel may be issued under this chapter only if the vessel 

33 is— 

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

35 in subsection (b); 

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

37 and 


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

2 ‘‘(b) ELIGIBLE OWNERS.—For purposes of subsection (a)(1), the fol3 lowing are eligible owners: 

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

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

6 ‘‘(A) each of its members is a citizen of the United States; and 

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

8 the United States or a State. 

9 ‘‘(3) A partnership if— 

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

11 ‘‘(B) the controlling interest in the partnership is owned by citi12 zens of the United States. 

13 ‘‘(4) A corporation if— 

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

15 a State; 

16 ‘‘(B) its chief executive officer, by whatever title, and the chair17 man of its board of directors are citizens of the United States; and 

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

19 of the number necessary to constitute a quorum. 

20 ‘‘(5) The United States Government. 

21 ‘‘(6) The government of a State. 

22 ‘‘(c) TEMPORARY CERTIFICATES PRIOR TO MEASUREMENT.—Notwith23 standing subsection (a)(2), the Secretary may issue a temporary certificate 

24 of documentation for a vessel before it is measured. 

25 ‘‘§ 12104. Applications for documentation 

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

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

28 The application must be filed in the manner, be in the form, and contain 

29 the information prescribed by the Secretary. 

30 ‘‘(b) APPLICANT’S IDENTIFYING INFORMATION.—The Secretary shall re31 quire the applicant to provide— 

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

33 number; or 

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

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

36 ‘‘(B) if the entity does not have a taxpayer identification num37 ber, the social security number of an individual who is a corporate 

38 officer, general partner, or individual trustee of the entity and who 

39 signs the application. 


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1 ‘‘§ 12105. Issuance of documentation 

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

3 Secretary, on receipt of a proper application, shall issue a certificate of doc4 umentation or a temporary certificate of documentation for a vessel satis5 fying the requirements of section 12103 of this title. The certificate shall 

6 contain each endorsement under subchapter II of this chapter for which the 

7 owner applies and the vessel is eligible. 

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

9 Secretary may delegate, subject to the supervision and control of the Sec10 retary and under terms prescribed by regulation, to private entities deter11 mined and certified by the Secretary to be qualified, the authority to issue 

12 a temporary certificate of documentation for a recreational vessel eligible 

13 under section 12103 of this title. A temporary certificate issued under this 

14 subsection is valid for not more than 30 days. 

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

16 documentation shall— 

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

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

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

20 ‘‘(d) PROCEDURES TO ENSURE INTEGRITY AND ACCURACY.—The Sec21 retary shall prescribe procedures to ensure the integrity of, and the accuracy 

22 of information contained in, certificates of documentation. 

23 ‘‘§ 12106. Surrender of title and number 

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

25 or required to display numbers under chapter 123 of this title, and any cer26 tificate of title issued by a State for a documented vessel shall be surren27 dered as provided by regulations prescribed by the Secretary. 

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

29 may approve the surrender under subsection (a) of a certificate of title for 

30 a vessel covered by a preferred mortgage under section 31322(d) of this title 

31 only if the mortgagee consents. 

32 ‘‘§ 12107. Wrecked vessels 

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

34 it— 

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

36 and 

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

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

39 ‘‘(b) APPRAISALS.—The Secretary may appoint a board of three apprais40 ers to determine whether a vessel satisfies subsection (a)(2). The costs of 

41 the appraisal shall be paid by the owner of the vessel. 


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1 ‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL 

2 DOCUMENTATION 

3 ‘‘§ 12111. Registry endorsement 

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

5 that satisfies the requirements of section 12103 of this title. 

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

7 is issued may engage in foreign trade or trade with Guam, American 

8 Samoa, Wake, Midway, or Kingman Reef. 

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

10 ‘‘(1) NONAPPLICATION OF BENEFICIARY CITIZENSHIP REQUIRE11 MENT.—For the issuance of a certificate of documentation with only 

12 a registry endorsement, the beneficiaries of a trust are not required to 

13 be citizens of the United States if the trust qualifies under paragraph 

14 (2) and the vessel is subject to a charter to a citizen of the United 

15 States. 

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

17 ‘‘(A) IN GENERAL.—Subject to subparagraph (B), a trust quali18 fies under this paragraph with respect to a vessel only if— 

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

20 ‘‘(ii) the application for documentation of the vessel in21 cludes the affidavit of each trustee stating that the trustee is 

22 not aware of any reason involving a beneficiary of the trust 

23 that is not a citizen of the United States, or involving any 

24 other person that is not a citizen of the United States, as a 

25 result of which the beneficiary or other person would hold 

26 more than 25 percent of the aggregate power to influence or 

27 limit the exercise of the authority of the trustee with respect 

28 to matters involving any ownership or operation of the vessel 

29 that may adversely affect the interests of the United States. 

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

31 a citizen of the United States has authority to direct or participate 

32 in directing a trustee for a trust in matters involving any owner33 ship or operation of the vessel that may adversely affect the inter34 ests of the United States or in removing a trustee for a trust with35 out cause, either directly or indirectly through the control of an36 other person, the trust is not qualified under this paragraph un37 less the trust instrument provides that persons who are not citi38 zens of the United States may not hold more than 25 percent of 

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

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

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


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

2 in a trust. 

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

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

5 a citizen of the United States under section 50501 of this title, the ves6 sel is deemed to be owned by a citizen of the United States for pur7 poses of that section and related laws, except chapter 531 of this title. 

8 ‘‘§ 12112. Coastwise endorsement 

9 ‘‘(a) REQUIREMENTS.—A coastwise endorsement may be issued for a ves10 sel that— 

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

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

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

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

15 lawfully condemned as prize; 

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

17 the United States; or 

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

19 title; and 

20 ‘‘(3) otherwise qualifies under the laws of the United States to en21 gage in the coastwise trade. 

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

23 regulating the coastwise trade, a vessel for which a coastwise endorsement 

24 is issued may engage in the coastwise trade. 

25 ‘‘§ 12113. Fishery endorsement 

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

27 that— 

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

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

30 subsection (c); 

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

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

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

34 1, 2001, for a breach of the laws of the United States; and 

35 ‘‘(5) otherwise qualifies under the laws of the United States to en36 gage in the fisheries. 

37 ‘‘(b) AUTHORIZED ACTIVITY.— 

38 ‘‘(1) IN GENERAL.—Subject to the laws of the United States regu39 lating the fisheries, a vessel for which a fishery endorsement is issued 

40 may engage in the fisheries. 


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1 ‘‘(2) USE BY PROHIBITED PERSONS.—A fishery endorsement is in2 valid immediately if the vessel for which it is issued is used as a fishing 

3 vessel while it is chartered or leased to an individual who is not a cit4 izen of the United States or to an entity that is not eligible to own 

5 a vessel with a fishery endorsement. 

6 ‘‘(c) OWNERSHIP REQUIREMENTS FOR ENTITIES.— 

7 ‘‘(1) IN GENERAL.—A vessel owned by an entity is eligible for a fish8 ery endorsement only if at least 75 percent of the interest in the entity, 

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

10 by citizens of the United States. 

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

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

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

14 shall apply section 50501(d) of this title, except that for this purpose 

15 the terms ‘control’ or ‘controlled’— 

16 ‘‘(A) include the right to— 

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

18 ‘‘(ii) limit the actions of or replace the chief executive offi19 cer, a majority of the board of directors, any general partner, 

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

21 or 

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

23 with a fishery endorsement; but 

24 ‘‘(B) do not include the right to simply participate in the activi25 ties under subparagraph (A), or the exercise of rights under loan 

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

27 mortgagee under section 31322(a) of this title, except that a mort28 gagee not eligible to own a vessel with a fishery endorsement may 

29 only operate such a vessel to the extent necessary for the imme30 diate safety of the vessel or for repairs, drydocking, or berthing 

31 changes. 

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

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

34 authority of the Western Pacific Fishery Management Council estab35 lished under section 302(a)(1)(H) of the Magnuson-Stevens Fishery 

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

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

38 Ocean outside the exclusive economic zone or pursuant to the South 

39 Pacific Regional Fisheries Treaty, provided that the owner of the vessel 

40 continues to comply with the eligibility requirements for a fishery en41 dorsement under the Federal law that was in effect on October 1, 


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1 1998. A fishery endorsement issued pursuant to this paragraph is valid 

2 for engaging only in the activities described in this paragraph. 

3 ‘‘(d) REQUIREMENTS BASED ON LENGTH, TONNAGE, OR HORSE4 POWER.— 

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

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

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

8 chapter 145 of this title or 1,900 gross registered tons as meas9 ured under chapter 143 of this title; or 

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

11 more than 3,000 shaft horsepower. 

12 ‘‘(2) REQUIREMENTS.—A vessel subject to this subsection is not eli13 gible for a fishery endorsement unless— 

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

15 and endorsed with a fishery endorsement that was effective on 

16 September 25, 1997; 

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

18 21, 1998; and 

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

20 1998, application is made for a new fishery endorsement within 

21 15 business days of the invalidation; or 

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

23 the regional fishery management council of jurisdiction established 

24 under section 302(a)(1) of the Magnuson-Stevens Fishery Con25 servation and Management Act (16 U.S.C. 1852(a)(1)) has rec26 ommended after October 21, 1998, and the Secretary of Com27 merce has approved, conservation and management measures in 

28 accordance with the American Fisheries Act (Public Law 105– 

29 277, div. C, title II) (16 U.S.C. 1851 note) to allow the vessel to 

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

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

32 ‘‘(1) IN GENERAL.—The Administrator of the Maritime Administra33 tion shall administer subsections (c) and (d) with respect to vessels 100 

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

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

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

37 to demonstrate compliance with those provisions. 

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

39 conform to the extent practicable with the regulations establishing the 

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

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


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

2 owner of the vessel to satisfy any annual renewal requirements for a 

3 certificate of documentation for the vessel and to comply with this sub4 section and subsections (c) and (d), and shall not be required to be no5 tarized. 

6 ‘‘(3) TRANSFER OF OWNERSHIP.—Transfers of ownership and con7 trol of vessels subject to subsection (c) or (d), which are 100 feet or 

8 greater in registered length, shall be rigorously scrutinized for viola9 tions of those provisions, with particular attention given to— 

10 ‘‘(A) leases, charters, mortgages, financing, and similar ar11 rangements; 

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

13 fishery endorsement under subsection (c) or (d), over the manage14 ment, sales, financing, or other operations of an entity; and 

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

16 time of all, or substantially all, of the living marine resources har17 vested by a fishing vessel. 

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

19 establish reasonable and necessary requirements to demonstrate compliance 

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

21 feet in registered length, and shall seek to minimize the administrative bur22 den on individuals who own and operate those vessels. 

23 ‘‘(g) VESSELS PURCHASED THROUGH FISHING CAPACITY REDUCTION

24 PROGRAM.—A vessel purchased by the Secretary of Commerce through a 

25 fishing capacity reduction program under the Magnuson-Stevens Fishery 

26 Conservation Management Act (16 U.S.C. 1801 et seq.) or section 308 of 

27 the Interjurisdictional Fisheries Act of 1986 (16 U.S.C. 4107) is not eligible 

28 for a fishery endorsement, and any fishery endorsement issued for that ves29 sel is invalid. 

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

31 fishery endorsement of any vessel subject to subsection (c) or (d) whose 

32 owner does not comply with those provisions. 

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

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

35 transfers of ownership or control, specify any transactions that require prior 

36 approval of an implementing agency, identify transactions that do not re37 quire prior agency approval, and to the extent practicable, minimize disrup38 tions to the commercial fishing industry, to the traditional financing ar39 rangements of that industry, and to the opportunity to form fishery co40 operatives. 


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1 ‘‘§ 12114. Recreational endorsement 

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

3 vessel that satisfies the requirements of section 12103 of this title. 

4 ‘‘(b) AUTHORIZED ACTIVITY.—A vessel operating under a recreational en5 dorsement may be operated only for pleasure. 

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

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

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

9 of Homeland Security. However, a recreational vessel is subject to the re10 quirements for reporting arrivals under section 433 of the Tariff Act of 

11 1930 (19 U.S.C. 1433), and individuals on the vessel are subject to applica12 ble customs regulations. 

13 ‘‘§ 12115. Temporary endorsement for vessels procured out14 side the United States 

15 ‘‘(a) GENERAL AUTHORITY.—The Secretary and the Secretary of State, 

16 acting jointly, may provide for the issuance of a certificate of documentation 

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

18 States and meeting the ownership requirements of section 12103 of this 

19 title. 

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

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

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

23 Samoa, Wake, Midway, or Kingman Reef. 

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

25 vessel documented under this section is subject to the jurisdiction and laws 

26 of the United States. However, if the Secretary considers it to be in the 

27 public interest, the Secretary may suspend for a period of not more than 

28 6 months the application of a vessel inspection law carried out by the Sec29 retary or regulations prescribed under that law. 

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

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

32 regulations prescribed by the Secretary. 

33 ‘‘§ 12116. Limited endorsements for Guam, American Samoa, 

34 and Northern Mariana Islands 

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

36 (b) may be issued— 

37 ‘‘(1) a coastwise endorsement to engage in the coastwise trade of 

38 fisheries products between places in Guam, American Samoa, and the 

39 Northern Mariana Islands; or 


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

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

3 the Northern Mariana Islands. 

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

5 (a) for a vessel that— 

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

7 ‘‘(2) was not built in the United States, except that for an endorse8 ment under subsection (a)(2), the vessel must not have been built or 

9 rebuilt in the United States; 

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

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

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

13 title; and 

14 ‘‘(4) otherwise qualifies under the laws of the United States to en15 gage in the coastwise trade or the fisheries, as the case may be. 

16 ‘‘§ 12117. Oil spill response vessels 

17 ‘‘(a) REQUIREMENTS.—A coastwise endorsement may be issued for a ves18 sel that— 

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

20 for the ownership requirement otherwise applicable without regard to 

21 this section; 

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

23 members of such a cooperative that dedicate the vessel to use by the 

24 cooperative; 

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

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

27 ‘‘(4) is to be used only for— 

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

29 contain, or transport oil discharged into the navigable waters of 

30 the United States or the exclusive economic zone; or 

31 ‘‘(ii) training exercises to prepare to respond to such a dis32 charge. 

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

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

35 12103, 12132, and 50501 of this title. 

36 ‘‘§ 12118. Owners engaged primarily in manufacturing or 

37 mineral industry 

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

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

40 means a corporation that has filed a certificate under oath with the 


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

2 establishing that— 

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

4 United States or a State; 

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

6 are individuals who are citizens of the United States; 

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

8 residents of the United States; 

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

10 or mineral industry in the United States; 

11 ‘‘(E) the total book value of the vessels owned by the corpora12 tion is not more than 10 percent of the total book value of the 

13 assets of the corporation; and 

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

15 least 75 percent of the raw materials used or sold in its oper16 ations. 

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

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

19 times prescribed by the Secretary, establishing that the corporation— 

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

21 State; and 

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

23 voting stock of a Bowaters corporation. 

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

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

26 at the times prescribed by the Secretary, establishing that the corpora27 tion— 

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

29 State; and 

30 ‘‘(B) has at least 50 percent of its voting stock controlled, di31 rectly or indirectly, by a Bowaters corporation or its parent. 

32 ‘‘(b) DEEMED CITIZEN.—A Bowaters corporation is deemed to be a cit33 izen of the United States for purposes of chapters 121, 551, and 561 and 

34 section 80104 of this title. 

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

36 appropriate endorsement may be issued for a vessel that— 

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

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

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

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


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1 under section 14302 of this title as prescribed by the Secretary under 

2 section 14104 of this title; or 

3 ‘‘(B) is not self-propelled. 

4 ‘‘(d) EFFECTS OF DOCUMENTATION.— 

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

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

7 coastwise trade; and 

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

9 same benefits and are subject to the same requirements and pen10 alties as if the vessel were otherwise documented or exempt from 

11 documentation under this chapter. 

12 ‘‘(2) TRANSPORTATION OF PASSENGERS OR MERCHANDISE.—A ves13 sel documented under this section may transport passengers or mer14 chandise for hire in the coastwise trade only— 

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

16 owning the vessel; or 

17 ‘‘(B) when under a demise or bareboat charter, at prevailing 

18 rates for use not in the domestic noncontiguous trades, from the 

19 corporation owning the vessel to a carrier that— 

20 ‘‘(i) is subject to jurisdiction under subchapter II of chap21 ter 135 of title 49; 

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

23 under section 50501 of this title; and 

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

25 the corporation owning the vessel. 

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

27 corporation under this section remains valid only as long as the corporation 

28 continues to satisfy the conditions required of the corporation by this sec29 tion. When a corporation no longer satisfies those conditions, the corpora30 tion loses its status under this section and immediately shall surrender to 

31 the Secretary any documents issued to it based on that status. 

32 ‘‘(f) PENALTIES.— 

33 ‘‘(1) FALSIFYING MATERIAL FACT.—If a corporation knowingly fal34 sifies a material fact in a certificate filed under subsection (a), the ves35 sel (or its value) documented or operated under this section shall be 

36 forfeited. 

37 ‘‘(2) TRANSPORTING MERCHANDISE.—If a vessel transports mer38 chandise for hire in violation of this section, the merchandise shall be 

39 forfeited to the United States Government. 


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1 ‘‘(3) TRANSPORTING PASSENGERS.—If a vessel transports pas2 sengers for hire in violation of this section, the vessel is liable for a 

3 penalty of $200 for each passenger so transported. 

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

5 under this subsection may be remitted or mitigated under section 

6 2107(b) of this title. 

7 ‘‘§ 12119. Owners engaged primarily in leasing or financing 

8 transactions 

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

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

11 person, any other person that is— 

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

13 with, or controlling that person; or 

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

15 report or other document submitted to the United States Securi16 ties and Exchange Commission or the Internal Revenue Service. 

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

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

19 evading the requirements of subsection (c)(3). 

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

21 2101(20) of this title. 

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

23 an investment in which neither the investor nor any affiliate of the in24 vestor is involved in, or has the power to be involved in, the formula25 tion, determination, or direction of any activity or function concerning 

26 the management, use, or operation of the asset that is the subject of 

27 the investment. 

28 ‘‘(5) QUALIFIED PROPRIETARY CARGO.—The term ‘qualified propri29 etary cargo’ means— 

30 ‘‘(A) oil, petroleum products, petrochemicals, or liquefied nat31 ural gas cargo that is beneficially owned by the person that sub32 mits to the Secretary an application or annual certification under 

33 subsection (c)(3), or by an affiliate of that person, immediately be34 fore, during, or immediately after the cargo is carried in coastwise 

35 trade on a vessel owned by that person; 

36 ‘‘(B) oil, petroleum products, petrochemicals, or liquefied nat37 ural gas cargo not beneficially owned by the person that submits 

38 to the Secretary an application or an annual certification under 

39 subsection (c)(3), or by an affiliate of that person, but which is 

40 carried in coastwise trade by a vessel owned by that person and 

41 which is part of an arrangement in which vessels owned by that 


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1 person and at least one other person are operated collectively as 

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

3 products, petrochemicals, or liquefied natural gas cargo bene4 ficially owned by that person, or by an affiliate of that person, is 

5 carried in coastwise trade on one or more other vessels, not owned 

6 by that person, or by an affiliate of that person, if the other vessel 

7 or vessels are also part of the same arrangement; 

8 ‘‘(C) in the case of a towing vessel associated with a non-self9 propelled tank vessel where both vessels function as a single self10 propelled vessel, oil, petroleum products, petrochemicals, or lique11 fied natural gas cargo that is beneficially owned by the person that 

12 owns both the towing vessel and the non-self-propelled tank vessel, 

13 or any United States affiliate of that person, immediately before, 

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

15 on either of those vessels; or 

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

17 natural gas cargo carried on any vessel that is either a self-pro18 pelled tank vessel having a length of at least 210 meters or a tank 

19 vessel that is a liquefied natural gas carrier that— 

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

21 of the vessel after December 31, 1999; and 

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

23 the reasonable expectation, of transporting on the vessel liq24 uefied natural gas or unrefined petroleum beneficially owned 

25 by the owner of the vessel, or an affiliate of the owner, from 

26 Alaska to the continental United States. 

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

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

29 business of which is located in the United States. 

30 ‘‘(b) REQUIREMENTS.—A coastwise endorsement may be issued for a ves31 sel if— 

32 ‘‘(1) the vessel satisfies the requirements for a coastwise endorse33 ment, except for the ownership requirement otherwise applicable with34 out regard to this section; 

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

36 a trust or similar arrangement, the beneficiary of the trust or similar 

37 arrangement) meets the requirements of subsection (c); 

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

39 to the Secretary that the person is a citizen of the United States under 

40 section 50501 of this title for engaging in the coastwise trade; and 


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1 ‘‘(4) the demise charter is for a period of at least 3 years or a short2 er period as may be prescribed by the Secretary. 

3 ‘‘(c) OWNERSHIP CERTIFICATION.— 

4 ‘‘(1) IN GENERAL.—A person meets the requirements of this sub5 section if the person transmits to the Secretary each year the certifi6 cation required by paragraph (2) or (3) with respect to a vessel. 

7 ‘‘(2) INVESTMENT CERTIFICATION.—To meet the certification re8 quirement of this paragraph, a person shall certify that it— 

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

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

11 as a passive investment; 

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

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

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

15 of the vessel or any other person that has the right, directly or 

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

17 ‘‘(3) CERTAIN TANK VESSELS.— 

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

19 this paragraph, a person shall certify that— 

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

21 person and United States affiliates of the person does not ex22 ceed 10 percent of the aggregate book value of all assets 

23 owned by the person and its United States affiliates; 

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

25 of the person and its United States affiliates is derived from 

26 the ownership, operation, or management of vessels; 

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

28 cargo carried by all vessels owned by the person and its 

29 United States affiliates and documented with a coastwise en30 dorsement is qualified proprietary cargo; 

31 ‘‘(iv) any cargo other than qualified proprietary cargo car32 ried by all vessels owned by the person and its United States 

33 affiliates and documented with a coastwise endorsement con34 sists of oil, petroleum products, petrochemicals, or liquified 

35 natural gas; 

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

37 States affiliates and documented with a coastwise endorse38 ment carries molten sulphur; and 

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

40 under this section as of August 9, 2004. 


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

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

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

4 tons, as measured under section 14502 of this title (or an al5 ternative tonnage measured under section 14302 of this title 

6 as prescribed by the Secretary under section 14104 of this 

7 title); or 

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

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

10 both vessels function as a single self-propelled vessel. 

11 ‘‘(d) FILING OF DEMISE CHARTER.—The demise charter and any amend12 ments to the charter shall be filed with the certification required by sub13 section (b)(3) or within 10 days after filing an amendment to the charter. 

14 The charter and amendments shall be made available to the public. 

15 ‘‘(e) CONTINUATION OF ENDORSEMENT AFTER TERMINATION OF CHAR16 TER.—When a charter required by subsection (b)(3) is terminated for de17 fault by the charterer, the Secretary may continue the coastwise endorse18 ment for not more than 6 months on terms and conditions the Secretary 

19 may prescribe. 

20 ‘‘(f) DEEMED OWNED BY CITIZENS.—A vessel satisfying the require21 ments of this section is deemed to be owned only by citizens of the United 

22 States under sections 12103 and 50501 of this title. 

23 ‘‘§ 12120. Liquified gas tankers 

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

25 Secretary may issue a certificate of documentation with a coastwise endorse26 ment for a vessel to transport liquified natural gas or liquified petroleum 

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

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

29 or 

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

31 vessel is placed under a foreign registry and subsequently redocu32 mented under this chapter for operation under this section. 

33 ‘‘§ 12121. Small passenger vessels and uninspected pas34 senger vessels 

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

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

37 that— 

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

39 old; or 


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

2 3 years before the certificate requested under subsection (b) would 

3 take effect. 

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

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

6 ‘uninspected passenger vessel’, and ‘passenger for hire’ have the mean7 ing given those terms in section 2101 of this title. 

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

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

10 issue a certificate of documentation with an appropriate endorsement for 

11 employment in the coastwise trade as a small passenger vessel or an 

12 uninspected passenger vessel in the case of an eligible vessel authorized to 

13 carry no more than 12 passengers for hire if the Secretary of Transpor14 tation, after notice and an opportunity for public comment, determines that 

15 the employment of the vessel in the coastwise trade will not adversely af16 fect— 

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

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

19 built in the United States in that business. 

20 ‘‘(c) REVOCATION.— 

21 ‘‘(1) FOR FRAUD.—The Secretary shall revoke a certificate or en22 dorsement issued under subsection (b) if the Secretary of Transpor23 tation, after notice and an opportunity for a hearing, determines that 

24 the certificate or endorsement was obtained by fraud. 

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

26 affect— 

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

28 section 1001 of title 18; or 

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

30 or endorsement issued under subsection (b). 

31 ‘‘SUBCHAPTER III—MISCELLANEOUS 

32 ‘‘§ 12131. Command of documented vessels 

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

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

35 States. 

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

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

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

39 of the United States. 


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1 ‘‘§ 12132. Loss of coastwise trade privileges 

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

3 of more than 200 gross tons (as measured under chapter 143 of this title), 

4 eligible to engage in the coastwise trade, and later sold foreign in whole or 

5 in part or placed under foreign registry may not thereafter engage in the 

6 coastwise trade. 

7 ‘‘(b) REBUILT OUTSIDE THE UNITED STATES.—A vessel eligible to en8 gage in the coastwise trade and later rebuilt outside the United States may 

9 not thereafter engage in the coastwise trade. 

10 ‘‘§ 12133. Duty to carry certificate on vessel and allow exam11 ination 

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

13 be carried on the vessel unless the vessel is exempt by regulation from car14 rying the certificate. 

15 ‘‘(b) AVAILABILITY.—The owner or individual in charge of a vessel re16 quired to carry its certificate of documentation shall make the certificate 

17 available for examination at the request of an officer enforcing the revenue 

18 laws or as otherwise required by law or regulation. 

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

20 shall be fined under title 18, imprisoned for not more than one year, or 

21 both. 

22 ‘‘§ 12134. Evidentiary uses of documentation 

23 ‘‘A certificate of documentation is— 

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

25 not in a proceeding conducted under the laws of the United States; 

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

27 trade; and 

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

29 ownership is in issue. 

30 ‘‘§ 12135. Invalidation of certificates of documentation 

31 ‘‘A certificate of documentation or an endorsement on the certificate is 

32 invalid if the vessel for which it is issued— 

33 ‘‘(1) no longer meets the requirements of this chapter and regula34 tions prescribed under this chapter applicable to the certificate or en35 dorsement; or 

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

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

38 ‘‘§ 12136. Surrender of certificates of documentation 

39 ‘‘(a) SURRENDER.—An invalid certificate of documentation, or a certifi40 cate with an invalid endorsement, shall be surrendered as provided by regu41 lations prescribed by the Secretary. 


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1 ‘‘(b) CONDITIONS FOR SURRENDER.— 

2 ‘‘(1) VESSELS OVER 1,000 TONS.—The Secretary may condition ap3 proval of the surrender of the certificate of documentation for a vessel 

4 over 1,000 gross tons. 

5 ‘‘(2) VESSELS COVERED BY MORTGAGE.—The Secretary may ap6 prove the surrender of the certificate of documentation of a vessel cov7 ered by a mortgage filed or recorded under section 31321 of this title 

8 only if the mortgagee consents. 

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

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

11 the basis that a notice of a claim of a lien on the vessel has been re12 corded under section 31343(a) of this title. 

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

14 ‘‘(1) IN GENERAL.—Notwithstanding subsection (a), until the certifi15 cate of documentation is surrendered with the approval of the Sec16 retary, a documented vessel is deemed to continue to be documented 

17 under this chapter for purposes of— 

18 ‘‘(A) chapter 313 of this title for an instrument filed or re19 corded before the date of invalidation and an assignment after 

20 that date; 

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

22 title; and 

23 ‘‘(C) any other law of the United States identified by the Sec24 retary by regulation as a law to which the Secretary applies this 

25 subsection. 

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

27 forfeited or sold by order of a district court of the United States. 

28 ‘‘§ 12137. Recording of vessels built in the United States 

29 ‘‘The Secretary may provide for recording and certifying information 

30 about vessels built in the United States that the Secretary considers to be 

31 in the public interest. 

32 ‘‘§ 12138. List of documented vessels 

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

34 documented vessels and information about those vessels that the Secretary 

35 considers pertinent or useful. The list shall contain a notation clearly indi36 cating all vessels classed by the American Bureau of Shipping. 

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

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

39 maintain, and periodically update an inventory of vessels that are docu40 mented under this chapter, are at least 200 feet in length, and have 

41 the capability to lay, maintain, or repair a submarine cable, without reVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00027 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 gard to whether a particular vessel is classed as a cable ship or cable 

2 vessel. 

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

4 inventory, the Secretary of Transportation shall include in the inven5 tory— 

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

7 characteristics of the vessel; 

8 ‘‘(B) the abilities and limitations of the vessel with respect to 

9 laying, maintaining, and repairing a submarine cable; and 

10 ‘‘(C) the name and address of the person to whom inquiries re11 garding the vessel may be made. 

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

13 in the Federal Register an updated inventory every 6 months. 

14 ‘‘§ 12139. Reports 

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

16 governing the qualifications of vessels to engage in the coastwise trade and 

17 the fisheries, the Secretary may require owners, masters, and charterers of 

18 documented vessels to submit reports in any reasonable form and manner 

19 the Secretary may prescribe. 

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

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

22 if a vessel exceeding the tonnage specified in paragraph (2) and docu23 mented or last documented under the laws of the United States is re24 built outside the United States, the owner or master shall submit a re25 port of the rebuilding to the Secretary. 

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

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

28 title; or 

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

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

31 this title. 

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

33 United States, the report shall be submitted when the rebuilding is 

34 completed. If the rebuilding is completed outside the United States, the 

35 report shall be submitted when the vessel first arrives at a port in the 

36 customs territory of the United States. 

37 ‘‘SUBCHAPTER IV—PENALTIES 

38 ‘‘§ 12151. Penalties 

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

40 prescribed under this chapter is liable to the United States Government for 


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

2 is a separate violation. 

3 ‘‘(b) SEIZURE AND FORFEITURE OF VESSELS.—A vessel and its equip4 ment are liable to seizure by and forfeiture to the Government if— 

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

6 owner knowingly falsifies or conceals a material fact, or knowingly 

7 makes a false statement or representation, about the documentation of 

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

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

10 used for the vessel; 

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

12 revoked under section 12152 of this title; 

13 ‘‘(4) the vessel is employed in a trade without an appropriate en14 dorsement; 

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

16 other than for pleasure; 

17 ‘‘(6) the vessel is a documented vessel and is placed under the com18 mand of a person not a citizen of the United States, except as author19 ized by section 12131(b) of this title; or 

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

21 the rebuilding is not submitted as required by section 12139(b) of this 

22 title. 

23 ‘‘(c) ENGAGING IN FISHING AFTER FALSIFYING ELIGIBILITY.—In addi24 tion to other penalties under this section, the owner of a documented vessel 

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

26 for a civil penalty of not more than $100,000 for each day the vessel en27 gages in fishing (as defined in section 3 of the Magnuson-Stevens Fishery 

28 Conservation and Management Act (16 U.S.C. 1802)) within the exclusive 

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

30 knowingly falsified or concealed a material fact, or knowingly made a false 

31 statement or representation, about the eligibility of the vessel under section 

32 12113(c) or (d) of this title in applying for or applying to renew the fishery 

33 endorsement. 

34 ‘‘§ 12152. Denial or revocation of endorsement for non-pay35 ment of civil penalty 

36 ‘‘If the owner of a vessel fails to pay a civil penalty imposed by the Sec37 retary, the Secretary may deny the issuance or renewal of an endorsement, 

38 or revoke the endorsement, on a certificate of documentation issued for the 

39 vessel under this chapter.’’. 


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1 SEC. 6. SUBTITLE III OF TITLE 46. 

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

3 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’’. 

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

5 chapter 301 and the lines appearing immediately before and immediately 

6 after chapter 313 indicating that certain chapters are reserved. 

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

8 inserting after the analysis of subtitle III the following: 

9 ‘‘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. 

10 ‘‘§ 30101. Extension of jurisdiction to cases of damage or in11 jury on land 

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

13 United States extends to and includes cases of injury or damage, to person 

14 or property, caused by a vessel on navigable waters, even though the injury 

15 or damage is done or consummated on land. 

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

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

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

19 done and consummated on navigable waters. 

20 ‘‘(c) ACTIONS AGAINST UNITED STATES.— 

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

22 States for injury or damage done or consummated on land by a vessel 

23 on navigable waters, chapter 309 or 311 of this title, as appropriate, 

24 provides the exclusive remedy. 

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

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

27 the claim has been presented in writing to the agency owning or oper28 ating the vessel causing the injury or damage. 


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1 ‘‘§ 30102. Liability to passengers 

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

3 liable for personal injury to a passenger or damage to a passenger’s baggage 

4 caused by— 

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

6 of this title; or 

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

8 ‘‘(b) NOT SUBJECT TO LIMITATION.—A liability imposed under this sec9 tion is not subject to limitation under chapter 305 of this title. 

10 ‘‘§ 30103. Liability of master, mate, engineer, and pilot 

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

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

13 by the master’s, mate’s, engineer’s, or pilot’s— 

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

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

16 vessels. 

17 ‘‘§ 30104. Personal injury to or death of seamen 

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

19 or, if the seaman dies from the injury, the personal representative of the 

20 seaman may elect to bring a civil action at law, with the right of trial by 

21 jury, against the employer. Laws of the United States regulating recovery 

22 for personal injury to, or death of, a railway employee apply to an action 

23 under this section. 

24 ‘‘(b) VENUE.—An action under this section shall be brought in the judi25 cial district in which the employer resides or the employer’s principal office 

26 is located. 

27 ‘‘§ 30105. Restriction on recovery by non-citizens and non28 resident aliens for incidents in waters of other 

29 countries 

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

31 meaning given that term in article I of the 1958 Convention on the Conti32 nental Shelf. 

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

34 for maintenance and cure or for damages for personal injury or death may 

35 not be brought under a maritime law of the United States if— 

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

37 or permanent resident alien of the United States at the time of the in38 cident giving rise to the action; 

39 ‘‘(2) the incident occurred in the territorial waters or waters over40 laying the continental shelf of a country other than the United States; 

41 and 


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

2 time of the incident by a person engaged in the exploration, develop3 ment, or production of offshore mineral or energy resources, including 

4 drilling, mapping, surveying, diving, pipelaying, maintaining, repairing, 

5 constructing, or transporting supplies, equipment, or personnel, but not 

6 including transporting those resources by a vessel constructed or adapt7 ed primarily to carry oil in bulk in the cargo spaces. 

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

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

10 of— 

11 ‘‘(1) the country asserting jurisdiction over the area in which the in12 cident occurred; or 

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

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

15 ‘‘§ 30106. Time limit on bringing maritime action for per16 sonal injury or death 

17 ‘‘Except as otherwise provided by law, a civil action for damages for per18 sonal injury or death arising out of a maritime tort must be brought within 

19 3 years after the cause of action arose. 

20 ‘‘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. 

21 ‘‘§ 30301. Short title 

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

23 ‘‘§ 30302. Cause of action 

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

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

26 of the United States, the personal representative of the decedent may bring 

27 a civil action in admiralty against the person or vessel responsible. The ac28 tion shall be for the exclusive benefit of the decedent’s spouse, parent, child, 

29 or dependent relative. 

30 ‘‘§ 30303. Amount and apportionment of recovery 

31 ‘‘The recovery in an action under this chapter shall be a fair compensa32 tion for the pecuniary loss sustained by the individuals for whose benefit 

33 the action is brought. The court shall apportion the recovery among those 

34 individuals in proportion to the loss each has sustained. 


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1 ‘‘§ 30304. Contributory negligence 

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

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

4 of the decedent and reduce the recovery accordingly. 

5 ‘‘§ 30305. Death of plaintiff in pending action 

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

7 to recover for personal injury caused by wrongful act, neglect, or default 

8 described in section 30302 of this title, and the individual dies during the 

9 action as a result of the wrongful act, neglect, or default, the personal rep10 resentative of the decedent may be substituted as the plaintiff and the ac11 tion may proceed under this chapter for the recovery authorized by this 

12 chapter. 

13 ‘‘§ 30306. Foreign cause of action 

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

15 death by wrongful act, neglect, or default on the high seas, a civil action 

16 in admiralty may be brought in a court of the United States based on the 

17 foreign cause of action, without abatement of the amount for which recovery 

18 is authorized. 

19 ‘‘§ 30307. Commercial aviation accidents 

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

21 means damages for loss of care, comfort, and companionship. 

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

23 the death resulted from a commercial aviation accident occurring on the 

24 high seas beyond 12 nautical miles from the shore of the United States, ad25 ditional compensation is recoverable for nonpecuniary damages, but punitive 

26 damages are not recoverable. 

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

28 death resulted from a commercial aviation accident occurring on the high 

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

30 ‘‘§ 30308. Nonapplication 

31 ‘‘(a) STATE LAW.—This chapter does not affect the law of a State regu32 lating the right to recover for death. 

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

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

35 ‘‘CHAPTER 305—EXONERATION AND LIMITATION OF 

36 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. 


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‘‘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. 

1 ‘‘§ 30501. Definition 

2 ‘‘In this chapter, the term ‘owner’ includes a charterer that mans, sup3 plies, and navigates a vessel at the charterer’s own expense or by the 

4 charterer’s own procurement. 

5 ‘‘§ 30502. Application 

6 ‘‘Except as otherwise provided, this chapter (except section 30503) ap7 plies to seagoing vessels and vessels used on lakes or rivers or in inland 

8 navigation, including canal boats, barges, and lighters. 

9 ‘‘§ 30503. Declaration of nature and value of goods 

10 ‘‘(a) IN GENERAL.—If a shipper of an item named in subsection (b), con11 tained in a parcel, package, or trunk, loads the item as freight or baggage 

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

13 the item a written notice of the true character and value of the item and 

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

15 of the vessel are not liable as carriers. The owner and master are not liable 

16 beyond the value entered on the bill of lading. 

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

18 gold or silver plated articles, precious stones, jewelry, trinkets, watches, 

19 clocks, glass, china, coins, bills, securities, printings, engravings, pictures, 

20 stamps, maps, papers, silks, furs, lace, and similar items of high value and 

21 small size. 

22 ‘‘§ 30504. Loss by fire 

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

24 on the vessel caused by a fire on the vessel unless the fire resulted from 

25 the design or neglect of the owner. 

26 ‘‘§ 30505. General limit of liability 

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

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

29 in subsection (b) shall not exceed the value of the vessel and pending 

30 freight. If the vessel has more than one owner, the proportionate share of 

31 the liability of any one owner shall not exceed that owner’s proportionate 

32 interest in the vessel and pending freight. 

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

34 law, claims, debts, and liabilities subject to limitation under subsection (a) 

35 are those arising from any embezzlement, loss, or destruction of any prop36 erty, goods, or merchandise shipped or put on board the vessel, any loss, 

37 damage, or injury by collision, or any act, matter, or thing, loss, damage, 


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1 or forfeiture, done, occasioned, or incurred, without the privity or knowledge 

2 of the owner. 

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

4 ‘‘§ 30506. Limit of liability for personal injury or death 

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

6 does not apply to pleasure yachts, tugs, towboats, towing vessels, tank ves7 sels, fishing vessels, fish tender vessels, canal boats, scows, car floats, 

8 barges, lighters, or nondescript vessels. 

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

10 determined under section 30505 of this title is insufficient to pay all losses 

11 in full, and the portion available to pay claims for personal injury or death 

12 is less than $420 times the tonnage of the vessel, that portion shall be in13 creased to $420 times the tonnage of the vessel. That portion may be used 

14 only to pay claims for personal injury or death. 

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

16 a self-propelled vessel is the gross tonnage without deduction for engine 

17 room, and the tonnage of a sailing vessel is the tonnage for documentation. 

18 However, space for the use of seamen is excluded. 

19 ‘‘(d) CLAIMS ARISING ON DISTINCT OCCASIONS.—Separate limits of li20 ability apply to claims for personal injury or death arising on distinct occa21 sions. 

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

23 the privity or knowledge of the master or the owner’s superintendent or 

24 managing agent, at or before the beginning of each voyage, is imputed to 

25 the owner. 

26 ‘‘§ 30507. Apportionment of losses 

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

28 are insufficient to pay all claims— 

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

30 losses out of the amount determined under section 30505 of this title; 

31 and 

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

33 additional amount in proportion to their respective losses out of the ad34 ditional amount determined under section 30506(b) of this title. 

35 ‘‘§ 30508. Provisions requiring notice of claim or limiting 

36 time for bringing action 

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

38 does not apply to pleasure yachts, tugs, towboats, towing vessels, tank ves39 sels, fishing vessels, fish tender vessels, canal boats, scows, car floats, 

40 barges, lighters, or nondescript vessels. 


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

2 a vessel transporting passengers or property between ports in the United 

3 States, or between a port in the United States and a port in a foreign coun4 try, may not limit by regulation, contract, or otherwise the period for— 

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

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

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

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

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

10 personal injury or death is required by a contract, the failure to give the 

11 notice is not a bar to recovery if— 

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

13 had knowledge of the injury or death and the owner has not been prej14 udiced by the failure; 

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

16 could not have been given; or 

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

18 notice. 

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

20 or mental incompetent, or if a claim is for wrongful death, any period pro21 vided by a contract for giving notice of the claim is tolled until the earlier 

22 of— 

23 ‘‘(1) the date a legal representative is appointed for the minor, in24 competent, or decedent’s estate; or 

25 ‘‘(2) 3 years after the injury or death. 

26 ‘‘§ 30509. Provisions limiting liability for personal injury or 

27 death 

28 ‘‘(a) PROHIBITION.— 

29 ‘‘(1) IN GENERAL.—The owner, master, manager, or agent of a ves30 sel transporting passengers between ports in the United States, or be31 tween a port in the United States and a port in a foreign country, may 

32 not include in a regulation or contract a provision limiting— 

33 ‘‘(A) the liability of the owner, master, or agent for personal in34 jury or death caused by the negligence or fault of the owner or 

35 the owner’s employees or agents; or 

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

37 trial by court of competent jurisdiction. 

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

39 ‘‘(b) EMOTIONAL DISTRESS, MENTAL SUFFERING, AND PSYCHOLOGICAL

40 INJURY.— 


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1 ‘‘(1) IN GENERAL.—Subsection (a) does not prohibit a provision in 

2 a contract or in ticket conditions of carriage with a passenger that re3 lieves an owner, master, manager, agent, operator, or crewmember of 

4 a vessel from liability for infliction of emotional distress, mental suf5 fering, or psychological injury so long as the provision does not limit 

6 such liability when the emotional distress, mental suffering, or psycho7 logical injury 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, man10 ager, agent, or operator; 

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

12 physical injury, and the risk was caused by the negligence or fault 

13 of a crewmember or the owner, master, manager, agent, or oper14 ator; 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 

19 of a vessel in a case involving sexual harassment, sexual assault, or 

20 rape. 

21 ‘‘§ 30510. Vicarious liability for medical malpractice with re22 gard to crew 

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

24 or employer of a crewmember is claimed to have vicarious liability for med25 ical malpractice with regard to a crewmember occurring at a shoreside facil26 ity, and to the extent the damages resulted from the conduct of any shore27 side doctor, hospital, medical facility, or other health care provider, the 

28 owner, operator, or employer is entitled to rely on any statutory limitations 

29 of liability applicable to the doctor, hospital, medical facility, or other health 

30 care provider in the State of the United States in which the shoreside med31 ical care was provided. 

32 ‘‘§ 30511. Action by owner for limitation 

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

34 district court of the United States for limitation of liability under this chap35 ter. The action must be brought within 6 months after a claimant gives the 

36 owner written notice of a claim. 

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

38 the owner’s option) shall— 

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

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

41 the vessel and pending freight, or approved security; and 


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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 

10 claims and proceedings against the owner related to the matter in question 

11 shall 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 

24 apply 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 

27 of lading or shipping document. 

28 ‘‘(b) CONTENTS.—The bill of lading or shipping document shall include 

29 a 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 

9 due 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 

15 the vessel in all respects seaworthy and to properly man, equip, and supply 

16 the vessel, the carrier and the vessel are not liable for loss or damage aris17 ing from 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 

32 under 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 in38 jured 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 

9 person 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 

2 action 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 

5 be heard and determined according to the principles of law and the rules 

6 of practice applicable in like cases between private parties. 

7 ‘‘(b) IN REM.— 

8 ‘‘(1) REQUIREMENTS.—The action may proceed according to the 

9 principles 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 para14 graph (1) does not prevent the plaintiff from seeking relief in personam 

15 in the 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 

20 United 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 

35 the court, except that interest is not allowable for the period before the ac36 tion is 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, com4 promise, 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 

15 attachment 

16 ‘‘If a privately owned vessel not in the possession of the United States 

17 or a federally-owned corporation is arrested or attached in a civil action 

18 arising or alleged to have arisen from prior ownership, possession, or oper19 ation by the United States or corporation, the vessel shall be released with20 out bond or stipulation on a statement by the United States, through the 

21 Attorney General or other authorized law officer, that the United States is 

22 interested in the action, desires release of the vessel, and assumes liability 

23 for the satisfaction of any judgment obtained by the plaintiff. After the ves24 sel is released, the action shall proceed against the United States in accord25 ance with this chapter. 

26 ‘‘§ 30915. Seizures and other proceedings in foreign jurisdic27 tions 

28 ‘‘(a) IN GENERAL.—If a vessel or cargo described in section 30908 or 

29 30914 of this title is arrested, attached, or otherwise seized by judicial proc30 ess in a foreign country, or if an action is brought in a court of a foreign 

31 country against the master of such a vessel for a claim arising from the 

32 ownership, possession, or operation of the vessel, or the ownership, posses33 sion, or carriage of such cargo, the Secretary of State, on request of the 

34 Attorney General or another officer authorized by the Attorney General, 

35 may direct the United States consul residing at or nearest the place at 

36 which the action was brought— 

37 ‘‘(1) to claim the vessel or cargo as immune from arrest, attachment, 

38 or other seizure, and to execute an agreement, stipulation, bond, or un39 dertaking, for the United States or federally-owned corporation, for the 

40 release of the vessel or cargo and the prosecution of any appeal; or 


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1 ‘‘(2) if an action has been brought against the master of such a ves2 sel, to enter the appearance of the United States or corporation and 

3 to pledge the credit of the United States or corporation to the payment 

4 of any judgment and costs in the action. 

5 ‘‘(b) ARRANGING BOND OR STIPULATION.—The Attorney General may— 

6 ‘‘(1) arrange with a bank, surety company, or other person, whether 

7 in the United States or a foreign country, to execute a bond or stipula8 tion; and 

9 ‘‘(2) pledge the credit of the United States to secure the bond or 

10 stipulation. 

11 ‘‘(c) PAYMENT OF JUDGMENT.—The appropriate accounting officer of the 

12 United States or corporation may pay a judgment in an action described 

13 in subsection (a) on presentation of a copy of the judgment if certified by 

14 the clerk of the court and authenticated by— 

15 ‘‘(1) the certificate and seal of the United States consul claiming the 

16 vessel or cargo, or by the consul’s successor; and 

17 ‘‘(2) the certificate of the Secretary as to the official capacity of the 

18 consul. 

19 ‘‘(d) RIGHT TO CLAIM IMMUNITY NOT AFFECTED.—This section does 

20 not affect the right of the United States to claim immunity of a vessel or 

21 cargo from foreign jurisdiction. 

22 ‘‘§ 30916. Recovery by the United States for salvage services 

23 ‘‘(a) CIVIL ACTION.—The United States, and the crew of a merchant ves24 sel owned or operated by the United States, or a federally-owned corpora25 tion, may bring a civil action to recover for salvage services provided by the 

26 vessel and crew. 

27 ‘‘(b) DEPOSIT OF AMOUNTS RECOVERED.—Any amount recovered under 

28 this section by the United States for its own benefit, and not for the benefit 

29 of the crew, shall be deposited in the Treasury to the credit of the depart30 ment of the United States Government, or the corporation, having control 

31 of the possession or operation of the vessel. 

32 ‘‘§ 30917. Disposition of amounts recovered by the United 

33 States 

34 ‘‘Amounts recovered in a civil action brought by the United States on a 

35 claim arising from the ownership, possession, or operation of a merchant 

36 vessel, or the ownership, possession, or carriage of cargo, shall be deposited 

37 in the Treasury to the credit of the department of the United States Gov38 ernment, or the federally-owned corporation, having control of the vessel or 

39 cargo, for reimbursement of the appropriation, insurance fund, or other 

40 fund from which the compensation for which the judgment was recovered 

41 was or will be paid. 


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1 ‘‘§ 30918. Reports 

2 ‘‘The Secretary of each department of the United States Government, 

3 and the board of trustees of each federally-owned corporation, shall report 

4 to Congress at each session thereof all arbitration awards and settlements 

5 agreed to under this chapter since the previous session, for which the time 

6 to appeal 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 con15 tract 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 per19 sonam, or claim a setoff, against the United States for damages arising out 

20 of the 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 

27 or cargo is found within the United States. 

28 ‘‘(b) VESSEL OR CARGO OUTSIDE TERRITORIAL WATERS.—If the vessel 

29 or 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 

2 business in the United States, the action may be brought in the district 

3 court 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 

6 action is filed under this chapter, the respondent to the counterclaim shall 

7 give security in the usual amount and form to respond to the counterclaim, 

8 unless the court for cause shown orders otherwise. The proceedings in the 

9 original 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 

17 a contract providing for interest. 

18 ‘‘§ 31108. Arbitration, compromise, or settlement 

19 ‘‘The Attorney General may arbitrate, compromise, or settle a claim 

20 under 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 

23 judgment, arbitration award, or settlement under this chapter on presen24 tation of an authenticated copy. Payment shall be made from any money 

25 in the Treasury 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 subpoe28 naed 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 ac31 tion 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 

41 as 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 

3 all 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 

6 the 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 com16 mon carriage of goods by water in the foreign commerce of the United 

17 States with a minimum of government intervention and regulatory 

18 costs; 

19 ‘‘(2) provide an efficient and economic transportation system in the 

20 ocean commerce of the United States that is, insofar as possible, in 

21 harmony with, and responsive to, international shipping practices; 

22 ‘‘(3) encourage the development of an economically sound and effi23 cient liner fleet of vessels of the United States capable of meeting na24 tional security needs; and 

25 ‘‘(4) promote the growth and development of United States exports 

26 through competitive and efficient ocean transportation and by placing 

27 a greater reliance on the marketplace. 

28 ‘‘§ 40102. Definitions 

29 ‘‘In this part: 


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1 ‘‘(1) AGREEMENT.—The term ‘agreement’— 

2 ‘‘(A) means a written or oral understanding, arrangement, or 

3 association, and any modification or cancellation thereof; but 

4 ‘‘(B) does not include a maritime labor agreement. 

5 ‘‘(2) ANTITRUST LAWS.—The term ‘antitrust laws’ means— 

6 ‘‘(A) the Sherman Act (15 U.S.C. 1 et seq.); 

7 ‘‘(B) sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 

8 8, 9); 

9 ‘‘(C) the Clayton Act (15 U.S.C. 12 et seq.); 

10 ‘‘(D) the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a); 

11 ‘‘(E) the Federal Trade Commission Act (15 U.S.C. 41 et seq.); 

12 ‘‘(F) the Antitrust Civil Process Act (15 U.S.C. 1311 et seq.); 

13 and 

14 ‘‘(G) Acts supplementary to those Acts. 

15 ‘‘(3) ASSESSMENT AGREEMENT.—The term ‘assessment agreement’ 

16 means an agreement, whether part of a collective bargaining agreement 

17 or negotiated separately, to the extent the agreement provides for the 

18 funding of collectively bargained fringe-benefit obligations on other 

19 than a uniform worker-hour basis, regardless of the cargo handled or 

20 type of vessel or equipment used. 

21 ‘‘(4) BULK CARGO.—The term ‘bulk cargo’ means cargo that is load22 ed and carried in bulk without mark or count. 

23 ‘‘(5) CHEMICAL PARCEL-TANKER.—The term ‘chemical parcel-tank24 er’ means a vessel that has— 

25 ‘‘(A) a cargo-carrying capability consisting of individual cargo 

26 tanks for bulk chemicals that— 

27 ‘‘(i) are a permanent part of the vessel; and 

28 ‘‘(ii) have segregation capability with piping systems to per29 mit simultaneous carriage of several bulk chemical cargoes 

30 with minimum risk of cross-contamination; and 

31 ‘‘(B) a valid certificate of fitness under the International Mari32 time Organization Code for the Construction and Equipment of 

33 Ships Carrying Dangerous Chemicals in Bulk. 

34 ‘‘(6) COMMON CARRIER.—The term ‘common carrier’— 

35 ‘‘(A) means a person that— 

36 ‘‘(i) holds itself out to the general public to provide trans37 portation by water of passengers or cargo between the United 

38 States and a foreign country for compensation; 

39 ‘‘(ii) assumes responsibility for the transportation from the 

40 port or point of receipt to the port or point of destination; 

41 and 


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1 ‘‘(iii) uses, for all or part of that transportation, a vessel 

2 operating on the high seas or the Great Lakes between a port 

3 in the United States and a port in a foreign country; but 

4 ‘‘(B) does not include a carrier engaged in ocean transportation 

5 by ferry boat, ocean tramp, or chemical parcel-tanker, or by vessel 

6 when primarily engaged in the carriage of perishable agricultural 

7 commodities— 

8 ‘‘(i) if the carrier and the owner of those commodities are 

9 wholly-owned, directly or indirectly, by a person primarily en10 gaged in the marketing and distribution of those commodities; 

11 and 

12 ‘‘(ii) only with respect to the carriage of those commodities. 

13 ‘‘(7) CONFERENCE.—The term ‘conference’— 

14 ‘‘(A) means an association of ocean common carriers permitted, 

15 pursuant to an approved or effective agreement, to engage in con16 certed activity and to use a common tariff; but 

17 ‘‘(B) does not include a joint service, consortium, pooling, sail18 ing, or transshipment agreement. 

19 ‘‘(8) CONTROLLED CARRIER.—The term ‘controlled carrier’ means 

20 an ocean common carrier that is, or whose operating assets are, di21 rectly or indirectly, owned or controlled by a government, with owner22 ship or control by a government being deemed to exist for a carrier 

23 if— 

24 ‘‘(A) a majority of the interest in the carrier is owned or con25 trolled in any manner by that government, an agency of that gov26 ernment, or a public or private person controlled by that govern27 ment; or 

28 ‘‘(B) that government has the right to appoint or disapprove the 

29 appointment of a majority of the directors, the chief operating of30 ficer, or the chief executive officer of the carrier. 

31 ‘‘(9) DEFERRED REBATE.—The term ‘deferred rebate’ means a re32 turn by a common carrier of any freight money to a shipper, where 

33 the return is— 

34 ‘‘(A) consideration for the shipper giving all or any portion of 

35 its shipments to that or any other common carrier over a fixed pe36 riod of time; 

37 ‘‘(B) deferred beyond the completion of the service for which it 

38 was paid; and 

39 ‘‘(C) made only if the shipper has agreed to make a further 

40 shipment with that or any other common carrier. 


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1 ‘‘(10) FOREST PRODUCTS.—The term ‘forest products’ includes lum2 ber in bundles, rough timber, ties, poles, piling, laminated beams, bun3 dled siding, bundled plywood, bundled core stock or veneers, bundled 

4 particle or fiber boards, bundled hardwood, wood pulp in rolls, wood 

5 pulp in unitized bales, and paper and paper board in rolls or in pallet 

6 or skid-sized sheets. 

7 ‘‘(11) INLAND DIVISION.—The term ‘inland division’ means the 

8 amount paid by a common carrier to an inland carrier for the inland 

9 portion of through transportation offered to the public by the common 

10 carrier. 

11 ‘‘(12) INLAND PORTION.—The term ‘inland portion’ means the 

12 charge to the public by a common carrier for the non-ocean portion of 

13 through transportation. 

14 ‘‘(13) LOYALTY CONTRACT.—The term ‘loyalty contract’ means a 

15 contract with an ocean common carrier or agreement providing for— 

16 ‘‘(A) a shipper to obtain lower rates by committing all or a fixed 

17 portion of its cargo to that carrier or agreement; and 

18 ‘‘(B) a deferred rebate arrangement. 

19 ‘‘(14) MARINE TERMINAL OPERATOR.—The term ‘marine terminal 

20 operator’ means a person engaged in the United States in the business 

21 of providing wharfage, dock, warehouse, or other terminal facilities in 

22 connection with a common carrier, or in connection with a common car23 rier and a water carrier subject to subchapter II of chapter 135 of title 

24 49. 

25 ‘‘(15) MARITIME LABOR AGREEMENT.—The term ‘maritime labor 

26 agreement’— 

27 ‘‘(A) means— 

28 ‘‘(i) a collective bargaining agreement between an employer 

29 subject to this part, or a group of such employers, and a 

30 labor organization representing employees in the maritime or 

31 stevedoring industry; 

32 ‘‘(ii) an agreement preparatory to such a collective bar33 gaining agreement among members of a multi-employer bar34 gaining group; or 

35 ‘‘(iii) an agreement specifically implementing provisions of 

36 such a collective bargaining agreement or providing for the 

37 formation, financing, or administration of a multi-employer 

38 bargaining group; but 

39 ‘‘(B) does not include an assessment agreement. 

40 ‘‘(16) NON-VESSEL-OPERATING COMMON CARRIER.—The term ‘non41 vessel-operating common carrier’ means a common carrier that— 


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1 ‘‘(A) does not operate the vessels by which the ocean transpor2 tation is provided; and 

3 ‘‘(B) is a shipper in its relationship with an ocean common car4 rier. 

5 ‘‘(17) OCEAN COMMON CARRIER.—The term ‘ocean common carrier’ 

6 means a vessel-operating common carrier. 

7 ‘‘(18) OCEAN FREIGHT FORWARDER.—The term ‘ocean freight for8 warder’ means a person that— 

9 ‘‘(A) in the United States, dispatches shipments from the 

10 United States via a common carrier and books or otherwise ar11 ranges space for those shipments on behalf of shippers; and 

12 ‘‘(B) processes the documentation or performs related activities 

13 incident to those shipments. 

14 ‘‘(19) OCEAN TRANSPORTATION INTERMEDIARY.—The term ‘ocean 

15 transportation intermediary’ means an ocean freight forwarder or a 

16 non-vessel-operating common carrier. 

17 ‘‘(20) SERVICE CONTRACT.—The term ‘service contract’ means a 

18 written contract, other than a bill of lading or receipt, between one or 

19 more shippers, on the one hand, and an individual ocean common car20 rier or an agreement between or among ocean common carriers, on the 

21 other, in which— 

22 ‘‘(A) the shipper or shippers commit to providing a certain vol23 ume or portion of cargo over a fixed time period; and 

24 ‘‘(B) the ocean common carrier or the agreement commits to a 

25 certain rate or rate schedule and a defined service level, such as 

26 assured space, transit time, port rotation, or similar service fea27 tures. 

28 ‘‘(21) SHIPMENT.—The term ‘shipment’ means all of the cargo car29 ried under the terms of a single bill of lading. 

30 ‘‘(22) SHIPPER.—The term ‘shipper’ means— 

31 ‘‘(A) a cargo owner; 

32 ‘‘(B) the person for whose account the ocean transportation of 

33 cargo is provided; 

34 ‘‘(C) the person to whom delivery is to be made; 

35 ‘‘(D) a shippers’ association; or 

36 ‘‘(E) a non-vessel-operating common carrier that accepts re37 sponsibility for payment of all charges applicable under the tariff 

38 or service contract. 

39 ‘‘(23) SHIPPERS’ ASSOCIATION.—The term ‘shippers’ association’ 

40 means a group of shippers that consolidates or distributes freight on 


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1 a nonprofit basis for the members of the group to obtain carload, 

2 truckload, or other volume rates or service contracts. 

3 ‘‘(24) THROUGH RATE.—The term ‘through rate’ means the single 

4 amount charged by a common carrier in connection with through trans5 portation. 

6 ‘‘(25) THROUGH TRANSPORTATION.—The term ‘through transpor7 tation’ means continuous transportation between origin and destination 

8 for which a through rate is assessed and which is offered or performed 

9 by one or more carriers, at least one of which is a common carrier, 

10 between a United States port or point and a foreign port or point. 

11 ‘‘§ 40103. Administrative exemptions 

12 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on application or 

13 its own motion, may by order or regulation exempt for the future any class 

14 of agreements between persons subject to this part or any specified activity 

15 of those persons from any requirement of this part if the Commission finds 

16 that the exemption will not result in substantial reduction in competition 

17 or be detrimental to commerce. The Commission may attach conditions to 

18 an exemption and may, by order, revoke an exemption. 

19 ‘‘(b) OPPORTUNITY FOR HEARING.—An order or regulation of exemption 

20 or revocation of an exemption may be issued only if the Commission has 

21 provided an opportunity for a hearing to interested persons and depart22 ments and agencies of the United States Government. 

23 ‘‘§ 40104. Reports filed with the Commission 

24 ‘‘(a) IN GENERAL.—The Federal Maritime Commission may require a 

25 common carrier or an officer, receiver, trustee, lessee, agent, or employee 

26 of the carrier to file with the Commission a periodical or special report, an 

27 account, record, rate, or charge, or a memorandum of facts and transactions 

28 related to the business of the carrier. The report, account, record, rate, 

29 charge, or memorandum shall be made under oath if the Commission re30 quires, and shall be filed in the form and within the time prescribed by the 

31 Commission. 

32 ‘‘(b) CONFERENCE MINUTES.—Conference minutes required to be filed 

33 with the Commission under this section may not be released to third parties 

34 or published by the Commission. 

35 ‘‘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. 


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1 ‘‘§ 40301. Application 

2 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.—This part applies to an 

3 agreement between or among ocean common carriers to— 

4 ‘‘(1) discuss, fix, or regulate transportation rates, including through 

5 rates, cargo space accommodations, and other conditions of service; 

6 ‘‘(2) pool or apportion traffic, revenues, earnings, or losses; 

7 ‘‘(3) allot ports or regulate the number and character of voyages be8 tween ports; 

9 ‘‘(4) regulate the volume or character of cargo or passenger traffic 

10 to be carried; 

11 ‘‘(5) engage in an exclusive, preferential, or cooperative working ar12 rangement between themselves or with a marine terminal operator; 

13 ‘‘(6) control, regulate, or prevent competition in international ocean 

14 transportation; or 

15 ‘‘(7) discuss and agree on any matter related to a service contract. 

16 ‘‘(b) MARINE TERMINAL OPERATOR AGREEMENTS.—This part applies to 

17 an agreement between or among marine terminal operators, or between or 

18 among one or more marine terminal operators and one or more ocean com19 mon carriers, to— 

20 ‘‘(1) discuss, fix, or regulate rates or other conditions of service; or 

21 ‘‘(2) engage in exclusive, preferential, or cooperative working ar22 rangements, to the extent the agreement involves ocean transportation 

23 in the foreign commerce of the United States. 

24 ‘‘(c) ACQUISITIONS.—This part does not apply to an acquisition by any 

25 person, directly or indirectly, of any voting security or assets of any other 

26 person. 

27 ‘‘(d) MARITIME LABOR AGREEMENTS.—This part does not apply to a 

28 maritime labor agreement. However, this subsection does not exempt from 

29 this part any rate, charge, regulation, or practice of a common carrier that 

30 is required to be set forth in a tariff or is an essential term of a service 

31 contract, whether or not the rate, charge, regulation, or practice arises out 

32 of, or is otherwise related to, a maritime labor agreement. 

33 ‘‘(e) ASSESSMENT AGREEMENTS.—This part (except sections 40305 and 

34 40307(a)) does not apply to an assessment agreement. 

35 ‘‘§ 40302. Filing requirements 

36 ‘‘(a) IN GENERAL.—A true copy of every agreement referred to in section 

37 40301(a) or (b) of this title shall be filed with the Federal Maritime Com38 mission. If the agreement is oral, a complete memorandum specifying in de39 tail the substance of the agreement shall be filed. 

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


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1 ‘‘(1) an agreement related to transportation to be performed within 

2 or between foreign countries; or 

3 ‘‘(2) an agreement among common carriers to establish, operate, or 

4 maintain a marine terminal in the United States. 

5 ‘‘(c) REGULATIONS.—The Commission may by regulation prescribe the 

6 form and manner in which an agreement shall be filed and any additional 

7 information and documents necessary to evaluate the agreement. 

8 ‘‘§ 40303. Content requirements 

9 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.— 

10 ‘‘(1) RESTRICTIONS.—An ocean common carrier agreement may 

11 not— 

12 ‘‘(A) prohibit or restrict a member of the agreement from en13 gaging in negotiations for a service contract with a shipper; 

14 ‘‘(B) require a member of the agreement to disclose a negotia15 tion on a service contract, or the terms of a service contract, other 

16 than those terms required to be published under section 40502(d) 

17 of this title; or 

18 ‘‘(C) adopt mandatory rules or requirements affecting the right 

19 of an agreement member to negotiate and enter into a service con20 tract. 

21 ‘‘(2) VOLUNTARY GUIDELINES.—An ocean common carrier agree22 ment may provide authority to adopt voluntary guidelines relating to 

23 the terms and procedures of an agreement member’s service contracts 

24 if the guidelines explicitly state the right of members of the agreement 

25 not to follow the guidelines. Any guidelines adopted shall be submitted 

26 confidentially to the Federal Maritime Commission. 

27 ‘‘(b) CONFERENCE AGREEMENTS.—Each conference agreement must— 

28 ‘‘(1) state its purpose; 

29 ‘‘(2) provide reasonable and equal terms for admission and readmis30 sion to conference membership for any ocean common carrier willing 

31 to serve the particular trade or route; 

32 ‘‘(3) permit any member to withdraw from conference membership 

33 on reasonable notice without penalty; 

34 ‘‘(4) at the request of any member, require an independent neutral 

35 body to police fully the obligations of the conference and its members; 

36 ‘‘(5) prohibit the conference from engaging in conduct prohibited by 

37 section 41105(1) or (3) of this title; 

38 ‘‘(6) provide for a consultation process designed to promote— 

39 ‘‘(A) commercial resolution of disputes; and 

40 ‘‘(B) cooperation with shippers in preventing and eliminating 

41 malpractices; 


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1 ‘‘(7) establish procedures for promptly and fairly considering re2 quests and complaints of shippers; and 

3 ‘‘(8) provide that— 

4 ‘‘(A) any member of the conference may take independent ac5 tion on a rate or service item on not more than 5 days’ notice to 

6 the conference; and 

7 ‘‘(B) except for an exempt commodity not published in the con8 ference tariff, the conference will include the new rate or service 

9 item in its tariff for use by that member, effective no later than 

10 5 days after receipt of the notice, and by any other member that 

11 notifies the conference that it elects to adopt the independent rate 

12 or service item on or after its effective date, in lieu of the existing 

13 conference tariff provision for that rate or service item. 

14 ‘‘(c) INTERCONFERENCE AGREEMENTS.—Each agreement between car15 riers not members of the same conference must provide the right of inde16 pendent action for each carrier. Each agreement between conferences must 

17 provide the right of independent action for each conference. 

18 ‘‘(d) VESSEL SHARING AGREEMENTS.— 

19 ‘‘(1) IN GENERAL.—An ocean common carrier that is the owner, op20 erator, or bareboat, time, or slot charterer of a liner vessel documented 

21 under section 12103 or 12111(c) of this title may agree with an ocean 

22 common carrier described in paragraph (2) to which it charters or sub23 charters the vessel or space on the vessel that the charterer or 

24 subcharterer may not use or make available space on the vessel for the 

25 carriage of cargo reserved by law for vessels of the United States. 

26 ‘‘(2) CARRIER DESCRIBED.—An ocean common carrier described in 

27 this paragraph is one that is not the owner, operator, or bareboat 

28 charterer for at least one year of liner vessels of the United States that 

29 are eligible to be included in the Maritime Security Fleet Program and 

30 are enrolled in an Emergency Preparedness Program under chapter 

31 531 of this title. 

32 ‘‘§ 40304. Commission action 

33 ‘‘(a) NOTICE OF FILING.—Within 7 days after an agreement is filed, the 

34 Federal Maritime Commission shall transmit a notice of the filing to the 

35 Federal Register for publication. 

36 ‘‘(b) PRELIMINARY REVIEW AND REJECTION.—After preliminary review, 

37 the Commission shall reject an agreement that it finds does not meet the 

38 requirements of sections 40302 and 40303 of this title. The Commission 

39 shall notify in writing the person filing the agreement of the reason for re40 jection. 


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1 ‘‘(c) REVIEW AND EFFECTIVE DATE.—Unless rejected under subsection 

2 (b), an agreement (other than an assessment agreement) is effective— 

3 ‘‘(1) on the 45th day after filing, or on the 30th day after notice 

4 of the filing is published in the Federal Register, whichever is later; 

5 or 

6 ‘‘(2) if additional information or documents are requested under sub7 section (d)— 

8 ‘‘(A) on the 45th day after the Commission receives all the addi9 tional information and documents; or 

10 ‘‘(B) if the request is not fully complied with, on the 45th day 

11 after the Commission receives the information and documents sub12 mitted and a statement of the reasons for noncompliance with the 

13 request. 

14 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.—Before the expiration of 

15 the period specified in subsection (c)(1), the Commission may request from 

16 the person filing the agreement any additional information and documents 

17 the Commission considers necessary to make the determinations required by 

18 this section. 

19 ‘‘(e) MODIFICATION OF REVIEW PERIOD.— 

20 ‘‘(1) SHORTENING.—On request of the party filing an agreement, 

21 the Commission may shorten a period specified in subsection (c), but 

22 not to a date that is less than 14 days after notice of the filing of the 

23 agreement is published in the Federal Register. 

24 ‘‘(2) EXTENSION.—The period specified in subsection (c)(2) may be 

25 extended only by the United States District Court for the District of 

26 Columbia in a civil action brought by the Commission under section 

27 41307(c) of this title. 

28 ‘‘(f) FIXED TERMS.—The Commission may not limit the effectiveness of 

29 an agreement to a fixed term. 

30 ‘‘§ 40305. Assessment agreements 

31 ‘‘(a) FILING REQUIREMENT.—An assessment agreement shall be filed 

32 with the Federal Maritime Commission and is effective on filing. 

33 ‘‘(b) COMPLAINTS.—If a complaint is filed with the Commission within 

34 2 years after the date of an assessment agreement, the Commission shall 

35 disapprove, cancel, or modify the agreement, or an assessment or charge 

36 pursuant to the agreement, that the Commission finds, after notice and op37 portunity for a hearing, to be unjustly discriminatory or unfair as between 

38 carriers, shippers, or ports. The Commission shall issue its final decision in 

39 the proceeding within one year after the date the complaint is filed. 

40 ‘‘(c) ADJUSTMENTS OF ASSESSMENTS AND CHARGES.—To the extent 

41 that the Commission finds under subsection (b) that an assessment or 


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1 charge is unjustly discriminatory or unfair as between carriers, shippers, or 

2 ports, the Commission shall adjust the assessment or charge for the period 

3 between the filing of the complaint and the final decision by awarding pro4 spective credits or debits to future assessments and charges. However, if the 

5 complainant has ceased activities subject to the assessment or charge, the 

6 Commission may award reparations. 

7 ‘‘§ 40306. Nondisclosure of information 

8 ‘‘Information and documents (other than an agreement) filed with the 

9 Federal Maritime Commission under this chapter are exempt from disclo10 sure under section 552 of title 5 and may not be made public except as 

11 may be relevant to an administrative or judicial proceeding. This section 

12 does not prevent disclosure to either House of Congress or to a duly author13 ized committee or subcommittee of Congress. 

14 ‘‘§ 40307. Exemption from antitrust laws 

15 ‘‘(a) IN GENERAL.—The antitrust laws do not apply to— 

16 ‘‘(1) an agreement (including an assessment agreement) that has 

17 been filed and is effective under this chapter; 

18 ‘‘(2) an agreement that is exempt under section 40103 of this title 

19 from any requirement of this part; 

20 ‘‘(3) an agreement or activity within the scope of this part, whether 

21 permitted under or prohibited by this part, undertaken or entered into 

22 with a reasonable basis to conclude that it is— 

23 ‘‘(A) pursuant to an agreement on file with the Federal Mari24 time Commission and in effect when the activity takes place; or 

25 ‘‘(B) exempt under section 40103 of this title from any filing 

26 or publication requirement of this part; 

27 ‘‘(4) an agreement or activity relating to transportation services 

28 within or between foreign countries, whether or not via the United 

29 States, unless the agreement or activity has a direct, substantial, and 

30 reasonably foreseeable effect on the commerce of the United States; 

31 ‘‘(5) an agreement or activity relating to the foreign inland segment 

32 of through transportation that is part of transportation provided in a 

33 United States import or export trade; 

34 ‘‘(6) an agreement or activity to provide wharfage, dock, warehouse, 

35 or other terminal facilities outside the United States; or 

36 ‘‘(7) an agreement, modification, or cancellation approved before 

37 June 18, 1984, by the Commission under section 15 of the Shipping 

38 Act, 1916, or permitted under section 14b of that Act, and any prop39 erly published tariff, rate, fare, or charge, or classification, rule, or reg40 ulation explanatory thereof implementing that agreement, modification, 

41 or cancellation. 


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1 ‘‘(b) EXCEPTIONS.—This part does not extend antitrust immunity to— 

2 ‘‘(1) an agreement with or among air carriers, rail carriers, motor 

3 carriers, or common carriers by water not subject to this part relating 

4 to transportation within the United States; 

5 ‘‘(2) a discussion or agreement among common carriers subject to 

6 this part relating to the inland divisions (as opposed to the inland por7 tions) of through rates within the United States; 

8 ‘‘(3) an agreement among common carriers subject to this part to 

9 establish, operate, or maintain a marine terminal in the United States; 

10 or 

11 ‘‘(4) a loyalty contract. 

12 ‘‘(c) RETROACTIVE EFFECT OF DETERMINATIONS.—A determination by 

13 an agency or court that results in the denial or removal of the immunity 

14 to the antitrust laws under subsection (a) does not remove or alter the anti15 trust immunity for the period before the determination. 

16 ‘‘(d) RELIEF UNDER CLAYTON ACT.—A person may not recover damages 

17 under section 4 of the Clayton Act (15 U.S.C. 15), or obtain injunctive re18 lief under section 16 of that Act (15 U.S.C. 26), for conduct prohibited by 

19 this part. 

20 ‘‘CHAPTER 405—TARIFFS, SERVICE CONTRACTS, 

21 REFUNDS, AND WAIVERS 

‘‘Sec. 

‘‘40501. General rate and tariff requirements. 

‘‘40502. Service contracts. 

‘‘40503. Refunds and waivers. 

22 ‘‘§ 40501. General rate and tariff requirements 

23 ‘‘(a) AUTOMATED TARIFF SYSTEM.— 

24 ‘‘(1) IN GENERAL.—Each common carrier and conference shall keep 

25 open to public inspection in an automated tariff system, tariffs showing 

26 all its rates, charges, classifications, rules, and practices between all 

27 points or ports on its own route and on any through transportation 

28 route that has been established. However, a common carrier is not re29 quired to state separately or otherwise reveal in tariffs the inland divi30 sions of a through rate. 

31 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply with respect to 

32 bulk cargo, forest products, recycled metal scrap, new assembled motor 

33 vehicles, waste paper, or paper waste. 

34 ‘‘(b) CONTENTS OF TARIFFS.—A tariff under subsection (a) shall— 

35 ‘‘(1) state the places between which cargo will be carried; 

36 ‘‘(2) list each classification of cargo in use; 

37 ‘‘(3) state the level of compensation, if any, of any ocean freight for38 warder by a carrier or conference; 


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1 ‘‘(4) state separately each terminal or other charge, privilege, or fa2 cility under the control of the carrier or conference and any rules that 

3 in any way change, affect, or determine any part or the total of the 

4 rates or charges; 

5 ‘‘(5) include sample copies of any bill of lading, contract of affreight6 ment, or other document evidencing the transportation agreement; and 

7 ‘‘(6) include copies of any loyalty contract, omitting the shipper’s 

8 name. 

9 ‘‘(c) ELECTRONIC ACCESS.—A tariff under subsection (a) shall be made 

10 available electronically to any person, without time, quantity, or other limi11 tation, through appropriate access from remote locations. A reasonable fee 

12 may be charged for such access, except that no fee may be charged for ac13 cess by a Federal agency. 

14 ‘‘(d) TIME-VOLUME RATES.—A rate contained in a tariff under sub15 section (a) may vary with the volume of cargo offered over a specified period 

16 of time. 

17 ‘‘(e) EFFECTIVE DATES.— 

18 ‘‘(1) INCREASES.—A new or initial rate or change in an existing rate 

19 that results in an increased cost to a shipper may not become effective 

20 earlier than 30 days after publication. However, for good cause, the 

21 Federal Maritime Commission may allow the rate to become effective 

22 sooner. 

23 ‘‘(2) DECREASES.—A change in an existing rate that results in a de24 creased cost to a shipper may become effective on publication. 

25 ‘‘(f) MARINE TERMINAL OPERATOR SCHEDULES.—A marine terminal op26 erator may make available to the public a schedule of rates, regulations, and 

27 practices, including limitations of liability for cargo loss or damage, per28 taining to receiving, delivering, handling, or storing property at its marine 

29 terminal. Any such schedule made available to the public is enforceable by 

30 an appropriate court as an implied contract without proof of actual knowl31 edge of its provisions. 

32 ‘‘(g) REGULATIONS.— 

33 ‘‘(1) IN GENERAL.—The Commission shall by regulation prescribe 

34 the requirements for the accessibility and accuracy of automated tariff 

35 systems established under this section. The Commission, after periodic 

36 review, may prohibit the use of any automated tariff system that fails 

37 to meet the requirements established under this section. 

38 ‘‘(2) REMOTE TERMINALS.—The Commission may not require a 

39 common carrier to provide a remote terminal for electronic access 

40 under subsection (c). 


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1 ‘‘(3) MARINE TERMINAL OPERATOR SCHEDULES.—The Commission 

2 shall by regulation prescribe the form and manner in which marine ter3 minal operator schedules authorized by this section shall be published. 

4 ‘‘§ 40502. Service contracts 

5 ‘‘(a) IN GENERAL.—An individual ocean common carrier or an agreement 

6 between or among ocean common carriers may enter into a service contract 

7 with one or more shippers subject to the requirements of this part. 

8 ‘‘(b) FILING REQUIREMENTS.— 

9 ‘‘(1) IN GENERAL.—Each service contract entered into under this 

10 section by an individual ocean common carrier or an agreement shall 

11 be filed confidentially with the Federal Maritime Commission. 

12 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply to contracts re13 garding bulk cargo, forest products, recycled metal scrap, new assem14 bled motor vehicles, waste paper, or paper waste. 

15 ‘‘(c) ESSENTIAL TERMS.—Each service contract shall include— 

16 ‘‘(1) the origin and destination port ranges; 

17 ‘‘(2) the origin and destination geographic areas in the case of 

18 through intermodal movements; 

19 ‘‘(3) the commodities involved; 

20 ‘‘(4) the minimum volume or portion; 

21 ‘‘(5) the line-haul rate; 

22 ‘‘(6) the duration; 

23 ‘‘(7) service commitments; and 

24 ‘‘(8) the liquidated damages for nonperformance, if any. 

25 ‘‘(d) PUBLICATION OF CERTAIN TERMS.—When a service contract is filed 

26 confidentially with the Commission, a concise statement of the essential 

27 terms specified in paragraphs (1), (3), (4), and (6) of subsection (c) shall 

28 be published and made available to the general public in tariff format. 

29 ‘‘(e) DISCLOSURE OF CERTAIN TERMS.— 

30 ‘‘(1) DEFINITIONS.—In this subsection, the terms ‘dock area’ and 

31 ‘within the port area’ have the same meaning and scope as in the appli32 cable collective bargaining agreement between the requesting labor or33 ganization and the carrier. 

34 ‘‘(2) DISCLOSURE.—An ocean common carrier that is a party to or 

35 is otherwise subject to a collective bargaining agreement with a labor 

36 organization shall, in response to a written request by the labor organi37 zation, state whether it is responsible for the following work at a dock 

38 area or within a port area in the United States with respect to cargo 

39 transportation under a service contract: 


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1 ‘‘(A) The movement of the shipper’s cargo on a dock area or 

2 within the port area or to or from railroad cars on a dock area 

3 or within the port area. 

4 ‘‘(B) The assignment of intraport carriage of the shipper’s 

5 cargo between areas on a dock or within the port area. 

6 ‘‘(C) The assignment of the carriage of the shipper’s cargo be7 tween a container yard on a dock area or within the port area and 

8 a rail yard adjacent to the container yard. 

9 ‘‘(D) The assignment of container freight station work and con10 tainer maintenance and repair work performed at a dock area or 

11 within the port area. 

12 ‘‘(3) WITHIN REASONABLE TIME.—The common carrier shall provide 

13 the information described in paragraph (2) to the requesting labor or14 ganization within a reasonable period of time. 

15 ‘‘(4) EXISTENCE OF COLLECTIVE BARGAINING AGREEMENT.—This 

16 subsection does not require the disclosure of information by an ocean 

17 common carrier unless there exists an applicable and otherwise lawful 

18 collective bargaining agreement pertaining to that carrier. A disclosure 

19 by an ocean common carrier may not be deemed an admission or an 

20 agreement that any work is covered by a collective bargaining agree21 ment. A dispute about whether any work is covered by a collective bar22 gaining agreement and the responsibility of an ocean common carrier 

23 under a collective bargaining agreement shall be resolved solely in ac24 cordance with the dispute resolution procedures contained in the collec25 tive bargaining agreement and the National Labor Relations Act (29 

26 U.S.C. 151 et seq.), and without reference to this subsection. 

27 ‘‘(5) EFFECT UNDER OTHER LAWS.—This subsection does not affect 

28 the lawfulness or unlawfulness under this part or any other Federal or 

29 State law of any collective bargaining agreement or element thereof, in30 cluding any element that constitutes an essential term of a service con31 tract. 

32 ‘‘(f) REMEDY FOR BREACH.—Unless the parties agree otherwise, the ex33 clusive remedy for a breach of a service contract is an action in an appro34 priate court. The contract dispute resolution forum may not be controlled 

35 by or in any way affiliated with a controlled carrier or by the government 

36 that owns or controls the carrier. 

37 ‘‘§ 40503. Refunds and waivers 

38 ‘‘The Federal Maritime Commission, on application of a carrier or ship39 per, may permit a common carrier or conference to refund a portion of the 

40 freight charges collected from a shipper, or to waive collection of a portion 

41 of the charges from a shipper, if— 


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1 ‘‘(1) there is an error in a tariff, a failure to publish a new tariff, 

2 or an error in quoting a tariff, and the refund or waiver will not result 

3 in discrimination among shippers, ports, or carriers; 

4 ‘‘(2) the common carrier or conference, before filing an application 

5 for authority to refund or waive any charges for an error in a tariff 

6 or a failure to publish a tariff, has published a new tariff setting forth 

7 the rate on which the refund or waiver would be based; and 

8 ‘‘(3) the application for the refund or waiver is filed with the Com9 mission within 180 days from the date of shipment. 

10 ‘‘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. 

11 ‘‘§ 40701. Rates 

12 ‘‘(a) IN GENERAL.—A controlled carrier may not— 

13 ‘‘(1) maintain a rate or charge in a tariff or service contract, or 

14 charge or assess a rate, that is below a just and reasonable level; or 

15 ‘‘(2) establish, maintain, or enforce in a tariff or service contract a 

16 classification, rule, or regulation that results, or is likely to result, in 

17 the carriage or handling of cargo at a rate or charge that is below a 

18 just and reasonable level. 

19 ‘‘(b) COMMISSION PROHIBITION.—The Federal Maritime Commission, at 

20 any time after notice and opportunity for a hearing, may prohibit the publi21 cation or use of a rate, charge, classification, rule, or regulation that a con22 trolled carrier has failed to demonstrate is just and reasonable. 

23 ‘‘(c) BURDEN OF PROOF.—In a proceeding under this section, the burden 

24 of proof is on the controlled carrier to demonstrate that its rate, charge, 

25 classification, rule, or regulation is just and reasonable. 

26 ‘‘(d) VOIDNESS.—A rate, charge, classification, rule, or regulation that 

27 has been suspended or prohibited by the Commission is void and its use is 

28 unlawful. 

29 ‘‘§ 40702. Rate standards 

30 ‘‘(a) DEFINITION.—In this section, the term ‘constructive costs’ means 

31 the costs of another carrier, other than a controlled carrier, operating simi32 lar vessels and equipment in the same or a similar trade. 

33 ‘‘(b) STANDARDS.—In determining whether a rate, charge, classification, 

34 rule, or regulation of a controlled carrier is just and reasonable, the Federal 

35 Maritime Commission— 

36 ‘‘(1) shall take into account whether the rate or charge that has been 

37 published or assessed, or that would result from the pertinent classiVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00061 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 fication, rule, or regulation, is below a level that is fully compensatory 

2 to the controlled carrier based on the carrier’s actual costs or construc3 tive costs; and 

4 ‘‘(2) may take into account other appropriate factors, including 

5 whether the rate, charge, classification, rule, or regulation is— 

6 ‘‘(A) the same as, or similar to, those published or assessed by 

7 other carriers in the same trade; 

8 ‘‘(B) required to ensure movement of particular cargo in the 

9 same trade; or 

10 ‘‘(C) required to maintain acceptable continuity, level, or quality 

11 of common carrier service to or from affected ports. 

12 ‘‘§ 40703. Effective date of rates 

13 ‘‘Notwithstanding section 40501(e) of this title and except for service 

14 contracts, a rate, charge, classification, rule, or regulation of a controlled 

15 carrier may not become effective, without special permission of the Federal 

16 Maritime Commission, until the 30th day after publication. 

17 ‘‘§ 40704. Commission review 

18 ‘‘(a) REQUEST FOR JUSTIFICATION.—On request of the Federal Maritime 

19 Commission, a controlled carrier shall file with the Commission, within 20 

20 days of the request, a statement of justification that sufficiently details the 

21 carrier’s need and purpose for an existing or proposed rate, charge, classi22 fication, rule, or regulation and upon which the Commission may reasonably 

23 base a determination of its lawfulness. 

24 ‘‘(b) DETERMINATION.—Within 120 days after receipt of information re25 quested under subsection (a), the Commission shall determine whether the 

26 rate, charge, classification, rule, or regulation may be unjust and unreason27 able. 

28 ‘‘(c) SHOW CAUSE ORDER.—Whenever the Commission is of the opinion 

29 that a rate, charge, classification, rule, or regulation published or assessed 

30 by a controlled carrier may be unjust and unreasonable, the Commission 

31 shall issue an order to the controlled carrier to show cause why the rate, 

32 charge, classification, rule, or regulation should not be prohibited. 

33 ‘‘(d) SUSPENSION PENDING DETERMINATION.— 

34 ‘‘(1) NOT YET EFFECTIVE.—Pending a determination of the lawful35 ness of a rate, charge, classification, rule, or regulation in a proceeding 

36 under subsection (c), the Commission may suspend the rate, charge, 

37 classification, rule, or regulation at any time before its effective date. 

38 ‘‘(2) ALREADY EFFECTIVE.—If a rate, charge, classification, rule, or 

39 regulation has already become effective, the Commission, on issuance 

40 of an order to show cause, may suspend the rate, charge, classification, 

41 rule, or regulation on at least 30 days’ notice to the controlled carrier. 


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1 ‘‘(3) MAXIMUM SUSPENSION.—A period of suspension under this 

2 subsection may not exceed 180 days. 

3 ‘‘(e) REPLACEMENT DURING SUSPENSION.—Whenever the Commission 

4 has suspended a rate, charge, classification, rule, or regulation under this 

5 section, the controlled carrier may publish a new rate, charge, classification, 

6 rule, or regulation to take effect immediately during the suspension in lieu 

7 of the suspended rate, charge, classification, rule, or regulation. However, 

8 the Commission may reject the new rate, charge, classification, rule, or reg9 ulation if the Commission believes it is unjust and unreasonable. 

10 ‘‘§ 40705. Presidential review of Commission orders 

11 ‘‘(a) TRANSMISSION TO PRESIDENT.—The Federal Maritime Commission 

12 shall transmit to the President, concurrently with publication thereof, each 

13 order of suspension or final order of prohibition issued under section 40704 

14 of this title. 

15 ‘‘(b) PRESIDENTIAL REQUEST AND COMMISSION ACTION.—Within 10 

16 days after receipt or the effective date of a Commission order referred to 

17 in subsection (a), the President, in writing, may request the Commission to 

18 stay the effect of the order if the President finds that the stay is required 

19 for reasons of national defense or foreign policy. The reasons shall be speci20 fied in the request. The Commission shall immediately grant the request by 

21 issuing an order in which the President’s request shall be described. During 

22 a stay, the President shall, whenever practicable, attempt to resolve the 

23 matter by negotiating with representatives of the applicable foreign govern24 ments. 

25 ‘‘§ 40706. Exceptions 

26 ‘‘This chapter does not apply to— 

27 ‘‘(1) a controlled carrier of a foreign country whose vessels are enti28 tled by a treaty of the United States to receive national or most-fa29 vored-nation treatment; or 

30 ‘‘(2) a trade served only by controlled carriers. 

31 ‘‘CHAPTER 409—OCEAN TRANSPORTATION 

32 INTERMEDIARIES 

‘‘Sec. 

‘‘40901. License requirement. 

‘‘40902. Financial responsibility. 

‘‘40903. Suspension or revocation of license. 

‘‘40904. Compensation by common carriers. 

33 ‘‘§ 40901. License requirement 

34 ‘‘(a) IN GENERAL.—A person in the United States may not act as an 

35 ocean transportation intermediary unless the person holds an ocean trans36 portation intermediary’s license issued by the Federal Maritime Commis37 sion. The Commission shall issue a license to a person that the Commission 


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1 determines to be qualified by experience and character to act as an ocean 

2 transportation intermediary. 

3 ‘‘(b) EXCEPTION.—A person whose primary business is the sale of mer4 chandise may forward shipments of the merchandise for its own account 

5 without an ocean transportation intermediary’s license. 

6 ‘‘§ 40902. Financial responsibility 

7 ‘‘(a) IN GENERAL.—A person may not act as an ocean transportation 

8 intermediary unless the person furnishes a bond, proof of insurance, or 

9 other surety— 

10 ‘‘(1) in a form and amount determined by the Federal Maritime 

11 Commission to insure financial responsibility; and 

12 ‘‘(2) issued by a surety company found acceptable by the Secretary 

13 of the Treasury. 

14 ‘‘(b) SCOPE OF FINANCIAL RESPONSIBILITY.—A bond, insurance, or 

15 other surety obtained under this section— 

16 ‘‘(1) shall be available to pay any penalty assessed under section 

17 41109 of this title or any order for reparation issued under section 

18 41305 of this title; 

19 ‘‘(2) may be available to pay any claim against an ocean transpor20 tation intermediary arising from its transportation-related activities— 

21 ‘‘(A) with the consent of the insured ocean transportation inter22 mediary and subject to review by the surety company; or 

23 ‘‘(B) when the claim is deemed valid by the surety company 

24 after the ocean transportation intermediary has failed to respond 

25 to adequate notice to address the validity of the claim; and 

26 ‘‘(3) shall be available to pay any judgment for damages against an 

27 ocean transportation intermediary arising from its transportation-re28 lated activities, if the claimant has first attempted to resolve the claim 

29 under paragraph (2) and the claim has not been resolved within a rea30 sonable period of time. 

31 ‘‘(c) REGULATIONS ON COURT JUDGMENTS.—The Commission shall pre32 scribe regulations for the purpose of protecting the interests of claimants, 

33 ocean transportation intermediaries, and surety companies with respect to 

34 the process of pursuing claims against ocean transportation intermediary 

35 bonds, insurance, or sureties through court judgments. The regulations shall 

36 provide that a judgment for monetary damages may not be enforced except 

37 to the extent that the damages claimed arise from the transportation-related 

38 activities of the insured ocean transportation intermediary, as defined by the 

39 Commission. 

40 ‘‘(d) RESIDENT AGENT.—An ocean transportation intermediary not domi41 ciled in the United States shall designate a resident agent in the United 


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1 States for receipt of service of judicial and administrative process, including 

2 subpoenas. 

3 ‘‘§ 40903. Suspension or revocation of license 

4 ‘‘(a) FAILURE TO MAINTAIN QUALIFICATIONS OR TO COMPLY.—The 

5 Federal Maritime Commission, after notice and opportunity for a hearing, 

6 shall suspend or revoke an ocean transportation intermediary’s license if the 

7 Commission finds that the ocean transportation intermediary— 

8 ‘‘(1) is not qualified to provide intermediary services; or 

9 ‘‘(2) willfully failed to comply with a provision of this part or with 

10 an order or regulation of the Commission. 

11 ‘‘(b) FAILURE TO MAINTAIN BOND, PROOF OF INSURANCE, OR OTHER

12 SURETY.—The Commission may revoke an ocean transportation 

13 intermediary’s license for failure to maintain a bond, proof of insurance, or 

14 other surety as required by section 40902(a) of this title. 

15 ‘‘§ 40904. Compensation by common carriers 

16 ‘‘(a) CERTIFICATION OF LICENSE AND SERVICES.—A common carrier 

17 may compensate an ocean freight forwarder for a shipment dispatched for 

18 others only when the ocean freight forwarder has certified in writing that 

19 it holds an ocean transportation intermediary’s license (if required under 

20 section 40901 of this title) and has— 

21 ‘‘(1) engaged, booked, secured, reserved, or contracted directly with 

22 the carrier or its agent for space aboard a vessel or confirmed the 

23 availability of the space; and 

24 ‘‘(2) prepared and processed the ocean bill of lading, dock receipt, 

25 or other similar document for the shipment. 

26 ‘‘(b) DUAL COMPENSATION.—A common carrier may not pay compensa27 tion for services described in subsection (a) more than once on the same 

28 shipment. 

29 ‘‘(c) BENEFICIAL INTEREST SHIPMENTS.—An ocean freight forwarder 

30 may not receive compensation from a common carrier for a shipment in 

31 which the ocean freight forwarder has a direct or indirect beneficial interest. 

32 A common carrier may not knowingly pay compensation on that shipment. 

33 ‘‘(d) LIMITS ON AUTHORITY OF CONFERENCE OR GROUP.—A conference 

34 or group of two or more ocean common carriers in the foreign commerce 

35 of the United States that is authorized to agree on the level of compensation 

36 paid to an ocean freight forwarder may not— 

37 ‘‘(1) deny a member of the conference or group the right, upon no38 tice of not more than 5 days, to take independent action on any level 

39 of compensation paid to an ocean freight forwarder; or 

40 ‘‘(2) agree to limit the payment of compensation to an ocean freight 

41 forwarder to less than 1.25 percent of the aggregate of all rates and 


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1 charges applicable under a tariff and assessed against the cargo on 

2 which the services of the ocean freight forwarder are provided. 

3 ‘‘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. 

4 ‘‘§ 41101. Joint ventures and consortiums 

5 ‘‘In this chapter, a joint venture or consortium of two or more common 

6 carriers operating as a single entity is deemed to be a single common car7 rier. 

8 ‘‘§ 41102. General prohibitions 

9 ‘‘(a) OBTAINING TRANSPORTATION AT LESS THAN APPLICABLE

10 RATES.—A person may not knowingly and willfully, directly or indirectly, 

11 by means of false billing, false classification, false weighing, false report of 

12 weight, false measurement, or any other unjust or unfair device or means, 

13 obtain or attempt to obtain ocean transportation for property at less than 

14 the rates or charges that would otherwise apply. 

15 ‘‘(b) OPERATING CONTRARY TO AGREEMENT.—A person may not operate 

16 under an agreement required to be filed under section 40302 or 40305 of 

17 this title if— 

18 ‘‘(1) the agreement has not become effective under section 40304 of 

19 this title or has been rejected, disapproved, or canceled; or 

20 ‘‘(2) the operation is not in accordance with the terms of the agree21 ment or any modifications to the agreement made by the Federal Mari22 time Commission. 

23 ‘‘(c) PRACTICES IN HANDLING PROPERTY.—A common carrier, marine 

24 terminal operator, or ocean transportation intermediary may not fail to es25 tablish, observe, and enforce just and reasonable regulations and practices 

26 relating to or connected with receiving, handling, storing, or delivering prop27 erty. 

28 ‘‘§ 41103. Disclosure of information 

29 ‘‘(a) PROHIBITION.—A common carrier, marine terminal operator, or 

30 ocean freight forwarder, either alone or in conjunction with any other per31 son, directly or indirectly, may not knowingly disclose, offer, solicit, or re32 ceive any information concerning the nature, kind, quantity, destination, 

33 consignee, or routing of any property tendered or delivered to a common 

34 carrier, without the consent of the shipper or consignee, if the informa35 tion— 


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1 ‘‘(1) may be used to the detriment or prejudice of the shipper, the 

2 consignee, or any common carrier; or 

3 ‘‘(2) may improperly disclose its business transaction to a compet4 itor. 

5 ‘‘(b) EXCEPTIONS.—Subsection (a) does not prevent providing the infor6 mation— 

7 ‘‘(1) in response to legal process; 

8 ‘‘(2) to the Federal Maritime Commission or an agency of the 

9 United States Government; or 

10 ‘‘(3) to an independent neutral body operating within the scope of 

11 its authority to fulfill the policing obligations of the parties to an agree12 ment effective under this part. 

13 ‘‘(c) DISCLOSURE FOR DETERMINING BREACH OR COMPILING STATIS14 TICS.—An ocean common carrier that is a party to a conference agreement 

15 approved under this part, a receiver, trustee, lessee, agent, or employee of 

16 the carrier, or any other person authorized by the carrier to receive informa17 tion— 

18 ‘‘(1) may give information to the conference or any person or agency 

19 designated by the conference, for the purpose of— 

20 ‘‘(A) determining whether a shipper or consignee has breached 

21 an agreement with the conference or its member lines; 

22 ‘‘(B) determining whether a member of the conference has 

23 breached the conference agreement; or 

24 ‘‘(C) compiling statistics of cargo movement; and 

25 ‘‘(2) may not prevent the conference or its designee from soliciting 

26 or receiving information for any of those purposes. 

27 ‘‘§ 41104. Common carriers 

28 ‘‘A common carrier, either alone or in conjunction with any other person, 

29 directly or indirectly, may not— 

30 ‘‘(1) allow a person to obtain transportation for property at less than 

31 the rates or charges established by the carrier in its tariff or service 

32 contract by means of false billing, false classification, false weighing, 

33 false measurement, or any other unjust or unfair device or means; 

34 ‘‘(2) provide service in the liner trade that is— 

35 ‘‘(A) not in accordance with the rates, charges, classifications, 

36 rules, and practices contained in a tariff published or a service 

37 contract entered into under chapter 405 of this title, unless ex38 cepted or exempted under section 40103 or 40501(a)(2) of this 

39 title; or 


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1 ‘‘(B) under a tariff or service contract that has been suspended 

2 or prohibited by the Federal Maritime Commission under chapter 

3 407 or 423 of this title; 

4 ‘‘(3) retaliate against a shipper by refusing, or threatening to refuse, 

5 cargo space accommodations when available, or resort to other unfair 

6 or unjustly discriminatory methods because the shipper has patronized 

7 another carrier, or has filed a complaint, or for any other reason; 

8 ‘‘(4) for service pursuant to a tariff, engage in any unfair or unjustly 

9 discriminatory practice in the matter of— 

10 ‘‘(A) rates or charges; 

11 ‘‘(B) cargo classifications; 

12 ‘‘(C) cargo space accommodations or other facilities, with due 

13 regard being given to the proper loading of the vessel and the 

14 available tonnage; 

15 ‘‘(D) loading and landing of freight; or 

16 ‘‘(E) adjustment and settlement of claims; 

17 ‘‘(5) for service pursuant to a service contract, engage in any unfair 

18 or unjustly discriminatory practice in the matter of rates or charges 

19 with respect to any port; 

20 ‘‘(6) use a vessel in a particular trade for the purpose of excluding, 

21 preventing, or reducing competition by driving another ocean common 

22 carrier out of that trade; 

23 ‘‘(7) offer or pay any deferred rebates; 

24 ‘‘(8) for service pursuant to a tariff, give any undue or unreasonable 

25 preference or advantage or impose any undue or unreasonable prejudice 

26 or disadvantage; 

27 ‘‘(9) for service pursuant to a service contract, give any undue or 

28 unreasonable preference or advantage or impose any undue or unrea29 sonable prejudice or disadvantage with respect to any port; 

30 ‘‘(10) unreasonably refuse to deal or negotiate; 

31 ‘‘(11) knowingly and willfully accept cargo from or transport cargo 

32 for the account of an ocean transportation intermediary that does not 

33 have a tariff as required by section 40501 of this title and a bond, in34 surance, or other surety as required by section 40902 of this title; or 

35 ‘‘(12) knowingly and willfully enter into a service contract with an 

36 ocean transportation intermediary that does not have a tariff as re37 quired by section 40501 of this title and a bond, insurance, or other 

38 surety as required by section 40902 of this title, or with an affiliate 

39 of such an ocean transportation intermediary. 

40 ‘‘§ 41105. Concerted action 

41 ‘‘A conference or group of two or more common carriers may not— 


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1 ‘‘(1) boycott or take any other concerted action resulting in an un2 reasonable refusal to deal; 

3 ‘‘(2) engage in conduct that unreasonably restricts the use of inter4 modal services or technological innovations; 

5 ‘‘(3) engage in any predatory practice designed to eliminate the par6 ticipation, or deny the entry, in a particular trade of a common carrier 

7 not a member of the conference, a group of common carriers, an ocean 

8 tramp, or a bulk carrier; 

9 ‘‘(4) negotiate with a non-ocean carrier or group of non-ocean car10 riers (such as truck, rail, or air operators) on any matter relating to 

11 rates or services provided to ocean common carriers within the United 

12 States by those non-ocean carriers, unless the negotiations and any re13 sulting agreements are not in violation of the antitrust laws and are 

14 consistent with the purposes of this part, except that this paragraph 

15 does not prohibit the setting and publishing of a joint through rate by 

16 a conference, joint venture, or association of ocean common carriers; 

17 ‘‘(5) deny in the export foreign commerce of the United States com18 pensation to an ocean freight forwarder or limit that compensation to 

19 less than a reasonable amount; 

20 ‘‘(6) allocate shippers among specific carriers that are parties to the 

21 agreement or prohibit a carrier that is a party to the agreement from 

22 soliciting cargo from a particular shipper, except as— 

23 ‘‘(A) authorized by section 40303(d) of this title; 

24 ‘‘(B) required by the law of the United States or the importing 

25 or exporting country; or 

26 ‘‘(C) agreed to by a shipper in a service contract; 

27 ‘‘(7) for service pursuant to a service contract, engage in any un28 justly discriminatory practice in the matter of rates or charges with re29 spect to any locality, port, or person due to the person’s status as a 

30 shippers’ association or ocean transportation intermediary; or 

31 ‘‘(8) for service pursuant to a service contract, give any undue or 

32 unreasonable preference or advantage or impose any undue or unrea33 sonable prejudice or disadvantage with respect to any locality, port, or 

34 person due to the person’s status as a shippers’ association or ocean 

35 transportation intermediary. 

36 ‘‘§ 41106. Marine terminal operators 

37 ‘‘A marine terminal operator may not— 

38 ‘‘(1) agree with another marine terminal operator or with a common 

39 carrier to boycott, or unreasonably discriminate in the provision of ter40 minal services to, a common carrier or ocean tramp; 


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1 ‘‘(2) give any undue or unreasonable preference or advantage or im2 pose any undue or unreasonable prejudice or disadvantage with respect 

3 to any person; or 

4 ‘‘(3) unreasonably refuse to deal or negotiate. 

5 ‘‘§ 41107. Monetary penalties 

6 ‘‘(a) IN GENERAL.—A person that violates this part or a regulation or 

7 order of the Federal Maritime Commission issued under this part is liable 

8 to the United States Government for a civil penalty. Unless otherwise pro9 vided in this part, the amount of the penalty may not exceed $5,000 for 

10 each violation or, if the violation was willfully and knowingly committed, 

11 $25,000 for each violation. Each day of a continuing violation is a separate 

12 violation. 

13 ‘‘(b) LIEN ON CARRIER’S VESSELS.—The amount of a civil penalty im14 posed on a common carrier under this section constitutes a lien on the ves15 sels operated by the carrier. Any such vessel is subject to an action in rem 

16 to enforce the lien in the district court of the United States for the district 

17 in which it is found. 

18 ‘‘§ 41108. Additional penalties 

19 ‘‘(a) SUSPENSION OF TARIFFS.—For a violation of section 41104(1), (2), 

20 or (7) of this title, the Federal Maritime Commission may suspend any or 

21 all tariffs of the common carrier, or that common carrier’s right to use any 

22 or all tariffs of conferences of which it is a member, for a period not to 

23 exceed 12 months. 

24 ‘‘(b) OPERATING UNDER SUSPENDED TARIFF.—A common carrier that 

25 accepts or handles cargo for carriage under a tariff that has been sus26 pended, or after its right to use that tariff has been suspended, is liable 

27 to the United States Government for a civil penalty of not more than 

28 $50,000 for each shipment. 

29 ‘‘(c) FAILURE TO PROVIDE INFORMATION.— 

30 ‘‘(1) PENALTIES.—If the Commission finds, after notice and oppor31 tunity for a hearing, that a common carrier has failed to supply infor32 mation ordered to be produced or compelled by subpoena under section 

33 41303 of this title, the Commission may— 

34 ‘‘(A) suspend any or all tariffs of the carrier or the carrier’s 

35 right to use any or all tariffs of conferences of which it is a mem36 ber; and 

37 ‘‘(B) request the Secretary of Homeland Security to refuse or 

38 revoke any clearance required for a vessel operated by the carrier, 

39 and when so requested, the Secretary shall refuse or revoke the 

40 clearance. 


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1 ‘‘(2) DEFENSE BASED ON FOREIGN LAW.—If, in defense of its fail2 ure to comply with a subpoena or discovery order, a common carrier 

3 alleges that information or documents located in a foreign country can4 not be produced because of the laws of that country, the Commission 

5 shall immediately notify the Secretary of State of the failure to comply 

6 and of the allegation relating to foreign laws. On receiving the notifica7 tion, the Secretary of State shall promptly consult with the government 

8 of the nation within which the information or documents are alleged 

9 to be located for the purpose of assisting the Commission in obtaining 

10 the information or documents. 

11 ‘‘(d) IMPAIRING ACCESS TO FOREIGN TRADE.—If the Commission finds, 

12 after notice and opportunity for a hearing, that the action of a common car13 rier, acting alone or in concert with another person, or a foreign government 

14 has unduly impaired access of a vessel documented under the laws of the 

15 United States to ocean trade between foreign ports, the Commission shall 

16 take action that it finds appropriate, including imposing any of the penalties 

17 authorized by this section. The Commission also may take any of the actions 

18 authorized by sections 42304 and 42305 of this title. 

19 ‘‘(e) SUBMISSION OF ORDER TO PRESIDENT.—Before an order under this 

20 section becomes effective, it shall be submitted immediately to the President. 

21 The President, within 10 days after receiving it, may disapprove it if the 

22 President finds that disapproval is required for reasons of national defense 

23 or foreign policy. 

24 ‘‘§ 41109. Assessment of penalties 

25 ‘‘(a) GENERAL AUTHORITY.—Until a matter is referred to the Attorney 

26 General, the Federal Maritime Commission may, after notice and oppor27 tunity for a hearing, assess a civil penalty provided for in this part. The 

28 Commission may compromise, modify, or remit, with or without conditions, 

29 a civil penalty. 

30 ‘‘(b) FACTORS IN DETERMINING AMOUNT.—In determining the amount 

31 of a civil penalty, the Commission shall take into account the nature, cir32 cumstances, extent, and gravity of the violation committed and, with respect 

33 to the violator, the degree of culpability, history of prior offenses, ability to 

34 pay, and other matters justice may require. 

35 ‘‘(c) EXCEPTION.—A civil penalty may not be imposed for conspiracy to 

36 violate section 41102(a) or 41104(1) or (2) of this title or to defraud the 

37 Commission by concealing such a violation. 

38 ‘‘(d) PROHIBITED BASIS OF PENALTY.—The Commission or a court may 

39 not order a person to pay the difference between the amount billed and 

40 agreed upon in writing with a common carrier or its agent and the amount 


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1 set forth in a tariff or service contract by that common carrier for the 

2 transportation service provided. 

3 ‘‘(e) TIME LIMIT.—A proceeding to assess a civil penalty under this sec4 tion must be commenced within 5 years after the date of the violation. 

5 ‘‘(f) REVIEW OF CIVIL PENALTY.—A person against whom a civil penalty 

6 is assessed under this section may obtain review under chapter 158 of title 

7 28. 

8 ‘‘(g) CIVIL ACTIONS TO COLLECT.—If a person does not pay an assess9 ment of a civil penalty after it has become final or after the appropriate 

10 court has entered final judgment in favor of the Commission, the Attorney 

11 General at the request of the Commission may seek to collect the amount 

12 assessed in an appropriate district court of the United States. The court 

13 shall enforce the order of the Commission unless it finds that the order was 

14 not regularly made and duly issued. 

15 ‘‘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. 

16 ‘‘§ 41301. Complaints 

17 ‘‘(a) IN GENERAL.—A person may file with the Federal Maritime Com18 mission a sworn complaint alleging a violation of this part, except section 

19 41307(b)(1). If the complaint is filed within 3 years after the claim accrues, 

20 the complainant may seek reparations for an injury to the complainant 

21 caused by the violation. 

22 ‘‘(b) NOTICE AND RESPONSE.—The Commission shall provide a copy of 

23 the complaint to the person named in the complaint. Within a reasonable 

24 time specified by the Commission, the person shall satisfy the complaint or 

25 answer it in writing. 

26 ‘‘(c) IF COMPLAINT NOT SATISFIED.—If the complaint is not satisfied, 

27 the Commission shall investigate the complaint in an appropriate manner 

28 and make an appropriate order. 

29 ‘‘§ 41302. Investigations 

30 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on complaint or 

31 its own motion, may investigate any conduct or agreement that the Commis32 sion believes may be in violation of this part. The Commission may by order 

33 disapprove, cancel, or modify any agreement that operates in violation of 

34 this part. 


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1 ‘‘(b) EFFECTIVENESS OF AGREEMENT DURING INVESTIGATION.—Unless 

2 an injunction is issued under section 41306 or 41307 of this title, an agree3 ment under investigation by the Commission remains in effect until the 

4 Commission issues its order. 

5 ‘‘(c) DATE FOR DECISION.—Within 10 days after the initiation of a pro6 ceeding under this section or section 41301 of this title, the Commission 

7 shall set a date by which it will issue its final decision. The Commission 

8 by order may extend the date for good cause. 

9 ‘‘(d) SANCTIONS FOR DELAY.—If, within the period for final decision 

10 under subsection (c), the Commission determines that it is unable to issue 

11 a final decision because of undue delay caused by a party to the proceeding, 

12 the Commission may impose sanctions, including issuing a decision adverse 

13 to the delaying party. 

14 ‘‘(e) REPORT.—The Commission shall make a written report of every in15 vestigation under this part in which a hearing was held, stating its conclu16 sions, decisions, findings of fact, and order. The Commission shall provide 

17 a copy of the report to all parties and publish the report for public informa18 tion. A published report is competent evidence in a court of the United 

19 States. 

20 ‘‘§ 41303. Discovery and subpoenas 

21 ‘‘(a) IN GENERAL.—In an investigation or adjudicatory proceeding under 

22 this part— 

23 ‘‘(1) the Federal Maritime Commission may subpoena witnesses and 

24 evidence; and 

25 ‘‘(2) a party may use depositions, written interrogatories, and dis26 covery procedures under regulations prescribed by the Commission 

27 that, to the extent practicable, shall conform to the Federal Rules of 

28 Civil Procedure (28 App. U.S.C.). 

29 ‘‘(b) WITNESS FEES.—Unless otherwise prohibited by law, a witness is 

30 entitled to the same fees and mileage as in the courts of the United States. 

31 ‘‘§ 41304. Hearings and orders 

32 ‘‘(a) OPPORTUNITY FOR HEARING.—The Federal Maritime Commission 

33 shall provide an opportunity for a hearing before issuing an order relating 

34 to a violation of this part or a regulation prescribed under this part. 

35 ‘‘(b) MODIFICATION OF ORDER.—The Commission may reverse, suspend, 

36 or modify any of its orders. 

37 ‘‘(c) REHEARING.—On application of a party to a proceeding, the Com38 mission may grant a rehearing of the same or any matter determined in 

39 the proceeding. Except by order of the Commission, a rehearing does not 

40 operate as a stay of an order. 


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1 ‘‘(d) PERIOD OF EFFECTIVENESS.—An order of the Commission remains 

2 in effect for the period specified in the order or until suspended, modified, 

3 or set aside by the Commission or a court of competent jurisdiction. 

4 ‘‘§ 41305. Award of reparations 

5 ‘‘(a) DEFINITION.—In this section, the term ‘actual injury’ includes the 

6 loss of interest at commercial rates compounded from the date of injury. 

7 ‘‘(b) BASIC AMOUNT.—If the complaint was filed within the period speci8 fied in section 41301(a) of this title, the Federal Maritime Commission shall 

9 direct the payment of reparations to the complainant for actual injury 

10 caused by a violation of this part, plus reasonable attorney fees. 

11 ‘‘(c) ADDITIONAL AMOUNTS.—On a showing that the injury was caused 

12 by an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) 

13 or (3) of this title, the Commission may order the payment of additional 

14 amounts, but the total recovery of a complainant may not exceed twice the 

15 amount of the actual injury. 

16 ‘‘(d) DIFFERENCE BETWEEN RATES.—If the injury was caused by an ac17 tivity prohibited by section 41104(4)(A) or (B) of this title, the amount of 

18 the injury shall be the difference between the rate paid by the injured ship19 per and the most favorable rate paid by another shipper. 

20 ‘‘§ 41306. Injunctive relief sought by complainants 

21 ‘‘(a) IN GENERAL.—After filing a complaint with the Federal Maritime 

22 Commission under section 41301 of this title, the complainant may bring 

23 a civil action in a district court of the United States to enjoin conduct in 

24 violation of this part. 

25 ‘‘(b) VENUE.—The action must be brought in the judicial district in 

26 which— 

27 ‘‘(1) the Commission has brought a civil action against the defendant 

28 under section 41307(a) of this title; or 

29 ‘‘(2) the defendant resides or transacts business, if the Commission 

30 has not brought such an action. 

31 ‘‘(c) REMEDIES BY COURT.—After notice to the defendant, and a showing 

32 that the standards for granting injunctive relief by courts of equity are met, 

33 the court may grant a temporary restraining order or preliminary injunction 

34 for a period not to exceed 10 days after the Commission has issued an order 

35 disposing of the complaint. 

36 ‘‘(d) ATTORNEY FEES.—A defendant prevailing in a civil action under 

37 this section shall be allowed reasonable attorney fees to be assessed and col38 lected as part of the costs of the action. 

39 ‘‘§ 41307. Injunctive relief sought by the Commission 

40 ‘‘(a) GENERAL VIOLATIONS.—In connection with an investigation under 

41 section 41301 or 41302 of this title, the Federal Maritime Commission may 


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1 bring a civil action to enjoin conduct in violation of this part. The action 

2 must be brought in the district court of the United States for any judicial 

3 district in which the defendant resides or transacts business. After notice 

4 to the defendant, and a showing that the standards for granting injunctive 

5 relief by courts of equity are met, the court may grant a temporary restrain6 ing order or preliminary injunction for a period not to exceed 10 days after 

7 the Commission has issued an order disposing of the issues under investiga8 tion. 

9 ‘‘(b) REDUCTION IN COMPETITION.— 

10 ‘‘(1) ACTION BY COMMISSION.—If, at any time after the filing or ef11 fective date of an agreement under chapter 403 of this title, the Com12 mission determines that the agreement is likely, by a reduction in com13 petition, to produce an unreasonable reduction in transportation service 

14 or an unreasonable increase in transportation cost, the Commission, 

15 after notice to the person filing the agreement, may bring a civil action 

16 in the United States District Court for the District of Columbia to en17 join the operation of the agreement. The Commission’s sole remedy 

18 with respect to an agreement likely to have such an effect is an action 

19 under this subsection. 

20 ‘‘(2) REMEDIES BY COURT.—In an action under this subsection, the 

21 court may issue— 

22 ‘‘(A) a temporary restraining order or a preliminary injunction; 

23 and 

24 ‘‘(B) a permanent injunction after a showing that the agree25 ment is likely to have the effect described in paragraph (1). 

26 ‘‘(3) BURDEN OF PROOF AND THIRD PARTIES.—In an action under 

27 this subsection, the burden of proof is on the Commission. The court 

28 may not allow a third party to intervene. 

29 ‘‘(c) FAILURE TO PROVIDE INFORMATION.—If a person filing an agree30 ment, or an officer, director, partner, agent, or employee of the person, fails 

31 substantially to comply with a request for the submission of additional infor32 mation or documents within the period provided in section 40304(c) of this 

33 title, the Commission may bring a civil action in the United States District 

34 Court for the District of Columbia. At the request of the Commission, the 

35 Court— 

36 ‘‘(1) may order compliance; 

37 ‘‘(2) shall extend the period specified in section 40304(c)(2) of this 

38 title until there has been substantial compliance; and 

39 ‘‘(3) may grant other equitable relief that the court decides is appro40 priate. 


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1 ‘‘(d) REPRESENTATION.—The Commission may represent itself in a pro2 ceeding under this section in— 

3 ‘‘(1) a district court of the United States, on notice to the Attorney 

4 General; and 

5 ‘‘(2) a court of appeals of the United States, with the approval of 

6 the Attorney General. 

7 ‘‘§ 41308. Enforcement of subpoenas and orders 

8 ‘‘(a) CIVIL ACTION.—If a person does not comply with a subpoena or 

9 order of the Federal Maritime Commission, the Attorney General, at the re10 quest of the Commission, or an injured party, may seek enforcement in a 

11 district court of the United States having jurisdiction over the parties. If, 

12 after hearing, the court determines that the subpoena or order was regularly 

13 made and duly issued, the court shall enforce the subpoena or order. 

14 ‘‘(b) TIME LIMIT ON BRINGING ACTIONS.—An action under this section 

15 to enforce an order of the Commission must be brought within 3 years after 

16 the date the order was violated. 

17 ‘‘§ 41309. Enforcement of reparation orders 

18 ‘‘(a) CIVIL ACTION.—If a person does not comply with an order of the 

19 Federal Maritime Commission for the payment of reparation, the person to 

20 whom the award was made may seek enforcement of the order in a district 

21 court of the United States having jurisdiction over the parties. 

22 ‘‘(b) PARTIES AND SERVICE OF PROCESS.—All parties in whose favor the 

23 Commission has made an award of reparation by a single order may be 

24 joined as plaintiffs, and all other parties in the order may be joined as de25 fendants, in a single action in a judicial district in which any one plaintiff 

26 could maintain an action against any one defendant. Service of process 

27 against a defendant not found in that district may be made in a district 

28 in which any office of that defendant is located or in which any port of call 

29 on a regular route operated by that defendant is located. Judgment may 

30 be entered for any plaintiff against the defendant liable to that plaintiff. 

31 ‘‘(c) NATURE OF REVIEW.—In an action under this section, the findings 

32 and order of the Commission are prima facie evidence of the facts stated 

33 in the findings and order. 

34 ‘‘(d) COSTS AND ATTORNEY FEES.—The plaintiff is not liable for costs 

35 of the action or for costs of any subsequent stage of the proceedings unless 

36 they accrue on the plaintiff’s appeal. A prevailing plaintiff shall be allowed 

37 reasonable attorney fees to be assessed and collected as part of the costs 

38 of the action. 

39 ‘‘(e) TIME LIMIT ON BRINGING ACTIONS.—An action under this section 

40 to enforce an order of the Commission must be brought within 3 years after 

41 the date the order was violated. 


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1 ‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

2 ‘‘CHAPTER 421—REGULATIONS AFFECTING SHIPPING IN 

3 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. 

4 ‘‘§ 42101. Regulations of the Commission 

5 ‘‘(a) UNFAVORABLE CONDITIONS.—To further the objectives and policy 

6 set forth in section 50101 of this title, the Federal Maritime Commission 

7 shall prescribe regulations affecting shipping in foreign trade, not in conflict 

8 with law, to adjust or meet general or special conditions unfavorable to ship9 ping in foreign trade, whether in a particular trade or on a particular route 

10 or in commerce generally, including intermodal movements, terminal oper11 ations, cargo solicitation, agency services, ocean transportation intermediary 

12 services and operations, and other activities and services integral to trans13 portation systems, and which arise out of or result from laws or regulations 

14 of a foreign country or competitive methods, pricing practices, or other 

15 practices employed by owners, operators, agents, or masters of vessels of a 

16 foreign country. 

17 ‘‘(b) INITIATION OF REGULATION.—A regulation under subsection (a) 

18 may be initiated by the Commission on its own motion or on the petition 

19 of any person, including another component of the United States Govern20 ment. 

21 ‘‘§ 42102. Regulations of other agencies 

22 ‘‘(a) REQUEST TO AGENCY.—To further the objectives and policy set 

23 forth in section 50101 of this title, the Federal Maritime Commission shall 

24 request the head of a department, agency, or instrumentality of the United 

25 States Government to suspend, modify, or annul any existing regulations, 

26 or to make new regulations, affecting shipping in the foreign trade, except 

27 regulations relating to the Public Health Service, the Consular Service, or 

28 the inspection of vessels. 

29 ‘‘(b) PRIOR REVIEW AND APPROVAL.—A department, agency, or instru30 mentality of the Government may not prescribe a regulation affecting ship31 ping in the foreign trade (except a regulation affecting the Public Health 

32 Service, the Consular Service, or the inspection of vessels) until the regula33 tion has been submitted to the Commission for its approval and final action 

34 has been taken by the Commission or the President. 


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1 ‘‘(c) SUBMISSION TO PRESIDENT.—If the head of a department, agency, 

2 or instrumentality of the Government refuses to comply with a request 

3 under subsection (a) or objects to a decision of the Commission under sub4 section (b), the Commission or the head of the department, agency, or in5 strumentality may submit the facts to the President. The President may es6 tablish, suspend, modify, or annul the regulation. 

7 ‘‘§ 42103. No preference to Government-owned vessels 

8 ‘‘A regulation may not give a vessel owned by the United States Govern9 ment a preference over a vessel owned by citizens of the United States and 

10 documented under the laws of the United States. 

11 ‘‘§ 42104. Information, witnesses, and evidence 

12 ‘‘(a) ORDER TO SUPPLY INFORMATION.—In carrying out section 42101 

13 of this title, the Federal Maritime Commission may order any person (in14 cluding a common carrier, tramp operator, bulk operator, shipper, shippers’ 

15 association, ocean transportation intermediary, or marine terminal operator, 

16 or an officer, receiver, trustee, lessee, agent, or employee thereof) to file 

17 with the Commission a report, answers to questions, documentary material, 

18 or other information the Commission considers necessary or appropriate. 

19 The Commission may require the response to any such order to be made 

20 under oath. The response shall be provided in the form and within the time 

21 specified by the Commission. 

22 ‘‘(b) SUBPOENAS AND DISCOVERY.—In carrying out section 42101 of this 

23 title, the Commission may— 

24 ‘‘(1) subpoena witnesses and evidence; and 

25 ‘‘(2) authorize a party to use depositions, written interrogatories, 

26 and discovery procedures that, to the extent practicable, conform to the 

27 Federal Rules of Civil Procedure (28 App. U.S.C.). 

28 ‘‘(c) WITNESS FEES.—Unless otherwise prohibited by law, and subject to 

29 funds being appropriated, a witness in a proceeding under section 42101 

30 of this title is entitled to the same fees and mileage as in the courts of the 

31 United States. 

32 ‘‘(d) PENALTIES.—For failure to supply information ordered to be pro33 duced or compelled by subpoena under this section, the Commission may— 

34 ‘‘(1) after notice and opportunity for a hearing, suspend tariffs and 

35 service contracts of a common carrier or the common carrier’s right to 

36 use tariffs of conferences and service contracts of agreements of which 

37 it is a member; or 

38 ‘‘(2) assess a civil penalty of not more than $5,000 for each day that 

39 the information is not provided. 

40 ‘‘(e) ENFORCEMENT.—If a person does not comply with an order or sub41 poena of the Commission under this section, the Commission may seek enVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00078 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 forcement in a district court of the United States having jurisdiction over 

2 the parties. If, after hearing, the court determines that the order or sub3 poena was regularly made and duly issued, the court shall enforce the order 

4 or subpoena. 

5 ‘‘§ 42105. Disclosure to public 

6 ‘‘Notwithstanding any other provision of law, the Federal Maritime Com7 mission may refuse to disclose to the public a response or other information 

8 submitted to it under this chapter. 

9 ‘‘§ 42106. Other actions to remedy unfavorable conditions 

10 ‘‘If the Federal Maritime Commission finds that conditions unfavorable 

11 to shipping in foreign trade as described in section 42101 of this title exist, 

12 the Commission may— 

13 ‘‘(1) limit voyages to and from United States ports or the amount 

14 or type of cargo carried; 

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

16 carriage to or from United States ports, including a common carrier’s 

17 right to use tariffs of conferences and service contracts of agreements 

18 in United States trades of which it is a member for any period the 

19 Commission specifies; 

20 ‘‘(3) suspend, in whole or in part, an ocean common carrier’s right 

21 to operate under any agreement filed with the Commission, including 

22 any agreement authorizing preferential treatment at terminals, pref23 erential terminal leases, space chartering, or pooling of cargo or rev24 enue with other ocean common carriers; 

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

26 ‘‘(5) take any other action the Commission finds necessary and ap27 propriate to adjust or meet any condition unfavorable to shipping in 

28 the foreign trade of the United States. 

29 ‘‘§ 42107. Refusal of clearance and entry 

30 ‘‘At the request of the Federal Maritime Commission— 

31 ‘‘(1) the Secretary of Homeland Security shall— 

32 ‘‘(A) refuse the clearance required by section 60105 of this title 

33 to a vessel of a country that is named in a regulation prescribed 

34 by the Commission under section 42101 of this title; and 

35 ‘‘(B) collect any fees imposed by the Commission under section 

36 42106(4) of this title; and 

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

38 operating shall— 

39 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel 

40 of a country that is named in a regulation prescribed by the ComVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00079 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 mission under section 42101 of this title, to a port or place in the 

2 United States or the navigable waters of the United States; or 

3 ‘‘(B) detain the vessel at the port or place in the United States 

4 from which it is about to depart for another port or place in the 

5 United States. 

6 ‘‘§ 42108. Penalty for operating under suspended tariff or 

7 service contract 

8 ‘‘A common carrier that accepts or handles cargo for carriage under a 

9 tariff or service contract that has been suspended under section 42104(d)(1) 

10 or 42106(2) of this title, or after its right to use another tariff or service 

11 contract has been suspended under those provisions, is liable to the United 

12 States Government for a civil penalty of not more than $50,000 for each 

13 day that it is found to be operating under a suspended tariff or service con14 tract. 

15 ‘‘§ 42109. Consultation with other agencies 

16 ‘‘The Federal Maritime Commission may consult with, seek the coopera17 tion of, or make recommendations to other appropriate agencies of the 

18 United States Government prior to taking any action under this chapter. 

19 ‘‘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. 

20 ‘‘§ 42301. Definitions 

21 ‘‘(a) DEFINED IN PART A.—In this chapter, the terms ‘common carrier’, 

22 ‘marine terminal operator’, ‘ocean common carrier’, ‘ocean transportation 

23 intermediary’, ‘shipper’, and ‘shippers’ association’ have the meaning given 

24 those terms in section 40102 of this title. 

25 ‘‘(b) OTHER DEFINITIONS.—In this chapter: 

26 ‘‘(1) FOREIGN CARRIER.—The term ‘foreign carrier’ means an ocean 

27 common carrier a majority of whose vessels are documented under the 

28 laws of a foreign country. 

29 ‘‘(2) MARITIME SERVICES.—The term ‘maritime services’ means 

30 port-to-port transportation of cargo by vessels operated by an ocean 

31 common carrier. 

32 ‘‘(3) MARITIME-RELATED SERVICES.—The term ‘maritime-related 

33 services’ means intermodal operations, terminal operations, cargo solici34 tation, agency services, ocean transportation intermediary services and 

35 operations, and all other activities and services integral to total transVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00080 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 portation systems of ocean common carriers and their foreign domiciled 

2 affiliates for themselves and others. 

3 ‘‘(4) UNITED STATES CARRIER.—The term ‘United States carrier’ 

4 means an ocean common carrier operating vessels documented under 

5 the laws of the United States. 

6 ‘‘(5) UNITED STATES OCEANBORNE TRADE.—The term ‘United 

7 States oceanborne trade’ means the carriage of cargo between the 

8 United States and a foreign country, whether directly or indirectly, by 

9 an ocean common carrier. 

10 ‘‘§ 42302. Investigations 

11 ‘‘(a) IN GENERAL.—The Federal Maritime Commission shall investigate 

12 whether any laws, rules, regulations, policies, or practices of a foreign gov13 ernment, or any practices of a foreign carrier or other person providing 

14 maritime or maritime-related services in a foreign country, result in the ex15 istence of conditions that— 

16 ‘‘(1) adversely affect the operations of United States carriers in 

17 United States oceanborne trade; and 

18 ‘‘(2) do not exist for foreign carriers of that country in the United 

19 States under the laws of the United States or as a result of acts of 

20 United States carriers or other persons providing maritime or mari21 time-related services in the United States. 

22 ‘‘(b) INITIATION OF INVESTIGATION.—An investigation under subsection 

23 (a) may be initiated by the Commission on its own motion or on the petition 

24 of any person, including another component of the United States Govern25 ment. 

26 ‘‘(c) TIME FOR DECISION.—The Commission shall complete an investiga27 tion under this section and render a decision within 120 days after it is ini28 tiated. However, the Commission may extend this 120-day period for an ad29 ditional 90 days if the Commission is unable to obtain sufficient information 

30 to determine whether a condition specified in subsection (a) exists. A notice 

31 providing an extension shall state clearly the reasons for the extension. 

32 ‘‘§ 42303. Information requests 

33 ‘‘(a) IN GENERAL.—To further the purposes of section 42302(a) of this 

34 title, the Federal Maritime Commission may order any person (including a 

35 common carrier, shipper, shippers’ association, ocean transportation inter36 mediary, or marine terminal operator, or an officer, receiver, trustee, lessee, 

37 agent or employee thereof) to file with the Commission any periodic or spe38 cial report, answers to questions, documentary material, or other informa39 tion the Commission considers necessary or appropriate. The Commission 

40 may require the response to any such order to be made under oath. The 


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1 response shall be provided in the form and within the time specified by the 

2 Commission. 

3 ‘‘(b) SUBPOENAS.—In an investigation under section 42302 of this title, 

4 the Commission may subpoena witnesses and evidence. 

5 ‘‘(c) NONDISCLOSURE.—Notwithstanding any other provision of law, the 

6 Commission may determine that any information submitted to it in response 

7 to a request under this section, or otherwise, shall not be disclosed to the 

8 public. 

9 ‘‘§ 42304. Action against foreign carriers 

10 ‘‘(a) IN GENERAL.—Subject to section 42306 of this title, whenever the 

11 Federal Maritime Commission, after notice and opportunity for comment or 

12 hearing, determines that the conditions specified in section 42302(a) of this 

13 title exist, the Commission shall take such action to offset those conditions 

14 as it considers necessary and appropriate against any foreign carrier that 

15 is a contributing cause, or whose government is a contributing cause, to 

16 those conditions. The action may include— 

17 ‘‘(1) limitations on voyages to and from United States ports or on 

18 the amount or type of cargo carried; 

19 ‘‘(2) suspension, in whole or in part, of any or all tariffs and service 

20 contracts, including an ocean common carrier’s right to use any or all 

21 tariffs and service contracts of conferences in United States trades of 

22 which it is a member for any period the Commission specifies; 

23 ‘‘(3) suspension, in whole or in part, of an ocean common carrier’s 

24 right to operate under any agreement filed with the Commission, in25 cluding any agreement authorizing preferential treatment at terminals, 

26 preferential terminal leases, space chartering, or pooling of cargo or 

27 revenue with other ocean common carriers; and 

28 ‘‘(4) a fee not to exceed $1,000,000 per voyage. 

29 ‘‘(b) CONSULTATION.—The Commission may consult with, seek the co30 operation of, or make recommendations to other appropriate agencies of the 

31 United States Government prior to taking any action under subsection (a). 

32 ‘‘§ 42305. Refusal of clearance and entry 

33 ‘‘Subject to section 42306 of this title, whenever the Federal Maritime 

34 Commission determines that the conditions specified in section 42302(a) of 

35 this title exist, then at the request of the Commission— 

36 ‘‘(1) the Secretary of Homeland Security shall refuse the clearance 

37 required by section 60105 of this title to a vessel of a foreign carrier 

38 that is identified by the Commission under section 42304 of this title; 

39 and 

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

41 operating shall— 


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1 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel 

2 of a foreign carrier that is identified by the Commission under sec3 tion 42304 of this title, to a port or place in the United States 

4 or the 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 effec10 tive or a request is made under section 42305 of this title, the determina11 tion shall be submitted immediately to the President. The President, within 

12 10 days after receiving it, may disapprove it in writing, setting forth the 

13 reasons for the disapproval, if the President finds that disapproval is re14 quired for reasons 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 pas25 sengers; 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 

4 issued by a bonding company authorized to do business in the United 

5 States. 

6 ‘‘§ 44103. Financial responsibility to pay liability for death 

7 or injury 

8 ‘‘(a) GENERAL REQUIREMENT.—The owner or charterer of a vessel to 

9 which this chapter applies shall establish, under regulations prescribed by 

10 the Federal Maritime Commission, financial responsibility to meet liability 

11 for death or injury to passengers or other individuals on a voyage to or from 

12 a port in the United States. 

13 ‘‘(b) AMOUNTS.— 

14 ‘‘(1) IN GENERAL.—The amount of financial responsibility required 

15 under subsection (a) shall be based on the number of passenger accom16 modations as follows: 

17 ‘‘(A) $20,000 for each of the first 500 passenger accommoda18 tions. 

19 ‘‘(B) $15,000 for each additional passenger accommodation be20 tween 501 and 1,000. 

21 ‘‘(C) $10,000 for each additional passenger accommodation be22 tween 1,001 and 1,500. 

23 ‘‘(D) $5,000 for each additional passenger accommodation over 

24 1,500. 

25 ‘‘(2) MULTIPLE VESSELS.—If the owner or charterer is operating 

26 more than one vessel subject to this chapter, the amount of financial 

27 responsibility shall be based on the number of passenger accommoda28 tions on the vessel with the largest number of passenger accommoda29 tions. 

30 ‘‘(c) AVAILABILITY TO PAY JUDGMENT.—The amount determined under 

31 subsection (b) shall be available to pay a judgment for damages (whether 

32 less than or more than $20,000) for death or injury to a passenger or other 

33 individual on a voyage to or from a port in the United States. 

34 ‘‘(d) MEANS OF ESTABLISHING.—Financial responsibility under this sec35 tion may be established by one or more of the following if acceptable to the 

36 Commission: 

37 ‘‘(1) Insurance. 

38 ‘‘(2) Surety bond issued by a bonding company authorized to do 

39 business in the United States. 

40 ‘‘(3) Qualification as a self-insurer. 

41 ‘‘(4) Other evidence of financial responsibility. 


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1 ‘‘§ 44104. Civil penalty 

2 ‘‘A person that violates section 44102 or 44103 of this title is liable to 

3 the United States Government for a civil penalty of not more than $5,000, 

4 plus $200 for each passage sold, to be assessed by the Federal Maritime 

5 Commission. The Commission may remit or mitigate the penalty on terms 

6 the Commission considers proper. 

7 ‘‘§ 44105. Refusal of clearance 

8 ‘‘The Secretary of Homeland Security shall refuse the clearance required 

9 by section 60105 of this title, at the port or place of departure from the 

10 United States, of a vessel that is subject to this chapter and does not have 

11 evidence issued by the Federal Maritime Commission of compliance with 

12 sections 44102 and 44103 of this title. 

13 ‘‘§ 44106. Conduct of proceedings 

14 ‘‘Part A of this subtitle applies to proceedings conducted by the Federal 

15 Maritime Commission under this chapter.’’. 

16 SEC. 8. SUBTITLE V OF TITLE 46. 

17 (a) SUBTITLE ANALYSIS.—The analysis of subtitle V of title 46, United 

18 States Code, is amended to read as follows: 

19 ‘‘PART A—GENERAL

‘‘Chapter Sec. 

‘‘501. Policy, Studies, and Reports ................................................................. 50101 

‘‘503. Administrative ........................................................................................... 50301 

‘‘505. Other General Provisions ...................................................................... 50501 

20 ‘‘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 

21 ‘‘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 

22 ‘‘PART D—PROMOTIONAL PROGRAMS

‘‘551. Coastwise Trade ........................................................................................ 55101 

‘‘553. Passenger and Cargo Preferences ...................................................... 55301 

‘‘555. Miscellaneous ............................................................................................. 55501 

23 ‘‘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 

24 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

‘‘571. General Authority ..................................................................................... 57101 

‘‘573. Vessel Trade-In Program ....................................................................... 57301 

‘‘575. Construction, Charter, and Sale of Vessels .................................... 57501 


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1 ‘‘PART G—RESTRICTIONS AND PENALTIES

‘‘581. Restrictions and Penalties .................................................................... 58101’’. 

2 (b) CHAPTERS PRECEDING CHAPTER 531.—Subtitle V of title 46, United 

3 States Code, is amended by inserting after the subtitle analysis the fol4 lowing: 

5 ‘‘PART A—GENERAL

6 ‘‘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. 

7 ‘‘§ 50101. Objectives and policy 

8 ‘‘(a) OBJECTIVES.—It is necessary for the national defense and the devel9 opment of the domestic and foreign commerce of the United States that the 

10 United States have a merchant marine— 

11 ‘‘(1) sufficient to carry the waterborne domestic commerce and a 

12 substantial part of the waterborne export and import foreign commerce 

13 of the United States and to provide shipping service essential for main14 taining the flow of the waterborne domestic and foreign commerce at 

15 all times; 

16 ‘‘(2) capable of serving as a naval and military auxiliary in time of 

17 war or national emergency; 

18 ‘‘(3) owned and operated as vessels of the United States by citizens 

19 of the United States; 

20 ‘‘(4) composed of the best-equipped, safest, and most suitable types 

21 of vessels and manned with a trained and efficient citizen personnel; 

22 and 

23 ‘‘(5) supplemented by efficient facilities for building and repairing 

24 vessels. 

25 ‘‘(b) POLICY.—It is the policy of the United States to encourage and aid 

26 the development and maintenance of a merchant marine satisfying the ob27 jectives described in subsection (a). 

28 ‘‘§ 50102. Survey of merchant marine 

29 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall survey the 

30 merchant marine of the United States to determine whether replacements 

31 and additions are required to carry out the objectives and policy of section 


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1 50101 of this title. The Secretary shall study, perfect, and adopt a long2 range program for replacements and additions that will result, as soon as 

3 practicable, in— 

4 ‘‘(1) an adequate and well-balanced merchant fleet, including vessels 

5 of all types, that will provide shipping service essential for maintaining 

6 the flow of foreign commerce by vessels designed to be readily and 

7 quickly convertible into transport and supply vessels in a time of na8 tional emergency; 

9 ‘‘(2) ownership and operation of the fleet by citizens of the United 

10 States insofar as practicable; 

11 ‘‘(3) vessels designed to afford the best and most complete protection 

12 for passengers and crew against fire and all marine perils; and 

13 ‘‘(4) an efficient capacity for building and repairing vessels in the 

14 United States with an adequate number of skilled personnel to provide 

15 an adequate mobilization base. 

16 ‘‘(b) COOPERATION WITH SECRETARY OF NAVY.—In carrying out sub17 section (a)(1), the Secretary of Transportation shall cooperate closely with 

18 the Secretary of the Navy as to national defense requirements. 

19 ‘‘§ 50103. Determinations of essential services 

20 ‘‘(a) ESSENTIAL SERVICES, ROUTES, AND LINES.— 

21 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall inves22 tigate, determine, and keep current records of the ocean services, 

23 routes, and lines from ports in the United States, or in the territories 

24 and possessions of the United States, to foreign markets, which the 

25 Secretary determines to be essential for the promotion, development, 

26 expansion, and maintenance of the foreign commerce of the United 

27 States. In making such a determination, the Secretary shall consider 

28 and give due weight to— 

29 ‘‘(A) the cost of maintaining each line; 

30 ‘‘(B) the probability that a line cannot be maintained except at 

31 a heavy loss disproportionate to the benefit to foreign trade; 

32 ‘‘(C) the number of voyages and types of vessels that should be 

33 employed in a line; 

34 ‘‘(D) the intangible benefit of maintaining a line to the foreign 

35 commerce of the United States, the national defense, and other 

36 national requirements; and 

37 ‘‘(E) any other facts and conditions a prudent business person 

38 would consider when dealing with the person’s own business. 

39 ‘‘(2) SAINT LAWRENCE SEAWAY.—For purposes of paragraph (1), 

40 the Secretary shall establish services, routes, and lines that reflect the 

41 seasonal closing of the Saint Lawrence Seaway and provide for alterVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00087 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 nate routing of vessels through a different range of ports during that 

2 closing to maintain continuity of service on a year-round basis. 

3 ‘‘(b) BULK CARGO CARRYING SERVICES.—The Secretary shall inves4 tigate, determine, and keep current records of the bulk cargo carrying serv5 ices that should be provided by vessels of the United States (whether or not 

6 operating on particular services, routes, or lines) for the promotion, develop7 ment, expansion, and maintenance of the foreign commerce of the United 

8 States and the national defense or other national requirements. 

9 ‘‘(c) TYPES OF VESSELS.—The Secretary shall investigate, determine, 

10 and keep current records of the type, size, speed, method of propulsion, and 

11 other requirements of the vessels, including express-liner or super-liner ves12 sels, that should be employed in— 

13 ‘‘(1) the services, routes, or lines described in subsection (a), and the 

14 frequency and regularity of the voyages of the vessels, with a view to 

15 furnishing adequate, regular, certain, and permanent service; and 

16 ‘‘(2) the bulk cargo carrying services described in subsection (b). 

17 ‘‘§ 50104. Studies of general maritime problems 

18 ‘‘The Secretary of Transportation shall study all maritime problems aris19 ing in carrying out the policy in section 50101 of this title. 

20 ‘‘§ 50105. Studies and cooperation relating to the construc21 tion of vessels 

22 ‘‘(a) RELATIVE COSTS AND NEW DESIGNS.—The Secretary of Transpor23 tation shall investigate, determine, and keep current records of— 

24 ‘‘(1) the relative cost of construction of comparable vessels in the 

25 United States and in foreign countries; and 

26 ‘‘(2) new designs, new methods of construction, and new types of 

27 equipment for vessels. 

28 ‘‘(b) RULES, CLASSIFICATIONS, AND RATINGS.—The Secretary shall ex29 amine the rules under which vessels are constructed abroad and in the 

30 United States and the methods of classifying and rating the vessels. 

31 ‘‘(c) COLLABORATION WITH OWNERS AND BUILDERS.—The Secretary 

32 shall collaborate with vessel owners and shipbuilders in developing plans for 

33 the economical construction of vessels and their propelling machinery, of 

34 most modern economical types, giving thorough consideration to all well-rec35 ognized means of propulsion and taking into account the benefits from 

36 standardized production where practicable and desirable. 

37 ‘‘(d) EXPRESS-LINER AND SUPER-LINER VESSELS.—The Secretary shall 

38 study and cooperate with vessel owners in devising means by which there 

39 may be constructed, by or with the aid of the United States Government, 

40 express-liner or super-liner vessels comparable to those of other nations, esVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00088 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 pecially with a view to their use in a national emergency, and the use of 

2 transoceanic aircraft service in connection with or in lieu of those vessels. 

3 ‘‘§ 50106. Studies on the operation of vessels 

4 ‘‘(a) RELATIVE COSTS.—The Secretary of Transportation shall inves5 tigate, determine, and keep current records of the relative cost of marine 

6 insurance, maintenance, repairs, wages and subsistence of officers and 

7 crews, and all other items of expense, in the operation of comparable vessels 

8 under the laws and regulations of the United States and those of the foreign 

9 countries whose vessels are substantial competitors of American vessels. 

10 ‘‘(b) SHIPYARDS.—The Secretary shall investigate, determine, and keep 

11 current records of the number, location, and efficiency of shipyards in the 

12 United States. 

13 ‘‘(c) NAVIGATION LAWS.—The Secretary shall examine the navigation 

14 laws and regulations of the United States and make such recommendations 

15 to Congress as the Secretary considers proper for the amendment, improve16 ment, and revision of those laws and for the development of the merchant 

17 marine of the United States. 

18 ‘‘§ 50107. Studies on marine insurance 

19 ‘‘The Secretary of Transportation shall— 

20 ‘‘(1) examine into the subject of marine insurance, the number of 

21 companies in the United States, domestic and foreign, engaging in ma22 rine insurance, the extent of the insurance on hulls and cargoes placed 

23 or written in the United States, and the extent of reinsurance of Amer24 ican maritime risks in foreign companies; and 

25 ‘‘(2) ascertain what steps may be necessary to develop an ample ma26 rine insurance system as an aid in the development of the merchant 

27 marine of the United States. 

28 ‘‘§ 50108. Studies on cargo carriage and cargo containers 

29 ‘‘(a) STUDIES.—The Secretary of Transportation shall study— 

30 ‘‘(1) the methods of encouraging the development and implementa31 tion of new concepts for the carriage of cargo in the domestic and for32 eign commerce of the United States; and 

33 ‘‘(2) the economic and technological aspects of the use of cargo con34 tainers as a method of carrying out the policy in section 50101 of this 

35 title. 

36 ‘‘(b) RESTRICTION.—In carrying out subsection (a) and the policy in sec37 tion 50101 of this title, the United States Government may not give pref38 erence as between carriers based on the length, height, or width of cargo 

39 containers or the length, height, or width of cargo container cells. This re40 striction applies to all existing container vessels and any container vessel to 

41 be constructed or 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 

4 the governmental aid and subsidies granted by foreign governments to their 

5 merchant marine. 

6 ‘‘(b) LAWS APPLICABLE TO AIRCRAFT.—The Secretary shall investigate, 

7 determine, and keep current records of the provisions of law relating to 

8 shipping that should be made applicable to aircraft engaged in foreign com9 merce to further the policy in section 50101 of this title, and any appro10 priate legislation in this regard. 

11 ‘‘(c) AID FOR COTTON, COAL, LUMBER, AND CEMENT.—The Secretary 

12 shall investigate, determine, and keep current records of the advisability of 

13 enactment of suitable legislation authorizing the Secretary, in an economic 

14 or commercial emergency, to aid farmers and producers of cotton, coal, lum15 ber, and cement in any section of the United States in the transportation 

16 and landing of their products in any foreign port, which products can be 

17 carried in dry-cargo vessels by reducing rates, by supplying additional ton18 nage to any American operator, or by operation of vessels directly by the 

19 Secretary, until the Secretary considers the special rate reduction and oper20 ation unnecessary 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 

26 make studies and reports to Congress on— 

27 ‘‘(1) the scrapping or removal from service of old or obsolete mer28 chant tonnage owned by the United States Government or in use in 

29 the merchant 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 

34 of 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 

41 of the United States. 


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1 ‘‘(b) INDUCEMENTS TO IMPORTERS AND EXPORTERS.—The Secretary 

2 shall study and cooperate with vessel owners in devising means by which 

3 the importers and exporters of the United States can be induced to give 

4 preference to vessels of the United States. 

5 ‘‘(c) LIAISON WITH AGENCIES AND ORGANIZATIONS.—The Secretary 

6 shall establish and maintain liaison with such other agencies of the United 

7 States Government, and with such representative trade organizations 

8 throughout the United States, as may be concerned, directly or indirectly, 

9 with any movement of commodities in the waterborne export and import for10 eign commerce of the United States, for the purpose of securing preference 

11 to vessels of the 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 

14 of Transportation shall submit a report to Congress. The report shall in15 clude, with respect to activities of the Secretary under this subtitle, the re16 sults of investigations, a summary of transactions, a statement of all ex17 penditures and receipts, the purposes for which all expenditures were made, 

18 and any recommendations for legislation. 

19 ‘‘(b) ADMINISTERED AND OVERSIGHT FUNDS.—The Secretary, in the re20 port under subsection (a) and in the annual budget estimate for the Mari21 time Administration submitted to Congress, shall state separately the 

22 amount, source, intended use, and nature of any funds (other than funds 

23 appropriated to the Administration or to the Secretary of Transportation 

24 for use by the Administration) administered, or subject to oversight, by the 

25 Administration. 

26 ‘‘(c) ADDITIONAL RECOMMENDATIONS FOR LEGISLATION.—The Sec27 retary, from time to time, shall make recommendations to Congress for leg28 islation the Secretary considers necessary to better achieve the objectives 

29 and policy of section 50101 of this title. 

30 ‘‘§ 50112. National Maritime Enhancement Institutes 

31 ‘‘(a) DESIGNATION.—The Secretary of Transportation may designate Na32 tional Maritime Enhancement Institutes. 

33 ‘‘(b) ACTIVITIES.—Activities undertaken by an institute may include— 

34 ‘‘(1) conducting research about methods to improve the performance 

35 of maritime industries; 

36 ‘‘(2) enhancing the competitiveness of domestic maritime industries 

37 in international trade; 

38 ‘‘(3) forecasting trends in maritime trade; 

39 ‘‘(4) assessing technological advancements; 

40 ‘‘(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 designa9 tion as a National Maritime Enhancement Institute shall submit an applica10 tion under regulations prescribed by the Secretary. 

11 ‘‘(d) CRITERIA FOR DESIGNATION.—The Secretary shall designate an in12 stitute 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 indus20 tries. 

21 ‘‘(4) The demonstrated ability of the applicant to assemble and 

22 evaluate pertinent information from national and international sources 

23 and to disseminate results of maritime industry research and edu24 cational programs through a continuing education program. 

25 ‘‘(5) The qualification of the applicant as a nonprofit institution of 

26 higher learning. 

27 ‘‘(e) FINANCIAL AWARDS.—The Secretary may make awards on an equal 

28 matching basis to an institute designated under subsection (a) from 

29 amounts appropriated. The aggregate annual amount of the Federal share 

30 of the awards by the Secretary may not exceed $500,000. 

31 ‘‘(f) UNIVERSITY TRANSPORTATION RESEARCH FUNDS.—The Secretary 

32 may make a grant under section 5505 of title 49 to an institute designated 

33 under subsection (a) for maritime and maritime intermodal research under 

34 that section as if the institute were a university transportation center. In 

35 making a grant, the Secretary, through the Research and Innovative Tech36 nology Administration, shall advise the Maritime Administration on the 

37 availability of funds for the grants and consult with the Administration on 

38 making the grants. 


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1 ‘‘§ 50113. Use and performance reports by operators of ves2 sels 

3 ‘‘(a) FILING REQUIREMENT.—The Secretary of Transportation by regula4 tion may require the operator of a vessel in the waterborne foreign com5 merce of the United States to file such report, account, record, or memo6 randum on the use and performance of the vessel as the Secretary considers 

7 desirable to assist in carrying out this subtitle. The report, account, record, 

8 or memorandum shall be signed and verified, and be filed at the times and 

9 in the manner, as provided by regulation. 

10 ‘‘(b) CIVIL PENALTY.—An operator not filing a report, account, record, 

11 or memorandum required by the Secretary under this section is liable to the 

12 United States Government for a civil penalty of $50 for each day of the 

13 violation. A penalty imposed under this section on the operator of a vessel 

14 constitutes a lien on the vessel involved in the violation. A civil action in 

15 rem to enforce the lien may be brought in the district court of the United 

16 States for any district in which the vessel is found. The Secretary may remit 

17 or mitigate any penalty imposed under this section. 

18 ‘‘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. 

19 ‘‘§ 50301. Vessel Operations Revolving Fund 

20 ‘‘(a) IN GENERAL.—There is a ‘Vessel Operations Revolving Fund’ for 

21 use by the Secretary of Transportation in carrying out duties and powers 

22 related to vessel operations, including charter, operation, maintenance, re23 pair, reconditioning, and improvement of merchant vessels under the juris24 diction of the Secretary. The Fund has a working capital of $20,000,000, 

25 to remain available until expended. 

26 ‘‘(b) RELATIONSHIP TO OTHER LAWS.—Notwithstanding any other law, 

27 rates for shipping services provided under the Fund shall be prescribed by 

28 the Secretary and the Fund shall be credited with receipts from vessel oper29 ations conducted under the Fund. Sections 1(a) and (c), 3(c), and 4 of the 

30 Act of March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294), apply 

31 to those operations and to seamen employed through general agents as em32 ployees of the United States Government. Notwithstanding any other law 

33 on the employment of persons by the Government, the seamen may be em34 ployed in accordance with customary commercial practices in the maritime 

35 industry. 

36 ‘‘(c) ADVANCEMENTS.—With the approval of the Director of the Office 

37 of Management and Budget, the Secretary may advance amounts the SecVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00093 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 retary considers necessary, but not more than 2 percent of vessel operating 

2 expenses, from the Fund to the appropriation ‘Salaries and Expenses’ in 

3 carrying out duties and powers related to vessel operations, without regard 

4 to the limitations on amounts stated in that appropriation. 

5 ‘‘(d) TRANSFERS.—The unexpended balances of working funds or of allo6 cation accounts established after January 1, 1951, for the activities pro7 vided for in subsection (a), and receipts received from those activities, may 

8 be transferred to the Fund, which shall be available for the purposes of 

9 those working funds or allocation accounts. 

10 ‘‘(e) LIMITATION.— 

11 ‘‘(1) IN GENERAL.—Amounts made available to the Secretary for 

12 maritime activities by this section or any other law may not be used 

13 to pay for a vessel described in paragraph (2) unless the compensation 

14 to be paid is computed under section 56303 of this title as that section 

15 is interpreted by the Comptroller General. 

16 ‘‘(2) APPLICABLE VESSELS.—Paragraph (1) applies to a vessel— 

17 ‘‘(A) the title to which is acquired by the Government by req18 uisition or purchase; 

19 ‘‘(B) the use of which is taken by requisition or agreement; or 

20 ‘‘(C) lost while insured by the Government. 

21 ‘‘(3) NONAPPLICABLE VESSELS.—Paragraph (1) does not apply to a 

22 vessel under a construction-differential subsidy contract. 

23 ‘‘(f) AVAILABILITY FOR ADDITIONAL PURPOSES.—The Fund is available 

24 for— 

25 ‘‘(1) necessary expenses incurred in the protection, preservation, 

26 maintenance, acquisition, or use of vessels involved in mortgage fore27 closure or forfeiture proceedings instituted by the Government, includ28 ing payment of prior claims and liens, expenses of sale, or other related 

29 charges; 

30 ‘‘(2) necessary expenses incident to the redelivery and lay-up, in the 

31 United States, of vessels chartered as of June 20, 1956, under agree32 ments not calling for their return to the Government; 

33 ‘‘(3) the activation, repair, and deactivation of merchant vessels 

34 chartered for limited emergency purposes during fiscal year 1957 under 

35 the jurisdiction of the Secretary; and 

36 ‘‘(4) payment of expenses of custody and maintenance of Govern37 ment-owned vessels not in the National Defense Reserve Fleet. 

38 ‘‘(g) EXPENSES AND RECEIPTS RELATED TO CHARTER OPERATIONS.— 

39 The Fund is available for expenses incurred in activating, repairing, and de40 activating merchant vessels chartered under the jurisdiction of the SecVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00094 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 retary. Receipts from charter operations of Government-owned vessels under 

2 the jurisdiction of the Secretary shall be credited to the Fund. 

3 ‘‘§ 50302. Port development 

4 ‘‘(a) GENERAL REQUIREMENTS.—With the objective of promoting, en5 couraging, and developing ports and transportation facilities in connection 

6 with water commerce over which the Secretary of Transportation has juris7 diction, the Secretary, in cooperation with the Secretary of the Army, 

8 shall— 

9 ‘‘(1) investigate territorial regions and zones tributary to ports, tak10 ing into consideration the economies of transportation by rail, water, 

11 and highway and the natural direction of the flow of commerce; 

12 ‘‘(2) investigate the causes of congestion of commerce at ports and 

13 applicable remedies; 

14 ‘‘(3) investigate the subject of water terminals, including the nec15 essary docks, warehouses, and equipment, to devise and suggest the 

16 types most appropriate for different locations and for the most expedi17 tious and economical transfer or interchange of passengers or property 

18 between water carriers and rail carriers; 

19 ‘‘(4) consult with communities on the appropriate location and plan 

20 of construction of wharves, piers, and water terminals; 

21 ‘‘(5) investigate the practicability and advantages of harbor, river, 

22 and port improvements in connection with foreign and coastwise trade; 

23 and 

24 ‘‘(6) investigate any other matter that may tend to promote and en25 courage the use by vessels of ports adequate to care for the freight that 

26 naturally would pass through those ports. 

27 ‘‘(b) SUBMISSION OF FINDINGS TO SURFACE TRANSPORTATION

28 BOARD.—After an investigation under subsection (a), if the Secretary of 

29 Transportation believes that the rates or practices of a rail carrier subject 

30 to the jurisdiction of the Surface Transportation Board are detrimental to 

31 the objective specified in subsection (a), or that new rates or practices, new 

32 or additional port terminal facilities, or affirmative action by a rail carrier 

33 is necessary to promote that objective, the Secretary may submit findings 

34 to the Board for action the Board considers appropriate under existing law. 

35 ‘‘§ 50303. Operating property and extending term of notes 

36 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may— 

37 ‘‘(1) operate or lease docks, wharves, piers, or real property under 

38 the Secretary’s control; and 

39 ‘‘(2) make extensions and accept renewals of— 

40 ‘‘(A) promissory notes and other evidences of indebtedness on 

41 property; and 


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1 ‘‘(B) mortgages and other contracts securing the property. 

2 ‘‘(b) TERMS OF TRANSACTIONS.—A transaction under subsection (a) 

3 shall be on terms the Secretary considers necessary to carry out the pur4 poses of this subtitle, but consistent with sound business practice. 

5 ‘‘(c) AVAILABILITY OF AMOUNTS.—Amounts received by the Secretary 

6 from a transaction under this section are available for expenditure by the 

7 Secretary as provided in this subtitle. 

8 ‘‘§ 50304. Sale and transfer of property 

9 ‘‘(a) AUTHORITY TO SELL.—The Secretary of Transportation may sell 

10 property (other than vessels transferred under section 4 of the Merchant 

11 Marine Act, 1920 (ch. 250, 41 Stat. 990)) on terms the Secretary considers 

12 appropriate. 

13 ‘‘(b) TRANSFERS FROM MILITARY TO CIVILIAN CONTROL.—When the 

14 President considers it in the interest of the United States, the President 

15 may transfer to the Secretary of Transportation possession and control of 

16 property described in the second paragraph of section 17 of the Merchant 

17 Marine Act, 1920 (ch. 250, 41 Stat. 994), as originally enacted, that is pos18 sessed and controlled by the Secretary of a military department. 

19 ‘‘(c) TRANSFERS FROM CIVILIAN TO MILITARY CONTROL.—When the 

20 President considers it necessary, the President by executive order may 

21 transfer to the Secretary of a military department possession and control 

22 of property described in section 17 of the Merchant Marine Act, 1920 (ch. 

23 250, 41 Stat. 994), as originally enacted, that is possessed and controlled 

24 by the Secretary of Transportation. The President’s order shall state the 

25 need for the transfer and the period of the need. When the President de26 cides that the need has ended, the possession and control shall revert to the 

27 Secretary of Transportation. The property may not be sold except as pro28 vided by law. 

29 ‘‘§ 50305. Appointment of trustee or receiver and operation 

30 of vessels 

31 ‘‘(a) APPOINTMENT OF TRUSTEES AND RECEIVERS.— 

32 ‘‘(1) APPOINTMENT OF SECRETARY.—In a proceeding in a court of 

33 the United States in which a trustee or receiver may be appointed for 

34 a corporation operating a vessel of United States registry between the 

35 United States and a foreign country, on which the United States Gov36 ernment holds a mortgage, the court may appoint the Secretary of 

37 Transportation as the sole trustee or receiver (subject to the direction 

38 of the court) if— 

39 ‘‘(A) the court finds that the appointment will— 

40 ‘‘(i) inure to the advantage of the estate and the parties 

41 in interest; and 


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1 ‘‘(ii) tend to carry out the purposes of this subtitle; and 

2 ‘‘(B) the Secretary expressly consents to the appointment. 

3 ‘‘(2) APPOINTMENT OF OTHER PERSON.—The appointment of an4 other person as trustee or receiver without a hearing becomes effective 

5 when ratified by the Secretary, but the Secretary may demand a hear6 ing. 

7 ‘‘(b) OPERATION OF VESSELS.— 

8 ‘‘(1) IN GENERAL.—If the court is unwilling to allow the trustee or 

9 receiver to operate the vessel in foreign commerce without financial aid 

10 from the Government pending termination of the proceeding, and the 

11 Secretary certifies to the court that the continued operation of the ves12 sel is essential to the foreign commerce of the United States and is rea13 sonably calculated to carry out the purposes of this subtitle, the court 

14 may allow the Secretary to operate the vessel, either directly or through 

15 a managing agent or operator employed by the Secretary. The Sec16 retary must agree to comply with terms imposed by the court sufficient 

17 to protect the parties in interest. The Secretary also must agree to pay 

18 all operating losses resulting from the operation. The operation shall 

19 be for the account of the trustee or receiver. 

20 ‘‘(2) PAYMENT OF OPERATING LOSSES AND OTHER AMOUNTS.—The 

21 Secretary has no claim against the corporation, its estate, or its assets 

22 for operating losses paid by the Secretary, but the Secretary may pay 

23 amounts for depreciation the Secretary considers reasonable and other 

24 amounts the court considers just. The payment of operating losses and 

25 the other amounts and compliance with terms imposed by the court 

26 shall be in satisfaction of any claim against the Secretary resulting 

27 from the operation of the vessel. 

28 ‘‘(3) DEEMED OPERATION BY GOVERNMENT.—A vessel operated by 

29 the Secretary under this subsection is deemed to be a vessel operated 

30 by the United States under chapter 309 of this title. 

31 ‘‘§ 50306. Requiring testimony and records in investigations 

32 ‘‘(a) IN GENERAL.—In conducting an investigation that the Secretary of 

33 Transportation considers necessary and proper to carry out this subtitle, the 

34 Secretary may administer oaths, take evidence, and subpoena persons to 

35 testify and produce documents relevant to the matter under investigation. 

36 Persons may be required to attend or produce documents from any place 

37 in the United States at any designated place of hearing. 

38 ‘‘(b) FEES AND MILEAGE.—Persons subpoenaed by the Secretary under 

39 subsection (a) shall be paid the same fees and mileage paid to witnesses in 

40 the courts of the United States. 


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1 ‘‘(c) ENFORCEMENT OF SUBPOENAS.—If a person disobeys a subpoena 

2 issued under subsection (a), the Secretary may seek an order enforcing the 

3 subpoena from the district court of the United States for the district in 

4 which the person resides or does business. Process may be served in the ju5 dicial district in which the person resides or is found. The court may issue 

6 an order to obey the subpoena and punish a refusal to obey as a contempt 

7 of court. 

8 ‘‘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. 

9 ‘‘§ 50501. Entities deemed citizens of the United States 

10 ‘‘(a) IN GENERAL.—In this subtitle, a corporation, partnership, or asso11 ciation is deemed to be a citizen of the United States only if the controlling 

12 interest is owned by citizens of the United States. However, if the corpora13 tion, partnership, or association is operating a vessel in the coastwise trade, 

14 at least 75 percent of the interest must be owned by citizens of the United 

15 States. 

16 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CORPORATIONS.—In this subtitle, 

17 a corporation is deemed to be a citizen of the United States only if, in addi18 tion to satisfying the requirements in subsection (a)— 

19 ‘‘(1) it is incorporated under the laws of the United States or a 

20 State; 

21 ‘‘(2) its chief executive officer, by whatever title, and the chairman 

22 of its board of directors are citizens of the United States; and 

23 ‘‘(3) no more of its directors are noncitizens than a minority of the 

24 number necessary to constitute a quorum. 

25 ‘‘(c) DETERMINATION OF CONTROLLING CORPORATE INTEREST.—The 

26 controlling interest in a corporation is owned by citizens of the United 

27 States under subsection (a) only if— 

28 ‘‘(1) title to the majority of the stock in the corporation is vested 

29 in citizens of the United States free from any trust or fiduciary obliga30 tion in favor of a person not a citizen of the United States; 

31 ‘‘(2) the majority of the voting power in the corporation is vested 

32 in citizens of the United States; 

33 ‘‘(3) there is no contract or understanding by which the majority of 

34 the voting power in the corporation may be exercised, directly or indi35 rectly, in behalf of a person not a citizen of the United States; and 

36 ‘‘(4) there is no other means by which control of the corporation is 

37 given to or permitted to be exercised by a person not a citizen of the 

38 United States. 


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1 ‘‘(d) DETERMINATION OF 75 PERCENT CORPORATE INTEREST.—At least 

2 75 percent of the interest in a corporation is owned by citizens of the 

3 United States under subsection (a) only if— 

4 ‘‘(1) title to at least 75 percent of the stock in the corporation is 

5 vested in citizens of the United States free from any trust or fiduciary 

6 obligation in favor of a person not a citizen of the United States; 

7 ‘‘(2) at least 75 percent of the voting power in the corporation is 

8 vested in citizens of the United States; 

9 ‘‘(3) there is no contract or understanding by which more than 25 

10 percent of the voting power in the corporation may be exercised, di11 rectly or indirectly, in behalf of a person not a citizen of the United 

12 States; and 

13 ‘‘(4) there is no other means by which control of more than 25 per14 cent of any interest in the corporation is given to or permitted to be 

15 exercised by a person not a citizen of the United States. 

16 ‘‘§ 50502. Applicability to receivers, trustees, successors, and 

17 assigns 

18 ‘‘This subtitle applies to receivers, trustees, successors, and assigns of any 

19 person to whom this subtitle applies. 

20 ‘‘§ 50503. Oceanographic research vessels 

21 ‘‘An oceanographic research vessel (as defined in section 2101 of this 

22 title) is deemed not to be engaged in trade or commerce. 

23 ‘‘§ 50504. Sailing school vessels 

24 ‘‘(a) DEFINITIONS.—In this section, the terms ‘sailing school instructor’, 

25 ‘sailing school student’, and ‘sailing school vessel’ have the meaning given 

26 those terms in section 2101 of this title. 

27 ‘‘(b) NOT SEAMEN.—A sailing school student or sailing school instructor 

28 is deemed not to be a seaman under— 

29 ‘‘(1) parts B, F, and G of subtitle II of this title; or 

30 ‘‘(2) the maritime law doctrines of maintenance and cure or war31 ranty of seaworthiness. 

32 ‘‘(c) NOT MERCHANT VESSEL OR ENGAGED IN TRADE OR COMMERCE.— 

33 A sailing school vessel is deemed not to be— 

34 ‘‘(1) a merchant vessel under section 11101(a)–(c) of this title; or 

35 ‘‘(2) a vessel engaged in trade or commerce. 

36 ‘‘(d) EVIDENCE OF FINANCIAL RESPONSIBILITY.—The owner or 

37 charterer of a sailing school vessel shall maintain evidence of financial re38 sponsibility to meet liability for death or injury to sailing school students 

39 and sailing school instructors on a voyage on the vessel. The amount of fi40 nancial responsibility shall be at least $50,000 for each student and instrucVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00099 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 tor. Financial responsibility under this subsection may be evidenced by in2 surance or other adequate financial resources. 

3 ‘‘PART B—MERCHANT MARINE SERVICE

4 ‘‘CHAPTER 511—GENERAL 

‘‘Sec. 

‘‘51101. Policy. 

‘‘51102. Definitions. 

‘‘51103. General authority of Secretary of Transportation. 

‘‘51104. General authority of Secretary of the Navy. 

5 ‘‘§ 51101. Policy 

6 ‘‘It is the policy of the United States that merchant marine vessels of the 

7 United States should be operated by highly trained and efficient citizens of 

8 the United States and that the United States Navy and the merchant ma9 rine of the United States should work closely together to promote the max10 imum integration of the total seapower forces of the United States. 

11 ‘‘§ 51102. Definitions 

12 ‘‘In this part: 

13 ‘‘(1) ACADEMY.—The term ‘Academy’ means the United States Mer14 chant Marine Academy located at Kings Point, New York, and main15 tained under chapter 513 of this title. 

16 ‘‘(2) COST OF EDUCATION PROVIDED.—The term ‘cost of education 

17 provided’ means the financial costs incurred by the United States Gov18 ernment for providing training or financial assistance to students at 

19 the Academy and the State maritime academies, including direct finan20 cial assistance, room, board, classroom academics, and other training 

21 activities. 

22 ‘‘(3) MERCHANT MARINE OFFICER.—The term ‘merchant marine of23 ficer’ means an individual issued a license by the Coast Guard author24 izing service as— 

25 ‘‘(A) a master, mate, or pilot on a documented vessel that— 

26 ‘‘(i) is of at least 1,000 gross tons as measured under sec27 tion 14502 of this title or an alternate tonnage measured 

28 under section 14302 of this title as prescribed by the Sec29 retary under section 14104 of this title; and 

30 ‘‘(ii) operates on the oceans or the Great Lakes; or 

31 ‘‘(B) an engineer officer on a documented vessel propelled by 

32 machinery of at least 4,000 horsepower. 

33 ‘‘(4) STATE MARITIME ACADEMY.—The term ‘State maritime acad34 emy’ means— 

35 ‘‘(A) a State maritime academy or college sponsored by a State 

36 and assisted under chapter 515 of this title; and 

37 ‘‘(B) a regional maritime academy or college sponsored by a 

38 group of States and assisted under chapter 515 of this title. 


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1 ‘‘§ 51103. General authority of Secretary of Transportation 

2 ‘‘(a) EDUCATION AND TRAINING.—The Secretary of Transportation may 

3 provide for the education and training of citizens of the United States for 

4 the safe and efficient operation of the merchant marine of the United States 

5 at all times, including operation as a naval and military auxiliary in time 

6 of war or national emergency. 

7 ‘‘(b) SURPLUS PROPERTY FOR INSTRUCTIONAL PURPOSES.— 

8 ‘‘(1) IN GENERAL.—The Secretary may cooperate with and assist the 

9 institutions named in paragraph (2) by making vessels, shipboard 

10 equipment, and other marine equipment, owned by the United States 

11 Government and determined to be excess or surplus, available to those 

12 institutions for instructional purposes, by gift, loan, sale, lease, or char13 ter on terms the Secretary considers appropriate. 

14 ‘‘(2) INSTITUTIONS.—The institutions referred to in paragraph (1) 

15 are— 

16 ‘‘(A) the United States Merchant Marine Academy; 

17 ‘‘(B) a State maritime academy; and 

18 ‘‘(C) a nonprofit training institution jointly approved by the 

19 Secretary of Transportation and the Secretary of the department 

20 in which the Coast Guard is operating as offering training courses 

21 that meet Federal regulations for maritime training. 

22 ‘‘(c) ASSISTANCE FROM OTHER AGENCIES.— 

23 ‘‘(1) IN GENERAL.—The Secretary of Transportation may secure di24 rectly from an agency, on a reimbursable basis, information, facilities, 

25 and equipment necessary to carry out this part. 

26 ‘‘(2) DETAILING PERSONNEL.—At the request of the Secretary, the 

27 head of an agency (including a military department) may detail, on a 

28 reimbursable basis, personnel from the agency to the Secretary to as29 sist in carrying out this part. 

30 ‘‘(d) ACADEMY PERSONNEL.—To carry out this part, the Secretary 

31 may— 

32 ‘‘(1) employ an individual as a professor, lecturer, or instructor at 

33 the Academy, without regard to the provisions of title 5 governing ap34 pointments in the competitive service; and 

35 ‘‘(2) pay the individual without regard to chapter 51 and subchapter 

36 III of chapter 53 of title 5. 

37 ‘‘§ 51104. General authority of Secretary of the Navy 

38 ‘‘The Secretary of the Navy, in cooperation with the Maritime Adminis39 trator and the head of each State maritime academy, shall ensure that— 

40 ‘‘(1) the training of future merchant marine officers at the United 

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1 cludes programs for naval science training in the operation of merchant 

2 vessels as a naval and military auxiliary; and 

3 ‘‘(2) naval officer training programs for future officers, insofar as 

4 possible, are maintained at designated maritime academies consistent 

5 with Navy standards and needs. 

6 ‘‘CHAPTER 513—UNITED STATES MERCHANT MARINE 

7 ACADEMY 

‘‘Sec. 

‘‘51301. Maintenance of the Academy. 

‘‘51302. Nomination and competitive appointment of cadets. 

‘‘51303. Non-competitive appointments. 

‘‘51304. Additional appointments from particular areas. 

‘‘51305. Prohibited basis for appointment. 

‘‘51306. Cadet commitment agreements. 

‘‘51307. Places of training. 

‘‘51308. Uniforms, textbooks, and transportation allowances. 

‘‘51309. Academic degree. 

‘‘51310. Deferment of service obligation under cadet commitment agreements. 

‘‘51311. Midshipman status in the Naval Reserve. 

‘‘51312. Board of Visitors. 

‘‘51313. Advisory Board. 

‘‘51314. Limitation on charges and fees for attendance. 

8 ‘‘§ 51301. Maintenance of the Academy 

9 ‘‘The Secretary of Transportation shall maintain the United States Mer10 chant Marine Academy to provide instruction to individuals to prepare them 

11 for service in the merchant marine of the United States. 

12 ‘‘§ 51302. Nomination and competitive appointment of ca13 dets 

14 ‘‘(a) REQUIREMENTS.—An individual may be nominated for a competitive 

15 appointment as a cadet at the United States Merchant Marine Academy 

16 only if the individual— 

17 ‘‘(1) is a citizen or national of the United States; and 

18 ‘‘(2) meets the minimum requirements that the Secretary of Trans19 portation shall establish. 

20 ‘‘(b) NOMINATORS.—Nominations for competitive appointments for the 

21 positions allocated under subsection (c) may be made as follows: 

22 ‘‘(1) A Senator may nominate residents of the State represented by 

23 that Senator. 

24 ‘‘(2) A Member of the House of Representatives may nominate resi25 dents of the State in which the congressional district represented by 

26 that Member is located. 

27 ‘‘(3) A Delegate to the House of Representatives from the District 

28 of Columbia, the Virgin Islands, Guam, or American Samoa may nomi29 nate residents of the jurisdiction represented by that Delegate. 

30 ‘‘(4) The Resident Commissioner to the United States from Puerto 

31 Rico may nominate residents of Puerto Rico. 


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1 ‘‘(5) The Governor of the Northern Mariana Islands may nominate 

2 residents of the Northern Mariana Islands. 

3 ‘‘(6) The Panama Canal Commission may nominate— 

4 ‘‘(A) residents, or sons or daughters of residents, of an area or 

5 installation in Panama and made available to the United States 

6 under the Panama Canal Treaty of 1977, the agreements relating 

7 to and implementing that Treaty, signed September 7, 1977, and 

8 the Agreement Between the United States of America and the Re9 public of Panama Concerning Air Traffic Control and Related 

10 Services, concluded January 8, 1979; and 

11 ‘‘(B) sons or daughters of personnel of the United States Gov12 ernment and the Panama Canal Commission residing in Panama. 

13 ‘‘(c) ALLOCATION OF POSITIONS.—Positions for competitive appointments 

14 shall be allocated each year as follows: 

15 ‘‘(1) Positions shall be allocated for residents of each State nomi16 nated by the Members of Congress from that State in proportion to 

17 the representation in Congress from that State. 

18 ‘‘(2) Four positions shall be allocated for residents of the District 

19 of Columbia nominated by the Delegate to the House of Representa20 tives from the District of Columbia. 

21 ‘‘(3) One position each shall be allocated for residents of the Virgin 

22 Islands, Guam, and American Samoa nominated by the Delegates to 

23 the House of Representatives from the Virgin Islands, Guam, and 

24 American Samoa, respectively. 

25 ‘‘(4) One position shall be allocated for a resident of Puerto Rico 

26 nominated by the Resident Commissioner to the United States from 

27 Puerto Rico. 

28 ‘‘(5) One position shall be allocated for a resident of the Northern 

29 Mariana Islands nominated by the Governor of the Northern Mariana 

30 Islands. 

31 ‘‘(6) Two positions shall be allocated for individuals nominated by 

32 the Panama Canal Commission. 

33 ‘‘(d) COMPETITIVE SYSTEM FOR APPOINTMENT.— 

34 ‘‘(1) ESTABLISHMENT OF SYSTEM.—The Secretary shall establish a 

35 competitive system for selecting individuals nominated under subsection 

36 (b) to fill the positions allocated under subsection (c). The system must 

37 determine the relative merit of each individual based on competitive ex38 aminations, an assessment of the individual’s academic background, 

39 and other effective indicators of motivation and probability of success40 ful completion of training at the Academy. 


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1 ‘‘(2) APPOINTMENTS BY JURISDICTION.—The Secretary shall ap2 point individuals to fill the positions allocated under subsection (c) for 

3 each jurisdiction in the order of merit of the individuals nominated 

4 from that jurisdiction. 

5 ‘‘(3) REMAINING UNFILLED POSITIONS.—If positions remain unfilled 

6 after the appointments are made under paragraph (2), the Secretary 

7 shall appoint individuals to fill the positions in the order of merit of 

8 the remaining individuals nominated from all jurisdictions. 

9 ‘‘§ 51303. Non-competitive appointments 

10 ‘‘The Secretary of Transportation may appoint each year without com11 petition as cadets at the United States Merchant Marine Academy not more 

12 than 40 qualified individuals with qualities the Secretary considers to be of 

13 special value to the Academy. In making these appointments, the Secretary 

14 shall try to achieve a national demographic balance at the Academy. 

15 ‘‘§ 51304. Additional appointments from particular areas 

16 ‘‘(a) OTHER COUNTRIES IN WESTERN HEMISPHERE.—The President 

17 may appoint individuals from countries in the Western Hemisphere other 

18 than the United States to receive instruction at the United States Merchant 

19 Marine Academy. Not more than 12 individuals may receive instruction 

20 under this subsection at the same time, and not more than 2 individuals 

21 from the same country may receive instruction under this subsection at the 

22 same time. 

23 ‘‘(b) OTHER COUNTRIES GENERALLY.— 

24 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap25 proval of the Secretary of State, may appoint individuals from coun26 tries other than the United States to receive instruction at the Acad27 emy. Not more than 30 individuals may receive instruction under this 

28 subsection at the same time. 

29 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall en30 sure that the country from which an individual comes under this sub31 section will reimburse the Secretary for the cost (as determined by the 

32 Secretary) of the instruction and allowances received by the individual. 

33 ‘‘(c) PANAMA.— 

34 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap35 proval of the Secretary of State, may appoint individuals from Panama 

36 to receive instruction at the Academy. Individuals appointed under this 

37 subsection are in addition to those appointed under any other provision 

38 of this chapter. 

39 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall be 

40 reimbursed for the cost (as determined by the Secretary) of the instrucVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00104 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 tion and allowances received by an individual appointed under this sub2 section. 

3 ‘‘(d) ALLOWANCES AND REGULATIONS.—Individuals receiving instruction 

4 under this section are entitled to the same allowances and are subject to 

5 the same regulations on admission, attendance, discipline, resignation, dis6 charge, dismissal, and graduation, as cadets at the Academy appointed from 

7 the United States. 

8 ‘‘§ 51305. Prohibited basis for appointment 

9 ‘‘Preference may not be given to an individual for appointment as a cadet 

10 at the United States Merchant Marine Academy because one or more mem11 bers of the individual’s immediate family are alumni of the Academy. 

12 ‘‘§ 51306. Cadet commitment agreements 

13 ‘‘(a) AGREEMENT REQUIREMENTS.—A citizen of the United States ap14 pointed as a cadet at the United States Merchant Marine Academy must 

15 sign, as a condition of the appointment, an agreement to— 

16 ‘‘(1) complete the course of instruction at the Academy; 

17 ‘‘(2) fulfill the requirements for a license as an officer in the mer18 chant marine of the United States before graduation from the Acad19 emy; 

20 ‘‘(3) maintain a valid license as an officer in the merchant marine 

21 of the United States for at least 6 years after graduation from the 

22 Academy, accompanied by the appropriate national and international 

23 endorsements and certification required by the Coast Guard for service 

24 aboard vessels on domestic and international voyages; 

25 ‘‘(4) apply for, and accept if tendered, an appointment as a commis26 sioned officer in the Naval Reserve (including the Merchant Marine Re27 serve, Naval Reserve), the Coast Guard Reserve, or any other reserve 

28 unit of an armed force of the United States, and, if tendered the ap29 pointment, to serve for at least 6 years after graduation from the Acad30 emy; 

31 ‘‘(5) serve the foreign and domestic commerce and the national de32 fense of the United States for at least 5 years after graduation from 

33 the Academy— 

34 ‘‘(A) as a merchant marine officer on a documented vessel or 

35 a vessel owned and operated by the United States Government or 

36 by a State; 

37 ‘‘(B) as an employee in a United States maritime-related indus38 try, profession, or marine science (as determined by the Secretary 

39 of Transportation), if the Secretary determines that service under 

40 subparagraph (A) is not available to the individual; 


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1 ‘‘(C) as a commissioned officer on active duty in an armed force 

2 of the United States, as a commissioned officer in the National 

3 Oceanic and Atmospheric Administration, or in other maritime-re4 lated Federal employment which serves the national security inter5 ests of the United States, as determined by the Secretary; or 

6 ‘‘(D) by a combination of the service alternatives referred to in 

7 subparagraphs (A)–(C); and 

8 ‘‘(6) report to the Secretary on compliance with this subsection. 

9 ‘‘(b) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

10 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

11 that an individual who has attended the Academy for at least 2 years 

12 has failed to fulfill the part of the agreement described in subsection 

13 (a)(1), the individual may be ordered by the Secretary of Defense to 

14 serve on active duty in one of the armed forces of the United States 

15 for a period of not more than 2 years. In cases of hardship as deter16 mined by the Secretary of Transportation, the Secretary of Transpor17 tation may waive this paragraph in whole or in part. 

18 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or 

19 unwilling to order an individual to serve on active duty under para20 graph (1), or if the Secretary of Transportation determines that reim21 bursement of the cost of education provided would better serve the in22 terests of the United States, the Secretary of Transportation may re23 cover from the individual the cost of education provided by the Govern24 ment. 

25 ‘‘(c) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

26 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

27 that an individual has failed to fulfill any part of the agreement de28 scribed in subsection (a)(2)–(6), the individual may be ordered to serve 

29 on active duty for a period of at least 3 years but not more than the 

30 unexpired period (as determined by the Secretary) of the service re31 quired by subsection (a)(5). The Secretary of Transportation, in con32 sultation with the Secretary of Defense, shall determine in which serv33 ice the individual shall serve. In cases of hardship as determined by 

34 the Secretary of Transportation, the Secretary of Transportation may 

35 waive this paragraph in whole or in part. 

36 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or 

37 unwilling to order an individual to serve on active duty under para38 graph (1), or if the Secretary of Transportation determines that reim39 bursement of the cost of education provided would better serve the in40 terests of the United States, the Secretary of Transportation may re41 cover from the individual the cost of education provided. The Secretary 


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1 may reduce the amount to be recovered to reflect partial performance 

2 of service obligations and other factors the Secretary determines merit 

3 a reduction. 

4 ‘‘(d) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost 

5 of education provided by the Government under a commitment agreement 

6 under this section, the Secretary of Transportation may— 

7 ‘‘(1) request the Attorney General to bring a civil action against the 

8 individual; and 

9 ‘‘(2) make use of the Federal debt collection procedures in chapter 

10 176 of title 28 or other applicable administrative remedies. 

11 ‘‘§ 51307. Places of training 

12 ‘‘The Secretary of Transportation may provide for the training of cadets 

13 at the United States Merchant Marine Academy— 

14 ‘‘(1) on vessels owned or subsidized by the United States Govern15 ment; 

16 ‘‘(2) on other documented vessels, with the permission of the owner; 

17 and 

18 ‘‘(3) in shipyards or plants and with industrial or educational organi19 zations. 

20 ‘‘§ 51308. Uniforms, textbooks, and transportation allow21 ances 

22 ‘‘The Secretary of Transportation shall provide cadets at the United 

23 States Merchant Marine Academy— 

24 ‘‘(1) all required uniforms and textbooks; and 

25 ‘‘(2) allowances for transportation (including reimbursement of trav26 eling expenses) when traveling under orders as a cadet. 

27 ‘‘§ 51309. Academic degree 

28 ‘‘(a) BACHELOR’S DEGREE.— 

29 ‘‘(1) IN GENERAL.—The Superintendent of the United States Mer30 chant Marine Academy may confer the degree of bachelor of science 

31 on an individual who— 

32 ‘‘(A) has met the conditions prescribed by the Secretary of 

33 Transportation; and 

34 ‘‘(B) if a citizen of the United States, has passed the examina35 tion for a merchant marine officer’s license. 

36 ‘‘(2) EFFECT OF PHYSICAL DISQUALIFICATION.—An individual not 

37 allowed to take the examination for a merchant marine officer’s license 

38 only because of physical disqualification may not be denied a degree for 

39 not taking the examination. 

40 ‘‘(b) MASTER’S DEGREE.—The Superintendent of the Academy may con41 fer a master’s degree on an individual who has met the conditions preVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00107 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 scribed by the Secretary. A master’s degree program may be funded 

2 through non-appropriated funds. To maintain the appropriate academic 

3 standards, the program shall be accredited by the appropriate accreditation 

4 body. The Secretary may prescribe regulations necessary to administer such 

5 a program. 

6 ‘‘(c) GRADUATION NOT ENTITLEMENT TO HOLD LICENSE.—Graduation 

7 from the Academy does not entitle an individual to hold a license author8 izing service on a merchant vessel. 

9 ‘‘§ 51310. Deferment of service obligation under cadet com10 mitment agreements 

11 ‘‘The Secretary of Transportation may defer the service commitment of 

12 an individual under section 51306(a)(5) of this title (as specified in the 

13 cadet commitment agreement) for not more than 2 years if the individual 

14 is engaged in a graduate course of study approved by the Secretary. How15 ever, deferment of service as a commissioned officer under section 

16 51306(a)(5) must be approved by the Secretary of the military department 

17 that has jurisdiction over the service or by the Secretary of Commerce for 

18 service with the National Oceanic and Atmospheric Administration. 

19 ‘‘§ 51311. Midshipman status in the Naval Reserve 

20 ‘‘(a) APPLICATION REQUIREMENT.—Before being appointed as a cadet at 

21 the United States Merchant Marine Academy, a citizen of the United States 

22 must agree to apply for midshipman status in the Naval Reserve (including 

23 the Merchant Marine Reserve, Naval Reserve). 

24 ‘‘(b) APPOINTMENT.— 

25 ‘‘(1) IN GENERAL.—A citizen of the United States appointed as a 

26 cadet at the Academy shall be appointed by the Secretary of the Navy 

27 as a midshipman in the Naval Reserve (including the Merchant Marine 

28 Reserve, Naval Reserve). 

29 ‘‘(2) RIGHTS AND PRIVILEGES.—The Secretary of the Navy shall 

30 provide for cadets of the Academy who are midshipmen in the United 

31 States Naval Reserve to be— 

32 ‘‘(A) issued an identification card (referred to as a ‘military ID 

33 card’); and 

34 ‘‘(B) entitled to all rights and privileges in accordance with the 

35 same eligibility criteria as apply to other members of the Ready 

36 Reserve of the reserve components of the armed forces. 

37 ‘‘(3) COORDINATION.—The Secretary of the Navy shall carry out 

38 paragraphs (1) and (2) in coordination with the Secretary of Transpor39 tation. 


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1 ‘‘§ 51312. Board of Visitors 

2 ‘‘(a) IN GENERAL.—A Board of Visitors to the United States Merchant 

3 Marine Academy shall be established, for a term of 2 years commencing at 

4 the beginning of each Congress, to visit the Academy annually on a date 

5 determined by the Secretary of Transportation and to make recommenda6 tions on the operation of the Academy. 

7 ‘‘(b) APPOINTMENT.— 

8 ‘‘(1) IN GENERAL.—The Board shall be composed of— 

9 ‘‘(A) 2 Senators appointed by the chairman of the Committee 

10 on Commerce, Science, and Transportation of the Senate; 

11 ‘‘(B) 3 Members of the House of Representatives appointed by 

12 the chairman of the Committee on Armed Services of the House 

13 of Representatives; 

14 ‘‘(C) 1 Senator appointed by the Vice President; 

15 ‘‘(D) 2 Members of the House of Representatives appointed by 

16 the Speaker of the House of Representatives; and 

17 ‘‘(E) the chairmen of the Committee on Commerce, Science, and 

18 Transportation of the Senate and the Committee on Armed Serv19 ices of the House of Representatives, as ex officio members. 

20 ‘‘(2) SUBSTITUTE APPOINTMENT.—If an appointed member of the 

21 Board is unable to visit the Academy as provided in subsection (a), an22 other individual may be appointed as a substitute in the manner pro23 vided in paragraph (1). 

24 ‘‘(c) STAFF.—The chairmen of the Committee on Commerce, Science, and 

25 Transportation of the Senate and the Committee on Armed Services of the 

26 House of Representatives may designate staff members of their committees 

27 to serve without reimbursement as staff for the Board. 

28 ‘‘(d) TRAVEL EXPENSES.—When serving away from home or regular 

29 place of business, a member of the Board or a staff member designated 

30 under subsection (c) shall be allowed travel expenses, including per diem in 

31 lieu of subsistence, as authorized by section 5703 of title 5. 

32 ‘‘§ 51313. Advisory Board 

33 ‘‘(a) IN GENERAL.—An Advisory Board to the United States Merchant 

34 Marine Academy shall be established to visit the Academy at least once dur35 ing each academic year, for the purpose of examining the course of instruc36 tion and management of the Academy and advising the Maritime Adminis37 trator and the Superintendent of the Academy. 

38 ‘‘(b) APPOINTMENT AND TERMS.—The Board shall be composed of not 

39 more than 7 individuals appointed by the Secretary of Transportation. The 

40 individuals must be distinguished in education and other fields related to 

41 the Academy. Members of the Board shall be appointed for terms of not 


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1 more than 3 years and may be reappointed. The Secretary shall designate 

2 one of the members as chairman. 

3 ‘‘(c) TRAVEL EXPENSES.—When serving away from home or regular 

4 place of business, a member of the Board shall be allowed travel expenses, 

5 including per diem in lieu of subsistence, as authorized by section 5703 of 

6 title 5. 

7 ‘‘(d) RELATIONSHIP TO OTHER LAW.—The Federal Advisory Committee 

8 Act (5 App. U.S.C.) does not apply to the Board. 

9 ‘‘§ 51314. Limitation on charges and fees for attendance 

10 ‘‘(a) PROHIBITION.—Except as provided in subsection (b), no charge or 

11 fee for tuition, room, or board for attendance at the United States Merchant 

12 Marine Academy may be imposed unless the charge or fee is specifically au13 thorized by a law enacted after October 5, 1994. 

14 ‘‘(b) EXCEPTION.—The prohibition specified in subsection (a) does not 

15 apply with respect to any item or service provided to cadets for which a 

16 charge or fee is imposed as of October 5, 1994. The Secretary of Transpor17 tation shall notify Congress of any change made by the Academy in the 

18 amount of a charge or fee authorized under this subsection. 

19 ‘‘CHAPTER 515—STATE MARITIME ACADEMY SUPPORT 

20 PROGRAM 

‘‘Sec. 

‘‘51501. General support program. 

‘‘51502. Detailing of personnel. 

‘‘51503. Regional maritime academies. 

‘‘51504. Use of training vessels. 

‘‘51505. Annual payments for maintenance and support. 

‘‘51506. Conditions to receiving payments and use of vessels. 

‘‘51507. Places of training. 

‘‘51508. Allowances for students. 

‘‘51509. Student incentive payment agreements. 

‘‘51510. Deferment of service obligation under student incentive payment agreements. 

‘‘51511. Midshipman status in the Naval Reserve. 

21 ‘‘§ 51501. General support program 

22 ‘‘(a) ASSISTANCE TO STATE MARITIME ACADEMIES.—The Secretary of 

23 Transportation shall cooperate with and assist State maritime academies in 

24 providing instruction to individuals to prepare them for service in the mer25 chant marine of the United States. 

26 ‘‘(b) COURSE DEVELOPMENT.—The Secretary shall provide to each State 

27 maritime academy guidance and assistance in developing courses on the op28 eration and maintenance of new vessels, on equipment, and on innovations 

29 being introduced to the merchant marine of the United States. 

30 ‘‘§ 51502. Detailing of personnel 

31 ‘‘At the request of the Governor of a State, the President may detail, 

32 without reimbursement, personnel of the Navy, the Coast Guard, and the 


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1 Maritime Service to a State maritime academy to serve as a superintendent, 

2 professor, lecturer, or instructor at the academy. 

3 ‘‘§ 51503. Regional maritime academies 

4 ‘‘The Governors of the States cooperating to sponsor a regional maritime 

5 academy shall designate in writing one of those States to conduct the affairs 

6 of that academy. A regional maritime academy is eligible for assistance from 

7 the United States Government on the same basis as a State maritime acad8 emy sponsored by a single State. 

9 ‘‘§ 51504. Use of training vessels 

10 ‘‘(a) APPLICATIONS TO USE VESSELS.—The Governor of a State spon11 soring a State maritime academy (or the Governor of the State designated 

12 to conduct the affairs of a regional maritime academy) may apply in writing 

13 to the Secretary of Transportation to obtain the use of a training vessel for 

14 the academy. A vessel provided under this section remains the property of 

15 the United States Government. 

16 ‘‘(b) GENERAL AUTHORITY.—Subject to subsection (c), the Secretary 

17 may provide to a State maritime academy, for use as a training vessel, a 

18 suitable vessel under the control of the Secretary or made available to the 

19 Secretary under subsection (e). If a suitable vessel is not available, the Sec20 retary may build and provide a suitable vessel. 

21 ‘‘(c) APPROVAL REQUIREMENTS.—The Secretary may provide a vessel 

22 under this section only if— 

23 ‘‘(1) an application has been made under subsection (a); 

24 ‘‘(2) the State maritime academy satisfies section 51506(a) of this 

25 title; and 

26 ‘‘(3) a suitable port will be available for the safe mooring of the ves27 sel while the academy is using the vessel. 

28 ‘‘(d) PREPARATION AND MAINTENANCE.—A vessel provided under this 

29 section shall be— 

30 ‘‘(1) repaired, reconditioned, and equipped (with all apparel, charts, 

31 books, and instruments of navigation) as necessary for use as a train32 ing vessel; and 

33 ‘‘(2) maintained in good repair by the Secretary. 

34 ‘‘(e) AGENCY VESSELS.—An agency may provide to the Secretary, for use 

35 by a State maritime academy, a vessel (including equipment) that— 

36 ‘‘(1) is suitable for training purposes; and 

37 ‘‘(2) can be provided without detriment to the service to which the 

38 vessel is assigned. 

39 ‘‘(f) FUEL COSTS.—The Secretary may pay to a State maritime academy 

40 the costs of fuel used by a vessel provided under this section while used for 

41 training. 


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1 ‘‘(g) REMOVING VESSELS FROM SERVICE AND VESSEL SHARING.—The 

2 Secretary may not— 

3 ‘‘(1) take a vessel, currently in use as a training vessel under this 

4 section, out of service to implement an alternative program (including 

5 vessel sharing) unless the vessel is incapable of being maintained in 

6 good repair as required by subsection (d); or 

7 ‘‘(2) implement a program requiring a State maritime academy to 

8 share its training vessel with another State maritime academy, except 

9 with the express consent of Congress. 

10 ‘‘§ 51505. Annual payments for maintenance and support 

11 ‘‘(a) PAYMENT AGREEMENTS.—The Secretary of Transportation may 

12 make an agreement (effective for not more than 4 years) with the following 

13 academies to provide annual payments to those academies for their mainte14 nance and support: 

15 ‘‘(1) One State maritime academy in each State that satisfies section 

16 51506(a) of this title. 

17 ‘‘(2) Each regional maritime academy that satisfies section 51506(a) 

18 of this title. 

19 ‘‘(b) PAYMENTS.— 

20 ‘‘(1) IN GENERAL.—Subject to paragraph (2), an annual payment to 

21 an academy under subsection (a) shall be at least equal to the amount 

22 given to the academy for its maintenance and support by the State in 

23 which it is located, or, for a regional maritime academy, by all States 

24 cooperating to sponsor the academy. 

25 ‘‘(2) MAXIMUM.—The amount under paragraph (1) may not be more 

26 than $25,000. However, if the academy satisfies section 51506(b) of 

27 this title, the amount shall be— 

28 ‘‘(A) $100,000 for a State maritime academy; and 

29 ‘‘(B) $200,000 for a regional maritime academy. 

30 ‘‘§ 51506. Conditions to receiving payments and use of ves31 sels 

32 ‘‘(a) GENERAL CONDITIONS.—As conditions of receiving an annual pay33 ment or the use of a vessel under this chapter, a State maritime academy 

34 must— 

35 ‘‘(1) provide courses of instruction on navigation, marine engineering 

36 (including steam and diesel propulsion), the operation and maintenance 

37 of new vessels and equipment, and innovations being introduced to the 

38 merchant marine of the United States; 

39 ‘‘(2) agree in writing to conform to the standards for courses, train40 ing facilities, admissions, and instruction that the Secretary of TransVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00112 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 portation may establish after consultation with the superintendents of 

2 State maritime academies; and 

3 ‘‘(3) agree in writing to require, as a condition for graduation, that 

4 each individual who is a citizen of the United States and who is attend5 ing the academy in a merchant marine officer preparation program 

6 pass the examination required for the issuance of a license under sec7 tion 7101 of this title. 

8 ‘‘(b) ADDITIONAL CONDITION TO PAYMENTS OF MORE THAN $25,000.— 

9 As a condition of receiving an annual payment of more than $25,000 under 

10 section 51505 of this title, a State maritime academy also must agree to 

11 admit each year a number of citizens of the United States who meet its ad12 mission requirements and reside in a State not supporting that academy. 

13 The Secretary shall determine the number of individuals to be admitted by 

14 each academy under this subsection. The number may not be more than 

15 one-third of the total number of individuals attending the academy at any 

16 time. 

17 ‘‘§ 51507. Places of training 

18 ‘‘The Secretary of Transportation may provide for the training of stu19 dents attending a State maritime academy— 

20 ‘‘(1) on vessels owned or subsidized by the United States Govern21 ment; 

22 ‘‘(2) on other documented vessels, with the permission of the owner; 

23 and 

24 ‘‘(3) in shipyards or plants and with industrial or educational organi25 zations. 

26 ‘‘§ 51508. Allowances for students 

27 ‘‘Under regulations prescribed by the Secretary of Transportation, a stu28 dent at a State maritime academy shall receive from the Secretary allow29 ances for transportation (including reimbursement of traveling expenses) 

30 when traveling under orders to receive training under section 51507 of this 

31 title. 

32 ‘‘§ 51509. Student incentive payment agreements 

33 ‘‘(a) GENERAL AUTHORITY.—If a State maritime academy has an agree34 ment with the Secretary of Transportation under section 51505 of this title, 

35 the Secretary may make an agreement with a student at the academy who 

36 is a citizen of the United States to make student incentive payments to the 

37 individual. An agreement with a student may not be effective for more than 

38 4 academic years. The Secretary shall allocate payments under this section 

39 among the various State maritime academies in an equitable manner. 

40 ‘‘(b) PAYMENTS.—Payments under an agreement under this section shall 

41 be equal to $4,000 each academic year and be paid, as prescribed by the 


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1 Secretary, while the individual is attending the academy. The payments 

2 shall be used for uniforms, books, and subsistence. 

3 ‘‘(c) MIDSHIPMAN AND ENLISTED RESERVE STATUS.—An agreement 

4 under this section shall require the student to accept midshipman and en5 listed reserve status in the Naval Reserve (including the Merchant Marine 

6 Reserve, Naval Reserve) before receiving any payments under the agree7 ment. 

8 ‘‘(d) AGREEMENT REQUIREMENTS.—An agreement under this section 

9 shall require the student to— 

10 ‘‘(1) complete the course of instruction at the academy the individual 

11 is attending; 

12 ‘‘(2) take the examination for a license as an officer in the merchant 

13 marine of the United States before graduation from the academy and 

14 fulfill the requirements for such a license within 3 months after grad15 uation from the academy; 

16 ‘‘(3) maintain a valid license as an officer in the merchant marine 

17 of the United States for at least 6 years after graduation from the 

18 academy, accompanied by the appropriate national and international 

19 endorsements and certification required by the Coast Guard for service 

20 aboard vessels on domestic and international voyages; 

21 ‘‘(4) accept, if tendered, an appointment as a commissioned officer 

22 in the Naval Reserve (including the Merchant Marine Reserve, Naval 

23 Reserve), the Coast Guard Reserve, or any other reserve unit of an 

24 armed force of the United States, and, if tendered the appointment, to 

25 serve for at least 6 years after graduation from the academy; 

26 ‘‘(5) serve the foreign and domestic commerce and the national de27 fense of the United States for at least 3 years after graduation from 

28 the academy— 

29 ‘‘(A) as a merchant marine officer on a documented vessel or 

30 a vessel owned and operated by the United States Government or 

31 by a State; 

32 ‘‘(B) as an employee in a United States maritime-related indus33 try, profession, or marine science (as determined by the Sec34 retary), if the Secretary determines that service under subpara35 graph (A) is not available to the individual; 

36 ‘‘(C) as a commissioned officer on active duty in an armed force 

37 of the United States, as a commissioned officer in the National 

38 Oceanic and Atmospheric Administration, or in other maritime-re39 lated Federal employment which serves the national security inter40 ests of the United States, as determined by the Secretary; or 


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1 ‘‘(D) by a combination of the service alternatives referred to in 

2 subparagraphs (A)–(C); and 

3 ‘‘(6) report to the Secretary on compliance with this subsection. 

4 ‘‘(e) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

5 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

6 that an individual who has accepted the payments described in sub7 section (b) for a minimum of 2 academic years has failed to fulfill the 

8 part of the agreement described in subsection (d)(1), the individual 

9 may be ordered by the Secretary of Defense to serve on active duty 

10 in the armed forces of the United States for a period of not more than 

11 2 years. In cases of hardship as determined by the Secretary of Trans12 portation, the Secretary of Transportation may waive this paragraph 

13 in whole or in part. 

14 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or 

15 unwilling to order an individual to serve on active duty under para16 graph (1), or if the Secretary of Transportation determines that reim17 bursement of the cost of education provided would better serve the in18 terests of the United States, the Secretary of Transportation may re19 cover from the individual the amount of student incentive payments, 

20 plus interest and attorney fees. The Secretary may reduce the amount 

21 to be recovered to reflect partial performance of service obligations and 

22 other factors the Secretary determines merit a reduction. 

23 ‘‘(f) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

24 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

25 that an individual has failed to fulfill any part of the agreement de26 scribed in subsection (d)(2)–(6), the individual may be ordered to serve 

27 on active duty for a period of at least 2 years but not more than the 

28 unexpired period (as determined by the Secretary) of the service re29 quired by subsection (d)(5). The Secretary of Transportation, in con30 sultation with the Secretary of Defense, shall determine in which serv31 ice the individual shall serve. In cases of hardship as determined by 

32 the Secretary of Transportation, the Secretary of Transportation may 

33 waive this paragraph in whole or in part. 

34 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or 

35 unwilling to order an individual to serve on active duty under para36 graph (1), or if the Secretary of Transportation determines that reim37 bursement of the cost of education provided would better serve the in38 terests of the United States, the Secretary of Transportation may re39 cover from the individual the amount of student incentive payments, 

40 plus interest and attorney fees. The Secretary may reduce the amount 


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1 to be recovered to reflect partial performance of service obligations and 

2 other factors the Secretary determines merit a reduction. 

3 ‘‘(g) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost 

4 of education provided by the Government under a commitment agreement 

5 under this section, the Secretary of Transportation may— 

6 ‘‘(1) request the Attorney General to bring a civil action against the 

7 individual; and 

8 ‘‘(2) make use of the Federal debt collection procedures in chapter 

9 176 of title 28 or other applicable administrative remedies. 

10 ‘‘§ 51510. Deferment of service obligation under student in11 centive payment agreements 

12 ‘‘The Secretary of Transportation may defer the service commitment of 

13 an individual under section 51509(d)(5) of this title (as specified in the 

14 agreement under section 51509) for not more than 2 years if the individual 

15 is engaged in a graduate course of study approved by the Secretary. How16 ever, deferment of service as a commissioned officer on active duty must be 

17 approved by the Secretary of the affected military department (or the Sec18 retary of Commerce, for service with the National Oceanic and Atmospheric 

19 Administration). 

20 ‘‘§ 51511. Midshipman status in the Naval Reserve 

21 ‘‘A citizen of the United States attending a State maritime academy may 

22 be appointed by the Secretary of the Navy as a midshipman in the Naval 

23 Reserve (including the Merchant Marine Reserve, Naval Reserve). 

24 ‘‘CHAPTER 517—OTHER SUPPORT FOR MERCHANT 

25 MARINE TRAINING 

‘‘Sec. 

‘‘51701. United States Maritime Service. 

‘‘51702. Civilian nautical schools. 

‘‘51703. Additional training. 

‘‘51704. Training for maritime oil pollution prevention, response, and clean-up. 

26 ‘‘§ 51701. United States Maritime Service 

27 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may es28 tablish and maintain a voluntary organization, to be known as the United 

29 States Maritime Service, for the training of citizens of the United States 

30 to serve on merchant vessels of the United States. 

31 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may— 

32 ‘‘(1) determine the number of individuals to be enrolled for training 

33 and reserve purposes in the Service; 

34 ‘‘(2) fix the rates of pay and allowances of the individuals without 

35 regard to chapter 51 or subchapter III of chapter 53 of title 5; 

36 ‘‘(3) prescribe the course of study and the periods of training for the 

37 Service; and 


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1 ‘‘(4) prescribe the uniform of the Service and the rules on providing 

2 and wearing the uniform. 

3 ‘‘(c) RANKS, GRADES, AND RATINGS.—The ranks, grades, and ratings for 

4 personnel of the Service shall be the same as those prescribed for personnel 

5 of the Coast Guard. 

6 ‘‘(d) MEDALS AND AWARDS.—The Secretary may establish and maintain 

7 a medals and awards program to recognize distinguished service, superior 

8 achievement, professional performance, and other commendable achievement 

9 by personnel of the Service. 

10 ‘‘§ 51702. Civilian nautical schools 

11 ‘‘(a) DEFINITION.—In this section, the term ‘civilian nautical school’ 

12 means a school operated in the United States (except the United States 

13 Merchant Marine Academy, a State maritime academy, or another school 

14 operated by the United States Government) that offers instruction to indi15 viduals quartered on a vessel primarily to train them for service in the mer16 chant marine. 

17 ‘‘(b) INSPECTION.—Each civilian nautical school is subject to inspection 

18 by the Secretary of Transportation. 

19 ‘‘(c) RATING AND CERTIFICATION.—The Secretary may, under regula20 tions the Secretary may prescribe, provide for the rating and certification 

21 of civilian nautical schools as to the adequacy of their course of instruction, 

22 the competence of their instructors, and the suitability of the equipment 

23 used in their course of instruction. 

24 ‘‘§ 51703. Additional training 

25 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may pro26 vide additional training on maritime subjects to supplement other training 

27 opportunities and make the training available to the personnel of the mer28 chant marine of the United States and individuals preparing for a career 

29 in the merchant marine of the United States. 

30 ‘‘(b) EQUIPMENT, SUPPLIES, AND CONTRACTS.—The Secretary may— 

31 ‘‘(1) prepare or buy equipment or supplies required for the additional 

32 training; and 

33 ‘‘(2) without regard to section 3709 of the Revised Statutes (41 

34 U.S.C. 5), make contracts for services the Secretary considers nec35 essary to prepare the equipment and supplies and to supervise and ad36 minister the additional training. 

37 ‘‘§ 51704. Training for maritime oil pollution prevention, re38 sponse, and clean-up 

39 ‘‘(a) ASSISTANCE IN ESTABLISHING PROGRAM.—The Secretary of Trans40 portation shall assist maritime training institutions approved by the SecVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00117 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 retary in establishing a training program for maritime oil pollution preven2 tion, response, and clean-up. 

3 ‘‘(b) PROVIDING TRAINING VESSELS.—Subject to subsection (c), the Sec4 retary may provide, with title free of all liens, to maritime training institu5 tions that have a program established under subsection (a), offshore supply 

6 vessels and tug/supply vessels that were built in the United States and are 

7 in the possession of the Maritime Administration because of a default on 

8 a loan guaranteed under chapter 537 of this title. 

9 ‘‘(c) REQUIREMENTS.—In addition to any other requirements the Sec10 retary considers appropriate, the following requirements apply to vessels 

11 provided under this section: 

12 ‘‘(1) The vessel shall be offered to the institution at a location se13 lected by the Secretary. 

14 ‘‘(2) The institution shall use the vessel to train students and appro15 priate maritime industry personnel in oil spill prevention, response, 

16 clean-up, and related skills. 

17 ‘‘(3) The institution shall make the vessel and qualified students 

18 available to appropriate Federal, State, and local oil spill response au19 thorities when there is a maritime oil spill. 

20 ‘‘(4) The institution may not sell, trade, charter, donate, scrap, or 

21 in any way alter or dispose of the vessel without prior approval of the 

22 Secretary. 

23 ‘‘(5) The institution may not use the vessel in competition with a 

24 privately-owned vessel documented under chapter 121 of this title or 

25 titled under the law of a State, unless necessary to carry out this sec26 tion. 

27 ‘‘(6) When the institution can no longer use the vessel for its train28 ing program, the institution shall return the vessel to the Secretary. 

29 The Secretary shall take possession at the institution and thereafter 

30 may provide the vessel to another institution under this section or dis31 pose of the vessel. 

32 ‘‘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. 

33 ‘‘§ 51901. Awards for individual acts or service 

34 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may 

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1 bon bars, emblems, rosettes, miniature facsimiles, plaques, citations, or 

2 other suitable devices or insignia) for individual acts or service in the mer3 chant marine of the United States. The design may be similar to the design 

4 of a decoration or medal authorized for members of the armed forces for 

5 similar acts or service. 

6 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may award— 

7 ‘‘(1) a Merchant Marine Distinguished Service Medal to an indi8 vidual for outstanding acts, conduct, or valor beyond the line of duty; 

9 ‘‘(2) a Merchant Marine Meritorious Service Medal to an individual 

10 for meritorious acts, conduct, or valor in the line of duty, but not of 

11 the outstanding character that would warrant the award of the Mer12 chant Marine Distinguished Service Medal; 

13 ‘‘(3) a decoration or medal to an individual for service during a war, 

14 national emergency proclaimed by the President or Congress, or oper15 ations by the armed forces outside the continental United States under 

16 conditions of danger to life and property; and 

17 ‘‘(4) a decoration or medal to an individual for other acts or service 

18 of conspicuous gallantry, intrepidity, and extraordinary heroism under 

19 conditions of danger to life and property that would warrant a similar 

20 decoration or medal for a member of the armed forces. 

21 ‘‘§ 51902. Gallant Ship Award 

22 ‘‘(a) AWARDS TO VESSELS.—The Secretary of Transportation may award 

23 a Gallant Ship Award and a citation to a vessel (including a foreign vessel) 

24 participating in outstanding or gallant action in a marine disaster or other 

25 emergency to save life or property at sea. The Secretary may award a 

26 plaque to the vessel, and a replica of the plaque may be preserved as a per27 manent historical record. 

28 ‘‘(b) AWARDS TO CREWS.—The Secretary of Transportation may award 

29 an appropriate citation ribbon bar to the master and each individual serv30 ing, at the time of the action, on a vessel issued an award under subsection 

31 (a). 

32 ‘‘(c) CONSULTATION.—The Secretary of Transportation shall consult with 

33 the Secretary of State before awarding an award or citation to a foreign 

34 vessel or its crew under this section. 

35 ‘‘§ 51903. Multiple awards 

36 ‘‘An individual may not be awarded more than one of any type of decora37 tion or medal under this chapter. For each succeeding act or service justi38 fying the same decoration or medal, a suitable device may be awarded to 

39 be worn with the decoration or medal. 


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1 ‘‘§ 51904. Presentation to representatives 

2 ‘‘If an individual to be issued an award under this chapter is unable to 

3 accept the award personally, the Secretary of Transportation may present 

4 the award to an appropriate representative. 

5 ‘‘§ 51905. Flags and grave markers 

6 ‘‘Except as authorized under another law, the Secretary of Transpor7 tation may issue, at no cost, a flag of the United States and a grave marker 

8 to the family or personal representative of a deceased individual who served 

9 in the merchant marine of the United States in support of the armed forces 

10 of the United States or its allies during a war or national emergency. 

11 ‘‘§ 51906. Special certificates for civilian service to armed 

12 forces 

13 ‘‘(a) GENERAL AUTHORITY.—The Maritime Administrator may issue a 

14 special certificate to an individual, or the personal representative of an indi15 vidual, in recognition of service of that individual in the merchant marine 

16 of the United States, if the service has been determined to be active duty 

17 under section 401 of the GI Bill Improvement Act of 1977 (Public Law 95– 

18 202; 38 U.S.C. 106 note). 

19 ‘‘(b) RELATIONSHIP TO OTHER LAWS.—Issuance of a certificate under 

20 subsection (a) does not entitle an individual to any rights, privileges, or ben21 efits under a law of the United States. 

22 ‘‘§ 51907. Manufacture and sale of awards and replacements 

23 ‘‘The Secretary of Transportation may— 

24 ‘‘(1) authorize private persons to manufacture decorations and med25 als authorized under this chapter or a prior law; and 

26 ‘‘(2) provide at cost, or authorize private persons to sell at reason27 able prices, replacements for those decorations and medals. 

28 ‘‘§ 51908. Prohibition against unauthorized manufacture, 

29 sale, possession, or display of awards 

30 ‘‘(a) PROHIBITION.—Except as authorized under this chapter, a person 

31 may not manufacture, sell, possess, or display a decoration or medal pro32 vided for in this chapter. 

33 ‘‘(b) CIVIL PENALTY.—A person violating this section is liable to the 

34 United States Government for a civil penalty of not more than $2,000. 

35 ‘‘CHAPTER 521—MISCELLANEOUS 

‘‘Sec. 

‘‘52101. Reemployment rights for certain merchant seamen. 

36 ‘‘§ 52101. Reemployment rights for certain merchant seamen 

37 ‘‘(a) IN GENERAL.—An individual who is certified by the Secretary of 

38 Transportation under subsection (c) shall be entitled to reemployment rights 

39 and other benefits substantially equivalent to the rights and benefits proVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00120 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 vided for by chapter 43 of title 38 for any member of a reserve component 

2 of the armed forces of the United States who is ordered to active duty. 

3 ‘‘(b) TIME FOR APPLICATION.—An individual may submit an application 

4 for certification under subsection (c) to the Secretary not later than 45 days 

5 after the date the individual completes a period of employment described in 

6 subsection (c)(1)(A) with respect to which the application is submitted. 

7 ‘‘(c) CERTIFICATION DETERMINATION.—Not later than 20 days after the 

8 date the Secretary receives from an individual an application for certifi9 cation under this subsection, the Secretary shall— 

10 ‘‘(1) determine whether the individual— 

11 ‘‘(A) was employed in the activation or operation of a vessel— 

12 ‘‘(i) in the National Defense Reserve Fleet maintained 

13 under section 11 of the Merchant Ship Sales Act of 1946 (50 

14 App. U.S.C. 1744) in a period in which the vessel was in use 

15 or being activated for use under subsection (b) of that sec16 tion; 

17 ‘‘(ii) requisitioned or purchased under chapter 563 of this 

18 title; or 

19 ‘‘(iii) owned, chartered, or controlled by the United States 

20 Government and used by the Government for a war, armed 

21 conflict, national emergency, or maritime mobilization need 

22 (including for training purposes or testing for readiness and 

23 suitability for mission performance); and 

24 ‘‘(B) during the period of that employment, possessed a valid 

25 license, certificate of registry, or merchant mariner’s document 

26 issued under chapter 71 or 73 of this title; and 

27 ‘‘(2) if the Secretary makes affirmative determinations under sub28 paragraphs (A) and (B) of paragraph (1), certify that individual under 

29 this subsection. 

30 ‘‘(d) EQUIVALENCE TO MILITARY SELECTIVE SERVICE ACT CERTIFI31 CATE.—For purposes of reemployment rights and benefits provided by this 

32 section, a certification under subsection (c) shall be considered to be the 

33 equivalent of a certificate described in section 9(a) of the Military Selective 

34 Service Act (50 App. U.S.C. 459(a)). 

35 ‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS’’. 

36 (c) CHAPTERS FOLLOWING CHAPTER 531.—Subtitle V of title 46, United 

37 States Code, is amended by adding at the end the following: 

38 ‘‘CHAPTER 533—CONSTRUCTION RESERVE FUNDS 

‘‘Sec. 

‘‘53301. Definitions. 

‘‘53302. Authority for construction reserve funds. 

‘‘53303. Persons eligible to establish funds. 

‘‘53304. Vessel ownership. 


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‘‘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. 

1 ‘‘§ 53301. Definitions 

2 ‘‘(a) IN GENERAL.—In this chapter: 

3 ‘‘(1) CONSTRUCTION CONTRACT.—The term ‘construction contract’ 

4 includes, for a taxpayer constructing a new vessel in a shipyard owned 

5 by that taxpayer, an agreement between the taxpayer and the Secretary 

6 of Transportation for that construction containing provisions the Sec7 retary considers advisable to carry out this chapter. 

8 ‘‘(2) NEW VESSEL.—The term ‘new vessel’ means— 

9 ‘‘(A) a vessel— 

10 ‘‘(i) constructed in the United States after December 31, 

11 1939, constructed with a construction-differential subsidy 

12 under title V of the Merchant Marine Act, 1936, or con13 structed with financing or a financing guarantee under chap14 ter 537 or 575 of this title; 

15 ‘‘(ii) documented or agreed with the Secretary to be docu16 mented under the laws of the United States; and 

17 ‘‘(iii)(I) of a type, size, and speed that the Secretary deter18 mines is suitable for use on the high seas or Great Lakes in 

19 carrying out this subtitle, but not less than 2,000 gross tons 

20 or less than 12 knots speed unless the Secretary certifies in 

21 each case that a vessel of lesser tonnage or speed is desirable 

22 for use by the United States Government in case of war or 

23 national emergency; or 

24 ‘‘(II) constructed to replace a vessel bought or requisitioned 

25 by the Government; and 

26 ‘‘(B) a vessel reconstructed or reconditioned for use only on the 

27 Great Lakes, including the Saint Lawrence River and Gulf, if the 

28 Secretary finds that the reconstruction or reconditioning will pro29 mote the objectives of this subtitle. 

30 ‘‘(b) ADDITIONAL TAX-RELATED TERMS.—Other terms used in this 

31 chapter have the same meaning as in chapter 1 of the Internal Revenue 

32 Code of 1986 (26 U.S.C. ch. 1). 

33 ‘‘§ 53302. Authority for construction reserve funds 

34 ‘‘(a) GENERAL AUTHORITY.—An eligible person under section 53303 of 

35 this title may establish a construction reserve fund for the construction, reVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00122 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 construction, reconditioning, or acquisition of a new vessel or for other pur2 poses authorized by this chapter. 

3 ‘‘(b) APPLICATION OF CERTAIN LAWS AND REGULATIONS.—The fund 

4 shall be established, maintained, expended, and used as provided by this 

5 chapter and regulations prescribed jointly by the Secretary of Transpor6 tation and the Secretary of the Treasury. 

7 ‘‘§ 53303. Persons eligible to establish funds 

8 ‘‘A construction reserve fund may be established by a citizen of the 

9 United States that— 

10 ‘‘(1) is operating a vessel in the foreign or domestic commerce of the 

11 United States or in the fisheries; 

12 ‘‘(2) owns, in whole or in part, a vessel being operated in the foreign 

13 or domestic commerce of the United States or in the fisheries; 

14 ‘‘(3) was operating a vessel in the foreign or domestic commerce of 

15 the United States or in the fisheries when it was bought or requi16 sitioned by the United States Government; 

17 ‘‘(4) owned, in whole or in part, a vessel being operated in the for18 eign or domestic commerce of the United States or in the fisheries 

19 when it was bought or requisitioned by the Government; or 

20 ‘‘(5) had acquired or was having constructed a vessel to operate in 

21 the foreign or domestic commerce of the United States or in the fish22 eries when it was bought or requisitioned by the Government. 

23 ‘‘§ 53304. Vessel ownership 

24 ‘‘In this chapter, a vessel is deemed to be constructed or acquired by a 

25 taxpayer if constructed or acquired by a corporation when the taxpayer 

26 owns at least 95 percent of each class of stock of the corporation. 

27 ‘‘§ 53305. Eligible fund deposits 

28 ‘‘A construction reserve fund may include deposits of— 

29 ‘‘(1) the proceeds from the sale of a vessel; 

30 ‘‘(2) indemnities for the loss of a vessel; 

31 ‘‘(3) earnings from the operation of a documented vessel and from 

32 services incident to the operation; and 

33 ‘‘(4) interest or other amounts accrued on deposits in the fund. 

34 ‘‘§ 53306. Recognition of gain for tax purposes 

35 ‘‘(a) DEFINITIONS.—In this section, the terms ‘net proceeds’ and ‘net in36 demnity’ mean the sum of— 

37 ‘‘(1) the adjusted basis of the vessel; and 

38 ‘‘(2) the amount of gain the taxpayer would recognize without regard 

39 to this section. 

40 ‘‘(b) RECOGNITION OF GAIN.—In computing net income under the income 

41 or excess profits tax laws of the United States, a taxpayer does not recogVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00123 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 nize a gain on the sale or the actual or constructive total loss of a vessel 

2 if the taxpayer— 

3 ‘‘(1) deposits an amount equal to the net proceeds of the sale or the 

4 net indemnity for the loss in a construction reserve fund within 60 days 

5 after receiving the payment of proceeds or indemnity; and 

6 ‘‘(2) elects under this section not to recognize the gain. 

7 ‘‘(c) WHEN ELECTION MUST BE MADE.— 

8 ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the tax9 payer must make the election referred to in subsection (b) in the tax10 payer’s income tax return for the taxable year in which the gain was 

11 realized. 

12 ‘‘(2) RECEIPT AFTER TAXABLE YEAR.—If the vessel is bought or 

13 requisitioned by the United States Government, or is lost, and the tax14 payer receives payment for the vessel or indemnity for the loss from 

15 the Government after the end of the taxable year in which it was 

16 bought, requisitioned, or lost, the taxpayer must make the election re17 ferred to in subsection (b) within 60 days after receiving the payment 

18 or indemnity, on a form prescribed by the Secretary of the Treasury. 

19 ‘‘(d) EFFECT OF STATUTE OF LIMITATION.—If the taxpayer makes an 

20 election under subsection (c)(2), and computation or recomputation under 

21 this section is otherwise allowable but is prevented by a statute of limitation 

22 on the date the election is made or within 6 months thereafter, the com23 putation or recomputation nevertheless shall be made notwithstanding the 

24 statute if the taxpayer files a claim for the computation or recomputation 

25 within 6 months after the date of making the election. 

26 ‘‘§ 53307. Basis for determining gain or loss and for depre27 ciating new vessels 

28 ‘‘Under the income or excess profits tax laws of the United States, the 

29 basis for determining a gain or loss and for depreciation of a new vessel 

30 constructed, reconstructed, reconditioned, or acquired by the taxpayer, or 

31 for which purchase-money indebtedness is liquidated as provided in section 

32 53310 of this title, with amounts from a construction reserve fund, shall 

33 be reduced by that part of the deposits in the fund expended in the con34 struction, reconstruction, reconditioning, acquisition, or liquidation of pur35 chase-money indebtedness of the new vessel that represents a gain not rec36 ognized for tax purposes under section 53306 of this title. 

37 ‘‘§ 53308. Order and proportions of deposits and with38 drawals 

39 ‘‘In this chapter— 


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1 ‘‘(1) if the net proceeds of a sale or the net indemnity for a loss is 

2 deposited in more than one deposit, the amount consisting of the gain 

3 shall be deemed to be deposited first; 

4 ‘‘(2) amounts expended, obligated, or otherwise withdrawn shall be 

5 applied against the amounts deposited in the fund in the order of de6 posit; and 

7 ‘‘(3) if a deposit consists in part of a gain not recognized under sec8 tion 53306 of this title, any expenditure, obligation, or withdrawal ap9 plied against that deposit shall be deemed to be a gain in the propor10 tion that the part of the deposit consisting of a gain bears to the total 

11 amount of the deposit. 

12 ‘‘§ 53309. Accumulation of deposits 

13 ‘‘For any taxable year, amounts on deposit in a construction reserve fund 

14 on the last day of the taxable year, for which the requirements of section 

15 53310 of this title have been satisfied (to the extent they apply on the last 

16 day of the taxable year), are deemed to have been retained for the reason17 able needs of the business within the meaning of section 537(a) of the Inter18 nal Revenue Code of 1986 (26 U.S.C. 537(a)). 

19 ‘‘§ 53310. Obligation of deposits and period for construction 

20 of certain vessels 

21 ‘‘(a) APPLICATION OF SECTIONS 53306 AND 53309.—Sections 53306 and 

22 53309 of this title apply to a deposit in a construction reserve fund only 

23 if, within 3 years after the date of the deposit (and any extension under 

24 subsection (c))— 

25 ‘‘(1)(A) a contract is made for the construction or acquisition of a 

26 new vessel or, with the approval of the Secretary of Transportation, for 

27 a part interest in a new vessel or for the reconstruction or recondi28 tioning of a new vessel; 

29 ‘‘(B) the deposit is expended or obligated for expenditure under that 

30 contract; 

31 ‘‘(C) at least 12.5 percent of the construction or contract price of 

32 the vessel is paid or irrevocably committed for payment; and 

33 ‘‘(D) the plans and specifications for the vessel are approved by the 

34 Secretary to the extent the Secretary considers necessary; or 

35 ‘‘(2) the deposit is expended or obligated for expenditure for the liq36 uidation of existing or subsequently incurred purchase-money indebted37 ness to a person not a parent company of, or a company affiliated or 

38 associated with, the mortgagor on a new vessel. 

39 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CERTAIN VESSELS.—In addition 

40 to the requirements of subsection (a)(1), for a vessel not constructed under 


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1 a construction-differential subsidy contract or not bought from the Sec2 retary of Transportation— 

3 ‘‘(1) at least 5 percent of the construction (or, if the contract covers 

4 more than one vessel, at least 5 percent of the construction of the first 

5 vessel) must be completed within 6 months after the date of the con6 struction contract (or within the period of an extension under sub7 section (c)), as estimated by the Secretary and certified by the Sec8 retary to the Secretary of the Treasury; and 

9 ‘‘(2) construction under the contract must be completed with reason10 able dispatch thereafter. 

11 ‘‘(c) EXTENSIONS.—The Secretary of Transportation may grant exten12 sions of the period within which the deposits must be expended or obligated 

13 or within which the construction must have progressed to the extent of 5 

14 percent completion under this section. However, the extensions may not be 

15 for a total of more than 2 years for the expenditure or obligation of deposits 

16 or one year for the progress of construction. 

17 ‘‘§ 53311. Taxation of deposits on failure of conditions 

18 ‘‘A deposited gain, if otherwise taxable income under the law applicable 

19 to the taxable year in which the gain was realized, shall be included in gross 

20 income for that taxable year, except for purposes of the declared value ex21 cess profits tax and the capital stock tax, if— 

22 ‘‘(1) the deposited gain is not expended or obligated within the ap23 propriate period under section 53310 of this title; 

24 ‘‘(2) the deposited gain is withdrawn before the end of that period; 

25 ‘‘(3) the construction related to that deposited gain has not pro26 gressed to the extent of 5 percent of completion within the appropriate 

27 period under section 53310 of this title; or 

28 ‘‘(4) the Secretary of Transportation finds and certifies to the Sec29 retary of the Treasury that, for causes within the control of the tax30 payer, the entire construction related to that deposited gain is not com31 pleted with reasonable dispatch. 

32 ‘‘§ 53312. Assessment and collection of deficiency tax 

33 ‘‘Notwithstanding any other provision of law, a deficiency in tax for a tax34 able year resulting from the inclusion of an amount in gross income as pro35 vided by section 53311 of this title, and the amount to be treated as a defi36 ciency under section 53311 instead of as an adjustment for the declared 

37 value excess profits tax, may be assessed or a civil action may be brought 

38 to collect the deficiency without assessment, at any time. Interest on a defi39 ciency or amount to be treated as a deficiency does not begin until the date 

40 the deposited gain or part of the deposited gain in question is required to 

41 be included in gross income under section 51111. 


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1 ‘‘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. 

2 ‘‘§ 53501. Definitions 

3 ‘‘In this chapter: 

4 ‘‘(1) AGREEMENT VESSEL.—The term ‘agreement vessel’ means— 

5 ‘‘(A) an eligible vessel or a qualified vessel that is subject to an 

6 agreement under this chapter; and 

7 ‘‘(B) a barge or container that is part of the complement of a 

8 vessel described in subparagraph (A) if provided for in the agree9 ment. 

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

11 ‘‘(A) a vessel— 

12 ‘‘(i) constructed in the United States (and, if recon13 structed, reconstructed in the United States), constructed 

14 outside the United States but documented under the laws of 

15 the United States on April 15, 1970, or constructed outside 

16 the United States for use in the United States foreign trade 

17 pursuant to a contract made before April 15, 1970; 

18 ‘‘(ii) documented under the laws of the United States; and 

19 ‘‘(iii) operated in the foreign or domestic trade of the 

20 United States or in the fisheries of the United States; and 

21 ‘‘(B) a commercial fishing vessel— 

22 ‘‘(i) constructed in the United States and, if reconstructed, 

23 reconstructed in the United States; 

24 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

25 ‘‘(iii) owned by a citizen of the United States; 

26 ‘‘(iv) having its home port in the United States; and 

27 ‘‘(v) operated in the commercial fisheries of the United 

28 States. 


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1 ‘‘(3) JOINT REGULATIONS.—The term ‘joint regulations’ means reg2 ulations prescribed jointly by the Secretary and the Secretary of the 

3 Treasury under section 53502(b) of this title. 

4 ‘‘(4) NONCONTIGUOUS TRADE.—The term ‘noncontiguous trade’ 

5 means— 

6 ‘‘(A) trade between— 

7 ‘‘(i) one of the contiguous 48 States; and 

8 ‘‘(ii) Alaska, Hawaii, Puerto Rico, or an insular territory 

9 or possession of the United States; and 

10 ‘‘(B) trade between— 

11 ‘‘(i) a place in Alaska, Hawaii, Puerto Rico, or an insular 

12 territory or possession of the United States; and 

13 ‘‘(ii) another place in Alaska, Hawaii, Puerto Rico, or an 

14 insular territory or possession of the United States. 

15 ‘‘(5) QUALIFIED VESSEL.—The term ‘qualified vessel’ means— 

16 ‘‘(A) a vessel— 

17 ‘‘(i) constructed in the United States (and, if recon18 structed, reconstructed in the United States), constructed 

19 outside the United States but documented under the laws of 

20 the United States on April 15, 1970, or constructed outside 

21 the United States for use in the United States foreign trade 

22 pursuant to a contract made before April 15, 1970; 

23 ‘‘(ii) documented under the laws of the United States; and 

24 ‘‘(iii) agreed, between the Secretary and the person main25 taining the capital construction fund established under sec26 tion 53503 of this title, to be operated in the United States 

27 foreign, Great Lakes, or noncontiguous domestic trade or in 

28 the fisheries of the United States; and 

29 ‘‘(B) a commercial fishing vessel— 

30 ‘‘(i) constructed in the United States and, if reconstructed, 

31 reconstructed in the United States; 

32 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

33 ‘‘(iii) owned by a citizen of the United States; 

34 ‘‘(iv) having its home port in the United States; and 

35 ‘‘(v) operated in the commercial fisheries of the United 

36 States. 

37 ‘‘(6) SECRETARY.—The term ‘Secretary’ means— 

38 ‘‘(A) the Secretary of Commerce with respect to an eligible ves39 sel or a qualified vessel operated or to be operated in the fisheries 

40 of the United States; and 


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1 ‘‘(B) the Secretary of Transportation with respect to other ves2 sels. 

3 ‘‘(7) UNITED STATES FOREIGN TRADE.—The term ‘United States 

4 foreign trade’ includes those areas in domestic trade in which a vessel 

5 built with a construction-differential subsidy is allowed to operate 

6 under the first sentence of section 506 of the Merchant Marine Act, 

7 1936. 

8 ‘‘(8) VESSEL.—The term ‘vessel’ includes— 

9 ‘‘(A) cargo handling equipment that the Secretary determines is 

10 intended for use primarily on the vessel; and 

11 ‘‘(B) an ocean-going towing vessel, an ocean-going barge, or a 

12 comparable towing vessel or barge operated on the Great Lakes. 

13 ‘‘§ 53502. Regulations 

14 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the Secretary 

15 shall prescribe regulations to carry out this chapter. 

16 ‘‘(b) TAX LIABILITY.—The Secretary and the Secretary of the Treasury 

17 shall prescribe joint regulations for the determination of tax liability under 

18 this chapter. 

19 ‘‘§ 53503. Establishing a capital construction fund 

20 ‘‘(a) IN GENERAL.—A citizen of the United States owning or leasing an 

21 eligible vessel may make an agreement with the Secretary under this chap22 ter to establish a capital construction fund for the vessel. 

23 ‘‘(b) ALLOWABLE PURPOSE.—The purpose of the agreement shall be to 

24 provide replacement vessels, additional vessels, or reconstructed vessels, 

25 built in the United States and documented under the laws of the United 

26 States, for operation in the United States foreign, Great Lakes, or non27 contiguous domestic trade or in the fisheries of the United States. 

28 ‘‘§ 53504. Deposits and withdrawals 

29 ‘‘(a) REQUIRED DEPOSITS.—An agreement to establish a capital con30 struction fund shall provide for the deposit in the fund of the amounts 

31 agreed to be appropriate to provide for qualified withdrawals under section 

32 53509 of this title. 

33 ‘‘(b) APPLICABLE REQUIREMENTS.—Deposits in and withdrawals from 

34 the fund are subject to the requirements included in the agreement or pre35 scribed by the Secretary by regulation. However, the Secretary may not re36 quire a person to deposit in the fund for a taxable year more than 50 per37 cent of that portion of the person’s taxable income for that year (as deter38 mined under section 53505(a)(1) of this title) that is attributable to the op39 eration of an agreement vessel. 


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1 ‘‘§ 53505. Ceiling on deposits 

2 ‘‘(a) MAXIMUM DEPOSITS.—The amount deposited in a capital construc3 tion fund for a taxable year may not exceed the sum of— 

4 ‘‘(1) that portion of the taxable income of the owner or lessee for 

5 the taxable year (computed under chapter 1 of the Internal Revenue 

6 Code of 1986 (26 U.S.C. ch. 1) but without regard to the carryback 

7 of net operating loss or net capital loss or this chapter) that is attrib8 utable to the operation of agreement vessels in the foreign or domestic 

9 trade of the United States or in the fisheries of the United States; 

10 ‘‘(2) the amount allowable as a deduction under section 167 of such 

11 Code (26 U.S.C. 167) for the taxable year for agreement vessels; 

12 ‘‘(3) if the transaction is not taken into account for purposes of 

13 paragraph (1), the net proceeds (as defined in joint regulations) from 

14 the disposition of an agreement vessel or from insurance or indemnity 

15 attributable to an agreement vessel; and 

16 ‘‘(4) the receipts from the investment or reinvestment of amounts 

17 held in the fund. 

18 ‘‘(b) REDUCTIONS FOR LESSEES.—For a lessee, the maximum amount 

19 that may be deposited for an agreement vessel under subsection (a)(2) for 

20 any period shall be reduced by any amount the owner is required or per21 mitted, under the capital construction fund agreement, to deposit for that 

22 period for the vessel under subsection (a)(2). 

23 ‘‘§ 53506. Investment and fiduciary requirements 

24 ‘‘(a) IN GENERAL.—Amounts in a capital construction fund shall be kept 

25 in the depository specified in the agreement and shall be subject to trustee 

26 and other fiduciary requirements prescribed by the Secretary. Except as 

27 provided in subsection (b), amounts in the fund may be invested only in in28 terest-bearing securities approved by the Secretary. 

29 ‘‘(b) STOCK INVESTMENTS.— 

30 ‘‘(1) IN GENERAL.—With the approval of the Secretary, an agreed 

31 percentage (but not more than 60 percent) of the assets of the fund 

32 may be invested in the stock of domestic corporations that— 

33 ‘‘(A) is fully listed and registered on an exchange registered 

34 with the Securities and Exchange Commission as a national secu35 rities exchange; and 

36 ‘‘(B) would be acquired by a prudent investor seeking a reason37 able income and the preservation of capital. 

38 ‘‘(2) PREFERRED STOCK.—The preferred stock of a corporation is 

39 deemed to satisfy the requirements of this subsection, even though it 

40 may not be registered and listed because it is nonvoting stock, if the 


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1 common stock of the corporation satisfies the requirements and the 

2 preferred stock otherwise would satisfy the requirements. 

3 ‘‘(c) MAINTAINING AGREED PERCENTAGE.—If at any time the fair mar4 ket value of the stock in the fund is more than the agreed percentage of 

5 the assets in the fund, any subsequent investment of amounts deposited in 

6 the fund, and any subsequent withdrawal from the fund, shall be made in 

7 a way that tends to restore the fair market value of the stock to not more 

8 than the agreed percentage. 

9 ‘‘§ 53507. Nontaxation of deposits 

10 ‘‘(a) TAX TREATMENT.—Subject to subsection (b), under the Internal 

11 Revenue Code of 1986 (26 U.S.C. 1 et seq.)— 

12 ‘‘(1) taxable income (determined without regard to this chapter and 

13 section 7518 of such Code (26 U.S.C. 7518)) for the taxable year shall 

14 be reduced by the amount deposited for the taxable year out of 

15 amounts referred to in section 53505(a)(1) of this title; 

16 ‘‘(2) a gain from a transaction referred to in section 53505(a)(3) of 

17 this title shall not be taken into account if an amount equal to the net 

18 proceeds (as defined in joint regulations) from the transaction is depos19 ited in the fund; 

20 ‘‘(3) the earnings (including gains and losses) from the investment 

21 and reinvestment of amounts held in the fund shall not be taken into 

22 account; 

23 ‘‘(4) the earnings and profits of a corporation (within the meaning 

24 of section 316 of such Code (26 U.S.C. 316)) shall be determined with25 out regard to this chapter and section 7518 of such Code (26 U.S.C. 

26 7518); and 

27 ‘‘(5) in applying the tax imposed by section 531 of such Code (26 

28 U.S.C. 531), amounts held in the fund shall not be taken into account. 

29 ‘‘(b) CONDITION.—This section applies to an amount only if the amount 

30 is deposited in the fund under the agreement within the time provided in 

31 joint regulations. 

32 ‘‘§ 53508. Separate accounts within a fund 

33 ‘‘(a) IN GENERAL.—A capital construction fund shall have three ac34 counts: 

35 ‘‘(1) The capital account. 

36 ‘‘(2) The capital gain account. 

37 ‘‘(3) The ordinary income account. 

38 ‘‘(b) CAPITAL ACCOUNT.—The capital account shall consist of— 

39 ‘‘(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 Inter5 nal Revenue Code of 1986 (26 U.S.C. 243(a)(1)) of any dividend re6 ceived by the fund for which the person maintaining the fund would 

7 be allowed (were it not for section 53507(a)(3) of this title) a deduction 

8 under section 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 

12 of— 

13 ‘‘(1) amounts representing capital gains on assets held for more than 

14 6 months and referred to in section 53505(a)(3) or (4) of this title; 

15 minus 

16 ‘‘(2) amounts representing capital losses on assets held in the fund 

17 for more than 6 months. 

18 ‘‘(d) ORDINARY INCOME ACCOUNT.—The ordinary income account shall 

19 consist of— 

20 ‘‘(1) amounts referred to in section 53505(a)(1) of this title; 

21 ‘‘(2)(A) amounts representing capital gains on assets held for not 

22 more than 6 months and referred to in section 53505(a)(3) or (4) of 

23 this title; minus 

24 ‘‘(B) amounts representing capital losses on assets held in the fund 

25 for not more than 6 months; 

26 ‘‘(3) interest (except tax-exempt interest referred to in subsection 

27 (b)(4)) and other ordinary income (except any dividend referred to in 

28 paragraph (5)) received on assets held in the fund; 

29 ‘‘(4) ordinary income from a transaction described in section 

30 53505(a)(3) of this title; and 

31 ‘‘(5) that portion of any dividend referred to in subsection (b)(3) not 

32 taken into account under subsection (b)(3). 

33 ‘‘(e) WHEN LOSSES ALLOWED.—Except on termination of a fund, capital 

34 losses referred to in subsection (c) or (d)(2) shall be allowed only as an off35 set to gains referred to in subsection (c) or (d)(2), respectively. 

36 ‘‘§ 53509. Qualified withdrawals 

37 ‘‘(a) IN GENERAL.—Subject to subsection (b), a withdrawal from a cap38 ital construction fund is a qualified withdrawal if it is made under the terms 

39 of the agreement and is for— 


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1 ‘‘(1) the acquisition, construction, or reconstruction of a qualified 

2 vessel or a barge or container that is part of the complement of a quali3 fied vessel; or 

4 ‘‘(2) the payment of the principal on indebtedness incurred in the 

5 acquisition, construction, or reconstruction of a qualified vessel or a 

6 barge or container that is part of the complement of a qualified vessel. 

7 ‘‘(b) BARGES AND CONTAINERS.—Except as provided in regulations pre8 scribed by the Secretary, subsection (a) applies to a barge or container only 

9 if it is constructed in the United States. 

10 ‘‘(c) TREATMENT AS NONQUALIFIED WITHDRAWAL.—Under joint regula11 tions, if the Secretary determines that a substantial obligation under an 

12 agreement is not being fulfilled, the Secretary, after notice and opportunity 

13 for a hearing to the person maintaining the fund, may treat any amount 

14 in the fund as an amount withdrawn from the fund in a nonqualified with15 drawal. 

16 ‘‘§ 53510. Tax treatment of qualified withdrawals and basis 

17 of property 

18 ‘‘(a) ORDER OF WITHDRAWALS.—A qualified withdrawal from a capital 

19 construction fund shall be treated as made— 

20 ‘‘(1) first from the capital account; 

21 ‘‘(2) second from the capital gain account; and 

22 ‘‘(3) third from the ordinary income account. 

23 ‘‘(b) ORDINARY INCOME ACCOUNT WITHDRAWALS.—If a portion of a 

24 qualified withdrawal for a vessel, barge, or container is made from the ordi25 nary income account, the basis of the vessel, barge, or container shall be 

26 reduced by an amount equal to that portion. 

27 ‘‘(c) CAPITAL GAIN ACCOUNT WITHDRAWALS.—If a portion of a qualified 

28 withdrawal for a vessel, barge, or container is made from the capital gain 

29 account, the basis of the vessel, barge, or container shall be reduced by an 

30 amount equal to that portion. 

31 ‘‘(d) WITHDRAWALS TO PAY PRINCIPAL.—If a portion of a qualified 

32 withdrawal to pay the principal on indebtedness is made from the ordinary 

33 income account or the capital gain account, an amount equal to the total 

34 reduction that would be required by subsections (b) and (c) if the with35 drawal were a qualified withdrawal for a purpose described in those sub36 sections shall be applied, in the order provided in joint regulations, to re37 duce the basis of vessels, barges, and containers owned by the person main38 taining the fund. The remaining amount of the withdrawal shall be treated 

39 as a nonqualified withdrawal. 

40 ‘‘(e) GAIN ON PROPERTY WITH REDUCED BASIS.—If property, the basis 

41 of which was reduced under subsection (b), (c), or (d), is disposed of, any 


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1 gain realized on the disposition, to the extent it does not exceed the total 

2 reduction in the basis of the property under those subsections, shall be 

3 treated as an amount referred to in section 53511(c)(1) of this title with4 drawn on the date of disposition of the property. Subject to conditions pre5 scribed in joint regulations, this subsection does not apply to a disposition 

6 if there is a redeposit, in an amount determined under joint regulations, 

7 that restores the fund as far as practicable to the position it was in before 

8 the withdrawal. 

9 ‘‘§ 53511. Tax treatment of nonqualified withdrawals 

10 ‘‘(a) IN GENERAL.—Except as provided in section 53513 of this title, a 

11 withdrawal from a fund that is not a qualified withdrawal shall be treated 

12 as a nonqualified withdrawal. 

13 ‘‘(b) ORDER OF WITHDRAWALS.—A nonqualified withdrawal shall be 

14 treated as made— 

15 ‘‘(1) first from the ordinary income account; 

16 ‘‘(2) second from the capital gain account; and 

17 ‘‘(3) third from the capital account. 

18 ‘‘(c) TAX TREATMENT.—For purposes of the Internal Revenue Code of 

19 1986 (26 U.S.C. 1 et seq.)— 

20 ‘‘(1) a nonqualified withdrawal from the ordinary income account 

21 shall be included in income as an item of ordinary income for the tax22 able year in which the withdrawal is made; 

23 ‘‘(2) a nonqualified withdrawal from the capital gain account shall 

24 be included in income for the taxable year in which the withdrawal is 

25 made as an item of gain realized during that year from the disposition 

26 of an asset held for more than 6 months; and 

27 ‘‘(3) for the period through the last date prescribed for payment of 

28 tax for the taxable year in which the withdrawal is made— 

29 ‘‘(A) no interest shall be payable under section 6601 of such 

30 Code (26 U.S.C. 6601) and no addition to the tax shall be payable 

31 under section 6651 of such Code (26 U.S.C. 6651); 

32 ‘‘(B) interest on the amount of the additional tax attributable 

33 to an amount treated as a nonqualified withdrawal from the ordi34 nary income account or the capital gain account shall be paid at 

35 the rate determined under subsection (d) from the last date pre36 scribed for payment of the tax for the taxable year for which the 

37 amount was deposited in the fund; and 

38 ‘‘(C) no interest shall be payable on amounts treated as with39 drawn on a last-in-first-out basis under section 53512 of this title. 

40 ‘‘(d) INTEREST RATE.—The rate of interest under subsection (c)(3)(B) 

41 for a nonqualified withdrawal made in a taxable year beginning after 1971 


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1 shall be determined and published jointly by the Secretary and the Secretary 

2 of the Treasury. The rate shall be such that its relationship to 8 percent 

3 is comparable, as determined by the Secretaries under joint regulations, to 

4 the relationship between— 

5 ‘‘(1) the money rates and investment yields for the calendar year im6 mediately before the beginning of the taxable year; and 

7 ‘‘(2) the money rates and investment yields for the calendar year 

8 1970. 

9 ‘‘(e) NONQUALIFIED WITHDRAWALS.— 

10 ‘‘(1) IN GENERAL.—The following applicable percentage of any 

11 amount that remains in a capital construction fund at the close of the 

12 following specified taxable year following the taxable year for which the 

13 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. 

14 ‘‘(2) EARNINGS.—The earnings of a capital construction fund for 

15 any taxable year (except net gains) shall be treated under this sub16 section as an amount deposited for the taxable year. 

17 ‘‘(3) CONTRACT FOR QUALIFIED WITHDRAWAL.—Under paragraph 

18 (1), an amount shall not be treated as remaining in a capital construc19 tion fund at the close of a taxable year to the extent there is a binding 

20 contract at the close of the taxable year for a qualified withdrawal of 

21 the amount for an identified item for which the withdrawal may be 

22 made. 

23 ‘‘(4) EXCESS EARNINGS.—If the Secretary determines that the bal24 ance in a capital construction fund exceeds the amount appropriate to 

25 meet the vessel construction program objectives of the person that es26 tablished the fund, the amount of the excess shall be treated as a non27 qualified withdrawal under paragraph (1) unless the person develops 

28 appropriate program objectives within 3 years to dissipate the excess. 

29 ‘‘(5) AMOUNTS IN FUND ON JANUARY 1, 1987.—Under this sub30 section, amounts in a capital construction fund on January 1, 1987, 

31 shall be treated as having been deposited in that fund on that date. 

32 ‘‘(f) TAX DETERMINATIONS.— 

33 ‘‘(1) IN GENERAL.—For a taxable year for which there is a non34 qualified withdrawal (including an amount treated as a nonqualified 

35 withdrawal under subsection (e)), the tax imposed by chapter 1 of the 


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1 Internal Revenue Code of 1986 (26 U.S.C. ch. 1) shall be determined 

2 by— 

3 ‘‘(A) excluding the withdrawal from gross income; and 

4 ‘‘(B) increasing the tax imposed by chapter 1 of such Code by 

5 the product of the amount of the withdrawal and the highest tax 

6 rate specified in section 1 (or section 11 for a corporation) of such 

7 Code (26 U.S.C. 1, 11). 

8 ‘‘(2) MAXIMUM TAX RATE.—For that portion of a nonqualified with9 drawal made from the capital gain account during a taxable year to 

10 which section 1(h) or 1201(a) of such Code (26 U.S.C. 1(h), 1201(a)) 

11 applies, the tax rate used under paragraph (1)(B) may not exceed 15 

12 percent (or 34 percent for a corporation). 

13 ‘‘(3) TAX BENEFIT RULE.—If any portion of a nonqualified with14 drawal is properly attributable to deposits (except earnings on deposits) 

15 made by the taxpayer in a taxable year that did not reduce the tax16 payer’s liability for tax under chapter 1 of such Code (26 U.S.C. ch. 

17 1) for a taxable year before the taxable year in which the withdrawal 

18 occurs— 

19 ‘‘(A) that portion shall not be taken into account under para20 graph (1); and 

21 ‘‘(B) an amount equal to that portion shall be allowed as a de22 duction under section 172 of such Code (26 U.S.C. 172) for the 

23 taxable year in which the withdrawal occurs. 

24 ‘‘(4) COORDINATION WITH DEDUCTION FOR NET OPERATING

25 LOSSES.—A nonqualified withdrawal excluded from gross income under 

26 paragraph (1) shall be excluded in determining taxable income under 

27 section 172(b)(2) of such Code (26 U.S.C. 172(b)(2)). 

28 ‘‘§ 53512. FIFO and LIFO withdrawals 

29 ‘‘(a) FIFO.—Except as provided in subsection (b), an amount withdrawn 

30 from an account under this chapter shall be treated as withdrawn on a first31 in-first-out basis. 

32 ‘‘(b) LIFO.—An amount withdrawn from an account under this chapter 

33 shall be treated as withdrawn on a last-in-first-out basis if it is— 

34 ‘‘(1) a nonqualified withdrawal for research, development, and design 

35 expenses incident to new and advanced vessel design, machinery, and 

36 equipment; or 

37 ‘‘(2) an amount treated as a nonqualified withdrawal under section 

38 53510(d) of this title. 

39 ‘‘§ 53513. Corporate reorganizations and partnership 

40 changes 

41 ‘‘Under joint regulations— 


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1 ‘‘(1) a transfer of a capital construction fund from one person to an2 other person in a transaction to which section 381 of the Internal Rev3 enue Code of 1986 (26 U.S.C. 381) applies may be treated as if the 

4 transaction is not a nonqualified withdrawal; and 

5 ‘‘(2) a similar rule shall be applied to a continuation of a partnership 

6 (within the meaning of subchapter K of chapter 1 of such Code (26 

7 U.S.C. 701 et seq.)). 

8 ‘‘§ 53514. Relationship of old fund to new fund 

9 ‘‘(a) DEFINITION.—In this section, the term ‘old fund’ means a capital 

10 construction fund maintained before October 21, 1970. 

11 ‘‘(b) ELECTION TO MAINTAIN OLD FUND.—A person maintaining an old 

12 fund may elect to continue the old fund, but may not— 

13 ‘‘(1) hold amounts in the old fund beyond the expiration date pro14 vided in the agreement under which the old fund is maintained (deter15 mined without regard to an extension or renewal made after April 14, 

16 1970); or 

17 ‘‘(2) maintain simultaneously the old fund and a new fund estab18 lished under this chapter. 

19 ‘‘(c) APPLICATION OF NEW FUND AGREEMENT TO OLD FUND

20 AMOUNTS.—If a person makes an agreement under this chapter to establish 

21 a new fund, the person may agree to extend the agreement to some or all 

22 of the amounts in an old fund. Each item in the old fund to be transferred 

23 shall be transferred in a nontaxable transaction to the appropriate account 

24 in the new fund. For purposes of section 53511(c)(3) of this title, the date 

25 of the deposit of an item so transferred shall be July 1, 1971, or the date 

26 of the deposit in the old fund, whichever is later. 

27 ‘‘§ 53515. Records and reports 

28 ‘‘A person maintaining a fund under this chapter shall keep records and 

29 make reports as required by the Secretary or the Secretary of the Treasury. 

30 ‘‘§ 53516. Termination of agreement after change in regula31 tions 

32 ‘‘If, after an agreement has been made under this chapter, a change is 

33 made either in the joint regulations or in the regulations prescribed by the 

34 Secretary under this chapter that could have a substantial effect on the 

35 rights or duties of a person maintaining a fund under this chapter, that per36 son may terminate the agreement. 

37 ‘‘§ 53517. Reports 

38 ‘‘(a) IN GENERAL.—Within 120 days after the close of each calendar 

39 year, the Secretary of Transportation and the Secretary of Commerce each 

40 shall provide the Secretary of the Treasury a written report on the capital 


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1 construction funds under the particular Secretary’s jurisdiction for the cal2 endar year. 

3 ‘‘(b) CONTENTS.—The report shall state the name and taxpayer identi4 fication number of each person— 

5 ‘‘(1) establishing a capital construction fund during the calendar 

6 year; 

7 ‘‘(2) maintaining a capital construction fund on the last day of the 

8 calendar year; 

9 ‘‘(3) terminating a capital construction fund during the calendar 

10 year; 

11 ‘‘(4) making a deposit to or withdrawal from a capital construction 

12 fund during the calendar year, and the amount of the deposit or with13 drawal; or 

14 ‘‘(5) having been determined during the calendar year to have failed 

15 to fulfill a substantial obligation under a capital construction fund 

16 agreement to which the person is a party. 

17 ‘‘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. 

18 ‘‘SUBCHAPTER I—GENERAL 

19 ‘‘§ 53701. Definitions 

20 ‘‘In this chapter: 


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1 ‘‘(1) ACTUAL COST.—The term ‘actual cost’ means the sum of— 

2 ‘‘(A) all amounts paid by or for the account of the obligor as 

3 of the date on which a determination is made under section 

4 53715(d)(1) of this title; and 

5 ‘‘(B) all amounts that the Secretary reasonably estimates the 

6 obligor will become obligated to pay from time to time thereafter, 

7 for the construction, reconstruction, or reconditioning of the ves8 sel, including guarantee fees that will become payable under sec9 tion 53714 of this title in connection with all obligations issued 

10 for construction, reconstruction, or reconditioning of the vessel or 

11 equipment to be delivered, and all obligations issued for the deliv12 ered vessel or equipment. 

13 ‘‘(2) CONSTRUCTION, RECONSTRUCTION, AND RECONDITIONING.— 

14 The terms ‘construction’, ‘reconstruction’, and ‘reconditioning’ include 

15 designing, inspecting, outfitting, and equipping. 

16 ‘‘(3) DEPRECIATED ACTUAL COST.—The term ‘depreciated actual 

17 cost’ of a vessel means— 

18 ‘‘(A) if the vessel was not reconstructed or reconditioned, the 

19 actual cost of the vessel depreciated on a straight line basis over 

20 the useful life of the vessel as determined by the Secretary, not 

21 to exceed 25 years from the date of delivery by the builder; or 

22 ‘‘(B) if the vessel was reconstructed or reconditioned, the sum 

23 of— 

24 ‘‘(i) the actual cost of the vessel depreciated on a straight 

25 line basis from the date of delivery by the builder to the date 

26 of the reconstruction or reconditioning, using the original use27 ful life of the vessel, and from the date of the reconstruction 

28 or reconditioning, using a useful life of the vessel determined 

29 by the Secretary; and 

30 ‘‘(ii) any amount paid or obligated to be paid for the recon31 struction or reconditioning, depreciated on a straight line 

32 basis using a useful life of the vessel determined by the Sec33 retary. 

34 ‘‘(4) ELIGIBLE EXPORT VESSEL.—The term ‘eligible export vessel’ 

35 means a vessel that— 

36 ‘‘(A) is constructed, reconstructed, or reconditioned in the 

37 United States for use in world-wide trade; and 

38 ‘‘(B) will, on delivery or redelivery, become or remain docu39 mented under the laws of a country other than the United States. 

40 ‘‘(5) FISHERY FACILITY.— 


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1 ‘‘(A) IN GENERAL.—Subject to subparagraph (B), the term 

2 ‘fishery facility’ means— 

3 ‘‘(i) for operations on land— 

4 ‘‘(I) a structure or appurtenance thereto designed for 

5 the unloading and receiving from vessels, the processing, 

6 the holding pending processing, the distribution after 

7 processing, or the holding pending distribution, of fish 

8 from a fishery; 

9 ‘‘(II) the land necessary for the structure or appur10 tenance; and 

11 ‘‘(III) equipment that is for use with the structure or 

12 appurtenance and that is necessary for performing a 

13 function referred to in subclause (I); 

14 ‘‘(ii) for operations not on land, a vessel built in the United 

15 States and used for, equipped to be used for, or of a type nor16 mally used for, the processing of fish; or 

17 ‘‘(iii) for aquaculture, including operations on land or else18 where— 

19 ‘‘(I) a structure or appurtenance thereto designed for 

20 aquaculture; 

21 ‘‘(II) the land necessary for the structure or appur22 tenance; 

23 ‘‘(III) equipment that is for use with the structure or 

24 appurtenance and that is necessary for performing a 

25 function referred to in subclause (I); and 

26 ‘‘(IV) a vessel built in the United States and used for, 

27 equipped to be used for, or of a type normally used for, 

28 aquaculture. 

29 ‘‘(B) REQUIRED OWNERSHIP.—Under subparagraph (A), the 

30 structure, appurtenance, land, equipment, or vessel must be owned 

31 by— 

32 ‘‘(i) an individual who is a citizen of the United States; or 

33 ‘‘(ii) an entity that is a citizen of the United States under 

34 section 50501 of this title and that is at least 75 percent 

35 owned (as determined under that section) by citizens of the 

36 United States. 

37 ‘‘(6) FISHING VESSEL.—The term ‘fishing vessel’ has the meaning 

38 given that term in section 3 of the Magnuson-Stevens Fishery Con39 servation and Management Act (16 U.S.C. 1802), and any reference 

40 in this chapter to a vessel designed principally for commercial use in 


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1 the fishing trade or industry is deemed to be a reference to a fishing 

2 vessel. 

3 ‘‘(7) MORTGAGE.—The term ‘mortgage’ includes— 

4 ‘‘(A) a preferred mortgage as defined in section 31301 of this 

5 title; and 

6 ‘‘(B) a mortgage on a vessel that will become a preferred mort7 gage when filed or recorded under chapter 313 of this title. 

8 ‘‘(8) OBLIGATION.—The term ‘obligation’ means an instrument of 

9 indebtedness issued for a purpose described in section 53706 of this 

10 title, except— 

11 ‘‘(A) an obligation issued by the Secretary under section 53723 

12 of this title; and 

13 ‘‘(B) an obligation eligible for investment of funds under section 

14 53715(f) or 53717 of this title. 

15 ‘‘(9) OBLIGEE.—The term ‘obligee’ means the holder of an obliga16 tion. 

17 ‘‘(10) OBLIGOR.—The term ‘obligor’ means a party primarily liable 

18 for payment of the principal of or interest on an obligation. 

19 ‘‘(11) OCEAN THERMAL ENERGY CONVERSION FACILITY OR

20 PLANTSHIP.—The term ‘ocean thermal energy conversion facility or 

21 plantship’ means an at-sea facility or vessel, whether mobile, floating 

22 unmoored, moored, or standing on the seabed, that uses temperature 

23 differences in ocean water to produce electricity or another form of en24 ergy capable of being used directly to perform work, and includes— 

25 ‘‘(A) equipment installed on the facility or vessel to use the elec26 tricity or other form of energy to produce, process, refine, or man27 ufacture a product; 

28 ‘‘(B) a cable or pipeline used to deliver the electricity, fresh29 water, or product to shore; and 

30 ‘‘(C) other associated equipment and appurtenances of the facil31 ity or vessel to the extent they are located seaward of the high 

32 water mark. 

33 ‘‘(12) SECRETARY.—The term ‘Secretary’ means— 

34 ‘‘(A) the Secretary of Commerce with respect to fishing vessels 

35 and fishery facilities; and 

36 ‘‘(B) the Secretary of Transportation with respect to other ves37 sels and general shipyard facilities (as defined in section 53733(a) 

38 of this title). 

39 ‘‘(13) VESSEL.—The term ‘vessel’ means any type of vessel, whether 

40 in existence or under construction, including— 

41 ‘‘(A) a cargo vessel; 


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1 ‘‘(B) a passenger vessel; 

2 ‘‘(C) a combination cargo and passenger vessel; 

3 ‘‘(D) a tanker; 

4 ‘‘(E) a tug or towboat; 

5 ‘‘(F) a barge; 

6 ‘‘(G) a dredge; 

7 ‘‘(H) a floating drydock with a capacity of at least 35,000 lift8 ing tons and a beam of at least 125 feet between the wing walls; 

9 ‘‘(I) an oceanographic research vessel; 

10 ‘‘(J) an instruction vessel; 

11 ‘‘(K) a pollution treatment, abatement, or control vessel; 

12 ‘‘(L) a fishing vessel whose ownership meets the citizenship re13 quirements under section 50501 of this title for documenting ves14 sels to operate in the coastwise trade; and 

15 ‘‘(M) an ocean thermal energy conversion facility or plantship 

16 that is or will be documented under the laws of the United States. 

17 ‘‘§ 53702. General authority 

18 ‘‘(a) IN GENERAL.—The Secretary, on terms the Secretary may pre19 scribe, may guarantee or make a commitment to guarantee the payment of 

20 the principal of and interest on an obligation eligible to be guaranteed under 

21 this chapter. A guarantee or commitment to guarantee shall cover 100 per22 cent of the principal and interest. 

23 ‘‘(b) DIRECT LOANS FOR FISHERIES.— 

24 ‘‘(1) IN GENERAL.—Notwithstanding any other provision of this 

25 chapter, any obligation involving a fishing vessel, fishery facility, aqua26 culture facility, individual fishing quota, or fishing capacity reduction 

27 program issued under this chapter after October 11, 1996, shall be a 

28 direct loan obligation for which the Secretary shall be the obligee, rath29 er than an obligation issued to an obligee other than the Secretary and 

30 guaranteed by the Secretary. A direct loan obligation under this sub31 section shall be treated in the same manner and to the same extent 

32 as an obligation guaranteed under this chapter except with respect to 

33 provisions of this chapter that by their nature can only be applied to 

34 obligations guaranteed under this chapter. 

35 ‘‘(2) INTEREST RATE.—Notwithstanding any other provision of this 

36 chapter, the annual rate of interest an obligor shall pay on a direct 

37 loan obligation under this subsection is 2 percent plus the additional 

38 percent the Secretary must pay as interest to borrow from the Treas39 ury the funds to make the loan. 

40 ‘‘§ 53703. Application procedures 

41 ‘‘(a) TIME FOR DECISION.— 


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1 ‘‘(1) IN GENERAL.—The Secretary shall approve or deny an applica2 tion for a loan guarantee under this chapter within 270 days after the 

3 date on which the signed application is received by the Secretary. 

4 ‘‘(2) EXTENSION.—On request by an applicant, the Secretary may 

5 extend the 270-day period in paragraph (1) to a date not later than 

6 2 years after the date on which the signed application was received by 

7 the Secretary. 

8 ‘‘(b) CERTIFICATION OF REVIEW.—The Secretary may not guarantee or 

9 make a commitment to guarantee an obligation under this chapter unless 

10 the Secretary certifies that a full and fair consideration of all the regulatory 

11 requirements, including economic soundness and financial requirements ap12 plicable to the obligor and related parties, and a thorough assessment of the 

13 technical, economic, and financial aspects of the loan application, has been 

14 made. 

15 ‘‘§ 53704. Funding limits 

16 ‘‘(a) GENERAL LIMITATIONS.—The total unpaid principal amount of obli17 gations guaranteed under this chapter and outstanding at one time may not 

18 exceed $12,000,000,000. Of that amount— 

19 ‘‘(1) $850,000,000 shall be limited to obligations related to fishing 

20 vessels and fishery facilities; and 

21 ‘‘(2) $3,000,000,000 shall be limited to obligations related to eligible 

22 export vessels. 

23 ‘‘(b) ADDITIONAL LIMITATIONS.—Additional limitations may not be im24 posed on new commitments to guarantee loans for any fiscal year, except 

25 in amounts established in advance by annual authorization laws. A vessel 

26 eligible for a guarantee under this chapter may not be denied eligibility be27 cause of its type. 

28 ‘‘(c) LIMITS BASED ON RISK FACTORS.— 

29 ‘‘(1) DEFINITION.—In this subsection, the term ‘cost’ has the mean30 ing given that term in section 502 of the Federal Credit Reform Act 

31 of 1990 (2 U.S.C. 661a). 

32 ‘‘(2) SYSTEM OF RISK CATEGORIES.—The Secretary shall— 

33 ‘‘(A) establish, and update annually, a system of risk categories 

34 for obligations guaranteed under this chapter that categorizes the 

35 relative risk of guarantees based on the risk factors set forth in 

36 paragraph (4); 

37 ‘‘(B) determine annually for each risk category a subsidy rate 

38 equivalent to the cost of obligations in the category, expressed as 

39 a percentage of the amount guaranteed for obligations in the cat40 egory; and 


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1 ‘‘(C) ensure that each risk category is comprised of loans that 

2 are relatively homogeneous in cost and share characteristics pre3 dictive of defaults and other costs, given the facts known at the 

4 time of obligation or commitment, using a risk category system 

5 that is based on historical analysis of program data and statistical 

6 evidence concerning the likely costs of defaults or other costs that 

7 are expected to be associated with the loans in the category. 

8 ‘‘(3) USE OF SYSTEM.— 

9 ‘‘(A) PLACING OBLIGATION IN CATEGORY.—Before making a 

10 guarantee under this chapter for an obligation, and annually for 

11 projects subject to a guarantee, the Secretary shall apply the risk 

12 factors specified in paragraph (4) to place the obligation in a risk 

13 category established under paragraph (2). 

14 ‘‘(B) REDUCTION OF AVAILABLE AMOUNT.—The Secretary shall 

15 consider the total amount available to the Secretary for making 

16 guarantees under this chapter to be reduced by the amount deter17 mined by multiplying— 

18 ‘‘(i) the amount guaranteed under this chapter for an obli19 gation; by 

20 ‘‘(ii) the subsidy rate for the category in which the obliga21 tion is placed under subparagraph (A). 

22 ‘‘(C) ESTIMATED COST.—The estimated cost to the United 

23 States Government of a guarantee under this chapter for an obli24 gation is deemed to be the amount determined under subpara25 graph (B) for the obligation. 

26 ‘‘(D) RESTRICTION ON FURTHER GUARANTEES.—The Secretary 

27 may not guarantee obligations under this chapter after the total 

28 amount available to the Secretary under appropriations laws for 

29 the cost of loan guarantees is considered to be reduced to zero 

30 under subparagraph (B). 

31 ‘‘(4) RISK FACTORS.—The risk factors referred to in this subsection 

32 are— 

33 ‘‘(A) if applicable, the country risk for each eligible export vessel 

34 financed or to be financed by an obligation; 

35 ‘‘(B) the period for which an obligation is guaranteed or to be 

36 guaranteed; 

37 ‘‘(C) the amount of an obligation guaranteed or to be guaran38 teed in relation to the total cost of the project financed or to be 

39 financed by the obligation; 

40 ‘‘(D) the financial condition of an obligor or applicant for a 

41 guarantee; 


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1 ‘‘(E) if applicable, other guarantees related to the project; 

2 ‘‘(F) if applicable, the projected employment of each vessel or 

3 equipment to be financed with an obligation; 

4 ‘‘(G) if applicable, the projected market that will be served by 

5 each vessel or equipment to be financed with an obligation; 

6 ‘‘(H) the collateral provided for a guarantee for an obligation; 

7 ‘‘(I) the management and operating experience of an obligor or 

8 applicant for a guarantee; 

9 ‘‘(J) whether a guarantee under this chapter is or will be in ef10 fect during the construction period of the project; and 

11 ‘‘(K) the concentration risk presented by an unduly large per12 centage of loans outstanding by any one borrower or group of af13 filiated borrowers. 

14 ‘‘§ 53705. Pledge of United States Government 

15 ‘‘(a) FULL FAITH AND CREDIT.—The full faith and credit of the United 

16 States Government is pledged to the payment of a guarantee made under 

17 this chapter, for both principal and interest, including interest (as may be 

18 provided for in the guarantee) accruing between the date of default under 

19 a guaranteed obligation and the date of payment in full of the guarantee. 

20 ‘‘(b) INCONTESTABILITY.—A guarantee or commitment to guarantee 

21 made under this chapter is conclusive evidence of the eligibility of the obli22 gation for the guarantee. The validity of a guarantee or commitment to 

23 guarantee made under this chapter is incontestable. 

24 ‘‘§ 53706. Eligible purposes of obligations 

25 ‘‘(a) IN GENERAL.—To be eligible for a guarantee under this chapter, an 

26 obligation must aid in any of the following: 

27 ‘‘(1)(A) Financing (including reimbursement of an obligor for ex28 penditures previously made for) the construction, reconstruction, or re29 conditioning of a vessel (including an eligible export vessel) designed 

30 principally for research, or for commercial use— 

31 ‘‘(i) in the coastwise or intercoastal trade; 

32 ‘‘(ii) on the Great Lakes, or on bays, sounds, rivers, harbors, 

33 or inland lakes of the United States; 

34 ‘‘(iii) in foreign trade as defined in section 109(b) of this title; 

35 ‘‘(iv) as an ocean thermal energy conversion facility or 

36 plantship; 

37 ‘‘(v) as a floating drydock in the construction, reconstruction, 

38 reconditioning, or repair of vessels; or 

39 ‘‘(vi) as an eligible export vessel in worldwide trade. 

40 ‘‘(B) A guarantee under subparagraph (A) may not be made more 

41 than one year after delivery of the vessel (or redelivery if the vessel was 


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1 reconstructed or reconditioned) unless the proceeds of the obligation 

2 are used to finance the construction, reconstruction, or reconditioning 

3 of a vessel or of facilities or equipment related to marine operations. 

4 ‘‘(2) Financing (including reimbursement of an obligor for expendi5 tures previously made for) the construction, reconstruction, recondi6 tioning, or purchase of a vessel owned by citizens of the United States 

7 and designed principally for research, or for commercial use in the fish8 ing industry. 

9 ‘‘(3) Financing the purchase, reconstruction, or reconditioning of a 

10 vessel or fishery facility— 

11 ‘‘(A) for which an obligation was guaranteed under this chapter; 

12 and 

13 ‘‘(B) that, under subchapter II of this chapter— 

14 ‘‘(i) is a vessel or fishery facility for which an obligation 

15 was accelerated and paid; 

16 ‘‘(ii) was acquired by the Federal Ship Financing Fund or 

17 successor account under section 53717 of this title; or 

18 ‘‘(iii) was sold at foreclosure begun or intervened in by the 

19 Secretary. 

20 ‘‘(4) Financing any part of the repayment to the United States Gov21 ernment of any amount of a construction-differential subsidy paid for 

22 a vessel. 

23 ‘‘(5) Refinancing an existing obligation (regardless of whether guar24 anteed under this chapter) issued for a purpose described in para25 graphs (1)–(4), including a short-term obligation incurred to obtain 

26 temporary funds with the intention of refinancing. 

27 ‘‘(6) Financing or refinancing (including reimbursement of an obli28 gor for expenditures previously made for) the construction, reconstruc29 tion, reconditioning, or purchase of a fishery facility. 

30 ‘‘(7) Financing or refinancing (including reimbursement of an obli31 gor for expenditures previously made for) the purchase of an individual 

32 fishing quota in accordance with section 303(d)(4) of the Magnuson33 Stevens Fishery Conservation and Management Act (16 U.S.C. 

34 1853(d)(4)). 

35 ‘‘(b) NON-VESSELS TREATED AS VESSELS.—An obligation guaranteed 

36 under subsection (a)(6) or (7) shall be treated, for purposes of this chapter, 

37 in the same manner and to the same extent as an obligation that aids in 

38 financing the construction, reconstruction, reconditioning, or purchase of a 

39 vessel, except with respect to provisions that by their nature can only be 

40 applied to vessels. 


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1 ‘‘(c) PRIORITIES FOR CERTAIN VESSELS.—In guaranteeing or making a 

2 commitment to guarantee an obligation under this chapter, the Secretary 

3 shall give priority to— 

4 ‘‘(1) a vessel that is otherwise eligible for a guarantee and is con5 structed with assistance under subtitle D of the Maritime Security Act 

6 of 2003 (46 U.S.C. 53101 note); and 

7 ‘‘(2) after applying paragraph (1), a vessel that is otherwise eligible 

8 for a guarantee and that the Secretary of Defense determines— 

9 ‘‘(A) is suitable for service as a naval auxiliary in time of war 

10 or national emergency; and 

11 ‘‘(B) meets a shortfall in sealift capacity or capability. 

12 ‘‘§ 53707. Findings related to obligors and operators 

13 ‘‘(a) RESPONSIBLE OBLIGOR.—The Secretary may not guarantee or make 

14 a commitment to guarantee an obligation under this chapter unless the Sec15 retary finds that the obligor is responsible and has the ability, experience, 

16 financial resources, and other qualifications necessary for the adequate oper17 ation and maintenance of each vessel that will serve as security for the 

18 guarantee. 

19 ‘‘(b) OPERATORS OF LINER VESSELS.—The Secretary of Transportation 

20 may not guarantee or make a commitment to guarantee a loan for the con21 struction, reconstruction, or reconditioning of a liner vessel under this chap22 ter unless the Chairman of the Federal Maritime Commission certifies that 

23 the operator of the vessel has not been found by the Commission to have 

24 committed, within the previous 5 years— 

25 ‘‘(1) a violation of part A of subtitle IV of this title that involves 

26 unjust or unfair discriminatory treatment or undue or unreasonable 

27 prejudice or disadvantage with respect to a United States shipper, 

28 ocean transportation intermediary, ocean common carrier, or port; or 

29 ‘‘(2) a violation of part B of subtitle IV of this title. 

30 ‘‘(c) OPERATORS OF FISHING VESSELS.—The Secretary of Commerce 

31 may not guarantee or make a commitment to guarantee a loan for the con32 struction, reconstruction, or reconditioning of a fishing vessel under this 

33 chapter if the operator of the vessel has been— 

34 ‘‘(1) held liable, or the vessel has been held liable in rem, for a civil 

35 penalty under section 308 of the Magnuson-Stevens Fishery Conserva36 tion and Management Act (16 U.S.C. 1858) and the operator has not 

37 paid the penalty; 

38 ‘‘(2) found guilty of an offense under section 309 of the Magnuson39 Stevens Fishery Conservation and Management Act (16 U.S.C. 1859) 

40 and not paid the assessed fine or served the assessed sentence; 


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1 ‘‘(3) held liable for a civil or criminal penalty under section 105 of 

2 the Marine Mammal Protection Act of 1972 (16 U.S.C. 1375) and not 

3 paid the assessed fine or served the assessed sentence; or 

4 ‘‘(4) held liable for a civil penalty by the Coast Guard under this 

5 title or title 33 and not paid the assessed fine. 

6 ‘‘(d) WAIVERS CONCERNING FINANCIAL CONDITION.—The Secretary 

7 shall prescribe regulations concerning circumstances under which waivers of, 

8 or exceptions to, otherwise applicable regulatory requirements concerning fi9 nancial condition can be made. The regulations shall require that— 

10 ‘‘(1) the economic soundness requirements in section 53708(a) of 

11 this title are met after the waiver of the financial condition require12 ment; and 

13 ‘‘(2) the waiver shall provide for the imposition of other requirements 

14 on the obligor designed to compensate for the increased risk associated 

15 with the obligor’s failure to meet regulatory requirements applicable to 

16 financial condition. 

17 ‘‘§ 53708. Findings related to economic soundness 

18 ‘‘(a) BY SECRETARY OF TRANSPORTATION.—The Secretary of Transpor19 tation may not guarantee or make a commitment to guarantee an obligation 

20 under this chapter unless the Secretary finds that the property or project 

21 for which the obligation will be executed will be economically sound. In mak22 ing that finding, the Secretary shall consider— 

23 ‘‘(1) the need in the particular segment of the maritime industry for 

24 new or additional capacity, including any impact on existing equipment 

25 for which a guarantee under this chapter is in effect; 

26 ‘‘(2) the market potential for employment of the vessel over the life 

27 of the guarantee; 

28 ‘‘(3) projected revenues and expenses associated with employment of 

29 the vessel; 

30 ‘‘(4) any charter, contract of affreightment, transportation agree31 ment, or similar agreement or undertaking relevant to the employment 

32 of the vessel; 

33 ‘‘(5) other relevant criteria; and 

34 ‘‘(6) for inland waterways, the need for technical improvements, in35 cluding increased fuel efficiency or improved safety. 

36 ‘‘(b) BY SECRETARY OF COMMERCE.—The Secretary of Commerce may 

37 not guarantee or make a commitment to guarantee an obligation under this 

38 chapter unless the Secretary finds, at or prior to the time the commitment 

39 is made or the guarantee becomes effective, that— 

40 ‘‘(1) the property or project for which the obligation will be executed 

41 will be economically sound; and 


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1 ‘‘(2) for a fishing vessel, the purpose of the financing or refinancing 

2 is consistent with— 

3 ‘‘(A) the wise use of the fisheries resources and the develop4 ment, advancement, management, conservation, and protection of 

5 the fisheries resources; or 

6 ‘‘(B) the need for technical improvements, including increased 

7 fuel efficiency or improved safety. 

8 ‘‘(c) USED FISHING VESSELS AND FACILITIES.—The Secretary of Com9 merce may not guarantee or make a commitment to guarantee an obligation 

10 under this chapter for the purchase of a used fishing vessel or used fishery 

11 facility unless the vessel or facility will be— 

12 ‘‘(1) reconstructed or reconditioned in the United States and will 

13 contribute to the development of the United States fishing industry; or 

14 ‘‘(2) used— 

15 ‘‘(A) in the harvesting of fish from an underused fishery; or 

16 ‘‘(B) for a purpose described in the definition of ‘fishery facility’ 

17 in section 53701 of this title with respect to an underused fishery. 

18 ‘‘(d) INDEPENDENT ANALYSIS.—The Secretary may make a determina19 tion that aspects of an application under this chapter require independent 

20 analysis to be conducted by third party experts due to risk factors associ21 ated with markets, technology, financial structures, or other risk factors 

22 identified by the Secretary. Any independent analysis conducted under this 

23 subsection shall be performed by a party chosen by the Secretary. 

24 ‘‘(e) ADDITIONAL EQUITY BECAUSE OF INCREASED RISKS.—Notwith25 standing any other provision of this chapter, the Secretary may make a de26 termination that an application under this title requires additional equity 

27 because of increased risk factors associated with markets, technology, finan28 cial structures, or other risk factors identified by the Secretary. 

29 ‘‘§ 53709. Amount of obligations 

30 ‘‘(a) IN GENERAL.—The principal of an obligation may not be guaranteed 

31 in an amount greater than the amount determined by multiplying the per32 centage applicable under subsection (b) by— 

33 ‘‘(1) the amount paid by or for the account of the obligor (as deter34 mined by the Secretary, which determination shall be conclusive) for 

35 the construction, reconstruction, or reconditioning of the vessel used as 

36 security for the guarantee; or 

37 ‘‘(2) if the obligor creates an escrow fund under section 53715 of 

38 this title, the actual cost of the vessel. 

39 ‘‘(b) LIMITATIONS ON AMOUNT BORROWED.— 

40 ‘‘(1) IN GENERAL.—Except as otherwise provided, the principal 

41 amount of an obligation guaranteed under this chapter may not exceed 


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1 75 percent of the actual cost or depreciated actual cost, as determined 

2 by the Secretary, of the vessel used as security for the guarantee. 

3 ‘‘(2) CERTAIN APPROVED VESSELS.—The principal amount may not 

4 exceed 87.5 percent of the actual cost or depreciated actual cost if— 

5 ‘‘(A) the size and speed of the vessel are approved by the Sec6 retary; 

7 ‘‘(B) the vessel is or would have been eligible for mortgage aid 

8 for construction under section 509 of the Merchant Marine Act, 

9 1936, or would have been eligible except that the vessel was built 

10 with a construction-differential subsidy and the subsidy has been 

11 repaid; and 

12 ‘‘(C) the vessel is of a type described in that section for which 

13 the minimum down payment required by that section is 12.5 per14 cent of the cost of the vessel. 

15 ‘‘(3) BARGES.—For a barge constructed without a construction-dif16 ferential subsidy or for which the subsidy has been repaid, the principal 

17 amount may not exceed 87.5 percent of the actual cost or depreciated 

18 actual cost. 

19 ‘‘(4) FISHING VESSELS AND FISHERY FACILITIES.—For a fishing 

20 vessel or fishery facility, the principal amount may not exceed 80 per21 cent of the actual cost or depreciated actual cost. However, debt for 

22 the vessel or facility may not be placed through the Federal Financing 

23 Bank. 

24 ‘‘(5) OTEC.—For an ocean thermal energy conversion facility or 

25 plantship constructed without a construction-differential subsidy, the 

26 principal amount may not exceed 87.5 percent of the actual cost or de27 preciated actual cost of the facility or plantship. 

28 ‘‘(6) ELIGIBLE EXPORT VESSELS.—For an eligible export vessel, the 

29 principal amount may not exceed 87.5 percent of the actual cost or de30 preciated actual cost. 

31 ‘‘(c) SECURITY INVOLVING MULTIPLE VESSELS.—The principal amount 

32 of an obligation having more than one vessel as security for the guarantee 

33 may not exceed the sum of the principal amounts allowable for all the ves34 sels. 

35 ‘‘(d) PROHIBITION ON UNIFORM PERCENTAGE LIMITATIONS.—The Sec36 retary may not establish a percentage under any provision of subsection (b) 

37 that is to be applied uniformly to all guarantees or commitments to guar38 antee made under that provision. 

39 ‘‘(e) PROHIBITION ON MINIMUM PRINCIPAL AMOUNT.—The Secretary 

40 may not establish, as a condition of eligibility for a guarantee under this 

41 chapter, a minimum principal amount for an obligation covering the reconVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00150 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 struction or reconditioning of a fishing vessel or fishery facility. For pur2 poses of this chapter, the reconstruction or reconditioning of a fishing vessel 

3 or fishery facility does not include the routine minor repair or maintenance 

4 of the vessel or facility. 

5 ‘‘§ 53710. Contents of obligations 

6 ‘‘(a) IN GENERAL.—An obligation guaranteed under this chapter must— 

7 ‘‘(1) provide for payments by the obligor satisfactory to the Sec8 retary; 

9 ‘‘(2) provide for interest (exclusive of guarantee fees and other fees) 

10 at a rate not more than the annual rate on the unpaid principal that 

11 the Secretary determines is reasonable, considering the range of inter12 est rates prevailing in the private market for similar loans and the 

13 risks assumed by the Secretary; 

14 ‘‘(3) have a maturity date satisfactory to the Secretary, but— 

15 ‘‘(A) not more than 25 years after the date of delivery of the 

16 vessel used as security for the guarantee; or 

17 ‘‘(B) if the vessel has been reconstructed or reconditioned, not 

18 more than the later of— 

19 ‘‘(i) 25 years after the date of delivery of the vessel; or 

20 ‘‘(ii) the remaining years of useful life of the vessel as de21 termined by the Secretary; and 

22 ‘‘(4) provide, or a related agreement must provide, that if the vessel 

23 used as security for the guarantee is a delivered vessel, the vessel shall 

24 be— 

25 ‘‘(A) in class A–1, American Bureau of Shipping, or meet other 

26 standards acceptable to the Secretary, with all required certifi27 cates, including marine inspection certificates of the Coast Guard 

28 or, in the case of an eligible export vessel, of the appropriate for29 eign authorities under a treaty, convention, or other international 

30 agreement to which the United States is a party, and with all out31 standing requirements and recommendations necessary for class 

32 retention accomplished, unless the Secretary permits a deferment 

33 of repairs necessary to meet these requirements; and 

34 ‘‘(B) well equipped, in good repair, and in every respect sea35 worthy and fit for service. 

36 ‘‘(b) PROVISIONS FOR CERTAIN PASSENGER VESSELS.— 

37 ‘‘(1) IN GENERAL.—With the Secretary’s approval, if the vessel used 

38 as security for the guarantee is a passenger vessel having the tonnage, 

39 speed, passenger accommodations, and other characteristics described 

40 in section 503 of the Merchant Marine Act, 1936, an obligation guar41 anteed under this chapter or a related agreement may provide that— 


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1 ‘‘(A) the only recourse by the United States Government 

2 against the obligor for payments under the guarantee will be re3 possession of the vessel and assignment of insurance claims; and 

4 ‘‘(B) the obligor’s liability for payments under the guarantee 

5 will be satisfied and discharged by the surrender of the vessel and 

6 all interest in the vessel to the Government in the condition de7 scribed in paragraph (2). 

8 ‘‘(2) SURRENDER OF VESSEL.— 

9 ‘‘(A) IN GENERAL.—On surrender, the vessel must be— 

10 ‘‘(i) free and clear of all liens and encumbrances except the 

11 security interest conveyed to the Secretary under this chapter; 

12 ‘‘(ii) in class; and 

13 ‘‘(iii) in as good order and condition (ordinary wear and 

14 tear excepted) as when acquired by the obligor. 

15 ‘‘(B) COVERING DEFICIENCIES BY INSURANCE.—To the extent 

16 covered by insurance, a deficiency related to a requirement in sub17 paragraph (A) may be satisfied by assignment of the obligor’s in18 surance claims to the Government. 

19 ‘‘(c) OTHER PROVISIONS TO PROTECT SECURITY INTERESTS.—An obli20 gation guaranteed under this chapter and any related agreement must con21 tain other provisions for the protection of the security interests of the Gov22 ernment (including acceleration, assumption, and subrogation provisions and 

23 the issuance of notes by the obligor to the Secretary), liens and releases of 

24 liens, payment of taxes, and other matters that the Secretary may prescribe. 

25 ‘‘§ 53711. Security interest 

26 ‘‘(a) IN GENERAL.—The Secretary may guarantee an obligation under 

27 this chapter only if the obligor conveys or agrees to convey to the Secretary 

28 a security interest the Secretary considers necessary to protect the interest 

29 of the United States Government. 

30 ‘‘(b) MULTIPLE VESSELS AND TYPES OF SECURITY.—The security inter31 est may relate to more than one vessel and may consist of more than one 

32 type of security. If the security interest relates to more than one vessel, the 

33 obligation may have the latest maturity date allowable under section 

34 53710(a)(3) of this title for any of the vessels used as security for the guar35 antee. However, the Secretary may require such payments of principal prior 

36 to maturity, with respect to all related obligations, as the Secretary con37 siders necessary to maintain adequate security for the guarantee. 

38 ‘‘§ 53712. Monitoring financial condition and operations of 

39 obligor 

40 ‘‘(a) IN GENERAL.—The Secretary shall monitor the financial condition 

41 and operations of the obligor on a regular basis during the term of the 


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1 guarantee. The Secretary shall document the results of the monitoring on 

2 an annual or quarterly basis depending on the condition of the obligor. If 

3 the Secretary determines that the financial condition of the obligor warrants 

4 additional protections to the Secretary, the Secretary shall take appropriate 

5 action under subsection (b). If the Secretary determines that the financial 

6 condition of the obligor jeopardizes its continued ability to perform its re7 sponsibilities in connection with the guarantee of an obligation by the Sec8 retary, the Secretary shall make an immediate determination whether de9 fault should take place and whether further measures described in sub10 section (b) should be taken to protect the interests of the Secretary while 

11 ensuring that program objectives are met. 

12 ‘‘(b) CONTRACT PROVISIONS TO PROTECT SECRETARY.—The Secretary 

13 shall include provisions in a loan agreement with an obligor that provides 

14 additional authority to the Secretary to take action to limit potential losses 

15 in connection with a defaulted loan or a loan that is in jeopardy due to the 

16 deteriorating financial condition of the obligor. These provisions include re17 quirements for additional collateral or greater equity contributions that are 

18 effective upon the occurrence of verifiable conditions relating to the obligor’s 

19 financial condition or the status of the vessel or shipyard project. 

20 ‘‘§ 53713. Administrative fees 

21 ‘‘(a) IN GENERAL.—The Secretary shall charge and collect from the obli22 gor fees the Secretary considers reasonable for— 

23 ‘‘(1) investigating an application for a guarantee; 

24 ‘‘(2) appraising property offered as security for a guarantee; 

25 ‘‘(3) issuing a commitment; 

26 ‘‘(4) providing services related to an escrow fund under section 

27 53715 of this title; and 

28 ‘‘(5) inspecting property during construction, reconstruction, or re29 conditioning. 

30 ‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection (a) may 

31 not exceed 0.5 percent of the original principal amount of the obligations 

32 to be guaranteed. 

33 ‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may charge 

34 and collect fees to cover the costs of independent analysis under section 

35 53708(d) of this title. Notwithstanding section 3302 of title 31, any fee col36 lected under this subsection shall— 

37 ‘‘(1) be credited as an offsetting collection to the account that fi38 nances the administration of the loan guarantee program; 

39 ‘‘(2) be available for expenditure only to pay the costs of activities 

40 and services for which the fee is imposed; and 

41 ‘‘(3) remain available until expended. 


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1 ‘‘§ 53714. Guarantee fees 

2 ‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall prescribe 

3 regulations to assess a fee for guaranteeing an obligation under this chap4 ter. 

5 ‘‘(b) COMPUTATION OF FEE.— 

6 ‘‘(1) IN GENERAL.—The amount of the fee for a guarantee under 

7 this chapter shall be equal to the sum of the amounts determined under 

8 paragraph (2) for the years in which the guarantee is in effect. 

9 ‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred to in 

10 paragraph (1) for a year in which the guarantee is in effect is the 

11 present value of the amount calculated under paragraph (3). To deter12 mine the present value, the Secretary shall apply a discount rate deter13 mined by the Secretary of the Treasury, considering current market 

14 yields on outstanding obligations of the United States Government hav15 ing periods to maturity comparable to the period to maturity for the 

16 guaranteed obligation. 

17 ‘‘(3) CALCULATION OF AMOUNT.—The amount referred to in para18 graph (2) shall be calculated by multiplying— 

19 ‘‘(A) the estimated average unpaid principal amount of the obli20 gation that will be outstanding during the year (excluding the av21 erage amount, other than interest, on deposit during the year in 

22 an escrow fund under section 53715 of this title); by 

23 ‘‘(B) the fee rate set under paragraph (4). 

24 ‘‘(4) SETTING FEE RATES.—To set the fee rate referred to in para25 graph (3)(B), the Secretary shall establish a formula that— 

26 ‘‘(A) takes into account the security provided for the guaranteed 

27 obligation; and 

28 ‘‘(B) is a sliding scale based on the creditworthiness of the obli29 gor, using— 

30 ‘‘(i) the lowest allowable rate under paragraph (5) for the 

31 most creditworthy obligors; and 

32 ‘‘(ii) the highest allowable rate under paragraph (5) for the 

33 least creditworthy obligors. 

34 ‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under para35 graph (4) shall be— 

36 ‘‘(A) for a delivered vessel or equipment, at least 0.5 percent 

37 and not more than 1 percent; and 

38 ‘‘(B) for a vessel to be constructed, reconstructed, or recondi39 tioned or equipment to be delivered, at least 0.25 percent and not 

40 more than 0.5 percent. 


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1 ‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an obligation 

2 under this chapter shall be collected not later than the date on which an 

3 amount is first paid on the obligation. 

4 ‘‘(d) FINANCING THE FEE.—A fee paid under this section is eligible to 

5 be financed under this chapter and shall be included in the actual cost of 

6 the obligation guaranteed. 

7 ‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not refundable. 

8 However, an obligor shall receive credit for the amount paid for the remain9 ing term of the obligation if the obligation is refinanced and guaranteed 

10 under this chapter after the refinancing. 

11 ‘‘§ 53715. Escrow fund 

12 ‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed under 

13 this chapter are to be used to finance the construction, reconstruction, or 

14 reconditioning of a vessel that will serve as security for a guarantee under 

15 this chapter, the Secretary may accept and hold in escrow, under an escrow 

16 agreement with the obligor, a portion of the proceeds of all obligations guar17 anteed under this chapter whose proceeds are to be so used which is equal 

18 to— 

19 ‘‘(1) the excess of— 

20 ‘‘(A) the principal amount of all obligations whose proceeds are 

21 to be so used; over 

22 ‘‘(B) 75 percent or 87.5 percent, whichever is applicable under 

23 section 53709(b) of this title, of the amount paid by or for the 

24 account of the obligor for the construction, reconstruction, or re25 conditioning of the vessel; plus 

26 ‘‘(2) any interest the Secretary may require on the amount described 

27 in paragraph (1). 

28 ‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VES29 SELS.—If the security for the guarantee of an obligation relates both to a 

30 vessel to be constructed, reconstructed, or reconditioned and to a delivered 

31 vessel, the principal amount of the obligation shall be prorated for purposes 

32 of subsection (a) under regulations prescribed by the Secretary. 

33 ‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— 

34 ‘‘(1) PURPOSES.—The Secretary shall disburse amounts in the es35 crow fund, as specified in the escrow agreement, to— 

36 ‘‘(A) pay amounts the obligor is obligated to pay for— 

37 ‘‘(i) the construction, reconstruction, or reconditioning of a 

38 vessel used as security for the guarantee; and 

39 ‘‘(ii) interest on the obligations; 

40 ‘‘(B) redeem the obligations under a refinancing guaranteed 

41 under this chapter; and 


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1 ‘‘(C) pay any excess interest deposits to the obligor at times 

2 provided for in the escrow agreement. 

3 ‘‘(2) MANNER OF PAYMENT.—If a payment becomes due under the 

4 guarantee before the termination of the escrow agreement, the amount 

5 in the escrow fund at the time the payment becomes due, including re6 alized income not yet paid to the obligor, shall be paid into the appro7 priate account under section 53717 of this title. The amount shall be 

8 credited against amounts due or to become due from the obligor to the 

9 Secretary on the guaranteed obligations or, to the extent not so re10 quired, be paid to the obligor. 

11 ‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— 

12 ‘‘(1) IN GENERAL.—No disbursement shall be made under subsection 

13 (c) to any person until the total amount paid by or for the account 

14 of the obligor from sources other than the proceeds of the obligation 

15 equals at least 25 percent or 12.5 percent, whichever is applicable 

16 under section 53709(b) of this title, of the aggregate actual cost of the 

17 vessel, as previously approved by the Secretary. If the aggregate actual 

18 cost of the vessel has increased since the Secretary’s initial approval 

19 or if it increases after the first disbursement is permitted under this 

20 subsection, then no further disbursements shall be made under sub21 section (c) until the total amount paid by or for the account of the obli22 gor from sources other than the proceeds of the obligation equals at 

23 least 25 percent or 12.5 percent, as applicable, of the increase, as de24 termined by the Secretary, in the aggregate actual cost of the vessel. 

25 This paragraph does not require the Secretary to consent to finance 

26 any increase in actual cost unless the Secretary determines that such 

27 an increase in the obligation meets all the terms and conditions of this 

28 chapter or other applicable law. 

29 ‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The Sec30 retary shall, by regulation, establish a transparent, independent, and 

31 risk-based process for verifying and documenting the progress of 

32 projects under construction before disbursing guaranteed loan funds. 

33 At a minimum, the process shall require documented proof of progress 

34 in connection with the construction, reconstruction, or reconditioning of 

35 a vessel or vessels before disbursements are made from the escrow 

36 fund. The Secretary may require that the obligor provide a certificate 

37 from an independent party certifying that the requisite progress in con38 struction, reconstruction, or reconditioning has taken place. 

39 ‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.— 


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1 ‘‘(1) IN GENERAL.—If a payment has not become due under the 

2 guarantee before the termination of the escrow agreement, the balance 

3 of the escrow fund at the time of termination shall be disbursed to— 

4 ‘‘(A) prepay the excess of— 

5 ‘‘(i) the principal amount of all obligations whose proceeds 

6 are to be used to finance the construction, reconstruction, or 

7 reconditioning of the vessel used or to be used as security for 

8 the guarantee; over 

9 ‘‘(ii) 75 percent or 87.5 percent, whichever is applicable 

10 under section 53709(b) of this title, of the actual cost of the 

11 vessel to the extent paid; and 

12 ‘‘(B) pay interest on that prepaid amount of principal. 

13 ‘‘(2) REMAINING BALANCE.—Any remaining balance of the escrow 

14 fund shall be paid to the obligor. 

15 ‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any part of 

16 an escrow fund in obligations of the United States Government with matu17 rities such that the escrow fund will be available as required for purposes 

18 of the escrow agreement. Investment income shall be paid to the obligor 

19 when received. 

20 ‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement shall 

21 contain other terms the Secretary considers necessary to protect fully the 

22 interests of the Government. 

23 ‘‘§ 53716. Deposit fund 

24 ‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury for purposes 

25 of this section. The Secretary, in accordance with an agreement under sub26 section (b), may deposit into and hold in the fund cash belonging to an obli27 gor to serve as collateral for a guarantee made under this chapter with re28 spect to the obligor. 

29 ‘‘(b) AGREEMENT.—The Secretary and an obligor shall make a reserve 

30 fund or other collateral account agreement to govern the deposit, with31 drawal, retention, use, and reinvestment of cash of the obligor held in the 

32 fund. The agreement shall contain— 

33 ‘‘(1) terms and conditions required by this section; 

34 ‘‘(2) terms that grant to the United States Government a security 

35 interest in all amounts deposited into the fund; and 

36 ‘‘(3) any additional terms considered by the Secretary to be nec37 essary to protect fully the interests of the Government. 

38 ‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any part of 

39 the amounts in the fund in obligations of the Government with maturities 

40 such that amounts in the fund will be available as required for purposes 

41 of the agreement under subsection (b). Cash balances in the fund in excess 


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1 of current requirements shall be maintained in a form of uninvested funds, 

2 and the Secretary of the Treasury shall pay interest on these funds. 

3 ‘‘(d) WITHDRAWALS.— 

4 ‘‘(1) IN GENERAL.—Cash deposited into the fund may not be with5 drawn without the consent of the Secretary. 

6 ‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may 

7 pay any income earned on cash of an obligor deposited into the fund 

8 in accordance with the agreement with the obligor under subsection (b). 

9 ‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may retain and 

10 offset any or all of the cash of an obligor in the fund, and any income 

11 realized thereon, as part of the Secretary’s recovery against the obligor 

12 in case of a default by the obligor on an obligation. 

13 ‘‘§ 53717. Management of funds in the Treasury 

14 ‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the Federal 

15 Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). 

16 ‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.— 

17 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Transpor18 tation shall account for payments and disbursements involving obliga19 tions guaranteed under this chapter and not subject to FCRA in an 

20 account in the Treasury entitled the Federal Ship Financing Fund Liq21 uidating Account (a liquidating account as defined in FCRA). 

22 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation 

23 shall account for payments and disbursements involving obligations 

24 guaranteed under this chapter and subject to FCRA in a separate ac25 count in the Treasury entitled the Federal Ship Financing Guaranteed 

26 Loan Financing Account (a financing account as defined in FCRA). 

27 ‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.— 

28 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce 

29 shall account for payments and disbursements involving obligations 

30 guaranteed under this chapter and not subject to FCRA in a separate 

31 account in the Treasury established for this purpose. 

32 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce shall 

33 account for payments and disbursements involving obligations guaran34 teed under this chapter and subject to FCRA in a separate account in 

35 the Treasury established for this purpose. 

36 ‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of 

37 Commerce shall account for payments and disbursements involving direct 

38 loans made under this chapter in a separate account in the Treasury estab39 lished for this purpose. 


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1 ‘‘§ 53718. Annual report to Congress 

2 ‘‘The Secretary of Transportation shall report to Congress annually on 

3 the loan guarantee program under this chapter. Each report shall include— 

4 ‘‘(1) the size, in dollars, of the portfolio of loans guaranteed; 

5 ‘‘(2) the size, in dollars, of projects in the portfolio facing financial 

6 difficulties; 

7 ‘‘(3) the number and type of projects covered; 

8 ‘‘(4) a profile of pending loan applications; 

9 ‘‘(5) the amount of appropriations available for new guarantees; 

10 ‘‘(6) a profile of each project approved since the last report; and 

11 ‘‘(7) a profile of any defaults since the last report. 

12 ‘‘SUBCHAPTER II—DEFAULT PROVISIONS 

13 ‘‘§ 53721. Rights of obligee 

14 ‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection (c), if 

15 an obligor has continued in default for 30 days in the payment of principal 

16 or interest on an obligation guaranteed under this chapter, the obligee or 

17 the obligee’s agent may demand that the Secretary pay the unpaid principal 

18 amount of the obligation and the unpaid interest on the obligation to the 

19 date of payment. The demand must be made within the earlier of— 

20 ‘‘(1) a period that may be specified in the guarantee or a related 

21 agreement; or 

22 ‘‘(2) 90 days from the date of the default. 

23 ‘‘(b) PAYMENTS BY SECRETARY.— 

24 ‘‘(1) IN GENERAL.—If a demand is made under subsection (a), the 

25 Secretary shall pay to the obligee or the obligee’s agent the unpaid 

26 principal amount of the obligation and the unpaid interest on the obli27 gation to the date of payment. Payment shall be made within the ear28 lier of— 

29 ‘‘(A) a period that may be specified in the guarantee or a re30 lated agreement; or 

31 ‘‘(B) 30 days from the date of the demand. 

32 ‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not required to 

33 make payment under this subsection if, within the appropriate period 

34 under paragraph (1), the Secretary finds that the obligor was not in 

35 default or that the default was remedied before the demand. 

36 ‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE DEMAND.—An 

37 obligee or the obligee’s agent may not demand payment under this section 

38 if the Secretary, before the demand and on terms that may be provided in 

39 the obligation or a related agreement, has assumed the obligor’s rights and 

40 duties under the obligation and any related agreement and made any payVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00159 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 ment in default. However, the guarantee of the obligation remains in effect 

2 after the Secretary’s assumption. 

3 ‘‘§ 53722. Actions by Secretary 

4 ‘‘(a) GENERAL AUTHORITY.—On default under an obligation or related 

5 agreement between the Secretary and the obligor, the Secretary, on terms 

6 that may be provided in the obligation or agreement, may— 

7 ‘‘(1) assume the obligor’s rights and duties under the obligation or 

8 agreement, make any payment in default, and notify the obligee or the 

9 obligee’s agent of the default and the Secretary’s assumption; or 

10 ‘‘(2) notify the obligee or the obligee’s agent of the default. 

11 ‘‘(b) DEMANDS BY OBLIGEES.— 

12 ‘‘(1) DEMAND.—If the Secretary proceeds under subsection (a)(2), 

13 the obligee or the obligee’s agent may demand that the Secretary pay 

14 the unpaid principal amount of the obligation and the unpaid interest 

15 on the obligation. The demand must be made within the earlier of— 

16 ‘‘(A) a period that may be specified in the guarantee or a re17 lated agreement; or 

18 ‘‘(B) 60 days from the date of the Secretary’s notice. 

19 ‘‘(2) PAYMENT.—If a demand is made under paragraph (1), the Sec20 retary shall pay to the obligee or the obligee’s agent the unpaid prin21 cipal amount of the obligation and the unpaid interest on the obligation 

22 to the date of payment. Payment shall be made within the earlier of— 

23 ‘‘(A) a period that may be specified in the guarantee or a re24 lated agreement; or 

25 ‘‘(B) 30 days from the date of the demand. 

26 ‘‘(c) CONTINUED EFFECT OF GUARANTEE.—A guarantee of an obligation 

27 remains in effect after an assumption of the obligation by the Secretary. 

28 ‘‘(d) ADDITIONAL RESPONSES.—If there is a default on an obligation, the 

29 Secretary shall conduct operations under this chapter in a manner that— 

30 ‘‘(1) maximizes the net present value return from the sale or disposi31 tion of assets associated with the obligation, including prompt referral 

32 to the Attorney General for collection as appropriate; 

33 ‘‘(2) minimizes the amount of any loss realized in the resolution of 

34 the guarantee; 

35 ‘‘(3) ensures adequate competition and fair and consistent treatment 

36 of offerors; and 

37 ‘‘(4) requires appraisal of assets by an independent appraiser. 

38 ‘‘§ 53723. Payments by Secretary and issuance of obligations 

39 ‘‘(a) CASH PAYMENT.—Amounts required to be paid by the Secretary 

40 under section 53721 or 53722 of this title shall be paid in cash. 


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1 ‘‘(b) ISSUANCE OF OBLIGATIONS.—If amounts in the appropriate account 

2 under section 53717 of this title are not sufficient to make a payment re3 quired under section 53721 or 53722 of this title, the Secretary may issue 

4 obligations to the Secretary of the Treasury. The Secretary, with the ap5 proval of the Secretary of the Treasury, shall prescribe the form, denomina6 tion, maturity, and other terms (except the interest rate) of the obligations. 

7 The Secretary of the Treasury shall set the interest rate for the obligations, 

8 considering the current average market yield on outstanding marketable ob9 ligations of the United States Government of comparable maturities during 

10 the month before the obligations are issued. 

11 ‘‘(c) PURCHASE OF OBLIGATIONS.—The Secretary of the Treasury shall 

12 purchase the obligations issued under this section. To purchase the obliga13 tions, the Secretary of the Treasury may use as a public debt transaction 

14 the proceeds from the sale of securities issued under chapter 31 of title 31. 

15 The purposes for which securities may be issued under that chapter are ex16 tended to include the purchase of obligations under this subsection. The 

17 Secretary of the Treasury may sell obligations purchased under this section. 

18 A redemption, purchase, or sale of the obligations by the Secretary of the 

19 Treasury is a public debt transaction of the Government. 

20 ‘‘(d) DEPOSITS AND REDEMPTIONS.—The Secretary shall deposit 

21 amounts borrowed under this section in the appropriate account under sec22 tion 53717 of this title and make redemptions of the obligations from that 

23 account. 

24 ‘‘§ 53724. Rights to secured property 

25 ‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary makes a 

26 payment on, or assumes, an obligation under section 53721 or 53722 of this 

27 title, the Secretary acquires the rights under the security agreement with 

28 the obligor in the security held by the Secretary to guarantee the obligation. 

29 ‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding 

30 any other law relating to the acquisition, handling, or disposal of property 

31 by the United States Government, the Secretary has the right, in the Sec32 retary’s discretion, to complete, reconstruct, recondition, renovate, repair, 

33 maintain, operate, charter, or sell any property acquired under a security 

34 agreement with an obligor, or to place a vessel so acquired in the National 

35 Defense Reserve Fleet. The terms of a sale under this subsection shall be 

36 as approved by the Secretary. 

37 ‘‘§ 53725. Actions against obligor 

38 ‘‘(a) IN GENERAL.—For a default under a guaranteed obligation or re39 lated agreement, the Secretary may take any action against the obligor or 

40 another liable party that the Secretary considers necessary to protect the 

41 interests of the United States Government. A civil action may be brought 


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1 in the name of the United States or the obligee. The obligee shall make 

2 available to the Government all records and evidence necessary to prosecute 

3 the action. 

4 ‘‘(b) TITLE, POSSESSION, AND PURCHASE.— 

5 ‘‘(1) IN GENERAL.—The Secretary may— 

6 ‘‘(A) accept a conveyance of title to and possession of property 

7 from the obligor or another party liable to the Secretary; and 

8 ‘‘(B) purchase the property for an amount not greater than the 

9 unpaid principal amount of the obligation and interest thereon. 

10 ‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property, the 

11 Secretary receives an amount of cash greater than the unpaid principal 

12 amount of the obligation, the unpaid interest on the obligation, and the 

13 expenses of collecting those amounts, the Secretary shall pay the excess 

14 to the obligor. 

15 ‘‘SUBCHAPTER III—PARTICULAR PROJECTS 

16 ‘‘§ 53731. Commercial demonstration ocean thermal energy 

17 conversion facilities and plantships 

18 ‘‘(a) IN GENERAL.—Under subchapter I of this chapter, the Secretary 

19 may guarantee or make a commitment to guarantee the payment of the 

20 principal of and interest on an obligation that aids in financing (including 

21 reimbursement of an obligor for expenditures previously made for) the con22 struction, reconstruction, or reconditioning of a commercial demonstration 

23 ocean thermal energy conversion facility or plantship. This section may be 

24 used to guarantee obligations for a total of not more than 5 separate facili25 ties and plantships or a demonstrated 400 megawatt capacity, whichever 

26 comes first. 

27 ‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise pro28 vided in this section, a guarantee or commitment to guarantee under this 

29 section is subject to all the provisions applicable to a guarantee or commit30 ment to guarantee under subchapter I of this chapter. 

31 ‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic 

32 soundness under section 53708 of this title applies to a guarantee or com33 mitment to guarantee for that portion of a facility or plantship not to be 

34 supported with appropriated Federal funds. 

35 ‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment to guar36 antee may not be made under this section unless the Secretary of Energy, 

37 in consultation with the Secretary, certifies to the Secretary that, for the 

38 facility or plantship for which the guarantee or commitment to guarantee 

39 is sought, there is sufficient guarantee of performance and payment to lower 

40 the risk to the United States Government to a reasonable level. In deciding 


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1 whether to issue such a certification, the Secretary of Energy shall con2 sider— 

3 ‘‘(1) the successful demonstration of the technology to be used in the 

4 facility at a scale sufficient to establish the likelihood of technical and 

5 economic viability in the proposed market; and 

6 ‘‘(2) the need of the United States to develop new and renewable 

7 sources of energy and the benefits to be realized from the construction 

8 and successful operation of the facility or plantship. 

9 ‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of an obliga10 tion guaranteed under this section may not exceed 87.5 percent of— 

11 ‘‘(1) the actual cost or depreciated actual cost of the facility or 

12 plantship; or 

13 ‘‘(2) if the facility or plantship is supported with appropriated Fed14 eral funds, the total principal amount of that portion of the actual cost 

15 or depreciated actual cost for which the obligor is obligated to secure 

16 financing under the agreement between the obligor and the Department 

17 of Energy or other Federal agency. 

18 ‘‘(f) OTEC DEMONSTRATION FUND.— 

19 ‘‘(1) IN GENERAL.—There is a special subaccount, known as the 

20 OTEC Demonstration Fund, in the account established under section 

21 53717(b)(1) of this title. 

22 ‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund shall 

23 be used for obligation guarantees authorized under this section that do 

24 not qualify under subchapter I of this chapter. Except as otherwise 

25 provided in this section, the OTEC Demonstration Fund shall be oper26 ated in the same manner as the parent account. However— 

27 ‘‘(A) amounts received by the Secretary under subchapter I of 

28 this chapter related to guarantees or commitments to guarantee 

29 made under this section shall be deposited only in the OTEC 

30 Demonstration Fund; and 

31 ‘‘(B) when obligations issued by the Secretary under section 

32 53723 of this title related to the OTEC Demonstration Fund are 

33 outstanding, any amount received by the Secretary under sub34 chapter I of this chapter related to ocean thermal energy conver35 sion facilities or plantships shall be deposited in the OTEC Dem36 onstration Fund. 

37 ‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund may 

38 be transferred to the parent account when and to the extent the bal39 ance in the OTEC Demonstration Fund exceeds the total guarantees 

40 or commitments to guarantee made under this section then outVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00163 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 standing, plus obligations issued by the Secretary under section 53723 

2 of this title related to the OTEC Demonstration Fund. 

3 ‘‘(4) LIABILITY.—The parent account is not liable for a guarantee 

4 or commitment to guarantee made under this section. 

5 ‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total unpaid prin6 cipal amount of the obligations guaranteed with the backing of the 

7 OTEC Demonstration Fund and outstanding at any one time may not 

8 exceed $1,650,000,000. 

9 ‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723 of this 

10 title applies to the OTEC Demonstration Fund. However, obligations issued 

11 by the Secretary under that section related to the OTEC Demonstration 

12 Fund shall be payable only from proceeds realized by the OTEC Dem13 onstration Fund. 

14 ‘‘(h) TAXATION OF INTEREST.—Interest on an obligation guaranteed 

15 under this section shall be included in gross income under chapter 1 of the 

16 Internal Revenue Code of 1986 (26 U.S.C. ch. 1). 

17 ‘‘§ 53732. Eligible export vessels 

18 ‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an obligation 

19 for an eligible export vessel in accordance with— 

20 ‘‘(1) the terms applicable under this chapter for vessels documented 

21 under the laws of the United States; or 

22 ‘‘(2) other terms the Secretary determines are more favorable than 

23 those terms and compatible with export credit terms offered by foreign 

24 governments for the sale of vessels built in foreign shipyards. 

25 ‘‘(b) INTERAGENCY COUNCIL.— 

26 ‘‘(1) ESTABLISHMENT.—There is an interagency council to carry out 

27 this section. 

28 ‘‘(2) COMPOSITION.—The council is composed of the following indi29 viduals or their designees: 

30 ‘‘(A) The Secretary of Transportation, who is the chairman of 

31 the council. 

32 ‘‘(B) The Secretary of the Treasury. 

33 ‘‘(C) The Secretary of State. 

34 ‘‘(D) The Assistant to the President for Economic Policy. 

35 ‘‘(E) The United States Trade Representative. 

36 ‘‘(F) The President and Chairman of the Export-Import Bank 

37 of the United States. 

38 ‘‘(3) FUNCTIONS.—The council shall— 

39 ‘‘(A) obtain information on shipbuilding loan guarantees, direct 

40 and indirect subsidies, and other favorable treatment of shipyards 


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1 provided by foreign governments to shipyards in competition with 

2 United States shipyards; 

3 ‘‘(B) consult regularly with United States shipbuilders to obtain 

4 the essential information about international shipbuilding competi5 tion on which to set terms for loan guarantees under subsection 

6 (a)(2); and 

7 ‘‘(C) provide guidance to the Secretary in establishing terms for 

8 loan guarantees under subsection (a)(2). 

9 ‘‘(4) ANNUAL REPORT.—Not later than January 31 of each year, the 

10 Secretary shall submit to Congress a report on activities of the Sec11 retary under this section during the preceding year. The report shall 

12 include— 

13 ‘‘(A) documentation of sources of information about assistance 

14 by governments of other countries to shipyards in those countries; 

15 and 

16 ‘‘(B) a summary of recommendations made to the Secretary 

17 during the preceding year about applications submitted to the Sec18 retary during that year for loan guarantees to construct eligible 

19 export vessels. 

20 ‘‘(c) REQUIRED FINDINGS.— 

21 ‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary may 

22 not guarantee or make a commitment to guarantee an obligation for 

23 an eligible export vessel unless the Secretary finds that the construc24 tion, reconstruction, or reconditioning of the vessel will aid in the tran25 sition of United States shipyards to commercial activities or will pre26 serve shipbuilding assets that would be essential in time of war or na27 tional emergency. 

28 ‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary may not 

29 make a commitment to guarantee an obligation for an eligible export 

30 vessel unless the Secretary determines that making the commitment 

31 will not result in denial of an economically sound application for a com32 mitment to guarantee an obligation for a vessel documented under the 

33 laws of the United States and operating in the domestic or foreign 

34 commerce of the United States. The Secretary has sole discretion in 

35 making the determination. In making the determination, the Secretary 

36 shall consider— 

37 ‘‘(A) the status and economic soundness of pending applications 

38 for commitments to guarantee obligations for vessels documented 

39 under the laws of the United States that are operating or will be 

40 operating in the domestic or foreign commerce of the United 

41 States; and 


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1 ‘‘(B) the amount of guarantee authority available. 

2 ‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may not 

3 guarantee or make a commitment to guarantee an obligation for an eligible 

4 export vessel unless the owner of the vessel agrees with the Secretary that 

5 the vessel will not be transferred to a country designated by the Secretary 

6 of Defense as a country whose interests are hostile to the interests of the 

7 United States. 

8 ‘‘(e) REVIEW BY SECRETARY OF DEFENSE.— 

9 ‘‘(1) NOTIFICATION.—The Secretary shall promptly notify the Sec10 retary of Defense of the receipt of an application for a loan guarantee 

11 for an eligible export vessel. 

12 ‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30 days after 

13 receiving the notice, may disapprove the guarantee based on an assess14 ment of the potential use of the vessel in a manner that may harm the 

15 national security interests of the United States. The Secretary may not 

16 disapprove a guarantee solely because of the type of vessel to be con17 structed. 

18 ‘‘(3) DELEGATION.—The authority of the Secretary of Defense to 

19 disapprove a guarantee under this subsection may be delegated only to 

20 a civilian officer of the Department of Defense appointed by the Presi21 dent by and with the advice and consent of the Senate. 

22 ‘‘(4) PROHIBITION.—The Secretary may not make a loan guarantee 

23 disapproved by the Secretary of Defense under this subsection. 

24 ‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue a com25 mitment to guarantee an obligation for an eligible export vessel under this 

26 chapter after the last date on which such a commitment may be issued 

27 under any treaty or convention entered into after November 30, 1993, that 

28 prohibits guarantee of such an obligation. 

29 ‘‘§ 53733. Shipyard modernization and improvement 

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

31 ‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term ‘advanced 

32 shipbuilding technology’ includes— 

33 ‘‘(A) numerically controlled machine tools, robots, automated 

34 process control equipment, computerized flexible manufacturing 

35 systems, associated computer software, and other technology for 

36 improving shipbuilding and related industrial production that ad37 vance the state-of-the-art; and 

38 ‘‘(B) novel techniques and processes designed to improve ship39 building quality, productivity, and practice, and to promote sus40 tainable development, including engineering design, quality assur41 ance, concurrent engineering, continuous process production techVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00166 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 nology, energy efficiency, waste minimization, design for 

2 recyclability or parts reuse, inventory management, upgraded 

3 worker skills, and communications with customers and suppliers. 

4 ‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard fa5 cility’ means— 

6 ‘‘(A) for operations on land— 

7 ‘‘(i) a structure or appurtenance thereto designed for the 

8 construction, reconstruction, repair, rehabilitation, or refur9 bishment of a vessel, including a graving dock, building way, 

10 ship lift, wharf, or pier crane; 

11 ‘‘(ii) the land necessary for the structure or appurtenance; 

12 and 

13 ‘‘(iii) equipment that is for use with the structure or ap14 purtenance and that is necessary for performing a function 

15 referred to in clause (i); and 

16 ‘‘(B) for operations not on land, a vessel, floating drydock, or 

17 barge built in the United States and used for, equipped to be used 

18 for, or of a type normally used for, performing a function referred 

19 to in subparagraph (A)(i). 

20 ‘‘(3) MODERN SHIPBUILDING TECHNOLOGY.—The term ‘modern 

21 shipbuilding technology’ means the best available proven technology, 

22 techniques, and processes appropriate to enhancing the productivity of 

23 shipyards. 

24 ‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter, the 

25 Secretary may guarantee or make a commitment to guarantee the payment 

26 of the principal of and interest on an obligation for advanced shipbuilding 

27 technology and modern shipbuilding technology of a general shipyard facility 

28 in the United States. Only a private shipyard is eligible to receive a guar29 antee. 

30 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise pro31 vided in this section, a guarantee or commitment to guarantee under this 

32 section is subject to all the provisions applicable to a guarantee or commit33 ment to guarantee under subchapter I of this chapter. 

34 ‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an obligation 

35 guaranteed under this chapter may not exceed 87.5 percent of the actual 

36 cost of the advanced shipbuilding technology or modern shipbuilding tech37 nology. 

38 ‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the transfer 

39 of amounts from a department, agency, or instrumentality of the United 

40 States Government and may use those amounts to cover the cost (as defined 


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1 in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) 

2 of making guarantees or commitments to guarantee under this section. 

3 ‘‘§ 53734. Replacement of vessels because of changes in oper4 ating standards 

5 ‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this 

6 chapter, the Secretary, on terms the Secretary may prescribe, may guar7 antee or make a commitment to guarantee the payment of the principal of 

8 and interest on an obligation that aids in financing or refinancing (including 

9 reimbursement of an obligor for expenditures previously made for) a con10 tract for the construction or reconstruction of a vessel if— 

11 ‘‘(1) the vessel is designed and to be used for commercial use in 

12 coastwise, intercoastal, or foreign trade; 

13 ‘‘(2) the construction or reconstruction is necessary to replace a ves14 sel that cannot continue to be operated because of a change required 

15 by law in the standards for the operation of vessels, and the applicant 

16 for the guarantee or commitment would not otherwise legally be able 

17 to continue operating vessels in the trades in which the applicant oper18 ated vessels before the change; 

19 ‘‘(3) the applicant is presently engaged in transporting cargoes in 

20 vessels of the type and class that will be constructed or reconstructed 

21 under this section and agrees to employ vessels constructed or recon22 structed under this section as replacements only for vessels made obso23 lete by the change in operating standards; 

24 ‘‘(4) the capacity of the vessels to be constructed or reconstructed 

25 under this section will not increase the cargo carrying capacity of the 

26 vessels being replaced; 

27 ‘‘(5) the Secretary has not determined that the market demand for 

28 the vessel over its useful life will diminish so as to make granting the 

29 guarantee fiduciarily imprudent; 

30 ‘‘(6) the vessel, if to be reconstructed, will have a useful life of at 

31 least 15 years after the reconstruction; and 

32 ‘‘(7) the Secretary has considered the criteria specified in section 

33 53708(a)(3)–(5) of this title. 

34 ‘‘(b) TERM AND AMOUNT OF OBLIGATION.— 

35 ‘‘(1) TERM.—The term of an obligation guaranteed under this sec36 tion may not exceed 25 years. 

37 ‘‘(2) AMOUNT.—The amount of an obligation guaranteed under this 

38 section may not exceed 87.5 percent of the actual cost or depreciated 

39 actual cost to the applicant for the construction or reconstruction of 

40 the vessel. The Secretary may not establish a percentage under this 


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1 paragraph that is to be applied uniformly to all guarantees or commit2 ments to guarantee made under this section. 

3 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—A guarantee or commit4 ment to guarantee under this section is also subject to sections 53701, 

5 53702(a), 53704, 53705, 53707(a), 53708(d) and (e), 53709(a), 

6 53710(a)(1), (2), and (4) and (c), 53711(a), 53713, 53714, 53717, and 

7 53721–53725 of this title. 

8 ‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by reg9 ulation that an applicant under this section provide adequate security 

10 against default. 

11 ‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for the guar12 antee of an obligation under this section that is in addition to the fee estab13 lished under section 53714 of this title. The fee may be— 

14 ‘‘(1) an annual fee of not more than an additional 1 percent added 

15 to the fee established under section 53714 of this title; or 

16 ‘‘(2) a fee based on the amount of the obligation versus the percent17 age of the obligor’s fleet being replaced by vessels constructed or recon18 structed under this section. 

19 ‘‘§ 53735. Fisheries financing and capacity reduction 

20 ‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing 

21 capacity reduction program established under section 312 of the Magnuson22 Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a). 

23 ‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee the repay24 ment of debt obligations issued by entities under this section. Debt obliga25 tions to be guaranteed may be issued by any entity that has been approved 

26 by the Secretary and has agreed with the Secretary to conditions the Sec27 retary considers necessary for this section to achieve the objective of the 

28 program and to protect the interest of the United States. 

29 ‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed 

30 under this section shall— 

31 ‘‘(1) be treated in the same manner and to the same extent as other 

32 obligations guaranteed under this chapter, except with respect to provi33 sions of this chapter that by their nature cannot be applied to obliga34 tions guaranteed under this section; 

35 ‘‘(2) have the fishing fees established under the program paid into 

36 a separate subaccount of the fishing capacity reduction fund estab37 lished under this section; 

38 ‘‘(3) not exceed $100,000,000 in an unpaid principal amount out39 standing at any one time for a program; 


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1 ‘‘(4) have such maturity (not to exceed 20 years), take such form, 

2 and contain such conditions as the Secretary determines necessary for 

3 the program to which they relate; 

4 ‘‘(5) have as the exclusive source of repayment (subject to the second 

5 sentence of subsection (d)(2)) and as the exclusive payment security, 

6 the fishing fees established under the program; and 

7 ‘‘(6) at the discretion of the Secretary be issued in the public market 

8 or sold to the Federal Financing Bank. 

9 ‘‘(d) FISHING CAPACITY REDUCTION FUND.— 

10 ‘‘(1) IN GENERAL.—There is a separate account in the Treasury, 

11 known as the Fishing Capacity Reduction Fund. Within the Fund, at 

12 least one subaccount shall be established for each program into which 

13 shall be paid all fishing fees established under the program and other 

14 amounts authorized for the program. 

15 ‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall be 

16 available, without appropriation or fiscal year limitation, to the Sec17 retary to pay the cost of the program, including payments to financial 

18 institutions to pay debt obligations incurred by entities under this sec19 tion. Funds available for this purpose from other amounts available for 

20 the program may also be used to pay those debt obligations. 

21 ‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently 

22 needed for the purpose of this section shall be kept on deposit or in23 vested in obligations of the United States Government. 

24 ‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations the Sec25 retary considers necessary to carry out this section. 

26 ‘‘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. 

27 ‘‘§ 53901. Definitions 

28 ‘‘In this chapter: 

29 ‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’ includes— 

30 ‘‘(A) a documented vessel with a registry or coastwise endorse31 ment under chapter 121 of this title; 

32 ‘‘(B) an undocumented vessel owned or chartered by or made 

33 available to the United States Government; and 


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1 ‘‘(C) a tug, barge, or other watercraft (whether or not docu2 mented) owned by a citizen of the United States and used in es3 sential water transportation or in the fisheries, except only for 

4 sport fishing. 

5 ‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty container 

6 on a vessel. 

7 ‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF THE

8 UNITED STATES.—The term ‘transportation in the waterborne com9 merce of the United States’ includes the operation of a vessel in the 

10 fisheries, except only for sport fishing. 

11 ‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the 

12 Secretary of Transportation determines— 

13 ‘‘(A) any part of a loss excluded from marine insurance cov14 erage under a ‘free of capture or seizure’ clause or analogous 

15 clause; and 

16 ‘‘(B) any other loss from a hostile act, including confiscation, 

17 expropriation, nationalization, or deprivation. 

18 ‘‘§ 53902. Authority to provide insurance 

19 ‘‘(a) IN GENERAL.—With the approval of the President, and after such 

20 consultation with interested agencies of United States Government as the 

21 President may require, the Secretary of Transportation may provide insur22 ance and reinsurance against loss or damage from war risks as provided by 

23 this chapter whenever it appears to the Secretary that insurance adequate 

24 for the needs of the waterborne commerce of the United States cannot be 

25 obtained on reasonable terms and conditions from companies authorized to 

26 do insurance business in a State of the United States. 

27 ‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under this 

28 chapter shall be based, insofar as practicable, on consideration of the risk 

29 involved. 

30 ‘‘(c) AVAILABILITY OF VESSEL DURING WAR OR NATIONAL EMER31 GENCY.—Insurance or reinsurance for a vessel may be provided under this 

32 chapter only on the condition that the vessel will be available to the Govern33 ment in time of war or national emergency. 

34 ‘‘§ 53903. Insurable interests 

35 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur36 ance and reinsurance under this chapter for— 

37 ‘‘(1) an American vessel, including a vessel under construction; 

38 ‘‘(2) a foreign vessel— 

39 ‘‘(A) owned by a citizen of the United States; or 

40 ‘‘(B) engaged in transportation in the waterborne commerce of 

41 the United States or in such other transportation by water or such 


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1 other services as the Secretary considers to be in the interest of 

2 the national defense or national economy of the United States, 

3 when so engaged; 

4 ‘‘(3) cargo— 

5 ‘‘(A) shipped or to be shipped on a vessel insurable under this 

6 section, including by express or registered mail; 

7 ‘‘(B) owned by a citizen or resident of the United States; 

8 ‘‘(C) imported to or exported from the United States, or sold 

9 or purchased by a citizen or resident of the United States, under 

10 a contract of sale or purchase the terms of which provide that the 

11 risk of loss by war risks or the obligation to provide insurance 

12 against war risks is on a citizen or resident of the United States; 

13 or 

14 ‘‘(D) shipped between ports in the United States; 

15 ‘‘(4) disbursements, including advances to masters and general aver16 age disbursements, and freight and passage money of a vessel insurable 

17 under this section; 

18 ‘‘(5) personal effects of an individual on a vessel insurable under this 

19 section; 

20 ‘‘(6) loss of life, injury, or detention by an enemy of the United 

21 States after capture, with respect to an individual on a vessel insurable 

22 under this section; and 

23 ‘‘(7) statutory or contractual obligations or other liabilities of a ves24 sel insurable under this section or of the owner or charterer of such 

25 a vessel, of a nature customarily covered by insurance. 

26 ‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining whether 

27 to provide insurance or reinsurance for a foreign vessel, the Secretary shall 

28 consider the characteristics, employment, and general management of the 

29 vessel by the owner or charterer. 

30 ‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection (a)(5)–(7), 

31 insofar as it involves a liability related to an individual on the vessel, may 

32 include risks other than war risks to the extent the Secretary considers ad33 visable. 

34 ‘‘§ 53904. Liability insurance for persons involved in war or 

35 defense efforts 

36 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur37 ance under this chapter against legal liability that a person may incur in 

38 providing services or facilities for a vessel if, in the opinion of the Secretary, 

39 the insurance— 

40 ‘‘(1) is required in prosecuting a war or for national defense; and 


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1 ‘‘(2) cannot be obtained at reasonable rates or on reasonable terms 

2 and conditions from approved companies authorized to do insurance 

3 business in a State of the United States. 

4 ‘‘(b) LIMITATIONS.—Employer liability insurance and worker compensa5 tion insurance against legal liability to employees may not be provided under 

6 this section. 

7 ‘‘§ 53905. Agency insurance 

8 ‘‘(a) IN GENERAL.—With the approval of the President, an agency of the 

9 United States Government may obtain insurance provided for by this chap10 ter from the Secretary of Transportation, except as provided in sections 

11 17302 and 17303 of title 40. 

12 ‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec13 retary of Transportation may provide insurance under this chapter at the 

14 request of the Secretary of Defense and other agencies the President may 

15 prescribe, without payment of an insurance premium if the Secretary of De16 fense or agency agrees to indemnify the Secretary of Transportation against 

17 loss covered by the insurance. The Secretary of Defense and agencies may 

18 make such an indemnity agreement. 

19 ‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President (or an 

20 official designated by the President) on the agreement shall be treated as 

21 the approval required by section 53902(a) of this title. 

22 ‘‘§ 53906. Hull insurance valuation 

23 ‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for 

24 actual or constructive total loss of the insured vessel shall be a stated valu25 ation determined by the Secretary of Transportation. The stated valu26 ation— 

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 insur33 ance attaches under a policy referred to in subsection (a) or within 60 days 

34 after the Secretary determines the valuation, whichever is later, the insured 

35 may reject the valuation and pay, at the rate provided in the policy, pre36 miums based on the asserted valuation the insured specifies at the time of 

37 rejection. However, the asserted valuation is not binding on the Government 

38 in any 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 

41 rejected the stated valuation determined by the Secretary, the amount of a 


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1 claim adjusted, compromised, settled, adjudged, or paid may not exceed the 

2 stated valuation. However, if the insured has rejected the valuation, the in3 sured— 

4 ‘‘(1) shall be paid, as a tentative advance only, 75 percent of the 

5 stated valuation; and 

6 ‘‘(2) may bring a civil action against the United States in a court 

7 having jurisdiction of the claim to recover a valuation equal to the just 

8 compensation the court determines would have been payable if the own9 ership of the vessel had been requisitioned under chapter 563 of this 

10 title at the time the insurance attached under the policy. 

11 ‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination as pro12 vided under subsection (c)(2), premiums paid under the policy shall be ad13 justed based on the court’s determination and the rates provided for in the 

14 policy. 

15 ‘‘§ 53907. Reinsurance 

16 ‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is au17 thorized to provide insurance under this chapter, the Secretary may provide 

18 reinsurance to a company authorized to do insurance business in a State 

19 of the United States. The Secretary may obtain reinsurance from such a 

20 company for any insurance provided by the Secretary under this chapter. 

21 ‘‘(b) RATES.—The Secretary may not provide reinsurance at rates less 

22 than, nor obtain reinsurance at rates more than, the rates established by 

23 the Secretary on the same or similar risks or the rates charged by the insur24 ance company for the insurance reinsured, whichever is more advantageous 

25 to the Secretary. However, the Secretary may provide an allowance to the 

26 insurance company for the costs of services and facilities the company pro27 vides, in an amount the Secretary considers reasonable according to good 

28 business practice. The allowance to the company may not include any 

29 amount for soliciting or stimulating insurance business. 

30 ‘‘§ 53908. Additional insurance privately obtained 

31 ‘‘With the approval of the Secretary of Transportation, a person having 

32 an insurable interest in a vessel may obtain insurance on the vessel with 

33 other underwriting agents in addition to the insurance with the Secretary. 

34 The Secretary is not entitled to the benefit of the additional insurance. 

35 ‘‘§ 53909. War risk insurance revolving fund 

36 ‘‘(a) IN GENERAL.—There is a war risk insurance revolving fund in the 

37 Treasury. 

38 ‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts appro39 priated to carry out this chapter and amounts received in carrying out this 

40 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 

5 Secretary of the Treasury to invest such portion of the fund as is not, in 

6 the judgment of the Secretary of Transportation, required to meet the cur7 rent needs of the fund. These investments shall be made by the Secretary 

8 of the Treasury in public debt securities of the Government, with maturities 

9 suitable to the needs of the fund, and bearing interest rates determined by 

10 the Secretary of the Treasury, taking into consideration current market 

11 yields on outstanding marketable obligations of the Government of com12 parable maturity. Interest and benefits from the securities shall be deposited 

13 in the fund. 

14 ‘‘§ 53910. Administrative 

15 ‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 

16 chapter, the Secretary of Transportation may act in accordance with com17 mercial practice in the marine insurance business. 

18 ‘‘(b) REGULATIONS.—The Secretary may prescribe regulations the Sec19 retary considers appropriate to carry out this chapter. 

20 ‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may pre21 scribe and change forms and policies, and fix and change the amounts in22 sured and rates of premium, under this chapter. 

23 ‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an annual 

24 fee in an amount calculated to cover the expenses of processing applications 

25 for insurance, employing underwriting agents, and appointing experts under 

26 this chapter. 

27 ‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may settle 

28 and pay claims, and pay judgments against the United States, related to 

29 insurance under this chapter. 

30 ‘‘(f) UNDERWRITING AGENTS.— 

31 ‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary 

32 finds it practical to do so shall, employ a domestic company or group 

33 of domestic companies, authorized to do marine insurance business in 

34 a State of the United States, to act as underwriting agent for the Sec35 retary. The services of an underwriting agent may be used in adjusting 

36 claims, but a claim may not be paid until approved by the Secretary. 

37 ‘‘(2) COMPENSATION.—The Secretary may allow the company or 

38 group of companies reasonable compensation for services as the under39 writing agent. The compensation may include an allowance for expenses 

40 reasonably incurred by the agent, but may not include any amount for 

41 soliciting or stimulating business. 


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1 ‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in sub2 section (f)(2), the Secretary may not pay an insurance broker or other per3 son acting in a similar intermediary capacity a fee or other consideration 

4 for participating in arranging insurance when the Secretary directly insures 

5 any of the risk. 

6 ‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, 

7 without regard to the laws and regulations on the employment of Federal 

8 employees, may appoint and prescribe the duties of experts in marine insur9 ance 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 in12 formation, services, facilities, officers, and employees of the agency in car13 rying out this chapter. 

14 ‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by 

15 regulation vessel location reporting requirements for a vessel insured under 

16 this 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 

21 the plaintiff or the plaintiff’s agent resides. If the plaintiff has no residence 

22 in the United States, the action may be brought in the United States Dis23 trict Court for the District of Columbia or in the district court for any dis24 trict in which the Attorney General agrees to accept service. Any person 

25 who may have an interest in the insurance may be made a party, either ini26 tially or on the motion of either party. 

27 ‘‘(b) EXCLUSIVE REMEDY.—A civil action against the United States 

28 under this section is exclusive of any other action by reason of the same 

29 subject matter against an officer, employee, or agent employed or retained 

30 by the Government under this chapter. 

31 ‘‘(c) PROCEDURE.—A civil action under this section shall be heard and 

32 determined 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 

37 Secretary does not act on the claim within 6 months after the claim is filed, 

38 unless the Secretary for good cause shown agrees with the claimant on a 

39 different period for the Secretary to act on the claim. 

40 ‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of 

41 the Government under the insurance and there is a dispute about the perVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00176 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 sons entitled to receive payment, the Government may bring a civil action 

2 interpleading those persons. The action shall be brought in the United 

3 States District Court for the District of Columbia or in the district court 

4 for the district in which any of those persons resides. A person not residing 

5 or found in the district may be made a party by service in any reasonable 

6 manner the court directs. If the court is satisfied that unknown persons 

7 might make a claim under the insurance, the court may direct service on 

8 those unknown persons by publication in the Federal Register. Judgment 

9 after service by publication in the Federal Register discharges the Govern10 ment from further liability to all persons. 

11 ‘‘§ 53912. Expiration date 

12 ‘‘The authority of the Secretary of Transportation to provide insurance 

13 and 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, 

6 or 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 

11 the United States to which the coastwise laws apply, either directly or via 

12 a foreign port, unless the vessel— 

13 ‘‘(1) is wholly owned by citizens of the United States for purposes 

14 of 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 Sec21 retary of Homeland Security) or the actual cost of the transportation, 

22 whichever is greater, may be recovered from any person transporting the 

23 merchandise or 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 

27 or places in the United States to which the coastwise laws apply, either di28 rectly or via a foreign port, unless the vessel— 

29 ‘‘(1) is wholly owned by citizens of the United States for purposes 

30 of 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 fi40 nancial responsibility for indemnification of passengers for nonperformVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00178 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 ance of transportation issued by the Federal Maritime Commission 

2 under section 44102 of this title. 

3 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ means a ves4 sel 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 

11 a 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 

13 passenger vessel qualified to engage in the coastwise trade is offering 

14 or advertising passenger service between a port in Puerto Rico and an15 other port in the United States pursuant to a certificate, the Secretary 

16 shall notify the owner or operator of each vessel transporting pas17 sengers under subsection (b) to terminate that transportation within 

18 270 days after the Secretary’s notification. Except as provided in sub19 section (d), the authority to transport passengers under subsection (b) 

20 expires at the end of that 270-day period. 

21 ‘‘(2) WHEN NON-COASTWISE-QUALIFIED VESSEL OFFERING SERV22 ICE.—On a showing to the Secretary, by the vessel owner or charterer, 

23 that a United States passenger vessel not qualified to engage in the 

24 coastwise trade is offering or advertising passenger service between a 

25 port in Puerto Rico and another port in the United States pursuant 

26 to a certificate, the Secretary shall notify the owner or operator of each 

27 foreign vessel transporting passengers under subsection (b) to termi28 nate that transportation within 270 days after the Secretary’s notifica29 tion. Except as provided in subsection (d), the authority of a foreign 

30 vessel to transport passengers under subsection (b) expires at the end 

31 of that 270-day period. 

32 ‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising the 

33 service described in subsection (c) has not begun that service within 270 

34 days after the Secretary’s notification, the expiration provided by subsection 

35 (c) is delayed until 90 days after the vessel offering or advertising the serv36 ice begins that service. 

37 ‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that the 

38 service on which an expiration was based is no longer available, the expired 

39 authority to transport passengers is reinstated. 


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1 ‘‘§ 55105. Transportation of hazardous waste 

2 ‘‘(a) IN GENERAL.—The transportation of hazardous waste, as defined in 

3 section 1004(5) of the Resource Conservation and Recovery Act of 1976 (42 

4 U.S.C. 6903(5)), from a point in the United States to sea for incineration 

5 is deemed to be transportation of merchandise under section 55102 of this 

6 title. 

7 ‘‘(b) NONAPPLICATION TO CERTAIN FOREIGN VESSELS.— 

8 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to transportation 

9 performed by a foreign ocean incineration vessel owned by or under 

10 construction on May 1, 1982, for a corporation wholly owned by citi11 zens of the United States under section 50501(a)–(c) of this title. 

12 ‘‘(2) STANDARDS FOR INCINERATION EQUIPMENT.—Incineration 

13 equipment on a vessel described in paragraph (1) must meet standards 

14 of the Coast Guard and the Environmental Protection Agency. 

15 ‘‘(3) INSPECTION.—A vessel described in paragraph (1) shall be in16 spected by the Coast Guard, regardless of whether inspected by the na17 tion in which it is registered. The inspection shall be the same as would 

18 be required of a vessel of the United States, including drydock inspec19 tion and internal examination of tanks and void spaces. The inspection 

20 may be made concurrently with an inspection by that nation or within 

21 one year after the initial issuance or next scheduled issuance of the 

22 Safety of Life at Sea Safety Construction Certificate. In making the 

23 inspection, the Coast Guard shall refer to the condition of the hull and 

24 superstructure established by the initial foreign certification as the 

25 basis for evaluating the current condition of the hull and super26 structure. The Coast Guard shall allow the substitution of fittings, ma27 terial, apparatus, equipment, and appliances different from those re28 quired for vessels of the United States if satisfied they are equivalent 

29 and at least as effective as those required for vessels of the United 

30 States. A satisfactory inspection under this paragraph shall be certified 

31 in writing by the Secretary of the department in which the Coast 

32 Guard is operating. 

33 ‘‘(c) EFFECTIVE DATE.—Subsection (a) is not effective until an appro34 priate vessel has been built and documented under chapter 121 of this title. 

35 ‘‘§ 55106. Merchandise transferred between barges 

36 ‘‘(a) IN GENERAL.—On terms and conditions the Secretary of Homeland 

37 Security may prescribe by regulation, the Secretary may suspend the appli38 cation of section 55102 of this title to the transportation of merchandise 

39 that is transferred, when moving in the foreign trade of the United States, 

40 from a barge certified by the owner or operator as designed specifically for 

41 carriage on a vessel and carried regularly on a vessel in foreign trade, to 


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1 another such barge owned or leased by the same owner or operator. How2 ever, this subsection does not apply to transportation between the conti3 nental United States and noncontiguous States, territories, or possessions 

4 to which the coastwise laws apply. 

5 ‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

6 applies to a vessel of foreign registry only if the Secretary of Homeland Se7 curity finds, based on information from the Secretary of State, that the gov8 ernment of the nation of registry extends reciprocal privileges to vessels of 

9 the United States. 

10 ‘‘§ 55107. Empty cargo containers and barges 

11 ‘‘(a) IN GENERAL.—Subject to subsections (b) and (c), and on terms and 

12 conditions the Secretary of Homeland Security may prescribe by regulation, 

13 section 55102 of this title does not apply to the transportation of— 

14 ‘‘(1) empty cargo vans, empty lift vans, or empty shipping tanks; 

15 ‘‘(2) equipment for use with cargo vans, lift vans, or shipping tanks; 

16 ‘‘(3) empty barges specifically designed for carriage aboard a vessel 

17 and equipment (except propulsion equipment) for use with those 

18 barges; 

19 ‘‘(4) empty instruments for international traffic exempted from the 

20 customs laws under section 322(a) of the Tariff Act of 1930 (19 

21 U.S.C. 1322(a)); or 

22 ‘‘(5) stevedoring equipment and material. 

23 ‘‘(b) CONDITIONS.— 

24 ‘‘(1) PARAGRAPHS (1)–(4).—Paragraphs (1)–(4) of subsection (a) 

25 apply only if the items named are owned or leased by the owner or op26 erator of the vessel and transported for its use in handling its cargo 

27 in foreign trade. 

28 ‘‘(2) PARAGRAPH (5).—Paragraph (5) of subsection (a) applies only 

29 if the items named are— 

30 ‘‘(A) owned or leased by the owner or operator of the vessel or 

31 by the stevedoring company having the contract for the loading or 

32 unloading of the vessel; and 

33 ‘‘(B) transported without charge for use in the handling of 

34 cargo in foreign trade. 

35 ‘‘(c) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

36 applies to a vessel of foreign registry only if the Secretary of Homeland Se37 curity finds, based on information from the Secretary of State, that the gov38 ernment of the nation of registry extends reciprocal privileges to vessels of 

39 the United States. 

40 ‘‘§ 55108. Platform jackets 

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


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1 ‘‘(1) COASTWISE QUALIFIED VESSEL.—The term ‘coastwise qualified 

2 vessel’ means a vessel that has been issued a certificate of documenta3 tion with a coastwise endorsement under chapter 121 of this title. 

4 ‘‘(2) PLATFORM JACKET.—The term ‘platform jacket’ refers to a 

5 single physical component and includes any type of offshore explo6 ration, development, or production structure or component thereof, in7 cluding— 

8 ‘‘(A) platform jackets; 

9 ‘‘(B) tension leg or SPAR platform superstructures (including 

10 the deck, drilling rig and support utilities, and supporting struc11 ture); 

12 ‘‘(C) hull (including vertical legs and connecting pontoons or 

13 vertical cylinder); 

14 ‘‘(D) tower and base sections of a platform jacket; 

15 ‘‘(E) jacket structures; and 

16 ‘‘(F) deck modules (known as ‘topsides’). 

17 ‘‘(b) AUTHORIZED TRANSPORTATION.—Section 55102 of this title does 

18 not apply to the transportation of a platform jacket in or on a non-coastwise 

19 qualified launch barge between two points in the United States, at one of 

20 which there is an installation or other device within the meaning of section 

21 4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), if— 

22 ‘‘(1) the launch barge was built before December 31, 2000, and has 

23 a launch capacity of at least 12,000 long tons; and 

24 ‘‘(2) the Secretary of Transportation makes a determination, in ac25 cordance with procedures established under subsection (c), that a suit26 able coastwise qualified vessel is not available for use in the transpor27 tation and, if needed, launch or installation of a platform jacket. 

28 ‘‘(c) PROCEDURES TO MAXIMIZE USE OF COASTWISE QUALIFIED VES29 SELS.—The Secretary of Transportation shall adopt procedures imple30 menting this section that are reasonably designed to provide timely informa31 tion so as to maximize the use of coastwise qualified vessels. The procedures 

32 shall, among other things, establish that for purposes of this section, a 

33 coastwise qualified vessel shall be deemed to be not available only if— 

34 ‘‘(1) on application by an owner or operator for the use of a non35 coastwise qualified launch barge for transportation of a platform jacket 

36 under this section (which application shall include all relevant informa37 tion, including engineering details and timing requirements), the Sec38 retary promptly publishes a notice in the Federal Register— 

39 ‘‘(A) describing the project and the platform jacket involved; 


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1 ‘‘(B) advising that all relevant information reasonably needed to 

2 assess the transportation requirements for the platform jacket will 

3 be made available to interested parties on request; and 

4 ‘‘(C) requesting that information on the availability of coastwise 

5 qualified vessels be submitted within 30 days after publication of 

6 that notice; and 

7 ‘‘(2)(A) no information is submitted to the Secretary within that 30 

8 day period; or 

9 ‘‘(B) the owner or operator of a coastwise qualified vessel submits 

10 information to the Secretary asserting that the owner or operator has 

11 a suitable coastwise qualified vessel available for the transportation, but 

12 the Secretary determines, within 90 days after the notice is first pub13 lished, that the coastwise qualified vessel is not suitable or reasonably 

14 available for the transportation. 

15 ‘‘§ 55109. Dredging 

16 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel may 

17 engage in dredging in the navigable waters of the United States only if— 

18 ‘‘(1) the vessel is wholly owned by citizens of the United States for 

19 purposes of engaging in the coastwise trade; 

20 ‘‘(2) the charterer, if any, is a citizen of the United States for pur21 poses of engaging in the coastwise trade; and 

22 ‘‘(3) the vessel has been issued a certificate of documentation with 

23 a coastwise endorsement under chapter 121 of this title or is exempt 

24 from documentation but would otherwise be eligible for such a certifi25 cate and endorsement. 

26 ‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with a reg27 istry endorsement may engage in the dredging of gold in Alaska. 

28 ‘‘(c) PENALTY.—If a vessel is operated in knowing violation of this sec29 tion, the vessel and its equipment are liable to seizure by and forfeiture to 

30 the United States Government. 

31 ‘‘§ 55110. Transportation of dredged material 

32 ‘‘Section 55102 of this title applies to the transportation of valueless ma33 terial or dredged material, regardless of whether it has commercial value, 

34 from a point in the United States or on the high seas within the exclusive 

35 economic zone, to another point in the United States or on the high seas 

36 within the exclusive economic zone. 

37 ‘‘§ 55111. Towing 

38 ‘‘(a) IN GENERAL.—Except when towing a vessel in distress, a vessel may 

39 not do any part of any towing described in subsection (b) unless the towing 

40 vessel— 


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1 ‘‘(1) is wholly owned by citizens of the United States for purposes 

2 of engaging in the coastwise trade; and 

3 ‘‘(2) has been issued a certificate of documentation with a coastwise 

4 endorsement under chapter 121 of this title or is exempt from docu5 mentation but would otherwise be eligible for such a certificate and en6 dorsement. 

7 ‘‘(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of— 

8 ‘‘(1) a vessel between ports or places in the United States to which 

9 the coastwise laws apply, either directly or via a foreign port or place; 

10 ‘‘(2) a vessel from point to point within the harbors of ports or 

11 places to which the coastwise laws apply; or 

12 ‘‘(3) a vessel transporting valueless material or dredged material, re13 gardless of whether it has commercial value, from a point in the United 

14 States or on the high seas within the exclusive economic zone, to an15 other point in the United States or on the high seas within the exclu16 sive economic zone. 

17 ‘‘(c) PENALTIES.— 

18 ‘‘(1) OWNER AND MASTER.—The owner and master of a vessel tow19 ing another vessel in violation of this section are each liable for a pen20 alty of at least $350 but not more than $1,100. A penalty under this 

21 paragraph constitutes a lien on the vessel. The lien is enforceable in 

22 a district court of the United States for any district in which the vessel 

23 is found. Clearance may not be granted to the vessel until the penalties 

24 have been paid. 

25 ‘‘(2) VESSEL.—In addition to the penalties under paragraph (1), the 

26 towing vessel is liable for a penalty of $60 per ton based on the ton27 nage of each towed vessel. 

28 ‘‘§ 55112. Vessel escort operations and towing assistance 

29 ‘‘(a) IN GENERAL.—Except in the case of a vessel in distress, only a ves30 sel of the United States may perform the following escort vessel operations 

31 within the navigable waters of the United States: 

32 ‘‘(1) Operations that commence or terminate at a port or place in 

33 the United States. 

34 ‘‘(2) Operations required by United States law or regulation. 

35 ‘‘(3) Operations provided in whole or in part within or through navi36 gation facilities owned, maintained, or operated by the United States 

37 Government or the approaches to those facilities, other than facilities 

38 operated by the St. Lawrence Seaway Development Corporation on the 

39 St. Lawrence River portion of the Seaway. 

40 ‘‘(b) ESCORT VESSELS.—For purposes of this section, an escort vessel 

41 is— 


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1 ‘‘(1) any vessel that is assigned and dedicated to assist another ves2 sel, whether or not tethered to that vessel, solely as a safety precaution 

3 to assist in controlling the speed or course of the assisted vessel in the 

4 event of a steering or propulsion equipment failure, or any other simi5 lar emergency circumstance, or in restricted waters where additional 

6 assistance in maneuvering the vessel is required to ensure its safe oper7 ation; and 

8 ‘‘(2) in the case of a vessel being towed under section 55111 of this 

9 title, any vessel that is assigned and dedicated to the vessel being towed 

10 in addition to any towing vessel required under that section. 

11 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section does not affect sec12 tion 55111 of this title. 

13 ‘‘(d) PENALTY.—A person violating this section is liable to the Govern14 ment for a civil penalty of not more than $10,000 for each day during which 

15 the violation occurs. 

16 ‘‘§ 55113. Use of foreign documented oil spill response ves17 sels 

18 ‘‘Notwithstanding any other provision of law, an oil spill response vessel 

19 documented under the laws of a foreign country may operate in waters of 

20 the United States on an emergency and temporary basis, for the purpose 

21 of recovering, transporting, and unloading in a United States port oil dis22 charged as a result of an oil spill in or near those waters, if— 

23 ‘‘(1) an adequate number and type of oil spill response vessels docu24 mented under the laws of the United States cannot be engaged to re25 cover oil from an oil spill in or near those waters in a timely manner, 

26 as determined by the Federal On-Scene Coordinator for a discharge or 

27 threat of a discharge of oil; and 

28 ‘‘(2) the foreign country has by its laws accorded to vessels of the 

29 United States the same privileges accorded to vessels of the foreign 

30 country under this section. 

31 ‘‘§ 55114. Unloading fish from foreign vessels 

32 ‘‘(a) PROHIBITIONS.—Except as otherwise provided by this section or a 

33 treaty or convention to which the United States is a party, a foreign vessel 

34 may not unload, in a port of the United States— 

35 ‘‘(1) its catch of fish taken on board on the high seas or fish prod36 ucts processed from that catch of fish; or 

37 ‘‘(2) fish or fish products taken on board that vessel on the high seas 

38 from a vessel engaged in fishing operations or the processing of fish 

39 or fish products. 

40 ‘‘(b) REGULATIONS ON OBTAINING INFORMATION.—The Secretary of 

41 Commerce may prescribe regulations the Secretary considers necessary to 


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1 obtain information on the transportation of fish products by vessels of the 

2 United States for foreign fish processing vessels to points in the United 

3 States. 

4 ‘‘(c) VIRGIN ISLANDS.— 

5 ‘‘(1) IN GENERAL.—A foreign vessel of not more than 50 feet overall 

6 in length may unload its catch of fresh fish (whole or with the heads, 

7 viscera, or fins removed, but not frozen, otherwise processed, or further 

8 advanced) in a port of the Virgin Islands for immediate consumption 

9 in those islands. Fish unloaded under this paragraph may be sold or 

10 transferred only for immediate consumption. In the absence of satisfac11 tory evidence that a sale or transfer to an agent, representative, or em12 ployee of a freezer or cannery is for immediate consumption, the sale 

13 or transfer is deemed not to be for immediate consumption. This para14 graph does not prohibit the freezing, smoking, or other processing of 

15 fresh fish by the ultimate consumer of the fish. 

16 ‘‘(2) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded in the 

17 Virgin Islands that are retained, sold, or transferred, except as allowed 

18 by paragraph (1), are liable to seizure by and forfeiture to the United 

19 States Government. A person retaining, selling, transferring, buying, or 

20 receiving the fish is liable to the Government for a civil penalty of not 

21 more than $1,000 for each violation. A penalty or forfeiture under this 

22 paragraph may be compromised, modified, or remitted under section 

23 2107(b) of this title. 

24 ‘‘(d) NORTHERN MARIANA ISLANDS.—Subsection (a) does not apply to 

25 the Northern Mariana Islands. 

26 ‘‘§ 55115. Supplies on fish processing vessels 

27 ‘‘Section 55102 of this title does not apply to supplies aboard a United 

28 States documented fish processing vessel that are necessary and used for 

29 processing or assembling fishery products aboard such a vessel. 

30 ‘‘§ 55116. Canadian rail lines 

31 ‘‘Section 55102 of this title does not apply to the transportation of mer32 chandise between points in the continental United States, including Alaska, 

33 over through routes in part over Canadian rail lines and connecting water 

34 facilities if the routes are recognized by the Surface Transportation Board 

35 and rate tariffs for the routes have been filed with the Board. 

36 ‘‘§ 55117. Great Lakes rail route 

37 ‘‘Section 55102 of this title does not apply to the transportation of mer38 chandise loaded on a railroad car or to a motor vehicle with or without a 

39 trailer, and with its passengers or contents when accompanied by the oper40 ator, when the railroad car or motor vehicle is transported in a railroad car 


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1 ferry operated between fixed terminals on the Great Lakes as part of a rail 

2 route, if— 

3 ‘‘(1) the car ferry is owned by a common carrier by water and oper4 ated as part of a rail route with the approval of the Surface Transpor5 tation Board; 

6 ‘‘(2) the stock of the common carrier by water, or its predecessor, 

7 was owned or controlled by a common carrier by rail prior to June 5, 

8 1920; 

9 ‘‘(3) the stock of the common carrier owning the car ferry is, with 

10 the approval of the Board, now owned or controlled by a common car11 rier by rail; and 

12 ‘‘(4) the car ferry is built in and documented under the laws of the 

13 United States. 

14 ‘‘§ 55118. Foreign railroads whose road enters by ferry, tug15 boat, or towboat 

16 ‘‘A foreign railroad, whose road enters the United States by ferry, tug17 boat, or towboat, may own and operate a vessel not having a coastwise en18 dorsement in connection with the water transportation of the passenger, 

19 freight, express, baggage, and mail cars used by that road, together with 

20 the passengers, freight, express matter, baggage, and mails transported in 

21 those cars. However, the foreign railroad is subject to the same restrictions 

22 imposed by law on a vessel of the United States entering a port of the 

23 United States from the same foreign country. Except as otherwise author24 ized by this chapter, the ferry, tugboat, or towboat may not, under penalty 

25 of forfeiture, be used in the transportation of merchandise between ports 

26 or places in the United States to which the coastwise laws apply. 

27 ‘‘§ 55119. Yukon River 

28 ‘‘Section 55102 of this title does not apply to the transportation of mer29 chandise on the Yukon River until the Alaska Railroad is completed and the 

30 Secretary of Transportation finds that proper facilities will be available for 

31 transportation by citizens of the United States to properly handle the traf32 fic. 

33 ‘‘§ 55120. Transshipment of imported merchandise intended 

34 for immediate exportation 

35 ‘‘The Secretary of Homeland Security may prescribe regulations for the 

36 transshipment and transportation of merchandise that is imported into the 

37 United States by sea for immediate exportation to a foreign port by sea, 

38 or by a river, the right to ascend or descend which for the purposes of com39 merce is secured by treaty to the citizens of the United States and the sub40 jects of a foreign power. 


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1 ‘‘§ 55121. Transportation of merchandise and passengers on 

2 Canadian vessels 

3 ‘‘(a) BETWEEN ROCHESTER AND ALEXANDRIA BAY.—Until passenger 

4 service is established by vessels of the United States between the port of 

5 Rochester, New York, and the port of Alexandria Bay, New York, the Sec6 retary of Homeland Security may issue annually permits to Canadian pas7 senger vessels to transport passengers between those ports. Canadian vessels 

8 holding such a permit are not subject to section 55103 of this title. 

9 ‘‘(b) WITHIN ALASKA OR BETWEEN ALASKA AND OTHER POINTS IN THE

10 UNITED STATES.—Until the Secretary of Transportation determines that 

11 service by vessels of the United States is available to provide the transpor12 tation described in paragraph (1) or (2), sections 55102 and 55103 of this 

13 title do not apply to the transportation on Canadian vessels of— 

14 ‘‘(1) passengers between ports in southeastern Alaska; or 

15 ‘‘(2) passengers or merchandise between Hyder, Alaska, and other 

16 points in southeastern Alaska or in the United States outside Alaska. 

17 ‘‘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. 

18 ‘‘SUBCHAPTER I—GENERAL 

19 ‘‘§ 55301. Priority loading for coal 

20 ‘‘A vessel engaged in the coastwise transportation of coal produced in the 

21 United States, from a port in the United States to another port in the 

22 United States, shall be given priority in loading at any of those ports ahead 

23 of a waiting vessel engaged in the export transportation of coal produced 

24 in the United States. However, if the Secretary of Transportation finds that 


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1 it is in the national interest, the Secretary may eliminate this priority load2 ing at any port. The Secretary shall report to Congress within 30 days an 

3 action eliminating priority loading under this section. 

4 ‘‘§ 55302. Transportation of United States Government per5 sonnel 

6 ‘‘(a) IN GENERAL.—An officer or employee of the United States Govern7 ment traveling by sea on official business overseas or to or from a territory 

8 or possession of the United States shall travel and transport personal effects 

9 on a vessel documented under the laws of the United Sates if such a vessel 

10 is available, unless the necessity of the mission requires the use of a foreign 

11 vessel. 

12 ‘‘(b) REGULATIONS.—The Administrator of General Services shall pre13 scribe regulations under which agencies may not pay for or reimburse an 

14 officer or employee for travel or transportation expenses incurred on a for15 eign vessel in the absence of satisfactory proof of the necessity of using the 

16 vessel. 

17 ‘‘§ 55303. Motor vehicles owned by United States Govern18 ment personnel 

19 ‘‘Notwithstanding any other law, privately-owned American shipping serv20 ices may be used to transport motor vehicles owned by personnel of the 

21 United States Government whenever transportation of those vehicles at Gov22 ernment expense is otherwise authorized by law. 

23 ‘‘§ 55304. Exports financed by the United States Government 

24 ‘‘It is the sense of Congress that any loans made by an instrumentality 

25 of the United States Government to foster the exporting of agricultural or 

26 other products shall provide that the products may be transported only on 

27 vessels of the United States unless, as to any or all of those products, the 

28 Secretary of Transportation, after investigation, certifies to the instrumen29 tality that vessels of the United States are not available in sufficient num30 ber, in sufficient tonnage capacity, on necessary schedules, or at reasonable 

31 rates. 

32 ‘‘§ 55305. Cargoes procured, furnished, or financed by the 

33 United States Government 

34 ‘‘(a) DEFINITION.—In this section, the term ‘privately-owned commercial 

35 vessel of the United States’ does not include a vessel that, after September 

36 21, 1961, was built or rebuilt outside the United States or documented 

37 under the laws of a foreign country, until the vessel has been documented 

38 under the laws of the United States for at least 3 years. 

39 ‘‘(b) MINIMUM TONNAGE.—When the United States Government pro40 cures, contracts for, or otherwise obtains for its own account, or furnishes 

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1 ment, any equipment, materials, or commodities, within or without the 

2 United States, or advances funds or credits, or guarantees the convertibility 

3 of foreign currencies in connection with the furnishing of the equipment, 

4 materials, or commodities, the appropriate agencies shall take steps nec5 essary and practicable to ensure that at least 50 percent of the gross ton6 nage of the equipment, materials, or commodities (computed separately for 

7 dry bulk carriers, dry cargo liners, and tankers) which may be transported 

8 on ocean vessels is transported on privately-owned commercial vessels of the 

9 United States, to the extent those vessels are available at fair and reason10 able rates for commercial vessels of the United States, in a manner that 

11 will ensure a fair and reasonable participation of commercial vessels of the 

12 United States in those cargoes by geographic areas. 

13 ‘‘(c) WAIVERS.—The President, the Secretary of Defense, or Congress (by 

14 concurrent resolution or otherwise) may waive this section temporarily by— 

15 ‘‘(1) declaring the existence of an emergency justifying a waiver; and 

16 ‘‘(2) notifying the appropriate agencies of the waiver. 

17 ‘‘(d) PROGRAMS OF OTHER AGENCIES.—An agency having responsibility 

18 under this section shall administer its programs with respect to this section 

19 under regulations prescribed by the Secretary of Transportation. The Sec20 retary shall review the administration of those programs and report annu21 ally to Congress on their administration. 

22 ‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF 

23 AGRICULTURAL COMMODITIES 

24 ‘‘§ 55311. Findings and purposes 

25 ‘‘(a) FINDINGS.—Congress finds that— 

26 ‘‘(1) a productive and healthy agricultural industry and a strong and 

27 active United States maritime industry are vitally important to the eco28 nomic well-being and security of the United States; 

29 ‘‘(2) both industries must compete in international markets increas30 ingly dominated by foreign trade barriers and the subsidization prac31 tices of foreign governments; and 

32 ‘‘(3) increased agricultural exports and the use of merchant vessels 

33 of the United States contribute positively to the United States balance 

34 of trade and generate employment opportunities in the United States. 

35 ‘‘(b) PURPOSES.—The purposes of this subchapter are to— 

36 ‘‘(1) enable the Secretary of Agriculture to plan export programs ef37 fectively, by clarifying the ocean transportation requirements applicable 

38 to those programs; 

39 ‘‘(2) take immediate and positive steps to promote the growth of the 

40 cargo-carrying capacity of the United States merchant marine; 


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1 ‘‘(3) expand international trade in United States agricultural com2 modities and products and develop, maintain, and expand markets for 

3 United States agricultural exports; 

4 ‘‘(4) improve the efficiency of administration of both the commodity 

5 purchasing and selling activities and the ocean transportation activities 

6 associated with export programs sponsored by the Secretary; 

7 ‘‘(5) stimulate and promote the agricultural and maritime industries 

8 of the United States and encourage cooperative efforts by both indus9 tries to address their common problems; and 

10 ‘‘(6) provide for the appropriate disposition of these findings and 

11 purposes. 

12 ‘‘§ 55312. Determining prevailing world market price 

13 ‘‘(a) AGRICULTURAL COMMODITIES AND PRODUCTS.—The prevailing 

14 world market price for agricultural commodities or their products shall be 

15 determined under this subchapter under procedures prescribed by the Sec16 retary of Agriculture. The Secretary shall prescribe the procedures by regu17 lation, with notice and opportunity for public comment under section 553 

18 of title 5. 

19 ‘‘(b) SERVICES AND NON-AGRICULTURAL COMMODITIES AND PROD20 UCTS.—If a determination of the prevailing world market price of any other 

21 type of materials, goods, equipment, or service is required to determine 

22 whether a barter or exchange transaction is subject to section 55314(b)(6) 

23 or (7) of this title, the determination shall be made by the Secretary of Ag24 riculture in consultation with the heads of other appropriate agencies. 

25 ‘‘§ 55313. Exemption of certain agricultural exports from 

26 cargo preference provisions 

27 ‘‘Sections 55304 and 55305 of this title do not apply to export activities 

28 of the Secretary of Agriculture or the Commodity Credit Corporation under 

29 which— 

30 ‘‘(1) agricultural commodities or their products acquired by the Cor31 poration are made available to United States exporters, users, proc32 essors, or foreign purchasers for the purpose of developing, maintain33 ing, or expanding export markets for United States agricultural com34 modities or their products at prevailing world market prices; 

35 ‘‘(2) payments are made available to United States exporters, users, 

36 or processors or, except as provided in section 55314 of this title, cash 

37 grants are made available to foreign purchasers, for the purpose de38 scribed in paragraph (1); 

39 ‘‘(3) commercial credit guarantees are blended with direct credits 

40 from the Corporation to reduce the effective rate of interest on export 

41 sales of United States agricultural commodities or their products; 


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1 ‘‘(4) credit or credit guarantees for not more than 3 years are ex2 tended by the Corporation to finance or guarantee export sales of 

3 United States agricultural commodities or their products; or 

4 ‘‘(5) agricultural commodities or their products owned or controlled 

5 by or under loan from the Corporation are exchanged or bartered for 

6 materials, goods, equipment, or services at least equal in value to the 

7 agricultural commodities or their products for which they are ex8 changed or bartered (determined on the basis of prevailing world mar9 ket prices at the time of the exchange or barter), but this paragraph 

10 does not exempt from the cargo preference provisions referred to in 

11 section 55314(b) of this title any requirement otherwise applicable to 

12 the materials, goods, equipment, or services imported under the trans13 action. 

14 ‘‘§ 55314. Transportation requirements for certain exports 

15 sponsored by the Secretary of Agriculture 

16 ‘‘(a) MINIMUM TONNAGE.— 

17 ‘‘(1) IN GENERAL.—In addition to the requirement under section 

18 55305 of this title for the transportation of a percentage of gross ton19 nage on commercial vessels of the United States, 25 percent of the 

20 gross tonnage of agricultural commodities or their products specified in 

21 subsection (b) shall be transported each calendar year on commercial 

22 vessels of the United States that— 

23 ‘‘(A) are necessary for national security; and 

24 ‘‘(B) if more than 25 years old, were rebuilt within the last 5 

25 years and certified by the Secretary of Transportation as having 

26 a useful life of at least 5 years after that rebuilding. 

27 ‘‘(2) CALENDAR YEAR.—To provide for effective and equitable ad28 ministration of the cargo preference laws, the calendar year for the 

29 purpose of compliance with minimum percentage requirements is the 

30 12-month period beginning October 1 of each year. 

31 ‘‘(b) APPLICABLE EXPORT ACTIVITY.—This section applies to export ac32 tivity (except inspection or weighing activities, other activities carried out 

33 for health or safety, or technical assistance provided in the handling of com34 mercial transactions) of the Secretary of Agriculture or the Commodity 

35 Credit Corporation— 

36 ‘‘(1) carried out under the Agricultural Trade Development and As37 sistance Act of 1954 (7 U.S.C. 1691 et seq.); 

38 ‘‘(2) carried out under section 416 of the Agricultural Act of 1949 

39 (7 U.S.C. 1431); 

40 ‘‘(3) carried out under the Bill Emerson Humanitarian Trust Act (7 

41 U.S.C. 1736f–1); 


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1 ‘‘(4) under which agricultural commodities or their products are— 

2 ‘‘(A) donated through foreign governments or private or public 

3 agencies, including intergovernmental organizations; or 

4 ‘‘(B) sold for foreign currencies or for dollars on credit terms 

5 of more than 10 years; 

6 ‘‘(5) under which agricultural commodities or their products are 

7 made available for emergency food relief at less than prevailing world 

8 market prices; 

9 ‘‘(6) under which a cash grant is made directly or through an inter10 mediary to a foreign purchaser to enable the purchaser to obtain 

11 United States agricultural commodities or their products in an amount 

12 greater than the difference between the prevailing world market price 

13 and the United States market price, free along side vessel at a United 

14 States port; or 

15 ‘‘(7) under which agricultural commodities owned or controlled by or 

16 under loan from the Corporation are exchanged or bartered for mate17 rials, goods, equipment, or services produced in foreign countries, ex18 cept export activities described in section 55313(5) of this title. 

19 ‘‘(c) ADDITIONAL REQUIREMENTS.— 

20 ‘‘(1) APPLICATION OF SECTION 55305.—The requirement for trans21 portation on vessels of the United States under subsection (a) is sub22 ject to the same terms and conditions as provided in section 55305 of 

23 this title. 

24 ‘‘(2) ALLOCATION OF COMMODITIES.—Subject to paragraph (3), in 

25 carrying out this section and section 55305 of this title, the Corpora26 tion shall take steps necessary and practicable, and consistent with this 

27 section and section 55305, without detriment to any port range to allo28 cate, on the principle of lowest landed cost without regard to the coun29 try of registry of the vessel, 25 percent of the bagged, processed, or 

30 fortified commodities provided under title II of the Agricultural Trade 

31 Development and Assistance Act of 1954 (7 U.S.C. 1721 et seq.). 

32 ‘‘(3) CALCULATIONS.—In carrying out paragraph (2), first there 

33 shall be calculated the allocation of 100 percent of the quantity to be 

34 procured on an overall lowest landed cost basis without regard to the 

35 country of registry of the vessel, and then there shall be allocated to 

36 the Great Lakes port range any cargoes for which it has the lowest 

37 landed cost under that calculation. The requirements for transportation 

38 on vessels of the United States under this section and section 55305 

39 of this title do not apply to commodities allocated to the Great Lakes 

40 port range under paragraph (2). Commodities allocated to the Great 

41 Lakes port range under paragraph (2) may not be reallocated or diVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00193 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 verted to another port range to meet those requirements to the extent 

2 that the total tonnage of commodities to which paragraph (2) applies 

3 that is furnished and transported from the Great Lakes port range is 

4 less than 25 percent of the total annual tonnage of the commodities 

5 furnished. 

6 ‘‘(4) AWARDING CONTRACTS.—In awarding a contract for the trans7 portation by vessel of commodities from the Great Lakes port range 

8 pursuant to an export activity referred to in subsection (b), an agen9 cy— 

10 ‘‘(A) shall consider expressions of freight interest for any vessel 

11 from a vessel operator who meets reasonable requirements for fi12 nancial and operational integrity; and 

13 ‘‘(B) may not deny award of the contract to a person based on 

14 the type of vessel on which the transportation would be provided 

15 (including on the basis that the transportation would not be pro16 vided on a liner vessel, as that term is used in the Shipping Act 

17 of 1984, as in effect on November 14, 1995), if the person other18 wise satisfies reasonable requirements for financial and operational 

19 integrity. 

20 ‘‘(5) NONAVAILABILITY OF VESSELS.—A determination of nonavail21 ability of vessels of the United States resulting from the application of 

22 this subsection may not reduce the gross tonnage of commodities re23 quired by this section and section 55305 of this title to be transported 

24 on vessels of the United States. 

25 ‘‘§ 55315. Minimum tonnage 

26 ‘‘(a) DEFINITION.—In this section, the term ‘base period’ means the 5- 

27 year period running from the sixth through the second prior fiscal years. 

28 ‘‘(b) REQUIREMENT.—For each fiscal year, the minimum quantity of ag29 ricultural commodities to be exported under programs subject to section 

30 55314 of this title is the average of the tonnage exported under those pro31 grams during the base period, discarding the high and low years. 

32 ‘‘(c) WAIVERS.—The President may waive the minimum quantity for a 

33 fiscal year under this section if the President determines and reports to 

34 Congress, together with reasons, that the quantity cannot be used effectively 

35 for the purposes of those programs or, based on a certification by the Sec36 retary of Agriculture, that the commodities are not available for reasons 

37 that include the unavailability of funds. 


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1 ‘‘§ 55316. Financing the transportation of agricultural com2 modities 

3 ‘‘(a) FINANCING OF INCREASED CHARGES.—The Secretary of Transpor4 tation shall finance any increased ocean freight charges incurred in any fis5 cal year that result from the application of section 55314 of this title. 

6 ‘‘(b) REIMBURSEMENT OF INCREASED CHARGES.— 

7 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall reimburse 

8 the Secretary of Agriculture and the Commodity Credit Corporation for 

9 the amount by which, in any fiscal year— 

10 ‘‘(A) the total cost of ocean freight and ocean freight differen11 tial for which obligations are incurred by the Secretary of Agri12 culture and the Corporation on exports of agricultural commodities 

13 and their products under the agricultural export programs speci14 fied in section 55314(b) of this title; exceeds 

15 ‘‘(B) 20 percent of the value of the commodities and their prod16 ucts and the cost of the ocean freight and ocean freight differen17 tial on which obligations are incurred by the Secretary of Agri18 culture and the Corporation during that fiscal year. 

19 ‘‘(2) COMMODITIES SHIPPED FROM INVENTORY.—For purposes of 

20 this subsection, commodities shipped from the inventory of the Cor21 poration shall be valued as provided in section 412(d) of the Agricul22 tural Trade Development and Assistance Act of 1954 (7 U.S.C. 

23 1736f(d)). 

24 ‘‘(c) ISSUANCE AND PURCHASE OF OBLIGATIONS.— 

25 ‘‘(1) ISSUANCE.—To meet the expenses required to be assumed 

26 under subsections (a) and (b), the Secretary of Transportation shall 

27 issue obligations to the Secretary of the Treasury. The Secretary of 

28 Transportation, with the approval of the Secretary of the Treasury, 

29 shall prescribe the form, denomination, maturity, and other terms (ex30 cept the interest rate) of the obligations. The Secretary of the Treasury 

31 shall set the interest rate for the obligations, considering the average 

32 market yield on outstanding marketable obligations of the United 

33 States Government of comparable maturities during the month before 

34 the obligations are issued. 

35 ‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the 

36 obligations issued under this subsection. To purchase the obligations, 

37 the Secretary of the Treasury may use as a public debt transaction the 

38 proceeds from the sale of securities issued under chapter 31 of title 31. 

39 The purposes for which securities may be issued under that chapter are 

40 extended to include the purchase of obligations under this subsection. 


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1 A redemption or purchase of the obligations by the Secretary of the 

2 Treasury is a public debt transaction of the Government. 

3 ‘‘(d) SOURCE OF FUNDS FOR REIMBURSEMENT.—Reimbursement of the 

4 Secretary of Transportation for costs incurred under this section shall be 

5 made with appropriated funds rather than through cancellation of notes. 

6 ‘‘(e) APPROPRIATIONS.— 

7 ‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized to be 

8 appropriated an amount sufficient to reimburse the Secretary of Trans9 portation for the costs incurred under this section, including adminis10 trative expenses and the principal and interest due on obligations 

11 issued to the Secretary of the Treasury. 

12 ‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each fiscal 

13 year, such amounts as may be necessary are hereby appropriated to 

14 pay interest and to liquidate debt on obligations issued to the Secretary 

15 of the Treasury under this section. 

16 ‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary 

17 of Transportation is unable to obtain the funds necessary to finance the in18 creased ocean freight charges resulting from the requirements of subsections 

19 (a) and (b) and section 55314(a) of this title, the Secretary shall notify 

20 Congress within 10 working days of the discovery of the insufficiency. 

21 ‘‘§ 55317. Termination of subchapter 

22 ‘‘This subchapter terminates 90 days after the date on which a notifica23 tion is made under section 55316(f) of this title, except for shipments of 

24 agricultural commodities and their products subject to contracts made be25 fore the end of that 90-day period, unless within that 90-day period the Sec26 retary of Transportation proclaims that funds are available to finance in27 creased freight charges resulting from the requirements of sections 

28 55314(a) and 55316(a) and (b) of this title. On the termination of this sub29 chapter under this section— 

30 ‘‘(1) this subchapter does not exempt export activities from, or sub31 ject export activities to, the cargo preference laws; and 

32 ‘‘(2) the 50-percent requirement in section 55305 of this title re33 mains in effect. 

34 ‘‘§ 55318. Effect on other law 

35 ‘‘This subchapter does not affect chapter 5 of title 5. 

36 ‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 

37 ‘‘§ 55331. Definitions 

38 ‘‘In this subchapter: 

39 ‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American Great 

40 Lakes vessel’ means a vessel so designated under section 55332 of this 

41 title, but only during the period the designation is in effect. 


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1 ‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake Superior, 

2 Lake Michigan, Lake Huron, Lake Erie, Lake Ontario, the Saint Law3 rence River west of Saint Regis, New York, and their connecting and 

4 tributary waters. 

5 ‘‘(3) GREAT LAKES SHIPPING SEASON.—The term ‘Great Lakes 

6 shipping season’ means the period each year during which the Saint 

7 Lawrence Seaway is open for navigation by vessels, as declared by the 

8 Saint Lawrence Seaway Development Corporation. 

9 ‘‘§ 55332. Designating American Great Lakes vessels 

10 ‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a 

11 vessel as an American Great Lakes vessel if— 

12 ‘‘(1) an application for designation is submitted to the Secretary 

13 under regulations prescribed by the Secretary; 

14 ‘‘(2) the vessel is documented under the laws of the United States; 

15 ‘‘(3) the vessel, on the effective date of the designation, is— 

16 ‘‘(A) at least 1, but not more than 6, years old; or 

17 ‘‘(B) at least 1, but not more than 11, years old if the Secretary 

18 finds that suitable vessels are not available to provide the type of 

19 service for which the vessel will be used after the designation; 

20 ‘‘(4) the vessel has not previously been designated as an American 

21 Great Lakes vessel; and 

22 ‘‘(5) the owner makes an agreement as provided under subsection 

23 (b). 

24 ‘‘(b) AGREEMENTS.—A vessel may be designated as an American Great 

25 Lakes vessel only if the person that will be the owner of the vessel at the 

26 time of the designation makes an agreement with the Secretary providing 

27 that if the Secretary determines that the vessel is necessary to the defense 

28 of the United States, the United States Government will have an exclusive 

29 right, during the 120-day period following the date of a revocation of the 

30 designation under section 55335 of this title, to purchase the vessel for a 

31 price equal to the greater of— 

32 ‘‘(1) the approximate world market value of the vessel; or 

33 ‘‘(2) the cost of the vessel to the owner less a reasonable amount 

34 for depreciation. 

35 ‘‘(c) CERTAIN FOREIGN DOCUMENTATION AND SALE NOT PROHIB36 ITED.—Notwithstanding any other law, if the Government does not exercise 

37 its right of purchase under an agreement under subsection (b), the owner 

38 of the vessel is not prohibited from— 

39 ‘‘(1) documenting the vessel under the laws of a foreign country; or 

40 ‘‘(2) selling the vessel to a person not a citizen of the United States. 


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1 ‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations estab2 lishing requirements for submitting applications under this section. 

3 ‘‘§ 55333. Exemption from restriction on transporting cer4 tain cargo 

5 ‘‘The 3-year documentation requirement of section 55305(a) of this title 

6 does not apply to a vessel designated as an American Great Lakes vessel 

7 during the period of its designation. 

8 ‘‘§ 55334. Restrictions on operations 

9 ‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an American 

10 Great Lakes vessel may not be used to— 

11 ‘‘(1) engage in trade— 

12 ‘‘(A) from a port in the United States that is not located on 

13 the Great Lakes; or 

14 ‘‘(B) between ports in the United States; 

15 ‘‘(2) transport bulk cargo (as defined in section 40102 of this title) 

16 that is subject to section 55305 or 55314 of this title or section 2631 

17 of title 10; or 

18 ‘‘(3) provide a service (except ocean freight service) as— 

19 ‘‘(A) a contract carrier; or 

20 ‘‘(B) a common carrier on a fixed advertised schedule offering 

21 frequent sailings at regular intervals in the foreign trade of the 

22 United States. 

23 ‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel may be 

24 used for not more than 90 days during any 12-month period to engage in 

25 trade prohibited by subsection (a)(1)(A), except during the Great Lakes 

26 shipping season. 

27 ‘‘§ 55335. Revocations and terminations of designations 

28 ‘‘(a) REVOCATIONS.—After notice and an opportunity for a hearing, the 

29 Secretary of Transportation may revoke a designation of a vessel as an 

30 American Great Lakes vessel if the Secretary finds that— 

31 ‘‘(1) the vessel does not meet a requirement for the designation; 

32 ‘‘(2) the vessel has been operated in violation of this subchapter; or 

33 ‘‘(3) the owner or operator of the vessel has violated an agreement 

34 made under section 55332(b) of this title. 

35 ‘‘(b) TERMINATIONS.—On petition and a showing of good cause by the 

36 owner of a vessel, the Secretary may terminate the designation of a vessel 

37 as an American Great Lakes vessel. The Secretary may impose conditions 

38 in a termination order to prevent significant adverse effects on other opera39 tors of vessels of the United States. 


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1 ‘‘§ 55336. Civil penalty 

2 ‘‘After notice and an opportunity for a hearing, the Secretary of Trans3 portation may impose a civil penalty of not more than $1,000,000 on the 

4 owner of an American Great Lakes vessel for any act for which the designa5 tion may be revoked under section 55335 of this title. 

6 ‘‘CHAPTER 555—MISCELLANEOUS 

‘‘Sec. 

‘‘55501. Mobile trade fairs. 

7 ‘‘§ 55501. Mobile trade fairs 

8 ‘‘(a) IN GENERAL.—The Secretary of Commerce shall encourage and pro9 mote the development and use of mobile trade fairs designed to show and 

10 sell the products of United States business and agriculture at foreign ports 

11 and at other commercial centers throughout the world where the operators 

12 of the fairs use, insofar as practicable, vessels and aircraft of the United 

13 States in transporting their exhibits. 

14 ‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary de15 termines that a mobile trade fair provides an economical and effective 

16 means of promoting export sales, the Secretary may provide to the operator 

17 of the fair— 

18 ‘‘(1) technical assistance and support; and 

19 ‘‘(2) financial assistance to defray certain expenses incurred outside 

20 the United States, except the cost of transportation on foreign vessels 

21 and aircraft. 

22 ‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section, the 

23 President may use, in addition to amounts appropriated to carry out trade 

24 promotion activities, foreign currencies owned by or owed to the United 

25 States Government. 

26 ‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES

27 ‘‘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. 

28 ‘‘§ 56101. Approval required to transfer vessel to noncitizen 

29 ‘‘(a) RESTRICTIONS.— 

30 ‘‘(1) IN GENERAL.—Except as otherwise provided in this section, 

31 section 12119 of this title, or section 611 of the Merchant Marine Act, 

32 1936, a person may not, without the approval of the Secretary of 

33 Transportation— 

34 ‘‘(A) sell, lease, charter, deliver, or in any other manner trans35 fer, or agree to sell, lease, charter, deliver, or in any other manner 


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1 transfer, to a person not a citizen of the United States, an interest 

2 in or control of— 

3 ‘‘(i) a documented vessel owned by a citizen of the United 

4 States; or 

5 ‘‘(ii) a vessel last documented under the laws of the United 

6 States; or 

7 ‘‘(B) place under foreign registry, or operate under the author8 ity of a foreign country, a documented vessel or a vessel last docu9 mented under the laws of the United States. 

10 ‘‘(2) EXCEPTIONS.—Paragraph (1)(A) does not apply to a vessel 

11 that has been operated only for pleasure or only as a fishing vessel, 

12 fish processing vessel, or fish tender vessel (as defined in section 2101 

13 of this title). 

14 ‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing with 

15 respect to a vessel to be documented under chapter 121 of this title, the 

16 Secretary may grant approval under subsection (a) before the vessel is docu17 mented. 

18 ‘‘(c) EXCEPTIONS.—Notwithstanding any other provision of this subtitle, 

19 the Merchant Marine Act, 1936, or any contract with the Secretary made 

20 under this subtitle or that Act, a person may place a vessel under foreign 

21 registry without the approval of the Secretary if— 

22 ‘‘(1)(A) the Secretary, in conjunction with the Secretary of Defense, 

23 determines that at least one replacement vessel of equal or greater mili24 tary capability and of a capacity that is equivalent or greater, as meas25 ured by deadweight tons, gross tons, or container equivalent units, as 

26 appropriate, is documented under chapter 121 of this title by the owner 

27 of the vessel placed under foreign registry; and 

28 ‘‘(B) the replacement vessel is not more than 10 years old on the 

29 date of that documentation; or 

30 ‘‘(2) an operating agreement covering the vessel under chapter 531 

31 of this title has expired. 

32 ‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or trans33 fer of a vessel, or of an interest in or control of a vessel, in violation of 

34 this section is void. 

35 ‘‘(e) PENALTIES.— 

36 ‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells, charters, 

37 or transfers a vessel, or an interest in or control of a vessel, in violation 

38 of this section shall be fined under title 18, imprisoned for not more 

39 than 5 years, or both. 

40 ‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a 

41 vessel, or an interest in or control of a vessel, in violation of this secVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00200 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 tion is liable to the United States Government for a civil penalty of 

2 not more than $10,000 for each violation. 

3 ‘‘(3) FORFEITURE.—A documented vessel may be seized by and for4 feited to the Government if, in violation of this section, a person— 

5 ‘‘(A) knowingly sells, charters, or transfers the vessel or an in6 terest in or control of the vessel; or 

7 ‘‘(B) places the vessel under foreign registry or operates the 

8 vessel under the authority of a foreign country. 

9 ‘‘§ 56102. Additional controls during war or national emer10 gency 

11 ‘‘(a) IN GENERAL.—During war, or a national emergency declared by 

12 Presidential proclamation, a person may not, without the approval of the 

13 Secretary of Transportation— 

14 ‘‘(1) place under foreign registry a vessel owned in whole or in part 

15 by a citizen of the United States or a corporation incorporated under 

16 the laws of the United States or of a State; 

17 ‘‘(2) sell, mortgage, lease, charter, deliver, or in any other manner 

18 transfer, or agree to sell, mortgage, lease, charter, deliver, or in any 

19 other manner transfer, to a person not a citizen of the United States— 

20 ‘‘(A) a vessel owned as described in paragraph (1), or an inter21 est therein; 

22 ‘‘(B) a vessel documented under the laws of the United States, 

23 or an interest therein; or 

24 ‘‘(C) a facility for building or repairing vessels, or an interest 

25 therein; 

26 ‘‘(3) issue, assign, or transfer to a person not a citizen of the United 

27 States an instrument of indebtedness secured by a mortgage of a vessel 

28 to a trustee, by an assignment of an owner’s interest in a vessel under 

29 construction to a trustee, or by a mortgage of a facility for building 

30 or repairing vessels to a trustee, unless the trustee or a substitute 

31 trustee is approved by the Secretary under subsection (b); 

32 ‘‘(4) enter into an agreement or understanding to construct a vessel 

33 in the United States for, or to be delivered to, a person not a citizen 

34 of the United States without expressly stipulating that construction will 

35 not begin until after the war or national emergency has ended; 

36 ‘‘(5) enter into an agreement or understanding whereby there is vest37 ed in, or for the benefit of, a person not a citizen of the United States 

38 the controlling interest in a corporation that is incorporated under the 

39 laws of the United States or a State and that owns a vessel or facility 

40 for building or repairing vessels; or 


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1 ‘‘(6) cause or procure a vessel, constructed in whole or in part in 

2 the United States and never cleared for a foreign port, to depart from 

3 a port of the United States before it has been documented under the 

4 laws of the United States. 

5 ‘‘(b) TRUSTEES.— 

6 ‘‘(1) APPROVAL.—The Secretary shall approve a trustee or sub7 stitute trustee under subsection (a)(3) if and only if the trustee is a 

8 bank or trust company that— 

9 ‘‘(A) is organized as a corporation, and is doing business, under 

10 the laws of the United States or a State; 

11 ‘‘(B) is authorized under those laws to exercise corporate trust 

12 powers; 

13 ‘‘(C) is a citizen of the United States; 

14 ‘‘(D) is subject to supervision or examination by Federal or 

15 State authority; and 

16 ‘‘(E) has a combined capital and surplus (as set forth in its 

17 most recent published report of condition) of at least $3,000,000. 

18 ‘‘(2) DISAPPROVAL.—If a trustee or substitute trustee ceases to meet 

19 the conditions in paragraph (1), the Secretary shall disapprove the 

20 trustee or substitute trustee. After the disapproval, the restrictions on 

21 transfer or assignment without the Secretary’s approval in subsection 

22 (a)(3) apply. 

23 ‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) 

24 applies, a trustee referred to in subsection (a)(3), even though ap25 proved as a trustee by the Secretary, may not operate the vessel under 

26 the mortgage or assignment without the Secretary’s approval. 

27 ‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in violation 

28 of this section is void. 

29 ‘‘(d) RECOVERY OF CONSIDERATION.— 

30 ‘‘(1) IN GENERAL.—A person that deposited or paid consideration in 

31 connection with a transaction prohibited by this section may recover 

32 the consideration after tender of the vessel, facility, stock, or other se33 curity, or interest therein, to the person entitled to it, or the forfeiture 

34 thereof to the United States Government. 

35 ‘‘(2) EXCEPTION.—Paragraph (1) does not apply if the person in 

36 whose interest the consideration was deposited, or to whom it was paid, 

37 entered into the transaction in the belief that the person depositing or 

38 paying the consideration was a citizen of the United States. 

39 ‘‘(e) PENALTIES.— 


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1 ‘‘(1) CRIMINAL PENALTY.—A person that violates, or attempts or 

2 conspires to violate, this section shall be fined under title 18, impris3 oned for not more than 5 years, or both. 

4 ‘‘(2) FORFEITURE.—The following shall be forfeited to the Govern5 ment: 

6 ‘‘(A) A vessel, a facility for building or repairing vessels, or an 

7 interest in a vessel or such a facility, that is sold, mortgaged, 

8 leased, chartered, delivered, transferred, or documented, or agreed 

9 to be sold, mortgaged, leased, chartered, delivered, transferred, or 

10 documented, in violation of this section. 

11 ‘‘(B) Stock and other securities sold or transferred, or agreed 

12 to be sold or transferred, in violation of this section. 

13 ‘‘(C) A vessel departing in violation of subsection (a)(6). 

14 ‘‘§ 56103. Conditional approvals 

15 ‘‘(a) IN GENERAL.—In approving an act or transaction under section 

16 56101 or 56102 of this title, the Secretary of Transportation may do so 

17 absolutely or upon conditions the Secretary considers advisable. The Sec18 retary shall state the conditions in the notice of approval. 

19 ‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the 

20 same penalties as a violation resulting from an act done without the re21 quired approval. The violation occurs at the time the condition is violated. 

22 ‘‘§ 56104. Penalty for false statements 

23 ‘‘A person that knowingly makes a false statement of a material fact to 

24 the Secretary of Transportation or another officer, employee, or agent of the 

25 Department of Transportation, to obtain the Secretary’s approval under sec26 tion 56101 or 56102 of this title, shall be fined under title 18, imprisoned 

27 for not more than 5 years, or both. 

28 ‘‘§ 56105. Forfeiture procedure 

29 ‘‘(a) IN GENERAL.—A forfeiture under this chapter may be enforced in 

30 the same way as a forfeiture under the laws on the collection of duties. 

31 However, such a forfeiture may be remitted without seizure of the vessel. 

32 ‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter to enforce 

33 a forfeiture, a prior criminal conviction of a person for a violation of this 

34 chapter with respect to the subject matter of the forfeiture is prima facie 

35 evidence of the violation against the person convicted. 

36 ‘‘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. 


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1 ‘‘§ 56301. General authority 

2 ‘‘During a national emergency declared by Presidential proclamation, or 

3 a period for which the President has proclaimed that the security of the na4 tional defense makes it advisable, the Secretary of Transportation may req5 uisition or purchase, or requisition or charter the use of, a vessel owned by 

6 citizens of the United States, a documented vessel, or a vessel under con7 struction in the United States. 

8 ‘‘§ 56302. Charter terms 

9 ‘‘(a) IN GENERAL.—If a vessel is requisitioned for use but not ownership 

10 under this chapter, the Secretary of Transportation, at the time of requisi11 tion or as soon thereafter as the situation allows, shall offer the person enti12 tled to possession of the vessel a charter containing— 

13 ‘‘(1) the terms the Secretary believes should govern the relationship 

14 between the United States Government and the person; and 

15 ‘‘(2) the rate of hire the Secretary considers just compensation for 

16 the use of the vessel and the services required under the charter. 

17 ‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the charter 

18 and rate of hire, the parties shall proceed as provided in section 56304 of 

19 this title. 

20 ‘‘§ 56303. Compensation 

21 ‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of Transpor22 tation shall determine and pay just compensation for a vessel requisitioned 

23 under this chapter. 

24 ‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel may not 

25 be considered enhanced by the circumstances requiring its requisition. Con26 sequential damages arising from the requisition may not be paid. 

27 ‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.— 

28 ‘‘(1) IF PAID.—If a construction-differential subsidy has been paid 

29 for the vessel, the value of the vessel at the time of requisition shall 

30 be determined under section 802 of the Merchant Marine Act, 1936. 

31 ‘‘(2) IF NOT PAID.—If a construction-differential subsidy has not 

32 been paid for the vessel, the value of any national defense features pre33 viously paid for by the United States Government shall be excluded. 

34 ‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost or dam35 aged by a risk assumed by the Government under the charter, but a valu36 ation for the vessel or a means of compensation has not been agreed to, 

37 the Secretary shall pay just compensation for the loss or damage, to the 

38 extent the person is not reimbursed through insurance. 

39 ‘‘§ 56304. Disputed compensation 

40 ‘‘If the person entitled to compensation disputes the amount of just com41 pensation determined by the Secretary of Transportation under this chapter, 


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1 the Secretary shall pay the person, as a tentative advance, 75 percent of 

2 the amount determined. The person may bring a civil action against the 

3 United States to recover just compensation. If the tentative advance paid 

4 under this section is greater than the amount of the court’s judgment, the 

5 person shall refund the difference. 

6 ‘‘§ 56305. Vessel encumbrances 

7 ‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel does 

8 not prevent the requisition of the vessel under this chapter. 

9 ‘‘(b) DEPOSIT IN TREASURY.— 

10 ‘‘(1) IN GENERAL.—If an encumbrance exists, the Secretary of 

11 Transportation may deposit part of the compensation or advance of 

12 compensation to be paid under this chapter (but not more than the 

13 total amount of all encumbrances) in a fund in the Treasury. The Sec14 retary shall publish notice of the creation of the fund in the Federal 

15 Register. 

16 ‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts deposited in 

17 the fund shall be available to pay the compensation or any of the en18 cumbrances (including encumbrances stipulated to in a court of the 

19 United States or a State) existing at the time the vessel was requi20 sitioned. 

21 ‘‘(c) CIVIL ACTION.— 

22 ‘‘(1) IN GENERAL.—Within 6 months after publication of notice 

23 under subsection (b), the holder of an encumbrance may bring a civil 

24 action in admiralty, according to the principles of libels in rem, against 

25 the fund. 

26 ‘‘(2) VENUE.—The action must be brought in the district court of 

27 the United States— 

28 ‘‘(A) from whose custody the vessel was or may be requisitioned; 

29 or 

30 ‘‘(B) in whose district the vessel was located when it was requi31 sitioned. 

32 ‘‘(3) SERVICE OF PROCESS.—Service of process shall be made on the 

33 appropriate United States Attorney, the Attorney General, and the Sec34 retary, in the manner provided by the Federal Rules of Civil Procedure 

35 (28 App. U.S.C.). Notice of the action shall be given to all interested 

36 persons as ordered by the court. 

37 ‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and 

38 be determined according to the principles of law and the rules of prac39 tice applicable in like cases between private parties. 


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1 ‘‘§ 56306. Use and transfer of vessels 

2 ‘‘(a) IN GENERAL.—The Secretary of Transportation may repair, recon3 dition, reconstruct, operate, or charter for operation, a vessel acquired under 

4 this chapter. 

5 ‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may transfer the 

6 possession or control of a vessel acquired under this chapter to another de7 partment or agency of the United States Government on terms and condi8 tions approved by the President. The department or agency shall promptly 

9 reimburse the Secretary for expenditures for just compensation, purchase 

10 price, charter hire, repairs, reconditioning, or reconstruction. 

11 ‘‘§ 56307. Return of vessels 

12 ‘‘When a vessel requisitioned for use but not ownership is returned to the 

13 owner, the Secretary of Transportation shall— 

14 ‘‘(1) return the vessel in a condition at least as good as when taken, 

15 less ordinary wear and tear; or 

16 ‘‘(2) pay the owner an amount sufficient to recondition the vessel to 

17 that condition, less ordinary wear and tear. 

18 ‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY 

19 NEUTRALITY ACT 

‘‘Sec. 

‘‘56501. Definition. 

‘‘56502. Adjusting obligations and arranging maintenance. 

‘‘56503. Types of adjustments and arrangements. 

‘‘56504. Changes in adjustments and arrangements. 

20 ‘‘§ 56501. Definition 

21 ‘‘In this chapter, the term ‘essential vessel’ means a vessel that is— 

22 ‘‘(1)(A) security for a mortgage indebtedness to the United States 

23 Government; or 

24 ‘‘(B) constructed under this subtitle or required by a contract under 

25 this subtitle to be operated on a certain essential foreign trade route; 

26 and 

27 ‘‘(2) necessary in the interests of commerce and national defense to 

28 be maintained in condition for prompt use. 

29 ‘‘§ 56502. Adjusting obligations and arranging maintenance 

30 ‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of 

31 Transportation may adjust obligations and arrange for maintenance of an 

32 essential vessel as provided in this chapter if the Secretary determines, after 

33 any investigation or proceeding the Secretary considers desirable, that— 

34 ‘‘(1) the operation of the vessel in the service, route, or line to which 

35 it is assigned under this subtitle, or in which it otherwise would be op36 erated, is not— 

37 ‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 

38 et seq.) or a proclamation issued under that Act; or 


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1 ‘‘(B) compatible with maintaining the availability of the vessel 

2 for national defense and commerce; 

3 ‘‘(2) it is not feasible under existing law to employ the vessel in any 

4 other service or operation in foreign or domestic trade (except tem5 porary or emergency operation under section 56503(b)(5) of this title); 

6 and 

7 ‘‘(3) the applicant, because of the restrictions of the Neutrality Act 

8 of 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for na9 tional defense under paragraph (1), is not earning or will not earn a 

10 reasonable return on the capital necessarily employed in its business. 

11 ‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under sub12 section (a) shall continue in effect only as long as the circumstances de13 scribed in subsection (a) continue to exist. 

14 ‘‘§ 56503. Types of adjustments and arrangements 

15 ‘‘(a) SUSPENSION REQUIREMENTS.—An adjustment or arrangement 

16 under this chapter shall include suspension of— 

17 ‘‘(1) the requirement to operate the vessel in foreign trade under the 

18 applicable operating-differential or construction-differential subsidy 

19 contract or mortgage or other agreement; and 

20 ‘‘(2) the right to operating-differential subsidy for the vessel. 

21 ‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To the ex22 tent the Secretary of Transportation considers appropriate to carry out the 

23 purposes of this subtitle, an adjustment or arrangement under this chapter 

24 may include any of the following: 

25 ‘‘(1) Lay-up of the vessel by the owner or in the custody of the Sec26 retary, with payment or reimbursement by the Secretary of necessary 

27 and proper expenses (including reasonable overhead and insurance) or 

28 a fixed periodic allowance instead of payment or reimbursement. 

29 ‘‘(2) Postponement, for not more than the total period of the lay30 up, of the maturity date of each installment of the principal of obliga31 tions to the United States Government for the vessel (regardless of 

32 whether the maturity date is during a lay-up period), or rearrangement 

33 of those maturities. 

34 ‘‘(3) Postponement or cancellation of interest accruing on the obliga35 tions during a lay-up period. 

36 ‘‘(4) Extension, for not more than the total period of the lay-up, of 

37 the 20-year life limitation for the vessel and other limitations and pro38 visions of this subtitle based on a 20-year life. 

39 ‘‘(5) Provision for temporary or emergency employment of the vessel 

40 (instead of lay-up) as may be practicable, with such arrangements for 

41 management of the vessel, payment of expenses, and application of the 


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1 proceeds of the employment, as the Secretary may approve, with any 

2 period of operation being included as part of the lay-up period. 

3 ‘‘(6) Payment to the Secretary, on termination of the arrangements 

4 with the applicant, of the applicant’s net profits (earned while the ar5 rangements were in effect) in excess of 10 percent a year on the capital 

6 necessarily employed in the applicant’s business, as reimbursement for 

7 obligations postponed or canceled and expenses incurred or paid by the 

8 Secretary under this section. 

9 ‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the appli10 cant represented by a vessel of the applicant laid-up or operated under this 

11 section shall be included in capital necessarily employed in the applicant’s 

12 business. The Secretary may require a vessel laid-up or operated under this 

13 section to be security for reimbursement. 

14 ‘‘§ 56504. Changes in adjustments and arrangements 

15 ‘‘The Secretary of Transportation may change an adjustment or arrange16 ment made under this chapter as the Secretary considers necessary to carry 

17 out this chapter. 

18 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

19 ‘‘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. 

20 ‘‘§ 57101. Placement of vessels in National Defense Reserve 

21 Fleet 

22 ‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime Administration 

23 shall be placed in the National Defense Reserve Fleet maintained under sec24 tion 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744). 

25 ‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under sub26 section (a) may not be traded out or sold from the Fleet, except as provided 

27 in section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this 

28 title. 

29 ‘‘§ 57102. Disposition of vessels not worth preserving 

30 ‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that 

31 a vessel owned by the Maritime Administration is of insufficient value for 

32 commercial or military operation to warrant its further preservation, the 

33 Secretary may scrap the vessel or sell the vessel for cash. 


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1 ‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection (a) 

2 shall be made on the basis of competitive sealed bids, after an appraisal and 

3 due advertisement. The purchaser does not have to be a citizen of the 

4 United States. The purchaser shall provide a surety bond, with a surety ap5 proved by the Secretary, to ensure that the vessel will not be operated in 

6 the foreign trade of the United States at any time within 10 years after 

7 the sale, in competition with a vessel owned by a citizen of the United 

8 States and documented under the laws of the United States. 

9 ‘‘§ 57103. Sale of obsolete vessels in National Defense Re10 serve Fleet 

11 ‘‘(a) IN GENERAL.—The Secretary of Transportation may convey the 

12 right, title, and interest of the United States Government in any vessel of 

13 the National Defense Reserve Fleet that has been identified by the Sec14 retary as an obsolete vessel of insufficient value to warrant its further pres15 ervation, if the recipient— 

16 ‘‘(1) is a non-profit organization, a State, or a municipal corporation 

17 or political subdivision of a State; 

18 ‘‘(2) agrees not to use, or allow others to use, the vessel for commer19 cial transportation purposes; 

20 ‘‘(3) agrees to make the vessel available to the Government whenever 

21 the Secretary indicates that it is needed by the Government; 

22 ‘‘(4) agrees to hold the Government harmless for any claims arising 

23 from exposure to asbestos, polychlorinated biphenyls, lead paint, or 

24 other hazardous substances after conveyance of the vessel, except for 

25 claims arising from use of the vessel by the Government; 

26 ‘‘(5) has a conveyance plan and a business plan that describes the 

27 intended use of the vessel, each of which has been submitted to and 

28 approved by the Secretary; 

29 ‘‘(6) has provided proof, as determined by the Secretary, of resources 

30 sufficient to accomplish the transfer, necessary repairs and modifica31 tions, and initiation of the intended use of the vessel; and 

32 ‘‘(7) agrees that when the recipient no longer requires the vessel for 

33 use as described in the business plan required under paragraph (5)— 

34 ‘‘(A) the recipient will, at the discretion of the Secretary, re35 convey the vessel to the Government in good condition except for 

36 ordinary wear and tear; or 

37 ‘‘(B) if the Board of Trustees of the recipient has decided to 

38 dissolve the recipient according to the laws of the State in which 

39 the recipient is incorporated, then— 

40 ‘‘(i) the recipient shall distribute the vessel, as an asset of 

41 the recipient, to a person that has been determined exempt 


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1 from taxation under section 501(c)(3) of the Internal Rev2 enue Code of 1986 (26 U.S.C. 501(c)(3)), or to the Federal 

3 Government or a State or local government for a public pur4 pose; and 

5 ‘‘(ii) the vessel shall be disposed of by a court of competent 

6 jurisdiction of the county in which the principal office of the 

7 recipient is located, for such purposes as the court shall de8 termine, or to such organizations as the court shall determine 

9 are organized exclusively for public purposes. 

10 ‘‘(b) OTHER EQUIPMENT.—At the Secretary’s discretion, additional 

11 equipment from other obsolete vessels of the Fleet may be conveyed to assist 

12 the recipient with maintenance, repairs, or modifications. 

13 ‘‘(c) ADDITIONAL TERMS.—The Secretary may require any additional 

14 terms the Secretary considers appropriate. 

15 ‘‘(d) DELIVERY OF VESSEL.—If conveyance is made under this section, 

16 the vessel shall be delivered to the recipient at a time and place to be deter17 mined by the Secretary. The vessel shall be conveyed in an ‘as is’ condition. 

18 ‘‘(e) LIMITATIONS.—If at any time prior to delivery of the vessel to the 

19 recipient, the Secretary determines that a different disposition of the vessel 

20 would better serve the interests of the Government, the Secretary shall pur21 sue the more favorable disposition of the obsolete vessel and shall not be 

22 liable for any damages that may result from an intended recipient’s reliance 

23 upon a proposed transfer. 

24 ‘‘(f) REVERSION.—The Secretary shall include in any conveyance under 

25 this section terms under which all right, title, and interest conveyed by the 

26 Secretary shall revert to the Government if the Secretary determines the 

27 vessel has been used other than as described in the business plan required 

28 under subsection (a)(5). 

29 ‘‘§ 57104. Acquisition of vessels from sale of obsolete vessels 

30 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire suit31 able documented vessels with amounts in the Vessel Operations Revolving 

32 Fund derived from the sale of obsolete vessels in the National Defense Re33 serve Fleet. 

34 ‘‘(b) VALUATION.—The acquired and obsolete vessels shall be valued at 

35 their scrap value in domestic or foreign markets as of the date of the acqui36 sition for or sale from the Fleet. However, the value assigned to those ves37 sels shall be determined on the same basis, with consideration given to the 

38 fair value of the cost of moving the vessel sold from the Fleet to the place 

39 of scrapping. 

40 ‘‘(c) COSTS INCIDENT TO LAY-UP.—Costs incident to the lay-up of the 

41 vessel acquired under this section may be paid from amounts in the Fund. 


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1 ‘‘(d) TRANSFERS TO NON-CITIZENS.—A vessel sold from the Fleet under 

2 this section may be scrapped in an approved foreign market without obtain3 ing additional separate approval from the Secretary to transfer the vessel 

4 to a person not a citizen of the United States. 

5 ‘‘§ 57105. Acquisition of vessels for essential services, routes, 

6 or lines 

7 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire a ves8 sel, by purchase or otherwise, if— 

9 ‘‘(1) the Secretary considers the vessel necessary to establish, main10 tain, improve, or serve as a replacement on an essential service, route, 

11 or line in the foreign commerce of the United States, as determined 

12 under section 50103 of this title; 

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

14 ‘‘(3) the Secretary of the Navy has certified to the Secretary of 

15 Transportation that the vessel is suitable for economical and speedy 

16 conversion into a naval or military auxiliary or otherwise suitable for 

17 use by the United States Government in time of war or national emer18 gency. 

19 ‘‘(b) PRICE.—The price paid for the vessel shall be based on a fair and 

20 reasonable valuation. However, the price may not exceed by more than 5 

21 percent the cost of the vessel to the owner (excluding any construction-dif22 ferential subsidy and the cost of national defense features paid by the Sec23 retary of Transportation) plus the actual cost previously expended for recon24 ditioning, less depreciation based on a 25-year life for a dry-cargo or pas25 senger vessel and a 20-year life for a tanker or other liquid bulk carrier 

26 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 

37 terms and conditions the Secretary considers appropriate to carry out the 

38 purposes of this subtitle. 

39 ‘‘(b) DOCUMENTATION AND RESTRICTIONS ON OPERATION.—A vessel re40 conditioned, remodeled, or improved under subsection (a) shall be docu41 mented under the laws of the United States and remain so documented for 


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1 at least 5 years after completion of the reconditioning, remodeling, or im2 provement. During that period, it shall be operated on voyages that are not 

3 exclusively coastwise. 

4 ‘‘§ 57107. Vessels for other agencies 

5 ‘‘(a) IN GENERAL.—The Secretary of Transportation may construct, re6 construct, repair, equip, and outfit, by contract or otherwise, vessels or 

7 parts thereof, for any other department or agency of the United States Gov8 ernment to the extent the other department or agency is authorized by law 

9 to do so 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 

12 contract authorization of the Secretary, but instead shall be charged against 

13 the existing appropriation or contract authorization of the department or 

14 agency. 

15 ‘‘§ 57108. Consideration of ballast and equipment in deter16 mining selling price 

17 ‘‘The Maritime Administration may not sell a vessel until its ballast and 

18 equipment have been inventoried and their value considered in determining 

19 the selling price of the vessel. 

20 ‘‘§ 57109. Operation of vessels purchased, chartered, or 

21 leased from Secretary of Transportation 

22 ‘‘Unless otherwise authorized by the Secretary of Transportation, a vessel 

23 purchased, chartered, or leased from the Secretary may be operated only 

24 under a certificate of documentation with a registry or coastwise endorse25 ment. Such a vessel, while employed solely as a merchant vessel, is subject 

26 to the laws, regulations, and liabilities governing merchant vessels, whether 

27 the United States Government has an interest in the vessel as an owner or 

28 holds a mortgage, lien, or other interest. 

29 ‘‘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. 

30 ‘‘§ 57301. Definitions 

31 ‘‘In this chapter: 

32 ‘‘(1) NEW VESSEL.—The term ‘new vessel’ means a vessel— 

33 ‘‘(A) constructed under this subtitle and acquired within 2 years 

34 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 

9 interest; and 

10 ‘‘(C) has been owned by a citizen of the United States for at 

11 least 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 

14 the domestic and foreign waterborne commerce of the United States, the 

15 Secretary of Transportation may acquire an obsolete vessel in exchange for 

16 an allowance of credit toward the cost of construction or purchase of a new 

17 vessel as provided 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 

24 vessel will have a utility value at least equal to that of the obsolete vessel, 

25 the new vessel may be of lesser gross tonnage than the obsolete vessel. How26 ever, the gross tonnage of the new vessel must be at least one-third the 

27 gross tonnage of the obsolete vessel. 

28 ‘‘§ 57304. Eligible acquisition dates 

29 ‘‘At the option of the owner, the acquisition of an obsolete vessel under 

30 this chapter shall occur— 

31 ‘‘(1) when the owner contracts for the construction or purchase of 

32 a new vessel; or 

33 ‘‘(2) within 5 days of the actual date of delivery of the new vessel 

34 to 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 

38 vessel. The allowance shall be the fair value of the vessel. In determining 

39 the 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 

4 commerce or in the domestic or foreign commerce of the United States. 

5 ‘‘(b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete vessel 

6 occurs when the owner contracts for the construction of the new vessel, and 

7 the owner uses the obsolete vessel during the period of construction of the 

8 new vessel, the Secretary shall reduce the trade-in allowance by an amount 

9 representing the fair value of that use. The Secretary shall establish the 

10 rate for use of the obsolete vessel when the contract for construction of the 

11 new vessel 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 construc15 tion or purchase of the new vessel, the Secretary of Transportation shall 

16 apply the trade-in allowance to the purchase price of the new vessel rather 

17 than paying it to the owner. If the new vessel is constructed under this sub18 title, the Secretary may apply the trade-in allowance to the required cash 

19 payments on terms and conditions the Secretary may prescribe. If the new 

20 vessel is not constructed under this subtitle, the Secretary shall pay the 

21 trade-in allowance to the builder of the vessel for the account of the owner 

22 when the Secretary 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 

25 shall 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 

28 Federal income tax laws when the vessel is transferred to the Secretary of 

29 Transportation in exchange for a trade-in allowance under this chapter. The 

30 basis of the new vessel acquired with the allowance is the same as the basis 

31 of the obsolete vessel— 

32 ‘‘(1) increased by the difference between the cost of the new vessel 

33 and 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 

37 least 25 years old may not be used for commercial operation. However, the 

38 vessel 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 

2 serving 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 

9 fully realized within a reasonable time under titles V and VI of the Mer10 chant Marine Act, 1936, and the President approves the determination, the 

11 Secretary, in accordance with this chapter, shall complete the long-range 

12 program described 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 ves16 sels constructed, and have old vessels reconditioned or remodeled, as the 

17 Secretary 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 

25 a vessel by a private shipbuilder under this chapter are subject to the provi26 sions of title V of the Merchant Marine Act, 1936, applicable to a contract 


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1 with a private shipbuilder for the construction of a vessel under title V of 

2 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 

6 new vessel, or for the reconstruction or reconditioning of an existing vessel, 

7 only after due advertisement and upon sealed competitive bids. 

8 ‘‘(b) OPENING OF BIDS.—Bids required under this section shall be 

9 opened at the time and place stated in the advertisement for bids. All inter10 ested persons, including representatives of the press, shall be permitted to 

11 attend. The 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 

15 Transportation in any manner may be chartered or sold by the Secretary 

16 of Transportation 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 

19 the employment of the Department of Transportation’s vessels in steamship 

20 lines on such trade routes, exclusively serving the foreign trade of the 

21 United States, as the Secretary determines are essential for the development 

22 and maintenance of the commerce of the United States and the national de23 fense. However, the Secretary shall first determine that those routes are not 

24 being adequately served by existing steamship lines privately owned and op25 erated by citizens of the United States and documented under the laws of 

26 the United 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 

32 of the United States who agree to maintain the line in the manner pro33 vided in this chapter. 

34 ‘‘§ 57506. Minimum selling price of vessels 

35 ‘‘(a) IN GENERAL.—A vessel constructed under this subtitle or the Mer36 chant Marine Act, 1936, may not be sold by the Secretary of Transpor37 tation for less than the price specified in this section. 

38 ‘‘(b) OPERATION IN FOREIGN TRADE.—If the vessel is to be operated in 

39 foreign trade, the minimum price is the estimated foreign construction cost 

40 (exclusive of national defense features) determined as of the date the con41 struction 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 

2 in domestic trade, the minimum price is the cost of construction in the 

3 United States (exclusive of national defense features), less depreciation 

4 under subsection (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 

12 demise the vessel to the charterer subject to all usual conditions contained 

13 in a bareboat charter. The charter shall be for a term the Secretary con14 siders to be in the best interest of the United States Government and the 

15 merchant marine. 

16 ‘‘§ 57512. Competitive bidding 

17 ‘‘(a) IN GENERAL.—The Secretary of Transportation may charter a ves18 sel of the Department of Transportation to a private operator only on the 

19 basis of competitive sealed bidding. The bids must be submitted in strict 

20 compliance with the terms and conditions of a public advertisement solic21 iting the bids. 

22 ‘‘(b) ADVERTISEMENT FOR BIDS.—An advertisement for bids shall 

23 state— 

24 ‘‘(1) the number, type, and tonnage of the vessels being offered for 

25 bareboat charter for operation as a steamship line on a designated 

26 trade route; 

27 ‘‘(2) the minimum number of sailings required; 

28 ‘‘(3) the length of time of the charter; 

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

30 ‘‘(5) other information the Secretary considers necessary for the in31 formation of prospective bidders. 

32 ‘‘(c) OPENING OF BIDS.—Bids required under this section shall be 

33 opened at the time and place stated in the advertisement for bids. All inter34 ested persons, including representatives of the press, shall be permitted to 

35 attend. The results of the bidding shall be publicly announced. 

36 ‘‘§ 57513. Minimum bid 

37 ‘‘The Secretary of Transportation shall reject any bid for the charter 

38 under this subchapter of a vessel constructed under this subtitle or the Mer39 chant Marine Act, 1936, if the charter hire offered is lower than the min40 imum charter hire would be if the vessel were chartered under section 

41 57531 of this title. 


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1 ‘‘§ 57514. Qualifications of bidders 

2 ‘‘(a) CONSIDERATIONS.—In deciding whether to award a charter to a bid3 der, the Secretary of Transportation shall consider— 

4 ‘‘(1) the bidder’s financial resources, credit standing, and practical 

5 experience in operating vessels; and 

6 ‘‘(2) other factors a prudent business person would consider in enter7 ing into a transaction involving a large capital investment. 

8 ‘‘(b) DISQUALIFICATIONS.—The Secretary may not charter a vessel to a 

9 person appearing to lack sufficient capital, credit, and experience to operate 

10 the vessel successfully over the period covered by the charter. 

11 ‘‘§ 57515. Awarding of charters 

12 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall award the 

13 charter to the bidder proposing to pay the highest monthly charter hire. 

14 However, the Secretary may reject the highest or most advantageous or any 

15 other bid if the Secretary considers the charter hire offered too low or deter16 mines that the bidder lacks the qualifications required by section 57514 of 

17 this title. 

18 ‘‘(b) HIGHEST BID REJECTED.—If the Secretary rejects the highest bid, 

19 the Secretary may— 

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

21 ‘‘(2) reject all bids and either readvertise the line or operate the line 

22 until conditions appear more favorable to reoffer the line for private 

23 charter. 

24 ‘‘(c) REASON FOR REJECTION.—On request of a bidder, the reason for 

25 rejection shall be stated in writing to the bidder. 

26 ‘‘§ 57516. Operating-differential subsidies 

27 ‘‘If the Secretary of Transportation considers it necessary, the Secretary 

28 may make a contract with a charterer of a vessel owned by the Secretary 

29 for payment of an operating-differential subsidy, on the same terms and 

30 conditions, and subject to the same limitations and restrictions, as otherwise 

31 provided with respect to payment of operating-differential subsidies to oper32 ators of privately-owned vessels. 

33 ‘‘§ 57517. Recovery of excess profits 

34 ‘‘(a) IN GENERAL.—A charter under this chapter shall provide that if, 

35 at the end of a calendar year subsequent to the execution of the charter, 

36 the cumulative net voyage profit (after payment of the charter hire reserved 

37 in the charter and payment of the charterer’s fair and reasonable overhead 

38 expenses applicable to operation of the chartered vessel) exceeds 10 percent 

39 a year of the charterer’s capital necessarily employed in the business of the 

40 chartered vessel, the charterer shall pay to the Secretary of Transportation, 

41 as additional charter hire, half the cumulative net voyage profit in excess 


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1 of 10 percent a year. However, any cumulative net voyage profit accounted 

2 for under this subsection is not to be included in the calculation of cumu3 lative net voyage profit in any subsequent year. 

4 ‘‘(b) TERMS TO BE DEFINED AND USED.—The Secretary shall define the 

5 terms ‘net voyage profit’, ‘fair and reasonable overhead expenses’, and ‘cap6 ital necessarily employed’ for this section. Each advertisement for bids and 

7 each charter shall contain these definitions, stating the formula for deter8 mining each of these three amounts. 

9 ‘‘§ 57518. Performance bond 

10 ‘‘The Secretary of Transportation shall require a charterer of a vessel of 

11 the Secretary to deposit with the Secretary an undertaking, with approved 

12 sureties, in such amount as the Secretary may require as security for the 

13 faithful performance of the terms of the charter, including indemnity 

14 against liens on the chartered vessel. 

15 ‘‘§ 57519. Insurance 

16 ‘‘A charter under this chapter shall require the charterer to carry, at the 

17 charterer’s expense, insurance on the chartered vessel covering all marine 

18 and port risks, protection and indemnity risks, and all other hazards and 

19 liabilities, adequate to cover damages claimed against and losses sustained 

20 by the chartered vessel arising during the term of the charter. The insur21 ance shall be in such form, in such amount, and with such companies as 

22 the Secretary of Transportation may require. In accordance with law, any 

23 of the insurance risks may be underwritten by the Secretary. 

24 ‘‘§ 57520. Vessel maintenance 

25 ‘‘(a) IN GENERAL.—A charter under this chapter shall require the 

26 charterer, at the charterer’s expense, to— 

27 ‘‘(1) keep the chartered vessel in good repair and efficient operating 

28 condition; and 

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

30 ‘‘(b) INSPECTION.—The charter shall provide that the Secretary has the 

31 right to inspect the vessel at any time to ascertain its condition. 

32 ‘‘§ 57521. Termination of charter during national emergency 

33 ‘‘A charter under this chapter shall provide that during a national emer34 gency proclaimed by the President or a period for which the President has 

35 proclaimed that the security of the national defense makes it advisable, the 

36 Secretary of Transportation may terminate the charter without cost to the 

37 United States Government on such notice to the charterer as the President 

38 determines. 


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1 ‘‘SUBCHAPTER III—MISCELLANEOUS 

2 ‘‘§ 57531. Construction and charter of vessels for unsuccess3 ful routes 

4 ‘‘(a) IN GENERAL.—If the Secretary of Transportation finds that a trade 

5 route determined to be essential under section 50103 of this title cannot be 

6 successfully developed and maintained and the Secretary’s replacement pro7 gram cannot be achieved under private operation of the trade route by a 

8 citizen of the United States with vessels documented under chapter 121 of 

9 this title, without further aid by the United States Government in addition 

10 to the financial aid authorized under titles V and VI of the Merchant Ma11 rine Act, 1936, the Secretary, without advertisement or competition, may— 

12 ‘‘(1) have constructed, in private shipyards or in navy yards, vessels 

13 of the types necessary for the trade route; and 

14 ‘‘(2) demise charter those new vessels to the operator of vessels of 

15 the United States established on the trade route. 

16 ‘‘(b) AMOUNT OF CHARTER HIRE.— 

17 ‘‘(1) IN GENERAL.—The annual charter hire under subsection (a) 

18 shall be at least 4 percent of the price (referred to in this section as 

19 the ‘foreign cost’) at which the vessel would be sold if constructed 

20 under title V of the Merchant Marine Act, 1936, plus— 

21 ‘‘(A) a percentage of the depreciated foreign cost computed an22 nually determined by the Secretary of the Treasury, taking into 

23 consideration the current average market yield on outstanding 

24 marketable obligations of the Government with remaining periods 

25 to maturity comparable to the term of the charter, adjusted to the 

26 nearest one-eighth percent; and 

27 ‘‘(B) an allowance adequate in the judgment of the Secretary 

28 of Transportation to cover administrative costs. 

29 ‘‘(2) DEPRECIATION.—Depreciation under paragraph (1)(A) shall be 

30 based on— 

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

32 ‘‘(B) a 20-year life for tankers and other bulk liquid carrier ves33 sels. 

34 ‘‘(c) OPTION TO PURCHASE.—The charter may contain an option to the 

35 charterer to purchase the vessels from the Secretary of Transportation with36 in 5 years after delivery under the charter, on the same terms and condi37 tions as provided in title V of the Merchant Marine Act, 1936, for the pur38 chase of new vessels from the Secretary. However— 

39 ‘‘(1) the purchase price shall be the foreign cost less depreciation to 

40 the date of purchase based on the useful life specified in subsection 

41 (b)(2); 


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1 ‘‘(2) the required cash payment payable at the time of the purchase 

2 shall be 25 percent of the purchase price; 

3 ‘‘(3) the charter may provide that any part of the charter hire paid 

4 in excess of the minimum charter hire provided for in this section may 

5 be credited against the cash payment payable at the time of the pur6 chase; 

7 ‘‘(4) the balance of the purchase price shall be paid within the re8 maining years of useful life (as specified in subsection (b)(2)) after the 

9 date of delivery of the vessel under the charter and in approximately 

10 equal annual installments, except that the first installment, which shall 

11 be payable on the next ensuing anniversary date of the delivery under 

12 the charter, shall be a proportionate part of the annual installment; 

13 and 

14 ‘‘(5) interest shall be payable on the unpaid balances from the date 

15 of purchase, at a rate not less than— 

16 ‘‘(A) a rate determined by the Secretary of the Treasury, taking 

17 into consideration the current average market yield on outstanding 

18 marketable obligations of the Government with remaining periods 

19 to maturity comparable to the average maturities of the loans, ad20 justed to the nearest one-eighth percent; plus 

21 ‘‘(B) an allowance adequate in the judgment of the Secretary 

22 of Transportation to cover administrative costs. 

23 ‘‘(d) OPERATION OF VESSEL.— 

24 ‘‘(1) PERMISSIBLE VOYAGES.—The charter shall provide for oper25 ation of the vessel exclusively— 

26 ‘‘(A) in foreign trade; 

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

28 ‘‘(C) on a round voyage from the west coast of the United 

29 States to a European port that includes an intercoastal port of the 

30 United States; 

31 ‘‘(D) on a round voyage from the Atlantic coast of the United 

32 States to the Orient that includes an intercoastal port of the 

33 United States; or 

34 ‘‘(E) on a voyage in foreign trade on which the vessel may stop 

35 at Hawaii or an island territory or possession of the United 

36 States. 

37 ‘‘(2) DOMESTIC TRADE.—The charter shall provide if the vessel is 

38 operated in domestic trade on any of the services specified in para39 graph (1), the charterer will pay annually to the Secretary of Transportation that proportion of 1 40 ⁄25 of the difference between the domestic 

41 and foreign cost of the vessel as the gross revenue derived from the 


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1 domestic trade bears to the gross revenue derived from the entire voy2 ages completed during the preceding year. 

3 ‘‘§ 57532. Operation of experimental vessels 

4 ‘‘(a) DEFINITION.—In this section, the term ‘experimental vessel’ means 

5 a vessel owned by the United States Government (including a vessel in the 

6 National Defense Reserve Fleet) that has been constructed, reconditioned, 

7 or remodeled for experimental or testing purposes. 

8 ‘‘(b) AUTHORITY TO OPERATE.—The Secretary of Transportation, for 

9 the purpose of practical development, trial, and testing, may operate an ex10 perimental vessel under a bareboat charter or general agency agreement in 

11 the foreign or domestic trade of the United States or for use for the account 

12 of a department or agency of the Government, without regard to other pro13 visions of this subtitle and other laws related to chartering and general 

14 agency operations. Not more than 10 vessels may be operated and tested 

15 under this section in any one year. 

16 ‘‘(c) TERMS OF OPERATION.—Operation of a vessel under this section 

17 shall be on terms the Secretary considers appropriate to carry out the pur18 poses of this subtitle. A bareboat charter under this section shall be at rea19 sonable rates and include restrictions the Secretary considers appropriate to 

20 protect the public interest, including provisions for recapture of profits 

21 under section 57517 of this title. A charter or general agency agreement 

22 under this section shall be reviewed annually to determine whether condi23 tions exist to justify continuance of the charter or agreement. 

24 ‘‘(d) RIGHTS OF SEAMEN.—A seaman engaged in vessel operations of the 

25 Secretary under this section and employed through a general agent in con26 nection with a charter or agreement under this section is entitled to all the 

27 rights and remedies provided in sections 1(a) and (c), 3(c), and 4 of the 

28 Act of March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294). 

29 ‘‘PART G—RESTRICTIONS AND PENALTIES

30 ‘‘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. 

31 ‘‘§ 58101. Operating in domestic intercoastal or coastwise 

32 service 

33 ‘‘(a) PROHIBITION.—A subsidy may not be awarded or paid to a con34 tractor under the operating-differential subsidy program, and a vessel may 

35 not be chartered to a person under chapter 575 of this title, if the conVerDate Aug 31 2005 02:33 Sep 08, 2006 Jkt 049006 PO 00000 Frm 00222 Fmt 6652 Sfmt 6221 E:\BILLS\H1442.RS H1442

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1 tractor or charterer, or a holding company, subsidiary, affiliate, or associate 

2 of the contractor or charterer, or an officer, director, agent, or executive 

3 thereof, directly or indirectly— 

4 ‘‘(1) owns, charters, or operates a vessel engaged in the domestic 

5 intercoastal or coastwise service; or 

6 ‘‘(2) owns a pecuniary interest in a person that owns, charters, or 

7 operates a vessel in the domestic intercoastal or coastwise service. 

8 ‘‘(b) WAIVER.—A person may apply to the Secretary of Transportation 

9 for a waiver of subsection (a). Before deciding on the waiver, the Secretary 

10 shall give the applicant and other interested persons an opportunity for a 

11 hearing. The Secretary may not grant the waiver if the Secretary finds it 

12 would— 

13 ‘‘(1) result in unfair competition to a person operating exclusively in 

14 the domestic intercoastal or coastwise service; or 

15 ‘‘(2) be prejudicial to the objectives and policy of this subtitle. 

16 ‘‘(c) CONTINUOUS OPERATION SINCE 1935.—The Secretary shall grant 

17 an application under subsection (b) without requiring further proof that the 

18 public interest and convenience will be served and without further pro19 ceedings as to the competition in the route or trade, if the contractor or 

20 other person, or a predecessor in interest, was in bona-fide operation as a 

21 common carrier by water in the domestic intercoastal or coastwise trade in 

22 1935 over the route or in the trade for which the application is made and 

23 has so operated since that time or, if engaged in furnishing seasonal service 

24 only, was in bona-fide operation in 1935 during the season ordinarily cov25 ered by its operation, except in either event as to interruptions of service 

26 over which the applicant or its predecessor in interest had no control. 

27 ‘‘(d) DIVERSION INTO INTERCOASTAL OR COASTWISE OPERATIONS.—If 

28 an application under subsection (b) is approved, a person referred to in this 

29 section may not divert, directly or indirectly, money, property, or any other 

30 thing of value, used in a foreign-trade operation for which a subsidy is paid 

31 by the United States Government, into intercoastal or coastwise operations. 

32 ‘‘§ 58102. Default on payment or maintenance of reserves 

33 ‘‘The Secretary of Transportation may supervise the number and com34 pensation of all officers and employees of a contractor under the operating35 differential subsidy program or a charterer under chapter 575 of this title, 

36 receiving an operating-differential subsidy, if the contractor or charterer— 

37 ‘‘(1) is in default on a mortgage, note, purchase contract, or other 

38 obligation to the Secretary; or 

39 ‘‘(2) has not maintained, in a manner satisfactory to the Secretary, 

40 all of the reserves provided for in this subtitle. 


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1 ‘‘§ 58103. Employing another person as managing or oper2 ating agent 

3 ‘‘(a) PROHIBITION.—Except with the written consent of the Secretary of 

4 Transportation, a contractor holding a contract under the operating-dif5 ferential subsidy program or under chapter 575 of this title may not— 

6 ‘‘(1) employ another person as the managing or operating agent of 

7 the operator; or 

8 ‘‘(2) charter a vessel, on which an operating-differential subsidy is 

9 to be paid, for operation by another person. 

10 ‘‘(b) APPLICABILITY OF PROVISIONS TO CHARTERER.—If a charter pro11 hibited by this section is made, the person operating the chartered vessel 

12 is subject to all the provisions of this subtitle and the operating-differential 

13 subsidy program, including limitations of profits and salaries. 

14 ‘‘§ 58104. Willful violation constitutes breach of contract or 

15 charter 

16 ‘‘A willful violation of any provision of sections 58101–58103 of this title 

17 constitutes a breach of the contract or charter. On determining that a viola18 tion has occurred, the Secretary of Transportation may declare the contract 

19 or charter rescinded. 

20 ‘‘§ 58105. Preferences for cargo in which charterer has inter21 est 

22 ‘‘A contractor receiving an operating-differential subsidy, or a charterer 

23 under chapter 575 of this title, may not unjustly discriminate in any man24 ner so as to give preference, directly or indirectly, to cargo in which the con25 tractor or charterer has a direct or indirect ownership, purchase, or vending 

26 interest. 

27 ‘‘§ 58106. Concerted discriminatory activities 

28 ‘‘(a) PROHIBITION.—A contractor receiving an operating-differential sub29 sidy, or a charterer under chapter 575 of this title, may not continue as 

30 a party to or conform to an agreement with another carrier by water, or 

31 engage in a practice in concert with another carrier by water, that is un32 justly discriminatory or unfair to any other citizen of the United States op33 erating a common carrier by water employing only vessels documented 

34 under the laws of the United States on an established trade route from and 

35 to a United States port. 

36 ‘‘(b) GOVERNMENT PAYMENT PROHIBITED.—No payment or subsidy of 

37 any kind may be paid, directly or indirectly, out of funds of the United 

38 States Government to a contractor or charterer that has violated subsection 

39 (a). 

40 ‘‘(c) CIVIL ACTION.—A person whose business or property is injured by 

41 a violation of subsection (a) may bring a civil action in the district court 


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1 of the United States for the district in which the defendant resides, is 

2 found, or has an agent. If the person prevails, the person shall be award3 ed— 

4 ‘‘(1) 3 times the damages; and 

5 ‘‘(2) costs, including reasonable attorney fees. 

6 ‘‘§ 58107. Discrimination at ports by water common carriers 

7 ‘‘(a) PROHIBITION.—A common carrier by water may not, directly or in8 directly, through an agreement, conference, association, understanding, or 

9 otherwise, prevent or attempt to prevent any other common carrier by water 

10 from serving any port described in subsection (b) at the same rates the first 

11 carrier charges at the nearest port already regularly served by it. 

12 ‘‘(b) PORTS.—A port referred to in subsection (a) is one that is— 

13 ‘‘(1) designed for the accommodation of ocean-going vessels; 

14 ‘‘(2) located on an improvement project authorized by law or by a 

15 Federal agency; and 

16 ‘‘(3) located within the continental limits of the United States. 

17 ‘‘(c) OTHER AUTHORITY NOT LIMITED.—This section does not limit the 

18 authority otherwise vested in the Secretary of Transportation and the Fed19 eral Maritime Commission. 

20 ‘‘§ 58108. Charges for transportation subject to subtitle IV of 

21 title 49 

22 ‘‘(a) PROHIBITION.—A carrier may not charge, collect, or receive for 

23 transportation subject to subtitle IV of title 49 of persons or property, 

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

25 proportional rate, fare, or charge, that is based in whole or in part on the 

26 fact that the persons or property affected are to be transported to, or have 

27 been transported from, a port in a territory or possession of the United 

28 States or in a foreign country, by a carrier by water in foreign commerce, 

29 any lower rate, fare, or charge than the carrier charges, collects, or receives 

30 for the transportation of persons or similar property for the same distance, 

31 in the same direction, and over the same route, in commerce wholly within 

32 the United States, unless the vessel used for the transportation is or was 

33 at the time of the transportation documented under the laws of the United 

34 States. 

35 ‘‘(b) SUSPENSION OF PROHIBITION.—Whenever the Secretary of Trans36 portation believes that adequate shipping facilities to or from any port in 

37 a territory or possession of the United States or a foreign country are not 

38 being provided by vessels documented under the laws of the United States, 

39 the Secretary shall certify this fact to the Surface Transportation Board. 

40 On receiving the certification, the Board may by order suspend the oper41 ation of subsection (a) with respect to the rates, fares, and charges for the 


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1 transportation by rail of persons and property transported from or to be 

2 transported to those ports, for such time and under such terms and condi3 tions as the Secretary may specify in the order or in any supplemental 

4 order. 

5 ‘‘(c) TERMINATION OF SUSPENSION.—Whenever the Secretary believes 

6 that adequate shipping facilities are being provided to those ports by vessels 

7 documented under the laws of the United States, and certifies that fact to 

8 the Board, the Board may order the termination of the suspension. 

9 ‘‘§ 58109. Penalties 

10 ‘‘(a) INDIVIDUALS.—An individual convicted of violating section 

11 58101(d), 58103, or 58105 of this title shall be fined under title 18, impris12 oned for at least one year but not more than 5 years, or both. 

13 ‘‘(b) ORGANIZATIONS.—An organization convicted of committing an act 

14 prohibited by this subtitle shall be fined under title 18. 

15 ‘‘(c) INELIGIBILITY TO RECEIVE BENEFITS.—An individual or organiza16 tion convicted of violating a section referred to in subsection (a) is ineligible, 

17 at the discretion of the Secretary of Transportation, to receive any benefit 

18 under the construction-differential subsidy or operating-differential subsidy 

19 programs, or a charter under chapter 575 of this title, for 5 years after 

20 the conviction.’’. 

21 SEC. 9. SUBTITLE VI OF TITLE 46. 

22 (a) REDESIGNATION.—Title 46, United States Code, is amended by re23 designating subtitle VI as subtitle VII. 

24 (b) NEW SUBTITLE.—Title 46, United States Code, is amended by insert25 ing after subtitle V the following: 

26 ‘‘Subtitle VI—Clearance, Tonnage Taxes, and 

27 Duties 

‘‘Chapter Sec. 

‘‘601. Arrival and Departure Requirements ............................................... 60101 

‘‘603. Tonnage Taxes and Light Money ........................................................ 60301 

‘‘605. Discriminating Duties and Reciprocal Privileges ........................ 60501 

28 ‘‘CHAPTER 601—ARRIVAL AND DEPARTURE 

29 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. 


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1 ‘‘§ 60101. Boarding arriving vessels before inspection 

2 ‘‘(a) REGULATIONS.—The Secretary of Homeland Security shall prescribe 

3 and enforce regulations on the boarding of a vessel arriving at a port of 

4 the United States before the vessel has been inspected and secured. 

5 ‘‘(b) CRIMINAL PENALTY.—A person violating a regulation prescribed 

6 under this section shall be fined under title 18, imprisoned for not more 

7 than 6 months, or both. 

8 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section shall be construed as 

9 supplementary to section 2279 of title 18. 

10 ‘‘§ 60102. Production of certificate on entry 

11 ‘‘On entry of a vessel documented under chapter 121 of this title, the 

12 master or other individual in charge of the vessel shall produce the certifi13 cate of documentation to the customs officer at the place where the vessel 

14 is entered. If the certificate is not produced, the vessel is not entitled to 

15 the privileges of a documented vessel. 

16 ‘‘§ 60103. Oath of ownership on entry 

17 ‘‘(a) REQUIRED STATEMENT.—On entry of a vessel of the United States 

18 from a foreign port, the individual designated under subsection (b) shall 

19 state under oath that— 

20 ‘‘(1) the vessel’s certificate of documentation contains the names of 

21 all the owners of the vessel; or 

22 ‘‘(2) part of the ownership has been transferred since the certificate 

23 was issued and, to the best of the individual’s knowledge and belief, 

24 the vessel is still owned only by citizens of the United States. 

25 ‘‘(b) PERSON TO MAKE STATEMENT.—The statement under subsection 

26 (a) shall be made by— 

27 ‘‘(1) an owner if one resides at the port of entry; or 

28 ‘‘(2) the master if an owner does not reside at the port of entry. 

29 ‘‘(c) CONSEQUENCE OF NOT MAKING STATEMENT.—If the appropriate 

30 individual does not make the statement required by this section, the vessel 

31 is not entitled to the privileges of a vessel of the United States. 

32 ‘‘§ 60104. Depositing certificates of documentation with con33 sular officers 

34 ‘‘(a) REQUIREMENT OF MASTER.—When a vessel owned by citizens of the 

35 United States, on a voyage from a port in the United States, arrives at a 

36 foreign port, the master of the vessel shall deposit the vessel’s certificate 

37 of documentation with a consular officer at the foreign port if there is a 

38 consular officer at that port. 

39 ‘‘(b) RETURN OF CERTIFICATE.—When the master produces a clearance 

40 from the appropriate officer of the foreign port, the consular officer shall 

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1 plied with the provisions of law related to the discharge of seamen in a for2 eign country and the payment of fees of consular officers. 

3 ‘‘(c) CIVIL PENALTY AND COLLECTION.—The master of a vessel failing 

4 to deposit the certificate of documentation as required by subsection (a) is 

5 liable to the United States Government for a civil penalty of $500. The con6 sular officer shall bring an action to recover the penalty in any court of 

7 competent jurisdiction. The action shall be brought in the name of the con8 sular officer for the benefit of the United States. 

9 ‘‘§ 60105. Clearance of vessels 

10 ‘‘(a) VESSELS OF THE UNITED STATES.—Except as otherwise provided 

11 by law, a vessel of the United States shall obtain clearance from the Sec12 retary of Homeland Security before proceeding from a port or place in the 

13 United States— 

14 ‘‘(1) for a foreign port or place; 

15 ‘‘(2) for another port or place in the United States if the vessel has 

16 on board foreign merchandise for which entry has not been made; or 

17 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

18 merchandise while outside the territorial sea. 

19 ‘‘(b) OTHER VESSELS.—Except as otherwise provided by law, a vessel 

20 that is not a vessel of the United States shall obtain clearance from the Sec21 retary before proceeding from a port or place in the United States— 

22 ‘‘(1) for a foreign port or place; 

23 ‘‘(2) for another port or place in the United States; or 

24 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

25 or deliver merchandise while outside the territorial sea. 

26 ‘‘(c) REGULATIONS.—The Secretary may by regulation— 

27 ‘‘(1) prescribe the manner in which clearance under this section is 

28 to be obtained, including the documents, data, or information which 

29 shall be submitted or transmitted, pursuant to an authorized data 

30 interchange system, to obtain the clearance; 

31 ‘‘(2) permit clearance to be obtained before all requirements for 

32 clearance are complied with, but only if the owner or operator of the 

33 vessel files a bond in an amount set by the Secretary conditioned on 

34 the compliance by the owner or operator with all specified requirements 

35 for clearance within a time period (not exceeding 4 business days) es36 tablished by the Secretary; and 

37 ‘‘(3) permit clearance to be obtained at a place other than a des38 ignated port of entry, under conditions the Secretary may prescribe. 


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1 ‘‘§ 60106. State inspection laws 

2 ‘‘When State law requires a certificate of inspection for goods carried on 

3 a vessel, a vessel transporting the goods may not be cleared until the certifi4 cate is produced. 

5 ‘‘§ 60107. Payment of fees on departing vessel 

6 ‘‘A departing vessel may be cleared only when all legal fees that have ac7 crued on the vessel are paid and proof of payment is presented to the indi8 vidual granting the clearance. 

9 ‘‘§ 60108. Duty to transport tendered cargo 

10 ‘‘Clearance may be refused to a vessel or vehicle transporting cargo des11 tined for a domestic or foreign port when the owner, master, or other indi12 vidual in charge refuses to accept cargo tendered in good condition, with 

13 proper charges, for the same or an intermediate port by a citizen of the 

14 United States. This section does not apply if the vessel or vehicle is already 

15 fully loaded (giving appropriate consideration to its proper loading) or is not 

16 adaptable to transport the tendered cargo. 

17 ‘‘§ 60109. Duty to transport money and securities of the 

18 United States Government 

19 ‘‘Before being given clearance, a vessel owned by a citizen of the United 

20 States and bound on a voyage from a port in the United States to another 

21 port in the United States or in a foreign country, or on a voyage from a 

22 port in a foreign country to a port in the United States, shall receive on 

23 board any bullion, coin, notes, bonds, or other securities of the United 

24 States Government that an agency, consular officer, or other agent of the 

25 Government offers. The vessel shall transport the items securely and deliver 

26 them promptly to the proper authorities or consignees on arriving at the 

27 port of destination. Compensation shall be paid for services provided under 

28 this section that is equal to compensation paid to other carriers in the ordi29 nary transaction of business. 

30 ‘‘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. 


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1 ‘‘§ 60301. Regular tonnage taxes 

2 ‘‘(a) LOWER RATE.—A tax is imposed at the rate of 2 cents per ton (but 

3 not more than a total of 10 cents per ton per year) at each entry in a port 

4 of the United States of— 

5 ‘‘(1) a vessel entering from a foreign port or place in North America, 

6 Central America, the West Indies Islands, the Bahama Islands, the 

7 Bermuda Islands, or the coast of South America bordering the Carib8 bean Sea; or 

9 ‘‘(2) a vessel returning to the same port or place in the United 

10 States from which it departed, and not entering the United States from 

11 another port or place, except— 

12 ‘‘(A) a vessel of the United States; 

13 ‘‘(B) a recreational vessel (as defined in section 2101 of this 

14 title); or 

15 ‘‘(C) a barge. 

16 ‘‘(b) HIGHER RATE.—A tax is imposed at the rate of 6 cents per ton 

17 (but not more than a total of 30 cents per ton per year) on a vessel at each 

18 entry in a port of the United States from a foreign port or place not named 

19 in subsection (a)(1). 

20 ‘‘(c) EXCEPTION FOR VESSELS ENTERING OTHER THAN BY SEA.—Sub21 section (a) does not apply to a vessel entering other than by sea from a 

22 foreign port or place at which tonnage, lighthouse, or other equivalent taxes 

23 are not imposed on vessels of the United States. 

24 ‘‘§ 60302. Special tonnage taxes 

25 ‘‘(a) ENTRY FROM FOREIGN PORT OR PLACE.—Regardless of whether a 

26 tax is imposed under section 60301 of this title, a tax is imposed on a vessel 

27 at each entry in a port of the United States from a foreign port or place 

28 at the following rates: 

29 ‘‘(1) 30 cents per ton on a vessel built in the United States but 

30 owned in any part by a subject of a foreign country. 

31 ‘‘(2) 50 cents per ton on other vessels not of the United States. 

32 ‘‘(3) 50 cents per ton on a vessel of the United States having an 

33 officer who is not a citizen of the United States. 

34 ‘‘(4) $2 per ton on a foreign vessel entering from a foreign port or 

35 place at which vessels of the United States are not ordinarily allowed 

36 to enter and trade. 

37 ‘‘(b) VESSELS NOT OF THE UNITED STATES TRANSPORTING PROPERTY

38 BETWEEN DISTRICTS.—Regardless of whether a tax is imposed under sec39 tion 60301 of this title, a tax of 50 cents per ton is imposed on a vessel 

40 not of the United States at each entry in one customs district from another 


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1 district when transporting goods loaded in one district to be delivered in an2 other district. 

3 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—The tax of 50 

4 cents per ton under this section 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 ‘‘§ 60303. Light money 

9 ‘‘(a) IMPOSITION OF TAX.—A tax of 50 cents per ton, to be called ‘light 

10 money’, is imposed on a vessel not of the United States at each entry in 

11 a port of the United States. This tax shall be imposed and collected under 

12 the same regulations that apply to tonnage taxes. 

13 ‘‘(b) EXCEPTION FOR VESSELS OWNED BY CITIZENS.— 

14 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to a vessel owned 

15 only by citizens of the United States if— 

16 ‘‘(A) the vessel is carrying a regular document issued by a cus17 tomhouse of the United States proving the vessel to be owned only 

18 by citizens of the United States; and 

19 ‘‘(B) on entry of the vessel from a foreign port, the individual 

20 designated under paragraph (2) states under oath that— 

21 ‘‘(i) the document contains the names of all the owners of 

22 the vessel; or 

23 ‘‘(ii) part of the ownership has been transferred since the 

24 document was issued and, to the best of that individual’s 

25 knowledge and belief, the vessel is still owned only by citizens 

26 of the United States. 

27 ‘‘(2) PERSON TO MAKE STATEMENT.—The statement under para28 graph (1)(B) shall be made by— 

29 ‘‘(A) an owner if one resides at the port of entry; or 

30 ‘‘(B) the master if an owner does not reside at the port of 

31 entry. 

32 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection 

33 (a) section does not apply to a vessel that— 

34 ‘‘(1) is owned only by citizens of the United States; and 

35 ‘‘(2) after entering a port of the United States, becomes documented 

36 as a vessel of the United States before leaving that port. 

37 ‘‘§ 60304. Presidential suspension of tonnage taxes and light 

38 money 

39 ‘‘If the President is satisfied that the government of a foreign country 

40 does not impose discriminating or countervailing duties to the disadvantage 

41 of the United States, the President shall suspend the imposition of special 


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1 tonnage taxes and light money under sections 60302 and 60303 of this title 

2 on vessels of that country. 

3 ‘‘§ 60305. Vessels in distress 

4 ‘‘A vessel is exempt from tonnage taxes and light money when it enters 

5 because it is in distress. 

6 ‘‘§ 60306. Vessels not engaged in trade 

7 ‘‘A vessel is exempt from tonnage taxes and light money when not en8 gaged in trade. 

9 ‘‘§ 60307. Vessels engaged in coastwise trade or the fisheries 

10 ‘‘A vessel with a registry endorsement or a coastwise endorsement, trad11 ing from one port in the United States to another port in the United States 

12 or employed in the bank, whale, or other fisheries, is exempt from tonnage 

13 taxes and light money. 

14 ‘‘§ 60308. Vessels engaged in Great Lakes trade 

15 ‘‘A documented vessel with a registry endorsement, engaged in foreign 

16 trade on the Great Lakes or their tributary or connecting waters in trade 

17 with Canada, does not become subject to tonnage taxes or light money be18 cause of that trade. 

19 ‘‘§ 60309. Passenger vessels making trips between ports of 

20 the United States and foreign ports 

21 ‘‘A passenger vessel making at least 3 trips per week between a port of 

22 the United States and a foreign port is exempt from tonnage taxes and light 

23 money. 

24 ‘‘§ 60310. Vessels making daily trips on interior waters 

25 ‘‘A vessel making regular daily trips between a port of the United States 

26 and a port of Canada only on interior waters not navigable to the ocean 

27 is exempt from tonnage taxes and light money, except on its first clearing 

28 each year. 

29 ‘‘§ 60311. Hospital vessels in time of war 

30 ‘‘In time of war, a hospital vessel is exempt from tonnage taxes, light 

31 money, and pilotage charges in the ports of the United States if the vessel 

32 is one for which the conditions of the international convention for the ex33 emption of hospital ships from taxation in time of war, concluded at The 

34 Hague on December 21, 1904, are satisfied. The President by proclamation 

35 shall name the vessels for which the conditions are satisfied and state when 

36 the exemption begins and ends. 

37 ‘‘§ 60312. Rights under treaties preserved 

38 ‘‘This chapter and chapter 605 of this title do not affect a right or privi39 lege of a foreign country relating to tonnage taxes or other duties on vessels 

40 under a law or treaty of the United States. 


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1 ‘‘CHAPTER 605—DISCRIMINATING DUTIES AND 

2 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. 

3 ‘‘§ 60501. Vessels allowed to import 

4 ‘‘(a) IN GENERAL.—Except as otherwise provided by treaty, goods may 

5 be imported into the United States from a foreign port or place only in— 

6 ‘‘(1) a vessel of the United States; or 

7 ‘‘(2) a foreign vessel owned only by citizens or subjects of the coun8 try— 

9 ‘‘(A) in which the goods are grown, produced, or manufactured; 

10 or 

11 ‘‘(B) from which the goods can only be, or most usually are, 

12 first shipped for transportation. 

13 ‘‘(b) EXCEPTION FOR VESSELS OF COUNTRIES NOT MAINTAINING SIMI14 LAR RESTRICTIONS.—Subsection (a) does not apply to a vessel of a foreign 

15 country that does not maintain a similar restriction against United States 

16 documented vessels. 

17 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection 

18 (a) does not apply to a vessel that— 

19 ‘‘(1) is owned only by citizens of the United States; and 

20 ‘‘(2) after entering a port of the United States, becomes documented 

21 as a vessel of the United States before leaving that port. 

22 ‘‘(d) SEIZURE AND FORFEITURE.—If goods are imported in violation of 

23 this section, the goods and the vessel in which they are imported, along with 

24 its equipment and other cargo, may be seized by and forfeited to the United 

25 States Government. 

26 ‘‘§ 60502. Discriminating duty on goods imported in foreign 

27 vessels or from contiguous countries 

28 ‘‘(a) IMPOSITION OF DUTY.—A discriminating duty of 10 percent ad valo29 rem (in addition to other duties imposed by law) is imposed on goods— 

30 ‘‘(1) imported in a vessel not of the United States unless the ves31 sel— 

32 ‘‘(A) is entitled by law or treaty to enter the ports of the United 

33 States on payment of the same duties as are payable on goods im34 ported in a vessel of the United States; or 

35 ‘‘(B)(i) is owned only by citizens of the United States; and 


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1 ‘‘(ii) after entering a port of the United States, becomes docu2 mented as a vessel of the United States before leaving that port; 

3 or 

4 ‘‘(2) produced or manufactured in a foreign country not contiguous 

5 to the United States and imported from a country contiguous to the 

6 United States, unless imported in the usual course of strictly retail 

7 trade. 

8 ‘‘(b) SEIZURE AND FORFEITURE.—If goods are imported without pay9 ment of the duty required by this section, the goods and the vessel in which 

10 they are imported may be seized by, and forfeited to, the United States Gov11 ernment. 

12 ‘‘§ 60503. Reciprocal suspension of discriminating duties 

13 ‘‘(a) GENERAL AUTHORITY.—On receiving satisfactory proof from the 

14 government of a foreign country that it has suspended, in any part, the im15 position of discriminating duties for any class of vessels owned by citizens 

16 of the United States or goods imported in those vessels, the President may 

17 proclaim a reciprocal suspension of discriminating duties for the same class 

18 of vessels owned by citizens of that country or goods imported in those ves19 sels. 

20 ‘‘(b) EFFECTIVE AND EXPIRATION DATES.—A suspension under this sec21 tion takes effect retroactively from the date the President received the proof 

22 from the foreign government, and expires when that government stops 

23 granting the reciprocal suspension. 

24 ‘‘§ 60504. Reciprocal privileges for recreational vessels 

25 ‘‘When the President is satisfied that yachts owned by residents of the 

26 United States and used only for pleasure are allowed to arrive at, depart 

27 from, and cruise in the waters of a foreign port without entering, clearing, 

28 or paying any duties or fees (including cruising license fees), the Secretary 

29 of Homeland Security may allow yachts from that foreign port used only 

30 for pleasure to arrive at and depart from the ports of the United States 

31 and to cruise in the waters of the United States without paying any duties 

32 or fees. However, the Secretary may require foreign yachts to obtain a li33 cense to cruise in the waters of the United States. The license shall be in 

34 the form prescribed by the Secretary and contain limitations about length 

35 of time, direction, place of cruising and action, and other matters the Sec36 retary considers appropriate. The license shall be issued without cost to the 

37 yacht. 

38 ‘‘§ 60505. Retaliatory suspension of commercial privileges 

39 ‘‘(a) GENERAL AUTHORITY.—The President may proclaim a suspension 

40 of commercial privileges to vessels of a foreign country when— 


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1 ‘‘(1) vessels of that country have been given the same commercial 

2 privileges in the ports and waters of the United States given to vessels 

3 of the United States (except the privilege of engaging in coastwise com4 merce); and 

5 ‘‘(2) vessels of the United States are denied commercial privileges in 

6 the ports or waters of that country given to vessels of that country. 

7 ‘‘(b) APPLICATION.—A suspension under this section shall apply to the 

8 same commercial privileges denied to vessels of the United States in the 

9 ports or waters of the foreign country, and to the same class of vessels of 

10 that country as the class of vessels of the United States denied the privi11 leges. 

12 ‘‘(c) EFFECTIVE DATE.—The President shall designate the effective date 

13 of the suspension in the proclamation. 

14 ‘‘(d) PENALTIES.— 

15 ‘‘(1) SEIZURE AND FORFEITURE.—If the master, officer, or agent of 

16 a vessel of a foreign country does an act for the vessel in the ports 

17 or waters of the United States in violation of a proclamation issued 

18 under this section, the vessel and the goods on the vessel may be seized 

19 by, and forfeited to, the United States Government. 

20 ‘‘(2) FINE OR IMPRISONMENT.—A person opposing an official of the 

21 Government enforcing this section shall be fined under title 18, impris22 oned for not more than 2 years, or both. 

23 ‘‘§ 60506. Retaliation against British dominions of North 

24 America 

25 ‘‘(a) GENERAL AUTHORITY.—The President by proclamation may pro26 hibit vessels of the British dominions of North America, their masters and 

27 crews, and products of or coming from those dominions, from entering wa28 ters, ports, or places of the United States when the President is satisfied 

29 that— 

30 ‘‘(1) fishermen or fishing vessels of the United States in waters, 

31 ports, or places of the British dominions of North America are being 

32 or recently have been— 

33 ‘‘(A) denied rights provided by law or treaty; 

34 ‘‘(B) subjected to unreasonable restrictions in the exercise of 

35 those rights; or 

36 ‘‘(C) otherwise harassed; 

37 ‘‘(2) fishermen or fishing vessels of the United States, having a per38 mit under the laws of the United States to dock or trade at a port 

39 or place in the British dominions of North America, are being or re40 cently have been— 


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1 ‘‘(A) denied the privilege of entering the port or place in the 

2 same manner and under the same regulations applicable to trading 

3 vessels of the most-favored-nation; 

4 ‘‘(B) prevented from buying supplies allowed to be sold to trad5 ing vessels of the most-favored-nation; or 

6 ‘‘(C) otherwise harassed; or 

7 ‘‘(3) other vessels of the United States or their masters or crews in 

8 waters, ports, or places of the British dominions of North America are 

9 being or recently have been— 

10 ‘‘(A) denied privileges given to vessels of the most-favored-na11 tion or their masters or crews; or 

12 ‘‘(B) otherwise harassed. 

13 ‘‘(b) COVERAGE AND EXCEPTIONS.—The President may apply a procla14 mation under this section to any of the subjects named, and may include 

15 exceptions for vessels in distress or need of supplies. The President may 

16 change, revoke, and renew the proclamation. 

17 ‘‘(c) PENALTIES.—A person violating a proclamation issued under this 

18 section shall be fined under title 18, imprisoned for not more than 2 years, 

19 or both. A vessel or goods found in waters, ports, or places of the United 

20 States in violation of the proclamation may be seized by, and forfeited to, 

21 the United States Government. 

22 ‘‘§ 60507. Suspension of free passage through Saint Marys 

23 Falls Canal 

24 ‘‘(a) PURPOSE.—The purpose of this section is to secure reciprocal ad25 vantages for the citizens, ports, and vessels of the United States. 

26 ‘‘(b) GENERAL AUTHORITY.—When the President is satisfied that vessels 

27 of the United States, or passengers or cargo being transported to a port 

28 of the United States, are prohibited from passing through a canal or lock 

29 connected with the navigation of the Saint Lawrence River, the Great 

30 Lakes, or their connecting waterways, or burdened in that passage by tolls 

31 or other means that are unreasonable in view of the free passage through 

32 the Saint Marys Falls Canal allowed to vessels of all countries, the Presi33 dent by proclamation may suspend the right of free passage through the 

34 Saint Marys Falls Canal for vessels owned by subjects of the country impos35 ing the prohibition, tolls, or other burdens and for passengers and cargo 

36 being transported to the ports of that country, even when carried in vessels 

37 of the United States. The suspension shall apply to the extent and for the 

38 time the President considers appropriate. 

39 ‘‘(c) IMPOSITION OF TOLL.— 


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1 ‘‘(1) IN GENERAL.—During a suspension under this section, the 

2 President shall impose a toll of not more than $2 per ton on cargo and 

3 not more than $5 on each passenger. 

4 ‘‘(2) EXCEPTIONS.—Notwithstanding paragraph (1), a toll may not 

5 be imposed on passengers or cargo landed at Ogdensburg, New York, 

6 or any port west of Ogdensburg and south of a line drawn from the 

7 northern boundary of New York through the Saint Lawrence River, the 

8 Great Lakes, and their connecting channels to the northern boundary 

9 of Minnesota. 

10 ‘‘(d) COLLECTION OF TOLL.— 

11 ‘‘(1) IN GENERAL.—A toll imposed under this section shall be col12 lected under regulations prescribed by the Secretary of Homeland Secu13 rity. The Secretary may require the master of a vessel to provide a 

14 sworn statement of the amount and kind of cargo, the number of pas15 sengers, and the destination of the passengers and cargo. 

16 ‘‘(2) PROOF OF LANDING.—When applicable, the Secretary also may 

17 require satisfactory proof that the passengers and cargo were landed 

18 at a port described in subsection (c)(2). Until that proof is provided, 

19 the Secretary may assume the passengers and cargo were not landed 

20 at such a port, and the amount of a toll that otherwise would be im21 posed is a lien enforceable against the vessel when found in the waters 

22 of the United States.’’. 

23 SEC. 10. SUBTITLE VII OF TITLE 46. 

24 Subtitle VII of title 46, United States Code, as redesignated by section 

25 9(a) of this Act, is amended as follows: 

26 (1) The subtitle heading and analysis are amended to read as fol27 lows: 

28 ‘‘Subtitle VII—Security and Drug Enforcement 

‘‘Chapter Sec.

‘‘701. Port Security ............................................................................................... 70101

‘‘703. Maritime Security ..................................................................................... 70301

‘‘705. Maritime Drug Law Enforcement ...................................................... 70501’’. 

29 (2) Add after chapter 701 the following: 

30 ‘‘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. 

31 ‘‘§ 70301. Definitions 

32 ‘‘In this chapter: 

33 ‘‘(1) COMMON CARRIER.—The term ‘common carrier’ has the mean34 ing given that term in section 40102 of this title. 


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1 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ has the 

2 meaning given that term in section 2101 of this title. 

3 ‘‘(3) SECRETARY.—The term ‘Secretary’ means the Secretary of the 

4 department in which the Coast Guard is operating. 

5 ‘‘§ 70302. International measures for seaport and vessel se6 curity 

7 ‘‘Congress encourages the President to continue to seek agreement on 

8 international seaport and vessel security through the International Maritime 

9 Organization. In developing an agreement, each member country of the 

10 International Maritime Organization should consult with appropriate private 

11 sector interests in that country. The agreement would establish seaport and 

12 vessel security measures and could include— 

13 ‘‘(1) seaport screening of cargo and baggage similar to that done at 

14 airports; 

15 ‘‘(2) security measures to restrict access to cargo, vessels, and dock16 side property to authorized personnel only; 

17 ‘‘(3) additional security on board vessels; 

18 ‘‘(4) licensing or certification of compliance with appropriate security 

19 standards; and 

20 ‘‘(5) other appropriate measures to prevent unlawful acts against 

21 passengers and crews on vessels. 

22 ‘‘§ 70303. Security standards at foreign ports 

23 ‘‘(a) GENERAL REQUIREMENTS.—The Secretary shall develop and imple24 ment a plan to assess the effectiveness of the security measures maintained 

25 at foreign ports that the Secretary, in consultation with the Secretary of 

26 State, determines pose a high risk of acts of terrorism against passenger 

27 vessels. In carrying out this subsection, the Secretary shall consult with the 

28 Secretary of State about the terrorist threat that exists in each country and 

29 poses a high risk of acts of terrorism against passenger vessels. 

30 ‘‘(b) NOTICE AND RECOMMENDATIONS TO OTHER COUNTRIES.—If the 

31 Secretary, after implementing the plan under subsection (a), determines 

32 that a port does not maintain and administer effective security measures, 

33 the Secretary of State (after being informed by the Secretary) shall— 

34 ‘‘(1) notify the appropriate government authorities of the country in 

35 which the port is located of the determination; and 

36 ‘‘(2) recommend steps necessary to bring the security measures at 

37 that port up to the standard used by the Secretary in making the as38 sessment under subsection (a). 

39 ‘‘(c) ANTITERRORISM ASSISTANCE.—The President is encouraged to pro40 vide antiterrorism assistance related to maritime security under chapter 8 

41 of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 2349aa et seq.) 


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1 to foreign countries, especially for a port that the Secretary determines 

2 under subsection (b) does not maintain and administer effective security 

3 measures. 

4 ‘‘§ 70304. Travel advisories on security at foreign ports 

5 ‘‘(a) GENERAL REQUIREMENTS.—On being notified by the Secretary that 

6 the Secretary has determined that a condition exists that threatens the safe7 ty or security of passengers, passenger vessels, or crew traveling to or from 

8 a foreign port that the Secretary has determined under section 70303(b) of 

9 this title does not maintain and administer effective security measures, the 

10 Secretary of State immediately shall issue a travel advisory for that port. 

11 The Secretary of State shall take the necessary steps to widely publicize the 

12 travel advisory. 

13 ‘‘(b) LIFTING ADVISORIES.—A travel advisory issued under subsection (a) 

14 may be lifted only if the Secretary, in consultation with the Secretary of 

15 State, has determined that effective security measures are maintained and 

16 administered at the port. 

17 ‘‘(c) NOTICE TO CONGRESS.—The Secretary of State shall notify Con18 gress immediately of any change in the status of a travel advisory issued 

19 under this section. 

20 ‘‘§ 70305. Suspension of passenger services 

21 ‘‘(a) GENERAL AUTHORITY.—Whenever the President determines that a 

22 foreign nation permits the use of territory under its jurisdiction as a base 

23 of operations or training for, or as a sanctuary for, or in any way arms, 

24 aids, or abets, a terrorist or terrorist group that knowingly uses the illegal 

25 seizure of passenger vessels or the threat thereof as an instrument of policy, 

26 the President may suspend the right of any passenger vessel common car27 rier to operate to or from, and the right of any passenger vessel of the 

28 United States to use, a port in that foreign nation for passenger service. 

29 The suspension may be without notice or hearing and for as long as the 

30 President determines is necessary to ensure the security of passenger vessels 

31 against unlawful seizure. 

32 ‘‘(b) PROHIBITION.—A passenger vessel common carrier, or a passenger 

33 vessel of the United States, may not operate in violation of a suspension 

34 under this section. 

35 ‘‘(c) PENALTIES.— 

36 ‘‘(1) DENIAL OF ENTRY.—If a person operates a vessel in violation 

37 of this section, the Secretary may deny the vessels of that person entry 

38 to ports of the United States. 

39 ‘‘(2) CIVIL PENALTY.—A person violating this section is liable to the 

40 United States Government for a civil penalty of not more than 


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1 $50,000. Each day a vessel uses a prohibited port is a separate viola2 tion. 

3 ‘‘§ 70306. Report on terrorist threats 

4 ‘‘(a) CONTENT.—Not later than February 28 of each year, the Secretary 

5 shall submit a report to Congress on the threat from acts of terrorism to 

6 United States ports and vessels operating from those ports. The Secretary 

7 shall include a description of activities undertaken under title I of the Mari8 time Transportation Security Act of 2002 (Public Law 107–295, 116 Stat. 

9 2066) and an analysis of the effect of those activities on port security 

10 against acts of terrorism. 

11 ‘‘(b) SUBMISSION.—The report shall be submitted to the Committee on 

12 International Relations and the Committee on Transportation and Infra13 structure of the House of Representatives and the Committee on Foreign 

14 Relations and the Committee on Commerce, Science, and Transportation of 

15 the Senate. Any classified information in the report shall be submitted sepa16 rately as an addendum. 

17 ‘‘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. 

18 ‘‘§ 70501. Findings and declarations 

19 ‘‘Congress finds and declares that trafficking in controlled substances 

20 aboard vessels is a serious international problem, is universally condemned, 

21 and presents a specific threat to the security and societal well-being of the 

22 United States. 

23 ‘‘§ 70502. Definitions 

24 ‘‘(a) APPLICATION OF OTHER DEFINITIONS.—The definitions in section 

25 102 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 

26 (21 U.S.C. 802) apply to this chapter. 

27 ‘‘(b) VESSEL OF THE UNITED STATES.—In this chapter, the term ‘vessel 

28 of the United States’ means— 

29 ‘‘(1) a vessel documented under chapter 121 of this title or num30 bered as provided in chapter 123 of this title; 

31 ‘‘(2) a vessel owned in any part by an individual who is a citizen 

32 of the United States, the United States Government, the government 

33 of a State or political subdivision of a State, or a corporation incor34 porated under the laws of the United States or of a State, unless— 

35 ‘‘(A) the vessel has been granted the nationality of a foreign na36 tion under article 5 of the 1958 Convention on the High Seas; and 


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1 ‘‘(B) a claim of nationality or registry for the vessel is made 

2 by the master or individual in charge at the time of the enforce3 ment action by an officer or employee of the United States who 

4 is authorized to enforce applicable provisions of United States law; 

5 and 

6 ‘‘(3) a vessel that was once documented under the laws of the United 

7 States and, in violation of the laws of the United States, was sold to 

8 a person not a citizen of the United States, placed under foreign reg9 istry, or operated under the authority of a foreign nation, whether or 

10 not the vessel has been granted the nationality of a foreign nation. 

11 ‘‘(c) VESSEL SUBJECT TO THE JURISDICTION OF THE UNITED

12 STATES.— 

13 ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel subject to the 

14 jurisdiction of the United States’ includes— 

15 ‘‘(A) a vessel without nationality; 

16 ‘‘(B) a vessel assimilated to a vessel without nationality under 

17 paragraph (2) of article 6 of the 1958 Convention on the High 

18 Seas; 

19 ‘‘(C) a vessel registered in a foreign nation if that nation has 

20 consented or waived objection to the enforcement of United States 

21 law by the United States; 

22 ‘‘(D) a vessel in the customs waters of the United States; 

23 ‘‘(E) a vessel in the territorial waters of a foreign nation if the 

24 nation consents to the enforcement of United States law by the 

25 United States; and 

26 ‘‘(F) a vessel in the contiguous zone of the United States, as 

27 defined in Presidential Proclamation 7219 of September 2, 1999 

28 (43 U.S.C. 1331 note), that— 

29 ‘‘(i) is entering the United States; 

30 ‘‘(ii) has departed the United States; or 

31 ‘‘(iii) is a hovering vessel as defined in section 401 of the 

32 Tariff Act of 1930 (19 U.S.C. 1401). 

33 ‘‘(2) CONSENT OR WAIVER OF OBJECTION.—Consent or waiver of ob34 jection by a foreign nation to the enforcement of United States law by 

35 the United States under paragraph (1)(C) or (E)— 

36 ‘‘(A) may be obtained by radio, telephone, or similar oral or 

37 electronic means; and 

38 ‘‘(B) is proved conclusively by certification of the Secretary of 

39 State or the Secretary’s designee. 

40 ‘‘(d) VESSEL WITHOUT NATIONALITY.— 


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1 ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel without nation2 ality’ includes— 

3 ‘‘(A) a vessel aboard which the master or individual in charge 

4 makes a claim of registry that is denied by the nation whose reg5 istry is claimed; 

6 ‘‘(B) a vessel aboard which the master or individual in charge 

7 fails, on request of an officer of the United States authorized to 

8 enforce applicable provisions of United States law, to make a claim 

9 of nationality or registry for that vessel; and 

10 ‘‘(C) a vessel aboard which the master or individual in charge 

11 makes a claim of registry and for which the claimed nation of reg12 istry does not affirmatively and unequivocally assert that the ves13 sel is of its nationality. 

14 ‘‘(2) VERIFICATION OR DENIAL.—A claim of registry under para15 graph (1)(A) or (C) may be verified or denied by radio, telephone, or 

16 similar oral or electronic means. The denial of such a claim is proved 

17 conclusively by certification of the Secretary of State or the Secretary’s 

18 designee. 

19 ‘‘(e) CLAIM OF NATIONALITY OR REGISTRY.—A claim of nationality or 

20 registry under this section includes only— 

21 ‘‘(1) possession on board the vessel and production of documents evi22 dencing the vessel’s nationality as provided in article 5 of the 1958 

23 Convention on the High Seas; 

24 ‘‘(2) flying its nation’s ensign or flag; or 

25 ‘‘(3) a verbal claim of nationality or registry by the master or indi26 vidual in charge of the vessel. 

27 ‘‘§ 70503. Manufacture, distribution, or possession of con28 trolled substances on vessels 

29 ‘‘(a) PROHIBITIONS.—An individual may not knowingly or intentionally 

30 manufacture or distribute, or possess with intent to manufacture or dis31 tribute, a controlled substance on board— 

32 ‘‘(1) a vessel of the United States or a vessel subject to the jurisdic33 tion of the United States; or 

34 ‘‘(2) any vessel if the individual is a citizen of the United States or 

35 a resident alien of the United States. 

36 ‘‘(b) EXTENSION BEYOND TERRITORIAL JURISDICTION.—Subsection (a) 

37 applies even though the act is committed outside the territorial jurisdiction 

38 of the United States. 

39 ‘‘(c) NONAPPLICATION.— 

40 ‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection (a) does 

41 not apply to— 


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1 ‘‘(A) a common or contract carrier or an employee of the carrier 

2 who possesses or distributes a controlled substance in the lawful 

3 and usual course of the carrier’s business; or 

4 ‘‘(B) a public vessel of the United States or an individual on 

5 board the vessel who possesses or distributes a controlled sub6 stance in the lawful course of the individual’s duties. 

7 ‘‘(2) ENTERED IN MANIFEST.—Paragraph (1) applies only if the 

8 controlled substance is part of the cargo entered in the vessel’s mani9 fest and is intended to be imported lawfully into the country of destina10 tion for scientific, medical, or other lawful purposes. 

11 ‘‘(d) BURDEN OF PROOF.—The United States Government is not re12 quired to negative a defense provided by subsection (c) in a complaint, in13 formation, indictment, or other pleading or in a trial or other proceeding. 

14 The burden of going forward with the evidence supporting the defense is 

15 on the person claiming its benefit. 

16 ‘‘§ 70504. Jurisdiction and venue 

17 ‘‘(a) JURISDICTION.—Jurisdiction of the United States with respect to a 

18 vessel subject to this chapter is not an element of an offense. Jurisdictional 

19 issues arising under this chapter are preliminary questions of law to be de20 termined solely by the trial judge. 

21 ‘‘(b) VENUE.—A person violating section 70503 of this title shall be tried 

22 in the district court of the United States for— 

23 ‘‘(1) the district at which the person enters the United States; or 

24 ‘‘(2) the District of Columbia. 

25 ‘‘§ 70505. Failure to comply with international law as a de26 fense 

27 ‘‘A person charged with violating section 70503 of this title does not have 

28 standing to raise a claim of failure to comply with international law as a 

29 basis for a defense. A claim of failure to comply with international law in 

30 the enforcement of this chapter may be made only by a foreign nation. A 

31 failure to comply with international law does not divest a court of jurisdic32 tion and is not a defense to a proceeding under this chapter. 

33 ‘‘§ 70506. Penalties 

34 ‘‘(a) VIOLATIONS.—A person violating section 70503 of this title shall be 

35 punished as provided in section 1010 of the Comprehensive Drug Abuse 

36 Prevention and Control Act of 1970 (21 U.S.C. 960). However, if the of37 fense is a second or subsequent offense as provided in section 1012(b) of 

38 that Act (21 U.S.C. 962(b)), the person shall be punished as provided in 

39 section 1012 of that Act (21 U.S.C. 962). 


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1 ‘‘(b) ATTEMPTS AND CONSPIRACIES.—A person attempting or conspiring 

2 to violate section 70503 of this title is subject to the same penalties as pro3 vided for violating section 70503. 

4 ‘‘§ 70507. Forfeitures 

5 ‘‘(a) IN GENERAL.—Property described in section 511(a) of the Com6 prehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 

7 881(a)) that is used or intended for use to commit, or to facilitate the com8 mission of, an offense under section 70503 of this title may be seized and 

9 forfeited in the same manner that similar property may be seized and for10 feited under section 511 of that Act (21 U.S.C. 881). 

11 ‘‘(b) PRIMA FACIE EVIDENCE OF VIOLATION.—Practices commonly rec12 ognized as smuggling tactics may provide prima facie evidence of intent to 

13 use a vessel to commit, or to facilitate the commission of, an offense under 

14 section 70503 of this title, and may support seizure and forfeiture of the 

15 vessel, even in the absence of controlled substances aboard the vessel. The 

16 following indicia, among others, may be considered, in the totality of the 

17 circumstances, to be prima facie evidence that a vessel is intended to be 

18 used to commit, or to facilitate the commission of, such an offense: 

19 ‘‘(1) The construction or adaptation of the vessel in a manner that 

20 facilitates smuggling, including— 

21 ‘‘(A) the configuration of the vessel to ride low in the water or 

22 present a low hull profile to avoid being detected visually or by 

23 radar; 

24 ‘‘(B) the presence of any compartment or equipment that is 

25 built or fitted out for smuggling, not including items such as a 

26 safe or lock-box reasonably used for the storage of personal 

27 valuables; 

28 ‘‘(C) the presence of an auxiliary tank not installed in accord29 ance with applicable law or installed in such a manner as to en30 hance the vessel’s smuggling capability; 

31 ‘‘(D) the presence of engines that are excessively over-powered 

32 in relation to the design and size of the vessel; 

33 ‘‘(E) the presence of materials used to reduce or alter the heat 

34 or radar signature of the vessel and avoid detection; 

35 ‘‘(F) the presence of a camouflaging paint scheme, or of mate36 rials used to camouflage the vessel, to avoid detection; or 

37 ‘‘(G) the display of false vessel registration numbers, false indi38 cia of vessel nationality, false vessel name, or false vessel home39 port. 

40 ‘‘(2) The presence or absence of equipment, personnel, or cargo in41 consistent with the type or declared purpose of the vessel. 


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1 ‘‘(3) The presence of excessive fuel, lube oil, food, water, or spare 

2 parts, inconsistent with legitimate vessel operation, inconsistent with 

3 the construction or equipment of the vessel, or inconsistent with the 

4 character of the vessel’s stated purpose. 

5 ‘‘(4) The operation of the vessel without lights during times lights 

6 are required to be displayed under applicable law or regulation and in 

7 a manner of navigation consistent with smuggling tactics used to avoid 

8 detection by law enforcement authorities. 

9 ‘‘(5) The failure of the vessel to stop or respond or heave to when 

10 hailed by government authority, especially where the vessel conducts 

11 evasive maneuvering when hailed. 

12 ‘‘(6) The declaration to government authority of apparently false in13 formation about the vessel, crew, or voyage or the failure to identify 

14 the vessel by name or country of registration when requested to do so 

15 by government authority. 

16 ‘‘(7) The presence of controlled substance residue on the vessel, on 

17 an item aboard the vessel, or on an individual aboard the vessel, of a 

18 quantity or other nature that reasonably indicates manufacturing or 

19 distribution activity. 

20 ‘‘(8) The use of petroleum products or other substances on the vessel 

21 to foil the detection of controlled substance residue. 

22 ‘‘(9) The presence of a controlled substance in the water in the vicin23 ity of the vessel, where given the currents, weather conditions, and 

24 course and speed of the vessel, the quantity or other nature is such 

25 that it reasonably indicates manufacturing or distribution activity.’’. 

26 SEC. 11. SUBTITLE VIII OF TITLE 46. 

27 Title 46, United States Code, is amended by adding after subtitle VII the 

28 following: 

29 ‘‘Subtitle VIII—Miscellaneous 

‘‘Chapter Sec. 

‘‘801. Wrecks and Salvage ................................................................................. 80101 

‘‘803. Ice and Derelicts ....................................................................................... 80301 

‘‘805. Safe Containers for International Cargo ......................................... 80501 

30 ‘‘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. 

31 ‘‘§ 80101. Vessel stranded on foreign coast 

32 ‘‘(a) DUTIES OF CONSULAR OFFICER.—When a vessel of the United 

33 States is stranded on a coast of a foreign country, the consular officer in 


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1 that country shall take proper measures, to the extent the laws of that coun2 try allow, to— 

3 ‘‘(1) save and secure the vessel and property on the vessel; and 

4 ‘‘(2) prepare an inventory of the property that is saved. 

5 ‘‘(b) DELIVERY TO OWNER.—After deducting the expenses, the consular 

6 officer shall deliver the property, with an inventory, to the owner of the 

7 property. 

8 ‘‘(c) LIMITATION ON TAKING POSSESSION.—A consular officer may not 

9 take possession of property under this section when the owner, master, or 

10 consignee is present or able to take possession of the property. 

11 ‘‘§ 80102. License to salvage on Florida coast 

12 ‘‘(a) LICENSING REQUIREMENTS.—To be regularly employed in the busi13 ness of salvaging on the coast of Florida, a vessel and its master each must 

14 have a license issued by a judge of the district court of the United States 

15 for a judicial district of Florida. 

16 ‘‘(b) JUDICIAL FINDINGS.—Before issuing a license under this section, 

17 the judge must be satisfied, when the license is for— 

18 ‘‘(1) a vessel, that the vessel is seaworthy and properly equipped for 

19 the business of saving property shipwrecked and in distress; or 

20 ‘‘(2) a master, that the master is trustworthy and innocent of any 

21 fraud or misconduct related to property shipwrecked or saved on the 

22 coast. 

23 ‘‘§ 80103. Property on Florida coast to be taken to port of 

24 entry 

25 ‘‘(a) IN GENERAL.—Property taken from a wreck, the sea, or a key or 

26 shoal, on the coast of Florida and within the jurisdiction of the United 

27 States, shall be brought to a port of entry of the United States. 

28 ‘‘(b) SEIZURE AND FORFEITURE.—A vessel transporting property de29 scribed in subsection (a) to a foreign port may be seized by, and forfeited 

30 to, the United States Government. A forfeiture under this subsection ac31 crues half to the informer and half to the Government. 

32 ‘‘§ 80104. Salvaging operations by foreign vessels 

33 ‘‘(a) PROHIBITION.—Except as provided in this section or section 80105 

34 of this title, a foreign vessel may not, under penalty of forfeiture, engage 

35 in salvaging operations on the Atlantic or Pacific coast of the United States, 

36 in any portion of the Great Lakes or their connecting or tributary waters, 

37 including any portion of the Saint Lawrence River through which the inter38 national boundary line extends, or in territorial waters of the United States 

39 on the Gulf of Mexico. 

40 ‘‘(b) WHEN SUITABLE VESSEL NOT AVAILABLE.—The Secretary of 

41 Homeland Security may authorize a foreign vessel to engage in salvaging 


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1 operations in a particular locality if, on investigation, the Secretary is satis2 fied that there is not available in that locality a suitable vessel that is— 

3 ‘‘(1) owned only by citizens of the United States (including a 

4 Bowaters corporation under section 12118 of this title); and 

5 ‘‘(2) documented under chapter 121 of this title or numbered under 

6 chapter 123 of this title. 

7 ‘‘(c) OPERATIONS AUTHORIZED BY TREATY.—This section does not pro8 hibit or restrict assistance to vessels or salvaging operations authorized by 

9 treaty, including— 

10 ‘‘(1) article II of the Treaty between the United States and Great 

11 Britain concerning reciprocal rights for United States and Canada in 

12 the conveyance of prisoners and wrecking and salvage, signed at Wash13 ington, May 18, 1908 (35 Stat. 2036); or 

14 ‘‘(2) the Treaty between the United States of America and Mexico 

15 to facilitate assistance to and salvage of vessels in territorial waters, 

16 signed at Mexico City, June 13, 1935 (49 Stat. 3359). 

17 ‘‘§ 80105. Canadian vessels aiding vessels in United States 

18 waters 

19 ‘‘(a) IN GENERAL.—Canadian vessels and wrecking equipment may give 

20 aid to Canadian or other vessels and property wrecked, disabled, or in dis21 tress in the waters of the United States contiguous to Canada, including— 

22 ‘‘(1) the canal and improvement of the waters between Lake Erie 

23 and Lake Huron; and 

24 ‘‘(2) the Saint Marys River and canal. 

25 ‘‘(b) RECIPROCITY.—This section does not apply after the President pro26 claims that privileges reciprocal to those under subsection (a) have been 

27 withdrawn or rendered inoperative by the Government of Canada. 

28 ‘‘§ 80106. International agreement on derelicts 

29 ‘‘The President may make an international agreement with other govern30 ments interested in the navigation of the North Atlantic Ocean, providing 

31 for the reporting, marking, and removal of dangerous wrecks, derelicts, and 

32 other menaces to navigation outside the coast waters of the countries bor33 dering the North Atlantic Ocean. 

34 ‘‘§ 80107. Salvors of life to share in remuneration 

35 ‘‘(a) ENTITLEMENT OF SALVORS.—A salvor of human life, who gave aid 

36 following an accident giving rise to salvage, is entitled to a fair share of 

37 the payment awarded to the salvor for salvaging the vessel or other property 

38 or preventing or minimizing damage to the environment. 

39 ‘‘(b) COMMON OWNERSHIP OF VESSELS.—The right to remuneration for 

40 aid or salvage services is not affected by common ownership of the vessels 

41 giving and receiving the aid or salvage services. 


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1 ‘‘(c) TIME LIMIT ON BRINGING ACTIONS.—A civil action to recover remu2 neration for giving aid or salvage services must be brought within 2 years 

3 after the date the aid or salvage services were given, unless the court in 

4 which the action is brought is satisfied that during that 2-year period there 

5 had not been a reasonable opportunity to seize the aided or salvaged vessel 

6 within the jurisdiction of the court or within the territorial waters of the 

7 country of the plaintiff’s residence or principal place of business. 

8 ‘‘(d) NONAPPLICATION.—This section does not apply to a vessel of war 

9 or a vessel owned by the United States Government appropriated only to 

10 a public service. 

11 ‘‘CHAPTER 803—ICE AND DERELICTS 

‘‘Sec. 

‘‘80301. International agreements. 

‘‘80302. Patrol services. 

‘‘80303. Speed of vessel in ice region. 

12 ‘‘§ 80301. International agreements 

13 ‘‘(a) GENERAL AUTHORITY.—The President may make agreements with 

14 interested maritime countries to— 

15 ‘‘(1) maintain in the North Atlantic Ocean a service of ice patrol, 

16 of study and observation of ice and current conditions, and of assist17 ance to vessels and their crews requiring assistance within the limits 

18 of the patrol; 

19 ‘‘(2) maintain a service of study and observation of ice and current 

20 conditions in the waters affecting the set and drift of ice in the North 

21 Atlantic Ocean; and 

22 ‘‘(3) take all practicable steps to ensure the destruction or removal 

23 of derelicts in the northern part of the Atlantic Ocean, east of the line 

24 drawn from Cape Sable to a point in latitude 34 degrees north, lon25 gitude 70 degrees west, if the destruction or removal is necessary. 

26 ‘‘(b) PAYMENT BETWEEN COUNTRIES.—The President may include in an 

27 agreement under subsection (a) a provision for— 

28 ‘‘(1) payment to the United States Government by other countries 

29 for their proportionate share of the expense of maintaining the services; 

30 or 

31 ‘‘(2) contribution by the Government for its proportionate share if 

32 the agreement provides for another country to maintain the services. 

33 ‘‘§ 80302. Patrol services 

34 ‘‘(a) GENERAL REQUIREMENTS.—Unless the agreements made under sec35 tion 80301 of this title provide otherwise, an ice patrol shall be maintained 

36 during the entire ice season in guarding the southeastern, southern, and 

37 southwestern limits of the region of icebergs in the vicinity of the Grand 

38 Banks of Newfoundland. The patrol shall inform trans-Atlantic and other 


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1 passing vessels by radio and other available means of the ice conditions and 

2 the extent of the dangerous region. During the ice season, there shall be 

3 maintained a service of study of ice and current conditions, a service of pro4 viding assistance to vessels and crews requiring assistance, and a service of 

5 removing and destroying derelicts. Any of these services may be maintained 

6 during the remainder of the year as may be advisable. 

7 ‘‘(b) WARNINGS TO VESSELS.—An ice patrol vessel shall warn any vessel 

8 known to be approaching a dangerous area and recommend safe routes. 

9 ‘‘(c) RECORDING AND REPORTING INCIDENTS.— 

10 ‘‘(1) RECORDING.—An ice patrol vessel shall record the name of a 

11 vessel and the facts of the case when the patrol observes or knows that 

12 the vessel— 

13 ‘‘(A) is on other than a regular recognized or advertised route 

14 crossing the North Atlantic Ocean; 

15 ‘‘(B) has crossed the fishing banks of Newfoundland north of 

16 latitude 43 degrees north during the fishing season; or 

17 ‘‘(C) has passed through regions known or believed to be endan18 gered by ice when proceeding to and from ports of North America. 

19 ‘‘(2) REPORTING.—The name of the vessel and all pertinent informa20 tion about the incident shall be reported to the government of the coun21 try to which the vessel belongs if that government requests. 

22 ‘‘(d) ADMINISTRATION.—The Commandant of the Coast Guard, under 

23 the direction of the Secretary of the department in which the Coast Guard 

24 is operating, shall carry out the services provided for in this section and 

25 shall assign necessary vessels, material, and personnel of the Coast Guard. 

26 On request of such Secretary, the head of an agency may detail personnel, 

27 lend or contribute material or equipment, or otherwise assist in carrying out 

28 the services provided for in this section. 

29 ‘‘(e) ANNUAL REPORT.—The Commandant shall publish an annual report 

30 of the activities of the services provided for in this section. A copy of the 

31 report shall be provided to each interested foreign government and to each 

32 agency assisting in the work. 

33 ‘‘§ 80303. Speed of vessel in ice region 

34 ‘‘(a) REQUIREMENT.—The master of a vessel of the United States, when 

35 ice is reported on or near the vessel’s course, shall proceed at a moderate 

36 speed or change the course of the vessel to go well clear of the danger zone. 

37 ‘‘(b) CIVIL PENALTY.—A master violating this section is liable to the 

38 United States Government for a civil penalty of not more than $500. 

39 ‘‘CHAPTER 805—SAFE CONTAINERS FOR 

40 INTERNATIONAL CARGO 

‘‘Sec. 

‘‘80501. Definitions. 


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‘‘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. 

1 ‘‘§ 80501. Definitions 

2 ‘‘In this chapter: 

3 ‘‘(1) CONTAINER.—The term ‘container’ has the meaning given that 

4 term in the Convention. 

5 ‘‘(2) CONVENTION.—The term ‘Convention’ means the International 

6 Convention for Safe Containers, and its annexes, done at Geneva, Swit7 zerland, December 2, 1972. 

8 ‘‘(3) INTERNATIONAL TRANSPORT.—The term ‘international trans9 port’ means the transportation of a container between— 

10 ‘‘(A) a place in a foreign country and a place in the jurisdiction 

11 of the United States; or 

12 ‘‘(B) two places outside the United States by United States car13 riers. 

14 ‘‘(4) OWNER.—The term ‘owner’ includes the lessee or bailee of a 

15 container if a written lease or bailment provides for the lessee or bailee 

16 to exercise the owner’s responsibility for maintaining and examining 

17 the container. 

18 ‘‘(5) SAFETY APPROVAL PLATE.—The term ‘safety approval plate’ 

19 has the meaning given that term in annex I of the Convention. 

20 ‘‘§ 80502. Application of Convention 

21 ‘‘The Convention applies to an owner of a container used in international 

22 transport if the owner is domiciled or has its principal office in the United 

23 States. 

24 ‘‘§ 80503. General authority of the Secretary 

25 ‘‘(a) IN GENERAL.—The Secretary of the department in which the Coast 

26 Guard is operating shall carry out the Convention and this chapter in the 

27 United States. 

28 ‘‘(b) REGULATIONS.—The Secretary shall prescribe regulations to carry 

29 out this chapter. The regulations shall— 

30 ‘‘(1) establish procedures for testing, inspecting, and initially approv31 ing containers and designs for containers, including procedures for at32 taching, invalidating, and removing safety approval plates for con33 tainers; 

34 ‘‘(2) establish procedures to be followed by the owners of containers 

35 for the periodic examination of containers as provided in the Conven36 tion; and 


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1 ‘‘(3) provide a method for developing, collecting, and disseminating 

2 information about container safety and the international transport of 

3 containers. 

4 ‘‘(c) SAFETY APPROVAL PLATES.—If the owner of a container without a 

5 safety approval plate establishes that the container satisfies the standards 

6 of the Convention, the Secretary may authorize a safety approval plate to 

7 be attached to the container. 

8 ‘‘(d) SCHEDULE OF FEES.—The Secretary may prescribe a schedule of 

9 fees for services performed by the Secretary, or by a person delegated au10 thority under section 80506 of this title, for the testing, inspection, and ini11 tial approval of containers and container designs. 

12 ‘‘(e) ENCOURAGING INTERMODAL TRANSPORT.—To the maximum extent 

13 possible, the Secretary shall encourage the development and use of inter14 modal transport, using containers built to facilitate economical, safe, and 

15 expeditious handling of containerized cargo without intermediate reloading 

16 when it is being transported over land, air, and sea areas. 

17 ‘‘§ 80504. Approval and examination 

18 ‘‘(a) DOMICILE AND PRINCIPAL OFFICE IN UNITED STATES.—A con19 tainer owner domiciled and having its principal office in the United States 

20 shall have the container— 

21 ‘‘(1) approved initially under procedures prescribed by the Secretary 

22 of the department in which the Coast Guard is operating or by the gov23 ernment of another country that is a party to the Convention; and 

24 ‘‘(2) examined periodically as provided in the Convention under pro25 cedures prescribed by the Secretary. 

26 ‘‘(b) DOMICILE OR PRINCIPAL OFFICE IN UNITED STATES.—A container 

27 owner domiciled or having its principal office in the United States shall have 

28 the container— 

29 ‘‘(1) approved initially under procedures prescribed by the Secretary 

30 or by the government of another country that is a party to the Conven31 tion; and 

32 ‘‘(2) examined periodically as provided in the Convention, under pro33 cedures prescribed by the government of the country in which the 

34 owner is domiciled or has its principal office, as long as that country 

35 is a party to the Convention. 

36 ‘‘(c) NEITHER DOMICILE NOR PRINCIPAL OFFICE IN UNITED STATES.— 

37 A container owner neither domiciled nor having its principal office in the 

38 United States or another country that is a party to the Convention may 

39 submit a container for initial approval and periodic examination under pro40 cedures prescribed by the Secretary. 


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1 ‘‘§ 80505. Enforcement 

2 ‘‘(a) IN GENERAL.—To enforce the Convention, this chapter, and regula3 tions prescribed under this chapter, the Secretary of the department in 

4 which the Coast Guard is operating may— 

5 ‘‘(1) examine, or require to be examined, containers in international 

6 transport; 

7 ‘‘(2) approve designs for containers; 

8 ‘‘(3) inspect and test containers being manufactured; 

9 ‘‘(4) issue a detention order removing or excluding a container from 

10 service until the container owner satisfies the Secretary that the con11 tainer meets the standards of the Convention, if the container— 

12 ‘‘(A) does not have a safety approval plate attached to it; or 

13 ‘‘(B) has a safety approval plate attached but there is signifi14 cant evidence that the container is in a condition that creates an 

15 obvious risk to safety; 

16 ‘‘(5) take other appropriate action, including issuing necessary or17 ders, to remove a container from service or restrict its use if the con18 tainer is not in compliance with the Convention, this chapter, or regula19 tions prescribed under this chapter, but does not present an obvious 

20 risk to safety; and 

21 ‘‘(6) allow a container found to be unsafe or without a safety ap22 proval plate to be moved to another location for repair or other disposi23 tion, under restrictions consistent with the intent of the Convention. 

24 ‘‘(b) PAYMENT OF EXPENSES.— 

25 ‘‘(1) EXAMINATION.—The owner of a container involved in an action 

26 by the Secretary under this section related to an examination of the 

27 container shall pay or reimburse the Secretary for the expenses arising 

28 from that action, except for the costs of routine examinations of the 

29 container or a safety approval plate. 

30 ‘‘(2) TESTING, INSPECTION, AND INITIAL APPROVAL.—The owner of 

31 a container submitted to the procedure established by the Secretary for 

32 testing, inspection, and initial approval, and the manufacturer of a con33 tainer that submits a design to the procedure established by the Sec34 retary for testing, inspection, and initial approval, shall pay or reim35 burse the Secretary for the expenses arising from the testing, inspec36 tion, or approval. 

37 ‘‘(3) CREDIT TO APPROPRIATION.—Amounts received by the Sec38 retary as reimbursement shall be credited to the appropriation for oper39 ating expenses of the Coast Guard. 

40 ‘‘(c) PRESUMPTION BASED ON SAFETY APPROVAL PLATE.—A container 

41 bearing a safety approval plate authorized by a country that is a party to 


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1 the Convention is presumed to be in a safe condition unless there is signifi2 cant evidence that the container is in a condition that creates an obvious 

3 risk to safety. 

4 ‘‘(d) NOTICE OF ORDERS.— 

5 ‘‘(1) IN GENERAL.—When the Secretary issues a detention or other 

6 order under this section, the Secretary promptly shall notify in writ7 ing— 

8 ‘‘(A) the owner of the container; 

9 ‘‘(B) the owner’s agent; or 

10 ‘‘(C) if the identity of the owner is not apparent from the con11 tainer or shipping documents, the custodian. 

12 ‘‘(2) INFORMATION TO INCLUDE.—The notification shall identify the 

13 container involved, give the location of the container, and describe the 

14 condition or situation giving rise to the order. 

15 ‘‘(e) DURATION OF ORDERS.—An order issued by the Secretary under 

16 this section remains in effect until— 

17 ‘‘(1) the Secretary declares the container to be in compliance with 

18 the standards of the Convention; or 

19 ‘‘(2) the container is removed permanently from service. 

20 ‘‘(f) NOTICE OF DEFECTIVE CONTAINER TO COUNTRY ISSUING SAFETY

21 APPROVAL PLATE.—If the Secretary has reason to believe that a container 

22 bearing a safety approval plate issued by another country was defective at 

23 the time of approval, the Secretary shall notify that country. 

24 ‘‘§ 80506. Delegation of authority 

25 ‘‘(a) IN GENERAL.—The Secretary of the department in which the Coast 

26 Guard is operating may delegate to any person, including a public or private 

27 agency or nonprofit organization, authority to grant initial approval for con28 tainers and designs and to attach safety approval plates. 

29 ‘‘(b) REGULATIONS.—Before making a delegation under this section, the 

30 Secretary shall prescribe regulations establishing— 

31 ‘‘(1) criteria to be followed in selecting a person to whom authority 

32 is to be delegated; 

33 ‘‘(2) a detailed description of the duties and powers to be carried out 

34 by the person to whom authority is delegated, including the records the 

35 person shall keep; and 

36 ‘‘(3) the review the Secretary will conduct to decide whether the per37 son is carrying out the delegated duties and powers properly. 

38 ‘‘(c) INSPECTION OF RECORDS.—A person delegated authority under this 

39 section shall make available to the Secretary for inspection, on request, 

40 records the person is required to keep. 


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1 ‘‘(d) PENALTIES AND ORDERS.—A person delegated authority under this 

2 section may not— 

3 ‘‘(1) assess or collect, or attempt to assess or collect, a penalty for 

4 violation of the Convention, this chapter, or an order issued by the Sec5 retary under this chapter; or 

6 ‘‘(2) issue or attempt to issue a detention or other order. 

7 ‘‘(e) PUBLICATION.—The Secretary shall publish in the Federal Register 

8 or other appropriate publication— 

9 ‘‘(1) the name and address of each person to whom authority is dele10 gated; 

11 ‘‘(2) the duties and powers delegated; and 

12 ‘‘(3) the period of the delegation. 

13 ‘‘(f) REVOCATION.—The Secretary may revoke a delegation of authority 

14 under this section at any time. 

15 ‘‘§ 80507. Employee protection 

16 ‘‘(a) PROHIBITION.—A person may not discharge or discriminate against 

17 an employee because the employee has reported the existence of an unsafe 

18 container or a violation of this chapter or a regulation prescribed under this 

19 chapter. 

20 ‘‘(b) COMPLAINTS.—An employee alleging to have been discharged or dis21 criminated against in violation of subsection (a) may file a complaint with 

22 the Secretary of Labor. The complaint must be filed within 60 days after 

23 the violation. 

24 ‘‘(c) ENFORCEMENT.—The Secretary of Labor may investigate the com25 plaint. If the Secretary of Labor finds there has been a violation, the Sec26 retary of Labor may bring a civil action in an appropriate district court of 

27 the United States. The court has jurisdiction to restrain violations of sub28 section (a) and order appropriate relief, including reinstatement of the em29 ployee to the employee’s former position with back pay. 

30 ‘‘(d) NOTICE TO COMPLAINANT.—Within 30 days after receiving a com31 plaint under this section, the Secretary of Labor shall notify the complain32 ant of the intended action on the complaint. 

33 ‘‘§ 80508. Amendments to Convention 

34 ‘‘(a) PROPOSALS BY UNITED STATES.—The Secretary of State, with the 

35 concurrence of the Secretary of the department in which the Coast Guard 

36 is operating, may propose amendments to the Convention or request a con37 ference for amending the Convention as provided in article IX of the Con38 vention. 

39 ‘‘(b) PROPOSALS BY OTHER COUNTRIES.—An amendment communicated 

40 to the United States under article IX(2) of the Convention may be accepted 

41 for the United States by the President, with the advice and consent of the 


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1 Senate. The President may declare that the United States does not accept 

2 an amendment. 

3 ‘‘(c) AMENDMENTS TO ANNEXES.— 

4 ‘‘(1) IN GENERAL.—The Secretary of State, with the concurrence of 

5 the Secretary of the department in which the Coast Guard is oper6 ating— 

7 ‘‘(A) may propose amendments to the annexes to the Conven8 tion; 

9 ‘‘(B) may propose a conference for amending annexes to the 

10 Convention; and 

11 ‘‘(C) shall consider and act on amendments to the annexes to 

12 the Convention adopted by the Maritime Safety Committee of the 

13 International Maritime Organization and communicated to the 

14 United States under article X(2) of the Convention. 

15 ‘‘(2) ACTION FOLLOWING APPROVAL OR OBJECTION.—If a proposed 

16 amendment to an annex is approved by the United States, the amend17 ment shall enter into force as provided in article X of the Convention. 

18 If a proposed amendment is objected to, the Secretary of State prompt19 ly shall communicate the objection as provided in article X(3) of the 

20 Convention. 

21 ‘‘(d) APPOINTMENT OF ARBITRATOR.—The Secretary of State, with the 

22 concurrence of the Secretary of the department in which the Coast Guard 

23 is operating, shall appoint an arbitrator when one is required to resolve a 

24 dispute within the meaning of article XIII of the Convention. 

25 ‘‘§ 80509. Civil penalty 

26 ‘‘(a) IN GENERAL.—An owner, agent, or custodian who has been notified 

27 of an order issued under section 80505 of this title and fails to take reason28 able and prompt action to prevent or stop a container subject to the order 

29 from being moved in violation of the order is liable to the United States 

30 Government for a civil penalty of not more than $5,000 for each container 

31 moved. Each day the container remains in service while the order is in effect 

32 is a separate violation. 

33 ‘‘(b) ASSESSMENT AND COLLECTION.— 

34 ‘‘(1) IN GENERAL.—After notice and an opportunity for a hearing, 

35 the Secretary of the department in which the Coast Guard is operating 

36 shall assess and collect any penalty under this section. 

37 ‘‘(2) FACTORS TO CONSIDER.—In determining the amount of the 

38 penalty, the Secretary shall consider the gravity of the violation, the 

39 hazards involved, and the record of the person charged with respect to 

40 violations of the Convention, this chapter, or regulations prescribed 

41 under this chapter. 


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1 ‘‘(3) REMISSION, MITIGATION, OR COMPROMISE.—The Secretary may 

2 remit, mitigate, or compromise a penalty under this section. 

3 ‘‘(4) ENFORCEMENT.—If a person fails to pay a penalty under this 

4 section, the Secretary shall refer the matter to the Attorney General 

5 for collection in an appropriate district court of the United States.’’. 

6 SEC. 12. MARITIME ADMINISTRATION. 

7 Section 109 of title 49, United States Code, is amended to read as fol8 lows: 

9 ‘‘§ 109. Maritime Administration 

10 ‘‘(a) ORGANIZATION.—The Maritime Administration is an administration 

11 in the Department of Transportation. 

12 ‘‘(b) MARITIME ADMINISTRATOR.—The head of the Maritime Administra13 tion is the Maritime Administrator, who is appointed by the President by 

14 and with the advice and consent of the Senate. The Administrator shall re15 port directly to the Secretary of Transportation and carry out the duties 

16 prescribed by the Secretary. 

17 ‘‘(c) DEPUTY MARITIME ADMINISTRATOR.—The Maritime Administration 

18 shall have a Deputy Maritime Administrator, who is appointed in the com19 petitive service by the Secretary, after consultation with the Administrator. 

20 The Deputy Administrator shall carry out the duties prescribed by the Ad21 ministrator. The Deputy Administrator shall be Acting Administrator dur22 ing the absence or disability of the Administrator and, unless the Secretary 

23 designates another individual, during a vacancy in the office of Adminis24 trator. 

25 ‘‘(d) DUTIES AND POWERS VESTED IN SECRETARY.—All duties and pow26 ers 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, 

29 and may have other regional offices as necessary. The Secretary shall ap30 point a qualified individual as Director of each regional office. The Sec31 retary shall carry out appropriate activities and programs of the Maritime 

32 Administration through the regional offices. 

33 ‘‘(f) INTERAGENCY AND INDUSTRY RELATIONS.—The Secretary shall es34 tablish and maintain liaison with other agencies, and with representative 

35 trade organizations throughout the United States, concerned with the trans36 portation of commodities by water in the export and import foreign com37 merce of the United States, for the purpose of securing preference to vessels 

38 of the United States for the transportation of those commodities. 

39 ‘‘(g) DETAILING OFFICERS FROM ARMED FORCES.—To assist the Sec40 retary in carrying out duties and powers relating to the Maritime Adminis41 tration, not more than five officers of the armed forces may be detailed to 


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1 the Secretary at any one time, in addition to details authorized by any other 

2 law. During the period of a detail, the Secretary shall pay the officer an 

3 amount that, when added to the officer’s pay and allowances as an officer 

4 in the armed forces, makes the officer’s total pay and allowances equal to 

5 the amount that would be paid to an individual performing work the Sec6 retary considers to be of similar importance, difficulty, and responsibility as 

7 that performed 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 char11 ter, the Secretary may make contracts for the United States Govern12 ment and 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 

21 this section or subtitle V of title 46. At least once a year, the Comp22 troller General shall report to Congress any departure by the Secretary 

23 from 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 oper41 ations; 


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1 ‘‘(F) the Vessel Operations Revolving Fund; 

2 ‘‘(G) National Defense Reserve Fleet expenses; 

3 ‘‘(H) expenses necessary to carry out part B of subtitle V of 

4 title 46; and 

5 ‘‘(I) other operations and training expenses related to the devel6 opment of waterborne transportation systems, the use of water7 borne transportation systems, and general administration. 

8 ‘‘(3) TRAINING VESSELS.—Amounts may not be appropriated for the 

9 purchase or construction of training vessels for State maritime acad10 emies unless the Secretary has approved a plan for sharing training 

11 vessels between State maritime academies.’’. 

12 SEC. 13. AMENDMENTS RELATING TO MARITIME SECURITY ACT OF 

13 2003. 

14 (a) AMENDMENTS TO CHAPTER 531.—Chapter 531 of title 46, United 

15 States Code, is amended as follows: 

16 (1) In section 53102— 

17 (A) in the headings of paragraphs (1), (2), and (4) of sub18 section (c), strike ‘‘SECTION 2’’ and substitute ‘‘SECTION 50501’’; 

19 (B) in subsection (c)(1), (2)(A)(i) and (ii)(II) and (B), and 

20 (4)(B), strike ‘‘section 2 of the Shipping Act, 1916 (46 U.S.C. 

21 App. 802)’’ and substitute ‘‘section 50501 of this title’’; 

22 (C) in subsection (d), strike ‘‘the first section of Public Law 

23 81–891 (64 Stat. 1120; 46 U.S.C. App. note prec. 3)’’ and sub24 stitute ‘‘section 501 of this title’’; and 

25 (D) in subsection (e)(1)— 

26 (i) strike ‘‘a documented vessel (as that term is defined in 

27 section 12101 of this title)’’ and substitute ‘‘documented 

28 under chapter 121 of this title,’’; and 

29 (ii) in subparagraph (B), strike ‘‘a documented vessel (as 

30 defined in that section)’’ and substitute ‘‘documented under 

31 chapter 121’’. 

32 (2) In section 53103(c)— 

33 (A) in the heading of paragraph (1)(C), strike ‘‘SECTION 2’’ and 

34 substitute ‘‘SECTION 50501’’; 

35 (B) in paragraphs (1)(A)(iii) and (C)(i) and (ii), strike ‘‘section 

36 2 of the Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute 

37 ‘‘section 50501 of this title’’; 

38 (C) in paragraph (1)(B), strike ‘‘subparagraphs’’ and substitute 

39 ‘‘subparagraph’’; and 

40 (D) in paragraph (3)(B), strike ‘‘agreement’’ and substitute 

41 ‘‘agreements’’. 


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1 (3) In section 53104— 

2 (A) in subsection (c)(3)(B)(ii)(I) and (II), strike ‘‘section 2 of 

3 the Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute 

4 ‘‘section 50501 of this title’’; 

5 (B) in subsection (e)(2), strike ‘‘section 9 of the Shipping Act, 

6 1916 (46 U.S.C. App. 808)’’ and substitute ‘‘section 56101 of this 

7 title’’; and 

8 (C) in subsection (e)(3), strike ‘‘section 902 of the Merchant 

9 Marine Act, 1936 (46 U.S.C. App. 1242)’’ and ‘‘section 902 of 

10 such Act’’ and substitute ‘‘chapter 563 of this title’’ and ‘‘chapter 

11 563’’, respectively. 

12 (4) In section 53105— 

13 (A) in subsection (a)(1)(A), strike ‘‘section 12105’’ and sub14 stitute ‘‘section 12111’’; and 

15 (B) in subsection (f), strike ‘‘approve’’ and substitute ‘‘ap16 proves’’. 

17 (5) In section 53106— 

18 (A) in subsection (d)(1), strike ‘‘section 2631 of title 10, United 

19 States Code, the Act of March 26, 1934 (46 U.S.C. App. 1241– 

20 1), section 901(a), 901(b), or 901b of the Merchant Marine Act, 

21 1936 (46 U.S.C. App. 1241(a), 1241(b), or 1241f)’’ and sub22 stitute ‘‘section 55302(a), 55304, 55305, or 55314 of this title, 

23 section 2631 of title 10’’; 

24 (B) in subsection (d)(2), strike ‘‘section 901(a), 901(b), or 901b 

25 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a), 

26 1241(b), or 1241f),’’ and substitute ‘‘section 55302(a), 55305, or 

27 55314 of this title’’; and 

28 (C) in subsection (e)(2), strike ‘‘section 2(c) of the Shipping 

29 Act, 1916 (46 U.S.C. App. 802(c))’’ and substitute ‘‘section 

30 50501 of this title, applying the 75 percent ownership requirement 

31 of that section’’. 

32 (6) In section 53107(f)— 

33 (A) strike ‘‘section 2631 of title 10, United States Code, the Act 

34 of March 26, 1934 (46 U.S.C. App. 1241–1), section 901(a), 

35 901(b), or 901b of the Merchant Marine Act, 1936 (46 U.S.C. 

36 App. 1241(a), 1241(b), or 1241f)’’ and substitute ‘‘section 

37 55302(a), 55304, 55305, or 55314 of this title, section 2631 of 

38 title 10’’; and 

39 (B) strike ‘‘section 2631 of title 10, United States Code, the 

40 Act of March 26, 1934 (46 U.S.C. App. 1241–1), and sections 

41 901(a), 901(b), and 901b of the Merchant Marine Act, 1936 (46 


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1 U.S.C. App. 1241(a), 1241(b), and 1241b)’’ and substitute ‘‘sec2 tions 55302(a), 55304, 55305, and 55314 of this title and section 

3 2631 of title 10’’. 

4 (7) In section 53108(b), strike ‘‘section 901(b)(1) of the Merchant 

5 Marine Act, 1936 (46 U.S.C. App. 1241(b)(1))’’ and substitute ‘‘sec6 tion 55305(a) of this title’’. 

7 (b) OTHER CONFORMING PROVISIONS.—If this Act is enacted prior to 

8 October 1, 2005, then— 

9 (1) until that date, the reference in section 12111(c)(3) of title 46, 

10 United States Code, as enacted by this Act, to ‘‘chapter 531 of this 

11 title’’ is deemed instead to be a reference to ‘‘subtitle B of title VI of 

12 the Merchant Marine Act, 1936’’; and 

13 (2) section 3534(b)(1) of the Maritime Security Act of 2003 (Public 

14 Law 108–136, 117 Stat. 1818) is repealed. 

15 SEC. 14. AMENDMENTS TO PARTIALLY RESTATED PROVISIONS. 

16 (a) Section 2793 of the Revised Statutes (19 U.S.C. 288, 46 App. U.S.C. 

17 111, 123) is amended by striking ‘‘or tonnage tax’’. 

18 (b) Section 809(a) of the Merchant Marine Act, 1936 (46 App. U.S.C. 

19 1213(a)), is amended by striking ‘‘and section 211(a)’’. 

20 SEC. 15. ADDITIONAL AMENDMENTS TO TITLE 46. 

21 Title 46, United States Code, is amended as follows: 

22 (1) The analysis of subtitle II is amended as follows: 

23 (A) In each chapter item, capitalize the first letter of each word 

24 containing 4 or more letters. 

25 (B) Strike the item for chapter 39. 

26 (C) The item for chapter 45 is amended to read as follows: 

‘‘45. Uninspected Commercial Fishing Industry Vessels .................... 4501’’. 

27 (2) Section 2101 is amended as follows: 

28 (A) Paragraphs (2), (3), (3a), (6), (10), (10a), (12), (17b), 

29 (36), (41), (44), (45), and (46) are repealed. 

30 (B) In paragraph (8a), insert ‘‘Prevention’’ after ‘‘Abuse’’. 

31 (C) In paragraph (18), strike ‘‘those’’. 

32 (D) In paragraph (34)— 

33 (i) strike ‘‘, except in part H,’’; and 

34 (ii) strike ‘‘head’’ and substitute ‘‘Secretary’’. 

35 (3) In section 2102(b), strike ‘‘West’’ and ‘‘East’’ and substitute 

36 ‘‘west’’ and ‘‘east’’, respectively. 

37 (4) In section 2106, strike ‘‘a district court of the United States’’ 

38 and substitute ‘‘the district court of the United States for any district’’. 

39 (5) Section 2108 is repealed. 

40 (6) In section 2110— 


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1 (A) in subsection (a)(2), strike ‘‘part B of this title’’ and sub2 stitute ‘‘part B of this subtitle’’; 

3 (B) in subsection (b)(2)(A)(iii), strike the period at the end and 

4 substitute ‘‘; and’’; 

5 (C) in subsection (b)(5), strike ‘‘fees’’ and substitute ‘‘fee’’; 

6 (D) In subsection (f), strike ‘‘Secretary of the Treasury shall 

7 deny the clearance required by section 4197 of the Revised Stat8 utes of the United States (46 App. U.S.C. 91)’’ and substitute 

9 ‘‘Secretary of Homeland Security shall deny the clearance required 

10 by section 60105 of this title’’; and 

11 (E) In subsection (j), strike ‘‘state’’ and substitute ‘‘State’’. 

12 (7) In section 2301, strike ‘‘section’’ and substitute ‘‘sections 2304 

13 and’’. 

14 (8) In section 2304— 

15 (A) insert the paragraph designation ‘‘(1)’’ after ‘‘(a)’’; and 

16 (B) insert at the end of subsection (a) the following new para17 graph: 

18 ‘‘(2) Paragraph (1) does not apply to a vessel of war or a vessel owned 

19 by the United States Government appropriated only to a public service.’’. 

20 (9) In section 2306(a)(2), strike ‘‘section 212(A) of the Merchant 

21 Marine Act, 1936 (46 App. U.S.C. 1122a),’’ and substitute ‘‘section 

22 50113 of this title’’. 

23 (10) In section 3205(d), strike ‘‘Secretary of the Treasury shall 

24 withhold or revoke the clearance required by section 4197 of the Re25 vised Statutes (46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of 

26 Homeland Security shall withhold or revoke the clearance required by 

27 section 60105 of this title’’. 

28 (11) In section 3302— 

29 (A) in subsection (b), insert a comma after ‘‘fishing vessel’’; 

30 (B) in subsection (j)(2)(B), strike ‘‘section 1304 of the Mer31 chant Marine Act, 1936 (46 App. U.S.C. 1295c)’’ and substitute 

32 ‘‘chapter 515 of this title’’; and 

33 (C) in subsection (l)(1)(C), strike ‘‘Inc..’’ and substitute ‘‘Inc.’’. 

34 (12) In section 3306(d), strike ‘‘section 1302(3) of the Merchant 

35 Marine Act, 1936 (46 App. U.S.C. 1295a(3))’’ and substitute ‘‘section 

36 51102 of this title’’. 

37 (13) In section 3318(f), strike the period after ‘‘felony’’. 

38 (14) In the analysis of chapter 37, the item for section 3719 is 

39 amended to read as follows: 

‘‘3719. Reduction of oil spills from single hull non-self-propelled tank vessels.’’. 


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1 (15) In paragraphs (1)(C), (2), and (3) of section 3703a(c), strike 

2 ‘‘documentation under section 4136 of the Revised Statutes of the 

3 United States (46 App. U.S.C. 14)’’ and substitute ‘‘documentation as 

4 a wrecked vessel under section 12112 of this title’’. 

5 (16) In section 3704, strike ‘‘section 27 of the Merchant Marine Act, 

6 1920 (46 App. U.S.C. 883),’’ and substitute ‘‘chapter 551 of this 

7 title’’. 

8 (17) In section 3718(e)(1), strike ‘‘Secretary of the Treasury’’ and 

9 ‘‘section 4197 of the Revised Statutes of the United States (46 App. 

10 U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and 

11 ‘‘section 60105 of this title’’, respectively. 

12 (18) In section 4702, strike the subsection ‘‘(a)’’ designation. 

13 (19) In section 4705— 

14 (A) strike ‘‘subcontractor not’’ and substitute ‘‘subcontractor 

15 are not’’; 

16 (B) strike ‘‘(a)(1)’’ and substitute ‘‘(a)’’; 

17 (C) strike ‘‘(2) Paragraph (1)’’ and substitute ‘‘(b) Subsection 

18 (a)’’; 

19 (D) strike ‘‘(A)’’ and substitute ‘‘(1)’’; and 

20 (E) strike ‘‘(B)’’ and substitute ‘‘(2)’’. 

21 (20) In section 5113(b), strike ‘‘section 4197 of the Revised Statutes 

22 (46 App. U.S.C. 91)’’ and substitute ‘‘section 60105 of this title’’. 

23 (21) In section 6101, redesignate the second subsection (g) and sub24 section (h) as subsections (h) and (i), respectively. 

25 (22) In section 8103(a), strike ‘‘Only’’ and substitute ‘‘Except as 

26 otherwise provided in this title, only’’. 

27 (23) In section 9307(b)(2)(A), strike ‘‘The’’ and substitute ‘‘the’’. 

28 (24) In section 12503(a), in the matter before paragraph (1), strike 

29 ‘‘delegee’’ and substitute ‘‘delegate’’. 

30 (25) In section 13102(a), insert ‘‘(26 U.S.C. 9504)’’ after ‘‘Internal 

31 Revenue Code of 1986’’. 

32 (26) In section 14305(a)— 

33 (A) in paragraph (1), strike ‘‘and sections 12106(c) and 

34 12108(c)’’ and substitute ‘‘of this subtitle and section 12116’’; 

35 (B) in paragraph (5), strike ‘‘section 4283 of the Revised Stat36 utes of the United States (46 App. U.S.C. 183)’’ and substitute 

37 ‘‘section 30506 of this title’’; 

38 (C) in paragraph (6), strike ‘‘sections 27 and 27A of the Act 

39 of June 5, 1920 (46 App. U.S.C. 883 and 883–1)’’ and substitute 

40 ‘‘sections 12118 and 12132 of this title’’; and 


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1 (D) in paragraph (7), strike ‘‘Act of July 14, 1956 (46 App. 

2 U.S.C. 883a)’’ and substitute ‘‘section 12139(b) of this title’’. 

3 (27) In section 31306(a), strike ‘‘section 9 or 37 of the Shipping 

4 Act, 1916 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56102 

5 or 56103 of this title’’. 

6 (28) In section 31308, strike ‘‘title XI of the Merchant Marine Act, 

7 1936 (46 App. U.S.C. 1271 et seq.)’’ and substitute ‘‘chapter 537 of 

8 this title’’. 

9 (29) In section 31322— 

10 (A) in subsection (a)(4)(A), strike ‘‘section 12102(c)’’ and sub11 stitute ‘‘section 12113(c)’’; 

12 (B) in subsection (a)(4)(E), strike ‘‘under section 12102(a)’’ 

13 and substitute ‘‘for purposes of documentation under section 

14 12103’’; and 

15 (C) in subsection (f)(2), strike ‘‘section 12102(c)’’ and sub16 stitute ‘‘section 12113(c)’’. 

17 (30) In section 31325(b)(3)(B), strike ‘‘section 9 or 37 of the Ship18 ping Act, 1936 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 

19 56101 or 56102 of this title’’. 

20 (31) In section 31326(b)— 

21 (A) in paragraph (1), strike ‘‘title XI of the Merchant Marine 

22 Act, 1936 (46 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘chapter 

23 537 of this title,’’; and 

24 (B) in paragraph (2), strike ‘‘title XI of that Act’’ and sub25 stitute ‘‘chapter 537 of this title’’. 

26 (32) In section 31329— 

27 (A) in subsection (a)(1), strike ‘‘section 12102’’ and substitute 

28 ‘‘section 12103’’; and 

29 (B) in subsection (b)— 

30 (i) in paragraph (2), strike ‘‘section 902 of the Merchant 

31 Marine Act, 1936 (46 App. U.S.C. 1242)’’ and substitute 

32 ‘‘chapter 563 of this title’’; and 

33 (ii) in paragraph (3), strike ‘‘sale foreign within the terms 

34 of the first proviso of section 27 of the Merchant Marine Act, 

35 1920 (46 App. U.S.C. 883)’’ and substitute ‘‘sale to a person 

36 not a citizen of the United States under section 12132 of this 

37 title’’. 

38 (33)(A) Sections 70118 and 70119, as added by section 801(a) of 

39 the Coast Guard and Maritime Transportation Act of 2004 (Public 

40 Law 108–293, 118 Stat. 1078), are redesignated as sections 70117 


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1 and 70118, respectively, and moved to appear immediately after section 

2 70116 of title 46, United States Code. 

3 (B) Sections 70117 and 70118, as added by section 802(a)(2) of 

4 such Act, are redesignated as sections 70120 and 70121, respectively, 

5 and moved to appear immediately after section 70119 of title 46, 

6 United States Code. 

7 (C) In section 70120(a) (as redesignated by subparagraph (B)), 

8 strike ‘‘section 70120’’ and substitute ‘‘section 70119’’. 

9 (D) In section 70121(a) (as redesignated by subparagraph (B))— 

10 (i) strike ‘‘section 70120’’ and substitute ‘‘section 70119’’; and 

11 (ii) strike ‘‘section 4197 of the Revised Statutes of the United 

12 States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 of this 

13 title’’. 

14 (E) In the analysis of chapter 701, strike the items relating to sec15 tions 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.’’. 

16 SEC. 16. RECREATIONAL BOATING SAFETY TECHNICAL AMENDMENTS. 

17 (a) SECTION 2102.—Section 2102 of title 46, United States Code, is 

18 amended by— 

19 (1) striking subsection (a); and 

20 (2) striking the subsection (b) designation. 

21 (b) CHAPTER 131.—Chapter 131 of title 46, United States Code, is 

22 amended as follows: 

23 (1) Redesignate sections 13101 to 13106 as sections 13102 to 

24 13107. 

25 (2) Insert as the first section the following: 

26 ‘‘§ 13101. Definitions 

27 ‘‘In this chapter: 

28 ‘‘(1) ELIGIBLE STATE.—The term ‘eligible State’ means a State that 

29 has a State recreational boating safety program accepted by the Sec30 retary. 

31 ‘‘(2) STATE RECREATIONAL BOATING SAFETY PROGRAM.—The term 

32 ‘State recreational boating safety program’ means education, assist33 ance, and enforcement activities conducted for maritime casualty pre34 vention, reduction, and reporting for recreational boating.’’. 

35 (3) In the chapter analysis, redesignate items 13101 to 13106 as 

36 items 13102 to 13107 and insert as the first item the following: 

‘‘13101. Definitions.’’. 

37 (c) CROSS REFERENCES.— 


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1 (1) Section 4 of the Dingell-Johnson Sport Fish Restoration Act (16 

2 U.S.C. 777c) is amended by striking ‘‘13106’’ wherever appearing and 

3 substituting ‘‘13107’’. 

4 (2) Section 9504(c) of the Internal Revenue Code of 1986 (26 

5 U.S.C. 9504(c)) is amended by striking ‘‘section 13106’’ and sub6 stituting ‘‘section 13107’’. 

7 (3) Section 13102(c) of title 46, United States Code, as redesignated 

8 by subsection (b), is amended by striking ‘‘section 13103’’ and sub9 stituting ‘‘section 13104’’. 

10 (4) Section 13103(c) of title 46, United States Code, as redesignated 

11 by subsection (b), is amended by striking ‘‘section 13106’’ and sub12 stituting ‘‘section 13107’’. 

13 (5) Section 13107(a)(1) of title 46, United States Code, as redesig14 nated by subsection (b), is amended by striking ‘‘section 13103’’ and 

15 substituting ‘‘section 13104’’. 

16 (6) Section 13108(a) of title 46, United States Code, is amended 

17 by— 

18 (A) striking ‘‘section 13103’’ and substituting ‘‘section 13104’’; 

19 and 

20 (B) striking ‘‘section 13105’’ and substituting ‘‘section 13106’’. 

21 (7) Section 31322(d)(1)(A) of title 46, United States Code, is 

22 amended by striking ‘‘section 13106(b)(8)’’ and substituting ‘‘section 

23 13107(b)(8)’’. 

24 SEC. 17. CONFORMING AMENDMENTS TO OTHER LAWS. 

25 (a) TITLE 10.—Title 10, United States Code, is amended as follows: 

26 (1) In section 374(b)(4)(A)(iv), strike ‘‘The Maritime Drug Law En27 forcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘Chapter 

28 705 of title 46’’. 

29 (2) In section 2218(d)(2), strike ‘‘sections 508 and 510 of the Mer30 chant Marine Act of 1936 (46 U.S.C. App. 1158, 1160), shall be de31 posited in the Fund’’ and substitute ‘‘sections 57101–57104 and chap32 ter 573 of title 46’’. 

33 (3) In section 2350b(g)(2), strike ‘‘section 901(b) of the Merchant 

34 Marine Act, 1936 (46 U.S.C. App. 1241(b))’’ and substitute ‘‘section 

35 55305 of title 46’’. 

36 (4) In section 2645— 

37 (A) in subsection (c), strike ‘‘the second sentence of section 

38 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

39 1288(a))’’ and substitute ‘‘section 53909(b) of title 46’’; 


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1 (B) in subsection (h)(1), strike ‘‘title XII of the Merchant Ma2 rine Act, 1936 (46 U.S.C. App. 1281 et seq.),’’ and substitute 

3 ‘‘chapter 539 of title 46’’; and 

4 (C) in subsection (h)(2), strike ‘‘the first sentence of section 

5 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

6 1288(a))’’ and substitute ‘‘section 53909(a) of title 46’’. 

7 (5) In section 5985, strike ‘‘section 1304 of the Merchant Marine 

8 Act, 1936 (46 U.S.C. App. 1295c),’’ and substitute ‘‘chapter 515 of 

9 title 46’’. 

10 (6) In section 7721(a), strike ‘‘the Act of March 3, 1925 (commonly 

11 referred to as the ‘Public Vessels Act’) (46 U.S.C. App. 781–790)’’ and 

12 substitute ‘‘chapter 311 of title 46’’. 

13 (b) TITLE 11.—Title 11, United States Code, is amended as follows: 

14 (1) In section 362(b)— 

15 (A) in paragraph (12), strike ‘‘section 207 or title XI of the 

16 Merchant Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 

17 46 or section 109(h) of title 49’’; and 

18 (B) in paragraph (13), strike ‘‘section 207 or title XI of the 

19 Merchant Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 

20 46’’. 

21 (2) In section 1110(a)(3)(A)(ii), strike ‘‘documented vessel (as de22 fined in section 30101(1) of title 46)’’ and substitute ‘‘vessel docu23 mented under chapter 121 of title 46’’. 

24 (c) TITLE 14.—Sections 821(b) and 823a(b) of title 14, United States 

25 Code, are each amended by striking paragraphs (3)–(5) and substituting the 

26 following: 

27 ‘‘(3) Section 30101 of title 46 (popularly known as the Admiralty 

28 Extension Act). 

29 ‘‘(4) Chapter 309 of title 46 (known as the Suits in Admiralty Act). 

30 ‘‘(5) Chapter 311 of title 46 (known as the Public Vessels Act).’’. 

31 (d) TITLE 18.—Title 18, United States Code, is amended as follows: 

32 (1) In section 229F(9)(C), strike ‘‘section 3(b) of the Maritime Drug 

33 Enforcement Act, as amended (46 U.S.C., App. sec. 1903(b))’’ and 

34 substitute ‘‘section 70502(b) of title 46, United States Code’’. 

35 (2) In section 507— 

36 (A) in the first paragraph, strike ‘‘recording, registry, or enroll37 ment of any vessel, in the office of any collector of the customs, 

38 or a license to any vessel for carrying on the coasting trade or 

39 fisheries of the United States’’ and substitute ‘‘documentation of 

40 any vessel’’; 

41 (B) in the first paragraph, strike ‘‘collector or other’’; and 


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1 (C) in the second paragraph, strike ‘‘license,’’. 

2 (3) In section 924— 

3 (A) in subsections (c)(2), (e)(2)(A)(i), (g)(2), and (k)(1), strike 

4 ‘‘the Maritime Drug Law Enforcement Act (46 U.S.C. App. 1901 

5 et seq.)’’ and substitute ‘‘chapter 705 of title 46’’; and 

6 (B) in subsection (g)(2), strike ‘‘802 et seq.’’ and substitute 

7 ‘‘801 et seq.’’. 

8 (4) In section 929(a)(2), strike ‘‘the Maritime Drug Law Enforce9 ment Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chapter 705 

10 of title 46’’. 

11 (5) In section 965(a), strike ‘‘section 4197 of the Revised Statutes 

12 of the United States (46 U.S.C. App. 91)’’ and substitute ‘‘section 

13 60105 of title 46’’. 

14 (6) In section 2277(a), strike ‘‘registered, enrolled, or licensed’’ and 

15 substitute ‘‘documented’’. 

16 (7) In section 3142(e) and (f)(1)(C), strike ‘‘the Maritime Drug Law 

17 Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chap18 ter 705 of title 46’’. 

19 (e) INTERNAL REVENUE CODE OF 1986.—The Internal Revenue Code of 

20 1986 (26 U.S.C. 1 et seq.) is amended as follows: 

21 (1) In section 56(c)(2)— 

22 (A) strike ‘‘section 607 of the Merchant Marine Act, 1936 (46 

23 U.S.C. 1177)’’ and substitute ‘‘chapter 535 of title 46, United 

24 States Code’’; and 

25 (B) in subparagraphs (A) and (B), strike ‘‘such section 607’’ 

26 substitute ‘‘such chapter 535’’. 

27 (2) In section 140(a)(4), strike ‘‘section 607(d) of the Merchant Ma28 rine Act, 1936 (46 U.S.C. 1177)’’ and substitute ‘‘section 53507 of 

29 title 46, United States Code’’. 

30 (3) In section 543(a)(1)(B), strike ‘‘section 511 or 607 of the Mer31 chant Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)’’ and sub32 stitute ‘‘chapter 533 or 535 of title 46, United States Code’’. 

33 (4) In section 1023(2), strike ‘‘section 511 of the Merchant Marine 

34 Act, 1936, as amended (46 U.S.C. 1161)’’ and substitute ‘‘chapter 533 

35 of title 46, United States Code’’. 

36 (5) In section 1061— 

37 (A) in paragraph (1), strike ‘‘section 510 of the Merchant Ma38 rine Act, 1936, see subsection (e) of that section, as amended Au39 gust 4, 1939 (46 U.S.C. App. 1160)’’ and substitute ‘‘chapter 573 

40 of title 46, United States Code, see section 57307 of title 46’’; 


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1 (B) in paragraph (2), strike ‘‘section 511 of such Act, as 

2 amended (46 U.S.C. App. 1161)’’ and substitute ‘‘chapter 533 of 

3 title 46, United States Code’’; and 

4 (C) strike paragraph (3). 

5 (6) In section 7518— 

6 (A) in subsection (a)(1), strike ‘‘section 607 of the Merchant 

7 Marine Act, 1936’’ and substitute ‘‘chapter 535 of title 46 of the 

8 United States Code’’; 

9 (B) in subsections (a)(2) and (c)(1)(A) and (D), strike ‘‘section 

10 607 of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter 

11 535 of title 46, United States Code’’; and 

12 (C) in subsection (g)(3)(C)(iii), strike ‘‘Merchant Marine Act of 

13 1936’’ and substitute ‘‘Merchant Marine Act, 1936,’’. 

14 (f) TITLE 28.—Title 28, United States Code, is amended as follows: 

15 (1) In section 994(h)(1)(B) and (2)(B), strike ‘‘the Maritime Drug 

16 Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute 

17 ‘‘chapter 705 of title 46’’. 

18 (2) In section 1605(d), strike ‘‘the Ship Mortgage Act, 1920 (46 

19 U.S.C. 911 and following)’’ and ‘‘that Act’’ and substitute ‘‘section 

20 31301 of title 46’’ and ‘‘chapter 313 of title 46’’, respectively. 

21 (3) In section 2342(3)— 

22 (A) in subparagraph (A), strike ‘‘section 2, 9, 37, or 41 of the 

23 Shipping Act, 1916 (46 U.S.C. App. 802, 803, 808, 835, 839, and 

24 841a)’’ and substitute ‘‘section 50501, 50502, 56101–56104, or 

25 57109 of title 46’’; and 

26 (B) strike subparagraph (B) and substitute the following: 

27 ‘‘(B) the Federal Maritime Commission issued pursuant to sec28 tion 305, 41304, 41308, or 41309 or chapter 421 or 441 of title 

29 46;’’. 

30 (4) In section 2680(d), strike ‘‘sections 741–752, 781–790 of Title 

31 46,’’ and substitute ‘‘chapter 309 or 311 of title 46’’. 

32 (g) TITLE 40.—Title 40, United States Code, is amended as follows: 

33 (1) In section 548, strike ‘‘the Merchant Marine Act, 1936 (46 App. 

34 U.S.C. 1101 et seq.),’’ and substitute ‘‘part F of subtitle V of title 46’’. 

35 (2) In section 3134(b), strike ‘‘the Merchant Marine Act, 1936 (46 

36 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘subtitle V of title 46’’. 

37 (3) In section 3313(a)— 

38 (A) in the matter before paragraph (1), strike ‘‘Except for the 

39 authority contained in section 3305(b) of this title, the’’ and sub40 stitute ‘‘The’’; and 


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1 (B) in paragraph (1), strike ‘‘shall’’ and substitute ‘‘shall, ex2 cept for the authority contained in section 3305(b) of this title,’’. 

3 (h) TITLE 49.—Title 49, United States Code, is amended as follows: 

4 (1) In section 5122(c)(1), strike ‘‘Secretary of the Treasury’’ and 

5 ‘‘section 4197 of the Revised Statutes of the United States (46 App. 

6 U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and 

7 ‘‘section 60105 of title 46’’, respectively. 

8 (2) In section 5901(3)(B), strike ‘‘section 3 of the Shipping Act of 

9 1984 (46 App. U.S.C. 1702)’’ and substitute ‘‘section 40102 of title 

10 46’’. 

11 (i) MISCELLANEOUS.—Section 5501(a) of the Oceans Act of 1992 (Public 

12 Law 102–587, 106 Stat. 5084) is amended by adding the following: 

13 ‘‘(3) The exceptions provided by paragraph (2) shall apply under section 

14 55109 of title 46, United States Code, to the same extent as under former 

15 section 1 of the Act of May 28, 1906, as amended by paragraph (1).’’ 

16 SEC. 18. TRANSITIONAL AND SAVINGS PROVISIONS. 

17 (a) CUTOFF DATE.—This Act replaces certain provisions enacted on or 

18 before April 30, 2005. If a law enacted after that date amends or repeals 

19 a provision replaced by this Act, that law is deemed to amend or repeal, 

20 as the case may be, the corresponding provision enacted by this Act. If a 

21 law enacted after that date is otherwise inconsistent with this Act, it super22 sedes this Act to the extent of the inconsistency. 

23 (b) ORIGINAL DATE OF ENACTMENT UNCHANGED.—For purposes of de24 termining whether one provision supersedes another based on enactment 

25 later in time, the date of enactment of a provision enacted by this Act is 

26 deemed to be the date of enactment of the provision it replaced. 

27 (c) REFERENCES TO PROVISIONS REPLACED.—A reference to a provision 

28 replaced by this Act is deemed to refer to the corresponding provision en29 acted by this Act. 

30 (d) LAWS GOVERNING APPLICABILITY OF PRIOR AMENDMENTS.—This 

31 Act does not affect any law governing the applicability of an amendment 

32 to a provision replaced by this Act, notwithstanding the repeal by this Act 

33 of the provision that was amended. To the extent that any such law gov34 erned the applicability of a provision replaced by this Act, that law governs 

35 the applicability of the corresponding provision enacted by this Act. 

36 (e) REGULATIONS, ORDERS, AND OTHER ADMINISTRATIVE ACTIONS.—A 

37 regulation, order, or other administrative action in effect under a provision 

38 replaced by this Act continues in effect under the corresponding provision 

39 enacted by this Act. 

40 (f) ACTIONS TAKEN AND OFFENSES COMMITTED.—An action taken or an 

41 offense committed under a provision replaced by this Act is deemed to have 


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1 been taken or committed under the corresponding provision enacted by this 

2 Act. 

3 SEC. 19. REPEALS. 

4 The following provisions are repealed, except with respect to rights and 

5 duties that matured, penalties that were incurred, or proceedings that were 

6 begun before the date of enactment of this Act: 

Revised Statutes 

Revised Statutes Section 

United States Code 

Title Section 

2792 ............................................................................ 46 App. 124 

4136 ............................................................................ 46 App. 14 

4173 ............................................................................ 46 App. 42 

4184 ............................................................................ 46 App. 57 

4188 ............................................................................ 46 App. 59 

4197 ............................................................................ 46 App. 91 

4202 ............................................................................ 46 App. 97 

4204 ............................................................................ 46 App. 98 

4206 ............................................................................ 46 App. 100 

4219 ............................................................................ 46 App. 121 

4220 ............................................................................ 46 App. 122 

4221 ............................................................................ 46 App. 125 

4225 ............................................................................ 46 App. 128 

4226 ............................................................................ 46 App. 129 

4227 ............................................................................ 46 App. 135 

4228 ............................................................................ 46 App. 141 

4238 ............................................................................ 46 App. 721 

4239 ............................................................................ 46 App. 722 

4240 ............................................................................ 46 App. 723 

4241 ............................................................................ 46 App. 724 

4281 ............................................................................ 46 App. 181 

4282 ............................................................................ 46 App. 182 

4283 ............................................................................ 46 App. 183 

4283A .......................................................................... 46 App. 183b 

4283B .......................................................................... 46 App. 183c 

4284 ............................................................................ 46 App. 184 

4285 ............................................................................ 46 App. 185 

4286 ............................................................................ 46 App. 186 

4287 ............................................................................ 46 App. 187 

4289 ............................................................................ 46 App. 188 

4309 ............................................................................ 46 App. 354 

4310 ............................................................................ 46 App. 355 

4311 ............................................................................ 46 App. 251 

4320 ............................................................................ 46 App. 262 

4336 ............................................................................ 46 App. 277 

4370 ............................................................................ 46 App. 316 

4373 ............................................................................ 46 App. 321 

4374 ............................................................................ 46 App. 322 

4375 ............................................................................ 46 App. 323 

4376 ............................................................................ 46 App. 324 

4378 ............................................................................ 46 App. 326 

4379 ............................................................................ 46 App. 327 

4380 ............................................................................ 46 App. 328 

4493 ............................................................................ 46 App. 491 

Statutes at Large 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

1874 

Apr. 18 110 ............................................................... 18 31 ................. 336 

1878 

June 19 324 ............................................................... 20 175 ............... 725 

1884 

June 26 121 14 ......................................................... 23 57 ................. 121 

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 


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Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

1892 

July 26 248 1 ........................................................... 27 267 ............... 144 

2 ........................................................... 27 268 ............... 145 

1893 

Feb. 13 105 1 ........................................................... 27 445 ............... 190 

2 ........................................................... 27 445 ............... 191 

3 ........................................................... 27 445 ............... 192 

4 ........................................................... 27 445 ............... 193 

5 ........................................................... 27 446 ............... 194 

6 ........................................................... 27 446 ............... 196 

7 ........................................................... 27 446 ............... 195 

8 ........................................................... 27 446 ............... 190 nt 

Oct. 31 No. 13 ............................................................... 28 13 ................. 726 

1898 

Feb. 17 26 1 ........................................................... 30 248 ............... 290 

3 ........................................................... 30 248 ............... 291 

1900 

Mar. 31 120 1–3 ....................................................... 31 58 ................. 163 

1906 

May 28 2566 1 (except as may be applicable under 

section 5501(a)(2) of Pub. L. 102– 

587).

34 204 ............... 292 

1908 

Mar. 24 96 1 ........................................................... 35 46 ................. 133 

2 ........................................................... 35 46 ................. 134 

May 28 212 5 ........................................................... 35 425 ............... 104 

1909 

Aug. 5 6 36 ......................................................... 36 111 ............... 121 

1910 

Mar. 8 86 ............................................................... 36 234 ............... 132 

1912 

Aug. 1 268 1 ........................................................... 37 242 ............... 727 

3 ........................................................... 37 242 ............... 729 

4 ........................................................... 37 242 ............... 730 

5 ........................................................... 37 242 ............... 731 

1913 

Oct. 3 16 IV(J)(1)–(3) ......................................... 38 195 ............... 19 U.S.C. 

128, 130, 

131; 

46 App. 146 

1915 

Mar. 4 153 20 ......................................................... 38 1185 ............. 688 

171 ............................................................... 38 1193 ............. 19 U.S.C. 

128, 131; 

46 App. 121, 

128, 146 

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 


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Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

Mar. 30 111 1 ........................................................... 41 537 ............... 761 

2 ........................................................... 41 537 ............... 762 

4 ........................................................... 41 537 ............... 764 

5 ........................................................... 41 537 ............... 765 

6 ........................................................... 41 537 ............... 766 

7 ........................................................... 41 538 ............... 767 

8 ........................................................... 41 538 ............... 768 

June 5 250 1 ........................................................... 41 988 ............... 861 

6 ........................................................... 41 991 ............... 865 

7 ........................................................... 41 991 ............... 866 

8 ........................................................... 41 992 ............... 867 

9 ........................................................... 41 992 ............... 868 

10 ......................................................... 41 992 ............... 869 

12 ......................................................... 41 993 ............... 871 

13 ......................................................... 41 993 ............... 872 

17 ......................................................... 41 994 ............... 875 

19 ......................................................... 41 995 ............... 876 

21 ......................................................... 41 997 ............... 877 

27 ......................................................... 41 999 ............... 883 

27A ....................................................... ........ ...................... 883–1 

28 ......................................................... 41 999 ............... 884 

36 ......................................................... 41 1007 ............. 887 

37 ......................................................... 41 1008 ............. 888 

39 ......................................................... 41 1008 ............. 889 

1925 

Mar. 3 428 1 ........................................................... 43 1112 ............. 781 

2 ........................................................... 43 1112 ............. 782 

3 ........................................................... 43 1112 ............. 783 

4 ........................................................... 43 1112 ............. 784 

5 ........................................................... 43 1113 ............. 785 

6 ........................................................... 43 1113 ............. 786 

7 ........................................................... 43 1113 ............. 787 

8 ........................................................... 43 1113 ............. 788 

9 ........................................................... 43 1113 ............. 789 

10 ......................................................... 43 1113 ............. 790 

1928 

May 22 675 1 ........................................................... 45 689 ............... 891 

202 ....................................................... 45 690 ............... 891b 

203 ....................................................... 45 690 ............... 891c 

703 ....................................................... 45 698 ............... 891u 

704 ....................................................... 45 698 ............... 891v 

705 ....................................................... 45 698 ............... 891w 

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 


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Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

703 ....................................................... 49 2008 ............. 1193 

704 ....................................................... 49 2008 ............. 1194 

705 ....................................................... 49 2009 ............. 1195 

706 ....................................................... 49 2009 ............. 1196 

707 ....................................................... 49 2009 ............. 1197 

708 ....................................................... 49 2009 ............. 1198 

709 ....................................................... 49 2010 ............. 1199 

710 ....................................................... 49 2010 ............. 1200 

711 ....................................................... 49 2010 ............. 1201 

712 ....................................................... 49 2010 ............. 1202 

713 ....................................................... 49 2010 ............. 1203 

714 ....................................................... 49 2011 ............. 1204 

715 ....................................................... ........ ...................... 1205 

805 ....................................................... 49 2012 ............. 1223 

806(b)–(d) ............................................ 49 2014 ............. 1228 

808 ....................................................... 49 2015 ............. 1226 

809(b) ................................................... ........ ...................... 1213 

810 ....................................................... 49 2015 ............. 1227 

901 ....................................................... 49 2015 ............. 1241 

901a ...................................................... ........ ...................... 1241e 

901b ..................................................... ........ ...................... 1241f 

901c ...................................................... ........ ...................... 1241g 

901d..................................................... ........ ...................... 1241h 

901e ...................................................... ........ ...................... 1241i 

901f ...................................................... ........ ...................... 1241j 

901g ..................................................... ........ ...................... 1241k 

901h ..................................................... ........ ...................... 1241l 

901i ...................................................... ........ ...................... 1241m 

901j ...................................................... ........ ...................... 1241n 

901k ..................................................... ........ ...................... 1241o 

902 ....................................................... 49 2015 ............. 1242 

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 


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274 

•HR 1442 RS 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 

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 


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Date Chapter or 

Public Law Section 

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(46 App. unless otherwise 

specified) 

Volume Page 

204 ....................................................... 96 1589 ............. 446 

205 ....................................................... 96 1589 ............. 446a 

206 ....................................................... 96 1590 ............. 446b 

207 ....................................................... 96 1590 ............. 446c 

1984 

Mar. 20 98–237 1 ........................................................... 98 67 ................. 1701 nt 

2 ........................................................... 98 67 ................. 1701 

3 ........................................................... 98 67 ................. 1702 

4 ........................................................... 98 70 ................. 1703 

5 ........................................................... 98 70 ................. 1704 

6 ........................................................... 98 72 ................. 1705 

7 ........................................................... 98 73 ................. 1706 

8 ........................................................... 98 74 ................. 1707 

9 ........................................................... 98 76 ................. 1708 

10 ......................................................... 98 77 ................. 1709 

11 ......................................................... 98 80 ................. 1710 

12 ......................................................... 98 81 ................. 1711 

13 ......................................................... 98 82 ................. 1712 

14 ......................................................... 98 83 ................. 1713 

15 ......................................................... 98 84 ................. 1714 

16 ......................................................... 98 84 ................. 1715 

17 ......................................................... 98 84 ................. 1716 

19 ......................................................... 98 87 ................. 1718 

20(e) ..................................................... 98 90 ................. 1719 

Oct. 5 98–454 302 ....................................................... 98 1734 ............. 808a 

Oct. 30 98–563 ............................................................... 98 2916 ............. 289c 

1985 

Dec. 23 99–198 1141 ..................................................... 99 1490 ............. 1241d 

1143 ..................................................... 99 1496 ............. 1241p 

1986 

Aug. 27 99–399 902 ....................................................... 100 889 ............... 1801 

905 ....................................................... 100 890 ............... 1802 

907 ....................................................... 100 891 ............... 1803 

908 ....................................................... 100 891 ............... 1804 

909 ....................................................... 100 892 ............... 1805 

910 ....................................................... 100 892 ............... 1806 

911 ....................................................... 100 892 ............... 1807 

912 ....................................................... 100 892 ............... 1808 

913 ....................................................... 100 892 ............... 1809 

1987 

Dec. 22 100–202 101(a) [title V (par. under heading 

‘‘Ocean Freight Differential’’)].

101 1329, ............

1329–27 .......

1241h nt 

101(a) [title V (4th proviso on p. 

1329-28)].

101 1329, ............

1329–28 .......

1295c–1 

1988 

May 30 100–324 1 ........................................................... 102 576 ............... 2001 nt 

2 ........................................................... 102 576 ............... 2001 

3 ........................................................... 102 576 ............... 2002 

4 ........................................................... 102 576 ............... 2003 

5 ........................................................... 102 576 ............... 2004 

6 ........................................................... 102 577 ............... 2005 

7 ........................................................... 102 577 ............... 2006 

8 ........................................................... 102 577 ............... 2007 

Aug. 23 100–418 10002 ................................................... 102 1570 ............. 1710a 

1989 

Oct. 13 101–115 4 ........................................................... 103 692 ............... 1295c nt 

8 ........................................................... 103 694 ............... 1121–2 

1990 

Nov. 28 101–624 1521 ..................................................... 104 3665 ............. 1241q 

1522 ..................................................... 104 3665 ............. 1241r 

1523 ..................................................... 104 3666 ............. 1241s 

1524 ..................................................... 104 3667 ............. 1241t 

1526 ..................................................... 104 3668 ............. 1241u 

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 


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Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

Nov. 13 105–383 502–504 ............................................... 112 3445 ............. 46 U.S.C. 

12106 nt 

2000 

Oct. 30 106–398 1 [§ 3506] ............................................. 114 1654, ............

1654A–494 ...

1118 nt 

2002 

Nov. 25 107–295 403 ....................................................... 116 2114 ............. 46 U.S.C. 

12119 nt 

404 ....................................................... 116 2114 ............. 316a 

2003 

Nov. 24 108–136 3527 ..................................................... 117 1802 ............. 1280b 

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 


pwalker on PRODPC60 with BILLS

pwalker on PRODPC60 with BILLS
Calendar No. 594 

109TH CONGRESS 

2D SESSION H. R. 1442 

AN ACT 

To complete the codification of title 46, United 

States Code, ‘‘Shipping’’, as positive law. 

SEPTEMBER 7 (legislative day, SEPTEMBER 6), 2006 

Reported without amendment 


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