IB 

House Calendar No. 224 

108TH CONGRESS 

2D SESSION H. R. 4319 

[Report No. 108–690] 

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

as positive law. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 10, 2004 

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

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

SEPTEMBER 17, 2004 

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

to be printed 

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

[For text of introduced bill, see copy of bill as introduced on May 10, 2004] 

A BILL 

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

‘‘Shipping’’, as positive law. 

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

2 States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the ‘‘Title 46 Codification 

5 Act of 2004’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Title analysis. 
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Sec. 3. Subtitle I of title 46. 

Sec. 4. Subtitle II of title 46. 

Sec. 5. Subtitle III of title 46. 

Sec. 6. Subtitle IV of title 46. 

Sec. 7. Subtitle V of title 46. 

Sec. 8. Subtitle VI of title 46. 

Sec. 9. Subtitle VII of title 46. 

Sec. 10. Subtitle VIII of title 46. 

Sec. 11. Maritime Administration. 

Sec. 12. Amendments relating to Maritime Security Act of 2003. 

Sec. 13. Amendments to partially restated provisions. 

Sec. 14. Additional amendments to title 46. 

Sec. 15. Conforming amendments to other laws. 

Sec. 16. Legislative construction and transitional provisions. 

Sec. 17. Repeals. 

Sec. 18. Effective date. 

1 SEC. 2. TITLE ANALYSIS. 

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

3 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’’. 

4 SEC. 3. SUBTITLE I OF TITLE 46. 

5 Title 46, United States Code, is amended by inserting after the title anal6 ysis the following: 

7 ‘‘Subtitle I—General 

‘‘Chapter Sec. 

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

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

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

8 ‘‘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. 

9 ‘‘§ 101. Agency 

10 ‘‘In this title, the term ‘agency’ means a department, agency, or instrumen11 tality of the United States Government. 
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1 ‘‘§ 102. Barge 

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

3 ‘‘§ 103. Boundary Line 

4 ‘‘In this title, the term ‘Boundary Line’ means a line established under sec5 tion 2(b) of the Act of February 19, 1895 (33 U.S.C. 151). 

6 ‘‘§ 104. Citizen of the United States 

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

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

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

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

11 ‘‘§ 105. Consular officer 

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

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

14 ‘‘§ 106. Documented vessel 

15 ‘‘In this title, the term ‘documented vessel’ means a vessel for which a cer16 tificate of documentation has been issued under chapter 121 of this title. 

17 ‘‘§ 107. Exclusive economic zone 

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

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

20 ‘‘§ 108. Fisheries 

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

22 (except in foreign commerce), planting, cultivating, catching, taking, or har23 vesting fish, shellfish, marine animals, pearls, shells, or marine vegetation in 

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

25 ‘‘§ 109. Foreign commerce or trade 

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

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

28 place in a foreign country. 

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

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

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

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

33 ‘foreign trade’ also include, in the case of liquid and dry bulk cargo carrying 

34 services, trading between foreign ports in accordance with normal commercial 

35 bulk shipping practices in a manner that will permit United States-flag bulk 

36 vessels to compete freely with foreign-flag bulk vessels in their operation or 

37 competition for charters, subject to regulations prescribed by the Secretary of 

38 Transportation. 

39 ‘‘§ 110. Foreign vessel 

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

41 operated under the authority of a foreign country. 
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1 ‘‘§ 111. Numbered vessel 

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

3 has been issued under chapter 123 of this title. 

4 ‘‘§ 112. State 

5 ‘‘In this title, the term ‘State’ means a State of the United States, the Dis6 trict of Columbia, Guam, Puerto Rico, the Virgin Islands, American Samoa, 

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

8 United States. 

9 ‘‘§ 113. Undocumented 

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

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

12 ‘‘§ 114. United States 

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

14 means the States of the United States, the District of Columbia, Guam, Puer15 to Rico, the Virgin Islands, American Samoa, the Northern Mariana Islands, 

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

17 ‘‘§ 115. Vessel 

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

19 3 of title 1. 

20 ‘‘§ 116. Vessel of the United States 

21 ‘‘In this title, the term ‘vessel of the United States’ means a vessel docu22 mented under chapter 121 of this title, numbered under chapter 123 of this 

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

24 ‘‘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. 

25 ‘‘§ 301. General organization 

26 ‘‘(a) ORGANIZATION.—The Federal Maritime Commission is an inde27 pendent establishment of the United States Government. 

28 ‘‘(b) COMMISSIONERS.— 

29 ‘‘(1) COMPOSITION.—The Commission is composed of 5 Commis30 sioners, appointed by the President by and with the advice and consent 

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

32 the same political party. 

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

34 term beginning one year apart. An individual appointed to fill a va35 cancy is appointed only for the unexpired term of the individual being 

36 succeeded. A vacancy shall be filled in the same manner as the original 
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1 appointment. When the term of a Commissioner ends, the Commissioner 

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

3 ‘‘(3) REMOVAL.—The President may remove a Commissioner for inef4 ficiency, neglect of duty, or malfeasance in office. 

5 ‘‘(c) CHAIRMAN.— 

6 ‘‘(1) DESIGNATION.—The President shall designate one of the Commis7 sioners as Chairman. 

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

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

10 powers of the Commission (other than under paragraph (3)), the Chair11 man is subject to the policies, regulatory decisions, findings, and deter12 minations of the Commission. 

13 ‘‘(3) PARTICULAR DUTIES.— 

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

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

16 Commission; 

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

18 only after consultation with the other Commissioners; 

19 ‘‘(iii) distribute the business of the Commission among per20 sonnel and organizational units; 

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

22 purposes; and 

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

24 to perform duties and powers delegated by the Commission 

25 under section 304 of this title. 

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

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

28 in the offices of Commissioners other than the Chairman. 

29 ‘‘(4) DELEGATION.—The Chairman may designate officers and em30 ployees under the Chairman’s jurisdiction to perform duties and powers 

31 of the Chairman, subject to the Chairman’s supervision and direction. 

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

33 recognized. 

34 ‘‘§ 302. Quorum 

35 ‘‘A vacancy or vacancies in the membership of the Federal Maritime Com36 mission do not impair the power of the Commission to execute its functions. 

37 The affirmative vote of a majority of the Commissioners serving on the Com38 mission is required to dispose of any matter before the Commission. 
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1 ‘‘§ 303. Record of meetings and votes 

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

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

4 financial transaction of the Commission. 

5 ‘‘§ 304. Delegation of authority 

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

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

8 Commissioner, an employee board, or an officer or employee of the Commis9 sion, any of its duties or powers, including those relating to hearing, deter10 mining, ordering, certifying, reporting, or otherwise acting on any matter. 

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

12 ‘‘(b) REVIEW.—The Commission may review any action taken under a del13 egation of authority under subsection (a). The review may be taken on the 

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

15 in the action, within the time and in the manner prescribed by the Commis16 sion. The vote of a majority of the Commission, less one member, is sufficient 

17 to bring an action before the Commission for review. 

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

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

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

21 of the Commission. 

22 ‘‘§ 305. Regulations 

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

24 its duties and powers. 

25 ‘‘§ 306. Annual report 

26 ‘‘(a) IN GENERAL.—Not later than April 1 of each year, the Federal Mari27 time Commission shall submit a report to Congress. The report shall include 

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

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

30 legislation. 

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

32 include in its annual report to Congress— 

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

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

35 trade with the United States; 

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

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

38 ‘‘(3) any actions being taken by the Commission to offset those condi39 tions; 

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

41 conditions; and 
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1 ‘‘(5) a list of petitions filed under section 42302(b) of this title that 

2 the Commission rejected and the reasons for each rejection. 

3 ‘‘§ 307. Expenditures 

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

5 necessary in the performance of its functions from funds appropriated or oth6 erwise made available to it, which appropriations are authorized. 

7 ‘‘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. 

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

9 ‘‘(a) ON REQUEST OF SECRETARY OF DEFENSE.—On request of the Sec10 retary of Defense, the head of an agency responsible for the administration 

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

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

13 defense. 

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

15 the administration of the navigation or vessel-inspection laws considers it nec16 essary in the interest of national defense, the individual may waive compli17 ance with those laws to the extent, in the manner, and on the terms the indi18 vidual prescribes. 

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

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

21 President may designate. 

22 ‘‘§ 502. Cargo exempt from forfeiture 

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

24 ‘‘(1) the cargo is owned in good faith by a person not the owner, mas25 ter, or crewmember of the vessel; and 

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

27 payment as provided by law. 

28 ‘‘§ 503. Notice of seizure 

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

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

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

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

33 ‘‘§ 504. Remission of fees and penalties 

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

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

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

37 date of the payment or forfeiture; and 
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1 ‘‘(2) it is found that the fee, tax, penalty, or forfeiture was improperly 

2 or excessively imposed. 

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

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

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

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

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

8 separate offense.’’. 

9 SEC. 4. SUBTITLE II OF TITLE 46. 

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

11 ‘‘CHAPTER 121—DOCUMENTATION OF VESSELS 

‘‘SUBCHAPTER I—GENERAL 

‘‘Sec. 

‘‘12101. Definitions. 

‘‘12102. Vessels requiring documentation. 

‘‘12103. General eligibility requirements. 

‘‘12104. Applications for documentation. 

‘‘12105. Issuance of documentation. 

‘‘12106. Surrender of title and number. 

‘‘12107. Wrecked vessels. 

‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL DOCUMENTATION 

‘‘12111. Registry endorsement. 

‘‘12112. Coastwise endorsement. 

‘‘12113. Fishery endorsement. 

‘‘12114. Recreational endorsement. 

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

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

‘‘12117. Oil spill response vessels. 

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

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

‘‘12120. Liquified gas tankers. 

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

‘‘SUBCHAPTER III—MISCELLANEOUS 

‘‘12131. Command of documented vessels. 

‘‘12132. Loss of coastwise trade privileges. 

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

‘‘12134. Evidentiary uses of documentation. 

‘‘12135. Invalidation of certificates of documentation. 

‘‘12136. Surrender of certificates of documentation. 

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

‘‘12138. List of documented vessels. 

‘‘12139. Reports. 

‘‘SUBCHAPTER IV—PENALTIES 

‘‘12151. Penalties. 

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

12 ‘‘SUBCHAPTER I—GENERAL 

13 ‘‘§ 12101. Definitions 

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

15 to have been rebuilt in the United States only if the entire rebuilding, includ16 ing the construction of any major component of the hull or superstructure, 

17 was done in the United States. 
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1 ‘‘(b) RELATED TERMS IN OTHER LAWS.—When the following terms are 

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

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

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

5 ‘register’, and ‘registry’ mean a certificate of documentation with a reg6 istry endorsement issued under this chapter. 

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

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

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

10 documentation with a coastwise endorsement issued under this chapter. 

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

12 documented. 

13 ‘‘§ 12102. Vessels requiring documentation 

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

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

16 an endorsement for that trade under this chapter. 

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

18 may engage in a trade without being documented if the vessel otherwise satis19 fies the requirements to engage in the particular trade. 

20 ‘‘(c) BARGES.—A barge qualified to engage in the coastwise trade may en21 gage in the coastwise trade, without being documented, on rivers, harbors, 

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

23 ‘‘§ 12103. General eligibility requirements 

24 ‘‘(a) IN GENERAL.—Except as otherwise provided, a certificate of docu25 mentation for a vessel may be issued under this chapter only if the vessel is— 

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

27 subsection (b); 

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

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

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

31 are eligible owners: 

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

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

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

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

36 the United States or a State. 

37 ‘‘(3) A partnership if— 

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

39 ‘‘(B) the controlling interest in the partnership is owned by citi40 zens of the United States. 

41 ‘‘(4) A corporation if— 
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1 ‘‘(A) it is incorporated under the laws of the United States or 

2 a State; 

3 ‘‘(B) its chief executive officer, by whatever title, and the chair4 man of its board of directors are citizens of the United States; and 

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

6 the number necessary to constitute a quorum. 

7 ‘‘(5) The United States Government. 

8 ‘‘(6) The government of a State. 

9 ‘‘(c) TEMPORARY CERTIFICATES PRIOR TO MEASUREMENT.—Notwith10 standing subsection (a)(2), the Secretary may issue a temporary certificate 

11 of documentation for a vessel before it is measured. 

12 ‘‘§ 12104. Applications for documentation 

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

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

15 application must be filed in the manner, be in the form, and contain the in16 formation prescribed by the Secretary. 

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

18 the applicant to provide— 

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

20 number; or 

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

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

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

24 the social security number of an individual who is a corporate offi25 cer, general partner, or individual trustee of the entity and who 

26 signs the application. 

27 ‘‘§ 12105. Issuance of documentation 

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

29 Secretary, on receipt of a proper application, shall issue a certificate of docu30 mentation or a temporary certificate of documentation for a vessel satisfying 

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

32 each endorsement under subchapter II of this chapter for which the owner ap33 plies and the vessel is eligible. 

34 ‘‘(b) TEMPORARY CERTIFICATES FOR RECREATIONAL VESSELS.—The Sec35 retary may delegate, subject to the supervision and control of the Secretary 

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

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

38 certificate of documentation for a recreational vessel eligible under section 

39 12103 of this title. A temporary certificate issued under this subsection is 

40 valid for not more than 30 days. 
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1 ‘‘(c) INFORMATION TO BE INCLUDED IN CERTIFICATE.—A certificate of 

2 documentation shall— 

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

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

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

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

7 shall prescribe procedures to ensure the integrity of, and the accuracy of infor8 mation contained in, certificates of documentation. 

9 ‘‘§ 12106. Surrender of title and number 

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

11 required to display numbers under chapter 123 of this title, and any certifi12 cate of title issued by a State for a documented vessel shall be surrendered 

13 as provided by regulations prescribed by the Secretary. 

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

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

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

17 the mortgagee consents. 

18 ‘‘§ 12107. Wrecked vessels 

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

20 it— 

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

22 and 

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

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

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

26 to determine whether a vessel satisfies subsection (a)(2). The costs of the ap27 praisal shall be paid by the owner of the vessel. 

28 ‘‘SUBCHAPTER II—ENDORSEMENTS AND SPECIAL 

29 DOCUMENTATION 

30 ‘‘§ 12111. Registry endorsement 

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

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

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

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

35 Wake, Midway, or Kingman Reef. 

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

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

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

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

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

41 vessel is subject to a charter to a citizen of the United States. 
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1 ‘‘(2) REQUIREMENTS FOR TRUST TO QUALIFY.— 

2 ‘‘(A) IN GENERAL.—Subject to subparagraph (B), a trust quali3 fies under this paragraph with respect to a vessel only if— 

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

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

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

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

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

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

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

11 25 percent of the aggregate power to influence or limit the exer12 cise of the authority of the trustee with respect to matters in13 volving any ownership or operation of the vessel that may ad14 versely affect the interests of the United States. 

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

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

17 in directing a trustee for a trust in matters involving any owner18 ship or operation of the vessel that may adversely affect the interests 

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

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

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

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

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

24 authority to so direct or remove a trustee. 

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

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

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

28 in a trust. 

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

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

31 a citizen of the United States under section 50501 of this title, the vessel 

32 is deemed to be owned by a citizen of the United States for purposes of 

33 that section and related laws, except subtitle B of title VI of the Merchant 

34 Marine Act, 1936. 

35 ‘‘§ 12112. Coastwise endorsement 

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

37 that— 

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

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

40 ‘‘(B) if not built in the United States— 
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1 ‘‘(i) was captured in war by citizens of the United States and 

2 lawfully condemned as prize; 

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

4 United States; or 

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

6 title; and 

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

8 in the coastwise trade. 

9 ‘‘(b) AUTHORIZED ACTIVITY.—Subject to the laws of the United States reg10 ulating the coastwise trade, a vessel for which a coastwise endorsement is 

11 issued may engage in the coastwise trade. 

12 ‘‘§ 12113. Fishery endorsement 

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

14 that— 

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

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

17 subsection (c); 

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

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

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

21 2001, for a breach of the laws of the United States; and 

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

23 in the fisheries. 

24 ‘‘(b) AUTHORIZED ACTIVITY.— 

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

26 the fisheries, a vessel for which a fishery endorsement is issued may en27 gage in the fisheries. 

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

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

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

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

32 a fishery endorsement. 

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

34 ‘‘(1) IN GENERAL.—A vessel owned by an entity is eligible for a fish35 ery endorsement only if at least 75 percent of the interest in the entity, 

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

37 by citizens of the United States. 

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

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

40 by citizens of the United States under paragraph (1), the Secretary shall 
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1 apply section 50501(d) of this title, except that for this purpose the terms 

2 ‘control’ or ‘controlled’— 

3 ‘‘(A) include the right to— 

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

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

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

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

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

9 with a fishery endorsement; but 

10 ‘‘(B) do not include the right to simply participate in the activi11 ties under clause (A), or the exercise of rights under loan or mort12 gage covenants by a mortgagee eligible to be a preferred mortgagee 

13 under section 31322(a) of this title, except that a mortgagee not eli14 gible to own a vessel with a fishery endorsement may only operate 

15 such a vessel to the extent necessary for the immediate safety of the 

16 vessel or for repairs, drydocking, or berthing changes. 

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

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

19 authority of the Western Pacific Fishery Management Council established 

20 under section 302(a)(1)(H) of the Magnuson-Stevens Fishery Conserva21 tion and Management Act (16 U.S.C. 1852(a)(1)(H)) or to a purse seine 

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

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

24 Fisheries Treaty, provided that the owner of the vessel continues to com25 ply with the eligibility requirements for a fishery endorsement under the 

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

27 issued pursuant to this paragraph is valid for engaging only in the ac28 tivities described in this paragraph. 

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

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

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

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

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

34 under chapter 143 of this title; or 

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

36 more than 3,000 shaft horsepower. 

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

38 for a fishery endorsement unless— 

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

40 and endorsed with a fishery endorsement that was effective on Sep41 tember 25, 1997; 
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1 ‘‘(ii) the vessel is not placed under foreign registry after October 

2 21, 1998; and 

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

4 1998, application is made for a new fishery endorsement within 15 

5 business days of the invalidation; or 

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

7 the regional fishery management council of jurisdiction established 

8 under section 302(a)(1) of the Magnuson-Stevens Fishery Conserva9 tion and Management Act (16 U.S.C. 1852(a)(1)) has recommended 

10 after October 21, 1998, and the Secretary of Commerce has ap11 proved, conservation and management measures in accordance with 

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

13 (16 U.S.C. 1851 note) to allow the vessel to be used in fisheries 

14 under the council’s authority. 

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

16 ‘‘(1) IN GENERAL.—The Administrator of the Maritime Administra17 tion shall administer subsections (c) and (d) with respect to vessels 100 

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

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

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

21 to demonstrate compliance with those provisions. 

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

23 conform to the extent practicable with the regulations establishing the 

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

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

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

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

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

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

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

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

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

33 provisions, with particular attention given to— 

34 ‘‘(A) leases, charters, mortgages, financing, and similar arrange35 ments; 

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

37 fishery endorsement under subsection (c) or (d), over the manage38 ment, sales, financing, or other operations of an entity; and 

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

40 time of all, or substantially all, of the living marine resources har41 vested by a fishing vessel. 
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1 ‘‘(f) VESSELS MEASURING LESS THAN 100 FEET.—The Secretary shall es2 tablish reasonable and necessary requirements to demonstrate compliance with 

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

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

5 individuals who own and operate those vessels. 

6 ‘‘(g) VESSELS PURCHASED THROUGH FISHING CAPACITY REDUCTION PRO7 GRAM.—A vessel purchased by the Secretary of Commerce through a fishing 

8 capacity reduction program under the Magnuson-Stevens Fishery Conserva9 tion Management Act (16 U.S.C. 1801 et seq.) or section 308 of the Interjuris10 dictional Fisheries Act of 1986 (16 U.S.C. 4107) is not eligible for a fishery 

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

12 ‘‘(h) REVOCATION OF ENDORSEMENTS.—The Secretary shall revoke the fish13 ery endorsement of any vessel subject to subsection (c) or (d) whose owner does 

14 not comply with those provisions. 

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

16 sections 12151(c) and 31322(b) of this title shall prohibit impermissible trans17 fers of ownership or control, specify any transactions that require prior ap18 proval of an implementing agency, identify transactions that do not require 

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

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

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

22 ‘‘§ 12114. Recreational endorsement 

23 ‘‘(a) REQUIREMENTS.—A recreational endorsement may be issued for a ves24 sel that satisfies the requirements of section 12103 of this title. 

25 ‘‘(b) AUTHORIZED ACTIVITY.—A vessel operating under a recreational en26 dorsement may be operated only for pleasure. 

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

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

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

30 of Homeland Security. However, a recreational vessel is subject to the require31 ments for reporting arrivals under section 433 of the Tariff Act of 1930 (19 

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

33 regulations. 

34 ‘‘§ 12115. Temporary endorsement for vessels procured out35 side the United States 

36 ‘‘(a) GENERAL AUTHORITY.—The Secretary and the Secretary of State, act37 ing jointly, may provide for the issuance of a certificate of documentation 

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

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

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

41 prescribe, a vessel documented under this section may proceed to the United 
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1 States and engage en route in foreign trade or trade with Guam, American 

2 Samoa, Wake, Midway, or Kingman Reef. 

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

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

5 United States. However, if the Secretary considers it to be in the public inter6 est, the Secretary may suspend for a period of not more than 6 months the 

7 application of a vessel inspection law carried out by the Secretary or regula8 tions prescribed under that law. 

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

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

11 regulations prescribed by the Secretary. 

12 ‘‘§ 12116. Limited endorsements for Guam, American Samoa, 

13 and Northern Mariana Islands 

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

15 (b) may be issued— 

16 ‘‘(1) a coastwise endorsement to engage in the coastwise trade of fish17 eries products between places in Guam, American Samoa, and the North18 ern Mariana Islands; or 

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

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

21 the Northern Mariana Islands. 

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

23 for a vessel that— 

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

25 ‘‘(2) was not built in the United States, except that for an endorse26 ment under subsection (a)(2), the vessel must not have been built or re27 built in the United States; 

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

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

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

31 and 

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

33 in the coastwise trade or the fisheries, as the case may be. 

34 ‘‘§ 12117. Oil spill response vessels 

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

36 that— 

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

38 the ownership requirement otherwise applicable without regard to this 

39 section; 
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1 ‘‘(2) is owned by a not-for-profit oil spill response cooperative or by 

2 members of such a cooperative that dedicate the vessel to use by the coop3 erative; 

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

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

6 ‘‘(4) is to be used only for— 

7 ‘‘(i) deploying equipment, supplies, and personnel to recover, con8 tain, or transport oil discharged into the navigable waters of the 

9 United States or the exclusive economic zone; or 

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

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

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

13 12103, 12132, and 50501 of this title. 

14 ‘‘§ 12118. Owners engaged primarily in manufacturing or 

15 mineral industry 

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

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

18 means a corporation that has filed a certificate under oath with the Sec19 retary, in the form and at the times prescribed by the Secretary, estab20 lishing that— 

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

22 States or a State; 

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

24 are individuals who are citizens of the United States; 

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

26 residents of the United States; 

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

28 or mineral industry in the United States; 

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

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

31 the corporation; and 

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

33 least 75 percent of the raw materials used or sold in its operations. 

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

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

36 prescribed by the Secretary, establishing that the corporation— 

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

38 State; and 

39 ‘‘(B) controls, directly or indirectly, at least 50 percent of the vot40 ing stock of a Bowaters corporation. 
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1 ‘‘(3) SUBSIDIARY.—The term ‘subsidiary’ means a corporation that 

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

3 at the times prescribed by the Secretary, establishing that the corpora4 tion— 

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

6 State; and 

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

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

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

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

11 80104 of this title. 

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

13 appropriate endorsement may be issued for a vessel that— 

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

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

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

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

18 under section 14302 of this title as prescribed by the Secretary under sec19 tion 14104 of this title; or 

20 ‘‘(B) is not self-propelled. 

21 ‘‘(d) EFFECTS OF DOCUMENTATION.— 

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

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

24 coastwise trade; and 

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

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

27 if the vessel were otherwise documented or exempt from documenta28 tion under this chapter. 

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

30 documented under this section may transport passengers or merchandise 

31 for hire in the coastwise trade only— 

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

33 owning the vessel; or 

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

35 rates for use not in the domestic noncontiguous trades, from the cor36 poration owning the vessel to a carrier that— 

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

38 135 of title 49; 

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

40 under section 50501 of this title; and 
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1 ‘‘(iii) is not owned or controlled, directly or indirectly, by 

2 the corporation owning the vessel. 

3 ‘‘(e) VALIDITY OF CORPORATE CERTIFICATE.—A certificate filed by a cor4 poration under this section remains valid only as long as the corporation con5 tinues to satisfy the conditions required of the corporation by this section. 

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

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

8 any documents issued to it based on that status. 

9 ‘‘(f) PENALTIES.— 

10 ‘‘(1) FALSIFYING MATERIAL FACT.—If a corporation knowingly fal11 sifies a material fact in a certificate filed under subsection (a), the vessel 

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

13 ‘‘(2) TRANSPORTING MERCHANDISE.—If a vessel transports merchan14 dise for hire in violation of this section, the merchandise shall be forfeited 

15 to the United States Government. 

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

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

18 $200 for each passenger so transported. 

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

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

21 of this title. 

22 ‘‘§ 12119. Owners engaged primarily in leasing or financing 

23 transactions 

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

25 ‘‘(1) AFFILIATE.—The term ‘affiliate’ means, with respect to any per26 son, any other person that is— 

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

28 with, or controlling that person; or 

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

30 report or other document submitted to the United States Securities 

31 and Exchange Commission or the Internal Revenue Service. 

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

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

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

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

36 2101(20) of this title. 

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

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

39 is involved in, or has the power to be involved in, the formulation, deter40 mination, or direction of any activity or function concerning the man-
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1 agement, use, or operation of the asset that is the subject of the invest2 ment. 

3 ‘‘(5) QUALIFIED PROPRIETARY CARGO.—The term ‘qualified propri4 etary cargo’ means— 

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

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

7 the Secretary an application or annual certification under sub8 section (c)(3), or by an affiliate of that person, immediately before, 

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

10 on a vessel owned by that person; 

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

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

13 Secretary an application or an annual certification under sub14 section (c)(3), or by an affiliate of that person, but which is carried 

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

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

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

18 extent that an equal amount of oil, petroleum products, petrochemi19 cals, or liquefied natural gas cargo beneficially owned by that per20 son, or by an affiliate of that person, is carried in coastwise trade 

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

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

23 of the same arrangement; 

24 ‘‘(C) in the case of a towing vessel associated with a non-self-pro25 pelled tank vessel where both vessels function as a single self-pro26 pelled vessel, oil, petroleum products, petrochemicals, or liquefied 

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

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

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

30 or immediately after the cargo is carried in coastwise trade on ei31 ther of those vessels; or 

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

33 natural gas cargo carried on any vessel that is either a self-pro34 pelled tank vessel having a length of at least 210 meters or a tank 

35 vessel that is a liquefied natural gas carrier that— 

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

37 of the vessel after December 31, 1999; and 

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

39 the reasonable expectation, of transporting on the vessel lique40 fied natural gas or unrefined petroleum beneficially owned by 
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1 the owner of the vessel, or an affiliate of the owner, from Alas2 ka to the continental United States. 

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

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

5 business of which is located in the United States. 

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

7 if— 

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

9 except for the ownership requirement otherwise applicable without regard 

10 to this section; 

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

12 trust or similar arrangement, the beneficiary of the trust or similar ar13 rangement) meets the requirements of subsection (c); 

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

15 the Secretary that the person is a citizen of the United States under sec16 tion 50501 of this title for engaging in the coastwise trade; and 

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

18 period as may be prescribed by the Secretary. 

19 ‘‘(c) OWNERSHIP CERTIFICATION.— 

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

21 if the person transmits to the Secretary each year the certification re22 quired by paragraph (2) or (3) with respect to a vessel. 

23 ‘‘(2) INVESTMENT CERTIFICATION.—To meet the certification require24 ment of this paragraph, a person shall certify that it— 

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

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

27 a passive investment; 

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

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

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

31 of the vessel or any other person that has the right, directly or indi32 rectly, to control or direct the movement or use of the vessel. 

33 ‘‘(3) CERTAIN TANK VESSELS.— 

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

35 paragraph, a person shall certify that— 

36 ‘‘(i) the aggregate book value of the vessels owned by the per37 son and United States affiliates of the person does not exceed 

38 10 percent of the aggregate book value of all assets owned by 

39 the person and its United States affiliates; 
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1 ‘‘(ii) not more than 10 percent of the aggregate revenues of 

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

3 ownership, operation, or management of vessels; 

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

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

6 States affiliates and documented with a coastwise endorsement 

7 is qualified proprietary cargo; 

8 ‘‘(iv) any cargo other than qualified proprietary cargo car9 ried by all vessels owned by the person and its United States 

10 affiliates and documented with a coastwise endorsement con11 sists of oil, petroleum products, petrochemicals, or liquified 

12 natural gas; 

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

14 States affiliates and documented with a coastwise endorsement 

15 carries molten sulphur; and 

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

17 this section as of August 9, 2004. 

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

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

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

21 tons, as measured under section 14502 of this title (or an alter22 native tonnage measured under section 14302 of this title as 

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

24 or 

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

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

27 vessels function as a single self-propelled vessel. 

28 ‘‘(d) FILING OF DEMISE CHARTER.—The demise charter and any amend29 ments to the charter shall be filed with the certification required by subsection 

30 (b)(3) or within 10 days after filing an amendment to the charter. The char31 ter and amendments shall be made available to the public. 

32 ‘‘(e) CONTINUATION OF ENDORSEMENT AFTER TERMINATION OF CHAR33 TER.—When a charter required by subsection (b)(3) is terminated for default 

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

35 not more than 6 months on terms and conditions the Secretary may prescribe. 

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

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

38 under sections 12103 and 50501 of this title. 

39 ‘‘§ 12120. Liquified gas tankers 

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

41 Secretary may issue a certificate of documentation with a coastwise endorse-
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1 ment for a vessel to transport liquified natural gas or liquified petroleum gas 

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

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

4 or 

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

6 vessel is placed under a foreign registry and subsequently redocumented 

7 under this chapter for operation under this section. 

8 ‘‘§ 12121. Small passenger vessels and uninspected passenger 

9 vessels 

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

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

12 that— 

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

14 old; or 

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

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

17 effect. 

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

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

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

21 terms in section 2101 of this title. 

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

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

24 a certificate of documentation with an appropriate endorsement for employ25 ment in the coastwise trade as a small passenger vessel or an uninspected pas26 senger vessel in the case of an eligible vessel authorized to carry no more than 

27 12 passengers for hire if the Secretary of Transportation, after notice and an 

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

29 in the coastwise trade will not adversely affect— 

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

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

32 built in the United States in that business. 

33 ‘‘(c) REVOCATION.— 

34 ‘‘(1) FOR FRAUD.—The Secretary shall revoke a certificate or endorse35 ment issued under subsection (b) if the Secretary of Transportation, after 

36 notice and an opportunity for a hearing, determines that the certificate 

37 or endorsement was obtained by fraud. 

38 ‘‘(2) OTHER PROVISIONS NOT AFFECTED.—Paragraph (1) does not af39 fect— 

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

41 section 1001 of title 18; or 
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1 ‘‘(B) any other authority of the Secretary to revoke a certificate 

2 or endorsement issued under subsection (b). 

3 ‘‘SUBCHAPTER III—MISCELLANEOUS 

4 ‘‘§ 12131. Command of documented vessels 

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

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

7 States. 

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

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

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

11 the United States. 

12 ‘‘§ 12132. Loss of coastwise trade privileges 

13 ‘‘A vessel having a lawful right to engage in the coastwise trade is perma14 nently prohibited from engaging in the coastwise trade if the vessel is— 

15 ‘‘(1)(A) more than 200 gross tons as measured under chapter 143 of 

16 this title; and 

17 ‘‘(B) sold foreign or placed under foreign registry; or 

18 ‘‘(2) rebuilt outside the United States. 

19 ‘‘§ 12133. Duty to carry certificate on vessel and allow exam20 ination 

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

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

23 the certificate. 

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

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

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

27 otherwise required by law or regulation. 

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

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

30 ‘‘§ 12134. Evidentiary uses of documentation 

31 ‘‘A certificate of documentation is— 

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

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

34 ‘‘(2) conclusive evidence of qualification to engage in a specified trade; 

35 and 

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

37 ownership is in issue. 

38 ‘‘§ 12135. Invalidation of certificates of documentation 

39 ‘‘A certificate of documentation or an endorsement on the certificate is in40 valid if the vessel for which it is issued— 
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1 ‘‘(1) no longer meets the requirements of this chapter and regulations 

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

3 or 

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

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

6 ‘‘§ 12136. Surrender of certificates of documentation 

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

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

9 prescribed by the Secretary. 

10 ‘‘(b) CONDITIONS FOR SURRENDER.— 

11 ‘‘(1) VESSELS OVER 1,000 TONS.—The Secretary may condition ap12 proval of the surrender of the certificate of documentation for a vessel 

13 over 1,000 gross tons. 

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

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

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

17 mortgagee consents. 

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

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

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

21 under section 31343(a) of this title. 

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

23 ‘‘(1) IN GENERAL.—Notwithstanding subsection (a), until the certifi24 cate of documentation is surrendered with the approval of the Secretary, 

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

26 chapter for purposes of— 

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

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

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

30 title; and 

31 ‘‘(C) any other law of the United States identified by the Sec32 retary by regulation as a law to which the Secretary applies this 

33 subsection. 

34 ‘‘(2) EXCEPTION.—This subsection does not apply when a vessel is for35 feited or sold by order of a district court of the United States. 

36 ‘‘§ 12137. Recording of vessels built in the United States 

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

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

39 public interest. 
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1 ‘‘§ 12138. List of documented vessels 

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

3 documented vessels and information about those vessels that the Secretary con4 siders pertinent or useful. The list shall contain a notation clearly indicating 

5 all vessels classed by the American Bureau of Shipping. 

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

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

8 maintain, and periodically update an inventory of vessels that are docu9 mented under this chapter, are at least 200 feet in length, and have the 

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

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

12 ‘‘(2) INFORMATION TO BE INCLUDED.—For each vessel listed in the in13 ventory, the Secretary of Transportation shall include in the inventory— 

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

15 characteristics of the vessel; 

16 ‘‘(B) the abilities and limitations of the vessel with respect to lay17 ing, maintaining, and repairing a submarine cable; and 

18 ‘‘(C) the name and address of the person to whom inquiries re19 garding the vessel may be made. 

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

21 the Federal Register an updated inventory every 6 months. 

22 ‘‘§ 12139. Reports 

23 ‘‘(a) IN GENERAL.—To ensure compliance with this chapter and laws gov24 erning the qualifications of vessels to engage in the coastwise trade and the 

25 fisheries, the Secretary may require owners, masters, and charterers of docu26 mented vessels to submit reports in any reasonable form and manner the Sec27 retary may prescribe. 

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

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

30 a vessel exceeding the tonnage specified in paragraph (2) and docu31 mented or last documented under the laws of the United States is rebuilt 

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

33 the rebuilding to the Secretary. 

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

35 ‘‘(A) 500 gross tons as measured under section 14502 of this title; 

36 or 

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

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

39 title. 

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

41 United States, the report shall be submitted when the rebuilding is com-
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1 pleted. If the rebuilding is completed outside the United States, the report 

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

3 territory of the United States. 

4 ‘‘SUBCHAPTER IV—PENALTIES 

5 ‘‘§ 12151. Penalties 

6 ‘‘(a) IN GENERAL.—A person that violates this chapter or a regulation pre7 scribed under this chapter is liable to the United States Government for a 

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

9 is a separate violation. 

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

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

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

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

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

15 or in applying for documentation of the vessel; 

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

17 for the vessel; 

18 ‘‘(3) the vessel is operated after its endorsement has been denied or re19 voked under section 12152 of this title; 

20 ‘‘(4) the vessel is employed in a trade without an appropriate endorse21 ment; 

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

23 other than for pleasure; 

24 ‘‘(6) the vessel is a documented vessel and is placed under the com25 mand of a person not a citizen of the United States, except as authorized 

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

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

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

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

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

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

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

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

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

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

36 or concealed a material fact, or knowingly made a false statement or represen37 tation, about the eligibility of the vessel under section 12113(c) or (d) of this 

38 title in applying for or applying to renew the fishery endorsement. 
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1 ‘‘§ 12152. Denial or revocation of endorsement for non-pay2 ment of civil penalty 

3 ‘‘If the owner of a vessel fails to pay a civil penalty imposed by the Sec4 retary, the Secretary may deny the issuance or renewal of an endorsement, 

5 or revoke the endorsement, on a certificate of documentation issued for the ves6 sel under this chapter.’’. 

7 SEC. 5. SUBTITLE III OF TITLE 46. 

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

9 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 United States Government ............... 30901 

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

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

10 (b) REPEALS.—Title 46, United States Code, is amended by striking chap11 ter 301 and the lines appearing immediately before and immediately after 

12 chapter 313 indicating that certain chapters are reserved. 

13 (c) CHAPTERS 301–311.—Title 46, United States Code, is amended by in14 serting after the analysis of subtitle III the following: 

15 ‘‘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 action. 

16 ‘‘§ 30101. Extension of jurisdiction to cases of damage or in17 jury on land 

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

19 States extends to and includes cases of injury or damage, to person or prop20 erty, caused by a vessel on navigable waters, even though the injury or dam21 age is done or consummated on land. 

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

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

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

25 and consummated on navigable waters. 

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

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

28 Government for injury or damage done or consummated on land by a 

29 vessel on navigable waters, chapter 309 or 311 of this title, as appro30 priate, provides the exclusive remedy. 
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1 ‘‘(2) ADMINISTRATIVE CLAIM.—A civil action described in paragraph 

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

3 the claim has been presented in writing to the agency owning or oper4 ating the vessel causing the injury or damage. 

5 ‘‘§ 30102. Liability to passengers 

6 ‘‘(a) LIABILITY.—The owner and master of a vessel, and the vessel, are lia7 ble for personal injury to a passenger or damage to a passenger’s baggage 

8 caused by— 

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

10 of this title; or 

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

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

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

14 ‘‘§ 30103. Liability of master, mate, engineer, and pilot 

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

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

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

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

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

20 vessels. 

21 ‘‘§ 30104. Personal injury to or death of seamen 

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

23 or, if the seaman dies from the injury, the personal representative of the sea24 man may elect to bring a civil action at law, with the right of trial by jury, 

25 against the employer. Laws of the United States regulating recovery for per26 sonal injury to, or death of, a railway employee apply to an action under 

27 this section. 

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

29 district in which the employer resides or the employer’s principal office is lo30 cated. 

31 ‘‘§ 30105. Restriction on recovery by non-citizens and non32 resident aliens for incidents in waters of other 

33 countries 

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

35 meaning given that term in article I of the 1958 Convention on the Conti36 nental Shelf. 

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

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

39 be brought under a maritime law of the United States if— 
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1 ‘‘(1) the individual suffering the injury or death was not a citizen or 

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

3 giving rise to the action; 

4 ‘‘(2) the incident occurred in the territorial waters or waters over5 laying the continental shelf of a country other than the United States; 

6 and 

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

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

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

10 mapping, surveying, diving, pipelaying, maintaining, repairing, con11 structing, or transporting supplies, equipment, or personnel, but not in12 cluding transporting those resources by a vessel constructed or adapted 

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

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

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

16 of— 

17 ‘‘(1) the country asserting jurisdiction over the area in which the inci18 dent occurred; or 

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

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

21 ‘‘§ 30106. Time limit on bringing action 

22 ‘‘Except as otherwise provided by law, a civil action for damages for per23 sonal injury or death arising out of a maritime tort must be brought within 

24 3 years after the cause of action arose. 

25 ‘‘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. 

26 ‘‘§ 30301. Short title 

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

28 ‘‘§ 30302. Cause of action 

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

30 default occurring on the high seas beyond a marine league from the shore of 

31 the United States, the personal representative of the decedent may bring a 

32 civil action in admiralty against the person or vessel responsible. The action 

33 shall be for the exclusive benefit of the decedent’s spouse, parent, child, or de34 pendent relative. 
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1 ‘‘§ 30303. Amount and apportionment of recovery 

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

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

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

5 in proportion to the loss each has sustained. 

6 ‘‘§ 30304. Contributory negligence 

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

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

9 the decedent and reduce the recovery accordingly. 

10 ‘‘§ 30305. Death of plaintiff in pending action 

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

12 to recover for personal injury caused by wrongful act, neglect, or default de13 scribed in section 30302 of this title, and the individual dies during the ac14 tion as a result of the wrongful act, neglect, or default, the personal represent15 ative of the decedent may be substituted as the plaintiff and the action may 

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

17 ‘‘§ 30306. Foreign cause of action 

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

19 by wrongful act, neglect, or default on the high seas, a civil action in admi20 ralty may be brought in a court of the United States based on the foreign 

21 cause of action, without abatement for the amount for which recovery is au22 thorized. 

23 ‘‘§ 30307. Commercial aviation accidents 

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

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

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

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

28 beyond 12 nautical miles from the shore of the United States, additional com29 pensation is recoverable for nonpecuniary damages for wrongful death, but 

30 punitive damages are not recoverable. 

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

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

33 12 nautical miles or less from the shore of the United States. 

34 ‘‘§ 30308. Nonapplication 

35 ‘‘(a) STATE LAW.—This chapter does not affect the law of a State regu36 lating the right to recover for death. 

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

38 waters within the territorial limits of a State, or navigable waters in the 

39 Panama Canal. 
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1 ‘‘CHAPTER 305—EXONERATION AND LIMITATION OF 

2 LIABILITY 

‘‘Sec. 

‘‘30501. Definition. 

‘‘30502. Application. 

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

‘‘30504. Loss by fire. 

‘‘30505. General limit of liability. 

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

‘‘30507. Apportionment of losses. 

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

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

‘‘30510. Vicarious liability for medical malpractice. 

‘‘30511. Action by owner for limitation. 

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

3 ‘‘§ 30501. Definition 

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

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

6 procurement. 

7 ‘‘§ 30502. Application 

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

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

10 including canal boats, barges, and lighters. 

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

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

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

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

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

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

18 the value entered on the bill of lading. 

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

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

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

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

23 ‘‘§ 30504. Loss by fire 

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

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

26 or neglect of the owner. 

27 ‘‘§ 30505. General limit of liability 

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

29 liability of the owner of a vessel for any claim arising from any cause, on 

30 account of that ownership, without the privity or knowledge of the owner shall 

31 not exceed the value of the vessel and pending freight. If the vessel has more 

32 than one owner, the proportionate share of the liability of any one owner shall 
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1 not exceed that owner’s proportionate interest in the vessel and pending 

2 freight. 

3 ‘‘(b) NONAPPLICATION.—This section 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 does 

6 not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fish7 ing vessels, fish tender vessels, canal boats, scows, car floats, barges, lighters, 

8 or nondescript vessels. 

9 ‘‘(b) MINIMUM LIABILITY.—If the amount of the vessel owner’s liability de10 termined under section 30505 of this title is such that the portion available 

11 to pay claims for personal injury or death is less than $420 times the tonnage 

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

13 vessel. That portion may be used only to pay claims for personal injury or 

14 death. 

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

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

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

18 space for the use of seamen is excluded. 

19 ‘‘(d) CLAIMS ARISING ON DISTINCT OCCASIONS.—Separate limits of liabil20 ity apply to claims for personal injury or death arising on distinct occasions. 

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

22 the privity or knowledge of the master or managing agent, at or before the 

23 beginning of each voyage, is imputed to the owner. 

24 ‘‘§ 30507. Apportionment of losses 

25 ‘‘If the amount determined under sections 30505 and 30506 of this title is 

26 insufficient to pay all claimants, the claimants shall be paid in proportion 

27 to their respective losses. 

28 ‘‘§ 30508. Provisions requiring notice of claim or limiting 

29 time for bringing action 

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

31 not apply to pleasure yachts, tugs, towboats, towing vessels, tank vessels, fish32 ing vessels, fish tender vessels, canal boats, scows, car floats, barges, lighters, 

33 or nondescript vessels. 

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

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

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

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

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

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

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

41 one year after the date of the injury or death. 
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1 ‘‘(c) EFFECT OF FAILURE TO GIVE NOTICE.—When notice of a claim for 

2 personal injury or death is required by a contract, the failure to give the no3 tice is not a bar to recovery if— 

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

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

6 by the failure; 

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

8 could not have been given; or 

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

10 notice. 

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

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

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

14 ‘‘(1) the date a legal representative is appointed for the minor, incom15 petent, or decedent’s estate; or 

16 ‘‘(2) 3 years after the injury or death. 

17 ‘‘§ 30509. Provisions limiting liability for personal injury or 

18 death 

19 ‘‘(a) PROHIBITION.— 

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

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

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

23 include in a regulation or contract a provision limiting— 

24 ‘‘(A) the liability of the owner, master, or agent for personal in25 jury or death caused by the negligence or fault of the owner or the 

26 owner’s employees or agents; or 

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

28 trial. 

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

30 ‘‘(b) EMOTIONAL DISTRESS, MENTAL SUFFERING, AND PSYCHOLOGICAL IN31 JURY.— 

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

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

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

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

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

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

38 is— 

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

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

41 agent, or operator; 
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1 ‘‘(B) the result of the claimant having been at actual risk of phys2 ical injury, and the risk was caused by the negligence or fault of 

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

4 or 

5 ‘‘(C) intentionally inflicted by a crewmember or the owner, mas6 ter, manager, agent, or operator. 

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

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

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

10 ‘‘§ 30510. Vicarious liability for medical malpractice 

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

12 or employer of a crewmember is claimed to have vicarious liability for med13 ical malpractice with regard to a crewmember occurring at a shoreside facil14 ity, and to the extent the damages resulted from the conduct of any shoreside 

15 doctor, hospital, medical facility, or other health care provider, the owner, op16 erator, or employer is entitled to rely on any statutory limitations of liability 

17 applicable to the doctor, hospital, medical facility, or other health care pro18 vider in the State of the United States in which the shoreside medical care 

19 was provided. 

20 ‘‘§ 30511. Action by owner for limitation 

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

22 district court of the United States for limitation of liability under this chap23 ter. The action must be brought within 6 months after a claimant gives the 

24 owner written notice of a claim. 

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

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

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

28 vessel and pending freight, or approved security; and 

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

30 from time to time as necessary to carry out this chapter; or 

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

32 claimants— 

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

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

35 from time to time as necessary to carry out this chapter. 

36 ‘‘(c) CESSATION OF OTHER ACTIONS.—When an action has been brought 

37 under this section and the owner has complied with subsection (b), all claims 

38 and proceedings against the owner related to the matter in question shall 

39 cease. 
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1 ‘‘§ 30512. Liability as master, officer, or seaman not affected 

2 ‘‘This chapter does not affect the liability of an individual as a master, 

3 officer, or seaman, even though the individual is also an owner of the vessel. 

4 ‘‘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. Civil penalty. 

5 ‘‘§ 30701. Definition 

6 ‘‘In this chapter, the term ‘carrier’ means the owner, manager, charterer, 

7 agent, or master of a vessel. 

8 ‘‘§ 30702. Application 

9 ‘‘(a) IN GENERAL.—Except as otherwise provided, this chapter applies to 

10 a carrier engaged in the carriage of goods to or from any port in the United 

11 States. 

12 ‘‘(b) RELATION TO COGSA.—The relationship between this chapter and the 

13 Carriage of Goods By Sea Act shall be the same as the relationship that ex14 isted between the Act of February 13, 1893 (ch. 105, 27 Stat. 445) (commonly 

15 known as the Harter Act) and the Carriage of Goods By Sea Act, prior to 

16 the repeal of the Harter Act. 

17 ‘‘(c) LIVE ANIMALS.—Sections 30703 and 30704 of this title do not apply 

18 to the carriage of live animals. 

19 ‘‘§ 30703. Bills of lading 

20 ‘‘(a) ISSUANCE.—A carrier shall issue to a shipper a bill of lading or ship21 ping document. 

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

23 statement of— 

24 ‘‘(1) the marks necessary to identify the goods; 

25 ‘‘(2) the number of packages, or the quantity or weight, and whether 

26 it is carrier’s or shipper’s weight; and 

27 ‘‘(3) the apparent condition of the goods. 

28 ‘‘(c) PRIMA FACIE EVIDENCE OF RECEIPT.—A bill of lading or shipping 

29 document issued under this section is prima facie evidence of receipt of the 

30 goods described. 

31 ‘‘§ 30704. Loading, stowage, custody, care, and delivery 

32 ‘‘A carrier may not insert in a bill of lading or shipping document a pro33 vision relieving the carrier from liability for loss or damage arising from im34 proper loading, stowage, custody, care, or delivery. Any such provision is 

35 void. 
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1 ‘‘§ 30705. Seaworthiness 

2 ‘‘(a) PROHIBITION.—A carrier may not insert in a bill of lading or ship3 ping document a provision lessening or avoiding its obligation to exercise due 

4 diligence to— 

5 ‘‘(1) make the vessel seaworthy; and 

6 ‘‘(2) properly man, equip, and supply the vessel. 

7 ‘‘(b) VOIDNESS.—A provision described in subsection (a) is void. 

8 ‘‘§ 30706. Defenses 

9 ‘‘(a) DUE DILIGENCE.—If a carrier has exercised due diligence to make the 

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

11 vessel, the carrier and the vessel are not liable for loss or damage arising from 

12 an error in the navigation or management of the vessel. 

13 ‘‘(b) OTHER DEFENSES.—A carrier and the vessel are not liable for loss 

14 or damage arising from— 

15 ‘‘(1) dangers of the sea or other navigable waters; 

16 ‘‘(2) acts of God; 

17 ‘‘(3) public enemies; 

18 ‘‘(4) seizure under legal process; 

19 ‘‘(5) inherent defect, quality, or vice of the goods; 

20 ‘‘(6) insufficiency of package; 

21 ‘‘(7) act or omission of the shipper or owner of the goods or their 

22 agent; or 

23 ‘‘(8) saving or attempting to save life or property at sea, including 

24 a deviation in rendering such a service. 

25 ‘‘§ 30707. Civil penalty 

26 ‘‘(a) IN GENERAL.—A carrier that violates this chapter is liable for a civil 

27 penalty of not more than $2,000. 

28 ‘‘(b) LIEN.—The amount of the penalty and costs for the violation con29 stitute a lien on the vessel engaged in the carriage. A civil action in rem to 

30 enforce the lien may be brought in the district court of the United States for 

31 any district in which the vessel is found. 

32 ‘‘(c) DISPOSITION OF PENALTY.—Half of the penalty shall be paid to the 

33 person injured by the violation and half to the United States Government. 

34 ‘‘CHAPTER 309—SUITS IN ADMIRALTY AGAINST UNITED 

35 STATES GOVERNMENT 

‘‘Sec. 

‘‘30901. Short title. 

‘‘30902. Definition. 

‘‘30903. Waiver of immunity. 

‘‘30904. Exclusive remedy. 

‘‘30905. Period for bringing action. 

‘‘30906. Venue. 

‘‘30907. Security. 

‘‘30908. Procedure for hearing and determination. 

‘‘30909. Exoneration and limitation. 
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‘‘30910. Costs and interest. 

‘‘30911. Arbitration, compromise, or settlement. 

‘‘30912. Payment of judgment or settlement. 

‘‘30913. Exemption from arrest or seizure. 

‘‘30914. Release of privately owned vessel after seizure. 

‘‘30915. Seizures and other proceedings in foreign jurisdictions. 

‘‘30916. Recovery by United States Government for salvage services. 

‘‘30917. Disposition of amounts recovered by United States Government. 

‘‘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 Government owns all the outstanding capital 

6 stock. 

7 ‘‘§ 30903. Waiver of immunity 

8 ‘‘(a) IN GENERAL.—In a case in which, if a vessel were privately owned 

9 or operated, or if cargo were privately owned or possessed, or if a private per10 son or property were involved, a civil action in admiralty could be main11 tained, a civil action in personam may be brought against the United States 

12 Government or a federally-owned corporation. In a civil action in admiralty 

13 brought by the Government or a federally-owned corporation, an admiralty 

14 claim in personam may be filed or a setoff claimed against the Government 

15 or corporation. 

16 ‘‘(b) NON-JURY.—A claim against the Government or a federally-owned 

17 corporation under this section shall be tried without a jury. 

18 ‘‘§ 30904. Exclusive remedy 

19 ‘‘If a remedy is provided by this chapter, it shall be exclusive of any other 

20 action arising out of the same subject matter against the officer, employee, 

21 or agent of the United States Government or the federally-owned corporation 

22 whose act or omission gave rise to the claim. 

23 ‘‘§ 30905. Period for bringing action 

24 ‘‘A civil action under this chapter must be brought within 2 years after 

25 the cause of action arose. 

26 ‘‘§ 30906. Venue 

27 ‘‘(a) IN GENERAL.—A civil action under this chapter shall be brought in 

28 the district court of the United States for the district in which— 

29 ‘‘(1) any plaintiff resides or has its principal place of business; or 

30 ‘‘(2) the vessel or cargo is found. 

31 ‘‘(b) TRANSFER.—On a motion by a party, the court may transfer the ac32 tion to any other district court of the United States. 
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1 ‘‘§ 30907. Security 

2 ‘‘Neither the United States Government nor a federally-owned corporation 

3 may be required to give a bond or admiralty stipulation in a civil action 

4 under this chapter. 

5 ‘‘§ 30908. Procedure for hearing and determination 

6 ‘‘(a) IN GENERAL.—A civil action under this chapter shall proceed and be 

7 heard and determined according to the principles of law and the rules of 

8 practice applicable in like cases between private parties. 

9 ‘‘(b) IN REM.— 

10 ‘‘(1) REQUIREMENTS.—The action may proceed according to the prin11 ciples of an action in rem if— 

12 ‘‘(A) the plaintiff elects in the complaint; and 

13 ‘‘(B) it appears that an action in rem could have been main14 tained had the vessel or cargo been privately owned and possessed. 

15 ‘‘(2) EFFECT ON RELIEF IN PERSONAM.—An election under paragraph 

16 (1) does not prevent the plaintiff from seeking relief in personam in the 

17 same action. 

18 ‘‘§ 30909. Exoneration and limitation 

19 ‘‘The United States Government is entitled to the exemptions from and lim20 itations of liability provided by law to an owner, charterer, operator, or agent 

21 of a vessel. 

22 ‘‘§ 30910. Costs and interest 

23 ‘‘(a) IN GENERAL.—A judgment against the United States Government or 

24 a federally-owned corporation under this chapter may include costs and inter25 est at the rate of 4 percent a year until satisfied. Interest shall run as ordered 

26 by the court, except that interest is not allowable for the period before the ac27 tion is filed. 

28 ‘‘(b) CONTRACT PROVIDING FOR INTEREST.—Notwithstanding subsection 

29 (a), if the claim is based on a contract providing for interest, interest may 

30 be awarded at the rate and for the period provided in the contract. 

31 ‘‘§ 30911. Arbitration, compromise, or settlement 

32 ‘‘The Secretary of a department of the United States Government, or the 

33 board of trustees of a federally-owned corporation, may arbitrate, compromise, 

34 or settle a claim authorized by this chapter. 

35 ‘‘§ 30912. Payment of judgment or settlement 

36 ‘‘(a) IN GENERAL.—The proper accounting officer of the United States 

37 Government shall pay a final judgment, arbitration award, or settlement 

38 under this chapter on presentation of an authenticated copy. 

39 ‘‘(b) SOURCE OF PAYMENT.—Payment shall be made from an appropria40 tion or fund available specifically for the purpose. If no appropriation or 

41 fund is specifically available, there is hereby appropriated, out of money in 
41 

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1 the Treasury not otherwise appropriated, an amount sufficient to pay the 

2 judgment, award, or settlement. 

3 ‘‘§ 30913. Exemption from arrest or seizure 

4 ‘‘The following are not subject to arrest or seizure by judicial process in 

5 the United States: 

6 ‘‘(1) A vessel owned by, possessed by, or operated by or for the United 

7 States Government or a federally-owned corporation. 

8 ‘‘(2) Cargo owned or possessed by the Government or a federally-owned 

9 corporation. 

10 ‘‘§ 30914. Release of privately owned vessel after seizure 

11 ‘‘If a privately owned vessel not in the possession of the United States Gov12 ernment or a federally-owned corporation is arrested or attached in a civil 

13 action arising or alleged to have arisen from prior ownership, possession, or 

14 operation by the Government or corporation, the vessel shall be released with15 out bond or stipulation on a statement by the Government, through the Attor16 ney General or other authorized law officer, that the Government is interested 

17 in the action, desires release of the vessel, and assumes liability for the satis18 faction of any judgment obtained by the plaintiff. After the vessel is released, 

19 the action shall proceed against the Government in accordance with this chap20 ter. 

21 ‘‘§ 30915. Seizures and other proceedings in foreign jurisdic22 tions 

23 ‘‘(a) IN GENERAL.—If a vessel or cargo described in section 30913 or 30914 

24 of this title is arrested, attached, or otherwise seized by judicial process in 

25 a foreign country, or if an action is brought in a court of a foreign country 

26 against the master of such a vessel for a claim arising from the ownership, 

27 possession, or operation of the vessel, or the ownership, possession, or carriage 

28 of such cargo, the Secretary of State, on request of the Attorney General or 

29 another officer authorized by the Attorney General, may direct the United 

30 States consul residing at or nearest the place at which the action was 

31 brought— 

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

33 or other seizure, and to execute an agreement, stipulation, bond, or un34 dertaking, for the United States Government or federally-owned corpora35 tion, for the release of the vessel or cargo and the prosecution of any ap36 peal; or 

37 ‘‘(2) if an action has been brought against the master of such a vessel, 

38 to enter the appearance of the Government or corporation and to pledge 

39 the credit of the Government or corporation to the payment of any judg40 ment and costs in the action. 

41 ‘‘(b) ARRANGING BOND OR STIPULATION.—The Attorney General may— 
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1 ‘‘(1) arrange with a bank, surety company, or other person, whether 

2 in the United States or a foreign country, to execute a bond or stipula3 tion; and 

4 ‘‘(2) pledge the credit of the Government to secure the bond or stipula5 tion. 

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

7 Government or corporation may pay a judgment in an action described in 

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

9 clerk of the court and authenticated by— 

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

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

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

13 consul. 

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

15 affect the right of the Government to claim immunity of a vessel or cargo from 

16 foreign jurisdiction. 

17 ‘‘§ 30916. Recovery by United States Government for salvage 

18 services 

19 ‘‘(a) CIVIL ACTION.—The United States Government, and the crew of a 

20 merchant vessel owned or operated by the Government, or a federally-owned 

21 corporation, may bring a civil action to recover for salvage services provided 

22 by the vessel and crew. 

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

24 this section by the Government for its own benefit, and not for the benefit 

25 of the crew, shall be deposited in the Treasury to the credit of the department 

26 of the Government, or the corporation, having control of the possession or op27 eration of the vessel. 

28 ‘‘§ 30917. Disposition of amounts recovered by United States 

29 Government 

30 ‘‘Amounts recovered in a civil action brought by the United States Govern31 ment on a claim arising from the ownership, possession, or operation of a 

32 merchant vessel, or the ownership, possession, or carriage of cargo, shall be 

33 deposited in the Treasury to the credit of the department of the Government, 

34 or the federally-owned corporation, having control of the vessel or cargo, for 

35 reimbursement of the appropriation, insurance fund, or other fund from 

36 which the compensation for which the judgment was recovered was or will be 

37 paid. 

38 ‘‘§ 30918. Reports 

39 ‘‘The Secretary of each department of the United States Government, and 

40 the board of trustees of each federally-owned corporation, shall report to Con41 gress at each session thereof all arbitration awards and settlements agreed to 
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1 under this chapter since the previous session, for which the time to appeal 

2 has expired or been waived. 

3 ‘‘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. 

4 ‘‘§ 31101. Short title 

5 ‘‘This chapter may be cited as the ‘Public Vessels Act’. 

6 ‘‘§ 31102. Waiver of immunity 

7 ‘‘(a) IN GENERAL.—A civil action in personam in admiralty may be 

8 brought, or an impleader filed, against the United States Government for— 

9 ‘‘(1) damages caused by a public vessel of the United States; or 

10 ‘‘(2) compensation for towage and salvage services, including contract 

11 salvage, rendered to a public vessel of the United States. 

12 ‘‘(b) COUNTERCLAIM OR SETOFF.—If the Government brings a civil action 

13 in admiralty for damages caused by a privately owned vessel, the owner of 

14 the vessel, or the successor in interest, may file a counterclaim in personam, 

15 or claim a setoff, against the Government for damages arising out of the same 

16 subject matter. 

17 ‘‘§ 31103. Applicable procedure 

18 ‘‘A civil action under this chapter is subject to the provisions of chapter 

19 309 of this title except to the extent inconsistent with this chapter. 

20 ‘‘§ 31104. Venue 

21 ‘‘(a) IN GENERAL.—A civil action under this chapter shall be brought in 

22 the district court of the United States for the district in which the vessel or 

23 cargo is found within the United States. 

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

25 cargo is outside the territorial waters of the United States— 

26 ‘‘(1) the action shall be brought in the district court of the United 

27 States for any district in which any plaintiff resides or has an office 

28 for the transaction of business; or 

29 ‘‘(2) if no plaintiff resides or has an office for the transaction of busi30 ness in the United States, the action may be brought in the district court 

31 of the United States for any district. 
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1 ‘‘§ 31105. Security when counterclaim filed 

2 ‘‘If a counterclaim is filed for a cause of action for which the original ac3 tion is filed under this chapter, the respondent to the counterclaim shall give 

4 security in the usual amount and form to respond to the counterclaim, unless 

5 the court for cause shown orders otherwise. The proceedings in the original 

6 action shall be stayed until the security is given. 

7 ‘‘§ 31106. Exoneration and limitation 

8 ‘‘The United States Government is entitled to the exemptions from and lim9 itations of liability provided by law to an owner, charterer, operator, or agent 

10 of a vessel. 

11 ‘‘§ 31107. Interest 

12 ‘‘A judgment in a civil action under this chapter may not include interest 

13 for the period before the judgment is issued unless the claim is based on a 

14 contract providing for interest. 

15 ‘‘§ 31108. Arbitration, compromise, or settlement 

16 ‘‘The Attorney General may arbitrate, compromise, or settle a claim au17 thorized by this chapter if the claim actually has been filed. 

18 ‘‘§ 31109. Payment of judgment or settlement 

19 ‘‘The proper accounting officer of the United States shall pay a final judg20 ment, arbitration award, or settlement under this chapter on presentation of 

21 an authenticated copy. Payment shall be made from any money in the Treas22 ury appropriated for the purpose. 

23 ‘‘§ 31110. Subpoenas to officers or members of crew 

24 ‘‘An officer or member of the crew of a public vessel may not be subpoenaed 

25 in a civil action under this chapter without the consent of— 

26 ‘‘(1) the Secretary of the department or the head of the independent 

27 establishment having control of the vessel at the time the cause of action 

28 arose; or 

29 ‘‘(2) the master or commanding officer of the vessel at the time the 

30 subpoena is issued. 

31 ‘‘§ 31111. Claims by nationals of foreign countries 

32 ‘‘A national of a foreign country may not maintain a civil action under 

33 this chapter unless it appears to the satisfaction of the court in which the 

34 action is brought that the government of that country, in similar cir35 cumstances, allows nationals of the United States to sue in its courts. 

36 ‘‘§ 31112. Lien not recognized or created 

37 ‘‘This chapter shall not be construed as recognizing the existence of or as 

38 creating a lien against a public vessel of the United States. 

39 ‘‘§ 31113. Reports 

40 ‘‘The Attorney General shall report to Congress at each session thereof all 

41 claims settled under this chapter.’’. 
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1 SEC. 6. SUBTITLE IV OF TITLE 46. 

2 Title 46, United States Code, is amended by inserting after subtitle III the 

3 following: 

4 ‘‘Subtitle IV—Regulation of Ocean Shipping 

5 ‘‘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 

6 ‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

‘‘421. Regulations Affecting Shipping in Foreign Trade ......................... 42101 

‘‘423. Foreign Shipping Practices ........................................................................ 42301 

7 ‘‘PART C—MISCELLANEOUS

‘‘441. Evidence of Financial Responsibility for Passenger Transportation.44101 

8 ‘‘PART A—OCEAN SHIPPING

9 ‘‘CHAPTER 401—GENERAL 

‘‘Sec. 

‘‘40101. Purposes. 

‘‘40102. Definitions. 

‘‘40103. Administrative exemptions. 

‘‘40104. Reports filed with the Commission. 

10 ‘‘§ 40101. Purposes 

11 ‘‘The purposes of this part are to— 

12 ‘‘(1) establish a nondiscriminatory regulatory process for the common 

13 carriage of goods by water in the foreign commerce of the United States 

14 with a minimum of government intervention and regulatory costs; 

15 ‘‘(2) provide an efficient and economic transportation system in the 

16 ocean commerce of the United States that is, insofar as possible, in har17 mony with, and responsive to, international shipping practices; 

18 ‘‘(3) encourage the development of an economically sound and efficient 

19 United States-flag liner fleet capable of meeting national security needs; 

20 and 

21 ‘‘(4) promote the growth and development of United States exports 

22 through competitive and efficient ocean transportation and by placing a 

23 greater reliance on the marketplace. 

24 ‘‘§ 40102. Definitions 

25 ‘‘In this part: 

26 ‘‘(1) AGREEMENT.—The term ‘agreement’— 

27 ‘‘(A) means a written or oral understanding, arrangement, or as28 sociation, and any modification or cancellation thereof; but 

29 ‘‘(B) does not include a maritime labor agreement. 
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1 ‘‘(2) ANTITRUST LAWS.—The term ‘antitrust laws’ means— 

2 ‘‘(A) the Sherman Act (15 U.S.C. 1 et seq.); 

3 ‘‘(B) sections 73 and 74 of the Wilson Tariff Act (15 U.S.C. 8, 

4 9); 

5 ‘‘(C) the Clayton Act (15 U.S.C. 12 et seq.); 

6 ‘‘(D) the Act of June 19, 1936 (15 U.S.C. 13, 13a, 13b, 21a); 

7 ‘‘(E) the Federal Trade Commission Act (15 U.S.C. 41 et seq.); 

8 ‘‘(F) the Antitrust Civil Process Act (15 U.S.C. 1311 et seq.); and 

9 ‘‘(G) Acts supplementary to those Acts. 

10 ‘‘(3) ASSESSMENT AGREEMENT.—The term ‘assessment agreement’ 

11 means an agreement, whether part of a collective bargaining agreement 

12 or negotiated separately, to the extent the agreement provides for the 

13 funding of collectively bargained fringe-benefit obligations on other than 

14 a uniform worker-hour basis, regardless of the cargo handled or type of 

15 vessel or equipment used. 

16 ‘‘(4) BULK CARGO.—The term ‘bulk cargo’ means cargo that is loaded 

17 and carried in bulk without mark or count. 

18 ‘‘(5) CHEMICAL PARCEL-TANKER.—The term ‘chemical parcel-tanker’ 

19 means a vessel that has— 

20 ‘‘(A) a cargo-carrying capability consisting of individual cargo 

21 tanks for bulk chemicals that— 

22 ‘‘(i) are a permanent part of the vessel; and 

23 ‘‘(ii) have segregation capability with piping systems to per24 mit simultaneous carriage of several bulk chemical cargoes with 

25 minimum risk of cross-contamination; and 

26 ‘‘(B) a valid certificate of fitness under the International Mari27 time Organization Code for the Construction and Equipment of 

28 Ships Carrying Dangerous Chemicals in Bulk. 

29 ‘‘(6) COMMON CARRIER.—The term ‘common carrier’— 

30 ‘‘(A) means a person that— 

31 ‘‘(i) holds itself out to the general public to provide transpor32 tation by water of passengers or cargo between the United 

33 States and a foreign country for compensation; 

34 ‘‘(ii) assumes responsibility for the transportation from the 

35 port or point of receipt to the port or point of destination; and 

36 ‘‘(iii) uses, for all or part of that transportation, a vessel op37 erating on the high seas or the Great Lakes between a port in 

38 the United States and a port in a foreign country; but 

39 ‘‘(B) does not include a carrier engaged in ocean transportation 

40 by ferry boat, ocean tramp, or chemical parcel-tanker, or by vessel 
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1 when primarily engaged in the carriage of perishable agricultural 

2 commodities— 

3 ‘‘(i) if the carrier and the owner of those commodities are 

4 wholly-owned, directly or indirectly, by a person primarily en5 gaged in the marketing and distribution of those commodities; 

6 and 

7 ‘‘(ii) only with respect to the carriage of those commodities. 

8 ‘‘(7) CONFERENCE.—The term ‘conference’— 

9 ‘‘(A) means an association of ocean common carriers permitted, 

10 pursuant to an approved or effective agreement, to engage in con11 certed activity and to use a common tariff; but 

12 ‘‘(B) does not include a joint service, consortium, pooling, sailing, 

13 or transshipment agreement. 

14 ‘‘(8) CONTROLLED CARRIER.—The term ‘controlled carrier’ means an 

15 ocean common carrier that is, or whose operating assets are, directly or 

16 indirectly, owned or controlled by a government, with ownership or con17 trol by a government being deemed to exist for a carrier if— 

18 ‘‘(A) a majority of the interest in the carrier is owned or con19 trolled in any manner by that government, an agency of that gov20 ernment, or a public or private person controlled by that govern21 ment; or 

22 ‘‘(B) that government has the right to appoint or disapprove the 

23 appointment of a majority of the directors, the chief operating offi24 cer, or the chief executive officer of the carrier. 

25 ‘‘(9) DEFERRED REBATE.—The term ‘deferred rebate’ means a return 

26 by a common carrier of any freight money to a shipper, where the return 

27 is— 

28 ‘‘(A) consideration for the shipper giving all or any portion of 

29 its shipments to that or any other common carrier over a fixed pe30 riod of time; 

31 ‘‘(B) deferred beyond the completion of the service for which it 

32 was paid; and 

33 ‘‘(C) made only if the shipper has agreed to make a further ship34 ment with that or any other common carrier. 

35 ‘‘(10) FOREST PRODUCTS.—The term ‘forest products’ includes lumber 

36 in bundles, rough timber, ties, poles, piling, laminated beams, bundled 

37 siding, bundled plywood, bundled core stock or veneers, bundled particle 

38 or fiber boards, bundled hardwood, wood pulp in rolls, wood pulp in 

39 unitized bales, and paper and paper board in rolls or in pallet or skid40 sized sheets. 
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1 ‘‘(11) INLAND DIVISION.—The term ‘inland division’ means the 

2 amount paid by a common carrier to an inland carrier for the inland 

3 portion of through transportation offered to the public by the common 

4 carrier. 

5 ‘‘(12) INLAND PORTION.—The term ‘inland portion’ means the charge 

6 to the public by a common carrier for the non-ocean portion of through 

7 transportation. 

8 ‘‘(13) LOYALTY CONTRACT.—The term ‘loyalty contract’ means a con9 tract with an ocean common carrier or agreement providing for— 

10 ‘‘(A) a shipper to obtain lower rates by committing all or a fixed 

11 portion of its cargo to that carrier or agreement; and 

12 ‘‘(B) a deferred rebate arrangement. 

13 ‘‘(14) MARINE TERMINAL OPERATOR.—The term ‘marine terminal op14 erator’ means a person engaged in the United States in the business of 

15 providing wharfage, dock, warehouse, or other terminal facilities in con16 nection with a common carrier, or in connection with a common carrier 

17 and a water carrier subject to subchapter II of chapter 135 of title 49. 

18 ‘‘(15) MARITIME LABOR AGREEMENT.—The term ‘maritime labor 

19 agreement’— 

20 ‘‘(A) means— 

21 ‘‘(i) a collective bargaining agreement between an employer 

22 subject to this part, or a group of such employers, and a labor 

23 organization representing employees in the maritime or steve24 doring industry; 

25 ‘‘(ii) an agreement preparatory to such a collective bar26 gaining agreement among members of a multi-employer bar27 gaining group; or 

28 ‘‘(iii) an agreement specifically implementing provisions of 

29 such a collective bargaining agreement or providing for the for30 mation, financing, or administration of a multi-employer bar31 gaining group; but 

32 ‘‘(B) does not include an assessment agreement. 

33 ‘‘(16) NON-VESSEL-OPERATING COMMON CARRIER.—The term ‘non-ves34 sel-operating common carrier’ means a common carrier that— 

35 ‘‘(A) does not operate the vessels by which the ocean transpor36 tation is provided; and 

37 ‘‘(B) is a shipper in its relationship with an ocean common car38 rier. 

39 ‘‘(17) OCEAN COMMON CARRIER.—The term ‘ocean common carrier’ 

40 means a vessel-operating common carrier. 
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1 ‘‘(18) OCEAN FREIGHT FORWARDER.—The term ‘ocean freight for2 warder’ means a person that— 

3 ‘‘(A) in the United States, dispatches shipments from the United 

4 States via a common carrier and books or otherwise arranges space 

5 for those shipments on behalf of shippers; and 

6 ‘‘(B) processes the documentation or performs related activities 

7 incident to those shipments. 

8 ‘‘(19) OCEAN TRANSPORTATION INTERMEDIARY.—The term ‘ocean 

9 transportation intermediary’ means an ocean freight forwarder or a non10 vessel-operating common carrier. 

11 ‘‘(20) SERVICE CONTRACT.—The term ‘service contract’ means a writ12 ten contract, other than a bill of lading or receipt, between one or more 

13 shippers, on the one hand, and an individual ocean common carrier or 

14 an agreement between or among ocean common carriers, on the other, 

15 in which— 

16 ‘‘(A) the shipper or shippers commit to providing a certain vol17 ume or portion of cargo over a fixed time period; and 

18 ‘‘(B) the ocean common carrier or the agreement commits to a 

19 certain rate or rate schedule and a defined service level, such as as20 sured space, transit time, port rotation, or similar service features. 

21 ‘‘(21) SHIPMENT.—The term ‘shipment’ means all of the cargo carried 

22 under the terms of a single bill of lading. 

23 ‘‘(22) SHIPPER.—The term ‘shipper’ means— 

24 ‘‘(A) a cargo owner; 

25 ‘‘(B) the person for whose account the ocean transportation of 

26 cargo is provided; 

27 ‘‘(C) the person to whom delivery is to be made; 

28 ‘‘(D) a shippers’ association; or 

29 ‘‘(E) a non-vessel-operating common carrier that accepts respon30 sibility for payment of all charges applicable under the tariff or 

31 service contract. 

32 ‘‘(23) SHIPPERS’ ASSOCIATION.—The term ‘shippers’ association’ 

33 means a group of shippers that consolidates or distributes freight on a 

34 nonprofit basis for the members of the group to obtain carload, truckload, 

35 or other volume rates or service contracts. 

36 ‘‘(24) THROUGH RATE.—The term ‘through rate’ means the single 

37 amount charged by a common carrier in connection with through trans38 portation. 

39 ‘‘(25) THROUGH TRANSPORTATION.—The term ‘through transpor40 tation’ means continuous transportation between origin and destination 

41 for which a through rate is assessed and which is offered or performed 
50 

•HR 4319 RH 

1 by one or more carriers, at least one of which is a common carrier, be2 tween a United States port or point and a foreign port or point. 

3 ‘‘§ 40103. Administrative exemptions 

4 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on application or 

5 its own motion, may by order or regulation exempt for the future any class 

6 of agreements between persons subject to this part or any specified activity 

7 of those persons from any requirement of this part if the Commission finds 

8 that the exemption will not result in substantial reduction in competition or 

9 be detrimental to commerce. The Commission may attach conditions to an ex10 emption and may, by order, revoke an exemption. 

11 ‘‘(b) OPPORTUNITY FOR HEARING.—An order or regulation of exemption or 

12 revocation of an exemption may be issued only if the Commission has pro13 vided an opportunity for a hearing to interested persons and departments and 

14 agencies of the United States Government. 

15 ‘‘§ 40104. Reports filed with the Commission 

16 ‘‘(a) IN GENERAL.—The Federal Maritime Commission may require a com17 mon carrier or an officer, receiver, trustee, lessee, agent, or employee of the 

18 carrier to file with the Commission a periodical or special report, an account, 

19 record, rate, or charge, or a memorandum of facts and transactions related 

20 to the business of the carrier. The report, account, record, rate, charge, or 

21 memorandum shall be made under oath if the Commission requires, and shall 

22 be filed in the form and within the time prescribed by the Commission. 

23 ‘‘(b) CONFERENCE MINUTES.—Conference minutes required to be filed with 

24 the Commission under this section may not be released to third parties or 

25 published by the Commission. 

26 ‘‘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. 

27 ‘‘§ 40301. Application 

28 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.—This part applies to an 

29 agreement between or among ocean common carriers to— 

30 ‘‘(1) discuss, fix, or regulate transportation rates, including through 

31 rates, cargo space accommodations, and other conditions of service; 

32 ‘‘(2) pool or apportion traffic, revenues, earnings, or losses; 

33 ‘‘(3) allot ports or regulate the number and character of voyages be34 tween ports; 

35 ‘‘(4) regulate the volume or character of cargo or passenger traffic to 

36 be carried; 
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1 ‘‘(5) engage in an exclusive, preferential, or cooperative working ar2 rangement between themselves or with a marine terminal operator; 

3 ‘‘(6) control, regulate, or prevent competition in international ocean 

4 transportation; or 

5 ‘‘(7) discuss and agree on any matter related to a service contract. 

6 ‘‘(b) MARINE TERMINAL OPERATOR AGREEMENTS.—This part applies to 

7 an agreement between or among marine terminal operators, or between or 

8 among one or more marine terminal operators and one or more ocean com9 mon carriers, to— 

10 ‘‘(1) discuss, fix, or regulate rates or other conditions of service; or 

11 ‘‘(2) engage in exclusive, preferential, or cooperative working arrange12 ments, to the extent the agreement involves ocean transportation in the 

13 foreign commerce of the United States. 

14 ‘‘(c) ACQUISITIONS.—This part does not apply to an acquisition by any 

15 person, directly or indirectly, of any voting security or assets of any other 

16 person. 

17 ‘‘(d) MARITIME LABOR AGREEMENTS.—This part does not apply to a mar18 itime labor agreement. However, this subsection does not exempt from this 

19 part any rate, charge, regulation, or practice of a common carrier that is re20 quired to be set forth in a tariff or is an essential term of a service contract, 

21 whether or not the rate, charge, regulation, or practice arises out of, or is oth22 erwise related to, a maritime labor agreement. 

23 ‘‘(e) ASSESSMENT AGREEMENTS.—This part (except sections 40305 and 

24 40307(a)) does not apply to an assessment agreement. 

25 ‘‘§ 40302. Filing requirements 

26 ‘‘(a) IN GENERAL.—A true copy of every agreement referred to in section 

27 40301(a) or (b) of this title shall be filed with the Federal Maritime Commis28 sion. If the agreement is oral, a complete memorandum specifying in detail 

29 the substance of the agreement shall be filed. 

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

31 ‘‘(1) an agreement related to transportation to be performed within or 

32 between foreign countries; or 

33 ‘‘(2) an agreement among common carriers to establish, operate, or 

34 maintain a marine terminal in the United States. 

35 ‘‘(c) REGULATIONS.—The Commission may by regulation prescribe the 

36 form and manner in which an agreement shall be filed and any additional 

37 information and documents necessary to evaluate the agreement. 

38 ‘‘§ 40303. Content requirements 

39 ‘‘(a) OCEAN COMMON CARRIER AGREEMENTS.— 

40 ‘‘(1) RESTRICTIONS.—An ocean common carrier agreement may not— 
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1 ‘‘(A) prohibit or restrict a member of the agreement from engag2 ing in negotiations for a service contract with a shipper; 

3 ‘‘(B) require a member of the agreement to disclose a negotiation 

4 on a service contract, or the terms of a service contract, other than 

5 those terms required to be published under section 40502(d) of this 

6 title; or 

7 ‘‘(C) adopt mandatory rules or requirements affecting the right 

8 of an agreement member to negotiate and enter into a service con9 tract. 

10 ‘‘(2) VOLUNTARY GUIDELINES.—An ocean common carrier agreement 

11 may provide authority to adopt voluntary guidelines relating to the 

12 terms and procedures of an agreement member’s service contracts if the 

13 guidelines explicitly state the right of members of the agreement not to 

14 follow the guidelines. Any guidelines adopted shall be submitted confiden15 tially to the Federal Maritime Commission. 

16 ‘‘(b) CONFERENCE AGREEMENTS.—Each conference agreement must— 

17 ‘‘(1) state its purpose; 

18 ‘‘(2) provide reasonable and equal terms for admission and readmis19 sion to conference membership for any ocean common carrier willing to 

20 serve the particular trade or route; 

21 ‘‘(3) permit any member to withdraw from conference membership on 

22 reasonable notice without penalty; 

23 ‘‘(4) at the request of any member, require an independent neutral 

24 body to police fully the obligations of the conference and its members; 

25 ‘‘(5) prohibit the conference from engaging in conduct prohibited by 

26 section 41105(1) or (3) of this title; 

27 ‘‘(6) provide for a consultation process designed to promote— 

28 ‘‘(A) commercial resolution of disputes; and 

29 ‘‘(B) cooperation with shippers in preventing and eliminating 

30 malpractices; 

31 ‘‘(7) establish procedures for promptly and fairly considering requests 

32 and complaints of shippers; and 

33 ‘‘(8) provide that— 

34 ‘‘(A) any member of the conference may take independent action 

35 on a rate or service item on not more than 5 days’ notice to the 

36 conference; and 

37 ‘‘(B) except for an exempt commodity not published in the con38 ference tariff, the conference will include the new rate or service 

39 item in its tariff for use by that member, effective no later than 5 

40 days after receipt of the notice, and by any other member that noti41 fies the conference that it elects to adopt the independent rate or 
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1 service item on or after its effective date, in lieu of the existing con2 ference tariff provision for that rate or service item. 

3 ‘‘(c) INTERCONFERENCE AGREEMENTS.—Each agreement between carriers 

4 not members of the same conference must provide the right of independent ac5 tion for each carrier. Each agreement between conferences must provide the 

6 right of independent action for each conference. 

7 ‘‘(d) VESSEL SHARING AGREEMENTS.— 

8 ‘‘(1) IN GENERAL.—An ocean common carrier that is the owner, oper9 ator, or bareboat, time, or slot charterer of a United States-flag liner ves10 sel documented under section 12103 or 12111(c) of this title may agree 

11 with an ocean common carrier described in paragraph (2) to which it 

12 charters or subcharters the vessel or space on the vessel that the charterer 

13 or subcharterer may not use or make available space on the vessel for 

14 the carriage of cargo reserved by law for United States-flag vessels. 

15 ‘‘(2) CARRIER DESCRIBED.—An ocean common carrier described in 

16 this paragraph is one that is not the owner, operator, or bareboat 

17 charterer for at least one year of United States-flag liner vessels that are 

18 eligible to be included in the Maritime Security Fleet Program and are 

19 enrolled in an Emergency Preparedness Program under chapter 531 of 

20 this title. 

21 ‘‘§ 40304. Commission action 

22 ‘‘(a) NOTICE OF FILING.—Within 7 days after an agreement is filed, the 

23 Federal Maritime Commission shall transmit a notice of the filing to the Fed24 eral Register for publication. 

25 ‘‘(b) PRELIMINARY REVIEW AND REJECTION.—After preliminary review, 

26 the Commission shall reject an agreement that it finds does not meet the re27 quirements of sections 40302 and 40303 of this title. The Commission shall 

28 notify in writing the person filing the agreement of the reason for rejection. 

29 ‘‘(c) REVIEW AND EFFECTIVE DATE.—Unless rejected under subsection (b), 

30 an agreement (other than an assessment agreement) is effective— 

31 ‘‘(1) on the 45th day after filing, or on the 30th day after notice of 

32 the filing is published in the Federal Register, whichever is later; or 

33 ‘‘(2) if additional information or documents are requested under sub34 section (d)— 

35 ‘‘(A) on the 45th day after the Commission receives all the addi36 tional information and documents; or 

37 ‘‘(B) if the request is not fully complied with, on the 45th day 

38 after the Commission receives the information and documents sub39 mitted and a statement of the reasons for noncompliance with the 

40 request. 
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1 ‘‘(d) REQUEST FOR ADDITIONAL INFORMATION.—Before the expiration of 

2 the period specified in subsection (c)(1), the Commission may request from 

3 the person filing the agreement any additional information and documents 

4 the Commission considers necessary to make the determinations required by 

5 this section. 

6 ‘‘(e) MODIFICATION OF REVIEW PERIOD.— 

7 ‘‘(1) SHORTENING.—On request of the party filing an agreement, the 

8 Commission may shorten a period specified in subsection (c), but not to 

9 a date that is less than 14 days after notice of the filing of the agreement 

10 is published in the Federal Register. 

11 ‘‘(2) EXTENSION.—The period specified in subsection (c)(2) may be ex12 tended only by the United States District Court for the District of Co13 lumbia in a civil action brought by the Commission under section 

14 41307(c) of this title. 

15 ‘‘(f) FIXED TERMS.—The Commission may not limit the effectiveness of an 

16 agreement to a fixed term. 

17 ‘‘§ 40305. Assessment agreements 

18 ‘‘(a) FILING REQUIREMENT.—An assessment agreement shall be filed with 

19 the Federal Maritime Commission and is effective on filing. 

20 ‘‘(b) COMPLAINTS.—If a complaint is filed with the Commission within 2 

21 years after the date of an assessment agreement, the Commission shall dis22 approve, cancel, or modify the agreement, or an assessment or charge pursu23 ant to the agreement, that the Commission finds, after notice and opportunity 

24 for a hearing, to be unjustly discriminatory or unfair as between carriers, 

25 shippers, or ports. The Commission shall issue its final decision in the pro26 ceeding within one year after the date the complaint is filed. 

27 ‘‘(c) ADJUSTMENTS OF ASSESSMENTS AND CHARGES.—To the extent that 

28 the Commission finds under subsection (b) that an assessment or charge is 

29 unjustly discriminatory or unfair as between carriers, shippers, or ports, the 

30 Commission shall adjust the assessment or charge for the period between the 

31 filing of the complaint and the final decision by awarding prospective credits 

32 or debits to future assessments and charges. However, if the complainant has 

33 ceased activities subject to the assessment or charge, the Commission may 

34 award reparations. 

35 ‘‘§ 40306. Nondisclosure of information 

36 ‘‘Information and documents (other than an agreement) filed with the Fed37 eral Maritime Commission under this chapter are exempt from disclosure 

38 under section 552 of title 5 and may not be made public except as may be 

39 relevant to an administrative or judicial proceeding. This section does not 

40 prevent disclosure to either House of Congress or to a duly authorized com41 mittee or subcommittee of Congress. 
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1 ‘‘§ 40307. Exemption from antitrust laws 

2 ‘‘(a) IN GENERAL.—The antitrust laws do not apply to— 

3 ‘‘(1) an agreement (including an assessment agreement) that has been 

4 filed and is effective under this chapter; 

5 ‘‘(2) an agreement that is exempt under section 40103 of this title 

6 from any requirement of this part; 

7 ‘‘(3) an agreement or activity within the scope of this part, whether 

8 permitted under or prohibited by this part, undertaken or entered into 

9 with a reasonable basis to conclude that it is— 

10 ‘‘(A) pursuant to an agreement on file with the Federal Maritime 

11 Commission and in effect when the activity takes place; or 

12 ‘‘(B) exempt under section 40103 of this title from any filing or 

13 publication requirement of this part; 

14 ‘‘(4) an agreement or activity relating to transportation services with15 in or between foreign countries, whether or not via the United States, 

16 unless the agreement or activity has a direct, substantial, and reasonably 

17 foreseeable effect on the commerce of the United States; 

18 ‘‘(5) an agreement or activity relating to the foreign inland segment 

19 of through transportation that is part of transportation provided in a 

20 United States import or export trade; 

21 ‘‘(6) an agreement or activity to provide wharfage, dock, warehouse, 

22 or other terminal facilities outside the United States; or 

23 ‘‘(7) an agreement, modification, or cancellation approved before June 

24 18, 1984, by the Commission under section 15 of the Shipping Act, 1916, 

25 or permitted under section 14b of that Act, and any properly published 

26 tariff, rate, fare, or charge, or classification, rule, or regulation explana27 tory thereof implementing that agreement, modification, or cancellation. 

28 ‘‘(b) EXCEPTIONS.—This part does not extend antitrust immunity to— 

29 ‘‘(1) an agreement with or among air carriers, rail carriers, motor 

30 carriers, or common carriers by water not subject to this part relating 

31 to transportation within the United States; 

32 ‘‘(2) a discussion or agreement among common carriers subject to this 

33 part relating to the inland divisions (as opposed to the inland portions) 

34 of through rates within the United States; 

35 ‘‘(3) an agreement among common carriers subject to this part to es36 tablish, operate, or maintain a marine terminal in the United States; 

37 or 

38 ‘‘(4) a loyalty contract. 

39 ‘‘(c) RETROACTIVE EFFECT OF DETERMINATIONS.—A determination by an 

40 agency or court that results in the denial or removal of the immunity to the 
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1 antitrust laws under subsection (a) does not remove or alter the antitrust im2 munity for the period before the determination. 

3 ‘‘(d) RELIEF UNDER CLAYTON ACT.—A person may not recover damages 

4 under section 4 of the Clayton Act (15 U.S.C. 15), or obtain injunctive relief 

5 under section 16 of that Act (15 U.S.C. 26), for conduct prohibited by this 

6 part. 

7 ‘‘CHAPTER 405—TARIFFS, SERVICE CONTRACTS, 

8 REFUNDS, AND WAIVERS 

‘‘Sec. 

‘‘40501. General rate and tariff requirements. 

‘‘40502. Service contracts. 

‘‘40503. Refunds and waivers. 

9 ‘‘§ 40501. General rate and tariff requirements 

10 ‘‘(a) AUTOMATED TARIFF SYSTEM.— 

11 ‘‘(1) IN GENERAL.—Each common carrier and conference shall keep 

12 open to public inspection in an automated tariff system, tariffs showing 

13 all its rates, charges, classifications, rules, and practices between all 

14 points or ports on its own route and on any through transportation 

15 route that has been established. However, a common carrier is not re16 quired to state separately or otherwise reveal in tariffs the inland divi17 sions of a through rate. 

18 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply with respect to bulk 

19 cargo, forest products, recycled metal scrap, new assembled motor vehi20 cles, waste paper, or paper waste. 

21 ‘‘(b) CONTENTS OF TARIFFS.—A tariff under subsection (a) shall— 

22 ‘‘(1) state the places between which cargo will be carried; 

23 ‘‘(2) list each classification of cargo in use; 

24 ‘‘(3) state the level of compensation, if any, of any ocean freight for25 warder by a carrier or conference; 

26 ‘‘(4) state separately each terminal or other charge, privilege, or facil27 ity under the control of the carrier or conference and any rules that in 

28 any way change, affect, or determine any part or the total of the rates 

29 or charges; 

30 ‘‘(5) include sample copies of any bill of lading, contract of affreight31 ment, or other document evidencing the transportation agreement; and 

32 ‘‘(6) include copies of any loyalty contract, omitting the shipper’s 

33 name. 

34 ‘‘(c) ELECTRONIC ACCESS.—A tariff under subsection (a) shall be made 

35 available electronically to any person, without time, quantity, or other limita36 tion, through appropriate access from remote locations. A reasonable fee may 

37 be charged for such access, except that no fee may be charged for access by 

38 a Federal agency. 
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1 ‘‘(d) TIME-VOLUME RATES.—A rate contained in a tariff under subsection 

2 (a) may vary with the volume of cargo offered over a specified period of time. 

3 ‘‘(e) EFFECTIVE DATES.— 

4 ‘‘(1) INCREASES.—A new or initial rate or change in an existing rate 

5 that results in an increased cost to a shipper may not become effective 

6 earlier than 30 days after publication. However, for good cause, the Fed7 eral Maritime Commission may allow the rate to become effective sooner. 

8 ‘‘(2) DECREASES.—A change in an existing rate that results in a de9 creased cost to a shipper may become effective on publication. 

10 ‘‘(f) MARINE TERMINAL OPERATOR SCHEDULES.—A marine terminal oper11 ator may make available to the public a schedule of rates, regulations, and 

12 practices, including limitations of liability for cargo loss or damage, per13 taining to receiving, delivering, handling, or storing property at its marine 

14 terminal. Any such schedule made available to the public is enforceable by 

15 an appropriate court as an implied contract without proof of actual knowl16 edge of its provisions. 

17 ‘‘(g) REGULATIONS.— 

18 ‘‘(1) IN GENERAL.—The Commission shall by regulation prescribe the 

19 requirements for the accessibility and accuracy of automated tariff sys20 tems established under this section. The Commission, after periodic re21 view, may prohibit the use of any automated tariff system that fails to 

22 meet the requirements established under this section. 

23 ‘‘(2) REMOTE TERMINALS.—The Commission may not require a com24 mon carrier to provide a remote terminal for electronic access under sub25 section (c). 

26 ‘‘(3) MARINE TERMINAL OPERATOR SCHEDULES.—The Commission 

27 shall by regulation prescribe the form and manner in which marine ter28 minal operator schedules authorized by this section shall be published. 

29 ‘‘§ 40502. Service contracts 

30 ‘‘(a) IN GENERAL.—An individual ocean common carrier or an agreement 

31 between or among ocean common carriers may enter into a service contract 

32 with one or more shippers subject to the requirements of this part. 

33 ‘‘(b) FILING REQUIREMENTS.— 

34 ‘‘(1) IN GENERAL.—Each service contract entered into under this sec35 tion by an individual ocean common carrier or an agreement shall be 

36 filed confidentially with the Federal Maritime Commission. 

37 ‘‘(2) EXCEPTIONS.—Paragraph (1) does not apply to contracts regard38 ing bulk cargo, forest products, recycled metal scrap, new assembled 

39 motor vehicles, waste paper, or paper waste. 

40 ‘‘(c) ESSENTIAL TERMS.—Each service contract shall include— 

41 ‘‘(1) the origin and destination port ranges; 
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1 ‘‘(2) the origin and destination geographic areas in the case of through 

2 intermodal movements; 

3 ‘‘(3) the commodities involved; 

4 ‘‘(4) the minimum volume or portion; 

5 ‘‘(5) the line-haul rate; 

6 ‘‘(6) the duration; 

7 ‘‘(7) service commitments; and 

8 ‘‘(8) the liquidated damages for nonperformance, if any. 

9 ‘‘(d) PUBLICATION OF CERTAIN TERMS.—When a service contract is filed 

10 confidentially with the Commission, a concise statement of the essential terms 

11 specified in clauses (1), (3), (4), and (6) of subsection (c) shall be published 

12 and made available to the general public in tariff format. 

13 ‘‘(e) DISCLOSURE OF CERTAIN TERMS.— 

14 ‘‘(1) DEFINITIONS.—In this subsection, the terms ‘dock area’ and 

15 ‘within the port area’ have the same meaning and scope as in the appli16 cable collective bargaining agreement between the requesting labor orga17 nization and the carrier. 

18 ‘‘(2) DISCLOSURE.—An ocean common carrier that is a party to or 

19 is otherwise subject to a collective bargaining agreement with a labor or20 ganization shall, in response to a written request by the labor organiza21 tion, state whether it is responsible for the following work at a dock area 

22 or within a port area in the United States with respect to cargo trans23 portation under a service contract: 

24 ‘‘(A) The movement of the shipper’s cargo on a dock area or with25 in the port area or to or from railroad cars on a dock area or with26 in the port area. 

27 ‘‘(B) The assignment of intraport carriage of the shipper’s cargo 

28 between areas on a dock or within the port area. 

29 ‘‘(C) The assignment of the carriage of the shipper’s cargo be30 tween a container yard on a dock area or within the port area and 

31 a rail yard adjacent to the container yard. 

32 ‘‘(D) The assignment of container freight station work and con33 tainer maintenance and repair work performed at a dock area or 

34 within the port area. 

35 ‘‘(3) WITHIN REASONABLE TIME.—The common carrier shall provide 

36 the information described in paragraph (2) to the requesting labor orga37 nization within a reasonable period of time. 

38 ‘‘(4) EXISTENCE OF COLLECTIVE BARGAINING AGREEMENT.—This sub39 section does not require the disclosure of information by an ocean com40 mon carrier unless there exists an applicable and otherwise lawful collec41 tive bargaining agreement pertaining to that carrier. A disclosure by an 
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1 ocean common carrier may not be deemed an admission or an agreement 

2 that any work is covered by a collective bargaining agreement. A dispute 

3 about whether any work is covered by a collective bargaining agreement 

4 and the responsibility of an ocean common carrier under a collective bar5 gaining agreement shall be resolved solely in accordance with the dispute 

6 resolution procedures contained in the collective bargaining agreement 

7 and the National Labor Relations Act (29 U.S.C. 151 et seq.), and with8 out reference to this subsection. 

9 ‘‘(5) EFFECT UNDER OTHER LAWS.—This subsection does not affect the 

10 lawfulness or unlawfulness under this part or any other Federal or State 

11 law of any collective bargaining agreement or element thereof, including 

12 any element that constitutes an essential term of a service contract. 

13 ‘‘(f) REMEDY FOR BREACH.—Unless the parties agree otherwise, the exclu14 sive remedy for a breach of a service contract is an action in an appropriate 

15 court. The contract dispute resolution forum may not be controlled by or in 

16 any way affiliated with a controlled carrier or by the government that owns 

17 or controls the carrier. 

18 ‘‘§ 40503. Refunds and waivers 

19 ‘‘The Federal Maritime Commission, on application of a carrier or shipper, 

20 may permit a common carrier or conference to refund a portion of the freight 

21 charges collected from a shipper, or to waive collection of a portion of the 

22 charges from a shipper, if— 

23 ‘‘(1) there is an error in a tariff, a failure to publish a new tariff, 

24 or an error in quoting a tariff, and the refund or waiver will not result 

25 in discrimination among shippers, ports, or carriers; 

26 ‘‘(2) the common carrier or conference, before filing an application for 

27 authority to refund or waive any charges for an error in a tariff or a 

28 failure to publish a tariff, has published a new tariff setting forth the 

29 rate on which the refund or waiver would be based; and 

30 ‘‘(3) the application for the refund or waiver is filed with the Commis31 sion within 180 days from the date of shipment. 

32 ‘‘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. 

33 ‘‘§ 40701. Rates 

34 ‘‘(a) IN GENERAL.—A controlled carrier may not— 

35 ‘‘(1) maintain a rate or charge in a tariff or service contract, or 

36 charge or assess a rate, that is below a just and reasonable level; or 
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1 ‘‘(2) establish, maintain, or enforce in a tariff or service contract a 

2 classification, rule, or regulation that results, or is likely to result, in 

3 the carriage or handling of cargo at a rate or charge that is below a 

4 just and reasonable level. 

5 ‘‘(b) COMMISSION PROHIBITION.—The Federal Maritime Commission, at 

6 any time after notice and opportunity for a hearing, may prohibit the publi7 cation or use of a rate, charge, classification, rule, or regulation that a con8 trolled carrier has failed to demonstrate is just and reasonable. 

9 ‘‘(c) BURDEN OF PROOF.—In a proceeding under this section, the burden 

10 of proof is on the controlled carrier to demonstrate that its rate, charge, classi11 fication, rule, or regulation is just and reasonable. 

12 ‘‘(d) VOIDNESS.—A rate, charge, classification, rule, or regulation that has 

13 been suspended or prohibited by the Commission is void and its use is unlaw14 ful. 

15 ‘‘§ 40702. Rate standards 

16 ‘‘(a) DEFINITION.—In this section, the term ‘constructive costs’ means the 

17 costs of another carrier, other than a controlled carrier, operating similar ves18 sels and equipment in the same or a similar trade. 

19 ‘‘(b) STANDARDS.—In determining whether a rate, charge, classification, 

20 rule, or regulation of a controlled carrier is just and reasonable, the Federal 

21 Maritime Commission— 

22 ‘‘(1) shall take into account whether the rate or charge that has been 

23 published or assessed, or that would result from the pertinent classifica24 tion, rule, or regulation, is below a level that is fully compensatory to 

25 the controlled carrier based on the carrier’s actual costs or constructive 

26 costs; and 

27 ‘‘(2) may take into account other appropriate factors, including 

28 whether the rate, charge, classification, rule, or regulation is— 

29 ‘‘(A) the same as, or similar to, those published or assessed by 

30 other carriers in the same trade; 

31 ‘‘(B) required to ensure movement of particular cargo in the same 

32 trade; or 

33 ‘‘(C) required to maintain acceptable continuity, level, or quality 

34 of common carrier service to or from affected ports. 

35 ‘‘§ 40703. Effective date of rates 

36 ‘‘Notwithstanding section 40501(e) of this title and except for service con37 tracts, a rate, charge, classification, rule, or regulation of a controlled carrier 

38 may not become effective, without special permission of the Federal Maritime 

39 Commission, until the 30th day after publication. 
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1 ‘‘§ 40704. Commission review 

2 ‘‘(a) REQUEST FOR JUSTIFICATION.—On request of the Federal Maritime 

3 Commission, a controlled carrier shall file with the Commission, within 20 

4 days of the request, a statement of justification that sufficiently details the 

5 carrier’s need and purpose for an existing or proposed rate, charge, classifica6 tion, rule, or regulation and upon which the Commission may reasonably 

7 base a determination of its lawfulness. 

8 ‘‘(b) DETERMINATION.—Within 120 days after receipt of information re9 quested under subsection (a), the Commission shall determine whether the 

10 rate, charge, classification, rule, or regulation may be unjust and unreason11 able. 

12 ‘‘(c) SHOW CAUSE ORDER.—Whenever the Commission is of the opinion 

13 that a rate, charge, classification, rule, or regulation published or assessed by 

14 a controlled carrier may be unjust and unreasonable, the Commission shall 

15 issue an order to the controlled carrier to show cause why the rate, charge, 

16 classification, rule, or regulation should not be prohibited. 

17 ‘‘(d) SUSPENSION PENDING DETERMINATION.— 

18 ‘‘(1) NOT YET EFFECTIVE.—Pending a determination of the lawfulness 

19 of a rate, charge, classification, rule, or regulation in a proceeding under 

20 subsection (c), the Commission may suspend the rate, charge, classifica21 tion, rule, or regulation at any time before its effective date. 

22 ‘‘(2) ALREADY EFFECTIVE.—If a rate, charge, classification, rule, or 

23 regulation has already become effective, the Commission, on issuance of 

24 an order to show cause, may suspend the rate, charge, classification, rule, 

25 or regulation on at least 30 days’ notice to the controlled carrier. 

26 ‘‘(3) MAXIMUM SUSPENSION.—A period of suspension under this sub27 section may not exceed 180 days. 

28 ‘‘(e) REPLACEMENT DURING SUSPENSION.—Whenever the Commission has 

29 suspended a rate, charge, classification, rule, or regulation under this section, 

30 the controlled carrier may publish a new rate, charge, classification, rule, or 

31 regulation to take effect immediately during the suspension in lieu of the sus32 pended rate, charge, classification, rule, or regulation. However, the Commis33 sion may reject the new rate, charge, classification, rule, or regulation if the 

34 Commission believes it is unjust and unreasonable. 

35 ‘‘§ 40705. Presidential review of Commission orders 

36 ‘‘(a) TRANSMISSION TO PRESIDENT.—The Federal Maritime Commission 

37 shall transmit to the President, concurrently with publication thereof, each 

38 order of suspension or final order of prohibition issued under section 40704 

39 of this title. 

40 ‘‘(b) PRESIDENTIAL REQUEST AND COMMISSION ACTION.—Within 10 days 

41 after receipt or the effective date of a Commission order referred to in sub-
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1 section (a), the President, in writing, may request the Commission to stay 

2 the effect of the order if the President finds that the stay is required for rea3 sons of national defense or foreign policy. The reasons shall be specified in 

4 the request. The Commission shall immediately grant the request by issuing 

5 an order in which the President’s request shall be described. During a stay, 

6 the President shall, whenever practicable, attempt to resolve the matter by ne7 gotiating with representatives of the applicable foreign governments. 

8 ‘‘§ 40706. Exceptions 

9 ‘‘This chapter does not apply to— 

10 ‘‘(1) a controlled carrier of a foreign country whose vessels are entitled 

11 by a treaty of the United States to receive national or most-favored-na12 tion treatment; or 

13 ‘‘(2) a trade served only by controlled carriers. 

14 ‘‘CHAPTER 409—OCEAN TRANSPORTATION 

15 INTERMEDIARIES 

‘‘Sec. 

‘‘40901. License requirement. 

‘‘40902. Financial responsibility. 

‘‘40903. Suspension or revocation of license. 

‘‘40904. Compensation by common carriers. 

16 ‘‘§ 40901. License requirement 

17 ‘‘(a) IN GENERAL.—A person in the United States may not act as an ocean 

18 transportation intermediary unless the person holds an ocean transportation 

19 intermediary’s license issued by the Federal Maritime Commission. The Com20 mission shall issue a license to a person that the Commission determines to 

21 be qualified by experience and character to act as an ocean transportation 

22 intermediary. 

23 ‘‘(b) EXCEPTION.—A person whose primary business is the sale of merchan24 dise may forward shipments of the merchandise for its own account without 

25 an ocean transportation intermediary’s license. 

26 ‘‘§ 40902. Financial responsibility 

27 ‘‘(a) IN GENERAL.—A person may not act as an ocean transportation 

28 intermediary unless the person furnishes a bond, proof of insurance, or other 

29 surety— 

30 ‘‘(1) in a form and amount determined by the Federal Maritime Com31 mission to insure financial responsibility; and 

32 ‘‘(2) issued by a surety company found acceptable by the Secretary of 

33 the Treasury. 

34 ‘‘(b) SCOPE OF FINANCIAL RESPONSIBILITY.—A bond, insurance, or other 

35 surety obtained under this section— 

36 ‘‘(1) shall be available to pay any penalty assessed under section 

37 41109 of this title or any order for reparation issued under section 41305 

38 of this title; 
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1 ‘‘(2) may be available to pay any claim against an ocean transpor2 tation intermediary arising from its transportation-related activities— 

3 ‘‘(A) with the consent of the insured ocean transportation inter4 mediary and subject to review by the surety company; or 

5 ‘‘(B) when the claim is deemed valid by the surety company after 

6 the ocean transportation intermediary has failed to respond to ade7 quate notice to address the validity of the claim; and 

8 ‘‘(3) shall be available to pay any judgment for damages against an 

9 ocean transportation intermediary arising from its transportation-re10 lated activities, if the claimant has first attempted to resolve the claim 

11 under paragraph (2) and the claim has not been resolved within a rea12 sonable period of time. 

13 ‘‘(c) REGULATIONS ON COURT JUDGMENTS.—The Commission shall pre14 scribe regulations for the purpose of protecting the interests of claimants, 

15 ocean transportation intermediaries, and surety companies with respect to the 

16 process of pursuing claims against ocean transportation intermediary bonds, 

17 insurance, or sureties through court judgments. The regulations shall provide 

18 that a judgment for monetary damages may not be enforced except to the ex19 tent that the damages claimed arise from the transportation-related activities 

20 of the insured ocean transportation intermediary, as defined by the Commis21 sion. 

22 ‘‘(d) RESIDENT AGENT.—An ocean transportation intermediary not domi23 ciled in the United States shall designate a resident agent in the United 

24 States for receipt of service of judicial and administrative process, including 

25 subpoenas. 

26 ‘‘§ 40903. Suspension or revocation of license 

27 ‘‘(a) FAILURE TO MAINTAIN QUALIFICATIONS OR TO COMPLY.—The Fed28 eral Maritime Commission, after notice and opportunity for a hearing, shall 

29 suspend or revoke an ocean transportation intermediary’s license if the Com30 mission finds that the ocean transportation intermediary— 

31 ‘‘(1) is not qualified to provide intermediary services; or 

32 ‘‘(2) willfully failed to comply with a provision of this part or with 

33 an order or regulation of the Commission. 

34 ‘‘(b) FAILURE TO MAINTAIN BOND, PROOF OF INSURANCE, OR OTHER

35 SURETY.—The Commission may revoke an ocean transportation 

36 intermediary’s license for failure to maintain a bond, proof of insurance, or 

37 other surety as required by section 40902(a) of this title. 

38 ‘‘§ 40904. Compensation by common carriers 

39 ‘‘(a) CERTIFICATION OF LICENSE AND SERVICES.—A common carrier may 

40 compensate an ocean freight forwarder for a shipment dispatched for others 

41 only when the ocean freight forwarder has certified in writing that it holds 
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1 an ocean transportation intermediary’s license (if required under section 

2 40901 of this title) and has— 

3 ‘‘(1) engaged, booked, secured, reserved, or contracted directly with the 

4 carrier or its agent for space aboard a vessel or confirmed the avail5 ability of the space; and 

6 ‘‘(2) prepared and processed the ocean bill of lading, dock receipt, or 

7 other similar document for the shipment. 

8 ‘‘(b) DUAL COMPENSATION.—A common carrier may not pay compensation 

9 for services described in subsection (a) more than once on the same shipment. 

10 ‘‘(c) BENEFICIAL INTEREST SHIPMENTS.—An ocean freight forwarder may 

11 not receive compensation from a common carrier for a shipment in which the 

12 ocean freight forwarder has a direct or indirect beneficial interest. A common 

13 carrier may not knowingly pay compensation on that shipment. 

14 ‘‘(d) LIMITS ON AUTHORITY OF CONFERENCE OR GROUP.—A conference or 

15 group of two or more ocean common carriers in the foreign commerce of the 

16 United States that is authorized to agree on the level of compensation paid 

17 to an ocean freight forwarder may not— 

18 ‘‘(1) deny a member of the conference or group the right, upon notice 

19 of not more than 5 days, to take independent action on any level of com20 pensation paid to an ocean freight forwarder; or 

21 ‘‘(2) agree to limit the payment of compensation to an ocean freight 

22 forwarder to less than 1.25 percent of the aggregate of all rates and 

23 charges applicable under a tariff and assessed against the cargo on which 

24 the services of the ocean freight forwarder are provided. 

25 ‘‘CHAPTER 411—PROHIBITIONS AND PENALTIES 

‘‘Sec. 

‘‘41101. Joint ventures and consortiums. 

‘‘41102. General prohibitions. 

‘‘41103. Disclosure of information. 

‘‘41104. Common carriers. 

‘‘41105. Concerted action. 

‘‘41106. Marine terminal operators. 

‘‘41107. Monetary penalties. 

‘‘41108. Additional penalties. 

‘‘41109. Assessment of penalties. 

26 ‘‘§ 41101. Joint ventures and consortiums 

27 ‘‘In this chapter, a joint venture or consortium of two or more common 

28 carriers operating as a single entity is deemed to be a single common carrier. 

29 ‘‘§ 41102. General prohibitions 

30 ‘‘(a) OBTAINING TRANSPORTATION AT LESS THAN APPLICABLE RATES.— 

31 A person may not knowingly and willfully, directly or indirectly, by means 

32 of false billing, false classification, false weighing, false report of weight, false 

33 measurement, or any other unjust or unfair device or means, obtain or at34 tempt to obtain ocean transportation for property at less than the rates or 

35 charges that would otherwise apply. 
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1 ‘‘(b) OPERATING CONTRARY TO AGREEMENT.—A person may not operate 

2 under an agreement required to be filed under section 40302 or 40305 of this 

3 title if— 

4 ‘‘(1) the agreement has not become effective under section 40304 of this 

5 title or has been rejected, disapproved, or canceled; or 

6 ‘‘(2) the operation is not in accordance with the terms of the agree7 ment or any modifications to the agreement made by the Federal Mari8 time Commission. 

9 ‘‘(c) PRACTICES IN HANDLING PROPERTY.—A common carrier, marine ter10 minal operator, or ocean transportation intermediary may not fail to estab11 lish, observe, and enforce just and reasonable regulations and practices relat12 ing to or connected with receiving, handling, storing, or delivering property. 

13 ‘‘§ 41103. Disclosure of information 

14 ‘‘(a) PROHIBITION.—A common carrier, marine terminal operator, or 

15 ocean freight forwarder, either alone or in conjunction with any other person, 

16 directly or indirectly, may not knowingly disclose, offer, solicit, or receive any 

17 information concerning the nature, kind, quantity, destination, consignee, or 

18 routing of any property tendered or delivered to a common carrier, without 

19 the consent of the shipper or consignee, if the information— 

20 ‘‘(1) may be used to the detriment or prejudice of the shipper, the con21 signee, or any common carrier; or 

22 ‘‘(2) may improperly disclose its business transaction to a competitor. 

23 ‘‘(b) EXCEPTIONS.—Subsection (a) does not prevent providing the informa24 tion— 

25 ‘‘(1) in response to legal process; 

26 ‘‘(2) to the Federal Maritime Commission or an agency of the United 

27 States Government; or 

28 ‘‘(3) to an independent neutral body operating within the scope of its 

29 authority to fulfill the policing obligations of the parties to an agreement 

30 effective under this part. 

31 ‘‘(c) DISCLOSURE FOR DETERMINING BREACH OR COMPILING STATIS32 TICS.—An ocean common carrier that is a party to a conference agreement 

33 approved under this part, a receiver, trustee, lessee, agent, or employee of the 

34 carrier, or any other person authorized by the carrier to receive informa35 tion— 

36 ‘‘(1) may give information to the conference or any person or agency 

37 designated by the conference, for the purpose of— 

38 ‘‘(A) determining whether a shipper or consignee has breached an 

39 agreement with the conference or its member lines; 

40 ‘‘(B) determining whether a member of the conference has 

41 breached the conference agreement; or 
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1 ‘‘(C) compiling statistics of cargo movement; and 

2 ‘‘(2) may not prevent the conference or its designee from soliciting or 

3 receiving information for any of those purposes. 

4 ‘‘§ 41104. Common carriers 

5 ‘‘A common carrier, either alone or in conjunction with any other person, 

6 directly or indirectly, may not— 

7 ‘‘(1) allow a person to obtain transportation for property at less than 

8 the rates or charges established by the carrier in its tariff or service con9 tract by means of false billing, false classification, false weighing, false 

10 measurement, or any other unjust or unfair device or means; 

11 ‘‘(2) provide service in the liner trade that is— 

12 ‘‘(A) not in accordance with the rates, charges, classifications, 

13 rules, and practices contained in a tariff published or a service con14 tract entered into under chapter 405 of this title, unless excepted or 

15 exempted under section 40103 or 40501(a)(2) of this title; or 

16 ‘‘(B) under a tariff or service contract that has been suspended 

17 or prohibited by the Federal Maritime Commission under chapter 

18 407 or 423 of this title; 

19 ‘‘(3) retaliate against a shipper by refusing, or threatening to refuse, 

20 cargo space accommodations when available, or resort to other unfair or 

21 unjustly discriminatory methods because the shipper has patronized an22 other carrier, or has filed a complaint, or for any other reason; 

23 ‘‘(4) for service pursuant to a tariff, engage in any unfair or unjustly 

24 discriminatory practice in the matter of— 

25 ‘‘(A) rates or charges; 

26 ‘‘(B) cargo classifications; 

27 ‘‘(C) cargo space accommodations or other facilities, with due re28 gard being given to the proper loading of the vessel and the avail29 able tonnage; 

30 ‘‘(D) loading and landing of freight; or 

31 ‘‘(E) adjustment and settlement of claims; 

32 ‘‘(5) for service pursuant to a service contract, engage in any unfair 

33 or unjustly discriminatory practice in the matter of rates or charges 

34 with respect to any port; 

35 ‘‘(6) use a vessel in a particular trade for the purpose of excluding, 

36 preventing, or reducing competition by driving another ocean common 

37 carrier out of that trade; 

38 ‘‘(7) offer or pay any deferred rebates; 

39 ‘‘(8) for service pursuant to a tariff, give any undue or unreasonable 

40 preference or advantage or impose any undue or unreasonable prejudice 

41 or disadvantage; 
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1 ‘‘(9) for service pursuant to a service contract, give any undue or un2 reasonable preference or advantage or impose any undue or unreasonable 

3 prejudice or disadvantage with respect to any port; 

4 ‘‘(10) unreasonably refuse to deal or negotiate; 

5 ‘‘(11) knowingly and willfully accept cargo from or transport cargo 

6 for the account of an ocean transportation intermediary that does not 

7 have a tariff as required by section 40501 of this title and a bond, insur8 ance, or other surety as required by section 40902 of this title; or 

9 ‘‘(12) knowingly and willfully enter into a service contract with an 

10 ocean transportation intermediary that does not have a tariff as required 

11 by section 40501 of this title and a bond, insurance, or other surety as 

12 required by section 40902 of this title, or with an affiliate of such an 

13 ocean transportation intermediary. 

14 ‘‘§ 41105. Concerted action 

15 ‘‘A conference or group of two or more common carriers may not— 

16 ‘‘(1) boycott or take any other concerted action resulting in an unrea17 sonable refusal to deal; 

18 ‘‘(2) engage in conduct that unreasonably restricts the use of inter19 modal services or technological innovations; 

20 ‘‘(3) engage in any predatory practice designed to eliminate the par21 ticipation, or deny the entry, in a particular trade of a common carrier 

22 not a member of the conference, a group of common carriers, an ocean 

23 tramp, or a bulk carrier; 

24 ‘‘(4) negotiate with a non-ocean carrier or group of non-ocean carriers 

25 (such as truck, rail, or air operators) on any matter relating to rates 

26 or services provided to ocean common carriers within the United States 

27 by those non-ocean carriers, unless the negotiations and any resulting 

28 agreements are not in violation of the antitrust laws and are consistent 

29 with the purposes of this part, except that this clause does not prohibit 

30 the setting and publishing of a joint through rate by a conference, joint 

31 venture, or association of ocean common carriers; 

32 ‘‘(5) deny in the export foreign commerce of the United States com33 pensation to an ocean freight forwarder or limit that compensation to 

34 less than a reasonable amount; 

35 ‘‘(6) allocate shippers among specific carriers that are parties to the 

36 agreement or prohibit a carrier that is a party to the agreement from 

37 soliciting cargo from a particular shipper, except as— 

38 ‘‘(A) authorized by section 40303(d) of this title; 

39 ‘‘(B) required by the law of the United States or the importing 

40 or exporting country; or 

41 ‘‘(C) agreed to by a shipper in a service contract; 
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1 ‘‘(7) for service pursuant to a service contract, engage in any unjustly 

2 discriminatory practice in the matter of rates or charges with respect to 

3 any locality, port, or person due to the person’s status as a shippers’ as4 sociation or ocean transportation intermediary; or 

5 ‘‘(8) for service pursuant to a service contract, give any undue or un6 reasonable preference or advantage or impose any undue or unreasonable 

7 prejudice or disadvantage with respect to any locality, port, or person 

8 due to the person’s status as a shippers’ association or ocean transpor9 tation intermediary. 

10 ‘‘§ 41106. Marine terminal operators 

11 ‘‘A marine terminal operator may not— 

12 ‘‘(1) agree with another marine terminal operator or with a common 

13 carrier to boycott, or unreasonably discriminate in the provision of ter14 minal services to, a common carrier or ocean tramp; 

15 ‘‘(2) give any undue or unreasonable preference or advantage or im16 pose any undue or unreasonable prejudice or disadvantage with respect 

17 to any person; or 

18 ‘‘(3) unreasonably refuse to deal or negotiate. 

19 ‘‘§ 41107. Monetary penalties 

20 ‘‘(a) IN GENERAL.—A person that violates this part or a regulation or 

21 order of the Federal Maritime Commission issued under this part is liable 

22 to the United States Government for a civil penalty. Unless otherwise pro23 vided in this part, the amount of the penalty may not exceed $5,000 for each 

24 violation or, if the violation was willfully and knowingly committed, $25,000 

25 for each violation. Each day of a continuing violation is a separate violation. 

26 ‘‘(b) LIEN ON CARRIER’S VESSELS.—The amount of a civil penalty im27 posed on a common carrier under this section constitutes a lien on the vessels 

28 operated by the carrier. Any such vessel is subject to an action in rem to en29 force the lien in the district court of the United States for the district in 

30 which it is found. 

31 ‘‘§ 41108. Additional penalties 

32 ‘‘(a) SUSPENSION OF TARIFFS.—For a violation of section 41104(1), (2), 

33 or (7) of this title, the Federal Maritime Commission may suspend any or 

34 all tariffs of the common carrier, or that common carrier’s right to use any 

35 or all tariffs of conferences of which it is a member, for a period not to exceed 

36 12 months. 

37 ‘‘(b) OPERATING UNDER SUSPENDED TARIFF.—A common carrier that ac38 cepts or handles cargo for carriage under a tariff that has been suspended, 

39 or after its right to use that tariff has been suspended, is liable to the United 

40 States Government for a civil penalty of not more than $50,000 for each ship41 ment. 
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1 ‘‘(c) FAILURE TO PROVIDE INFORMATION.— 

2 ‘‘(1) PENALTIES.—If the Commission finds, after notice and oppor3 tunity for a hearing, that a common carrier has failed to supply infor4 mation ordered to be produced or compelled by subpoena under section 

5 41303 of this title, the Commission may— 

6 ‘‘(A) suspend any or all tariffs of the carrier or the carrier’s right 

7 to use any or all tariffs of conferences of which it is a member; and 

8 ‘‘(B) request the Secretary of Homeland Security to refuse or re9 voke any clearance required for a vessel operated by the carrier, and 

10 when so requested, the Secretary shall refuse or revoke the clearance. 

11 ‘‘(2) DEFENSE BASED ON FOREIGN LAW.—If, in defense of its failure 

12 to comply with a subpoena or discovery order, a common carrier alleges 

13 that information or documents located in a foreign country cannot be 

14 produced because of the laws of that country, the Commission shall im15 mediately notify the Secretary of State of the failure to comply and of 

16 the allegation relating to foreign laws. On receiving the notification, the 

17 Secretary of State shall promptly consult with the government of the na18 tion within which the information or documents are alleged to be located 

19 for the purpose of assisting the Commission in obtaining the information 

20 or documents. 

21 ‘‘(d) IMPAIRING ACCESS TO FOREIGN TRADE.—If the Commission finds, 

22 after notice and opportunity for a hearing, that the action of a common car23 rier, acting alone or in concert with another person, or a foreign government 

24 has unduly impaired access of a vessel documented under the laws of the 

25 United States to ocean trade between foreign ports, the Commission shall take 

26 action that it finds appropriate, including imposing any of the penalties au27 thorized by this section. The Commission also may take any of the actions 

28 authorized by sections 42304 and 42305 of this title. 

29 ‘‘(e) SUBMISSION OF ORDER TO PRESIDENT.—Before an order under this 

30 section becomes effective, it shall be submitted immediately to the President. 

31 The President, within 10 days after receiving it, may disapprove it if the 

32 President finds that disapproval is required for reasons of national defense 

33 or foreign policy. 

34 ‘‘§ 41109. Assessment of penalties 

35 ‘‘(a) GENERAL AUTHORITY.—Until a matter is referred to the Attorney 

36 General, the Federal Maritime Commission may, after notice and opportunity 

37 for a hearing, assess a civil penalty provided for in this part. The Commis38 sion may compromise, modify, or remit, with or without conditions, a civil 

39 penalty. 

40 ‘‘(b) FACTORS IN DETERMINING AMOUNT.—In determining the amount of 

41 a civil penalty, the Commission shall take into account the nature, cir-
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1 cumstances, extent, and gravity of the violation committed and, with respect 

2 to the violator, the degree of culpability, history of prior offenses, ability to 

3 pay, and other matters justice may require. 

4 ‘‘(c) EXCEPTION.—A civil penalty may not be imposed for conspiracy to 

5 violate section 41102(a) or 41104(1) or (2) of this title or to defraud the Com6 mission by concealing such a violation. 

7 ‘‘(d) PROHIBITED BASIS OF PENALTY.—The Commission or a court may 

8 not order a person to pay the difference between the amount billed and agreed 

9 upon in writing with a common carrier or its agent and the amount set forth 

10 in a tariff or service contract by that common carrier for the transportation 

11 service provided. 

12 ‘‘(e) TIME LIMIT.—A proceeding to assess a civil penalty under this section 

13 must be commenced within 5 years after the date of the violation. 

14 ‘‘(f) REVIEW OF CIVIL PENALTY.—A person against whom a civil penalty 

15 is assessed under this section may obtain review under chapter 158 of title 

16 28. 

17 ‘‘(g) CIVIL ACTIONS TO COLLECT.—If a person does not pay an assessment 

18 of a civil penalty after it has become final or after the appropriate court has 

19 entered final judgment in favor of the Commission, the Attorney General at 

20 the request of the Commission may seek to collect the amount assessed in an 

21 appropriate district court of the United States. The court shall enforce the 

22 order of the Commission unless it finds that the order was not regularly made 

23 and duly issued. 

24 ‘‘CHAPTER 413—ENFORCEMENT 

‘‘Sec. 

‘‘41301. Complaints. 

‘‘41302. Investigations. 

‘‘41303. Discovery and subpoenas. 

‘‘41304. Hearings and orders. 

‘‘41305. Award of reparations. 

‘‘41306. Injunctive relief sought by complainants. 

‘‘41307. Injunctive relief sought by the Commission. 

‘‘41308. Enforcement of subpoenas and orders. 

‘‘41309. Enforcement of reparation orders. 

25 ‘‘§ 41301. Complaints 

26 ‘‘(a) IN GENERAL.—A person may file with the Federal Maritime Commis27 sion a sworn complaint alleging a violation of this part, except section 

28 41307(b)(1). If the complaint is filed within 3 years after the claim accrues, 

29 the complainant may seek reparations for an injury to the complainant 

30 caused by the violation. 

31 ‘‘(b) NOTICE AND RESPONSE.—The Commission shall provide a copy of the 

32 complaint to the person named in the complaint. Within a reasonable time 

33 specified by the Commission, the person shall satisfy the complaint or answer 

34 it in writing. 
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1 ‘‘(c) IF COMPLAINT NOT SATISFIED.—If the complaint is not satisfied, the 

2 Commission shall investigate the complaint in an appropriate manner and 

3 make an appropriate order. 

4 ‘‘§ 41302. Investigations 

5 ‘‘(a) IN GENERAL.—The Federal Maritime Commission, on complaint or 

6 its own motion, may investigate any conduct or agreement that the Commis7 sion believes may be in violation of this part. The Commission may by order 

8 disapprove, cancel, or modify any agreement that operates in violation of this 

9 part. 

10 ‘‘(b) EFFECTIVENESS OF AGREEMENT DURING INVESTIGATION.—Unless an 

11 injunction is issued under section 41306 or 41307 of this title, an agreement 

12 under investigation by the Commission remains in effect until the Commis13 sion issues its order. 

14 ‘‘(c) DATE FOR DECISION.—Within 10 days after the initiation of a pro15 ceeding under this section or section 41301 of this title, the Commission shall 

16 set a date by which it will issue its final decision. The Commission by order 

17 may extend the date for good cause. 

18 ‘‘(d) SANCTIONS FOR DELAY.—If, within the period for final decision under 

19 subsection (c), the Commission determines that it is unable to issue a final 

20 decision because of undue delay caused by a party to the proceeding, the Com21 mission may impose sanctions, including issuing a decision adverse to the de22 laying party. 

23 ‘‘(e) REPORT.—The Commission shall make a written report of every inves24 tigation under this part in which a hearing was held, stating its conclusions, 

25 decisions, findings of fact, and order. The Commission shall provide a copy 

26 of the report to all parties and publish the report for public information. A 

27 published report is competent evidence in a court of the United States. 

28 ‘‘§ 41303. Discovery and subpoenas 

29 ‘‘(a) IN GENERAL.—In an investigation or adjudicatory proceeding under 

30 this part— 

31 ‘‘(1) the Federal Maritime Commission may subpoena witnesses and 

32 evidence; and 

33 ‘‘(2) a party may use depositions, written interrogatories, and dis34 covery procedures under regulations prescribed by the Commission that, 

35 to the extent practicable, shall conform to the Federal Rules of Civil Pro36 cedure (28 App. U.S.C.). 

37 ‘‘(b) WITNESS FEES.—Unless otherwise prohibited by law, a witness is en38 titled to the same fees and mileage as in the courts of the United States. 
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1 ‘‘§ 41304. Hearings and orders 

2 ‘‘(a) OPPORTUNITY FOR HEARING.—The Federal Maritime Commission 

3 shall provide an opportunity for a hearing before issuing an order relating 

4 to a violation of this part or a regulation prescribed under this part. 

5 ‘‘(b) MODIFICATION OF ORDER.—The Commission may reverse, suspend, or 

6 modify any of its orders. 

7 ‘‘(c) REHEARING.—On application of a party to a proceeding, the Commis8 sion may grant a rehearing of the same or any matter determined in the pro9 ceeding. Except by order of the Commission, a rehearing does not operate as 

10 a stay of an order. 

11 ‘‘(d) PERIOD OF EFFECTIVENESS.—An order of the Commission remains 

12 in effect for the period specified in the order or until suspended, modified, 

13 or set aside by the Commission or a court of competent jurisdiction. 

14 ‘‘§ 41305. Award of reparations 

15 ‘‘(a) DEFINITION.—In this section, the term ‘actual injury’ includes the loss 

16 of interest at commercial rates compounded from the date of injury. 

17 ‘‘(b) BASIC AMOUNT.—If the complaint was filed within the period speci18 fied in section 41301(a) of this title, the Federal Maritime Commission shall 

19 direct the payment of reparations to the complainant for actual injury caused 

20 by a violation of this part, plus reasonable attorney fees. 

21 ‘‘(c) ADDITIONAL AMOUNTS.—On a showing that the injury was caused by 

22 an activity prohibited by section 41102(b), 41104(3) or (6), or 41105(1) or 

23 (3) of this title, the Commission may order the payment of additional 

24 amounts, but the total recovery of a complainant may not exceed twice the 

25 amount of the actual injury. 

26 ‘‘(d) DIFFERENCE BETWEEN RATES.—If the injury was caused by an ac27 tivity prohibited by section 41104(4)(A) or (B) of this title, the amount of 

28 the injury shall be the difference between the rate paid by the injured shipper 

29 and the most favorable rate paid by another shipper. 

30 ‘‘§ 41306. Injunctive relief sought by complainants 

31 ‘‘(a) IN GENERAL.—After filing a complaint with the Federal Maritime 

32 Commission under section 41301 of this title, the complainant may bring a 

33 civil action in a district court of the United States to enjoin conduct in viola34 tion of this part. 

35 ‘‘(b) VENUE.—The action must be brought in the judicial district in 

36 which— 

37 ‘‘(1) the Commission has brought a civil action against the defendant 

38 under section 41307(a) of this title; or 

39 ‘‘(2) the defendant resides or transacts business, if the Commission has 

40 not brought such an action. 
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1 ‘‘(c) REMEDIES BY COURT.—After notice to the defendant, and a showing 

2 that the standards for granting injunctive relief by courts of equity are met, 

3 the court may grant a temporary restraining order or preliminary injunction 

4 for a period not to exceed 10 days after the Commission has issued an order 

5 disposing of the complaint. 

6 ‘‘(d) ATTORNEY FEES.—A defendant prevailing in a civil action under this 

7 section shall be allowed reasonable attorney fees to be assessed and collected 

8 as part of the costs of the action. 

9 ‘‘§ 41307. Injunctive relief sought by the Commission 

10 ‘‘(a) GENERAL VIOLATIONS.—In connection with an investigation under 

11 section 41301 or 41302 of this title, the Federal Maritime Commission may 

12 bring a civil action to enjoin conduct in violation of this part. The action 

13 must be brought in the district court of the United States for any judicial 

14 district in which the defendant resides or transacts business. After notice to 

15 the defendant, and a showing that the standards for granting injunctive relief 

16 by courts of equity are met, the court may grant a temporary restraining 

17 order or preliminary injunction for a period not to exceed 10 days after the 

18 Commission has issued an order disposing of the issues under investigation. 

19 ‘‘(b) REDUCTION IN COMPETITION.— 

20 ‘‘(1) ACTION BY COMMISSION.—If, at any time after the filing or effec21 tive date of an agreement under chapter 403 of this title, the Commission 

22 determines that the agreement is likely, by a reduction in competition, 

23 to produce an unreasonable reduction in transportation service or an un24 reasonable increase in transportation cost, the Commission, after notice 

25 to the person filing the agreement, may bring a civil action in the 

26 United States District Court for the District of Columbia to enjoin the 

27 operation of the agreement. The Commission’s sole remedy with respect 

28 to an agreement likely to have such an effect is an action under this sub29 section. 

30 ‘‘(2) REMEDIES BY COURT.—In an action under this subsection, the 

31 court may issue— 

32 ‘‘(A) a temporary restraining order or a preliminary injunction; 

33 and 

34 ‘‘(B) a permanent injunction after a showing that the agreement 

35 is likely to have the effect described in paragraph (1). 

36 ‘‘(3) BURDEN OF PROOF AND THIRD PARTIES.—In an action under 

37 this subsection, the burden of proof is on the Commission. The court may 

38 not allow a third party to intervene. 

39 ‘‘(c) FAILURE TO PROVIDE INFORMATION.—If a person filing an agree40 ment, or an officer, director, partner, agent, or employee of the person, fails 

41 substantially to comply with a request for the submission of additional infor-
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1 mation or documents within the period provided in section 40304(c) of this 

2 title, the Commission may bring a civil action in the United States District 

3 Court for the District of Columbia. At the request of the Commission, the 

4 Court— 

5 ‘‘(1) may order compliance; 

6 ‘‘(2) shall extend the period specified in section 40304(c)(2) of this title 

7 until there has been substantial compliance; and 

8 ‘‘(3) may grant other equitable relief that the court decides is appro9 priate. 

10 ‘‘(d) REPRESENTATION.—The Commission may represent itself in a pro11 ceeding under this section in— 

12 ‘‘(1) a district court of the United States, on notice to the Attorney 

13 General; and 

14 ‘‘(2) a court of appeals of the United States, with the approval of the 

15 Attorney General. 

16 ‘‘§ 41308. Enforcement of subpoenas and orders 

17 ‘‘(a) CIVIL ACTION.—If a person does not comply with a subpoena or order 

18 of the Federal Maritime Commission, the Attorney General, at the request of 

19 the Commission, or an injured party, may seek enforcement in a district 

20 court of the United States having jurisdiction over the parties. If, after hear21 ing, the court determines that the subpoena or order was regularly made and 

22 duly issued, the court shall enforce the subpoena or order. 

23 ‘‘(b) TIME LIMIT ON BRINGING ACTIONS.—An action under this section to 

24 enforce an order of the Commission must be brought within 3 years after the 

25 date the order was violated. 

26 ‘‘§ 41309. Enforcement of reparation orders 

27 ‘‘(a) CIVIL ACTION.—If a person does not comply with an order of the Fed28 eral Maritime Commission for the payment of reparation, the person to whom 

29 the award was made may seek enforcement of the order in a district court 

30 of the United States having jurisdiction over the parties. 

31 ‘‘(b) PARTIES AND SERVICE OF PROCESS.—All parties in whose favor the 

32 Commission has made an award of reparation by a single order may be 

33 joined as plaintiffs, and all other parties in the order may be joined as de34 fendants, in a single action in a judicial district in which any one plaintiff 

35 could maintain an action against any one defendant. Service of process 

36 against a defendant not found in that district may be made in a district in 

37 which any office of that defendant is located or in which any port of call on 

38 a regular route operated by that defendant is located. Judgment may be en39 tered for any plaintiff against the defendant liable to that plaintiff. 
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1 ‘‘(c) NATURE OF REVIEW.—In an action under this section, the findings 

2 and order of the Commission are prima facie evidence of the facts stated in 

3 the findings and order. 

4 ‘‘(d) COSTS AND ATTORNEY FEES.—The plaintiff is not liable for costs of 

5 the action or for costs of any subsequent stage of the proceedings unless they 

6 accrue on the plaintiff’s appeal. A prevailing plaintiff shall be allowed rea7 sonable attorney fees to be assessed and collected as part of the costs of the 

8 action. 

9 ‘‘(e) TIME LIMIT ON BRINGING ACTIONS.—An action under this section to 

10 enforce an order of the Commission must be brought within 3 years after the 

11 date the order was violated. 

12 ‘‘PART B—ACTIONS TO ADDRESS FOREIGN PRACTICES

13 ‘‘CHAPTER 421—REGULATIONS AFFECTING SHIPPING IN 

14 FOREIGN TRADE 

‘‘Sec. 

‘‘42101. Regulations of the Commission. 

‘‘42102. Regulations of other agencies. 

‘‘42103. No preference to Government-owned vessels. 

‘‘42104. Information, witnesses, and evidence. 

‘‘42105. Disclosure to public. 

‘‘42106. Other actions to remedy unfavorable conditions. 

‘‘42107. Refusal of clearance and entry. 

‘‘42108. Penalty for operating under suspended tariff or service contract. 

‘‘42109. Consultation with other agencies. 

15 ‘‘§ 42101. Regulations of the Commission 

16 ‘‘(a) UNFAVORABLE CONDITIONS.—To further the objectives and policy set 

17 forth in section 50101 of this title, the Federal Maritime Commission shall 

18 prescribe regulations affecting shipping in foreign trade, not in conflict with 

19 law, to adjust or meet general or special conditions unfavorable to shipping 

20 in foreign trade, whether in a particular trade or on a particular route or 

21 in commerce generally, including intermodal movements, terminal operations, 

22 cargo solicitation, agency services, ocean transportation intermediary services 

23 and operations, and other activities and services integral to transportation 

24 systems, and which arise out of or result from laws or regulations of a foreign 

25 country or competitive methods, pricing practices, or other practices employed 

26 by owners, operators, agents, or masters of vessels of a foreign country. 

27 ‘‘(b) INITIATION OF REGULATION.—A regulation under subsection (a) may 

28 be initiated by the Commission on its own motion or on the petition of any 

29 person, including another component of the United States Government. 

30 ‘‘§ 42102. Regulations of other agencies 

31 ‘‘(a) REQUEST TO AGENCY.—To further the objectives and policy set forth 

32 in section 50101 of this title, the Federal Maritime Commission shall request 

33 the head of a department, agency, or instrumentality of the United States 

34 Government to suspend, modify, or annul any existing regulations, or to make 

35 new regulations, affecting shipping in the foreign trade, except regulations re-
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1 lating to the Public Health Service, the Consular Service, or the inspection 

2 of vessels. 

3 ‘‘(b) PRIOR REVIEW AND APPROVAL.—A department, agency, or instrumen4 tality of the Government may not prescribe a regulation affecting shipping 

5 in the foreign trade (except a regulation affecting the Public Health Service, 

6 the Consular Service, or the inspection of vessels) until the regulation has been 

7 submitted to the Commission for its approval and final action has been taken 

8 by the Commission or the President. 

9 ‘‘(c) SUBMISSION TO PRESIDENT.—If the head of a department, agency, or 

10 instrumentality of the Government refuses to comply with a request under 

11 subsection (a) or objects to a decision of the Commission under subsection (b), 

12 the Commission or the head of the department, agency, or instrumentality 

13 may submit the facts to the President. The President may establish, suspend, 

14 modify, or annul the regulation. 

15 ‘‘§ 42103. No preference to Government-owned vessels 

16 ‘‘A regulation may not give a vessel owned by the United States Govern17 ment a preference over a vessel owned by citizens of the United States and 

18 documented under the laws of the United States. 

19 ‘‘§ 42104. Information, witnesses, and evidence 

20 ‘‘(a) ORDER TO SUPPLY INFORMATION.—In carrying out section 42101 of 

21 this title, the Federal Maritime Commission may order any person (including 

22 a common carrier, tramp operator, bulk operator, shipper, shippers’ associa23 tion, ocean transportation intermediary, or marine terminal operator, or an 

24 officer, receiver, trustee, lessee, agent, or employee thereof) to file with the 

25 Commission a report, answers to questions, documentary material, or other 

26 information the Commission considers necessary or appropriate. The Commis27 sion may require the response to any such order to be made under oath. The 

28 response shall be provided in the form and within the time specified by the 

29 Commission. 

30 ‘‘(b) SUBPOENAS AND DISCOVERY.—In carrying out section 42101 of this 

31 title, the Commission may— 

32 ‘‘(1) subpoena witnesses and evidence; and 

33 ‘‘(2) authorize a party to use depositions, written interrogatories, and 

34 discovery procedures that, to the extent practicable, conform to the Fed35 eral Rules of Civil Procedure (28 App. U.S.C.). 

36 ‘‘(c) WITNESS FEES.—Unless otherwise prohibited by law, and subject to 

37 funds being appropriated, a witness in a proceeding under section 42101 of 

38 this title is entitled to the same fees and mileage as in the courts of the United 

39 States. 

40 ‘‘(d) PENALTIES.—For failure to supply information ordered to be pro41 duced or compelled by subpoena under this section, the Commission may— 
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1 ‘‘(1) after notice and opportunity for a hearing, suspend tariffs and 

2 service contracts of a common carrier or the common carrier’s right to 

3 use tariffs of conferences and service contracts of agreements of which it 

4 is a member; or 

5 ‘‘(2) assess a civil penalty of not more than $5,000 for each day that 

6 the information is not provided. 

7 ‘‘(e) ENFORCEMENT.—If a person does not comply with an order or sub8 poena of the Commission under this section, the Commission may seek en9 forcement in a district court of the United States having jurisdiction over the 

10 parties. If, after hearing, the court determines that the order or subpoena was 

11 regularly made and duly issued, the court shall enforce the order or subpoena. 

12 ‘‘§ 42105. Disclosure to public 

13 ‘‘Notwithstanding any other provision of law, the Federal Maritime Com14 mission may refuse to disclose to the public a response or other information 

15 submitted to it under this chapter. 

16 ‘‘§ 42106. Other actions to remedy unfavorable conditions 

17 ‘‘If the Federal Maritime Commission finds that conditions unfavorable to 

18 shipping in foreign trade as described in section 42101 of this title exist, the 

19 Commission may— 

20 ‘‘(1) limit voyages to and from United States ports or the amount or 

21 type of cargo carried; 

22 ‘‘(2) suspend, in whole or in part, tariffs and service contracts for car23 riage to or from United States ports, including a common carrier’s right 

24 to use tariffs of conferences and service contracts of agreements in United 

25 States trades of which it is a member for any period the Commission 

26 specifies; 

27 ‘‘(3) suspend, in whole or in part, an ocean common carrier’s right 

28 to operate under any agreement filed with the Commission, including 

29 any agreement authorizing preferential treatment at terminals, pref30 erential terminal leases, space chartering, or pooling of cargo or revenue 

31 with other ocean common carriers; 

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

33 ‘‘(5) take any other action the Commission finds necessary and appro34 priate to adjust or meet any condition unfavorable to shipping in the 

35 foreign trade of the United States. 

36 ‘‘§ 42107. Refusal of clearance and entry 

37 ‘‘At the request of the Federal Maritime Commission— 

38 ‘‘(1) the Secretary of Homeland Security shall— 

39 ‘‘(A) refuse the clearance required by section 60105 of this title 

40 to a vessel of a country that is named in a regulation prescribed 

41 by the Commission under section 42101 of this title; and 
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1 ‘‘(B) collect any fees imposed by the Commission under section 

2 42106(4) of this title; and 

3 ‘‘(2) the Secretary of the department in which the Coast Guard is op4 erating shall— 

5 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel of 

6 a country that is named in a regulation prescribed by the Commis7 sion under section 42101 of this title, to a port or place in the 

8 United States or the navigable waters of the United States; or 

9 ‘‘(B) detain the vessel at the port or place in the United States 

10 from which it is about to depart for another port or place in the 

11 United States. 

12 ‘‘§ 42108. Penalty for operating under suspended tariff or 

13 service contract 

14 ‘‘A common carrier that accepts or handles cargo for carriage under a tar15 iff or service contract that has been suspended under section 42104(d)(1) or 

16 42106(2) of this title, or after its right to use another tariff or service contract 

17 has been suspended under those provisions, is liable to the United States Gov18 ernment for a civil penalty of not more than $50,000 for each day that it 

19 is found to be operating under a suspended tariff or service contract. 

20 ‘‘§ 42109. Consultation with other agencies 

21 ‘‘The Federal Maritime Commission may consult with, seek the cooperation 

22 of, or make recommendations to other appropriate agencies of the United 

23 States Government prior to taking any action under this chapter. 

24 ‘‘CHAPTER 423—FOREIGN SHIPPING PRACTICES 

‘‘Sec. 

‘‘42301. Definitions. 

‘‘42302. Investigations. 

‘‘42303. Information requests. 

‘‘42304. Action against foreign carriers. 

‘‘42305. Refusal of clearance and entry. 

‘‘42306. Submission of determinations to President. 

‘‘42307. Review of regulations and orders. 

25 ‘‘§ 42301. Definitions 

26 ‘‘(a) DEFINED IN PART A.—In this chapter, the terms ‘common carrier’, 

27 ‘marine terminal operator’, ‘ocean common carrier’, ‘ocean transportation 

28 intermediary’, ‘shipper’, and ‘shippers’ association’ have the meaning given 

29 those terms in section 40102 of this title. 

30 ‘‘(b) OTHER DEFINITIONS.—In this chapter: 

31 ‘‘(1) FOREIGN CARRIER.—The term ‘foreign carrier’ means an ocean 

32 common carrier a majority of whose vessels are documented under the 

33 laws of a foreign country. 

34 ‘‘(2) MARITIME SERVICES.—The term ‘maritime services’ means port35 to-port transportation of cargo by vessels operated by an ocean common 

36 carrier. 
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1 ‘‘(3) MARITIME-RELATED SERVICES.—The term ‘maritime-related serv2 ices’ means intermodal operations, terminal operations, cargo solicita3 tion, agency services, ocean transportation intermediary services and op4 erations, and all other activities and services integral to total transpor5 tation systems of ocean common carriers and their foreign domiciled af6 filiates for themselves and others. 

7 ‘‘(4) UNITED STATES CARRIER.—The term ‘United States carrier’ 

8 means an ocean common carrier operating vessels documented under the 

9 laws of the United States. 

10 ‘‘(5) UNITED STATES OCEANBORNE TRADE.—The term ‘United States 

11 oceanborne trade’ means the carriage of cargo between the United States 

12 and a foreign country, whether directly or indirectly, by an ocean com13 mon carrier. 

14 ‘‘§ 42302. Investigations 

15 ‘‘(a) IN GENERAL.—The Federal Maritime Commission shall investigate 

16 whether any laws, rules, regulations, policies, or practices of a foreign govern17 ment, or any practices of a foreign carrier or other person providing mari18 time or maritime-related services in a foreign country, result in the existence 

19 of conditions that— 

20 ‘‘(1) adversely affect the operations of United States carriers in United 

21 States oceanborne trade; and 

22 ‘‘(2) do not exist for foreign carriers of that country in the United 

23 States under the laws of the United States or as a result of acts of 

24 United States carriers or other persons providing maritime or maritime25 related services in the United States. 

26 ‘‘(b) INITIATION OF INVESTIGATION.—An investigation under subsection (a) 

27 may be initiated by the Commission on its own motion or on the petition 

28 of any person, including another component of the United States Government. 

29 ‘‘(c) TIME FOR DECISION.—The Commission shall complete an investiga30 tion under this section and render a decision within 120 days after it is initi31 ated. However, the Commission may extend this 120-day period for an addi32 tional 90 days if the Commission is unable to obtain sufficient information 

33 to determine whether a condition specified in subsection (a) exists. A notice 

34 providing an extension shall state clearly the reasons for the extension. 

35 ‘‘§ 42303. Information requests 

36 ‘‘(a) IN GENERAL.—To further the purposes of section 42302(a) of this title, 

37 the Federal Maritime Commission may order any person (including a com38 mon carrier, shipper, shippers’ association, ocean transportation inter39 mediary, or marine terminal operator, or an officer, receiver, trustee, lessee, 

40 agent or employee thereof) to file with the Commission any periodic or special 

41 report, answers to questions, documentary material, or other information the 
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1 Commission considers necessary or appropriate. The Commission may require 

2 the response to any such order to be made under oath. The response shall be 

3 provided in the form and within the time specified by the Commission. 

4 ‘‘(b) SUBPOENAS.—In an investigation under section 42302 of this title, the 

5 Commission may subpoena witnesses and evidence. 

6 ‘‘(c) NONDISCLOSURE.—Notwithstanding any other provision of law, the 

7 Commission may determine that any information submitted to it in response 

8 to a request under this section, or otherwise, shall not be disclosed to the pub9 lic. 

10 ‘‘§ 42304. Action against foreign carriers 

11 ‘‘(a) IN GENERAL.—Subject to section 42306 of this title, whenever the Fed12 eral Maritime Commission, after notice and opportunity for comment or 

13 hearing, determines that the conditions specified in section 42302(a) of this 

14 title exist, the Commission shall take such action to offset those conditions as 

15 it considers necessary and appropriate against any foreign carrier that is a 

16 contributing cause, or whose government is a contributing cause, to those con17 ditions. The action may include— 

18 ‘‘(1) limitations on voyages to and from United States ports or on the 

19 amount or type of cargo carried; 

20 ‘‘(2) suspension, in whole or in part, of any or all tariffs and service 

21 contracts, including an ocean common carrier’s right to use any or all 

22 tariffs and service contracts of conferences in United States trades of 

23 which it is a member for any period the Commission specifies; 

24 ‘‘(3) suspension, in whole or in part, of an ocean common carrier’s 

25 right to operate under any agreement filed with the Commission, includ26 ing any agreement authorizing preferential treatment at terminals, pref27 erential terminal leases, space chartering, or pooling of cargo or revenue 

28 with other ocean common carriers; and 

29 ‘‘(4) a fee not to exceed $1,000,000 per voyage. 

30 ‘‘(b) CONSULTATION.—The Commission may consult with, seek the coopera31 tion of, or make recommendations to other appropriate agencies of the United 

32 States Government prior to taking any action under subsection (a). 

33 ‘‘§ 42305. Refusal of clearance and entry 

34 ‘‘Subject to section 42306 of this title, whenever the Federal Maritime Com35 mission determines that the conditions specified in section 42302(a) of this 

36 title exist, then at the request of the Commission— 

37 ‘‘(1) the Secretary of Homeland Security shall refuse the clearance re38 quired by section 60105 of this title to a vessel of a foreign carrier that 

39 is identified by the Commission under section 42304 of this title; and 

40 ‘‘(2) the Secretary of the department in which the Coast Guard is op41 erating shall— 
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1 ‘‘(A) deny entry, for purposes of oceanborne trade, of a vessel of 

2 a foreign carrier that is identified by the Commission under section 

3 42304 of this title, to a port or place in the United States or the 

4 navigable waters of the United States; or 

5 ‘‘(B) detain the vessel at the port or place in the United States 

6 from which it is about to depart for another port or place in the 

7 United States. 

8 ‘‘§ 42306. Submission of determinations to President 

9 ‘‘Before a determination under section 42304 of this title becomes effective 

10 or a request is made under section 42305 of this title, the determination shall 

11 be submitted immediately to the President. The President, within 10 days 

12 after receiving it, may disapprove it in writing, setting forth the reasons for 

13 the disapproval, if the President finds that disapproval is required for reasons 

14 of national defense or foreign policy. 

15 ‘‘§ 42307. Review of regulations and orders 

16 ‘‘A regulation or final order of the Federal Maritime Commission under 

17 this chapter is reviewable exclusively in the same forum and in the same 

18 manner as provided in section 2342(3)(B) of title 28. 

19 ‘‘PART C—MISCELLANEOUS

20 ‘‘CHAPTER 441—EVIDENCE OF FINANCIAL 

21 RESPONSIBILITY FOR PASSENGER TRANSPORTATION 

‘‘Sec. 

‘‘44101. Application. 

‘‘44102. Financial responsibility to indemnify passengers for nonperformance of transportation. 

‘‘44103. Financial responsibility to pay liability for death or injury. 

‘‘44104. Civil penalty. 

‘‘44105. Refusal of clearance. 

‘‘44106. Conduct of proceedings. 

22 ‘‘§ 44101. Application 

23 ‘‘This chapter applies to a vessel that— 

24 ‘‘(1) has berth or stateroom accommodations for at least 50 passengers; 

25 and 

26 ‘‘(2) boards passengers at a port in the United States. 

27 ‘‘§ 44102. Financial responsibility to indemnify passengers 

28 for nonperformance of transportation 

29 ‘‘(a) FILING REQUIREMENT.—A person in the United States may not ar30 range, offer, advertise, or provide transportation on a vessel to which this 

31 chapter applies unless the person has filed with the Federal Maritime Com32 mission evidence of financial responsibility to indemnify passengers for non33 performance of the transportation. 

34 ‘‘(b) SATISFACTORY EVIDENCE.—To satisfy subsection (a), a person must 

35 file— 

36 ‘‘(1) information the Commission considers necessary; or 
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1 ‘‘(2) a copy of a bond or other security, in such form as the Commis2 sion by regulation may require. 

3 ‘‘(c) AUTHORIZED ISSUER OF BOND.—If a bond is filed, it must be issued 

4 by a bonding company authorized to do business in the United States. 

5 ‘‘§ 44103. Financial responsibility to pay liability for death 

6 or injury 

7 ‘‘(a) GENERAL REQUIREMENT.—The owner or charterer of a vessel to which 

8 this chapter applies shall establish, under regulations prescribed by the Fed9 eral Maritime Commission, financial responsibility to meet liability for death 

10 or injury to passengers or other individuals on a voyage to or from a port 

11 in the United States. 

12 ‘‘(b) AMOUNTS.— 

13 ‘‘(1) IN GENERAL.—The amount of financial responsibility required 

14 under subsection (a) shall be based on the number of passenger accom15 modations as follows: 

16 ‘‘(A) $20,000 for each of the first 500 passenger accommodations. 

17 ‘‘(B) $15,000 for each additional passenger accommodation be18 tween 501 and 1,000. 

19 ‘‘(C) $10,000 for each additional passenger accommodation be20 tween 1,001 and 1,500. 

21 ‘‘(D) $5,000 for each additional passenger accommodation over 

22 1,500. 

23 ‘‘(2) MULTIPLE VESSELS.—If the owner or charterer is operating more 

24 than one vessel subject to this chapter, the amount of financial responsi25 bility shall be based on the number of passenger accommodations on the 

26 vessel with the largest number of passenger accommodations. 

27 ‘‘(c) AVAILABILITY TO PAY JUDGMENT.—The amount determined under 

28 subsection (b) shall be available to pay a judgment for damages (whether less 

29 than or more than $20,000) for death or injury to a passenger or other indi30 vidual on a voyage to or from a port in the United States. 

31 ‘‘(d) MEANS OF ESTABLISHING.—Financial responsibility under this sec32 tion may be established by one or more of the following if acceptable to the 

33 Commission: 

34 ‘‘(1) Insurance. 

35 ‘‘(2) Surety bond issued by a bonding company authorized to do busi36 ness in the United States. 

37 ‘‘(3) Qualification as a self-insurer. 

38 ‘‘(4) Other evidence of financial responsibility. 

39 ‘‘§ 44104. Civil penalty 

40 ‘‘A person that violates section 44102 or 44103 of this title is liable to the 

41 United States Government for a civil penalty of not more than $5,000, plus 
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1 $200 for each passage sold, to be assessed by the Federal Maritime Commis2 sion. The Commission may remit or mitigate the penalty on terms the Com3 mission considers proper. 

4 ‘‘§ 44105. Refusal of clearance 

5 ‘‘The Secretary of Homeland Security shall refuse the clearance required by 

6 section 60105 of this title, at the port or place of departure from the United 

7 States, of a vessel that is subject to this chapter and does not have evidence 

8 issued by the Federal Maritime Commission of compliance with sections 

9 44102 and 44103 of this title. 

10 ‘‘§ 44106. Conduct of proceedings 

11 ‘‘Part A of this subtitle applies to proceedings conducted by the Federal 

12 Maritime Commission under this chapter.’’. 

13 SEC. 7. SUBTITLE V OF TITLE 46. 

14 (a) SUBTITLE ANALYSIS.—The analysis of subtitle V of title 46, United 

15 States Code, is amended to read as follows: 

16 ‘‘PART A—GENERAL

‘‘Chapter Sec. 

‘‘501. Policy, Studies, and Reports ....................................................................... 50101 

‘‘503. Administrative ................................................................................................... 50301 

‘‘505. Other General Provisions ............................................................................ 50501 

17 ‘‘PART B—MERCHANT MARINE SERVICE

‘‘511. General .................................................................................................................. 51101 

‘‘513. United States Merchant Marine Academy ........................................... 51301 

‘‘515. State Maritime Academy Support Program ....................................... 51501 

‘‘517. Other Support for Merchant Marine Training ................................. 51701 

‘‘519. Merchant Marine Awards ............................................................................ 51901 

‘‘521. Miscellaneous ..................................................................................................... 52101 

18 ‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS

‘‘531. Maritime Security Fleet ................................................................................ 53101 

‘‘533. Construction Reserve Funds ....................................................................... 53301 

‘‘535. Capital Construction Funds ....................................................................... 53501 

‘‘537. Loans and Guarantees .................................................................................. 53701 

‘‘539. War Risk Insurance ........................................................................................ 53901 

19 ‘‘PART D—PROMOTIONAL PROGRAMS

‘‘551. Coastwise Trade ............................................................................................... 55101 

‘‘553. Passenger and Cargo Preferences ........................................................... 55301 

‘‘555. Miscellaneous ..................................................................................................... 55501 

20 ‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES

‘‘561. Restrictions on Transfers ............................................................................. 56101 

‘‘563. Emergency Acquisition of Vessels ............................................................ 56301 

‘‘565. Essential Vessels Affected by Neutrality Act ...................................... 56501 

21 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

‘‘571. General Authority ............................................................................................ 57101 

‘‘573. Vessel Trade-In Program ............................................................................. 57301 

‘‘575. Construction, Charter, and Sale of Vessels ........................................ 57501 

22 ‘‘PART G—RESTRICTIONS AND PENALTIES

‘‘581. Restrictions and Penalties .......................................................................... 58101’’. 
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1 (b) CHAPTERS PRECEDING CHAPTER 531.—Subtitle V of title 46, United 

2 States Code, is amended by inserting after the subtitle analysis the following: 

3 ‘‘PART A—GENERAL

4 ‘‘CHAPTER 501—POLICY, STUDIES, AND REPORTS 

‘‘Sec. 

‘‘50101. Objectives and policy. 

‘‘50102. Survey of merchant marine. 

‘‘50103. Determinations of essential services. 

‘‘50104. Studies of general maritime problems. 

‘‘50105. Studies and cooperation relating to the construction of vessels. 

‘‘50106. Studies on the operation of vessels. 

‘‘50107. Studies on marine insurance. 

‘‘50108. Studies on cargo carriage and cargo containers. 

‘‘50109. Miscellaneous studies. 

‘‘50110. Securing preference to vessels of the United States. 

‘‘50111. Reports to Congress. 

‘‘50112. National Maritime Enhancement Institutes. 

‘‘50113. Use and performance reports by operators of vessels. 

5 ‘‘§ 50101. Objectives and policy 

6 ‘‘(a) OBJECTIVES.—It is necessary for the national defense and the develop7 ment of the domestic and foreign commerce of the United States that the 

8 United States have a merchant marine— 

9 ‘‘(1) sufficient to carry the waterborne domestic commerce and a sub10 stantial part of the waterborne export and import foreign commerce of 

11 the United States and to provide shipping service essential for maintain12 ing the flow of the waterborne domestic and foreign commerce at all 

13 times; 

14 ‘‘(2) capable of serving as a naval and military auxiliary in time of 

15 war or national emergency; 

16 ‘‘(3) owned and operated under United States flag by citizens of the 

17 United States insofar as practicable; 

18 ‘‘(4) composed of the best-equipped, safest, and most suitable types of 

19 vessels, built in the United States and manned with a trained and effi20 cient citizen personnel; and 

21 ‘‘(5) supplemented by efficient facilities for building and repairing 

22 vessels. 

23 ‘‘(b) POLICY.—It is the policy of the United States Government to encour24 age and aid the development and maintenance of a merchant marine satis25 fying the objectives described in subsection (a). 

26 ‘‘§ 50102. Survey of merchant marine 

27 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall survey the mer28 chant marine of the United States to determine whether replacements and ad29 ditions are required to carry out the objectives and policy of section 50101 

30 of this title. The Secretary shall study, perfect, and adopt a long-range pro31 gram for replacements and additions that will result, as soon as practicable, 

32 in— 
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1 ‘‘(1) an adequate and well-balanced merchant fleet, including vessels 

2 of all types, that will provide shipping service essential for maintaining 

3 the flow of foreign commerce by vessels designed to be readily and quickly 

4 convertible into transport and supply vessels in a time of national emer5 gency; 

6 ‘‘(2) ownership and operation of the fleet by citizens of the United 

7 States insofar as practicable; 

8 ‘‘(3) vessels designed to afford the best and most complete protection 

9 for passengers and crew against fire and all marine perils; and 

10 ‘‘(4) an efficient capacity for building and repairing vessels in the 

11 United States with an adequate number of skilled personnel to provide 

12 an adequate mobilization base. 

13 ‘‘(b) COOPERATION WITH SECRETARY OF NAVY.—In carrying out sub14 section (a)(1), the Secretary of Transportation shall cooperate closely with the 

15 Secretary of the Navy as to national defense requirements. 

16 ‘‘§ 50103. Determinations of essential services 

17 ‘‘(a) ESSENTIAL SERVICES, ROUTES, AND LINES.— 

18 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall investigate, 

19 determine, and keep current records of the ocean services, routes, and 

20 lines from ports in the United States, or in the territories and posses21 sions of the United States, to foreign markets, which the Secretary deter22 mines to be essential for the promotion, development, expansion, and 

23 maintenance of the foreign commerce of the United States. In making 

24 such a determination, the Secretary shall consider and give due weight 

25 to— 

26 ‘‘(A) the cost of maintaining each line; 

27 ‘‘(B) the probability that a line cannot be maintained except at 

28 a heavy loss disproportionate to the benefit to foreign trade; 

29 ‘‘(C) the number of voyages and types of vessels that should be 

30 employed in a line; 

31 ‘‘(D) the intangible benefit of maintaining a line to the foreign 

32 commerce of the United States, the national defense, and other na33 tional requirements; and 

34 ‘‘(E) any other facts and conditions a prudent business person 

35 would consider when dealing with the person’s own business. 

36 ‘‘(2) SAINT LAWRENCE SEAWAY.—For purposes of paragraph (1), the 

37 Secretary shall establish services, routes, and lines that reflect the sea38 sonal closing of the Saint Lawrence Seaway and provide for alternate 

39 routing of vessels through a different range of ports during that closing 

40 to maintain continuity of service on a year-round basis. 
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1 ‘‘(b) BULK CARGO CARRYING SERVICES.—The Secretary shall investigate, 

2 determine, and keep current records of the bulk cargo carrying services that 

3 should be provided by United States-flag vessels (whether or not operating on 

4 particular services, routes, or lines) for the promotion, development, expan5 sion, and maintenance of the foreign commerce of the United States and the 

6 national defense or other national requirements. 

7 ‘‘(c) TYPES OF VESSELS.—The Secretary shall investigate, determine, and 

8 keep current records of the type, size, speed, method of propulsion, and other 

9 requirements of the vessels, including express-liner or super-liner vessels, that 

10 should be employed in— 

11 ‘‘(1) the services, routes, or lines described in subsection (a), and the 

12 frequency and regularity of the voyages of the vessels, with a view to fur13 nishing adequate, regular, certain, and permanent service; and 

14 ‘‘(2) the bulk cargo carrying services described in subsection (b). 

15 ‘‘§ 50104. Studies of general maritime problems 

16 ‘‘The Secretary of Transportation shall study all maritime problems aris17 ing in carrying out the policy in section 50101 of this title. 

18 ‘‘§ 50105. Studies and cooperation relating to the construc19 tion of vessels 

20 ‘‘(a) RELATIVE COSTS AND NEW DESIGNS.—The Secretary of Transpor21 tation shall investigate, determine, and keep current records of— 

22 ‘‘(1) the relative cost of construction of comparable vessels in the 

23 United States and in foreign countries; and 

24 ‘‘(2) new designs, new methods of construction, and new types of 

25 equipment for vessels. 

26 ‘‘(b) RULES, CLASSIFICATIONS, AND RATINGS.—The Secretary shall exam27 ine the rules under which vessels are constructed abroad and in the United 

28 States and the methods of classifying and rating the vessels. 

29 ‘‘(c) COLLABORATION WITH OWNERS AND BUILDERS.—The Secretary shall 

30 collaborate with vessel owners and shipbuilders in developing plans for the ec31 onomical construction of vessels and their propelling machinery, of most mod32 ern economical types, giving thorough consideration to all well-recognized 

33 means of propulsion and taking into account the benefits from standardized 

34 production where practicable and desirable. 

35 ‘‘(d) EXPRESS-LINER AND SUPER-LINER VESSELS.—The Secretary shall 

36 study and cooperate with vessel owners in devising means by which there may 

37 be constructed, by or with the aid of the United States Government, express38 liner or super-liner vessels comparable to those of other nations, especially 

39 with a view to their use in a national emergency, and the use of transoceanic 

40 aircraft service in connection with or in lieu of those vessels. 
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1 ‘‘§ 50106. Studies on the operation of vessels 

2 ‘‘(a) RELATIVE COSTS.—The Secretary of Transportation shall investigate, 

3 determine, and keep current records of the relative cost of marine insurance, 

4 maintenance, repairs, wages and subsistence of officers and crews, and all 

5 other items of expense, in the operation of comparable vessels under the laws 

6 and regulations of the United States and those of the foreign countries whose 

7 vessels are substantial competitors of American vessels. 

8 ‘‘(b) SHIPYARDS.—The Secretary shall investigate, determine, and keep cur9 rent records of the number, location, and efficiency of shipyards in the United 

10 States. 

11 ‘‘(c) NAVIGATION LAWS.—The Secretary shall examine the navigation laws 

12 and regulations of the United States and make such recommendations to Con13 gress as the Secretary considers proper for the amendment, improvement, and 

14 revision of those laws and for the development of the merchant marine of the 

15 United States. 

16 ‘‘§ 50107. Studies on marine insurance 

17 ‘‘The Secretary of Transportation shall— 

18 ‘‘(1) examine into the subject of marine insurance, the number of com19 panies in the United States, domestic and foreign, engaging in marine 

20 insurance, the extent of the insurance on hulls and cargoes placed or 

21 written in the United States, and the extent of reinsurance of American 

22 maritime risks in foreign companies; and 

23 ‘‘(2) ascertain what steps may be necessary to develop an ample ma24 rine insurance system as an aid in the development of the merchant ma25 rine of the United States. 

26 ‘‘§ 50108. Studies on cargo carriage and cargo containers 

27 ‘‘(a) STUDIES.—The Secretary of Transportation shall study— 

28 ‘‘(1) the methods of encouraging the development and implementation 

29 of new concepts for the carriage of cargo in the domestic and foreign 

30 commerce of the United States; and 

31 ‘‘(2) the economic and technological aspects of the use of cargo con32 tainers as a method of carrying out the policy in section 50101 of this 

33 title. 

34 ‘‘(b) RESTRICTION.—In carrying out subsection (a) and the policy in sec35 tion 50101 of this title, the United States Government may not give preference 

36 as between carriers based on the length, height, or width of cargo containers 

37 or the length, height, or width of cargo container cells. This restriction applies 

38 to all existing container vessels and any container vessel to be constructed or 

39 rebuilt. 
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1 ‘‘§ 50109. Miscellaneous studies 

2 ‘‘(a) FOREIGN SUBSIDIES.—The Secretary of Transportation shall inves3 tigate, determine, and keep current records of the extent and character of the 

4 governmental aid and subsidies granted by foreign governments to their mer5 chant marine. 

6 ‘‘(b) LAWS APPLICABLE TO AIRCRAFT.—The Secretary shall investigate, de7 termine, and keep current records of the provisions of law relating to shipping 

8 that should be made applicable to aircraft engaged in foreign commerce to 

9 further the policy in section 50101 of this title, and any appropriate legisla10 tion in this regard. 

11 ‘‘(c) AID FOR COTTON, COAL, LUMBER, AND CEMENT.—The Secretary shall 

12 investigate, determine, and keep current records of the advisability of enact13 ment of suitable legislation authorizing the Secretary, in an economic or com14 mercial emergency, to aid farmers and producers of cotton, coal, lumber, and 

15 cement in any section of the United States in the transportation and landing 

16 of their products in any foreign port, which products can be carried in dry17 cargo vessels by reducing rates, by supplying additional tonnage to any 

18 American operator, or by operation of vessels directly by the Secretary, until 

19 the Secretary considers the special rate reduction and operation unnecessary 

20 for the benefit of those farmers and producers. 

21 ‘‘(d) INTERCOASTAL AND INLAND WATER TRANSPORTATION.—The Sec22 retary shall investigate, determine, and keep current records of intercoastal 

23 and inland water transportation, including their relation to transportation 

24 by land and air. 

25 ‘‘(e) OBSOLETE TONNAGE AND TRAMP SERVICE.—The Secretary shall make 

26 studies and reports to Congress on— 

27 ‘‘(1) the scrapping or removal from service of old or obsolete merchant 

28 tonnage owned by the United States Government or in use in the mer29 chant marine; and 

30 ‘‘(2) tramp shipping service and the advisability of citizens of the 

31 United States participating in that service with vessels under United 

32 States registry. 

33 ‘‘(f) MORTGAGE LOANS.—The Secretary shall investigate the legal status of 

34 mortgage loans on vessel property, with a view to the means of improving 

35 the security of those loans and of encouraging investment in American ship36 ping. 

37 ‘‘§ 50110. Securing preference to vessels of the United States 

38 ‘‘(a) POSSIBILITIES OF PROMOTING CARRIAGE.—The Secretary of Trans39 portation shall investigate, determine, and keep current records of the possi40 bilities of promoting the carriage of United States foreign trade in vessels of 

41 the United States. 
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1 ‘‘(b) INDUCEMENTS TO IMPORTERS AND EXPORTERS.—The Secretary shall 

2 study and cooperate with vessel owners in devising means by which the im3 porters and exporters of the United States can be induced to give preference 

4 to vessels of the United States. 

5 ‘‘(c) LIAISON WITH AGENCIES AND ORGANIZATIONS.—The Secretary shall 

6 establish and maintain liaison with such other agencies of the United States 

7 Government, and with such representative trade organizations throughout the 

8 United States, as may be concerned, directly or indirectly, with any move9 ment of commodities in the waterborne export and import foreign commerce 

10 of the United States, for the purpose of securing preference to vessels of the 

11 United States in the shipment of those commodities. 

12 ‘‘§ 50111. Reports to Congress 

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

14 Transportation shall submit a report to Congress. The report shall include, 

15 with respect to activities of the Secretary under this subtitle, the results of 

16 investigations, a summary of transactions, a statement of all expenditures 

17 and receipts, the purposes for which all expenditures were made, and any rec18 ommendations for legislation. 

19 ‘‘(b) ADMINISTERED AND OVERSIGHT FUNDS.—The Secretary, in the report 

20 under subsection (a) and in the annual budget estimate for the Maritime Ad21 ministration submitted to Congress, shall state separately the amount, source, 

22 intended use, and nature of any funds (other than funds appropriated to the 

23 Administration or to the Secretary of Transportation for use by the Adminis24 tration) administered, or subject to oversight, by the Administration. 

25 ‘‘(c) ADDITIONAL RECOMMENDATIONS FOR LEGISLATION.—The Secretary, 

26 from time to time, shall make recommendations to Congress for legislation the 

27 Secretary considers necessary to better achieve the objectives and policy of sec28 tion 50101 of this title. 

29 ‘‘§ 50112. National Maritime Enhancement Institutes 

30 ‘‘(a) DESIGNATION.—The Secretary of Transportation may designate Na31 tional Maritime Enhancement Institutes. 

32 ‘‘(b) ACTIVITIES.—Activities undertaken by an institute may include— 

33 ‘‘(1) conducting research about methods to improve the performance of 

34 maritime industries; 

35 ‘‘(2) enhancing the competitiveness of domestic maritime industries in 

36 international trade; 

37 ‘‘(3) forecasting trends in maritime trade; 

38 ‘‘(4) assessing technological advancements; 

39 ‘‘(5) developing management initiatives and training; 
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1 ‘‘(6) analyzing economic and operational impacts of regulatory poli2 cies and international negotiations or agreements pending before inter3 national bodies; 

4 ‘‘(7) assessing the compatibility of domestic maritime infrastructure 

5 systems with overseas transport systems; 

6 ‘‘(8) fostering innovations in maritime transportation pricing; and 

7 ‘‘(9) improving maritime economics and finance. 

8 ‘‘(c) APPLICATION FOR DESIGNATION.—An institution seeking designation 

9 as a National Maritime Enhancement Institute shall submit an application 

10 under regulations prescribed by the Secretary. 

11 ‘‘(d) CRITERIA FOR DESIGNATION.—The Secretary shall designate an insti12 tute under this section on the basis of the following criteria: 

13 ‘‘(1) The demonstrated research and extension resources available to 

14 the applicant for carrying out the activities specified in subsection (b). 

15 ‘‘(2) The ability of the applicant to provide leadership in making na16 tional and regional contributions to the solution of both long-range and 

17 immediate problems of the domestic maritime industry. 

18 ‘‘(3) The existence of an established program of the applicant encom19 passing research and training directed to enhancing maritime industries. 

20 ‘‘(4) The demonstrated ability of the applicant to assemble and evalu21 ate pertinent information from national and international sources and 

22 to disseminate results of maritime industry research and educational 

23 programs through a continuing education program. 

24 ‘‘(5) The qualification of the applicant as a nonprofit institution of 

25 higher learning. 

26 ‘‘(e) FINANCIAL AWARDS.—The Secretary may make awards on an equal 

27 matching basis to an institute designated under subsection (a) from amounts 

28 appropriated. The aggregate annual amount of the Federal share of the 

29 awards by the Secretary may not exceed $500,000. 

30 ‘‘(f) UNIVERSITY TRANSPORTATION RESEARCH FUNDS.—The Secretary 

31 may make a grant under section 5505 of title 49 to an institute designated 

32 under subsection (a) for maritime and maritime intermodal research under 

33 that section as if the institute were a university transportation center. In 

34 making a grant, the Secretary, through the Research and Special Programs 

35 Administration, shall advise the Maritime Administration on the availability 

36 of funds for the grants and consult with the Administration on making the 

37 grants. 

38 ‘‘§ 50113. Use and performance reports by operators of vessels 

39 ‘‘(a) FILING REQUIREMENT.—The Secretary of Transportation by regula40 tion may require the operator of a vessel in the waterborne foreign commerce 

41 of the United States to file such report, account, record, or memorandum on 
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1 the use and performance of the vessel as the Secretary considers desirable to 

2 assist in carrying out this subtitle. The report, account, record, or memo3 randum shall be signed and verified, and be filed at the times and in the 

4 manner, as provided by regulation. 

5 ‘‘(b) CIVIL PENALTY.—An operator not filing a report, account, record, or 

6 memorandum required by the Secretary under this section is liable to the 

7 United States Government for a civil penalty of $50 for each day of the viola8 tion. A penalty imposed under this section on the operator of a vessel con9 stitutes a lien on the vessel involved in the violation. A civil action in rem 

10 to enforce the lien may be brought in the district court of the United States 

11 for any district in which the vessel is found. The Secretary may remit or 

12 mitigate any penalty imposed under this section. 

13 ‘‘CHAPTER 503—ADMINISTRATIVE 

‘‘Sec. 

‘‘50301. Vessel Operations Revolving Fund. 

‘‘50302. Port development. 

‘‘50303. Operating property and extending term of notes. 

‘‘50304. Sale and transfer of property. 

‘‘50305. Appointment of trustee or receiver and operation of vessels. 

‘‘50306. Requiring testimony and records in investigations. 

14 ‘‘§ 50301. Vessel Operations Revolving Fund 

15 ‘‘(a) IN GENERAL.—There is a ‘Vessel Operations Revolving Fund’ for use 

16 by the Secretary of Transportation in carrying out duties and powers related 

17 to vessel operations, including charter, operation, maintenance, repair, recon18 ditioning, and improvement of merchant vessels under the jurisdiction of the 

19 Secretary. The Fund has a working capital of $20,000,000, to remain avail20 able until expended. 

21 ‘‘(b) RELATIONSHIP TO OTHER LAWS.—Notwithstanding any other law, 

22 rates for shipping services provided under the Fund shall be prescribed by the 

23 Secretary and the Fund shall be credited with receipts from vessel operations 

24 conducted under the Fund. Sections 1(a) and (c), 3(c), and 4 of the Act of 

25 March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294), apply to those 

26 operations and to seamen employed through general agents as employees of 

27 the United States Government. Notwithstanding any other law on the employ28 ment of persons by the Government, the seamen may be employed in accord29 ance with customary commercial practices in the maritime industry. 

30 ‘‘(c) ADVANCEMENTS.—With the approval of the Director of the Office of 

31 Management and Budget, the Secretary may advance amounts the Secretary 

32 considers necessary, but not more than 2 percent of vessel operating expenses, 

33 from the Fund to the appropriation ‘Salaries and Expenses’ in carrying out 

34 duties and powers related to vessel operations, without regard to the limita35 tions on amounts stated in that appropriation. 

36 ‘‘(d) TRANSFERS.—The unexpended balances of working funds or of alloca37 tion accounts established after January 1, 1951, for the activities provided 
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1 for in subsection (a), and receipts received from those activities, may be trans2 ferred to the Fund, which shall be available for the purposes of those working 

3 funds or allocation accounts. 

4 ‘‘(e) LIMITATION.— 

5 ‘‘(1) IN GENERAL.—Amounts made available to the Secretary for mar6 itime activities by this section or any other law may not be used to pay 

7 for a vessel described in paragraph (2) unless the compensation to be 

8 paid is computed under section 56303 of this title as that section is in9 terpreted by the Comptroller General. 

10 ‘‘(2) APPLICABLE VESSELS.—Paragraph (1) applies to a vessel— 

11 ‘‘(A) the title to which is acquired by the Government by requisi12 tion or purchase; 

13 ‘‘(B) the use of which is taken by requisition or agreement; or 

14 ‘‘(C) lost while insured by the Government. 

15 ‘‘(3) NONAPPLICABLE VESSELS.—Paragraph (1) does not apply to a 

16 vessel under a construction-differential subsidy contract. 

17 ‘‘(f) AVAILABILITY FOR ADDITIONAL PURPOSES.—The Fund is available 

18 for— 

19 ‘‘(1) necessary expenses incurred in the protection, preservation, main20 tenance, acquisition, or use of vessels involved in mortgage foreclosure or 

21 forfeiture proceedings instituted by the Government, including payment 

22 of prior claims and liens, expenses of sale, or other related charges; 

23 ‘‘(2) necessary expenses incident to the redelivery and lay-up, in the 

24 United States, of vessels chartered as of June 20, 1956, under agreements 

25 not calling for their return to the Government; 

26 ‘‘(3) the activation, repair, and deactivation of merchant vessels char27 tered for limited emergency purposes during fiscal year 1957 under the 

28 jurisdiction of the Secretary; and 

29 ‘‘(4) payment of expenses of custody and maintenance of Government30 owned vessels not in the National Defense Reserve Fleet. 

31 ‘‘(g) EXPENSES AND RECEIPTS RELATED TO CHARTER OPERATIONS.—The 

32 Fund is available for expenses incurred in activating, repairing, and deacti33 vating merchant vessels chartered under the jurisdiction of the Secretary. Re34 ceipts from charter operations of Government-owned vessels under the juris35 diction of the Secretary shall be credited to the Fund. 

36 ‘‘§ 50302. Port development 

37 ‘‘(a) GENERAL REQUIREMENTS.—With the objective of promoting, encour38 aging, and developing ports and transportation facilities in connection with 

39 water commerce over which the Secretary of Transportation has jurisdiction, 

40 the Secretary, in cooperation with the Secretary of the Army, shall— 
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1 ‘‘(1) investigate territorial regions and zones tributary to ports, taking 

2 into consideration the economies of transportation by rail, water, and 

3 highway and the natural direction of the flow of commerce; 

4 ‘‘(2) investigate the causes of congestion of commerce at ports and ap5 plicable remedies; 

6 ‘‘(3) investigate the subject of water terminals, including the necessary 

7 docks, warehouses, and equipment, to devise and suggest the types most 

8 appropriate for different locations and for the most expeditious and eco9 nomical transfer or interchange of passengers or property between water 

10 carriers and rail carriers; 

11 ‘‘(4) consult with communities on the appropriate location and plan 

12 of construction of wharves, piers, and water terminals; 

13 ‘‘(5) investigate the practicability and advantages of harbor, river, 

14 and port improvements in connection with foreign and coastwise trade; 

15 and 

16 ‘‘(6) investigate any other matter that may tend to promote and en17 courage the use by vessels of ports adequate to care for the freight that 

18 naturally would pass through those ports. 

19 ‘‘(b) SUBMISSION OF FINDINGS TO SURFACE TRANSPORTATION BOARD.— 

20 After an investigation under subsection (a), if the Secretary of Transportation 

21 believes that the rates or practices of a rail carrier subject to the jurisdiction 

22 of the Surface Transportation Board are detrimental to the objective specified 

23 in subsection (a), or that new rates or practices, new or additional port ter24 minal facilities, or affirmative action by a rail carrier is necessary to pro25 mote that objective, the Secretary may submit findings to the Board for action 

26 the Board considers appropriate under existing law. 

27 ‘‘§ 50303. Operating property and extending term of notes 

28 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may— 

29 ‘‘(1) operate or lease docks, wharves, piers, or real property under the 

30 Secretary’s control; and 

31 ‘‘(2) make extensions and accept renewals of— 

32 ‘‘(A) promissory notes and other evidences of indebtedness on 

33 property; and 

34 ‘‘(B) mortgages and other contracts securing the property. 

35 ‘‘(b) TERMS OF TRANSACTIONS.—A transaction under subsection (a) shall 

36 be on terms the Secretary considers necessary to carry out the purposes of this 

37 subtitle, but consistent with sound business practice. 

38 ‘‘(c) AVAILABILITY OF AMOUNTS.—Amounts received by the Secretary from 

39 a transaction under this section are available for expenditure by the Secretary 

40 as provided in this subtitle. 
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1 ‘‘§ 50304. Sale and transfer of property 

2 ‘‘(a) AUTHORITY TO SELL.—The Secretary of Transportation may sell 

3 property (other than vessels transferred under section 4 of the Merchant Ma4 rine Act, 1920 (ch. 250, 41 Stat. 990)) on terms the Secretary considers ap5 propriate. 

6 ‘‘(b) TRANSFERS FROM MILITARY TO CIVILIAN CONTROL.—When the Presi7 dent considers it in the interest of the United States, the President may trans8 fer to the Secretary of Transportation possession and control of property de9 scribed in the second paragraph of section 17 of the Merchant Marine Act, 

10 1920 (ch. 250, 41 Stat. 994), as originally enacted, that is possessed and con11 trolled by the Secretary of a military department. 

12 ‘‘(c) TRANSFERS FROM CIVILIAN TO MILITARY CONTROL.—When the Presi13 dent considers it necessary, the President by executive order may transfer to 

14 the Secretary of a military department possession and control of property de15 scribed in section 17 of the Merchant Marine Act, 1920 (ch. 250, 41 Stat. 

16 994), as originally enacted, that is possessed and controlled by the Secretary 

17 of Transportation. The President’s order shall state the need for the transfer 

18 and the period of the need. When the President decides that the need has 

19 ended, the possession and control shall revert to the Secretary of Transpor20 tation. The property may not be sold except as provided by law. 

21 ‘‘§ 50305. Appointment of trustee or receiver and operation of 

22 vessels 

23 ‘‘(a) APPOINTMENT OF TRUSTEES AND RECEIVERS.— 

24 ‘‘(1) APPOINTMENT OF SECRETARY.—In a proceeding in a court of the 

25 United States in which a trustee or receiver may be appointed for a cor26 poration operating a vessel of United States registry between the United 

27 States and a foreign country, on which the United States Government 

28 holds a mortgage, the court may appoint the Secretary of Transportation 

29 as the sole trustee or receiver (subject to the direction of the court) if— 

30 ‘‘(A) the court finds that the appointment will— 

31 ‘‘(i) inure to the advantage of the estate and the parties in 

32 interest; and 

33 ‘‘(ii) tend to carry out the purposes of this subtitle; and 

34 ‘‘(B) the Secretary expressly consents to the appointment. 

35 ‘‘(2) APPOINTMENT OF OTHER PERSON.—The appointment of another 

36 person as trustee or receiver without a hearing becomes effective when 

37 ratified by the Secretary, but the Secretary may demand a hearing. 

38 ‘‘(b) OPERATION OF VESSELS.— 

39 ‘‘(1) IN GENERAL.—If the court is unwilling to allow the trustee or 

40 receiver to operate the vessel in foreign commerce without financial aid 

41 from the Government pending termination of the proceeding, and the 
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1 Secretary certifies to the court that the continued operation of the vessel 

2 is essential to the foreign commerce of the United States and is reason3 ably calculated to carry out the purposes of this subtitle, the court may 

4 allow the Secretary to operate the vessel, either directly or through a 

5 managing agent or operator employed by the Secretary. The Secretary 

6 must agree to comply with terms imposed by the court sufficient to pro7 tect the parties in interest. The Secretary also must agree to pay all op8 erating losses resulting from the operation. The operation shall be for the 

9 account of the trustee or receiver. 

10 ‘‘(2) PAYMENT OF OPERATING LOSSES AND OTHER AMOUNTS.—The 

11 Secretary has no claim against the corporation, its estate, or its assets 

12 for operating losses paid by the Secretary, but the Secretary may pay 

13 amounts for depreciation the Secretary considers reasonable and other 

14 amounts the court considers just. The payment of operating losses and 

15 the other amounts and compliance with terms imposed by the court shall 

16 be in satisfaction of any claim against the Secretary resulting from the 

17 operation of the vessel. 

18 ‘‘(3) DEEMED OPERATION BY GOVERNMENT.—A vessel operated by the 

19 Secretary under this subsection is deemed to be a vessel operated by the 

20 Government under chapter 309 of this title. 

21 ‘‘§ 50306. Requiring testimony and records in investigations 

22 ‘‘(a) IN GENERAL.—In conducting an investigation that the Secretary of 

23 Transportation considers necessary and proper to carry out this subtitle, the 

24 Secretary may administer oaths, take evidence, and subpoena persons to tes25 tify and produce documents relevant to the matter under investigation. Per26 sons may be required to attend or produce documents from any place in the 

27 United States at any designated place of hearing. 

28 ‘‘(b) FEES AND MILEAGE.—Persons subpoenaed by the Secretary under sub29 section (a) shall be paid the same fees and mileage paid to witnesses in the 

30 courts of the United States. 

31 ‘‘(c) ENFORCEMENT OF SUBPOENAS.—If a person disobeys a subpoena 

32 issued under subsection (a), the Secretary may seek an order enforcing the 

33 subpoena from the district court of the United States for the district in which 

34 the person resides or does business. Process may be served in the judicial dis35 trict in which the person resides or is found. The court may issue an order 

36 to obey the subpoena and punish a refusal to obey as a contempt of court. 

37 ‘‘CHAPTER 505—OTHER GENERAL PROVISIONS 

‘‘Sec. 

‘‘50501. Entities deemed citizens of the United States. 

‘‘50502. Applicability to receivers, trustees, successors, and assigns. 

‘‘50503. Oceanographic research vessels. 

‘‘50504. Sailing school vessels. 
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1 ‘‘§ 50501. Entities deemed citizens of the United States 

2 ‘‘(a) IN GENERAL.—In this subtitle, a corporation, partnership, or associa3 tion is deemed to be a citizen of the United States only if the controlling in4 terest is owned by citizens of the United States. However, if the corporation, 

5 partnership, or association is operating a vessel in the coastwise trade, at 

6 least 75 percent of the interest must be owned by citizens of the United States. 

7 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CORPORATIONS.—In this subtitle, a 

8 corporation is deemed to be a citizen of the United States only if, in addition 

9 to satisfying the requirements in subsection (a)— 

10 ‘‘(1) it is incorporated under the laws of the United States or a State; 

11 ‘‘(2) its chief executive officer, by whatever title, and the chairman of 

12 its board of directors are citizens of the United States; and 

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

14 number necessary to constitute a quorum. 

15 ‘‘(c) DETERMINATION OF CONTROLLING CORPORATE INTEREST.—The con16 trolling interest in a corporation is owned by citizens of the United States 

17 under subsection (a) only if— 

18 ‘‘(1) title to the majority of the stock in the corporation is vested in 

19 citizens of the United States free from any trust or fiduciary obligation 

20 in favor of a person not a citizen of the United States; 

21 ‘‘(2) the majority of the voting power in the corporation is vested in 

22 citizens of the United States; 

23 ‘‘(3) there is no contract or understanding by which the majority of 

24 the voting power in the corporation may be exercised, directly or indi25 rectly, in behalf of a person not a citizen of the United States; and 

26 ‘‘(4) there is no other means by which control of the corporation is 

27 given to or permitted to be exercised by a person not a citizen of the 

28 United States. 

29 ‘‘(d) DETERMINATION OF 75 PERCENT CORPORATE INTEREST.—At least 75 

30 percent of the interest in a corporation is owned by citizens of the United 

31 States under subsection (a) only if— 

32 ‘‘(1) title to at least 75 percent of the stock in the corporation is vested 

33 in citizens of the United States free from any trust or fiduciary obliga34 tion in favor of a person not a citizen of the United States; 

35 ‘‘(2) at least 75 percent of the voting power in the corporation is vest36 ed in citizens of the United States; 

37 ‘‘(3) there is no contract or understanding by which more than 25 per38 cent of the voting power in the corporation may be exercised, directly 

39 or indirectly, in behalf of a person not a citizen of the United States; 

40 and 
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1 ‘‘(4) there is no other means by which control of more than 25 percent 

2 of any interest in the corporation is given to or permitted to be exercised 

3 by a person not a citizen of the United States. 

4 ‘‘§ 50502. Applicability to receivers, trustees, successors, and 

5 assigns 

6 ‘‘This subtitle applies to receivers, trustees, successors, and assigns of any 

7 person to whom this subtitle applies. 

8 ‘‘§ 50503. Oceanographic research vessels 

9 ‘‘An oceanographic research vessel (as defined in section 2101 of this title) 

10 is deemed not to be engaged in trade or commerce. 

11 ‘‘§ 50504. Sailing school vessels 

12 ‘‘(a) DEFINITIONS.—In this section, the terms ‘sailing school instructor’, 

13 ‘sailing school student’, and ‘sailing school vessel’ have the meaning given 

14 those terms in section 2101 of this title. 

15 ‘‘(b) NOT SEAMEN.—A sailing school student or sailing school instructor 

16 is deemed not to be a seaman under— 

17 ‘‘(1) parts B, F, and G of subtitle II of this title; or 

18 ‘‘(2) the maritime law doctrines of maintenance and cure or warranty 

19 of seaworthiness. 

20 ‘‘(c) NOT MERCHANT VESSEL OR ENGAGED IN TRADE OR COMMERCE.— 

21 A sailing school vessel is deemed not to be— 

22 ‘‘(1) a merchant vessel under section 11101(a)–(c) of this title; or 

23 ‘‘(2) a vessel engaged in trade or commerce. 

24 ‘‘(d) EVIDENCE OF FINANCIAL RESPONSIBILITY.—The owner or charterer 

25 of a sailing school vessel shall maintain evidence of financial responsibility 

26 to meet liability for death or injury to sailing school students and sailing 

27 school instructors on a voyage on the vessel. The amount of financial responsi28 bility shall be at least $50,000 for each student and instructor. Financial re29 sponsibility under this subsection may be evidenced by insurance or other 

30 adequate financial resources. 

31 ‘‘PART B—MERCHANT MARINE SERVICE

32 ‘‘CHAPTER 511—GENERAL 

‘‘Sec. 

‘‘51101. Policy. 

‘‘51102. Definitions. 

‘‘51103. General authority of Secretary of Transportation. 

‘‘51104. General authority of Secretary of the Navy. 

33 ‘‘§ 51101. Policy 

34 ‘‘It is the policy of the United States Government that merchant marine 

35 vessels of the United States should be operated by highly trained and efficient 

36 citizens of the United States and that the United States Navy and the mer37 chant marine of the United States should work closely together to promote the 

38 maximum integration of the total seapower forces of the United States. 
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1 ‘‘§ 51102. Definitions 

2 ‘‘In this part: 

3 ‘‘(1) ACADEMY.—The term ‘Academy’ means the United States Mer4 chant Marine Academy located at Kings Point, New York, and main5 tained under chapter 513 of this title. 

6 ‘‘(2) COST OF EDUCATION PROVIDED.—The term ‘cost of education 

7 provided’ means the financial costs incurred by the United States Gov8 ernment for providing training or financial assistance to students at the 

9 Academy and the State maritime academies, including direct financial 

10 assistance, room, board, classroom academics, and other training activi11 ties. 

12 ‘‘(3) MERCHANT MARINE OFFICER.—The term ‘merchant marine offi13 cer’ means an individual issued a license by the Coast Guard author14 izing service as— 

15 ‘‘(A) a master, mate, or pilot on a documented vessel that— 

16 ‘‘(i) is of at least 1,000 gross tons as measured under section 

17 14502 of this title or an alternate tonnage measured under sec18 tion 14302 of this title as prescribed by the Secretary under 

19 section 14104 of this title; and 

20 ‘‘(ii) operates on the oceans or the Great Lakes; or 

21 ‘‘(B) an engineer officer on a documented vessel propelled by ma22 chinery of at least 4,000 horsepower. 

23 ‘‘(4) STATE MARITIME ACADEMY.—The term ‘State maritime academy’ 

24 means— 

25 ‘‘(A) a State maritime academy or college sponsored by a State 

26 and assisted under chapter 515 of this title; and 

27 ‘‘(B) a regional maritime academy or college sponsored by a 

28 group of States and assisted under chapter 515 of this title. 

29 ‘‘§ 51103. General authority of Secretary of Transportation 

30 ‘‘(a) EDUCATION AND TRAINING.—The Secretary of Transportation may 

31 provide for the education and training of citizens of the United States for the 

32 safe and efficient operation of the merchant marine of the United States at 

33 all times, including operation as a naval and military auxiliary in time of 

34 war or national emergency. 

35 ‘‘(b) SURPLUS PROPERTY FOR INSTRUCTIONAL PURPOSES.— 

36 ‘‘(1) IN GENERAL.—The Secretary may cooperate with and assist the 

37 institutions named in paragraph (2) by making vessels, shipboard equip38 ment, and other marine equipment, owned by the United States Govern39 ment and determined to be excess or surplus, available to those institu40 tions for instructional purposes, by gift, loan, sale, lease, or charter on 

41 terms the Secretary considers appropriate. 
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1 ‘‘(2) INSTITUTIONS.—The institutions referred to in paragraph (1) 

2 are— 

3 ‘‘(A) the United States Merchant Marine Academy; 

4 ‘‘(B) a State maritime academy; and 

5 ‘‘(C) a nonprofit training institution jointly approved by the Sec6 retary of Transportation and the Secretary of the department in 

7 which the Coast Guard is operating as offering training courses that 

8 meet Federal regulations for maritime training. 

9 ‘‘(c) ASSISTANCE FROM OTHER AGENCIES.— 

10 ‘‘(1) IN GENERAL.—The Secretary of Transportation may secure di11 rectly from an agency, on a reimbursable basis, information, facilities, 

12 and equipment necessary to carry out this part. 

13 ‘‘(2) DETAILING PERSONNEL.—At the request of the Secretary, the 

14 head of an agency (including a military department) may detail, on a 

15 reimbursable basis, personnel from the agency to the Secretary to assist 

16 in carrying out this part. 

17 ‘‘(d) ACADEMY PERSONNEL.—To carry out this part, the Secretary may— 

18 ‘‘(1) employ an individual as a professor, lecturer, or instructor at the 

19 Academy, without regard to the provisions of title 5 governing appoint20 ments in the competitive service; and 

21 ‘‘(2) pay the individual without regard to chapter 51 and subchapter 

22 III of chapter 53 of title 5. 

23 ‘‘§ 51104. General authority of Secretary of the Navy 

24 ‘‘The Secretary of the Navy, in cooperation with the Maritime Adminis25 trator and the head of each State maritime academy, shall ensure that— 

26 ‘‘(1) the training of future merchant marine officers at the United 

27 States Merchant Marine Academy and at State maritime academies in28 cludes programs for naval science training in the operation of merchant 

29 vessels as a naval and military auxiliary; and 

30 ‘‘(2) naval officer training programs for future officers, insofar as pos31 sible, are maintained at designated maritime academies consistent with 

32 Navy standards and needs. 

33 ‘‘CHAPTER 513—UNITED STATES MERCHANT MARINE 

34 ACADEMY 

‘‘Sec. 

‘‘51301. Maintenance of the Academy. 

‘‘51302. Nomination and competitive appointment of cadets. 

‘‘51303. Non-competitive appointments. 

‘‘51304. Additional appointments from particular areas. 

‘‘51305. Prohibited basis for appointment. 

‘‘51306. Cadet commitment agreements. 

‘‘51307. Places of training. 

‘‘51308. Uniforms, textbooks, and transportation allowances. 

‘‘51309. Academic degree. 

‘‘51310. Deferment of service obligation under cadet commitment agreements. 
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‘‘51311. Midshipman status in the Naval Reserve. 

‘‘51312. Board of Visitors. 

‘‘51313. Advisory Board. 

1 ‘‘§ 51301. Maintenance of the Academy 

2 ‘‘The Secretary of Transportation shall maintain the United States Mer3 chant Marine Academy to provide instruction to individuals to prepare them 

4 for service in the merchant marine of the United States. 

5 ‘‘§ 51302. Nomination and competitive appointment of cadets 

6 ‘‘(a) REQUIREMENTS.—An individual may be nominated for a competitive 

7 appointment as a cadet at the United States Merchant Marine Academy only 

8 if the individual— 

9 ‘‘(1) is a citizen or national of the United States; and 

10 ‘‘(2) meets the minimum requirements that the Secretary of Transpor11 tation shall establish. 

12 ‘‘(b) NOMINATORS.—Nominations for competitive appointments for the po13 sitions allocated under subsection (c) may be made as follows: 

14 ‘‘(1) A Senator may nominate residents of the State represented by 

15 that Senator. 

16 ‘‘(2) A Member of the House of Representatives may nominate resi17 dents of the State in which the congressional district represented by that 

18 Member is located. 

19 ‘‘(3) A Delegate to the House of Representatives from the District of 

20 Columbia, the Virgin Islands, Guam, or American Samoa may nominate 

21 residents of the jurisdiction represented by that Delegate. 

22 ‘‘(4) The Resident Commissioner to the United States from Puerto 

23 Rico may nominate residents of Puerto Rico. 

24 ‘‘(5) The Governor of the Northern Mariana Islands may nominate 

25 residents of the Northern Mariana Islands. 

26 ‘‘(6) The Panama Canal Commission may nominate— 

27 ‘‘(A) residents, or sons or daughters of residents, of an area or 

28 installation in Panama and made available to the United States 

29 under the Panama Canal Treaty of 1977, the agreements relating 

30 to and implementing that Treaty, signed September 7, 1977, and 

31 the Agreement Between the United States of America and the Re32 public of Panama Concerning Air Traffic Control and Related 

33 Services, concluded January 8, 1979; and 

34 ‘‘(B) sons or daughters of personnel of the United States Govern35 ment and the Panama Canal Commission residing in Panama. 

36 ‘‘(c) ALLOCATION OF POSITIONS.—Positions for competitive appointments 

37 shall be allocated each year as follows: 
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1 ‘‘(1) Positions shall be allocated for residents of each State nominated 

2 by the Members of Congress from that State in proportion to the rep3 resentation in Congress from that State. 

4 ‘‘(2) Four positions shall be allocated for residents of the District of 

5 Columbia nominated by the Delegate to the House of Representatives 

6 from the District of Columbia. 

7 ‘‘(3) One position each shall be allocated for residents of the Virgin 

8 Islands, Guam, and American Samoa nominated by the Delegates to the 

9 House of Representatives from the Virgin Islands, Guam, and American 

10 Samoa, respectively. 

11 ‘‘(4) One position shall be allocated for a resident of Puerto Rico nom12 inated by the Resident Commissioner to the United States from Puerto 

13 Rico. 

14 ‘‘(5) One position shall be allocated for a resident of the Northern 

15 Mariana Islands nominated by the Governor of the Northern Mariana 

16 Islands. 

17 ‘‘(6) Two positions shall be allocated for individuals nominated by the 

18 Panama Canal Commission. 

19 ‘‘(d) COMPETITIVE SYSTEM FOR APPOINTMENT.— 

20 ‘‘(1) ESTABLISHMENT OF SYSTEM.—The Secretary shall establish a 

21 competitive system for selecting individuals nominated under subsection 

22 (b) to fill the positions allocated under subsection (c). The system must 

23 determine the relative merit of each individual based on competitive ex24 aminations, an assessment of the individual’s academic background, and 

25 other effective indicators of motivation and probability of successful com26 pletion of training at the Academy. 

27 ‘‘(2) APPOINTMENTS BY JURISDICTION.—The Secretary shall appoint 

28 individuals to fill the positions allocated under subsection (c) for each 

29 jurisdiction in the order of merit of the individuals nominated from that 

30 jurisdiction. 

31 ‘‘(3) REMAINING UNFILLED POSITIONS.—If positions remain unfilled 

32 after the appointments are made under paragraph (2), the Secretary 

33 shall appoint individuals to fill the positions in the order of merit of 

34 the remaining individuals nominated from all jurisdictions. 

35 ‘‘§ 51303. Non-competitive appointments 

36 ‘‘The Secretary of Transportation may appoint each year without competi37 tion as cadets at the United States Merchant Marine Academy not more than 

38 40 qualified individuals with qualities the Secretary considers to be of special 

39 value to the Academy. In making these appointments, the Secretary shall try 

40 to achieve a national demographic balance at the Academy. 
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1 ‘‘§ 51304. Additional appointments from particular areas 

2 ‘‘(a) OTHER COUNTRIES IN WESTERN HEMISPHERE.—The President may 

3 appoint individuals from countries in the Western Hemisphere other than the 

4 United States to receive instruction at the United States Merchant Marine 

5 Academy. Not more than 12 individuals may receive instruction under this 

6 subsection at the same time, and not more than 2 individuals from the same 

7 country may receive instruction under this subsection at the same time. 

8 ‘‘(b) OTHER COUNTRIES GENERALLY.— 

9 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap10 proval of the Secretary of State, may appoint individuals from countries 

11 other than the United States to receive instruction at the Academy. Not 

12 more than 30 individuals may receive instruction under this subsection 

13 at the same time. 

14 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall ensure 

15 that the country from which an individual comes under this subsection 

16 will reimburse the Secretary for the cost (as determined by the Secretary) 

17 of the instruction and allowances received by the individual. 

18 ‘‘(c) PANAMA.— 

19 ‘‘(1) APPOINTMENT.—The Secretary of Transportation, with the ap20 proval of the Secretary of State, may appoint individuals from Panama 

21 to receive instruction at the Academy. Individuals appointed under this 

22 subsection are in addition to those appointed under any other provision 

23 of this chapter. 

24 ‘‘(2) REIMBURSEMENT.—The Secretary of Transportation shall be re25 imbursed for the cost (as determined by the Secretary) of the instruction 

26 and allowances received by an individual appointed under this sub27 section. 

28 ‘‘(d) ALLOWANCES AND REGULATIONS.—Individuals receiving instruction 

29 under this section are entitled to the same allowances and are subject to the 

30 same regulations on admission, attendance, discipline, resignation, discharge, 

31 dismissal, and graduation, as cadets at the Academy appointed from the 

32 United States. 

33 ‘‘§ 51305. Prohibited basis for appointment 

34 ‘‘Preference may not be given to an individual for appointment as a cadet 

35 at the United States Merchant Marine Academy because one or more members 

36 of the individual’s immediate family are alumni of the Academy. 

37 ‘‘§ 51306. Cadet commitment agreements 

38 ‘‘(a) AGREEMENT REQUIREMENTS.—A citizen of the United States ap39 pointed as a cadet at the United States Merchant Marine Academy must sign, 

40 as a condition of the appointment, an agreement to— 

41 ‘‘(1) complete the course of instruction at the Academy; 
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1 ‘‘(2) fulfill the requirements for a license as an officer in the merchant 

2 marine of the United States before graduation from the Academy; 

3 ‘‘(3) maintain a valid license as an officer in the merchant marine 

4 of the United States for at least 6 years after graduation from the Acad5 emy, accompanied by the appropriate national and international en6 dorsements and certification required by the Coast Guard for service 

7 aboard vessels on domestic and international voyages; 

8 ‘‘(4) apply for, and accept if tendered, an appointment as a commis9 sioned officer in the Naval Reserve (including the Merchant Marine Re10 serve, Naval Reserve), the Coast Guard Reserve, or any other reserve unit 

11 of an armed force of the United States, and, if tendered the appointment, 

12 to serve for at least 6 years after graduation from the Academy; 

13 ‘‘(5) serve the foreign and domestic commerce and the national defense 

14 of the United States for at least 5 years after graduation from the Acad15 emy— 

16 ‘‘(A) as a merchant marine officer on a documented vessel or a 

17 vessel owned and operated by the United States Government or by 

18 a State; 

19 ‘‘(B) as an employee in a United States maritime-related indus20 try, profession, or marine science (as determined by the Secretary 

21 of Transportation), if the Secretary determines that service under 

22 subclause (A) is not available to the individual; 

23 ‘‘(C) as a commissioned officer on active duty in an armed force 

24 of the United States, as a commissioned officer in the National Oce25 anic and Atmospheric Administration, or in other maritime-related 

26 Federal employment which serves the national security interests of 

27 the United States, as determined by the Secretary; or 

28 ‘‘(D) by a combination of the service alternatives referred to in 

29 subclauses (A)–(C); and 

30 ‘‘(6) report to the Secretary on compliance with this subsection. 

31 ‘‘(b) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

32 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

33 that an individual who has attended the Academy for at least 2 years 

34 has failed to fulfill the part of the agreement described in subsection 

35 (a)(1), the individual may be ordered by the Secretary of Defense to serve 

36 on active duty in one of the armed forces of the United States for a pe37 riod of not more than 2 years. In cases of hardship as determined by 

38 the Secretary of Transportation, the Secretary of Transportation may 

39 waive this paragraph in whole or in part. 

40 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un41 willing to order an individual to serve on active duty under paragraph 
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1 (1), or if the Secretary of Transportation determines that reimbursement 

2 of the cost of education provided would better serve the interests of the 

3 United States, the Secretary of Transportation may recover from the in4 dividual the cost of education provided by the Government. 

5 ‘‘(c) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

6 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

7 that an individual has failed to fulfill any part of the agreement de8 scribed in subsection (a)(2)–(6), the individual may be ordered to serve 

9 on active duty for a period of at least 3 years but not more than the 

10 unexpired period (as determined by the Secretary) of the service required 

11 by subsection (a)(5). The Secretary of Transportation, in consultation 

12 with the Secretary of Defense, shall determine in which service the indi13 vidual shall serve. In cases of hardship as determined by the Secretary 

14 of Transportation, the Secretary of Transportation may waive this para15 graph in whole or in part. 

16 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un17 willing to order an individual to serve on active duty under paragraph 

18 (1), or if the Secretary of Transportation determines that reimbursement 

19 of the cost of education provided would better serve the interests of the 

20 United States, the Secretary of Transportation may recover from the in21 dividual the cost of education provided. The Secretary may reduce the 

22 amount to be recovered to reflect partial performance of service obliga23 tions and other factors the Secretary determines merit a reduction. 

24 ‘‘(d) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost of 

25 education provided by the Government under a commitment agreement under 

26 this section, the Secretary of Transportation may— 

27 ‘‘(1) request the Attorney General to bring a civil action against the 

28 individual; and 

29 ‘‘(2) make use of the Federal debt collection procedures in chapter 176 

30 of title 28 or other applicable administrative remedies. 

31 ‘‘§ 51307. Places of training 

32 ‘‘The Secretary of Transportation may provide for the training of cadets 

33 at the United States Merchant Marine Academy— 

34 ‘‘(1) on vessels owned or subsidized by the United States Government; 

35 ‘‘(2) on other documented vessels, with the permission of the owner; 

36 and 

37 ‘‘(3) in shipyards or plants and with industrial or educational organi38 zations. 
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1 ‘‘§ 51308. Uniforms, textbooks, and transportation allow2 ances 

3 ‘‘The Secretary of Transportation shall provide cadets at the United States 

4 Merchant Marine Academy— 

5 ‘‘(1) all required uniforms and textbooks; and 

6 ‘‘(2) allowances for transportation (including reimbursement of trav7 eling expenses) when traveling under orders as a cadet. 

8 ‘‘§ 51309. Academic degree 

9 ‘‘(a) BACHELOR’S DEGREE.— 

10 ‘‘(1) IN GENERAL.—The Superintendent of the United States Merchant 

11 Marine Academy may confer the degree of bachelor of science on an indi12 vidual who— 

13 ‘‘(A) has met the conditions prescribed by the Secretary of Trans14 portation; and 

15 ‘‘(B) if a citizen of the United States, has passed the examination 

16 for a merchant marine officer’s license. 

17 ‘‘(2) EFFECT OF PHYSICAL DISQUALIFICATION.—An individual not al18 lowed to take the examination for a merchant marine officer’s license 

19 only because of physical disqualification may not be denied a degree for 

20 not taking the examination. 

21 ‘‘(b) MASTER’S DEGREE.—The Superintendent of the Academy may confer 

22 a master’s degree on an individual who has met the conditions prescribed by 

23 the Secretary. A master’s degree program may be funded through non-appro24 priated funds. To maintain the appropriate academic standards, the program 

25 shall be accredited by the appropriate accreditation body. The Secretary may 

26 prescribe regulations necessary to administer such a program. 

27 ‘‘(c) GRADUATION NOT ENTITLEMENT TO HOLD LICENSE.—Graduation 

28 from the Academy does not entitle an individual to hold a license authorizing 

29 service on a merchant vessel. 

30 ‘‘§ 51310. Deferment of service obligation under cadet com31 mitment agreements 

32 ‘‘The Secretary of Transportation may defer the service commitment of an 

33 individual under section 51306(a)(5) of this title (as specified in the cadet 

34 commitment agreement) for not more than 2 years if the individual is en35 gaged in a graduate course of study approved by the Secretary. However, 

36 deferment of service as a commissioned officer under section 51306(a)(5) must 

37 be approved by the Secretary of the military department that has jurisdiction 

38 over the service or by the Secretary of Commerce for service with the National 

39 Oceanic and Atmospheric Administration. 
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1 ‘‘§ 51311. Midshipman status in the Naval Reserve 

2 ‘‘(a) APPLICATION REQUIREMENT.—Before being appointed as a cadet at 

3 the United States Merchant Marine Academy, a citizen of the United States 

4 must agree to apply for midshipman status in the Naval Reserve (including 

5 the Merchant Marine Reserve, Naval Reserve). 

6 ‘‘(b) APPOINTMENT.— 

7 ‘‘(1) IN GENERAL.—A citizen of the United States appointed as a 

8 cadet at the Academy shall be appointed by the Secretary of the Navy 

9 as a midshipman in the Naval Reserve (including the Merchant Marine 

10 Reserve, Naval Reserve). 

11 ‘‘(2) RIGHTS AND PRIVILEGES.—The Secretary of the Navy shall pro12 vide for cadets of the Academy who are midshipmen in the United States 

13 Naval Reserve to be— 

14 ‘‘(A) issued an identification card (referred to as a ‘military ID 

15 card’); and 

16 ‘‘(B) entitled to all rights and privileges in accordance with the 

17 same eligibility criteria as apply to other members of the Ready Re18 serve of the reserve components of the armed forces. 

19 ‘‘(3) COORDINATION.—The Secretary of the Navy shall carry out para20 graphs (1) and (2) in coordination with the Secretary of Transportation. 

21 ‘‘§ 51312. Board of Visitors 

22 ‘‘(a) IN GENERAL.—A Board of Visitors to the United States Merchant Ma23 rine Academy shall be established, for a term of 2 years commencing at the 

24 beginning of each Congress, to visit the Academy annually on a date deter25 mined by the Secretary of Transportation and to make recommendations on 

26 the operation of the Academy. 

27 ‘‘(b) APPOINTMENT.— 

28 ‘‘(1) IN GENERAL.—The Board shall be composed of— 

29 ‘‘(A) 2 Senators appointed by the chairman of the Committee on 

30 Commerce, Science, and Transportation of the Senate; 

31 ‘‘(B) 3 Members of the House of Representatives appointed by the 

32 chairman of the Committee on Armed Services of the House of Rep33 resentatives; 

34 ‘‘(C) 1 Senator appointed by the Vice President; 

35 ‘‘(D) 2 Members of the House of Representatives appointed by the 

36 Speaker of the House of Representatives; and 

37 ‘‘(E) the chairmen of the Committee on Commerce, Science, and 

38 Transportation of the Senate and the Committee on Armed Services 

39 of the House of Representatives, as ex officio members. 

40 ‘‘(2) SUBSTITUTE APPOINTMENT.—If an appointed member of the 

41 Board is unable to visit the Academy as provided in subsection (a), an-
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1 other individual may be appointed as a substitute in the manner pro2 vided in paragraph (1). 

3 ‘‘(c) STAFF.—The chairmen of the Committee on Commerce, Science, and 

4 Transportation of the Senate and the Committee on Armed Services of the 

5 House of Representatives may designate staff members of their committees to 

6 serve without reimbursement as staff for the Board. 

7 ‘‘(d) TRAVEL EXPENSES.—When serving away from home or regular place 

8 of business, a member of the Board or a staff member designated under sub9 section (c) shall be allowed travel expenses, including per diem in lieu of sub10 sistence, as authorized by section 5703 of title 5. 

11 ‘‘§ 51313. Advisory Board 

12 ‘‘(a) IN GENERAL.—An Advisory Board to the United States Merchant Ma13 rine Academy shall be established to visit the Academy at least once during 

14 each academic year, for the purpose of examining the course of instruction 

15 and management of the Academy and advising the Maritime Administrator 

16 and the Superintendent of the Academy. 

17 ‘‘(b) APPOINTMENT AND TERMS.—The Board shall be composed of not more 

18 than 7 individuals appointed by the Secretary of Transportation. The indi19 viduals must be distinguished in education and other fields related to the 

20 Academy. Members of the Board shall be appointed for terms of not more than 

21 3 years and may be reappointed. The Secretary shall designate one of the 

22 members as chairman. 

23 ‘‘(c) TRAVEL EXPENSES.—When serving away from home or regular place 

24 of business, a member of the Board shall be allowed travel expenses, including 

25 per diem in lieu of subsistence, as authorized by section 5703 of title 5. 

26 ‘‘(d) RELATIONSHIP TO OTHER LAW.—The Federal Advisory Committee 

27 Act (5 App. U.S.C.) does not apply to the Board. 

28 ‘‘CHAPTER 515—STATE MARITIME ACADEMY SUPPORT 

29 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. 

30 ‘‘§ 51501. General support program 

31 ‘‘(a) ASSISTANCE TO STATE MARITIME ACADEMIES.—The Secretary of 

32 Transportation shall cooperate with and assist State maritime academies in 
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1 providing instruction to individuals to prepare them for service in the mer2 chant marine of the United States. 

3 ‘‘(b) COURSE DEVELOPMENT.—The Secretary shall provide to each State 

4 maritime academy guidance and assistance in developing courses on the oper5 ation and maintenance of new vessels, on equipment, and on innovations 

6 being introduced to the merchant marine of the United States. 

7 ‘‘§ 51502. Detailing of personnel 

8 ‘‘At the request of the Governor of a State, the President may detail, with9 out reimbursement, personnel of the Navy, the Coast Guard, and the Maritime 

10 Service to a State maritime academy to serve as a superintendent, professor, 

11 lecturer, or instructor at the academy. 

12 ‘‘§ 51503. Regional maritime academies 

13 ‘‘The Governors of the States cooperating to sponsor a regional maritime 

14 academy shall designate in writing one of those States to conduct the affairs 

15 of that academy. A regional maritime academy is eligible for assistance from 

16 the United States Government on the same basis as a State maritime acad17 emy sponsored by a single State. 

18 ‘‘§ 51504. Use of training vessels 

19 ‘‘(a) APPLICATIONS TO USE VESSELS.—The Governor of a State spon20 soring a State maritime academy (or the Governor of the State designated 

21 to conduct the affairs of a regional maritime academy) may apply in writing 

22 to the Secretary of Transportation to obtain the use of a training vessel for 

23 the academy. A vessel provided under this section remains the property of the 

24 United States Government. 

25 ‘‘(b) GENERAL AUTHORITY.—Subject to subsection (c), the Secretary may 

26 provide to a State maritime academy, for use as a training vessel, a suitable 

27 vessel under the control of the Secretary or made available to the Secretary 

28 under subsection (e). If a suitable vessel is not available, the Secretary may 

29 build and provide a suitable vessel. 

30 ‘‘(c) APPROVAL REQUIREMENTS.—The Secretary may provide a vessel 

31 under this section only if— 

32 ‘‘(1) an application has been made under subsection (a); 

33 ‘‘(2) the State maritime academy satisfies section 51506(a) of this 

34 title; and 

35 ‘‘(3) a suitable port will be available for the safe mooring of the vessel 

36 while the academy is using the vessel. 

37 ‘‘(d) PREPARATION AND MAINTENANCE.—A vessel provided under this sec38 tion shall be— 

39 ‘‘(1) repaired, reconditioned, and equipped (with all apparel, charts, 

40 books, and instruments of navigation) as necessary for use as a training 

41 vessel; and 
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1 ‘‘(2) maintained in good repair by the Secretary. 

2 ‘‘(e) AGENCY VESSELS.—An agency may provide to the Secretary, for use 

3 by a State maritime academy, a vessel (including equipment) that— 

4 ‘‘(1) is suitable for training purposes; and 

5 ‘‘(2) can be provided without detriment to the service to which the ves6 sel is assigned. 

7 ‘‘(f) FUEL COSTS.—The Secretary may pay to a State maritime academy 

8 the costs of fuel used by a vessel provided under this section while used for 

9 training. 

10 ‘‘(g) REMOVING VESSELS FROM SERVICE AND VESSEL SHARING.—The Sec11 retary may not— 

12 ‘‘(1) take a vessel, currently in use as a training vessel under this sec13 tion, out of service to implement an alternative program (including ves14 sel sharing) unless the vessel is incapable of being maintained in good 

15 repair as required by subsection (d); or 

16 ‘‘(2) implement a program requiring a State maritime academy to 

17 share its training vessel with another State maritime academy, except 

18 with the express consent of Congress. 

19 ‘‘§ 51505. Annual payments for maintenance and support 

20 ‘‘(a) PAYMENT AGREEMENTS.—The Secretary of Transportation may make 

21 an agreement (effective for not more than 4 years) with the following acad22 emies to provide annual payments to those academies for their maintenance 

23 and support: 

24 ‘‘(1) One State maritime academy in each State that satisfies section 

25 51506(a) of this title. 

26 ‘‘(2) Each regional maritime academy that satisfies section 51506(a) 

27 of this title. 

28 ‘‘(b) PAYMENTS.— 

29 ‘‘(1) IN GENERAL.—Subject to paragraph (2), an annual payment to 

30 an academy under subsection (a) shall be at least equal to the amount 

31 given to the academy for its maintenance and support by the State in 

32 which it is located, or, for a regional maritime academy, by all States 

33 cooperating to sponsor the academy. 

34 ‘‘(2) MAXIMUM.—The amount under paragraph (1) may not be more 

35 than $25,000. However, if the academy satisfies section 51506(b) of this 

36 title, the amount shall be— 

37 ‘‘(A) $100,000 for a State maritime academy; and 

38 ‘‘(B) $200,000 for a regional maritime academy. 
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1 ‘‘§ 51506. Conditions to receiving payments and use of vessels 

2 ‘‘(a) GENERAL CONDITIONS.—As conditions of receiving an annual pay3 ment or the use of a vessel under this chapter, a State maritime academy 

4 must— 

5 ‘‘(1) provide courses of instruction on navigation, marine engineering 

6 (including steam and diesel propulsion), the operation and maintenance 

7 of new vessels and equipment, and innovations being introduced to the 

8 merchant marine of the United States; 

9 ‘‘(2) agree in writing to conform to the standards for courses, training 

10 facilities, admissions, and instruction that the Secretary of Transpor11 tation may establish after consultation with the superintendents of State 

12 maritime academies; and 

13 ‘‘(3) agree in writing to require, as a condition for graduation, that 

14 each individual who is a citizen of the United States and who is attend15 ing the academy in a merchant marine officer preparation program pass 

16 the examination required for the issuance of a license under section 7101 

17 of this title. 

18 ‘‘(b) ADDITIONAL CONDITION TO PAYMENTS OF MORE THAN $25,000.—As 

19 a condition of receiving an annual payment of more than $25,000 under sec20 tion 51505 of this title, a State maritime academy also must agree to admit 

21 each year a number of citizens of the United States who meet its admission 

22 requirements and reside in a State not supporting that academy. The Sec23 retary shall determine the number of individuals to be admitted by each acad24 emy under this subsection. The number may not be more than one-third of 

25 the total number of individuals attending the academy at any time. 

26 ‘‘§ 51507. Places of training 

27 ‘‘The Secretary of Transportation may provide for the training of students 

28 attending a State maritime academy— 

29 ‘‘(1) on vessels owned or subsidized by the United States Government; 

30 ‘‘(2) on other documented vessels, with the permission of the owner; 

31 and 

32 ‘‘(3) in shipyards or plants and with industrial or educational organi33 zations. 

34 ‘‘§ 51508. Allowances for students 

35 ‘‘Under regulations prescribed by the Secretary of Transportation, a stu36 dent at a State maritime academy shall receive from the Secretary allowances 

37 for transportation (including reimbursement of traveling expenses) when trav38 eling under orders to receive training under section 51507 of this title. 

39 ‘‘§ 51509. Student incentive payment agreements 

40 ‘‘(a) GENERAL AUTHORITY.—If a State maritime academy has an agree41 ment with the Secretary of Transportation under section 51505 of this title, 
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1 the Secretary may make an agreement with a student at the academy who 

2 is a citizen of the United States to make student incentive payments to the 

3 individual. An agreement with a student may not be effective for more than 

4 4 academic years. The Secretary shall allocate payments under this section 

5 among the various State maritime academies in an equitable manner. 

6 ‘‘(b) PAYMENTS.—Payments under an agreement under this section shall 

7 be equal to $4,000 each academic year and be paid, as prescribed by the Sec8 retary, while the individual is attending the academy. The payments shall be 

9 used for uniforms, books, and subsistence. 

10 ‘‘(c) MIDSHIPMAN AND ENLISTED RESERVE STATUS.—An agreement under 

11 this section shall require the student to accept midshipman and enlisted re12 serve status in the Naval Reserve (including the Merchant Marine Reserve, 

13 Naval Reserve) before receiving any payments under the agreement. 

14 ‘‘(d) AGREEMENT REQUIREMENTS.—An agreement under this section shall 

15 require the student to— 

16 ‘‘(1) complete the course of instruction at the academy the individual 

17 is attending; 

18 ‘‘(2) take the examination for a license as an officer in the merchant 

19 marine of the United States before graduation from the academy and ful20 fill the requirements for such a license within 3 months after graduation 

21 from the academy; 

22 ‘‘(3) maintain a valid license as an officer in the merchant marine 

23 of the United States for at least 6 years after graduation from the acad24 emy, accompanied by the appropriate national and international en25 dorsements and certification required by the Coast Guard for service 

26 aboard vessels on domestic and international voyages; 

27 ‘‘(4) accept, if tendered, an appointment as a commissioned officer in 

28 the Naval Reserve (including the Merchant Marine Reserve, Naval Re29 serve), the Coast Guard Reserve, or any other reserve unit of an armed 

30 force of the United States, and, if tendered the appointment, to serve for 

31 at least 6 years after graduation from the academy; 

32 ‘‘(5) serve the foreign and domestic commerce and the national defense 

33 of the United States for at least 3 years after graduation from the acad34 emy— 

35 ‘‘(A) as a merchant marine officer on a documented vessel or a 

36 vessel owned and operated by the United States Government or by 

37 a State; 

38 ‘‘(B) as an employee in a United States maritime-related indus39 try, profession, or marine science (as determined by the Secretary), 

40 if the Secretary determines that service under subclause (A) is not 

41 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 Oce3 anic and Atmospheric Administration, or in other maritime-related 

4 Federal employment which serves the national security interests of 

5 the United States, as determined by the Secretary; or 

6 ‘‘(D) by a combination of the service alternatives referred to in 

7 subclauses (A)–(C); and 

8 ‘‘(6) report to the Secretary on compliance with this subsection. 

9 ‘‘(e) FAILURE TO COMPLETE COURSE OF INSTRUCTION.— 

10 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

11 that an individual who has accepted the payments described in sub12 section (b) for a minimum of 2 academic years has failed to fulfill the 

13 part of the agreement described in subsection (d)(1), the individual may 

14 be ordered by the Secretary of Defense to serve on active duty in the 

15 armed forces of the United States for a period of not more than 2 years. 

16 In cases of hardship as determined by the Secretary of Transportation, 

17 the Secretary of Transportation may waive this paragraph in whole or 

18 in part. 

19 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un20 willing to order an individual to serve on active duty under paragraph 

21 (1), or if the Secretary of Transportation determines that reimbursement 

22 of the cost of education provided would better serve the interests of the 

23 United States, the Secretary of Transportation may recover from the in24 dividual the amount of student incentive payments, plus interest and at25 torney fees. The Secretary may reduce the amount to be recovered to re26 flect partial performance of service obligations and other factors the Sec27 retary determines merit a reduction. 

28 ‘‘(f) FAILURE TO CARRY OUT OTHER REQUIREMENTS.— 

29 ‘‘(1) ACTIVE DUTY.—If the Secretary of Transportation determines 

30 that an individual has failed to fulfill any part of the agreement de31 scribed in subsection (d)(2)–(6), the individual may be ordered to serve 

32 on active duty for a period of at least 2 years but not more than the 

33 unexpired period (as determined by the Secretary) of the service required 

34 by subsection (d)(5). The Secretary of Transportation, in consultation 

35 with the Secretary of Defense, shall determine in which service the indi36 vidual shall serve. In cases of hardship as determined by the Secretary 

37 of Transportation, the Secretary of Transportation may waive this para38 graph in whole or in part. 

39 ‘‘(2) RECOVERY OF COST.—If the Secretary of Defense is unable or un40 willing to order an individual to serve on active duty under paragraph 

41 (1), or if the Secretary of Transportation determines that reimbursement 
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1 of the cost of education provided would better serve the interests of the 

2 United States, the Secretary of Transportation may recover from the in3 dividual the amount of student incentive payments, plus interest and at4 torney fees. The Secretary may reduce the amount to be recovered to re5 flect partial performance of service obligations and other factors the Sec6 retary determines merit a reduction. 

7 ‘‘(g) ACTIONS TO RECOVER COST.—To aid in the recovery of the cost of 

8 education provided by the Government under a commitment agreement under 

9 this section, the Secretary of Transportation may— 

10 ‘‘(1) request the Attorney General to bring a civil action against the 

11 individual; and 

12 ‘‘(2) make use of the Federal debt collection procedures in chapter 176 

13 of title 28 or other applicable administrative remedies. 

14 ‘‘§ 51510. Deferment of service obligation under student in15 centive payment agreements 

16 ‘‘The Secretary of Transportation may defer the service commitment of an 

17 individual under section 51509(d)(5) of this title (as specified in the agree18 ment under section 51509) for not more than 2 years if the individual is en19 gaged in a graduate course of study approved by the Secretary. However, 

20 deferment of service as a commissioned officer on active duty must be ap21 proved by the Secretary of the affected military department (or the Secretary 

22 of Commerce, for service with the National Oceanic and Atmospheric Admin23 istration). 

24 ‘‘§ 51511. Midshipman status in the Naval Reserve 

25 ‘‘A citizen of the United States attending a State maritime academy may 

26 be appointed by the Secretary of the Navy as a midshipman in the Naval 

27 Reserve (including the Merchant Marine Reserve, Naval Reserve). 

28 ‘‘CHAPTER 517—OTHER SUPPORT FOR MERCHANT 

29 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. 

30 ‘‘§ 51701. United States Maritime Service 

31 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may estab32 lish and maintain a voluntary organization, to be known as the United 

33 States Maritime Service, for the training of citizens of the United States to 

34 serve on merchant vessels of the United States. 

35 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may— 

36 ‘‘(1) determine the number of individuals to be enrolled for training 

37 and reserve purposes in the Service; 
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1 ‘‘(2) fix the rates of pay and allowances of the individuals without re2 gard to chapter 51 or subchapter III of chapter 53 of title 5; 

3 ‘‘(3) prescribe the course of study and the periods of training for the 

4 Service; and 

5 ‘‘(4) prescribe the uniform of the Service and the rules on providing 

6 and wearing the uniform. 

7 ‘‘(c) RANKS, GRADES, AND RATINGS.—The ranks, grades, and ratings for 

8 personnel of the Service shall be the same as those prescribed for personnel 

9 of the Coast Guard. 

10 ‘‘(d) MEDALS AND AWARDS.—The Secretary may establish and maintain 

11 a medals and awards program to recognize distinguished service, superior 

12 achievement, professional performance, and other commendable achievement 

13 by personnel of the Service. 

14 ‘‘§ 51702. Civilian nautical schools 

15 ‘‘(a) DEFINITION.—In this section, the term ‘civilian nautical school’ 

16 means a school operated in the United States (except the United States Mer17 chant Marine Academy, a State maritime academy, or another school oper18 ated by the United States Government) that offers instruction to individuals 

19 quartered on a vessel primarily to train them for service in the merchant ma20 rine. 

21 ‘‘(b) INSPECTION.—Each civilian nautical school is subject to inspection by 

22 the Secretary of Transportation. 

23 ‘‘(c) RATING AND CERTIFICATION.—The Secretary may, under regulations 

24 the Secretary may prescribe, provide for the rating and certification of civil25 ian nautical schools as to the adequacy of their course of instruction, the com26 petence of their instructors, and the suitability of the equipment used in their 

27 course of instruction. 

28 ‘‘§ 51703. Additional training 

29 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may provide 

30 additional training on maritime subjects to supplement other training oppor31 tunities and make the training available to the personnel of the merchant ma32 rine of the United States and individuals preparing for a career in the mer33 chant marine of the United States. 

34 ‘‘(b) EQUIPMENT, SUPPLIES, AND CONTRACTS.—The Secretary may— 

35 ‘‘(1) prepare or buy equipment or supplies required for the additional 

36 training; and 

37 ‘‘(2) without regard to section 3709 of the Revised Statutes (41 U.S.C. 

38 5), make contracts for services the Secretary considers necessary to pre39 pare the equipment and supplies and to supervise and administer the 

40 additional training. 
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1 ‘‘§ 51704. Training for maritime oil pollution prevention, re2 sponse, and clean-up 

3 ‘‘(a) ASSISTANCE IN ESTABLISHING PROGRAM.—The Secretary of Trans4 portation shall assist maritime training institutions approved by the Sec5 retary in establishing a training program for maritime oil pollution preven6 tion, response, and clean-up. 

7 ‘‘(b) PROVIDING TRAINING VESSELS.—Subject to subsection (c), the Sec8 retary may provide, with title free of all liens, to maritime training institu9 tions that have a program established under subsection (a), offshore supply 

10 vessels and tug/supply vessels that were built in the United States and are 

11 in the possession of the Maritime Administration because of a default on a 

12 loan guaranteed under chapter 537 of this title. 

13 ‘‘(c) REQUIREMENTS.—In addition to any other requirements the Secretary 

14 considers appropriate, the following requirements apply to vessels provided 

15 under this section: 

16 ‘‘(1) The vessel shall be offered to the institution at a location selected 

17 by the Secretary. 

18 ‘‘(2) The institution shall use the vessel to train students and appro19 priate maritime industry personnel in oil spill prevention, response, 

20 clean-up, and related skills. 

21 ‘‘(3) The institution shall make the vessel and qualified students avail22 able to appropriate Federal, State, and local oil spill response authorities 

23 when there is a maritime oil spill. 

24 ‘‘(4) The institution may not sell, trade, charter, donate, scrap, or in 

25 any way alter or dispose of the vessel without prior approval of the Sec26 retary. 

27 ‘‘(5) The institution may not use the vessel in competition with a pri28 vately-owned vessel documented under chapter 121 of this title or titled 

29 under the law of a State, unless necessary to carry out this section. 

30 ‘‘(6) When the institution can no longer use the vessel for its training 

31 program, the institution shall return the vessel to the Secretary. The Sec32 retary shall take possession at the institution and thereafter may provide 

33 the vessel to another institution under this section or dispose of the vessel. 

34 ‘‘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. 
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1 ‘‘§ 51901. Awards for individual acts or service 

2 ‘‘(a) GENERAL AUTHORITY.—The Secretary of Transportation may award 

3 decorations and medals of appropriate design (including ribbons, ribbon bars, 

4 emblems, rosettes, miniature facsimiles, plaques, citations, or other suitable 

5 devices or insignia) for individual acts or service in the merchant marine of 

6 the United States. The design may be similar to the design of a decoration 

7 or medal authorized for members of the armed forces for similar acts or serv8 ice. 

9 ‘‘(b) SPECIFIC AUTHORITY.—The Secretary may award— 

10 ‘‘(1) a Merchant Marine Distinguished Service Medal to an individual 

11 for outstanding acts, conduct, or valor beyond the line of duty; 

12 ‘‘(2) a Merchant Marine Meritorious Service Medal to an individual 

13 for meritorious acts, conduct, or valor in the line of duty, but not of the 

14 outstanding character that would warrant the award of the Merchant 

15 Marine Distinguished Service Medal; 

16 ‘‘(3) a decoration or medal to an individual for service during a war, 

17 national emergency proclaimed by the President or Congress, or oper18 ations by the armed forces outside the continental United States under 

19 conditions of danger to life and property; and 

20 ‘‘(4) a decoration or medal to an individual for other acts or service 

21 of conspicuous gallantry, intrepidity, and extraordinary heroism under 

22 conditions of danger to life and property that would warrant a similar 

23 decoration or medal for a member of the armed forces. 

24 ‘‘§ 51902. Gallant Ship Award 

25 ‘‘(a) AWARDS TO VESSELS.—The Secretary of Transportation may award 

26 a Gallant Ship Award and a citation to a vessel (including a foreign vessel) 

27 participating in outstanding or gallant action in a marine disaster or other 

28 emergency to save life or property at sea. The Secretary may award a plaque 

29 to the vessel, and a replica of the plaque may be preserved as a permanent 

30 historical record. 

31 ‘‘(b) AWARDS TO CREWS.—The Secretary of Transportation may award an 

32 appropriate citation ribbon bar to the master and each individual serving, 

33 at the time of the action, on a vessel issued an award under subsection (a). 

34 ‘‘(c) CONSULTATION.—The Secretary of Transportation shall consult with 

35 the Secretary of State before awarding an award or citation to a foreign ves36 sel or its crew under this section. 

37 ‘‘§ 51903. Multiple awards 

38 ‘‘An individual may not be awarded more than one of any type of decora39 tion or medal under this chapter. For each succeeding act or service justifying 

40 the same decoration or medal, a suitable device may be awarded to be worn 

41 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 the 

4 award to an appropriate representative. 

5 ‘‘§ 51905. Flags and grave markers 

6 ‘‘Except as authorized under another law, the Secretary of Transportation 

7 may issue, at no cost, a flag of the United States and a grave marker to the 

8 family or personal representative of a deceased individual who served in the 

9 merchant marine of the United States in support of the armed forces of the 

10 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 sub20 section (a) does not entitle an individual to any rights, privileges, or benefits 

21 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 medals 

25 authorized under this chapter or a prior law; and 

26 ‘‘(2) provide at cost, or authorize private persons to sell at reasonable 

27 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 provided 

32 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 provided 
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1 for by chapter 43 of title 38 for any member of a reserve component of the 

2 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 certification 

9 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 under 

13 section 11 of the Merchant Ship Sales Act of 1946 (50 App. 

14 U.S.C. 1744) in a period in which the vessel was in use or 

15 being activated for use under subsection (b) of that section; 

16 ‘‘(ii) requisitioned or purchased under chapter 563 of this 

17 title; or 

18 ‘‘(iii) owned, chartered, or controlled by the United States 

19 Government and used by the Government for a war, armed 

20 conflict, national emergency, or maritime mobilization need 

21 (including for training purposes or testing for readiness and 

22 suitability for mission performance); and 

23 ‘‘(B) during the period of that employment, possessed a valid li24 cense, certificate of registry, or merchant mariner’s document issued 

25 under chapter 71 or 73 of this title; and 

26 ‘‘(2) if the Secretary makes affirmative determinations under para27 graph (1)(A) and (B), certify that individual under this subsection. 

28 ‘‘(d) EQUIVALENCE TO MILITARY SELECTIVE SERVICE ACT CERTIFI29 CATE.—For purposes of reemployment rights and benefits provided by this 

30 section, a certification under subsection (c) shall be considered to be the equiv31 alent of a certificate described in section 9(a) of the Military Selective Service 

32 Act (50 App. U.S.C. 459(a)). 

33 ‘‘PART C—FINANCIAL ASSISTANCE PROGRAMS’’. 

34 (c) CHAPTERS FOLLOWING CHAPTER 531.—Subtitle V of title 46, United 

35 States Code, is amended by adding at the end the following: 

36 ‘‘CHAPTER 533—CONSTRUCTION RESERVE FUNDS 

‘‘Sec. 

‘‘53301. Definitions. 

‘‘53302. Authority for construction reserve funds. 

‘‘53303. Persons eligible to establish funds. 

‘‘53304. Vessel ownership. 

‘‘53305. Eligible fund deposits. 

‘‘53306. Recognition of gain for tax purposes. 

‘‘53307. Basis for determining gain or loss and for depreciating new vessels. 
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‘‘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’ in4 cludes, for a taxpayer constructing a new vessel in a shipyard owned by 

5 that taxpayer, an agreement between the taxpayer and the Secretary of 

6 Transportation for that construction containing provisions the Secretary 

7 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 constructed 

13 with financing or a financing guarantee under chapter 537 or 

14 575 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 or 

20 less than 12 knots speed unless the Secretary certifies in each 

21 case that a vessel of lesser tonnage or speed is desirable for use 

22 by the United States Government in case of war or national 

23 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 chapter 

31 have the same meaning as in chapter 1 of the Internal Revenue Code of 1986 

32 (26 U.S.C. ch. 1). 

33 ‘‘§ 53302. Authority for construction reserve funds 

34 ‘‘(a) GENERAL AUTHORITY.—An eligible person under section 53303 of this 

35 title may establish a construction reserve fund for the construction, recon36 struction, reconditioning, or acquisition of a new vessel or for other purposes 

37 authorized by this chapter. 
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1 ‘‘(b) APPLICATION OF CERTAIN LAWS AND REGULATIONS.—The fund shall 

2 be established, maintained, expended, and used as provided by this chapter 

3 and regulations prescribed jointly by the Secretary of Transportation and the 

4 Secretary of the Treasury. 

5 ‘‘§ 53303. Persons eligible to establish funds 

6 ‘‘A construction reserve fund may be established by a citizen of the United 

7 States that— 

8 ‘‘(1) is operating a vessel in the foreign or domestic commerce of the 

9 United States or in the fisheries; 

10 ‘‘(2) owns, in whole or in part, a vessel being operated in the foreign 

11 or domestic commerce of the United States or in the fisheries; 

12 ‘‘(3) was operating a vessel in the foreign or domestic commerce of the 

13 United States or in the fisheries when it was bought or requisitioned by 

14 the United States Government; 

15 ‘‘(4) owned, in whole or in part, a vessel being operated in the foreign 

16 or domestic commerce of the United States or in the fisheries when it 

17 was bought or requisitioned by the Government; or 

18 ‘‘(5) had acquired or was having constructed a vessel to operate in the 

19 foreign or domestic commerce of the United States or in the fisheries 

20 when it was bought or requisitioned by the Government. 

21 ‘‘§ 53304. Vessel ownership 

22 ‘‘In this chapter, a vessel is deemed to be constructed or acquired by a tax23 payer if constructed or acquired by a corporation when the taxpayer owns 

24 at least 95 percent of each class of stock of the corporation. 

25 ‘‘§ 53305. Eligible fund deposits 

26 ‘‘A construction reserve fund may include deposits of— 

27 ‘‘(1) the proceeds from the sale of a vessel; 

28 ‘‘(2) indemnities for the loss of a vessel; 

29 ‘‘(3) earnings from the operation of a documented vessel and from 

30 services incident to the operation; and 

31 ‘‘(4) interest or other amounts accrued on deposits in the fund. 

32 ‘‘§ 53306. Recognition of gain for tax purposes 

33 ‘‘(a) DEFINITIONS.—In this section, the terms ‘net proceeds’ and ‘net in34 demnity’ mean the sum of— 

35 ‘‘(1) the adjusted basis of the vessel; and 

36 ‘‘(2) the amount of gain the taxpayer would recognize without regard 

37 to this section. 

38 ‘‘(b) RECOGNITION OF GAIN.—In computing net income under the income 

39 or excess profits tax laws of the United States, a taxpayer does not recognize 

40 a gain on the sale or the actual or constructive total loss of a vessel if the 

41 taxpayer— 
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1 ‘‘(1) deposits an amount equal to the net proceeds of the sale or the 

2 net indemnity for the loss in a construction reserve fund within 60 days 

3 after receiving the payment of proceeds or indemnity; and 

4 ‘‘(2) elects under this section not to recognize the gain. 

5 ‘‘(c) WHEN ELECTION MUST BE MADE.— 

6 ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the taxpayer 

7 must make the election referred to in subsection (b) in the taxpayer’s in8 come tax return for the taxable year in which the gain was realized. 

9 ‘‘(2) RECEIPT AFTER TAXABLE YEAR.—If the vessel is bought or requi10 sitioned by the United States Government, or is lost, and the taxpayer 

11 receives payment for the vessel or indemnity for the loss from the Govern12 ment after the end of the taxable year in which it was bought, requi13 sitioned, or lost, the taxpayer must make the election referred to in sub14 section (b) within 60 days after receiving the payment or indemnity, on 

15 a form prescribed by the Secretary of the Treasury. 

16 ‘‘(d) EFFECT OF STATUTE OF LIMITATION.—If the taxpayer makes an elec17 tion under subsection (c)(2), and computation or recomputation under this 

18 section is otherwise allowable but is prevented by a statute of limitation on 

19 the date the election is made or within 6 months thereafter, the computation 

20 or recomputation nevertheless shall be made notwithstanding the statute if the 

21 taxpayer files a claim for the computation or recomputation within 6 months 

22 after the date of making the election. 

23 ‘‘§ 53307. Basis for determining gain or loss and for depre24 ciating new vessels 

25 ‘‘Under the income or excess profits tax laws of the United States, the basis 

26 for determining a gain or loss and for depreciation of a new vessel con27 structed, reconstructed, reconditioned, or acquired by the taxpayer, or for 

28 which purchase-money indebtedness is liquidated as provided in section 53310 

29 of this title, with amounts from a construction reserve fund, shall be reduced 

30 by that part of the deposits in the fund expended in the construction, recon31 struction, reconditioning, acquisition, or liquidation of purchase-money in32 debtedness of the new vessel that represents a gain not recognized for tax pur33 poses under section 53306 of this title. 

34 ‘‘§ 53308. Order and proportions of deposits and withdrawals 

35 ‘‘In this chapter— 

36 ‘‘(1) if the net proceeds of a sale or the net indemnity for a loss is 

37 deposited in more than one deposit, the amount consisting of the gain 

38 shall be deemed to be deposited first; 

39 ‘‘(2) amounts expended, obligated, or otherwise withdrawn shall be ap40 plied against the amounts deposited in the fund in the order of deposit; 

41 and 
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1 ‘‘(3) if a deposit consists in part of a gain not recognized under sec2 tion 53306 of this title, any expenditure, obligation, or withdrawal ap3 plied against that deposit shall be deemed to be a gain in the proportion 

4 that the part of the deposit consisting of a gain bears to the total amount 

5 of the deposit. 

6 ‘‘§ 53309. Accumulation of deposits 

7 ‘‘For any taxable year, amounts on deposit in a construction reserve fund 

8 on the last day of the taxable year, for which the requirements of section 

9 53310 of this title have been satisfied (to the extent they apply on the last 

10 day of the taxable year), are deemed to have been retained for the reasonable 

11 needs of the business within the meaning of section 537(a) of the Internal 

12 Revenue Code of 1986 (26 U.S.C. 537(a)). 

13 ‘‘§ 53310. Obligation of deposits and period for construction 

14 of certain vessels 

15 ‘‘(a) APPLICATION OF SECTIONS 53306 AND 53309.—Sections 53306 and 

16 53309 of this title apply to a deposit in a construction reserve fund only if, 

17 within 3 years after the date of the deposit (and any extension under sub18 section (c))— 

19 ‘‘(1)(A) a contract is made for the construction or acquisition of a new 

20 vessel or, with the approval of the Secretary of Transportation, for a 

21 part interest in a new vessel or for the reconstruction or reconditioning 

22 of a new vessel; 

23 ‘‘(B) the deposit is expended or obligated for expenditure under that 

24 contract; 

25 ‘‘(C) at least 12.5 percent of the construction or contract price of the 

26 vessel is paid or irrevocably committed for payment; and 

27 ‘‘(D) the plans and specifications for the vessel are approved by the 

28 Secretary to the extent the Secretary considers necessary; or 

29 ‘‘(2) the deposit is expended or obligated for expenditure for the liq30 uidation of existing or subsequently incurred purchase-money indebted31 ness to a person not a parent company of, or a company affiliated or 

32 associated with, the mortgagor on a new vessel. 

33 ‘‘(b) ADDITIONAL REQUIREMENTS FOR CERTAIN VESSELS.—In addition to 

34 the requirements of subsection (a)(1), for a vessel not constructed under a con35 struction-differential subsidy contract or not bought from the Secretary of 

36 Transportation— 

37 ‘‘(1) at least 5 percent of the construction (or, if the contract covers 

38 more than one vessel, at least 5 percent of the construction of the first 

39 vessel) must be completed within 6 months after the date of the construc40 tion contract (or within the period of an extension under subsection (c)), 
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1 as estimated by the Secretary and certified by the Secretary to the Sec2 retary of the Treasury; and 

3 ‘‘(2) construction under the contract must be completed with reason4 able dispatch thereafter. 

5 ‘‘(c) EXTENSIONS.—The Secretary of Transportation may grant extensions 

6 of the period within which the deposits must be expended or obligated or with7 in which the construction must have progressed to the extent of 5 percent com8 pletion under this section. However, the extensions may not be for a total of 

9 more than 2 years for the expenditure or obligation of deposits or one year 

10 for the progress of construction. 

11 ‘‘§ 53311. Taxation of deposits on failure of conditions 

12 ‘‘A deposited gain, if otherwise taxable income under the law applicable to 

13 the taxable year in which the gain was realized, shall be included in gross 

14 income for that taxable year, except for purposes of the declared value excess 

15 profits tax and the capital stock tax, if— 

16 ‘‘(1) the deposited gain is not expended or obligated within the appro17 priate period under section 53310 of this title; 

18 ‘‘(2) the deposited gain is withdrawn before the end of that period; 

19 ‘‘(3) the construction related to that deposited gain has not progressed 

20 to the extent of 5 percent of completion within the appropriate period 

21 under section 53310 of this title; or 

22 ‘‘(4) the Secretary of Transportation finds and certifies to the Sec23 retary of the Treasury that, for causes within the control of the taxpayer, 

24 the entire construction related to that deposited gain is not completed 

25 with reasonable dispatch. 

26 ‘‘§ 53312. Assessment and collection of deficiency tax 

27 ‘‘Notwithstanding any other provision of law, a deficiency in tax for a tax28 able year resulting from the inclusion of an amount in gross income as pro29 vided by section 53311 of this title, and the amount to be treated as a defi30 ciency under section 53311 instead of as an adjustment for the declared value 

31 excess profits tax, may be assessed or a civil action may be brought to collect 

32 the deficiency without assessment, at any time. Interest on a deficiency or 

33 amount to be treated as a deficiency does not begin until the date the depos34 ited gain or part of the deposited gain in question is required to be included 

35 in gross income under section 51111. 

36 ‘‘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. 
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‘‘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. 

1 ‘‘§ 53501. Definitions 

2 ‘‘In this chapter: 

3 ‘‘(1) AGREEMENT VESSEL.—The term ‘agreement vessel’ means— 

4 ‘‘(A) an eligible vessel or a qualified vessel that is subject to an 

5 agreement under this chapter; and 

6 ‘‘(B) a barge or container that is part of the complement of a 

7 vessel described in subclause (A) if provided for in the agreement. 

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

9 ‘‘(A) a vessel— 

10 ‘‘(i) constructed in the United States (and, if reconstructed, 

11 reconstructed in the United States), constructed outside the 

12 United States but documented under the laws of the United 

13 States on April 15, 1970, or constructed outside the United 

14 States for use in the United States foreign trade pursuant to 

15 a contract made before April 15, 1970; 

16 ‘‘(ii) documented under the laws of the United States; and 

17 ‘‘(iii) operated in the foreign or domestic trade of the United 

18 States or in the fisheries of the United States; and 

19 ‘‘(B) a commercial fishing vessel— 

20 ‘‘(i) constructed in the United States and, if reconstructed, 

21 reconstructed in the United States; 

22 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

23 ‘‘(iii) owned by a citizen of the United States; 

24 ‘‘(iv) having its home port in the United States; and 

25 ‘‘(v) operated in the commercial fisheries of the United 

26 States. 

27 ‘‘(3) JOINT REGULATIONS.—The term ‘joint regulations’ means regula28 tions prescribed jointly by the Secretary and the Secretary of the Treas29 ury under section 53502(b) of this title. 

30 ‘‘(4) NONCONTIGUOUS TRADE.—The term ‘noncontiguous trade’ 

31 means— 

32 ‘‘(A) trade between— 

33 ‘‘(i) one of the contiguous 48 States; and 

34 ‘‘(ii) Alaska, Hawaii, Puerto Rico, or an insular territory 

35 or possession of the United States; and 
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1 ‘‘(B) trade between— 

2 ‘‘(i) a place in Alaska, Hawaii, Puerto Rico, or an insular 

3 territory or possession of the United States; and 

4 ‘‘(ii) another place in Alaska, Hawaii, Puerto Rico, or an 

5 insular territory or possession of the United States. 

6 ‘‘(5) QUALIFIED VESSEL.—The term ‘qualified vessel’ means— 

7 ‘‘(A) a vessel— 

8 ‘‘(i) constructed in the United States (and, if reconstructed, 

9 reconstructed in the United States), constructed outside the 

10 United States but documented under the laws of the United 

11 States on April 15, 1970, or constructed outside the United 

12 States for use in the United States foreign trade pursuant to 

13 a contract made before April 15, 1970; 

14 ‘‘(ii) documented under the laws of the United States; and 

15 ‘‘(iii) agreed, between the Secretary and the person main16 taining the capital construction fund established under section 

17 53503 of this title, to be operated in the United States foreign, 

18 Great Lakes, or noncontiguous domestic trade or in the fish19 eries of the United States; and 

20 ‘‘(B) a commercial fishing vessel— 

21 ‘‘(i) constructed in the United States and, if reconstructed, 

22 reconstructed in the United States; 

23 ‘‘(ii) of at least 2 net tons but less than 5 net tons; 

24 ‘‘(iii) owned by a citizen of the United States; 

25 ‘‘(iv) having its home port in the United States; and 

26 ‘‘(v) operated in the commercial fisheries of the United 

27 States. 

28 ‘‘(6) SECRETARY.—The term ‘Secretary’ means— 

29 ‘‘(A) the Secretary of Commerce with respect to an eligible vessel 

30 or a qualified vessel operated or to be operated in the fisheries of 

31 the United States; and 

32 ‘‘(B) the Secretary of Transportation with respect to other vessels. 

33 ‘‘(7) UNITED STATES FOREIGN TRADE.—The term ‘United States for34 eign trade’ includes those areas in domestic trade in which a vessel built 

35 with a construction-differential subsidy is allowed to operate under the 

36 first sentence of section 506 of the Merchant Marine Act, 1936. 

37 ‘‘(8) VESSEL.—The term ‘vessel’ includes— 

38 ‘‘(A) cargo handling equipment that the Secretary determines is 

39 intended for use primarily on the vessel; and 

40 ‘‘(B) an ocean-going towing vessel, an ocean-going barge, or a 

41 comparable towing vessel or barge operated on the Great Lakes. 
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1 ‘‘§ 53502. Regulations 

2 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the Secretary 

3 shall prescribe regulations to carry out this chapter. 

4 ‘‘(b) TAX LIABILITY.—The Secretary and the Secretary of the Treasury 

5 shall prescribe joint regulations for the determination of tax liability under 

6 this chapter. 

7 ‘‘§ 53503. Establishing a capital construction fund 

8 ‘‘(a) IN GENERAL.—A citizen of the United States owning or leasing an 

9 eligible vessel may make an agreement with the Secretary under this chapter 

10 to establish a capital construction fund for the vessel. 

11 ‘‘(b) ALLOWABLE PURPOSE.—The purpose of the agreement shall be to pro12 vide replacement vessels, additional vessels, or reconstructed vessels, built in 

13 the United States and documented under the laws of the United States, for 

14 operation in the United States foreign, Great Lakes, or noncontiguous domes15 tic trade or in the fisheries of the United States. 

16 ‘‘§ 53504. Deposits and withdrawals 

17 ‘‘(a) REQUIRED DEPOSITS.—An agreement to establish a capital construc18 tion fund shall provide for the deposit in the fund of the amounts agreed to 

19 be appropriate to provide for qualified withdrawals under section 53509 of 

20 this title. 

21 ‘‘(b) APPLICABLE REQUIREMENTS.—Deposits in and withdrawals from the 

22 fund are subject to the requirements included in the agreement or prescribed 

23 by the Secretary by regulation. However, the Secretary may not require a 

24 person to deposit in the fund for a taxable year more than 50 percent of that 

25 portion of the person’s taxable income for that year (as determined under sec26 tion 53505(a)(1) of this title) that is attributable to the operation of an agree27 ment vessel. 

28 ‘‘§ 53505. Ceiling on deposits 

29 ‘‘(a) MAXIMUM DEPOSITS.—The amount deposited in a capital construc30 tion fund for a taxable year may not exceed the sum of— 

31 ‘‘(1) that portion of the taxable income of the owner or lessee for the 

32 taxable year (computed under chapter 1 of the Internal Revenue Code 

33 of 1986 (26 U.S.C. ch. 1) but without regard to the carryback of net op34 erating loss or net capital loss or this chapter) that is attributable to the 

35 operation of agreement vessels in the foreign or domestic trade of the 

36 United States or in the fisheries of the United States; 

37 ‘‘(2) the amount allowable as a deduction under section 167 of such 

38 Code (26 U.S.C. 167) for the taxable year for agreement vessels; 

39 ‘‘(3) if the transaction is not taken into account for purposes of clause 

40 (1), the net proceeds (as defined in joint regulations) from the disposition 
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1 of an agreement vessel or from insurance or indemnity attributable to 

2 an agreement vessel; and 

3 ‘‘(4) the receipts from the investment or reinvestment of amounts held 

4 in the fund. 

5 ‘‘(b) REDUCTIONS FOR LESSEES.—For a lessee, the maximum amount that 

6 may be deposited for an agreement vessel under subsection (a)(2) for any pe7 riod shall be reduced by any amount the owner is required or permitted, 

8 under the capital construction fund agreement, to deposit for that period for 

9 the vessel under subsection (a)(2). 

10 ‘‘§ 53506. Investment and fiduciary requirements 

11 ‘‘(a) IN GENERAL.—Amounts in a capital construction fund shall be kept 

12 in the depository specified in the agreement and shall be subject to trustee 

13 and other fiduciary requirements prescribed by the Secretary. Except as pro14 vided in subsection (b), amounts in the fund may be invested only in interest15 bearing securities approved by the Secretary. 

16 ‘‘(b) STOCK INVESTMENTS.— 

17 ‘‘(1) IN GENERAL.—With the approval of the Secretary, an agreed per18 centage (but not more than 60 percent) of the assets of the fund may be 

19 invested in the stock of domestic corporations that— 

20 ‘‘(A) is fully listed and registered on an exchange registered with 

21 the Securities and Exchange Commission as a national securities 

22 exchange; and 

23 ‘‘(B) would be acquired by a prudent investor seeking a reason24 able income and the preservation of capital. 

25 ‘‘(2) PREFERRED STOCK.—The preferred stock of a corporation is 

26 deemed to satisfy the requirements of this subsection, even though it may 

27 not be registered and listed because it is nonvoting stock, if the common 

28 stock of the corporation satisfies the requirements and the preferred stock 

29 otherwise would satisfy the requirements. 

30 ‘‘(c) MAINTAINING AGREED PERCENTAGE.—If at any time the fair market 

31 value of the stock in the fund is more than the agreed percentage of the assets 

32 in the fund, any subsequent investment of amounts deposited in the fund, and 

33 any subsequent withdrawal from the fund, shall be made in a way that tends 

34 to restore the fair market value of the stock to not more than the agreed per35 centage. 

36 ‘‘§ 53507. Nontaxation of deposits 

37 ‘‘(a) TAX TREATMENT.—Subject to subsection (b), under the Internal Rev38 enue Code of 1986 (26 U.S.C. 1 et seq.)— 

39 ‘‘(1) taxable income (determined without regard to this chapter and 

40 section 7518 of such Code (26 U.S.C. 7518)) for the taxable year shall 
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1 be reduced by the amount deposited for the taxable year out of amounts 

2 referred to in section 53505(a)(1) of this title; 

3 ‘‘(2) a gain from a transaction referred to in section 53505(a)(3) of 

4 this title shall not be taken into account if an amount equal to the net 

5 proceeds (as defined in joint regulations) from the transaction is depos6 ited in the fund; 

7 ‘‘(3) the earnings (including gains and losses) from the investment and 

8 reinvestment of amounts held in the fund shall not be taken into account; 

9 ‘‘(4) the earnings and profits of a corporation (within the meaning 

10 of section 316 of such Code (26 U.S.C. 316)) shall be determined without 

11 regard to this chapter and section 7518 of such Code (26 U.S.C. 7518); 

12 and 

13 ‘‘(5) in applying the tax imposed by section 531 of such Code (26 

14 U.S.C. 531), amounts held in the fund shall not be taken into account. 

15 ‘‘(b) CONDITION.—This section applies to an amount only if the amount 

16 is deposited in the fund under the agreement within the time provided in 

17 joint regulations. 

18 ‘‘§ 53508. Separate accounts within a fund 

19 ‘‘(a) IN GENERAL.—A capital construction fund shall have three accounts: 

20 ‘‘(1) The capital account. 

21 ‘‘(2) The capital gain account. 

22 ‘‘(3) The ordinary income account. 

23 ‘‘(b) CAPITAL ACCOUNT.—The capital account shall consist of— 

24 ‘‘(1) amounts referred to in section 53505(a)(2) of this title; 

25 ‘‘(2) amounts referred to in section 53505(a)(3) of this title, except 

26 that portion representing a gain not taken into account because of sec27 tion 53507(a)(2) of this title; 

28 ‘‘(3) the percentage applicable under section 243(a)(1) of the Internal 

29 Revenue Code of 1986 (26 U.S.C. 243(a)(1)) of any dividend received by 

30 the fund for which the person maintaining the fund would be allowed 

31 (were it not for section 53507(a)(3) of this title) a deduction under sec32 tion 243 of such Code (26 U.S.C. 243); and 

33 ‘‘(4) interest income exempt from taxation under section 103 of such 

34 Code (26 U.S.C. 103). 

35 ‘‘(c) CAPITAL GAIN ACCOUNT.—The capital gain account shall consist of— 

36 ‘‘(1) amounts representing capital gains on assets held for more than 

37 6 months and referred to in section 53505(a)(3) or (4) of this title; 

38 minus 

39 ‘‘(2) amounts representing capital losses on assets held in the fund for 

40 more than 6 months. 
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1 ‘‘(d) ORDINARY INCOME ACCOUNT.—The ordinary income account shall 

2 consist of— 

3 ‘‘(1) amounts referred to in section 53505(a)(1) of this title; 

4 ‘‘(2)(A) amounts representing capital gains on assets held for not more 

5 than 6 months and referred to in section 53505(a)(3) or (4) of this title; 

6 minus 

7 ‘‘(B) amounts representing capital losses on assets held in the fund for 

8 not more than 6 months; 

9 ‘‘(3) interest (except tax-exempt interest referred to in subsection 

10 (b)(4)) and other ordinary income (except any dividend referred to in 

11 clause (5)) received on assets held in the fund; 

12 ‘‘(4) ordinary income from a transaction described in section 

13 53505(a)(3) of this title; and 

14 ‘‘(5) that portion of any dividend referred to in subsection (b)(3) not 

15 taken into account under subsection (b)(3). 

16 ‘‘(e) WHEN LOSSES ALLOWED.—Except on termination of a fund, capital 

17 losses referred to in subsection (c) or (d)(2) shall be allowed only as an offset 

18 to gains referred to in subsection (c) or (d)(2), respectively. 

19 ‘‘§ 53509. Qualified withdrawals 

20 ‘‘(a) IN GENERAL.—Subject to subsection (b), a withdrawal from a capital 

21 construction fund is a qualified withdrawal if it is made under the terms of 

22 the agreement and is for— 

23 ‘‘(1) the acquisition, construction, or reconstruction of a qualified ves24 sel or a barge or container that is part of the complement of a qualified 

25 vessel; or 

26 ‘‘(2) the payment of the principal on indebtedness incurred in the ac27 quisition, construction, or reconstruction of a qualified vessel or a barge 

28 or container that is part of the complement of a qualified vessel. 

29 ‘‘(b) BARGES AND CONTAINERS.—Except as provided in regulations pre30 scribed by the Secretary, subsection (a) applies to a barge or container only 

31 if it is constructed in the United States. 

32 ‘‘(c) TREATMENT AS NONQUALIFIED WITHDRAWAL.—Under joint regula33 tions, if the Secretary determines that a substantial obligation under an 

34 agreement is not being fulfilled, the Secretary, after notice and opportunity 

35 for a hearing to the person maintaining the fund, may treat any amount in 

36 the fund as an amount withdrawn from the fund in a nonqualified with37 drawal. 

38 ‘‘§ 53510. Tax treatment of qualified withdrawals and basis 

39 of property 

40 ‘‘(a) ORDER OF WITHDRAWALS.—A qualified withdrawal from a capital 

41 construction fund shall be treated as made— 
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1 ‘‘(1) first from the capital account; 

2 ‘‘(2) second from the capital gain account; and 

3 ‘‘(3) third from the ordinary income account. 

4 ‘‘(b) ORDINARY INCOME ACCOUNT WITHDRAWALS.—If a portion of a quali5 fied withdrawal for a vessel, barge, or container is made from the ordinary 

6 income account, the basis of the vessel, barge, or container shall be reduced 

7 by an amount equal to that portion. 

8 ‘‘(c) CAPITAL GAIN ACCOUNT WITHDRAWALS.—If a portion of a qualified 

9 withdrawal for a vessel, barge, or container is made from the capital gain 

10 account, the basis of the vessel, barge, or container shall be reduced by an 

11 amount equal to that portion. 

12 ‘‘(d) WITHDRAWALS TO PAY PRINCIPAL.—If a portion of a qualified with13 drawal to pay the principal on indebtedness is made from the ordinary in14 come account or the capital gain account, an amount equal to the total reduc15 tion that would be required by subsections (b) and (c) if the withdrawal were 

16 a qualified withdrawal for a purpose described in those subsections shall be 

17 applied, in the order provided in joint regulations, to reduce the basis of ves18 sels, barges, and containers owned by the person maintaining the fund. The 

19 remaining amount of the withdrawal shall be treated as a nonqualified with20 drawal. 

21 ‘‘(e) GAIN ON PROPERTY WITH REDUCED BASIS.—If property, the basis of 

22 which was reduced under subsection (b), (c), or (d), is disposed of, any gain 

23 realized on the disposition, to the extent it does not exceed the total reduction 

24 in the basis of the property under those subsections, shall be treated as an 

25 amount referred to in section 53511(c)(1) of this title withdrawn on the date 

26 of disposition of the property. Subject to conditions prescribed in joint regula27 tions, this subsection does not apply to a disposition if there is a redeposit, 

28 in an amount determined under joint regulations, that restores the fund as 

29 far as practicable to the position it was in before the withdrawal. 

30 ‘‘§ 53511. Tax treatment of nonqualified withdrawals 

31 ‘‘(a) IN GENERAL.—Except as provided in section 53513 of this title, a 

32 withdrawal from a fund that is not a qualified withdrawal shall be treated 

33 as a nonqualified withdrawal. 

34 ‘‘(b) ORDER OF WITHDRAWALS.—A nonqualified withdrawal shall be treat35 ed as made— 

36 ‘‘(1) first from the ordinary income account; 

37 ‘‘(2) second from the capital gain account; and 

38 ‘‘(3) third from the capital account. 

39 ‘‘(c) TAX TREATMENT.—For purposes of the Internal Revenue Code of 1986 

40 (26 U.S.C. 1 et seq.)— 
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1 ‘‘(1) a nonqualified withdrawal from the ordinary income account 

2 shall be included in income as an item of ordinary income for the tax3 able year in which the withdrawal is made; 

4 ‘‘(2) a nonqualified withdrawal from the capital gain account shall 

5 be included in income for the taxable year in which the withdrawal is 

6 made as an item of gain realized during that year from the disposition 

7 of an asset held for more than 6 months; and 

8 ‘‘(3) for the period through the last date prescribed for payment of tax 

9 for the taxable year in which the withdrawal is made— 

10 ‘‘(A) no interest shall be payable under section 6601 of such Code 

11 (26 U.S.C. 6601) and no addition to the tax shall be payable under 

12 section 6651 of such Code (26 U.S.C. 6651); 

13 ‘‘(B) interest on the amount of the additional tax attributable to 

14 an amount treated as a nonqualified withdrawal from the ordinary 

15 income account or the capital gain account shall be paid at the rate 

16 determined under subsection (d) from the last date prescribed for 

17 payment of the tax for the taxable year for which the amount was 

18 deposited in the fund; and 

19 ‘‘(C) no interest shall be payable on amounts treated as with20 drawn on a last-in-first-out basis under section 53512 of this title. 

21 ‘‘(d) INTEREST RATE.—The rate of interest under subsection (c)(3)(B) for 

22 a nonqualified withdrawal made in a taxable year beginning after 1971 shall 

23 be determined and published jointly by the Secretary and the Secretary of the 

24 Treasury. The rate shall be such that its relationship to 8 percent is com25 parable, as determined by the Secretaries under joint regulations, to the rela26 tionship between— 

27 ‘‘(1) the money rates and investment yields for the calendar year im28 mediately before the beginning of the taxable year; and 

29 ‘‘(2) the money rates and investment yields for the calendar year 1970. 

30 ‘‘(e) NONQUALIFIED WITHDRAWALS.— 

31 ‘‘(1) IN GENERAL.—The following applicable percentage of any 

32 amount that remains in a capital construction fund at the close of the 

33 following specified taxable year following the taxable year for which the 

34 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. 
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1 ‘‘(2) EARNINGS.—The earnings of a capital construction fund for any 

2 taxable year (except net gains) shall be treated under this subsection as 

3 an amount deposited for the taxable year. 

4 ‘‘(3) CONTRACT FOR QUALIFIED WITHDRAWAL.—Under paragraph (1), 

5 an amount shall not be treated as remaining in a capital construction 

6 fund at the close of a taxable year to the extent there is a binding con7 tract at the close of the taxable year for a qualified withdrawal of the 

8 amount for an identified item for which the withdrawal may be made. 

9 ‘‘(4) EXCESS EARNINGS.—If the Secretary determines that the balance 

10 in a capital construction fund exceeds the amount appropriate to meet 

11 the vessel construction program objectives of the person that established 

12 the fund, the amount of the excess shall be treated as a nonqualified 

13 withdrawal under paragraph (1) unless the person develops appropriate 

14 program objectives within 3 years to dissipate the excess. 

15 ‘‘(5) AMOUNTS IN FUND ON JANUARY 1, 1987.—Under this subsection, 

16 amounts in a capital construction fund on January 1, 1987, shall be 

17 treated as having been deposited in that fund on that date. 

18 ‘‘(f) TAX DETERMINATIONS.— 

19 ‘‘(1) IN GENERAL.—For a taxable year for which there is a non20 qualified withdrawal (including an amount treated as a nonqualified 

21 withdrawal under subsection (e)), the tax imposed by chapter 1 of the 

22 Internal Revenue Code of 1986 (26 U.S.C. ch. 1) shall be determined 

23 by— 

24 ‘‘(A) excluding the withdrawal from gross income; and 

25 ‘‘(B) increasing the tax imposed by chapter 1 of such Code by the 

26 product of the amount of the withdrawal and the highest tax rate 

27 specified in section 1 (or section 11 for a corporation) of such Code 

28 (26 U.S.C. 1, 11). 

29 ‘‘(2) MAXIMUM TAX RATE.—For that portion of a nonqualified with30 drawal made from the capital gain account during a taxable year to 

31 which section 1(h) or 1201(a) of such Code (26 U.S.C. 1(h), 1201(a)) ap32 plies, the tax rate used under subparagraph (A)(ii) may not exceed 15 

33 percent (or 34 percent for a corporation). 

34 ‘‘(3) TAXBENEFIT RULE.—If any portion of a nonqualified with35 drawal is properly attributable to deposits (except earnings on deposits) 

36 made by the taxpayer in a taxable year that did not reduce the tax37 payer’s liability for tax under chapter 1 of such Code (26 U.S.C. ch. 1) 

38 for a taxable year before the taxable year in which the withdrawal oc39 curs— 

40 ‘‘(A) that portion shall not be taken into account under para41 graph (1); and 
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1 ‘‘(B) an amount equal to that portion shall be allowed as a de2 duction under section 172 of such Code (26 U.S.C. 172) for the tax3 able year in which the withdrawal occurs. 

4 ‘‘(4) COORDINATION WITH DEDUCTION FOR NET OPERATING LOSSES.— 

5 A nonqualified withdrawal excluded from gross income under paragraph 

6 (1) shall be excluded in determining taxable income under section 

7 172(b)(2) of such Code (26 U.S.C. 172(b)(2)). 

8 ‘‘§ 53512. FIFO and LIFO withdrawals 

9 ‘‘(a) FIFO.—Except as provided in subsection (b), an amount withdrawn 

10 from an account under this chapter shall be treated as withdrawn on a first11 in-first-out basis. 

12 ‘‘(b) LIFO.—An amount withdrawn from an account under this chapter 

13 shall be treated as withdrawn on a last-in-first-out basis if it is— 

14 ‘‘(1) a nonqualified withdrawal for research, development, and design 

15 expenses incident to new and advanced vessel design, machinery, and 

16 equipment; or 

17 ‘‘(2) an amount treated as a nonqualified withdrawal under section 

18 53510(d) of this title. 

19 ‘‘§ 53513. Corporate reorganizations and partnership 

20 changes 

21 ‘‘Under joint regulations— 

22 ‘‘(1) a transfer of a capital construction fund from one person to an23 other person in a transaction to which section 381 of the Internal Rev24 enue Code of 1986 (26 U.S.C. 381) applies may be treated as if the 

25 transaction is not a nonqualified withdrawal; and 

26 ‘‘(2) a similar rule shall be applied to a continuation of a partnership 

27 (within the meaning of subchapter K of chapter 1 of such Code (26 

28 U.S.C. 701 et seq.)). 

29 ‘‘§ 53514. Relationship of old fund to new fund 

30 ‘‘(a) DEFINITION.—In this section, the term ‘old fund’ means a capital con31 struction fund maintained before October 21, 1970. 

32 ‘‘(b) ELECTION TO MAINTAIN OLD FUND.—A person maintaining an old 

33 fund may elect to continue the old fund, but may not— 

34 ‘‘(1) hold amounts in the old fund beyond the expiration date provided 

35 in the agreement under which the old fund is maintained (determined 

36 without regard to an extension or renewal made after April 14, 1970); 

37 or 

38 ‘‘(2) maintain simultaneously the old fund and a new fund established 

39 under this chapter. 

40 ‘‘(c) APPLICATION OF NEW FUND AGREEMENT TO OLD FUND AMOUNTS.— 

41 If a person makes an agreement under this chapter to establish a new fund, 
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1 the person may agree to extend the agreement to some or all of the amounts 

2 in an old fund. Each item in the old fund to be transferred shall be trans3 ferred in a nontaxable transaction to the appropriate account in the new 

4 fund. For purposes of section 53511(c)(3) of this title, the date of the deposit 

5 of an item so transferred shall be July 1, 1971, or the date of the deposit 

6 in the old fund, whichever is later. 

7 ‘‘§ 53515. Records and reports 

8 ‘‘A person maintaining a fund under this chapter shall keep records and 

9 make reports as required by the Secretary or the Secretary of the Treasury. 

10 ‘‘§ 53516. Termination of agreement after change in regula11 tions 

12 ‘‘If, after an agreement has been made under this chapter, a change is made 

13 either in the joint regulations or in the regulations prescribed by the Sec14 retary under this chapter that could have a substantial effect on the rights 

15 or duties of a person maintaining a fund under this chapter, that person may 

16 terminate the agreement. 

17 ‘‘§ 53517. Reports 

18 ‘‘(a) IN GENERAL.—Within 120 days after the close of each calendar year, 

19 the Secretary of Transportation and the Secretary of Commerce each shall 

20 provide the Secretary of the Treasury a written report on the capital con21 struction funds under the particular Secretary’s jurisdiction for the calendar 

22 year. 

23 ‘‘(b) CONTENTS.—The report shall state the name and taxpayer identifica24 tion number of each person— 

25 ‘‘(1) establishing a capital construction fund during the calendar year; 

26 ‘‘(2) maintaining a capital construction fund on the last day of the 

27 calendar year; 

28 ‘‘(3) terminating a capital construction fund during the calendar 

29 year; 

30 ‘‘(4) making a deposit to or withdrawal from a capital construction 

31 fund during the calendar year, and the amount of the deposit or with32 drawal; or 

33 ‘‘(5) having been determined during the calendar year to have failed 

34 to fulfill a substantial obligation under a capital construction fund 

35 agreement to which the person is a party. 

36 ‘‘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. 
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‘‘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. 

1 ‘‘SUBCHAPTER I—GENERAL 

2 ‘‘§ 53701. Definitions 

3 ‘‘In this chapter: 

4 ‘‘(1) ACTUAL COST.—The term ‘actual cost’ means the sum of— 

5 ‘‘(A) all amounts paid by or for the account of the obligor as of 

6 the date on which a determination is made under section 

7 53715(d)(1) of this title; and 

8 ‘‘(B) all amounts that the Secretary reasonably estimates the obli9 gor will become obligated to pay from time to time thereafter, for 

10 the construction, reconstruction, or reconditioning of the vessel, in11 cluding guarantee fees that will become payable under section 53714 

12 of this title in connection with all obligations issued for construc13 tion, reconstruction, or reconditioning of the vessel or equipment to 

14 be delivered, and all obligations issued for the delivered vessel or 

15 equipment. 

16 ‘‘(2) CONSTRUCTION, RECONSTRUCTION, AND RECONDITIONING.—The 

17 terms ‘construction’, ‘reconstruction’, and ‘reconditioning’ include de18 signing, inspecting, outfitting, and equipping. 

19 ‘‘(3) DEPRECIATED ACTUAL COST.—The term ‘depreciated actual cost’ 

20 of a vessel means— 

21 ‘‘(A) if the vessel was not reconstructed or reconditioned, the ac22 tual cost of the vessel depreciated on a straight line basis over the 

23 useful life of the vessel as determined by the Secretary, not to exceed 

24 25 years from the date of delivery by the builder; or 

25 ‘‘(B) if the vessel was reconstructed or reconditioned, the sum of— 
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1 ‘‘(i) the actual cost of the vessel depreciated on a straight 

2 line basis from the date of delivery by the builder to the date 

3 of the reconstruction or reconditioning, using the original use4 ful life of the vessel, and from the date of the reconstruction or 

5 reconditioning, using a useful life of the vessel determined by 

6 the Secretary; and 

7 ‘‘(ii) any amount paid or obligated to be paid for the recon8 struction or reconditioning, depreciated on a straight line basis 

9 using a useful life of the vessel determined by the Secretary. 

10 ‘‘(4) ELIGIBLE EXPORT VESSEL.—The term ‘eligible export vessel’ 

11 means a vessel that— 

12 ‘‘(A) is constructed, reconstructed, or reconditioned in the United 

13 States for use in world-wide trade; and 

14 ‘‘(B) will, on delivery or redelivery, become or remain docu15 mented under the laws of a country other than the United States. 

16 ‘‘(5) FISHERY FACILITY.— 

17 ‘‘(A) IN GENERAL.—Subject to paragraph (B), the term ‘fishery 

18 facility’ means— 

19 ‘‘(i) for operations on land— 

20 ‘‘(I) a structure or appurtenance thereto designed for 

21 the unloading and receiving from vessels, the processing, 

22 the holding pending processing, the distribution after 

23 processing, or the holding pending distribution, of fish 

24 from a fishery; 

25 ‘‘(II) the land necessary for the structure or appur26 tenance; and 

27 ‘‘(III) equipment that is for use with the structure or 

28 appurtenance and that is necessary for performing a func29 tion referred to in clause (I); 

30 ‘‘(ii) for operations not on land, a vessel built in the United 

31 States and used for, equipped to be used for, or of a type nor32 mally used for, the processing of fish; or 

33 ‘‘(iii) for aquaculture, including operations on land or else34 where— 

35 ‘‘(I) a structure or appurtenance thereto designed for 

36 aquaculture; 

37 ‘‘(II) the land necessary for the structure or appur38 tenance; 

39 ‘‘(III) equipment that is for use with the structure or 

40 appurtenance and that is necessary for performing a func41 tion referred to in clause (I); and 
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1 ‘‘(IV) a vessel built in the United States and used for, 

2 equipped to be used for, or of a type normally used for, 

3 aquaculture. 

4 ‘‘(B) REQUIRED OWNERSHIP.—Under paragraph (A), the struc5 ture, appurtenance, land, equipment, or vessel must be owned by— 

6 ‘‘(i) an individual who is a citizen of the United States; or 

7 ‘‘(ii) an entity that is a citizen of the United States under 

8 section 50501 of this title and that is at least 75 percent owned 

9 (as determined under that section) by citizens of the United 

10 States. 

11 ‘‘(6) FISHING VESSEL.—The term ‘fishing vessel’ has the meaning 

12 given that term in section 3 of the Magnuson-Stevens Fishery Conserva13 tion and Management Act (16 U.S.C. 1802), and any reference in this 

14 chapter to a vessel designed principally for commercial use in the fishing 

15 trade or industry is deemed to be a reference to a fishing vessel. 

16 ‘‘(7) MORTGAGE.—The term ‘mortgage’ includes— 

17 ‘‘(A) a preferred mortgage as defined in section 31301 of this 

18 title; and 

19 ‘‘(B) a mortgage on a vessel that will become a preferred mort20 gage when filed or recorded under chapter 313 of this title. 

21 ‘‘(8) OBLIGATION.—The term ‘obligation’ means an instrument of in22 debtedness issued for a purpose described in section 53706 of this title, 

23 except— 

24 ‘‘(A) an obligation issued by the Secretary under section 53723 

25 of this title; and 

26 ‘‘(B) an obligation eligible for investment of funds under section 

27 53715(f) or 53717 of this title. 

28 ‘‘(9) OBLIGEE.—The term ‘obligee’ means the holder of an obligation. 

29 ‘‘(10) OBLIGOR.—The term ‘obligor’ means a party primarily liable 

30 for payment of the principal of or interest on an obligation. 

31 ‘‘(11) OCEAN THERMAL ENERGY CONVERSION FACILITY OR

32 PLANTSHIP.—The term ‘ocean thermal energy conversion facility or 

33 plantship’ means an at-sea facility or vessel, whether mobile, floating 

34 unmoored, moored, or standing on the seabed, that uses temperature dif35 ferences in ocean water to produce electricity or another form of energy 

36 capable of being used directly to perform work, and includes— 

37 ‘‘(A) equipment installed on the facility or vessel to use the elec38 tricity or other form of energy to produce, process, refine, or manu39 facture a product; 

40 ‘‘(B) a cable or pipeline used to deliver the electricity, freshwater, 

41 or product to shore; and 
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1 ‘‘(C) other associated equipment and appurtenances of the facility 

2 or vessel to the extent they are located seaward of the high water 

3 mark. 

4 ‘‘(12) SECRETARY.—The term ‘Secretary’ means— 

5 ‘‘(A) the Secretary of Commerce with respect to fishing vessels 

6 and fishery facilities; and 

7 ‘‘(B) the Secretary of Transportation with respect to other vessels 

8 and general shipyard facilities (as defined in section 53733(a) of 

9 this title). 

10 ‘‘(13) VESSEL.—The term ‘vessel’ means any type of vessel, whether 

11 in existence or under construction, including— 

12 ‘‘(A) a cargo vessel; 

13 ‘‘(B) a passenger vessel; 

14 ‘‘(C) a combination cargo and passenger vessel; 

15 ‘‘(D) a tanker; 

16 ‘‘(E) a tug or towboat; 

17 ‘‘(F) a barge; 

18 ‘‘(G) a dredge; 

19 ‘‘(H) a floating drydock with a capacity of at least 35,000 lifting 

20 tons and a beam of at least 125 feet between the wing walls; 

21 ‘‘(I) an oceanographic research vessel; 

22 ‘‘(J) an instruction vessel; 

23 ‘‘(K) a pollution treatment, abatement, or control vessel; 

24 ‘‘(L) a fishing vessel whose ownership meets the citizenship re25 quirements under section 50501 of this title for documenting vessels 

26 to operate in the coastwise trade; and 

27 ‘‘(M) an ocean thermal energy conversion facility or plantship 

28 that is or will be documented under the laws of the United States. 

29 ‘‘§ 53702. General authority 

30 ‘‘(a) IN GENERAL.—The Secretary, on terms the Secretary may prescribe, 

31 may guarantee or make a commitment to guarantee the payment of the prin32 cipal of and interest on an obligation eligible to be guaranteed under this 

33 chapter. A guarantee or commitment to guarantee shall cover 100 percent of 

34 the principal and interest. 

35 ‘‘(b) DIRECT LOANS FOR FISHERIES.— 

36 ‘‘(1) IN GENERAL.—Notwithstanding any other provision of this chap37 ter, any obligation involving a fishing vessel, fishery facility, aquaculture 

38 facility, individual fishing quota, or fishing capacity reduction program 

39 issued under this chapter after October 11, 1996, shall be a direct loan 

40 obligation for which the Secretary shall be the obligee, rather than an 

41 obligation issued to an obligee other than the Secretary and guaranteed 
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1 by the Secretary. A direct loan obligation under this subsection shall be 

2 treated in the same manner and to the same extent as an obligation 

3 guaranteed under this chapter except with respect to provisions of this 

4 chapter that by their nature can only be applied to obligations guaran5 teed under this chapter. 

6 ‘‘(2) INTEREST RATE.—Notwithstanding any other provision of this 

7 chapter, the annual rate of interest an obligor shall pay on a direct loan 

8 obligation under this subsection is 2 percent plus the additional percent 

9 the Secretary must pay as interest to borrow from the Treasury the funds 

10 to make the loan. 

11 ‘‘§ 53703. Application procedures 

12 ‘‘(a) TIME FOR DECISION.— 

13 ‘‘(1) IN GENERAL.—The Secretary shall approve or deny an applica14 tion for a loan guarantee under this chapter within 270 days after the 

15 date on which the signed application is received by the Secretary. 

16 ‘‘(2) EXTENSION.—On request by an applicant, the Secretary may ex17 tend the 270-day period in paragraph (1) to a date not later than 2 

18 years after the date on which the signed application was received by the 

19 Secretary. 

20 ‘‘(b) CERTIFICATION OF REVIEW.—The Secretary may not guarantee or 

21 make a commitment to guarantee an obligation under this chapter unless the 

22 Secretary certifies that a full and fair consideration of all the regulatory re23 quirements, including economic soundness and financial requirements appli24 cable to the obligor and related parties, and a thorough assessment of the tech25 nical, economic, and financial aspects of the loan application, has been made. 

26 ‘‘§ 53704. Funding limits 

27 ‘‘(a) GENERAL LIMITATIONS.—The total unpaid principal amount of obli28 gations guaranteed under this chapter and outstanding at one time may not 

29 exceed $12,000,000,000. Of that amount— 

30 ‘‘(1) $850,000,000 shall be limited to obligations related to fishing ves31 sels and fishery facilities; and 

32 ‘‘(2) $3,000,000,000 shall be limited to obligations related to eligible 

33 export vessels. 

34 ‘‘(b) ADDITIONAL LIMITATIONS.—Additional limitations may not be im35 posed on new commitments to guarantee loans for any fiscal year, except in 

36 amounts established in advance by annual authorization laws. A vessel eligi37 ble for a guarantee under this chapter may not be denied eligibility because 

38 of its type. 

39 ‘‘(c) LIMITS BASED ON RISK FACTORS.— 
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1 ‘‘(1) DEFINITION.—In this subsection, the term ‘cost’ has the meaning 

2 given that term in section 502 of the Federal Credit Reform Act of 1990 

3 (2 U.S.C. 661a). 

4 ‘‘(2) SYSTEM OF RISK CATEGORIES.—The Secretary shall— 

5 ‘‘(A) establish, and update annually, a system of risk categories 

6 for obligations guaranteed under this chapter that categorizes the 

7 relative risk of guarantees based on the risk factors set forth in 

8 paragraph (4); 

9 ‘‘(B) determine annually for each risk category a subsidy rate 

10 equivalent to the cost of obligations in the category, expressed as a 

11 percentage of the amount guaranteed for obligations in the category; 

12 and 

13 ‘‘(C) ensure that each risk category is comprised of loans that are 

14 relatively homogeneous in cost and share characteristics predictive 

15 of defaults and other costs, given the facts known at the time of obli16 gation or commitment, using a risk category system that is based 

17 on historical analysis of program data and statistical evidence con18 cerning the likely costs of defaults or other costs that are expected 

19 to be associated with the loans in the category. 

20 ‘‘(3) USE OF SYSTEM.— 

21 ‘‘(A) PLACING OBLIGATION IN CATEGORY.—Before making a 

22 guarantee under this chapter for an obligation, and annually for 

23 projects subject to a guarantee, the Secretary shall apply the risk 

24 factors specified in paragraph (4) to place the obligation in a risk 

25 category established under paragraph (2). 

26 ‘‘(B) REDUCTION OF AVAILABLE AMOUNT.—The Secretary shall 

27 consider the total amount available to the Secretary for making 

28 guarantees under this chapter to be reduced by the amount deter29 mined by multiplying— 

30 ‘‘(i) the amount guaranteed under this chapter for an obliga31 tion; by 

32 ‘‘(ii) the subsidy rate for the category in which the obligation 

33 is placed under subparagraph (A). 

34 ‘‘(C) ESTIMATED COST.—The estimated cost to the United States 

35 Government of a guarantee under this chapter for an obligation is 

36 deemed to be the amount determined under subparagraph (B) for 

37 the obligation. 

38 ‘‘(D) RESTRICTION ON FURTHER GUARANTEES.—The Secretary 

39 may not guarantee obligations under this chapter after the total 

40 amount available to the Secretary under appropriations laws for the 
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1 cost of loan guarantees is considered to be reduced to zero under sub2 paragraph (B). 

3 ‘‘(4) RISK FACTORS.—The risk factors referred to in this subsection 

4 are— 

5 ‘‘(A) if applicable, the country risk for each eligible export vessel 

6 financed or to be financed by an obligation; 

7 ‘‘(B) the period for which an obligation is guaranteed or to be 

8 guaranteed; 

9 ‘‘(C) the amount of an obligation guaranteed or to be guaranteed 

10 in relation to the total cost of the project financed or to be financed 

11 by the obligation; 

12 ‘‘(D) the financial condition of an obligor or applicant for a 

13 guarantee; 

14 ‘‘(E) if applicable, other guarantees related to the project; 

15 ‘‘(F) if applicable, the projected employment of each vessel or 

16 equipment to be financed with an obligation; 

17 ‘‘(G) if applicable, the projected market that will be served by 

18 each vessel or equipment to be financed with an obligation; 

19 ‘‘(H) the collateral provided for a guarantee for an obligation; 

20 ‘‘(I) the management and operating experience of an obligor or 

21 applicant for a guarantee; 

22 ‘‘(J) whether a guarantee under this chapter is or will be in effect 

23 during the construction period of the project; and 

24 ‘‘(K) the concentration risk presented by an unduly large percent25 age of loans outstanding by any one borrower or group of affiliated 

26 borrowers. 

27 ‘‘§ 53705. Pledge of United States Government 

28 ‘‘(a) FULL FAITH AND CREDIT.—The full faith and credit of the United 

29 States Government is pledged to the payment of a guarantee made under this 

30 chapter, for both principal and interest, including interest (as may be pro31 vided for in the guarantee) accruing between the date of default under a guar32 anteed obligation and the date of payment in full of the guarantee. 

33 ‘‘(b) INCONTESTABILITY.—A guarantee or commitment to guarantee made 

34 under this chapter is conclusive evidence of the eligibility of the obligation for 

35 the guarantee. The validity of a guarantee or commitment to guarantee made 

36 under this chapter is incontestable. 

37 ‘‘§ 53706. Eligible purposes of obligations 

38 ‘‘(a) IN GENERAL.—To be eligible for a guarantee under this chapter, an 

39 obligation must aid in any of the following: 

40 ‘‘(1)(A) Financing (including reimbursement of an obligor for expend41 itures previously made for) the construction, reconstruction, or recondi-
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1 tioning of a vessel (including an eligible export vessel) designed prin2 cipally for research, or for commercial use— 

3 ‘‘(i) in the coastwise or intercoastal trade; 

4 ‘‘(ii) on the Great Lakes, or on bays, sounds, rivers, harbors, or 

5 inland lakes of the United States; 

6 ‘‘(iii) in foreign trade as defined in section 109(b) of this title; 

7 ‘‘(iv) as an ocean thermal energy conversion facility or plantship; 

8 ‘‘(v) as a floating drydock in the construction, reconstruction, re9 conditioning, or repair of vessels; or 

10 ‘‘(vi) as an eligible export vessel in worldwide trade. 

11 ‘‘(B) A guarantee under subparagraph (A) may not be made more 

12 than one year after delivery of the vessel (or redelivery if the vessel was 

13 reconstructed or reconditioned) unless the proceeds of the obligation are 

14 used to finance the construction, reconstruction, or reconditioning of a 

15 vessel or of facilities or equipment related to marine operations. 

16 ‘‘(2) Financing (including reimbursement of an obligor for expendi17 tures previously made for) the construction, reconstruction, recondi18 tioning, or purchase of a vessel owned by citizens of the United States 

19 and designed principally for research, or for commercial use in the fish20 ing industry. 

21 ‘‘(3) Financing the purchase, reconstruction, or reconditioning of a 

22 vessel or fishery facility— 

23 ‘‘(A) for which an obligation was guaranteed under this chapter; 

24 and 

25 ‘‘(B) that, under subchapter II of this chapter— 

26 ‘‘(i) is a vessel or fishery facility for which an obligation 

27 was accelerated and paid; 

28 ‘‘(ii) was acquired by the Federal Ship Financing Fund or 

29 successor account under section 53717 of this title; or 

30 ‘‘(iii) was sold at foreclosure begun by the Secretary. 

31 ‘‘(4) Financing any part of the repayment to the United States Gov32 ernment of any amount of a construction-differential subsidy paid for 

33 a vessel. 

34 ‘‘(5) Refinancing an existing obligation (regardless of whether guaran35 teed under this chapter) issued for a purpose described in clauses (1)– 

36 (4), including a short-term obligation incurred to obtain temporary 

37 funds with the intention of refinancing. 

38 ‘‘(6) Financing or refinancing (including reimbursement of an obligor 

39 for expenditures previously made for) the construction, reconstruction, re40 conditioning, or purchase of a fishery facility. 
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1 ‘‘(7) Financing or refinancing (including reimbursement of an obligor 

2 for expenditures previously made for) the purchase of an individual fish3 ing quota in accordance with section 303(d)(4) of the Magnuson-Stevens 

4 Fishery Conservation and Management Act (16 U.S.C. 1853(d)(4)). 

5 ‘‘(b) NON-VESSELS TREATED AS VESSELS.—An obligation guaranteed 

6 under subsection (a)(6) or (7) shall be treated, for purposes of this chapter, 

7 in the same manner and to the same extent as an obligation that aids in 

8 financing the construction, reconstruction, reconditioning, or purchase of a 

9 vessel, except with respect to provisions that by their nature can only be ap10 plied to vessels. 

11 ‘‘(c) PRIORITIES FOR CERTAIN VESSELS.—In guaranteeing or making a 

12 commitment to guarantee an obligation under this chapter, the Secretary 

13 shall give priority to— 

14 ‘‘(1) a vessel that is otherwise eligible for a guarantee and is con15 structed with assistance under subtitle D of the Maritime Security Act 

16 of 2003 (46 U.S.C. 53101 note); and 

17 ‘‘(2) after applying clause (1), a vessel that is otherwise eligible for 

18 a guarantee and that the Secretary of Defense determines— 

19 ‘‘(A) is suitable for service as a naval auxiliary in time of war 

20 or national emergency; and 

21 ‘‘(B) meets a shortfall in sealift capacity or capability. 

22 ‘‘§ 53707. Findings related to obligors and operators 

23 ‘‘(a) RESPONSIBLE OBLIGOR.—The Secretary may not guarantee or make 

24 a commitment to guarantee an obligation under this chapter unless the Sec25 retary finds that the obligor is responsible and has the ability, experience, fi26 nancial resources, and other qualifications necessary for the adequate oper27 ation and maintenance of each vessel that will serve as security for the guar28 antee. 

29 ‘‘(b) OPERATORS OF LINER VESSELS.—The Secretary of Transportation 

30 may not guarantee or make a commitment to guarantee a loan for the con31 struction, reconstruction, or reconditioning of a liner vessel under this chapter 

32 unless the Chairman of the Federal Maritime Commission certifies that the 

33 operator of the vessel has not been found by the Commission to have com34 mitted, within the previous 5 years— 

35 ‘‘(1) a violation of part A of subtitle IV of this title that involves un36 just or unfair discriminatory treatment or undue or unreasonable preju37 dice or disadvantage with respect to a United States shipper, ocean 

38 transportation intermediary, ocean common carrier, or port; or 

39 ‘‘(2) a violation of part B of subtitle IV of this title. 

40 ‘‘(c) OPERATORS OF FISHING VESSELS.—The Secretary of Commerce may 

41 not guarantee or make a commitment to guarantee a loan for the construc-
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1 tion, reconstruction, or reconditioning of a fishing vessel under this chapter 

2 if the operator of the vessel has been— 

3 ‘‘(1) held liable or liable in rem for a civil penalty under section 1858 

4 of title 16 and not paid the penalty; 

5 ‘‘(2) found guilty of an offense under section 1859 of title 16 and not 

6 paid the assessed fine or served the assessed sentence; 

7 ‘‘(3) held liable for a civil or criminal penalty under section 1375 of 

8 title 16 and not paid the assessed fine or served the assessed sentence; 

9 or 

10 ‘‘(4) held liable for a civil penalty by the Coast Guard under this title 

11 or title 33 and not paid the assessed fine. 

12 ‘‘(d) WAIVERS CONCERNING FINANCIAL CONDITION.—The Secretary shall 

13 prescribe regulations concerning circumstances under which waivers of, or ex14 ceptions to, otherwise applicable regulatory requirements concerning financial 

15 condition can be made. The regulations shall require that— 

16 ‘‘(1) the economic soundness requirements in section 53708(a) of this 

17 title are met after the waiver of the financial condition requirement; and 

18 ‘‘(2) the waiver shall provide for the imposition of other requirements 

19 on the obligor designed to compensate for the increased risk associated 

20 with the obligor’s failure to meet regulatory requirements applicable to 

21 financial condition. 

22 ‘‘§ 53708. Findings related to economic soundness 

23 ‘‘(a) BY SECRETARY OF TRANSPORTATION.—The Secretary of Transpor24 tation may not guarantee or make a commitment to guarantee an obligation 

25 under this chapter unless the Secretary finds that the property or project for 

26 which the obligation will be executed will be economically sound. In making 

27 that finding, the Secretary shall consider— 

28 ‘‘(1) the need in the particular segment of the maritime industry for 

29 new or additional capacity, including any impact on existing equipment 

30 for which a guarantee under this chapter is in effect; 

31 ‘‘(2) the market potential for employment of the vessel over the life of 

32 the guarantee; 

33 ‘‘(3) projected revenues and expenses associated with employment of 

34 the vessel; 

35 ‘‘(4) any charter, contract of affreightment, transportation agreement, 

36 or similar agreement or undertaking relevant to the employment of the 

37 vessel; 

38 ‘‘(5) other relevant criteria; and 

39 ‘‘(6) for inland waterways, the need for technical improvements, in40 cluding increased fuel efficiency or improved safety. 
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1 ‘‘(b) BY SECRETARY OF COMMERCE.—The Secretary of Commerce may not 

2 guarantee or make a commitment to guarantee an obligation under this chap3 ter unless the Secretary finds, at or prior to the time the commitment is made 

4 or the guarantee becomes effective, that— 

5 ‘‘(1) the property or project for which the obligation will be executed 

6 will be economically sound; and 

7 ‘‘(2) for a fishing vessel, the purpose of the financing or refinancing 

8 is consistent with— 

9 ‘‘(A) the wise use of the fisheries resources and the development, 

10 advancement, management, conservation, and protection of the fish11 eries resources; or 

12 ‘‘(B) the need for technical improvements, including increased 

13 fuel efficiency or improved safety. 

14 ‘‘(c) USED FISHING VESSELS AND FACILITIES.—The Secretary of Com15 merce may not guarantee or make a commitment to guarantee an obligation 

16 under this chapter for the purchase of a used fishing vessel or used fishery 

17 facility unless the vessel or facility will be— 

18 ‘‘(1) reconstructed or reconditioned in the United States and will con19 tribute to the development of the United States fishing industry; or 

20 ‘‘(2) used— 

21 ‘‘(A) in the harvesting of fish from an underused fishery; or 

22 ‘‘(B) for a purpose described in the definition of ‘fishery facility’ 

23 in section 53701 of this title with respect to an underused fishery. 

24 ‘‘(d) INDEPENDENT ANALYSIS.—The Secretary may make a determination 

25 that aspects of an application under this chapter require independent anal26 ysis to be conducted by third party experts due to risk factors associated with 

27 markets, technology, financial structures, or other risk factors identified by the 

28 Secretary. Any independent analysis conducted under this subsection shall be 

29 performed by a party chosen by the Secretary. 

30 ‘‘(e) ADDITIONAL EQUITY BECAUSE OF INCREASED RISKS.—Notwith31 standing any other provision of this chapter, the Secretary may make a deter32 mination that an application under this title requires additional equity be33 cause of increased risk factors associated with markets, technology, financial 

34 structures, or other risk factors identified by the Secretary. 

35 ‘‘§ 53709. Amount of obligations 

36 ‘‘(a) IN GENERAL.—The principal of an obligation may not be guaranteed 

37 in an amount greater than the amount determined by multiplying the per38 centage applicable under subsection (b) by— 

39 ‘‘(1) the amount paid by or for the account of the obligor (as deter40 mined by the Secretary, which determination shall be conclusive) for the 
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1 construction, reconstruction, or reconditioning of the vessel used as secu2 rity for the guarantee; or 

3 ‘‘(2) if the obligor creates an escrow fund under section 53715 of this 

4 title, the actual cost of the vessel. 

5 ‘‘(b) LIMITATIONS ON AMOUNT BORROWED.— 

6 ‘‘(1) IN GENERAL.—Except as otherwise provided, the principal 

7 amount of an obligation guaranteed under this chapter may not exceed 

8 75 percent of the actual cost or depreciated actual cost, as determined 

9 by the Secretary, of the vessel used as security for the guarantee. 

10 ‘‘(2) CERTAIN APPROVED VESSELS.—The principal amount may not 

11 exceed 87.5 percent of the actual cost or depreciated actual cost if— 

12 ‘‘(A) the size and speed of the vessel are approved by the Sec13 retary; 

14 ‘‘(B) the vessel is or would have been eligible for mortgage aid 

15 for construction under section 509 of the Merchant Marine Act, 

16 1936, or would have been eligible except that the vessel was built 

17 with a construction-differential subsidy and the subsidy has been re18 paid; and 

19 ‘‘(C) the vessel is of a type described in that section for which 

20 the minimum down payment required by that section is 12.5 per21 cent of the cost of the vessel. 

22 ‘‘(3) BARGES.—For a barge constructed without a construction-dif23 ferential subsidy or for which the subsidy has been repaid, the principal 

24 amount may not exceed 87.5 percent of the actual cost or depreciated ac25 tual cost. 

26 ‘‘(4) FISHING VESSELS AND FISHERY FACILITIES.—For a fishing vessel 

27 or fishery facility, the principal amount may not exceed 80 percent of 

28 the actual cost or depreciated actual cost. However, debt for the vessel 

29 or facility may not be placed through the Federal Financing Bank. 

30 ‘‘(5) OTEC.—For an ocean thermal energy conversion facility or 

31 plantship constructed without a construction-differential subsidy, the 

32 principal amount may not exceed 87.5 percent of the actual cost or de33 preciated actual cost of the facility or plantship. 

34 ‘‘(6) ELIGIBLE EXPORT VESSELS.—For an eligible export vessel, the 

35 principal amount may not exceed 87.5 percent of the actual cost or de36 preciated actual cost. 

37 ‘‘(c) SECURITY INVOLVING MULTIPLE VESSELS.—The principal amount of 

38 an obligation having more than one vessel as security for the guarantee may 

39 not exceed the sum of the principal amounts allowable for all the vessels. 

40 ‘‘(d) PROHIBITION ON UNIFORM PERCENTAGE LIMITATIONS.—The Sec41 retary may not establish a percentage under any provision of subsection (b) 
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1 that is to be applied uniformly to all guarantees or commitments to guarantee 

2 made under that provision. 

3 ‘‘(e) PROHIBITION ON MINIMUM PRINCIPAL AMOUNT.—The Secretary may 

4 not establish, as a condition of eligibility for a guarantee under this chapter, 

5 a minimum principal amount for an obligation covering the reconstruction 

6 or reconditioning of a fishing vessel or fishery facility. For purposes of this 

7 chapter, the reconstruction or reconditioning of a fishing vessel or fishery fa8 cility does not include the routine minor repair or maintenance of the vessel 

9 or facility. 

10 ‘‘§ 53710. Contents of obligations 

11 ‘‘(a) IN GENERAL.—An obligation guaranteed under this chapter must— 

12 ‘‘(1) provide for payments by the obligor satisfactory to the Secretary; 

13 ‘‘(2) provide for interest (exclusive of guarantee fees and other fees) at 

14 a rate not more than the annual rate on the unpaid principal that the 

15 Secretary determines is reasonable, considering the range of interest rates 

16 prevailing in the private market for similar loans and the risks assumed 

17 by the Secretary; 

18 ‘‘(3) have a maturity date satisfactory to the Secretary, but— 

19 ‘‘(A) not more than 25 years after the date of delivery of the ves20 sel used as security for the guarantee; or 

21 ‘‘(B) if the vessel has been reconstructed or reconditioned, not 

22 more than the later of— 

23 ‘‘(i) 25 years after the date of delivery of the vessel; or 

24 ‘‘(ii) the remaining years of useful life of the vessel as deter25 mined by the Secretary; and 

26 ‘‘(4) provide, or a related agreement must provide, that if the vessel 

27 used as security for the guarantee is a delivered vessel, the vessel shall 

28 be— 

29 ‘‘(A) in class A–1, American Bureau of Shipping, or meet other 

30 standards acceptable to the Secretary, with all required certificates, 

31 including marine inspection certificates of the Coast Guard or, in 

32 the case of an eligible export vessel, of the appropriate national flag 

33 authorities under a treaty, convention, or other international agree34 ment to which the United States Government is a party, and with 

35 all outstanding requirements and recommendations necessary for 

36 class retention accomplished, unless the Secretary permits a 

37 deferment of repairs necessary to meet these requirements; and 

38 ‘‘(B) well equipped, in good repair, and in every respect sea39 worthy and fit for service. 

40 ‘‘(b) PROVISIONS FOR CERTAIN PASSENGER VESSELS.— 
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1 ‘‘(1) IN GENERAL.—With the Secretary’s approval, if the vessel used 

2 as security for the guarantee is a passenger vessel having the tonnage, 

3 speed, passenger accommodations, and other characteristics described in 

4 section 503 of the Merchant Marine Act, 1936, an obligation guaranteed 

5 under this chapter or a related agreement may provide that— 

6 ‘‘(A) the only recourse by the Government against the obligor for 

7 payments under the guarantee will be repossession of the vessel and 

8 assignment of insurance claims; and 

9 ‘‘(B) the obligor’s liability for payments under the guarantee will 

10 be satisfied and discharged by the surrender of the vessel and all 

11 interest in the vessel to the Government in the condition described 

12 in paragraph (2). 

13 ‘‘(2) SURRENDER OF VESSEL.— 

14 ‘‘(A) IN GENERAL.—On surrender, the vessel must be— 

15 ‘‘(i) free and clear of all liens and encumbrances except the 

16 security interest conveyed to the Secretary under this chapter; 

17 ‘‘(ii) in class; and 

18 ‘‘(iii) in as good order and condition (ordinary wear and 

19 tear excepted) as when acquired by the obligor. 

20 ‘‘(B) COVERING DEFICIENCIES BY INSURANCE.—To the extent cov21 ered by insurance, a deficiency related to a requirement in subpara22 graph (A) may be satisfied by assignment of the obligor’s insurance 

23 claims to the Government. 

24 ‘‘(c) OTHER PROVISIONS TO PROTECT SECURITY INTERESTS.—An obliga25 tion guaranteed under this chapter and any related agreement must contain 

26 other provisions for the protection of the security interests of the Government 

27 (including acceleration, assumption, and subrogation provisions and the 

28 issuance of notes by the obligor to the Secretary), liens and releases of liens, 

29 payment of taxes, and other matters that the Secretary may prescribe. 

30 ‘‘§ 53711. Security interest 

31 ‘‘(a) IN GENERAL.—The Secretary may guarantee an obligation under this 

32 chapter only if the obligor conveys or agrees to convey to the Secretary a secu33 rity interest the Secretary considers necessary to protect the interest of the 

34 United States Government. 

35 ‘‘(b) MULTIPLE VESSELS AND TYPES OF SECURITY.—The security interest 

36 may relate to more than one vessel and may consist of more than one type 

37 of security. If the security interest relates to more than one vessel, the obliga38 tion may have the latest maturity date allowable under section 53710(a)(3) 

39 of this title for any of the vessels used as security for the guarantee. However, 

40 the Secretary may require such payments of principal prior to maturity, with 
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1 respect to all related obligations, as the Secretary considers necessary to main2 tain adequate security for the guarantee. 

3 ‘‘§ 53712. Monitoring financial condition and operations of 

4 obligor 

5 ‘‘(a) IN GENERAL.—The Secretary shall monitor the financial condition 

6 and operations of the obligor on a regular basis during the term of the guar7 antee. The Secretary shall document the results of the monitoring on an an8 nual or quarterly basis depending on the condition of the obligor. If the Sec9 retary determines that the financial condition of the obligor warrants addi10 tional protections to the Secretary, the Secretary shall take appropriate action 

11 under subsection (b). If the Secretary determines that the financial condition 

12 of the obligor jeopardizes its continued ability to perform its responsibilities 

13 in connection with the guarantee of an obligation by the Secretary, the Sec14 retary shall make an immediate determination whether default should take 

15 place and whether further measures described in subsection (b) should be 

16 taken to protect the interests of the Secretary while ensuring that program 

17 objectives are met. 

18 ‘‘(b) CONTRACT PROVISIONS TO PROTECT SECRETARY.—The Secretary 

19 shall include provisions in a loan agreement with an obligor that provides 

20 additional authority to the Secretary to take action to limit potential losses 

21 in connection with a defaulted loan or a loan that is in jeopardy due to the 

22 deteriorating financial condition of the obligor. These provisions include re23 quirements for additional collateral or greater equity contributions that are 

24 effective upon the occurrence of verifiable conditions relating to the obligor’s 

25 financial condition or the status of the vessel or shipyard project. 

26 ‘‘§ 53713. Administrative fees 

27 ‘‘(a) IN GENERAL.—The Secretary shall charge and collect from the obligor 

28 fees the Secretary considers reasonable for— 

29 ‘‘(1) investigating an application for a guarantee; 

30 ‘‘(2) appraising property offered as security for a guarantee; 

31 ‘‘(3) issuing a commitment; 

32 ‘‘(4) providing services related to an escrow fund under section 53715 

33 of this title; and 

34 ‘‘(5) inspecting property during construction, reconstruction, or recon35 ditioning. 

36 ‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection (a) may not 

37 exceed 0.5 percent of the original principal amount of the obligations to be 

38 guaranteed. 

39 ‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may charge and 

40 collect fees to cover the costs of independent analysis under section 53708(d) 
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1 of this title. Notwithstanding section 3302 of title 31, any fee collected under 

2 this subsection shall— 

3 ‘‘(1) be credited as an offsetting collection to the account that finances 

4 the administration of the loan guarantee program; 

5 ‘‘(2) be available for expenditure only to pay the costs of activities and 

6 services for which the fee is imposed; and 

7 ‘‘(3) remain available until expended. 

8 ‘‘§ 53714. Guarantee fees 

9 ‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall prescribe 

10 regulations to assess a fee for guaranteeing an obligation under this chapter. 

11 ‘‘(b) COMPUTATION OF FEE.— 

12 ‘‘(1) IN GENERAL.—The amount of the fee for a guarantee under this 

13 chapter shall be equal to the sum of the amounts determined under para14 graph (2) for the years in which the guarantee is in effect. 

15 ‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred to in 

16 paragraph (1) for a year in which the guarantee is in effect is the 

17 present value of the amount calculated under paragraph (3). To deter18 mine the present value, the Secretary shall apply a discount rate deter19 mined by the Secretary of the Treasury, considering current market 

20 yields on outstanding obligations of the United States Government hav21 ing periods to maturity comparable to the period to maturity for the 

22 guaranteed obligation. 

23 ‘‘(3) CALCULATION OF AMOUNT.—The amount referred to in para24 graph (2) shall be calculated by multiplying— 

25 ‘‘(A) the estimated average unpaid principal amount of the obli26 gation that will be outstanding during the year (excluding the aver27 age amount, other than interest, on deposit during the year in an 

28 escrow fund under section 53715 of this title); by 

29 ‘‘(B) the fee rate set under paragraph (4). 

30 ‘‘(4) SETTING FEE RATES.—To set the fee rate referred to in para31 graph (3)(B), the Secretary shall establish a formula that— 

32 ‘‘(A) takes into account the security provided for the guaranteed 

33 obligation; and 

34 ‘‘(B) is a sliding scale based on the creditworthiness of the obli35 gor, using— 

36 ‘‘(i) the lowest allowable rate under paragraph (5) for the 

37 most creditworthy obligors; and 

38 ‘‘(ii) the highest allowable rate under paragraph (5) for the 

39 least creditworthy obligors. 

40 ‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under para41 graph (4) shall be— 
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1 ‘‘(A) for a delivered vessel or equipment, at least 0.5 percent and 

2 not more than 1 percent; and 

3 ‘‘(B) for a vessel to be constructed, reconstructed, or reconditioned 

4 or equipment to be delivered, at least 0.25 percent and not more 

5 than 0.5 percent. 

6 ‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an obligation 

7 under this chapter shall be collected not later than the date on which an 

8 amount is first paid on the obligation. 

9 ‘‘(d) FINANCING THE FEE.—A fee paid under this section is eligible to be 

10 financed under this chapter and shall be included in the actual cost of the 

11 obligation guaranteed. 

12 ‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not refundable. 

13 However, an obligor shall receive credit for the amount paid for the remain14 ing term of the obligation if the obligation is refinanced and guaranteed 

15 under this chapter after the refinancing. 

16 ‘‘§ 53715. Escrow fund 

17 ‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed under this 

18 chapter are to be used to finance the construction, reconstruction, or recondi19 tioning of a vessel that will serve as security for a guarantee under this chap20 ter, the Secretary may accept and hold in escrow, under an escrow agreement 

21 with the obligor, a portion of the proceeds of all obligations guaranteed under 

22 this chapter whose proceeds are to be so used which is equal to— 

23 ‘‘(1) the excess of— 

24 ‘‘(A) the principal amount of all obligations whose proceeds are 

25 to be so used; over 

26 ‘‘(B) 75 percent or 87.5 percent, whichever is applicable under 

27 section 53709(b) of this title, of the amount paid by or for the ac28 count of the obligor for the construction, reconstruction, or recondi29 tioning of the vessel; plus 

30 ‘‘(2) any interest the Secretary may require on the amount described 

31 in clause (1). 

32 ‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VES33 SELS.—If the security for the guarantee of an obligation relates both to a ves34 sel to be constructed, reconstructed, or reconditioned and to a delivered vessel, 

35 the principal amount of the obligation shall be prorated for purposes of sub36 section (a) under regulations prescribed by the Secretary. 

37 ‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— 

38 ‘‘(1) PURPOSES.—The Secretary shall disburse amounts in the escrow 

39 fund, as specified in the escrow agreement, to— 

40 ‘‘(A) pay amounts the obligor is obligated to pay for— 
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1 ‘‘(i) the construction, reconstruction, or reconditioning of a 

2 vessel used as security for the guarantee; and 

3 ‘‘(ii) interest on the obligations; 

4 ‘‘(B) redeem the obligations under a refinancing guaranteed 

5 under this chapter; and 

6 ‘‘(C) pay any excess interest deposits to the obligor at times pro7 vided for in the escrow agreement. 

8 ‘‘(2) MANNER OF PAYMENT.—If a payment becomes due under the 

9 guarantee before the termination of the escrow agreement, the amount in 

10 the escrow fund at the time the payment becomes due, including realized 

11 income not yet paid to the obligor, shall be paid into the appropriate 

12 account under section 53717 of this title. The amount shall be credited 

13 against amounts due or to become due from the obligor to the Secretary 

14 on the guaranteed obligations or, to the extent not so required, be paid 

15 to the obligor. 

16 ‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— 

17 ‘‘(1) IN GENERAL.—No disbursement shall be made under subsection 

18 (c) to any person until the total amount paid by or for the account of 

19 the obligor from sources other than the proceeds of the obligation equals 

20 at least 25 percent or 12.5 percent, whichever is applicable under section 

21 53709(b) of this title, of the aggregate actual cost of the vessel, as pre22 viously approved by the Secretary. If the aggregate actual cost of the ves23 sel has increased since the Secretary’s initial approval or if it increases 

24 after the first disbursement is permitted under this subsection, then no 

25 further disbursements shall be made under subsection (c) until the total 

26 amount paid by or for the account of the obligor from sources other than 

27 the proceeds of the obligation equals at least 25 percent or 12.5 percent, 

28 as applicable, of the increase, as determined by the Secretary, in the ag29 gregate actual cost of the vessel. This paragraph does not require the Sec30 retary to consent to finance any increase in actual cost unless the Sec31 retary determines that such an increase in the obligation meets all the 

32 terms and conditions of this chapter or other applicable law. 

33 ‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The Sec34 retary shall, by regulation, establish a transparent, independent, and 

35 risk-based process for verifying and documenting the progress of projects 

36 under construction before disbursing guaranteed loan funds. At a min37 imum, the process shall require documented proof of progress in connec38 tion with the construction, reconstruction, or reconditioning of a vessel 

39 or vessels before disbursements are made from the escrow fund. The Sec40 retary may require that the obligor provide a certificate from an inde-
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1 pendent party certifying that the requisite progress in construction, re2 construction, or reconditioning has taken place. 

3 ‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.— 

4 ‘‘(1) IN GENERAL.—If a payment has not become due under the guar5 antee before the termination of the escrow agreement, the balance of the 

6 escrow fund at the time of termination shall be disbursed to— 

7 ‘‘(A) prepay the excess of— 

8 ‘‘(i) the principal amount of all obligations whose proceeds 

9 are to be used to finance the construction, reconstruction, or re10 conditioning of the vessel used or to be used as security for the 

11 guarantee; over 

12 ‘‘(ii) 75 percent or 87.5 percent, whichever is applicable 

13 under section 53709(b) of this title, of the actual cost of the ves14 sel to the extent paid; and 

15 ‘‘(B) pay interest on that prepaid amount of principal. 

16 ‘‘(2) REMAINING BALANCE.—Any remaining balance of the escrow 

17 fund shall be paid to the obligor. 

18 ‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any part of an 

19 escrow fund in obligations of the United States Government with maturities 

20 such that the escrow fund will be available as required for purposes of the 

21 escrow agreement. Investment income shall be paid to the obligor when re22 ceived. 

23 ‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement shall con24 tain other terms the Secretary considers necessary to protect fully the interests 

25 of the Government. 

26 ‘‘§ 53716. Deposit fund 

27 ‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury for purposes 

28 of this section. The Secretary, in accordance with an agreement under sub29 section (b), may deposit into and hold in the fund cash belonging to an obli30 gor to serve as collateral for a guarantee made under this chapter with respect 

31 to the obligor. 

32 ‘‘(b) AGREEMENT.—The Secretary and an obligor shall make a reserve fund 

33 or other collateral account agreement to govern the deposit, withdrawal, reten34 tion, use, and reinvestment of cash of the obligor held in the fund. The agree35 ment shall contain— 

36 ‘‘(1) terms and conditions required by this section; 

37 ‘‘(2) terms that grant to the United States Government a security in38 terest in all amounts deposited into the fund; and 

39 ‘‘(3) any additional terms considered by the Secretary to be necessary 

40 to protect fully the interests of the Government. 
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1 ‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any part of the 

2 amounts in the fund in obligations of the Government with maturities such 

3 that amounts in the fund will be available as required for purposes of the 

4 agreement under subsection (b). Cash balances in the fund in excess of current 

5 requirements shall be maintained in a form of uninvested funds, and the Sec6 retary of the Treasury shall pay interest on these funds. 

7 ‘‘(d) WITHDRAWALS.— 

8 ‘‘(1) IN GENERAL.—Cash deposited into the fund may not be with9 drawn without the consent of the Secretary. 

10 ‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may 

11 pay any income earned on cash of an obligor deposited into the fund 

12 in accordance with the agreement with the obligor under subsection (b). 

13 ‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may retain and 

14 offset any or all of the cash of an obligor in the fund, and any income 

15 realized thereon, as part of the Secretary’s recovery against the obligor 

16 in case of a default by the obligor on an obligation. 

17 ‘‘§ 53717. Management of funds in the Treasury 

18 ‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the Federal 

19 Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). 

20 ‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.— 

21 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Transportation 

22 shall account for payments and disbursements involving obligations 

23 guaranteed under this chapter and not subject to FCRA in an account 

24 in the Treasury entitled the Federal Ship Financing Fund Liquidating 

25 Account (a liquidating account as defined in FCRA). 

26 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation shall 

27 account for payments and disbursements involving obligations guaran28 teed under this chapter and subject to FCRA in a separate account in 

29 the Treasury entitled the Federal Ship Financing Guaranteed Loan Fi30 nancing Account (a financing account as defined in FCRA). 

31 ‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.— 

32 ‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce shall 

33 account for payments and disbursements involving obligations guaran34 teed under this chapter and not subject to FCRA in a separate account 

35 in the Treasury established for this purpose. 

36 ‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce shall ac37 count for payments and disbursements involving obligations guaranteed 

38 under this chapter and subject to FCRA in a separate account in the 

39 Treasury established for this purpose. 

40 ‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of 

41 Commerce shall account for payments and disbursements involving direct 
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1 loans made under this chapter in a separate account in the Treasury estab2 lished for this purpose. 

3 ‘‘§ 53718. Annual report to Congress 

4 ‘‘The Secretary of Transportation shall report to Congress annually on the 

5 loan guarantee program under this chapter. Each report shall include— 

6 ‘‘(1) the size, in dollars, of the portfolio of loans guaranteed; 

7 ‘‘(2) the size, in dollars, of projects in the portfolio facing financial 

8 difficulties; 

9 ‘‘(3) the number and type of projects covered; 

10 ‘‘(4) a profile of pending loan applications; 

11 ‘‘(5) the amount of appropriations available for new guarantees; 

12 ‘‘(6) a profile of each project approved since the last report; and 

13 ‘‘(7) a profile of any defaults since the last report. 

14 ‘‘SUBCHAPTER II—DEFAULT PROVISIONS 

15 ‘‘§ 53721. Rights of obligee 

16 ‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection (c), if an 

17 obligor has continued in default for 30 days in the payment of principal or 

18 interest on an obligation guaranteed under this chapter, the obligee or the 

19 obligee’s agent may demand that the Secretary pay the unpaid principal 

20 amount of the obligation and the unpaid interest on the obligation to the date 

21 of payment. The demand must be made within the earlier of— 

22 ‘‘(1) a period that may be specified in the guarantee or a related 

23 agreement; or 

24 ‘‘(2) 90 days from the date of the default. 

25 ‘‘(b) PAYMENTS BY SECRETARY.— 

26 ‘‘(1) IN GENERAL.—If a demand is made under subsection (a), the 

27 Secretary shall pay to the obligee or the obligee’s agent the unpaid prin28 cipal amount of the obligation and the unpaid interest on the obligation 

29 to the date of payment. Payment shall be made within the earlier of— 

30 ‘‘(A) a period that may be specified in the guarantee or a related 

31 agreement; or 

32 ‘‘(B) 30 days from the date of the demand. 

33 ‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not required to 

34 make payment under this subsection if, within the appropriate period 

35 under paragraph (1), the Secretary finds that the obligor was not in de36 fault or that the default was remedied before the demand. 

37 ‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE DEMAND.—An 

38 obligee or the obligee’s agent may not demand payment under this section if 

39 the Secretary, before the demand and on terms that may be provided in the 

40 obligation or a related agreement, has assumed the obligor’s rights and duties 

41 under the obligation and any related agreement and made any payment in 
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1 default. However, the guarantee of the obligation remains in effect after the 

2 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 that 

6 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), the 

13 obligee or the obligee’s agent may demand that the Secretary pay the un14 paid principal amount of the obligation and the unpaid interest on the 

15 obligation. The demand must be made within the earlier of— 

16 ‘‘(A) a period that may be specified in the guarantee or a related 

17 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 principal 

21 amount of the obligation and the unpaid interest on the obligation to 

22 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 related 

24 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 under 

40 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 approval 

5 of the Secretary of the Treasury, shall prescribe the form, denomination, ma6 turity, and other terms (except the interest rate) of the obligations. The Sec7 retary of the Treasury shall set the interest rate for the obligations, consid8 ering the current average market yield on outstanding marketable obligations 

9 of the United States Government of comparable maturities during the month 

10 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 the 

14 proceeds from the sale of securities issued under chapter 31 of title 31. The 

15 purposes for which securities may be issued under that chapter are extended 

16 to include the purchase of obligations under this subsection. The Secretary of 

17 the Treasury may sell obligations purchased under this section. A redemption, 

18 purchase, or sale of the obligations by the Secretary of the Treasury is a pub19 lic debt transaction of the Government. 

20 ‘‘(d) DEPOSITS AND REDEMPTIONS.—The Secretary shall deposit amounts 

21 borrowed under this section in the appropriate account under section 53717 

22 of this title and make redemptions of the obligations from that account. 

23 ‘‘§ 53724. Rights to secured property 

24 ‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary makes a 

25 payment on, or assumes, an obligation under section 53721 or 53722 of this 

26 title, the Secretary acquires the rights under the security agreement with the 

27 obligor in the security held by the Secretary to guarantee the obligation. 

28 ‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding 

29 any other law relating to the acquisition, handling, or disposal of property 

30 by the United States Government, the Secretary has the right, in the Sec31 retary’s discretion, to complete, reconstruct, recondition, renovate, repair, 

32 maintain, operate, charter, or sell any property acquired under a security 

33 agreement with an obligor, or to place a vessel so acquired in the National 

34 Defense Reserve Fleet. The terms of a sale under this subsection shall be as 

35 approved by the Secretary. 

36 ‘‘§ 53725. Actions against obligor 

37 ‘‘(a) IN GENERAL.—For a default under a guaranteed obligation or related 

38 agreement, the Secretary may take any action against the obligor or another 

39 liable party that the Secretary considers necessary to protect the interests of 

40 the United States Government. A civil action may be brought in the name 
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1 of the Government or the obligee. The obligee shall make available to the Gov2 ernment all records and evidence necessary to prosecute the action. 

3 ‘‘(b) TITLE, POSSESSION, AND PURCHASE.— 

4 ‘‘(1) IN GENERAL.—The Secretary may— 

5 ‘‘(A) accept a conveyance of title to and possession of property 

6 from the obligor or another party liable to the Secretary; and 

7 ‘‘(B) purchase the property for an amount not greater than the 

8 unpaid principal amount of the obligation and interest thereon. 

9 ‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property, the Sec10 retary receives an amount of cash greater than the unpaid principal 

11 amount of the obligation, the unpaid interest on the obligation, and the 

12 expenses of collecting those amounts, the Secretary shall pay the excess 

13 to the obligor. 

14 ‘‘SUBCHAPTER III—PARTICULAR PROJECTS 

15 ‘‘§ 53731. Commercial demonstration ocean thermal energy 

16 conversion facilities and plantships 

17 ‘‘(a) IN GENERAL.—Under subchapter I of this chapter, the Secretary may 

18 guarantee or make a commitment to guarantee the payment of the principal 

19 of and interest on an obligation that aids in financing (including reimburse20 ment of an obligor for expenditures previously made for) the construction, re21 construction, or reconditioning of a commercial demonstration ocean thermal 

22 energy conversion facility or plantship. This section may be used to guarantee 

23 obligations for a total of not more than 5 separate facilities and plantships 

24 or a demonstrated 400 megawatt capacity, whichever comes first. 

25 ‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 

26 in this section, a guarantee or commitment to guarantee under this section 

27 is subject to all the provisions applicable to a guarantee or commitment to 

28 guarantee under subchapter I of this chapter. 

29 ‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic 

30 soundness under section 53708 of this title applies to a guarantee or commit31 ment to guarantee for that portion of a facility or plantship not to be sup32 ported with appropriated Federal funds. 

33 ‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment to guar34 antee may not be made under this section unless the Secretary of Energy, in 

35 consultation with the Secretary, certifies to the Secretary that, for the facility 

36 or plantship for which the guarantee or commitment to guarantee is sought, 

37 there is sufficient guarantee of performance and payment to lower the risk 

38 to the United States Government to a reasonable level. In deciding whether 

39 to issue such a certification, the Secretary of Energy shall consider— 
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1 ‘‘(1) the successful demonstration of the technology to be used in the 

2 facility at a scale sufficient to establish the likelihood of technical and 

3 economic viability in the proposed market; and 

4 ‘‘(2) the need of the United States to develop new and renewable 

5 sources of energy and the benefits to be realized from the construction 

6 and successful operation of the facility or plantship. 

7 ‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of an obliga8 tion guaranteed under this section may not exceed 87.5 percent of— 

9 ‘‘(1) the actual cost or depreciated actual cost of the facility or 

10 plantship; or 

11 ‘‘(2) if the facility or plantship is supported with appropriated Fed12 eral funds, the total principal amount of that portion of the actual cost 

13 or depreciated actual cost for which the obligor is obligated to secure fi14 nancing under the agreement between the obligor and the Department of 

15 Energy or other Federal agency. 

16 ‘‘(f) OTEC DEMONSTRATION FUND.— 

17 ‘‘(1) IN GENERAL.—There is a special subaccount, known as the OTEC 

18 Demonstration Fund, in the account established under section 

19 53717(b)(1) of this title. 

20 ‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund shall be 

21 used for obligation guarantees authorized under this section that do not 

22 qualify under subchapter I of this chapter. Except as otherwise provided 

23 in this section, the OTEC Demonstration Fund shall be operated in the 

24 same manner as the parent account. However— 

25 ‘‘(A) amounts received by the Secretary under subchapter I of this 

26 chapter related to guarantees or commitments to guarantee made 

27 under this section shall be deposited only in the OTEC Demonstra28 tion Fund; and 

29 ‘‘(B) when obligations issued by the Secretary under section 

30 53723 of this title related to the OTEC Demonstration Fund are 

31 outstanding, any amount received by the Secretary under sub32 chapter I of this chapter related to ocean thermal energy conversion 

33 facilities or plantships shall be deposited in the OTEC Demonstra34 tion Fund. 

35 ‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund may be 

36 transferred to the parent account when and to the extent the balance in 

37 the OTEC Demonstration Fund exceeds the total guarantees or commit38 ments to guarantee made under this section then outstanding, plus obli39 gations issued by the Secretary under section 53723 of this title related 

40 to the OTEC Demonstration Fund. 
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1 ‘‘(4) LIABILITY.—The parent account is not liable for a guarantee or 

2 commitment to guarantee made under this section. 

3 ‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total unpaid prin4 cipal amount of the obligations guaranteed with the backing of the 

5 OTEC Demonstration Fund and outstanding at any one time may not 

6 exceed $1,650,000,000. 

7 ‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723 of this title 

8 applies to the OTEC Demonstration Fund. However, obligations issued by the 

9 Secretary under that section related to the OTEC Demonstration Fund shall 

10 be payable only from proceeds realized by the OTEC Demonstration Fund. 

11 ‘‘(h) TAXATION OF INTEREST.—Interest on an obligation guaranteed under 

12 this section shall be included in gross income under chapter 1 of the Internal 

13 Revenue Code of 1986 (26 U.S.C. ch. 1). 

14 ‘‘§ 53732. Eligible export vessels 

15 ‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an obligation for 

16 an eligible export vessel in accordance with— 

17 ‘‘(1) the terms applicable under this chapter for vessels documented 

18 under the laws of the United States; or 

19 ‘‘(2) other terms the Secretary determines are more favorable than 

20 those terms and compatible with export credit terms offered by foreign 

21 governments for the sale of vessels built in foreign shipyards. 

22 ‘‘(b) INTERAGENCY COUNCIL.— 

23 ‘‘(1) ESTABLISHMENT.—There is an interagency council to carry out 

24 this section. 

25 ‘‘(2) COMPOSITION.—The council is composed of the following individ26 uals or their designees: 

27 ‘‘(A) The Secretary of Transportation, who is the chairman of the 

28 council. 

29 ‘‘(B) The Secretary of the Treasury. 

30 ‘‘(C) The Secretary of State. 

31 ‘‘(D) The Assistant to the President for Economic Policy. 

32 ‘‘(E) The United States Trade Representative. 

33 ‘‘(F) The President and Chairman of the Export-Import Bank of 

34 the United States. 

35 ‘‘(3) FUNCTIONS.—The council shall— 

36 ‘‘(A) obtain information on shipbuilding loan guarantees, direct 

37 and indirect subsidies, and other favorable treatment of shipyards 

38 provided by foreign governments to shipyards in competition with 

39 United States shipyards; 

40 ‘‘(B) consult regularly with United States shipbuilders to obtain 

41 the essential information about international shipbuilding competi-
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1 tion on which to set terms for loan guarantees under subsection 

2 (a)(2); and 

3 ‘‘(C) provide guidance to the Secretary in establishing terms for 

4 loan guarantees under subsection (a)(2). 

5 ‘‘(4) ANNUAL REPORT.—Not later than January 31 of each year, the 

6 Secretary shall submit to Congress a report on activities of the Secretary 

7 under this section during the preceding year. The report shall include— 

8 ‘‘(A) documentation of sources of information about assistance by 

9 governments of other countries to shipyards in those countries; and 

10 ‘‘(B) a summary of recommendations made to the Secretary dur11 ing the preceding year about applications submitted to the Sec12 retary during that year for loan guarantees to construct eligible ex13 port vessels. 

14 ‘‘(c) REQUIRED FINDINGS.— 

15 ‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary may not 

16 guarantee or make a commitment to guarantee an obligation for an eli17 gible export vessel unless the Secretary finds that the construction, recon18 struction, or reconditioning of the vessel will aid in the transition of 

19 United States shipyards to commercial activities or will preserve ship20 building assets that would be essential in time of war or national emer21 gency. 

22 ‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary may not 

23 make a commitment to guarantee an obligation for an eligible export ves24 sel unless the Secretary determines that making the commitment will not 

25 result in denial of an economically sound application for a commitment 

26 to guarantee an obligation for a vessel documented under the laws of the 

27 United States and operating in the domestic or foreign commerce of the 

28 United States. The Secretary has sole discretion in making the deter29 mination. In making the determination, the Secretary shall consider— 

30 ‘‘(A) the status and economic soundness of pending applications 

31 for commitments to guarantee obligations for vessels documented 

32 under the laws of the United States that are operating or will be 

33 operating in the domestic or foreign commerce of the United States; 

34 and 

35 ‘‘(B) the amount of guarantee authority available. 

36 ‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may not 

37 guarantee or make a commitment to guarantee an obligation for an eligible 

38 export vessel unless the owner of the vessel agrees with the Secretary that the 

39 vessel will not be transferred to a country designated by the Secretary of De40 fense as a country whose interests are hostile to the interests of the United 

41 States. 
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1 ‘‘(e) REVIEW BY SECRETARY OF DEFENSE.— 

2 ‘‘(1) NOTIFICATION.—The Secretary shall promptly notify the Sec3 retary of Defense of the receipt of an application for a loan guarantee 

4 for an eligible export vessel. 

5 ‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30 days after 

6 receiving the notice, may disapprove the guarantee based on an assess7 ment of the potential use of the vessel in a manner that may harm the 

8 national security interests of the United States. The Secretary may not 

9 disapprove a guarantee solely because of the type of vessel to be con10 structed. 

11 ‘‘(3) DELEGATION.—The authority of the Secretary of Defense to dis12 approve a guarantee under this subsection may be delegated only to a 

13 civilian officer of the Department of Defense appointed by the President 

14 by and with the advice and consent of the Senate. 

15 ‘‘(4) PROHIBITION.—The Secretary may not make a loan guarantee 

16 disapproved by the Secretary of Defense under this subsection. 

17 ‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue a commit18 ment to guarantee an obligation for an eligible export vessel under this chap19 ter after the last date on which such a commitment may be issued under any 

20 treaty or convention entered into after November 30, 1993, that prohibits 

21 guarantee of such an obligation. 

22 ‘‘§ 53733. Shipyard modernization and improvement 

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

24 ‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term ‘advanced 

25 shipbuilding technology’ includes— 

26 ‘‘(A) numerically controlled machine tools, robots, automated 

27 process control equipment, computerized flexible manufacturing sys28 tems, associated computer software, and other technology for im29 proving shipbuilding and related industrial production that ad30 vance the state-of-the-art; and 

31 ‘‘(B) novel techniques and processes designed to improve ship32 building quality, productivity, and practice, and to promote sus33 tainable development, including engineering design, quality assur34 ance, concurrent engineering, continuous process production tech35 nology, energy efficiency, waste minimization, design for 

36 recyclability or parts reuse, inventory management, upgraded work37 er skills, and communications with customers and suppliers. 

38 ‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard facil39 ity’ means— 

40 ‘‘(A) for operations on land— 
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1 ‘‘(i) a structure or appurtenance thereto designed for the 

2 construction, reconstruction, repair, rehabilitation, or refur3 bishment of a vessel, including a graving dock, building way, 

4 ship lift, wharf, or pier crane; 

5 ‘‘(ii) the land necessary for the structure or appurtenance; 

6 and 

7 ‘‘(iii) equipment that is for use with the structure or appur8 tenance and that is necessary for performing a function re9 ferred to in subclause (i); and 

10 ‘‘(B) for operations not on land, a vessel, floating drydock, or 

11 barge built in the United States and used for, equipped to be used 

12 for, or of a type normally used for, performing a function referred 

13 to in subclause (A)(i). 

14 ‘‘(3) MODERN SHIPBUILDING TECHNOLOGY.—The term ‘modern ship15 building technology’ means the best available proven technology, tech16 niques, and processes appropriate to enhancing the productivity of ship17 yards. 

18 ‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter, the Sec19 retary may guarantee or make a commitment to guarantee the payment of 

20 the principal of and interest on an obligation for advanced shipbuilding tech21 nology and modern shipbuilding technology of a general shipyard facility in 

22 the United States. Only a private shipyard is eligible to receive a guarantee. 

23 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 

24 in this section, a guarantee or commitment to guarantee under this section 

25 is subject to all the provisions applicable to a guarantee or commitment to 

26 guarantee under subchapter I of this chapter. 

27 ‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an obligation 

28 guaranteed under this chapter may not exceed 87.5 percent of the actual cost 

29 of the advanced shipbuilding technology or modern shipbuilding technology. 

30 ‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the transfer of 

31 amounts from a department, agency, or instrumentality of the United States 

32 Government and may use those amounts to cover the cost (as defined in sec33 tion 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of making 

34 guarantees or commitments to guarantee under this section. 

35 ‘‘§ 53734. Replacement of vessels because of changes in oper36 ating standards 

37 ‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this 

38 chapter, the Secretary, on terms the Secretary may prescribe, may guarantee 

39 or make a commitment to guarantee the payment of the principal of and in40 terest on an obligation that aids in financing or refinancing (including reim-
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1 bursement of an obligor for expenditures previously made for) a contract for 

2 the construction or reconstruction of a vessel if— 

3 ‘‘(1) the vessel is designed and to be used for commercial use in coast4 wise, intercoastal, or foreign trade; 

5 ‘‘(2) the construction or reconstruction is necessary to replace a vessel 

6 that cannot continue to be operated because of a change required by law 

7 in the standards for the operation of vessels, and the applicant for the 

8 guarantee or commitment would not otherwise legally be able to continue 

9 operating vessels in the trades in which the applicant operated vessels 

10 before the change; 

11 ‘‘(3) the applicant is presently engaged in transporting cargoes in ves12 sels of the type and class that will be constructed or reconstructed under 

13 this section and agrees to employ vessels constructed or reconstructed 

14 under this section as replacements only for vessels made obsolete by the 

15 change in operating standards; 

16 ‘‘(4) the capacity of the vessels to be constructed or reconstructed under 

17 this section will not increase the cargo carrying capacity of the vessels 

18 being replaced; 

19 ‘‘(5) the Secretary has not determined that the market demand for the 

20 vessel over its useful life will diminish so as to make granting the guar21 antee fiduciarily imprudent; 

22 ‘‘(6) the vessel, if to be reconstructed, will have a useful life of at least 

23 15 years after the reconstruction; and 

24 ‘‘(7) the Secretary has considered the criteria specified in section 

25 53708(a)(3)–(5) of this title. 

26 ‘‘(b) TERM AND AMOUNT OF OBLIGATION.— 

27 ‘‘(1) TERM.—The term of an obligation guaranteed under this section 

28 may not exceed 25 years. 

29 ‘‘(2) AMOUNT.—The amount of an obligation guaranteed under this 

30 section may not exceed 87.5 percent of the actual cost or depreciated ac31 tual cost to the applicant for the construction or reconstruction of the 

32 vessel. The Secretary may not establish a percentage under this para33 graph that is to be applied uniformly to all guarantees or commitments 

34 to guarantee made under this section. 

35 ‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—A guarantee or commitment 

36 to guarantee under this section is also subject to sections 53701, 53702(a), 

37 53704, 53705, 53707(a), 53708(d) and (e), 53709(a), 53710(a)(1), (2), and 

38 (4) and (c), 53711(a), 53713, 53714, 53717, and 53721–53725 of this title. 

39 ‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by regula40 tion that an applicant under this section provide adequate security against 

41 default. 
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1 ‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for the guar2 antee of an obligation under this section that is in addition to the fee estab3 lished under section 53714 of this title. The fee may be— 

4 ‘‘(1) an annual fee of not more than an additional 1 percent added 

5 to the fee established under section 53714 of this title; or 

6 ‘‘(2) a fee based on the amount of the obligation versus the percentage 

7 of the obligor’s fleet being replaced by vessels constructed or reconstructed 

8 under this section. 

9 ‘‘§ 53735. Fisheries financing and capacity reduction 

10 ‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing ca11 pacity reduction program established under section 312 of the Magnuson-Ste12 vens Fishery Conservation and Management Act (16 U.S.C. 1861a). 

13 ‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee the repay14 ment of debt obligations issued by entities under this section. Debt obligations 

15 to be guaranteed may be issued by any entity that has been approved by the 

16 Secretary and has agreed with the Secretary to conditions the Secretary con17 siders necessary for this section to achieve the objective of the program and 

18 to protect the interest of the United States. 

19 ‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed 

20 under this section shall— 

21 ‘‘(1) be treated in the same manner and to the same extent as other 

22 obligations guaranteed under this chapter, except with respect to provi23 sions of this chapter that by their nature cannot be applied to obligations 

24 guaranteed under this section; 

25 ‘‘(2) have the fishing fees established under the program paid into a 

26 separate subaccount of the fishing capacity reduction fund established 

27 under this section; 

28 ‘‘(3) not exceed $100,000,000 in an unpaid principal amount out29 standing at any one time for a program; 

30 ‘‘(4) have such maturity (not to exceed 20 years), take such form, and 

31 contain such conditions as the Secretary determines necessary for the 

32 program to which they relate; 

33 ‘‘(5) have as the exclusive source of repayment (subject to the second 

34 sentence of subsection (d)(2)) and as the exclusive payment security, the 

35 fishing fees established under the program; and 

36 ‘‘(6) at the discretion of the Secretary be issued in the public market 

37 or sold to the Federal Financing Bank. 

38 ‘‘(d) FISHING CAPACITY REDUCTION FUND.— 

39 ‘‘(1) IN GENERAL.—There is a separate account in the Treasury, 

40 known as the Fishing Capacity Reduction Fund. Within the Fund, at 

41 least one subaccount shall be established for each program into which 
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1 shall be paid all fishing fees established under the program and other 

2 amounts authorized for the program. 

3 ‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall be 

4 available, without appropriation or fiscal year limitation, to the Sec5 retary to pay the cost of the program, including payments to financial 

6 institutions to pay debt obligations incurred by entities under this sec7 tion. Funds available for this purpose from other amounts available for 

8 the program may also be used to pay those debt obligations. 

9 ‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently need10 ed for the purpose of this section shall be kept on deposit or invested in 

11 obligations of the United States Government. 

12 ‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations the Sec13 retary considers necessary to carry out this section. 

14 ‘‘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. 

15 ‘‘§ 53901. Definitions 

16 ‘‘In this chapter: 

17 ‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’ includes— 

18 ‘‘(A) a documented vessel with a registry or coastwise endorse19 ment under chapter 121 of this title; 

20 ‘‘(B) an undocumented vessel owned or chartered by or made 

21 available to the United States Government; and 

22 ‘‘(C) a tug, barge, or other watercraft (whether or not docu23 mented) owned by a citizen of the United States and used in essen24 tial water transportation or in the fisheries, except only for sport 

25 fishing. 

26 ‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty container 

27 on a vessel. 

28 ‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF THE

29 UNITED STATES.—The term ‘transportation in the waterborne commerce 

30 of the United States’ includes the operation of a vessel in the fisheries, 

31 except only for sport fishing. 

32 ‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the Sec33 retary of Transportation determines— 
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1 ‘‘(A) any part of a loss excluded from marine insurance coverage 

2 under a ‘free of capture or seizure’ clause or analogous clause; and 

3 ‘‘(B) any other loss from a hostile act, including confiscation, ex4 propriation, nationalization, or deprivation. 

5 ‘‘§ 53902. Authority to provide insurance 

6 ‘‘(a) IN GENERAL.—With the approval of the President, and after such con7 sultation with interested agencies of United States Government as the Presi8 dent may require, the Secretary of Transportation may provide insurance 

9 and reinsurance against loss or damage from war risks as provided by this 

10 chapter whenever it appears to the Secretary that insurance adequate for the 

11 needs of the waterborne commerce of the United States cannot be obtained on 

12 reasonable terms and conditions from companies authorized to do insurance 

13 business in a State of the United States. 

14 ‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under this chap15 ter shall be based, insofar as practicable, on consideration of the risk involved. 

16 ‘‘(c) AVAILABILITY OF VESSEL DURING WAR OR NATIONAL EMERGENCY.— 

17 Insurance or reinsurance for a vessel may be provided under this chapter only 

18 on the condition that the vessel will be available to the Government in time 

19 of war or national emergency. 

20 ‘‘§ 53903. Insurable interests 

21 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur22 ance and reinsurance under this chapter for— 

23 ‘‘(1) an American vessel, including a vessel under construction; 

24 ‘‘(2) a foreign vessel— 

25 ‘‘(A) owned by a citizen of the United States; or 

26 ‘‘(B) engaged in transportation in the waterborne commerce of 

27 the United States or in such other transportation by water or such 

28 other services as the Secretary considers to be in the interest of the 

29 national defense or national economy of the United States, when so 

30 engaged; 

31 ‘‘(3) cargo— 

32 ‘‘(A) shipped or to be shipped on a vessel insurable under this 

33 section, including by express or registered mail; 

34 ‘‘(B) owned by a citizen or resident of the United States; 

35 ‘‘(C) imported to or exported from the United States, or sold or 

36 purchased by a citizen or resident of the United States, under a con37 tract of sale or purchase the terms of which provide that the risk 

38 of loss by war risks or the obligation to provide insurance against 

39 war risks is on a citizen or resident of the United States; or 

40 ‘‘(D) shipped between ports in the United States; 
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1 ‘‘(4) disbursements, including advances to masters and general average 

2 disbursements, and freight and passage money of a vessel insurable under 

3 this section; 

4 ‘‘(5) personal effects of an individual on a vessel insurable under this 

5 section; 

6 ‘‘(6) loss of life, injury, or detention by an enemy of the United States 

7 after capture, with respect to an individual on a vessel insurable under 

8 this section; and 

9 ‘‘(7) statutory or contractual obligations or other liabilities of a vessel 

10 insurable under this section or of the owner or charterer of such a vessel, 

11 of a nature customarily covered by insurance. 

12 ‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining whether to 

13 provide insurance or reinsurance for a foreign vessel, the Secretary shall con14 sider the characteristics, employment, and general management of the vessel 

15 by the owner or charterer. 

16 ‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection (a)(5)–(7), in17 sofar as it involves a liability related to an individual on the vessel, may in18 clude risks other than war risks to the extent the Secretary considers advis19 able. 

20 ‘‘§ 53904. Liability insurance for persons involved in war or 

21 defense efforts 

22 ‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur23 ance under this chapter against legal liability that a person may incur in 

24 providing services or facilities for a vessel if, in the opinion of the Secretary, 

25 the insurance— 

26 ‘‘(1) is required in prosecuting a war or for national defense; and 

27 ‘‘(2) cannot be obtained at reasonable rates or on reasonable terms and 

28 conditions from approved companies authorized to do insurance business 

29 in a State of the United States. 

30 ‘‘(b) LIMITATIONS.—Employer liability insurance and worker compensa31 tion insurance against legal liability to employees may not be provided under 

32 this section. 

33 ‘‘§ 53905. Agency insurance 

34 ‘‘(a) IN GENERAL.—With the approval of the President, an agency of the 

35 United States Government may obtain insurance provided for by this chapter 

36 from the Secretary of Transportation, except as provided in sections 17302 

37 and 17303 of title 40. 

38 ‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec39 retary of Transportation may provide insurance under this chapter at the re40 quest of the Secretary of Defense and other agencies the President may pre41 scribe, without payment of an insurance premium if the Secretary of Defense 
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1 or agency agrees to indemnify the Secretary of Transportation against loss 

2 covered by the insurance. The Secretary of Defense and agencies may make 

3 such an indemnity agreement. 

4 ‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President (or an offi5 cial designated by the President) on the agreement shall be treated as the ap6 proval required by section 53902(a) of this title. 

7 ‘‘§ 53906. Hull insurance valuation 

8 ‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for ac9 tual or constructive total loss of the insured vessel shall be a stated valuation 

10 determined by the Secretary of Transportation. The stated valuation— 

11 ‘‘(1) shall exclude national defense features paid for by the United 

12 States Government; and 

13 ‘‘(2) may not exceed the amount that would be payable if the owner14 ship of the vessel had been requisitioned under chapter 563 of this title 

15 at the time the insurance attached under the policy. 

16 ‘‘(b) REJECTING STATED VALUATION.—Within 60 days after the insurance 

17 attaches under a policy referred to in subsection (a) or within 60 days after 

18 the Secretary determines the valuation, whichever is later, the insured may 

19 reject the valuation and pay, at the rate provided in the policy, premiums 

20 based on the asserted valuation the insured specifies at the time of rejection. 

21 However, the asserted valuation is not binding on the Government in any 

22 subsequent action on the policy. 

23 ‘‘(c) AMOUNT OF CLAIM.—If a vessel is actually or constructively totally 

24 lost and the insured under a policy referred to in subsection (a) has not re25 jected the stated valuation determined by the Secretary, the amount of a claim 

26 adjusted, compromised, settled, adjudged, or paid may not exceed the stated 

27 valuation. However, if the insured has rejected the valuation, the insured— 

28 ‘‘(1) shall be paid, as a tentative advance only, 75 percent of the stated 

29 valuation; and 

30 ‘‘(2) may bring a civil action against the Government in a court hav31 ing jurisdiction of the claim to recover a valuation equal to the just com32 pensation the court determines would have been payable if the ownership 

33 of the vessel had been requisitioned under chapter 563 of this title at the 

34 time the insurance attached under the policy. 

35 ‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination as pro36 vided under subsection (c)(2), premiums paid under the policy shall be ad37 justed based on the court’s determination and the rates provided for in the 

38 policy. 

39 ‘‘§ 53907. Reinsurance 

40 ‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is au41 thorized to provide insurance under this chapter, the Secretary may provide 
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1 reinsurance to a company authorized to do insurance business in a State of 

2 the United States. The Secretary may obtain reinsurance from such a com3 pany for any insurance provided by the Secretary under this chapter. 

4 ‘‘(b) RATES.—The Secretary may not provide reinsurance at rates less 

5 than, nor obtain reinsurance at rates more than, the rates established by the 

6 Secretary on the same or similar risks or the rates charged by the insurance 

7 company for the insurance reinsured, whichever is more advantageous to the 

8 Secretary. However, the Secretary may provide an allowance to the insurance 

9 company for the costs of services and facilities the company provides, in an 

10 amount the Secretary considers reasonable according to good business prac11 tice. The allowance to the company may not include any amount for solic12 iting or stimulating insurance business. 

13 ‘‘§ 53908. Additional insurance privately obtained 

14 ‘‘With the approval of the Secretary of Transportation, a person having an 

15 insurable interest in a vessel may obtain insurance on the vessel with other 

16 underwriting agents in addition to the insurance with the Secretary. The Sec17 retary is not entitled to the benefit of the additional insurance. 

18 ‘‘§ 53909. War risk insurance revolving fund 

19 ‘‘(a) IN GENERAL.—There is a war risk insurance revolving fund in the 

20 Treasury. 

21 ‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts appro22 priated to carry out this chapter and amounts received in carrying out this 

23 chapter. 

24 ‘‘(c) PAYMENTS.—There shall be paid from the fund amounts for return 

25 premiums, losses, settlements, judgments, and all liabilities incurred by the 

26 United States Government under this chapter. 

27 ‘‘(d) INVESTMENT.—On request of the Secretary of Transportation, the Sec28 retary of the Treasury may invest or reinvest any part of the fund in securi29 ties of the Government or securities whose principal and interest are guaran30 teed by the Government. Interest and benefits from the securities shall be de31 posited in the fund. 

32 ‘‘§ 53910. Administrative 

33 ‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 

34 chapter, the Secretary of Transportation may act in accordance with commer35 cial practice in the marine insurance business. 

36 ‘‘(b) REGULATIONS.—The Secretary may prescribe regulations the Sec37 retary considers appropriate to carry out this chapter. 

38 ‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may prescribe 

39 and change forms and policies, and fix and change the amounts insured and 

40 rates of premium, under this chapter. 
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1 ‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an annual fee 

2 in an amount calculated to cover the expenses of processing applications for 

3 insurance, employing underwriting agents, and appointing experts under this 

4 chapter. 

5 ‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may settle and 

6 pay claims, and pay judgments against the United States Government, re7 lated to insurance under this chapter. 

8 ‘‘(f) UNDERWRITING AGENTS.— 

9 ‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary finds 

10 it practical to do so shall, employ a domestic company or group of do11 mestic companies, authorized to do marine insurance business in a State 

12 of the United States, to act as underwriting agent for the Secretary. The 

13 services of an underwriting agent may be used in adjusting claims, but 

14 a claim may not be paid until approved by the Secretary. 

15 ‘‘(2) COMPENSATION.—The Secretary may allow the company or 

16 group of companies reasonable compensation for services as the under17 writing agent. The compensation may include an allowance for expenses 

18 reasonably incurred by the agent, but may not include any amount for 

19 soliciting or stimulating business. 

20 ‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in subsection 

21 (f)(2), the Secretary may not pay an insurance broker or other person acting 

22 in a similar intermediary capacity a fee or other consideration for partici23 pating in arranging insurance when the Secretary directly insures any of the 

24 risk. 

25 ‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, 

26 without regard to the laws and regulations on the employment of Federal em27 ployees, may appoint and prescribe the duties of experts in marine insurance 

28 as the Secretary considers necessary to carry out this chapter. 

29 ‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the consent of 

30 another Government agency, the Secretary may use information, services, fa31 cilities, officers, and employees of the agency in carrying out this chapter. 

32 ‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by regu33 lation vessel location reporting requirements for a vessel insured under this 

34 chapter. 

35 ‘‘§ 53911. Civil actions for losses 

36 ‘‘(a) IN GENERAL.—If there is a disagreement about a loss insured under 

37 this chapter, a civil action in admiralty may be brought against the United 

38 States Government in the district court of the United States for the district 

39 in which the plaintiff or the plaintiff’s agent resides. If the plaintiff has no 

40 residence in the United States, the action may be brought in the United 

41 States District Court for the District of Columbia or in the district court for 
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1 any district in which the Attorney General agrees to accept service. Any per2 son who may have an interest in the insurance may be made a party, either 

3 initially or on the motion of either party. 

4 ‘‘(b) EXCLUSIVE REMEDY.—A civil action against the Government under 

5 this section is exclusive of any other action by reason of the same subject mat6 ter against an officer, employee, or agent employed or retained by the Govern7 ment under this chapter. 

8 ‘‘(c) PROCEDURE.—A civil action under this section shall be heard and de9 termined under chapter 309 of this title. 

10 ‘‘(d) TOLLING OF LIMITATIONS PERIOD.—If a claim is filed with the Sec11 retary of Transportation, the running of the limitations period for bringing 

12 a civil action is suspended until the Secretary denies the claim, and for 60 

13 days thereafter. The Secretary is deemed to have denied the claim if the Sec14 retary does not act on the claim within 6 months after the claim is filed, un15 less the Secretary for good cause shown agrees with the claimant on a dif16 ferent period for the Secretary to act on the claim. 

17 ‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of the 

18 Government under the insurance and there is a dispute about the persons en19 titled to receive payment, the Government may bring a civil action inter20 pleading those persons. The action shall be brought in the United States Dis21 trict Court for the District of Columbia or in the district court for the district 

22 in which any of those persons resides. A person not residing or found in the 

23 district may be made a party by service in any reasonable manner the court 

24 directs. If the court is satisfied that unknown persons might make a claim 

25 under the insurance, the court may direct service on those unknown persons 

26 by publication in the Federal Register. Judgment after service by publication 

27 in the Federal Register discharges the Government from further liability to 

28 all persons. 

29 ‘‘§ 53912. Expiration date 

30 ‘‘The authority of the Secretary of Transportation to provide insurance and 

31 reinsurance under this chapter expires on June 30, 2005. 

32 ‘‘PART D—PROMOTIONAL PROGRAMS

33 ‘‘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. 
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‘‘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. 

1 ‘‘§ 55101. Application of coastwise laws 

2 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), the coastwise 

3 laws apply to the United States, including the island territories and posses4 sions of the United States. 

5 ‘‘(b) EXCEPTIONS.—The coastwise laws do not apply to— 

6 ‘‘(1) the Virgin Islands until the President declares by proclamation 

7 that the coastwise laws apply to the Virgin Islands; or 

8 ‘‘(2) American Samoa. 

9 ‘‘§ 55102. Transportation of merchandise 

10 ‘‘(a) DEFINITION.—In this section, the term ‘merchandise’ includes— 

11 ‘‘(1) merchandise owned by the United States Government, a State, or 

12 a subdivision of a State; and 

13 ‘‘(2) valueless material. 

14 ‘‘(b) REQUIREMENTS.—Except as otherwise provided in this chapter or 

15 chapter 121 of this title, a vessel may not provide any part of the transpor16 tation of merchandise by water, or by land and water, between points in the 

17 United States to which the coastwise laws apply, either directly or via a for18 eign port, unless the vessel— 

19 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

20 engaging in the coastwise trade; and 

21 ‘‘(2) has been issued a certificate of documentation with a coastwise 

22 endorsement under chapter 121 or is exempt from documentation but 

23 would otherwise be eligible for such a certificate and endorsement. 

24 ‘‘(c) PENALTY.—Merchandise transported in violation of subsection (b) is 

25 liable to seizure by and forfeiture to the Government. Alternatively, an 

26 amount equal to the value of the merchandise (as determined by the Secretary 

27 of Homeland Security) or the actual cost of the transportation, whichever is 

28 greater, may be recovered from any person transporting the merchandise or 

29 causing the merchandise to be transported. 

30 ‘‘§ 55103. Transportation of passengers 

31 ‘‘(a) IN GENERAL.—Except as otherwise provided in this chapter or chap32 ter 121 of this title, a vessel may not transport passengers between ports or 

33 places in the United States, either directly or via a foreign port, unless the 

34 vessel— 

35 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

36 engaging in the coastwise trade; and 
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1 ‘‘(2) has been issued a certificate of documentation with a coastwise 

2 endorsement under chapter 121 or is exempt from documentation but 

3 would otherwise be eligible for such a certificate and endorsement. 

4 ‘‘(b) PENALTY.—The penalty for violating subsection (a) is $300 for each 

5 passenger transported and landed. 

6 ‘‘§ 55104. Transportation of passengers between Puerto Rico 

7 and other ports in the United States 

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

9 ‘‘(1) CERTIFICATE.—The term ‘certificate’ means a certificate of finan10 cial responsibility for indemnification of passengers for nonperformance 

11 of transportation issued by the Federal Maritime Commission under sec12 tion 44102 of this title. 

13 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ means a vessel 

14 of similar size, or offering similar service, as any other vessel trans15 porting passengers under subsection (b). 

16 ‘‘(b) EXEMPTION.—Except as otherwise provided in this section, a vessel 

17 not qualified to engage in the coastwise trade may transport passengers be18 tween a port in Puerto Rico and another port in the United States. 

19 ‘‘(c) EXPIRATION OF EXEMPTION.— 

20 ‘‘(1) WHEN COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.—On a 

21 showing to the Secretary of the department in which the Coast Guard 

22 is operating, by the vessel owner or charterer, that a United States pas23 senger vessel qualified to engage in the coastwise trade is offering or ad24 vertising passenger service between a port in Puerto Rico and another 

25 port in the United States pursuant to a certificate, the Secretary shall 

26 notify the owner or operator of each vessel transporting passengers under 

27 subsection (b) to terminate that transportation within 270 days after the 

28 Secretary’s notification. Except as provided in subsection (d), the author29 ity to transport passengers under subsection (b) expires at the end of that 

30 270-day period. 

31 ‘‘(2) WHEN NON-COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.— 

32 On a showing to the Secretary, by the vessel owner or charterer, that a 

33 United States passenger vessel not qualified to engage in the coastwise 

34 trade is offering or advertising passenger service between a port in Puer35 to Rico and another port in the United States pursuant to a certificate, 

36 the Secretary shall notify the owner or operator of each foreign vessel 

37 transporting passengers under subsection (b) to terminate that transpor38 tation within 270 days after the Secretary’s notification. Except as pro39 vided in subsection (d), the authority of a foreign vessel to transport pas40 sengers under subsection (b) expires at the end of that 270-day period. 
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1 ‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising the serv2 ice described in subsection (c) has not begun that service within 270 days 

3 after the Secretary’s notification, the expiration provided by subsection (c) is 

4 delayed until 90 days after the vessel offering or advertising the service begins 

5 that service. 

6 ‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that the serv7 ice on which an expiration was based is no longer available, the expired au8 thority to transport passengers is reinstated. 

9 ‘‘§ 55105. Transportation of hazardous waste 

10 ‘‘(a) IN GENERAL.—The transportation of hazardous waste, as defined in 

11 section 1004(5) of the Resource Conservation and Recovery Act of 1976 (42 

12 U.S.C. 6903(5)), from a point in the United States to sea for incineration 

13 is deemed to be transportation of merchandise under section 55102 of this 

14 title. 

15 ‘‘(b) NONAPPLICATION TO CERTAIN FOREIGN VESSELS.— 

16 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to transportation 

17 performed by a foreign-flag ocean incineration vessel owned by or under 

18 construction on May 1, 1982, for a corporation wholly owned by citizens 

19 of the United States under section 50501(a)–(c) of this title. 

20 ‘‘(2) STANDARDS FOR INCINERATION EQUIPMENT.—Incineration equip21 ment on a vessel described in paragraph (1) must meet standards of the 

22 Coast Guard and the Environmental Protection Agency. 

23 ‘‘(3) INSPECTION.—A vessel described in paragraph (1) shall be in24 spected by the Coast Guard, regardless of whether inspected by the flag 

25 nation. The inspection shall be the same as would be required of a vessel 

26 of the United States, including drydock inspection and internal exam27 ination of tanks and void spaces. The inspection may be made concur28 rently with an inspection by the flag nation or within one year after 

29 the initial issuance or next scheduled issuance of the Safety of Life at 

30 Sea Safety Construction Certificate. In making the inspection, the Coast 

31 Guard shall refer to the condition of the hull and superstructure estab32 lished by the initial foreign certification as the basis for evaluating the 

33 current condition of the hull and superstructure. The Coast Guard shall 

34 allow the substitution of fittings, material, apparatus, equipment, and 

35 appliances different from those required for vessels of the United States 

36 if satisfied they are equivalent and at least as effective as those required 

37 for vessels of the United States. A satisfactory inspection under this 

38 paragraph shall be certified in writing by the Secretary of the depart39 ment in which the Coast Guard is operating. 

40 ‘‘(c) EFFECTIVE DATE.—Subsection (a) is not effective until an appro41 priate vessel has been built and documented under chapter 121 of this title. 
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1 ‘‘§ 55106. Merchandise transferred between barges 

2 ‘‘(a) IN GENERAL.—On terms and conditions the Secretary of Homeland 

3 Security may prescribe by regulation, the Secretary may suspend the applica4 tion of section 55102 of this title to the transportation of merchandise that 

5 is transferred, when moving in the foreign trade of the United States, from 

6 a barge certified by the owner or operator as designed specifically for carriage 

7 on a vessel and carried regularly on a vessel in foreign trade, to another such 

8 barge owned or leased by the same owner or operator. However, this sub9 section does not apply to transportation between the continental United States 

10 and noncontiguous States, territories, or possessions to which the coastwise 

11 laws apply. 

12 ‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

13 applies to a vessel of foreign registry only if the Secretary of Homeland Secu14 rity finds, based on information from the Secretary of State, that the govern15 ment of the nation of registry extends reciprocal privileges to vessels of the 

16 United States. 

17 ‘‘§ 55107. Empty cargo containers and barges 

18 ‘‘(a) IN GENERAL.—Subject to subsections (b) and (c), and on terms and 

19 conditions the Secretary of Homeland Security may prescribe by regulation, 

20 section 55102 of this title does not apply to the transportation of— 

21 ‘‘(1) empty cargo vans, empty lift vans, or empty shipping tanks; 

22 ‘‘(2) equipment for use with cargo vans, lift vans, or shipping tanks; 

23 ‘‘(3) empty barges specifically designed for carriage aboard a vessel 

24 and equipment (except propulsion equipment) for use with those barges; 

25 ‘‘(4) empty instruments for international traffic exempted from the 

26 customs laws under section 322(a) of the Tariff Act of 1930 (19 U.S.C. 

27 1322(a)); or 

28 ‘‘(5) stevedoring equipment and material. 

29 ‘‘(b) CONDITIONS.— 

30 ‘‘(1) CLAUSES (1)–(4).—Clauses (1)–(4) of subsection (a) apply only if 

31 the items named are owned or leased by the owner or operator of the 

32 vessel and transported for its use in handling its cargo in foreign trade. 

33 ‘‘(2) CLAUSE (5).—Clause (5) of subsection (a) applies only if the 

34 items named are— 

35 ‘‘(A) owned or leased by the owner or operator of the vessel or 

36 by the stevedoring company having the contract for the loading or 

37 unloading of the vessel; and 

38 ‘‘(B) transported without charge for use in the handling of cargo 

39 in foreign trade. 

40 ‘‘(c) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 

41 applies to a vessel of foreign registry only if the Secretary of Homeland Secu-
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1 rity finds, based on information from the Secretary of State, that the govern2 ment of the nation of registry extends reciprocal privileges to vessels of the 

3 United States. 

4 ‘‘§ 55108. Platform jackets 

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

6 ‘‘(1) COASTWISE QUALIFIED VESSEL.—The term ‘coastwise qualified 

7 vessel’ means a vessel that has been issued a certificate of documentation 

8 with a coastwise endorsement under chapter 121 of this title. 

9 ‘‘(2) PLATFORM JACKET.—The term ‘platform jacket’ refers to a single 

10 physical component and includes any type of offshore exploration, devel11 opment, or production structure or component thereof, including— 

12 ‘‘(A) platform jackets; 

13 ‘‘(B) tension leg or SPAR platform superstructures (including the 

14 deck, drilling rig and support utilities, and supporting structure); 

15 ‘‘(C) hull (including vertical legs and connecting pontoons or 

16 vertical cylinder); 

17 ‘‘(D) tower and base sections of a platform jacket; 

18 ‘‘(E) jacket structures; and 

19 ‘‘(F) deck modules (known as ‘topsides’). 

20 ‘‘(b) AUTHORIZED TRANSPORTATION.—Section 55102 of this title does not 

21 apply to the transportation of a platform jacket in or on a non-coastwise 

22 qualified launch barge between two points in the United States, at one of 

23 which there is an installation or other device within the meaning of section 

24 4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), if— 

25 ‘‘(1) the launch barge was built before December 31, 2000, and has a 

26 launch capacity of at least 12,000 long tons; and 

27 ‘‘(2) the Secretary of Transportation makes a determination, in ac28 cordance with procedures established under subsection (c), that a suitable 

29 coastwise qualified vessel is not available for use in the transportation 

30 and, if needed, launch or installation of a platform jacket. 

31 ‘‘(c) PROCEDURES TO MAXIMIZE USE OF COASTWISE QUALIFIED VES32 SELS.—The Secretary of Transportation shall adopt procedures implementing 

33 this section that are reasonably designed to provide timely information so as 

34 to maximize the use of coastwise qualified vessels. The procedures shall, among 

35 other things, establish that for purposes of this section, a coastwise qualified 

36 vessel shall be deemed to be not available only if— 

37 ‘‘(1) on application by an owner or operator for the use of a non38 coastwise qualified launch barge for transportation of a platform jacket 

39 under this section (which application shall include all relevant informa40 tion, including engineering details and timing requirements), the Sec41 retary promptly publishes a notice in the Federal Register— 
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1 ‘‘(A) describing the project and the platform jacket involved; 

2 ‘‘(B) advising that all relevant information reasonably needed to 

3 assess the transportation requirements for the platform jacket will 

4 be made available to interested parties on request; and 

5 ‘‘(C) requesting that information on the availability of coastwise 

6 qualified vessels be submitted within 30 days after publication of 

7 that notice; and 

8 ‘‘(2)(A) no information is submitted to the Secretary within that 30 

9 day period; or 

10 ‘‘(B) the owner or operator of a coastwise qualified vessel submits in11 formation to the Secretary asserting that the owner or operator has a 

12 suitable coastwise qualified vessel available for the transportation, but 

13 the Secretary determines, within 90 days after the notice is first pub14 lished, that the coastwise qualified vessel is not suitable or reasonably 

15 available for the transportation. 

16 ‘‘§ 55109. Dredging 

17 ‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel may en18 gage in dredging in the navigable waters of the United States only if— 

19 ‘‘(1) the vessel is wholly owned by citizens of the United States for 

20 purposes of engaging in the coastwise trade; 

21 ‘‘(2) the charterer, if any, is a citizen of the United States for purposes 

22 of engaging in the coastwise trade; and 

23 ‘‘(3) the vessel has been issued a certificate of documentation with a 

24 coastwise endorsement under chapter 121 of this title or is exempt from 

25 documentation but would otherwise be eligible for such a certificate and 

26 endorsement. 

27 ‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with a registry 

28 endorsement may engage in the dredging of gold in Alaska. 

29 ‘‘(c) PENALTY.—If a vessel is operated in knowing violation of this section, 

30 the vessel and its equipment are liable to seizure by and forfeiture to the 

31 United States Government. 

32 ‘‘§ 55110. Transportation of dredged material 

33 ‘‘Section 55102 of this title applies to the transportation of valueless mate34 rial or dredged material, regardless of whether it has commercial value, from 

35 a point in the United States or on the high seas within the exclusive economic 

36 zone, to another point in the United States or on the high seas within the 

37 exclusive economic zone. 

38 ‘‘§ 55111. Towing 

39 ‘‘(a) IN GENERAL.—Except when towing a vessel in distress, a vessel may 

40 not do any part of any towing described in subsection (b) unless the towing 

41 vessel— 
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1 ‘‘(1) is wholly owned by citizens of the United States for purposes of 

2 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 places 

11 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 another 

15 point in the United States or on the high seas within the exclusive eco16 nomic zone. 

17 ‘‘(c) PENALTIES.— 

18 ‘‘(1) OWNER AND MASTER.—The owner and master of a vessel towing 

19 another vessel in violation of this section are each liable for a penalty 

20 of at least $350 but not more than $1,100. A penalty under this para21 graph constitutes a lien on the vessel. The lien is enforceable in a district 

22 court of the United States for any district in which the vessel is found. 

23 Clearance may not be granted to the vessel until the penalties have been 

24 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 tonnage 

27 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 vessel 

30 of the United States may perform the following escort vessel operations within 

31 the navigable waters of the United States: 

32 ‘‘(1) Operations that commence or terminate at a port or place in the 

33 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 op38 erated by the St. Lawrence Seaway Development Corporation on the St. 

39 Lawrence River portion of the Seaway. 

40 ‘‘(b) ESCORT VESSELS.—For purposes of this section, an escort vessel is— 
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1 ‘‘(1) any vessel that is assigned and dedicated to assist another vessel, 

2 whether or not tethered to that vessel, solely as a safety precaution to 

3 assist in controlling the speed or course of the assisted vessel in the event 

4 of a steering or propulsion equipment failure, or any other similar emer5 gency circumstance, or in restricted waters where additional assistance 

6 in maneuvering the vessel is required to ensure its safe operation; and 

7 ‘‘(2) in the case of a vessel being towed under section 55111 of this 

8 title, any vessel that is assigned and dedicated to the vessel being towed 

9 in addition to any towing vessel required under that section. 

10 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section does not affect section 

11 55111 of this title. 

12 ‘‘(d) PENALTY.—A person violating this section is liable to the Government 

13 for a civil penalty of not more than $10,000 for each day during which the 

14 violation occurs. 

15 ‘‘§ 55113. Use of foreign documented oil spill response vessels 

16 ‘‘Notwithstanding any other provision of law, an oil spill response vessel 

17 documented under the laws of a foreign country may operate in waters of the 

18 United States on an emergency and temporary basis, for the purpose of recov19 ering, transporting, and unloading in a United States port oil discharged as 

20 a result of an oil spill in or near those waters, if— 

21 ‘‘(1) an adequate number and type of oil spill response vessels docu22 mented under the laws of the United States cannot be engaged to recover 

23 oil from an oil spill in or near those waters in a timely manner, as de24 termined by the Federal On-Scene Coordinator for a discharge or threat 

25 of a discharge of oil; and 

26 ‘‘(2) the foreign country has by its laws accorded to vessels of the 

27 United States the same privileges accorded to vessels of the foreign coun28 try under this section. 

29 ‘‘§ 55114. Unloading fish from foreign vessels 

30 ‘‘(a) PROHIBITIONS.—Except as otherwise provided by this section or a 

31 treaty or convention to which the United States Government is a party, a 

32 foreign vessel may not unload, in a port of the United States— 

33 ‘‘(1) its catch of fish taken on board on the high seas or fish products 

34 processed from that catch of fish; or 

35 ‘‘(2) fish or fish products taken on board that vessel on the high seas 

36 from a vessel engaged in fishing operations or the processing of fish or 

37 fish products. 

38 ‘‘(b) REGULATIONS ON OBTAINING INFORMATION.—The Secretary of Com39 merce may prescribe regulations the Secretary considers necessary to obtain 

40 information on the transportation of fish products by vessels of the United 

41 States for foreign fish processing vessels to points in the United States. 
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1 ‘‘(c) VIRGIN ISLANDS EXEMPTION.—A foreign vessel of not more than 50 

2 feet overall in length may unload its catch of fresh fish (whole or with the 

3 heads, viscera, or fins removed, but not frozen, otherwise processed, or further 

4 advanced) in a port of the Virgin Islands for immediate consumption in those 

5 islands. Fish unloaded under this subsection may be sold or transferred only 

6 for immediate consumption. In the absence of satisfactory evidence that a sale 

7 or transfer to an agent, representative, or employee of a freezer or cannery 

8 is for immediate consumption, the sale or transfer is deemed not to be for 

9 immediate consumption. This subsection does not prohibit the freezing, smok10 ing, or other processing of fresh fish by the ultimate consumer of the fish. 

11 ‘‘(d) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded in the Virgin 

12 Islands that are retained, sold, or transferred, except as allowed by subsection 

13 (c), are liable to seizure by and forfeiture to the Government. A person retain14 ing, selling, transferring, buying, or receiving the fish is liable to the Govern15 ment for a civil penalty of not more than $1,000 for each violation. A penalty 

16 or forfeiture under this section may be compromised, modified, or remitted 

17 under section 2107(b) of this title. 

18 ‘‘§ 55115. Supplies on fish processing vessels 

19 ‘‘Section 55102 of this title does not apply to supplies aboard a United 

20 States documented fish processing vessel that are necessary and used for proc21 essing or assembling fishery products aboard such a vessel. 

22 ‘‘§ 55116. Canadian rail lines 

23 ‘‘Section 55102 of this title does not apply to the transportation of mer24 chandise between points in the continental United States, including Alaska, 

25 over through routes in part over Canadian rail lines and connecting water 

26 facilities if the routes have been recognized by the Surface Transportation 

27 Board and rate tariffs for the routes have been filed with the Board. 

28 ‘‘§ 55117. Great Lakes rail route 

29 ‘‘Section 55102 of this title does not apply to the transportation of mer30 chandise loaded on a railroad car or to a motor vehicle with or without a 

31 trailer, and with its passengers or contents when accompanied by the oper32 ator, when the railroad car or motor vehicle is transported in a railroad car 

33 ferry operated between fixed terminals on the Great Lakes as part of a rail 

34 route, if— 

35 ‘‘(1) the car ferry is owned by a common carrier by water and oper36 ated as part of a rail route with the approval of the Surface Transpor37 tation Board; 

38 ‘‘(2) the stock of the common carrier by water, or its predecessor, was 

39 owned or controlled by a common carrier by rail prior to June 5, 1920; 
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1 ‘‘(3) the stock of the common carrier owning the car ferry is, with the 

2 approval of the Board, now owned or controlled by a common carrier 

3 by rail; and 

4 ‘‘(4) the car ferry is built in and documented under the laws of the 

5 United States. 

6 ‘‘§ 55118. Foreign railroads whose road enters by ferry, tug7 boat, or towboat 

8 ‘‘A foreign railroad, whose road enters the United States by ferry, tugboat, 

9 or towboat, may own and operate a vessel not having a coastwise endorsement 

10 in connection with the water transportation of the passenger, freight, express, 

11 baggage, and mail cars used by that road, together with the passengers, 

12 freight, express matter, baggage, and mails transported in those cars. How13 ever, the foreign railroad is subject to the same restrictions imposed by law 

14 on a vessel of the United States entering a port of the United States from 

15 the same foreign country. Except as otherwise authorized by this chapter, the 

16 ferry, tugboat, or towboat may not, under penalty of forfeiture, be used in 

17 the transportation of merchandise between ports or places in the United 

18 States to which the coastwise laws apply. 

19 ‘‘§ 55119. Yukon River 

20 ‘‘Section 55102 of this title does not apply to the transportation of mer21 chandise on the Yukon River until the Alaska Railroad is completed and the 

22 Secretary of Transportation finds that proper facilities will be available for 

23 transportation by citizens of the United States to properly handle the traffic. 

24 ‘‘§ 55120. Transshipment of imported merchandise intended 

25 for immediate exportation 

26 ‘‘The Secretary of Homeland Security may prescribe regulations for the 

27 transshipment and transportation of merchandise that is imported into the 

28 United States by sea for immediate exportation to a foreign port by sea, or 

29 by a river, the right to ascend or descend which for the purposes of commerce 

30 is secured by treaty to the citizens of the United States and the subjects of 

31 a foreign power. 

32 ‘‘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. 
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‘‘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. 

1 ‘‘SUBCHAPTER I—GENERAL 

2 ‘‘§ 55301. Priority loading for coal 

3 ‘‘A vessel engaged in the coastwise transportation of coal produced in the 

4 United States, from a port in the United States to another port in the United 

5 States, shall be given priority in loading at any of those ports ahead of a 

6 waiting vessel engaged in the export transportation of coal produced in the 

7 United States. However, if the Secretary of Transportation finds that it is 

8 in the national interest, the Secretary may eliminate this priority loading at 

9 any port. The Secretary shall report to Congress within 30 days an action 

10 eliminating priority loading under this section. 

11 ‘‘§ 55302. Transportation of United States Government per12 sonnel 

13 ‘‘(a) IN GENERAL.—An officer or employee of the United States Govern14 ment traveling by sea on official business overseas or to or from a territory 

15 or possession of the United States shall travel and transport personal effects 

16 on a vessel documented under the laws of the United Sates if such a vessel 

17 is available, unless the necessity of the mission requires the use of a foreign 

18 vessel. 

19 ‘‘(b) REGULATIONS.—The Administrator of General Services shall prescribe 

20 regulations under which agencies may not pay for or reimburse an officer or 

21 employee for travel or transportation expenses incurred on a foreign vessel in 

22 the absence of satisfactory proof of the necessity of using the vessel. 

23 ‘‘§ 55303. Motor vehicles owned by United States Government 

24 personnel 

25 ‘‘Notwithstanding any other law, privately-owned American shipping serv26 ices may be used to transport motor vehicles owned by personnel of the United 

27 States Government whenever transportation of those vehicles at Government 

28 expense is otherwise authorized by law. 

29 ‘‘§ 55304. Exports financed by the United States Government 

30 ‘‘It is the sense of Congress that any loans made by an instrumentality of 

31 the United States Government to foster the exporting of agricultural or other 

32 products shall provide that the products may be transported only on vessels 

33 of the United States unless, as to any or all of those products, the Secretary 

34 of Transportation, after investigation, certifies to the instrumentality that 
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1 vessels of the United States are not available in sufficient number, in suffi2 cient tonnage capacity, on necessary schedules, or at reasonable rates. 

3 ‘‘§ 55305. Cargoes procured, furnished, or financed by the 

4 United States Government 

5 ‘‘(a) DEFINITION.—In this section, the term ‘privately-owned United 

6 States-flag commercial vessel’ does not include a vessel that, after September 

7 21, 1961, was built or rebuilt outside the United States or documented under 

8 the laws of a foreign country, until the vessel has been documented under the 

9 laws of the United States for at least 3 years. 

10 ‘‘(b) MINIMUM TONNAGE.—When the United States Government procures, 

11 contracts for, or otherwise obtains for its own account, or furnishes to or for 

12 the account of a foreign country without provision for reimbursement, any 

13 equipment, materials, or commodities, within or without the United States, 

14 or advances funds or credits, or guarantees the convertibility of foreign cur15 rencies in connection with the furnishing of the equipment, materials, or com16 modities, the appropriate agencies shall take steps necessary and practicable 

17 to ensure that at least 50 percent of the gross tonnage of the equipment, mate18 rials, or commodities (computed separately for dry bulk carriers, dry cargo 

19 liners, and tankers) which may be transported on ocean vessels is transported 

20 on privately-owned United States-flag commercial vessels, to the extent those 

21 vessels are available at fair and reasonable rates for United States-flag com22 mercial vessels, in a manner that will ensure a fair and reasonable participa23 tion of United States-flag commercial vessels in those cargoes by geographic 

24 areas. 

25 ‘‘(c) WAIVERS.—The President, the Secretary of Defense, or Congress (by 

26 concurrent resolution or otherwise) may waive this section temporarily by— 

27 ‘‘(1) declaring the existence of an emergency justifying a waiver; and 

28 ‘‘(2) notifying the appropriate agencies of the waiver. 

29 ‘‘(d) PROGRAMS OF OTHER AGENCIES.—An agency having responsibility 

30 under this section shall administer its programs with respect to this section 

31 under regulations prescribed by the Secretary of Transportation. The Sec32 retary shall review the administration of those programs and report annually 

33 to Congress on their administration. 

34 ‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF AGRICULTURAL 

35 COMMODITIES 

36 ‘‘§ 55311. Findings and purposes 

37 ‘‘(a) FINDINGS.—Congress finds that— 

38 ‘‘(1) a productive and healthy agricultural industry and a strong and 

39 active United States maritime industry are vitally important to the eco40 nomic well-being and security of the United States; 
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1 ‘‘(2) both industries must compete in international markets increas2 ingly dominated by foreign trade barriers and the subsidization practices 

3 of foreign governments; and 

4 ‘‘(3) increased agricultural exports and the use of merchant vessels of 

5 the United States contribute positively to the United States balance of 

6 trade and generate employment opportunities in the United States. 

7 ‘‘(b) PURPOSES.—The purposes of this subchapter are to— 

8 ‘‘(1) enable the Secretary of Agriculture to plan export programs effec9 tively, by clarifying the ocean transportation requirements applicable to 

10 those programs; 

11 ‘‘(2) take immediate and positive steps to promote the growth of the 

12 cargo-carrying capacity of the United States merchant marine; 

13 ‘‘(3) expand international trade in United States agricultural com14 modities and products and develop, maintain, and expand markets for 

15 United States agricultural exports; 

16 ‘‘(4) improve the efficiency of administration of both the commodity 

17 purchasing and selling activities and the ocean transportation activities 

18 associated with export programs sponsored by the Secretary; 

19 ‘‘(5) stimulate and promote the agricultural and maritime industries 

20 of the United States and encourage cooperative efforts by both industries 

21 to address their common problems; and 

22 ‘‘(6) provide for the appropriate disposition of these findings and pur23 poses. 

24 ‘‘§ 55312. Determining prevailing world market price 

25 ‘‘(a) AGRICULTURAL COMMODITIES AND PRODUCTS.—The prevailing world 

26 market price for agricultural commodities or their products shall be deter27 mined under this subchapter under procedures prescribed by the Secretary of 

28 Agriculture. The Secretary shall prescribe the procedures by regulation, with 

29 notice and opportunity for public comment under section 553 of title 5. 

30 ‘‘(b) SERVICES AND NON-AGRICULTURAL COMMODITIES AND PRODUCTS.— 

31 If a determination of the prevailing world market price of any other type of 

32 materials, goods, equipment, or service is required to determine whether a 

33 barter or exchange transaction is subject to section 55314(b)(6) or (7) of this 

34 title, the determination shall be made by the Secretary of Agriculture in con35 sultation with the heads of other appropriate agencies. 

36 ‘‘§ 55313. Exemption of certain agricultural exports from 

37 cargo preference provisions 

38 ‘‘Sections 55304 and 55305 of this title do not apply to export activities 

39 of the Secretary of Agriculture or the Commodity Credit Corporation under 

40 which— 
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1 ‘‘(1) agricultural commodities or their products acquired by the Cor2 poration are made available to United States exporters, users, processors, 

3 or foreign purchasers for the purpose of developing, maintaining, or ex4 panding export markets for United States agricultural commodities or 

5 their products at prevailing world market prices; 

6 ‘‘(2) payments are made available to United States exporters, users, 

7 or processors or, except as provided in section 55314 of this title, cash 

8 grants are made available to foreign purchasers, for the purpose de9 scribed in clause (1); 

10 ‘‘(3) commercial credit guarantees are blended with direct credits from 

11 the Corporation to reduce the effective rate of interest on export sales of 

12 United States agricultural commodities or their products; 

13 ‘‘(4) credit or credit guarantees for not more than 3 years are extended 

14 by the Corporation to finance or guarantee export sales of United States 

15 agricultural commodities or their products; or 

16 ‘‘(5) agricultural commodities or their products owned or controlled by 

17 or under loan from the Corporation are exchanged or bartered for mate18 rials, goods, equipment, or services at least equal in value to the agricul19 tural commodities or their products for which they are exchanged or 

20 bartered (determined on the basis of prevailing world market prices at 

21 the time of the exchange or barter), but this clause does not exempt from 

22 the cargo preference provisions referred to in section 55314(b) of this title 

23 any requirement otherwise applicable to the materials, goods, equipment, 

24 or services imported under the transaction. 

25 ‘‘§ 55314. Transportation requirements for certain exports 

26 sponsored by the Secretary of Agriculture 

27 ‘‘(a) MINIMUM TONNAGE.— 

28 ‘‘(1) IN GENERAL.—In addition to the requirement under section 

29 55305 of this title for the transportation of a percentage of gross tonnage 

30 on United States-flag vessels, 25 percent of the gross tonnage of agricul31 tural commodities or their products specified in subsection (b) shall be 

32 transported each calendar year on United States-flag commercial vessels 

33 that— 

34 ‘‘(A) are necessary for national security; and 

35 ‘‘(B) if more than 25 years old, were rebuilt within the last 5 

36 years and certified by the Secretary of Transportation as having a 

37 useful life of at least 5 years after that rebuilding. 

38 ‘‘(2) CALENDAR YEAR.—To provide for effective and equitable admin39 istration of the cargo preference laws, the calendar year for the purpose 

40 of compliance with minimum percentage requirements is the 12-month 

41 period beginning October 1 of each year. 
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1 ‘‘(b) APPLICABLE EXPORT ACTIVITY.—This section applies to export activ2 ity (except inspection or weighing activities, other activities carried out for 

3 health or safety, or technical assistance provided in the handling of commer4 cial transactions) of the Secretary of Agriculture or the Commodity Credit 

5 Corporation— 

6 ‘‘(1) carried out under the Agricultural Trade Development and As7 sistance Act of 1954 (7 U.S.C. 1691 et seq.); 

8 ‘‘(2) carried out under section 416 of the Agricultural Act of 1949 (7 

9 U.S.C. 1431); 

10 ‘‘(3) carried out under the Bill Emerson Humanitarian Trust Act (7 

11 U.S.C. 1736f–1); 

12 ‘‘(4) under which agricultural commodities or their products are— 

13 ‘‘(A) donated through foreign governments or private or public 

14 agencies, including intergovernmental organizations; or 

15 ‘‘(B) sold for foreign currencies or for dollars on credit terms of 

16 more than 10 years; 

17 ‘‘(5) under which agricultural commodities or their products are made 

18 available for emergency food relief at less than prevailing world market 

19 prices; 

20 ‘‘(6) under which a cash grant is made directly or through an inter21 mediary to a foreign purchaser to enable the purchaser to obtain United 

22 States agricultural commodities or their products in an amount greater 

23 than the difference between the prevailing world market price and the 

24 United States market price, free along side vessel at a United States 

25 port; or 

26 ‘‘(7) under which agricultural commodities owned or controlled by or 

27 under loan from the Corporation are exchanged or bartered for materials, 

28 goods, equipment, or services produced in foreign countries, except export 

29 activities described in section 55313(5) of this title. 

30 ‘‘(c) ADDITIONAL REQUIREMENTS.— 

31 ‘‘(1) APPLICATION OF SECTION 55305.—The requirement for United 

32 States-flag transportation under subsection (a) is subject to the same 

33 terms and conditions as provided in section 55305 of this title. 

34 ‘‘(2) ALLOCATION OF COMMODITIES.—Subject to paragraph (3), in 

35 carrying out this section and section 55305 of this title, the Corporation 

36 shall take steps necessary and practicable, and consistent with this sec37 tion and section 55305, without detriment to any port range to allocate, 

38 on the principle of lowest landed cost without regard to the country of 

39 documentation of the vessel, 25 percent of the bagged, processed, or for40 tified commodities provided under title II of the Agricultural Trade De41 velopment and Assistance Act of 1954 (7 U.S.C. 1721 et seq.). 
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1 ‘‘(3) CALCULATIONS.—In carrying out paragraph (2), first there shall 

2 be calculated the allocation of 100 percent of the quantity to be procured 

3 on an overall lowest landed cost basis without regard to the country of 

4 documentation of the vessel, and then there shall be allocated to the Great 

5 Lakes port range any cargoes for which it has the lowest landed cost 

6 under that calculation. The requirements for United States-flag transpor7 tation under this section and section 55305 of this title do not apply to 

8 commodities allocated to the Great Lakes port range under paragraph 

9 (2). To the extent that the Great Lakes port range is used to furnish and 

10 transport less than 25 percent of the total annual tonnage of commodities 

11 to which paragraph (2) applies, the commodities allocated to the Great 

12 Lakes port range under paragraph (2) may not be reallocated or diverted 

13 to another port range to meet the requirements for United States-flag 

14 transportation under this section and section 55305 of this title. 

15 ‘‘(4) AWARDING CONTRACTS.—In awarding a contract for the trans16 portation by vessel of commodities from the Great Lakes port range pur17 suant to an export activity referred to in subsection (b), an agency— 

18 ‘‘(A) shall consider expressions of freight interest for any vessel 

19 from a vessel operator who meets reasonable requirements for finan20 cial and operational integrity; and 

21 ‘‘(B) may not deny award of the contract to a person based on 

22 the type of vessel on which the transportation would be provided 

23 (including on the basis that the transportation would not be pro24 vided on a liner vessel, as that term is used in the Shipping Act 

25 of 1984, as in effect on November 14, 1995), if the person otherwise 

26 satisfies reasonable requirements for financial and operational in27 tegrity. 

28 ‘‘(5) NONAVAILABILITY OF VESSELS.—A determination of nonavail29 ability of United States-flag vessels resulting from the application of this 

30 subsection may not reduce the gross tonnage of commodities required by 

31 this section and section 55305 of this title to be transported on United 

32 States-flag vessels. 

33 ‘‘§ 55315. Minimum tonnage 

34 ‘‘(a) DEFINITION.—In this section, the term ‘base period’ means the 5-year 

35 period running from the sixth through the second prior fiscal years. 

36 ‘‘(b) REQUIREMENT.—For each fiscal year, the minimum quantity of agri37 cultural commodities to be exported under programs subject to section 55314 

38 of this title is the average of the tonnage exported under those programs dur39 ing the base period, discarding the high and low years. 

40 ‘‘(c) WAIVERS.—The President may waive the minimum quantity for a fis41 cal year under this section if the President determines and reports to Con-
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1 gress, together with reasons, that the quantity cannot be used effectively for 

2 the purposes of those programs or, based on a certification by the Secretary 

3 of Agriculture, that the commodities are not available for reasons that include 

4 the unavailability of funds. 

5 ‘‘§ 55316. Financing the transportation of agricultural com6 modities 

7 ‘‘(a) FINANCING OF INCREASED CHARGES.—The Secretary of Transpor8 tation shall finance any increased ocean freight charges incurred in any fiscal 

9 year that result from the application of section 55314 of this title. 

10 ‘‘(b) REIMBURSEMENT OF INCREASED CHARGES.— 

11 ‘‘(1) IN GENERAL.—The Secretary of Transportation shall reimburse 

12 the Secretary of Agriculture and the Commodity Credit Corporation for 

13 the amount by which, in any fiscal year— 

14 ‘‘(A) the total cost of ocean freight and ocean freight differential 

15 for which obligations are incurred by the Secretary of Agriculture 

16 and the Corporation on exports of agricultural commodities and 

17 their products under the agricultural export programs specified in 

18 section 55314(b) of this title; exceeds 

19 ‘‘(B) 20 percent of the value of the commodities and their prod20 ucts and the cost of the ocean freight and ocean freight differential 

21 on which obligations are incurred by the Secretary of Agriculture 

22 and the Corporation during that fiscal year. 

23 ‘‘(2) COMMODITIES SHIPPED FROM INVENTORY.—For purposes of this 

24 subsection, commodities shipped from the inventory of the Corporation 

25 shall be valued as provided in section 412(d) of the Agricultural Trade 

26 Development and Assistance Act of 1954 (7 U.S.C. 1736f(d)). 

27 ‘‘(c) ISSUANCE AND PURCHASE OF OBLIGATIONS.— 

28 ‘‘(1) ISSUANCE.—To meet the expenses required to be assumed under 

29 subsections (a) and (b), the Secretary of Transportation shall issue obli30 gations to the Secretary of the Treasury. The Secretary of Transpor31 tation, with the approval of the Secretary of the Treasury, shall prescribe 

32 the form, denomination, maturity, and other terms (except the interest 

33 rate) of the obligations. The Secretary of the Treasury shall set the inter34 est rate for the obligations, considering the average market yield on out35 standing marketable obligations of the United States Government of com36 parable maturities during the month before the obligations are issued. 

37 ‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the ob38 ligations issued under this subsection. To purchase the obligations, the 

39 Secretary of the Treasury may use as a public debt transaction the pro40 ceeds from the sale of securities issued under chapter 31 of title 31. The 

41 purposes for which securities may be issued under that chapter are ex-
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1 tended to include the purchase of obligations under this subsection. A re2 demption or purchase of the obligations by the Secretary of the Treasury 

3 is a public debt transaction of the Government. 

4 ‘‘(d) SOURCE OF FUNDS FOR REIMBURSEMENT.—Reimbursement of the 

5 Secretary of Transportation for costs incurred under this section shall be 

6 made with appropriated funds rather than through cancellation of notes. 

7 ‘‘(e) APPROPRIATIONS.— 

8 ‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized to be ap9 propriated an amount sufficient to reimburse the Secretary of Transpor10 tation for the costs incurred under this section, including administrative 

11 expenses and the principal and interest due on obligations issued to the 

12 Secretary of the Treasury. 

13 ‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each fiscal 

14 year, such amounts as may be necessary are hereby appropriated to pay 

15 interest and to liquidate debt on obligations issued to the Secretary of 

16 the Treasury under this section. 

17 ‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary of 

18 Transportation is unable to obtain the funds necessary to finance the in19 creased ocean freight charges resulting from the requirements of subsections 

20 (a) and (b) and section 55314(a) of this title, the Secretary shall notify Con21 gress within 10 working days of the discovery of the insufficiency. 

22 ‘‘§ 55317. Termination of subchapter 

23 ‘‘This subchapter terminates 90 days after the date on which a notification 

24 is made under section 55316(f) of this title, except for shipments of agricul25 tural commodities and their products subject to contracts made before the end 

26 of that 90-day period, unless within that 90-day period the Secretary of 

27 Transportation proclaims that funds are available to finance increased freight 

28 charges resulting from the requirements of sections 55314(a) and 55316(a) 

29 and (b) of this title. On the termination of this subchapter under this sec30 tion— 

31 ‘‘(1) this subchapter does not exempt export activities from, or subject 

32 export activities to, the cargo preference laws; and 

33 ‘‘(2) the 50-percent requirement in section 55305 of this title remains 

34 in effect. 

35 ‘‘§ 55318. Effect on other law 

36 ‘‘This subchapter does not affect chapter 5 of title 5. 

37 ‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 

38 ‘‘§ 55331. Definitions 

39 ‘‘In this subchapter: 
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1 ‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American Great 

2 Lakes vessel’ means a vessel so designated under section 55332 of this 

3 title, but only during the period the designation is in effect. 

4 ‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake Superior, 

5 Lake Michigan, Lake Huron, Lake Erie, Lake Ontario, the Saint Law6 rence River west of Saint Regis, New York, and their connecting and 

7 tributary waters. 

8 ‘‘(3) GREAT LAKES SHIPPING SEASON.—The term ‘Great Lakes ship9 ping season’ means the period each year during which the Saint Law10 rence Seaway is open for navigation by vessels, as declared by the Saint 

11 Lawrence Seaway Development Corporation. 

12 ‘‘§ 55332. Designating American Great Lakes vessels 

13 ‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a 

14 vessel as an American Great Lakes vessel if— 

15 ‘‘(1) an application for designation is submitted to the Secretary 

16 under regulations prescribed by the Secretary; 

17 ‘‘(2) the vessel is documented under the laws of the United States; 

18 ‘‘(3) the vessel, on the effective date of the designation, is— 

19 ‘‘(A) at least 1, but not more than 6, years old; or 

20 ‘‘(B) at least 1, but not more than 11, years old if the Secretary 

21 finds that suitable vessels are not available to provide the type of 

22 service for which the vessel will be used after the designation; 

23 ‘‘(4) the vessel has not previously been designated as an American 

24 Great Lakes vessel; and 

25 ‘‘(5) the owner makes an agreement as provided under subsection (b). 

26 ‘‘(b) AGREEMENTS.—A vessel may be designated as an American Great 

27 Lakes vessel only if the person that will be the owner of the vessel at the time 

28 of the designation makes an agreement with the Secretary providing that if 

29 the Secretary determines that the vessel is necessary to the defense of the 

30 United States, the United States Government will have an exclusive right, 

31 during the 120-day period following the date of a revocation of the designa32 tion under section 55335 of this title, to purchase the vessel for a price equal 

33 to the greater of— 

34 ‘‘(1) the approximate world market value of the vessel; or 

35 ‘‘(2) the cost of the vessel to the owner less a reasonable amount for 

36 depreciation. 

37 ‘‘(c) CERTAIN FOREIGN DOCUMENTATION AND SALE NOT PROHIBITED.— 

38 Notwithstanding any other law, if the Government does not exercise its right 

39 of purchase under an agreement under subsection (b), the owner of the vessel 

40 is not prohibited from— 

41 ‘‘(1) documenting the vessel under the laws of a foreign country; or 
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1 ‘‘(2) selling the vessel to a person not a citizen of the United States. 

2 ‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations establishing 

3 requirements for submitting applications under this section. 

4 ‘‘§ 55333. Exemption from restriction on transporting certain 

5 cargo 

6 ‘‘The 3-year documentation requirement of section 55305(a) of this title 

7 does not apply to a vessel designated as an American Great Lakes vessel dur8 ing the period of its designation. 

9 ‘‘§ 55334. Restrictions on operations 

10 ‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an American 

11 Great Lakes vessel may not be used to— 

12 ‘‘(1) engage in trade— 

13 ‘‘(A) from a port in the United States that is not located on the 

14 Great Lakes; or 

15 ‘‘(B) between ports in the United States; 

16 ‘‘(2) transport bulk cargo (as defined in section 40102 of this title) 

17 that is subject to section 55305 or 55314 of this title or section 2631 of 

18 title 10; or 

19 ‘‘(3) provide a service (except ocean freight service) as— 

20 ‘‘(A) a contract carrier; or 

21 ‘‘(B) a common carrier on a fixed advertised schedule offering fre22 quent sailings at regular intervals in the foreign trade of the United 

23 States. 

24 ‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel may be 

25 used for not more than 90 days during any 12-month period to engage in 

26 trade prohibited by subsection (a)(1)(A), except during the Great Lakes ship27 ping season. 

28 ‘‘§ 55335. Revocations and terminations of designations 

29 ‘‘(a) REVOCATIONS.—After notice and an opportunity for a hearing, the 

30 Secretary of Transportation may revoke a designation of a vessel as an Amer31 ican Great Lakes vessel if the Secretary finds that— 

32 ‘‘(1) the vessel does not meet a requirement for the designation; 

33 ‘‘(2) the vessel has been operated in violation of this subchapter; or 

34 ‘‘(3) the owner or operator of the vessel has violated an agreement 

35 made under section 55332(b) of this title. 

36 ‘‘(b) TERMINATIONS.—On petition and a showing of good cause by the 

37 owner of a vessel, the Secretary may terminate the designation of a vessel as 

38 an American Great Lakes vessel. The Secretary may impose conditions in a 

39 termination order to prevent significant adverse effects on other operators of 

40 United States-flag vessels. 
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1 ‘‘§ 55336. Civil penalty 

2 ‘‘After notice and an opportunity for a hearing, the Secretary of Transpor3 tation may impose a civil penalty of not more than $1,000,000 on the owner 

4 of an American Great Lakes vessel for any act for which the designation may 

5 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 sell 

10 the products of United States business and agriculture at foreign ports and 

11 at other commercial centers throughout the world where the operators of the 

12 fairs use, insofar as practicable, vessels and aircraft of the United States in 

13 transporting their exhibits. 

14 ‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary deter15 mines that a mobile trade fair provides an economical and effective means 

16 of promoting export sales, the Secretary may provide to the operator of the 

17 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 and 

21 aircraft. 

22 ‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section, the Presi23 dent may use, in addition to amounts appropriated to carry out trade pro24 motion activities, foreign currencies owned by or owed to the United States 

25 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, sec31 tion 12119 of this title, or section 611 of the Merchant Marine Act, 1936, 

32 a person may not, without the approval of the Secretary of Transpor33 tation— 

34 ‘‘(A) sell, lease, charter, deliver, or in any other manner transfer, 

35 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 authority 

8 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 that 

11 has been operated only for pleasure or only as a fishing vessel, fish proc12 essing vessel, or fish tender vessel (as defined in section 2101 of this 

13 title). 

14 ‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing with re15 spect to a vessel to be documented under chapter 121 of this title, the Sec16 retary 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 reg21 istry 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 ap26 propriate, 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 date 

29 of that documentation; or 

30 ‘‘(2) an operating agreement covering the vessel under chapter 531 of 

31 this title has expired. 

32 ‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or transfer 

33 of a vessel, or of an interest in or control of a vessel, in violation of this sec34 tion is void. 

35 ‘‘(e) PENALTIES.— 

36 ‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells, charters, or 

37 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 than 

39 5 years, or both. 

40 ‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a ves41 sel, or an interest in or control of a vessel, in violation of this section 
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1 is liable to the United States Government for a civil penalty of not more 

2 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 inter6 est in or control of the vessel; or 

7 ‘‘(B) places the vessel under foreign registry or operates the vessel 

8 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 Sec13 retary of Transportation— 

14 ‘‘(1) place under foreign registry or flag a vessel owned in whole or 

15 in part by a citizen of the United States or a corporation incorporated 

16 under 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 other 

19 manner transfer, to a person not a citizen of the United States— 

20 ‘‘(A) a vessel owned as described in clause (1), or an interest 

21 therein; 

22 ‘‘(B) a vessel documented under the laws of the United States, or 

23 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 or 

30 repairing vessels to a trustee, unless the trustee or a substitute trustee 

31 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 vested 

37 in, or for the benefit of, a person not a citizen of the United States the 

38 controlling interest in a corporation that is incorporated under the laws 

39 of the United States or a State and that owns a vessel or facility for 

40 building or repairing vessels; or 
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1 ‘‘(6) cause or procure a vessel, constructed in whole or in part in the 

2 United States and never cleared for a foreign port, to depart from a port 

3 of the United States before it has been documented under the laws of the 

4 United States. 

5 ‘‘(b) TRUSTEES.— 

6 ‘‘(1) APPROVAL.—The Secretary shall approve a trustee or substitute 

7 trustee under subsection (a)(3) if and only if the trustee is a bank or 

8 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 State 

15 authority; and 

16 ‘‘(E) has a combined capital and surplus (as set forth in its most 

17 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 trust20 ee or substitute trustee. After the disapproval, the restrictions on transfer 

21 or assignment without the Secretary’s approval in subsection (a)(3) 

22 apply. 

23 ‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) 

24 applies, a trustee referred to in subsection (a)(3), even though approved 

25 as a trustee by the Secretary, may not operate the vessel under the mort26 gage or assignment without the Secretary’s approval. 

27 ‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in violation of 

28 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 the 

32 consideration after tender of the vessel, facility, stock, or other security, 

33 or interest therein, to the person entitled to it, or the forfeiture thereof 

34 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 con2 spires to violate, this section shall be fined under title 18, imprisoned 

3 for not more than 5 years, or both. 

4 ‘‘(2) FORFEITURE.—The following shall be forfeited to the Government: 

5 ‘‘(A) A vessel, a facility for building or repairing vessels, or an 

6 interest in a vessel or such a facility, that is sold, mortgaged, leased, 

7 chartered, delivered, transferred, or documented, or agreed to be sold, 

8 mortgaged, leased, chartered, delivered, transferred, or documented, 

9 in violation of this section. 

10 ‘‘(B) Stock and other securities sold or transferred, or agreed to 

11 be sold or transferred, in violation of this section. 

12 ‘‘(C) A vessel departing in violation of subsection (a)(6). 

13 ‘‘§ 56103. Conditional approvals 

14 ‘‘(a) IN GENERAL.—In approving an act or transaction under section 

15 56101 or 56102 of this title, the Secretary of Transportation may do so abso16 lutely or upon conditions the Secretary considers advisable. The Secretary 

17 shall state the conditions in the notice of approval. 

18 ‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the 

19 same penalties as a violation resulting from an act done without the required 

20 approval. The violation occurs at the time the condition is violated. 

21 ‘‘§ 56104. Penalty for false statements 

22 ‘‘A person that knowingly makes a false statement of a material fact to the 

23 Secretary of Transportation or another officer, employee, or agent of the De24 partment of Transportation, to obtain the Secretary’s approval under section 

25 56101 or 56102 of this title, shall be fined under title 18, imprisoned for not 

26 more than 5 years, or both. 

27 ‘‘§ 56105. Forfeiture procedure 

28 ‘‘(a) IN GENERAL.—A forfeiture under this chapter may be enforced in the 

29 same way as a forfeiture under the laws on the collection of duties. However, 

30 such a forfeiture may be remitted without seizure of the vessel. 

31 ‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter to enforce 

32 a forfeiture, a prior criminal conviction of a person for a violation of this 

33 chapter with respect to the subject matter of the forfeiture is prima facie evi34 dence of the violation against the person convicted. 

35 ‘‘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 construc7 tion 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 requisition 

11 or as soon thereafter as the situation allows, shall offer the person entitled 

12 to possession of the vessel a charter containing— 

13 ‘‘(1) the terms the Secretary believes should govern the relationship be14 tween the United States Government and the person; and 

15 ‘‘(2) the rate of hire the Secretary considers just compensation for the 

16 use of the vessel and the services required under the charter. 

17 ‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the charter and 

18 rate of hire, the parties shall proceed as provided in section 56304 of this title. 

19 ‘‘§ 56303. Compensation 

20 ‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of Transportation 

21 shall determine and pay just compensation for a vessel requisitioned under 

22 this chapter. 

23 ‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel may not be 

24 considered enhanced by the circumstances requiring its requisition. Con25 sequential damages arising from the requisition may not be paid. 

26 ‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.— 

27 ‘‘(1) IF PAID.—If a construction-differential subsidy has been paid for 

28 the vessel, the value of the vessel at the time of requisition shall be deter29 mined under section 802 of the Merchant Marine Act, 1936. 

30 ‘‘(2) IF NOT PAID.—If a construction-differential subsidy has not been 

31 paid for the vessel, the value of any national defense features previously 

32 paid for by the United States Government shall be excluded. 

33 ‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost or damaged 

34 by a risk assumed by the Government under the charter, but a valuation for 

35 the vessel or a means of compensation has not been agreed to, the Secretary 

36 shall pay just compensation for the loss or damage, to the extent the person 

37 is not reimbursed through insurance. 

38 ‘‘§ 56304. Disputed compensation 

39 ‘‘If the person entitled to compensation disputes the amount of just com40 pensation determined by the Secretary of Transportation under this chapter, 

41 the Secretary shall pay the person, as a tentative advance, 75 percent of the 
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1 amount determined. The person may bring a civil action against the United 

2 States Government to recover just compensation. If the tentative advance paid 

3 under this section is greater than the amount of the court’s judgment, the per4 son shall refund the difference. 

5 ‘‘§ 56305. Vessel encumbrances 

6 ‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel does not 

7 prevent the requisition of the vessel under this chapter. 

8 ‘‘(b) DEPOSIT IN TREASURY.— 

9 ‘‘(1) IN GENERAL.—If an encumbrance exists, the Secretary of Trans10 portation may deposit part of the compensation or advance of compensa11 tion to be paid under this chapter (but not more than the total amount 

12 of all encumbrances) in a fund in the Treasury. The Secretary shall pub13 lish notice of the creation of the fund in the Federal Register. 

14 ‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts deposited in 

15 the fund shall be available to pay the compensation or any of the encum16 brances (including encumbrances stipulated to in a court of the United 

17 States or a State) existing at the time the vessel was requisitioned. 

18 ‘‘(c) CIVIL ACTION.— 

19 ‘‘(1) IN GENERAL.—Within 6 months after publication of notice under 

20 subsection (b), the holder of an encumbrance may bring a civil action 

21 in admiralty, according to the principles of libels in rem, against the 

22 fund. 

23 ‘‘(2) VENUE.—The action must be brought in the district court of the 

24 United States— 

25 ‘‘(A) from whose custody the vessel was or may be requisitioned; 

26 or 

27 ‘‘(B) in whose district the vessel was located when it was requi28 sitioned. 

29 ‘‘(3) SERVICE OF PROCESS.—Service of process shall be made on the 

30 appropriate United States Attorney, the Attorney General, and the Sec31 retary, in the manner provided by the Federal Rules of Civil Procedure 

32 (28 App. U.S.C.). Notice of the action shall be given to all interested per33 sons as ordered by the court. 

34 ‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and 

35 be determined according to the principles of law and the rules of practice 

36 applicable in like cases between private parties. 

37 ‘‘§ 56306. Use and transfer of vessels 

38 ‘‘(a) IN GENERAL.—The Secretary of Transportation may repair, recondi39 tion, reconstruct, operate, or charter for operation, a vessel acquired under 

40 this chapter. 
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1 ‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may transfer the 

2 possession or control of a vessel acquired under this chapter to another depart3 ment or agency of the United States Government on terms and conditions ap4 proved by the President. The department or agency shall promptly reimburse 

5 the Secretary for expenditures for just compensation, purchase price, charter 

6 hire, repairs, reconditioning, or reconstruction. 

7 ‘‘§ 56307. Return of vessels 

8 ‘‘When a vessel requisitioned for use but not ownership is returned to the 

9 owner, the Secretary of Transportation shall— 

10 ‘‘(1) return the vessel in a condition at least as good as when taken, 

11 less ordinary wear and tear; or 

12 ‘‘(2) pay the owner an amount sufficient to recondition the vessel to 

13 that condition, less ordinary wear and tear. 

14 ‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY 

15 NEUTRALITY ACT 

‘‘Sec. 

‘‘56501. Definition. 

‘‘56502. Adjusting obligations and arranging maintenance. 

‘‘56503. Types of adjustments and arrangements. 

‘‘56504. Changes in adjustments and arrangements. 

16 ‘‘§ 56501. Definition 

17 ‘‘In this chapter, the term ‘essential vessel’ means a vessel that is— 

18 ‘‘(1)(A) security for a mortgage indebtedness to the United States Gov19 ernment; or 

20 ‘‘(B) constructed under this subtitle or required by a contract under 

21 this subtitle to be operated on a certain essential foreign trade route; and 

22 ‘‘(2) necessary in the interests of commerce and national defense to be 

23 maintained in condition for prompt use. 

24 ‘‘§ 56502. Adjusting obligations and arranging maintenance 

25 ‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of 

26 Transportation may adjust obligations and arrange for maintenance of an es27 sential vessel as provided in this chapter if the Secretary determines, after 

28 any investigation or proceeding the Secretary considers desirable, that— 

29 ‘‘(1) the operation of the vessel in the service, route, or line to which 

30 it is assigned under this subtitle, or in which it otherwise would be oper31 ated, is not— 

32 ‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 et 

33 seq.) or a proclamation issued under that Act; or 

34 ‘‘(B) compatible with maintaining the availability of the vessel 

35 for national defense and commerce; 

36 ‘‘(2) it is not feasible under existing law to employ the vessel in any 

37 other service or operation in foreign or domestic trade (except temporary 

38 or emergency operation under section 56503(b)(5) of this title); and 
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1 ‘‘(3) the applicant, because of the restrictions of the Neutrality Act of 

2 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for national 

3 defense under clause (1), is not earning or will not earn a reasonable 

4 return on the capital necessarily employed in its business. 

5 ‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under subsection 

6 (a) shall continue in effect only as long as the circumstances described in sub7 section (a) continue to exist. 

8 ‘‘§ 56503. Types of adjustments and arrangements 

9 ‘‘(a) SUSPENSION REQUIREMENTS.—An adjustment or arrangement under 

10 this chapter shall include suspension of— 

11 ‘‘(1) the requirement to operate the vessel in foreign trade under the 

12 applicable operating-differential or construction-differential subsidy con13 tract or mortgage or other agreement; and 

14 ‘‘(2) the right to operating-differential subsidy for the vessel. 

15 ‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To the extent 

16 the Secretary of Transportation considers appropriate to carry out the pur17 poses of this subtitle, an adjustment or arrangement under this chapter may 

18 include any of the following: 

19 ‘‘(1) Lay-up of the vessel by the owner or in the custody of the Sec20 retary, with payment or reimbursement by the Secretary of necessary 

21 and proper expenses (including reasonable overhead and insurance) or 

22 a fixed periodic allowance instead of payment or reimbursement. 

23 ‘‘(2) Postponement, for not more than the total period of the lay-up, 

24 of the maturity date of each installment of the principal of obligations 

25 to the United States Government for the vessel (regardless of whether the 

26 maturity date is during a lay-up period), or rearrangement of those ma27 turities. 

28 ‘‘(3) Postponement or cancellation of interest accruing on the obliga29 tions during a lay-up period. 

30 ‘‘(4) Extension, for not more than the total period of the lay-up, of 

31 the 20-year life limitation for the vessel and other limitations and provi32 sions of this subtitle based on a 20-year life. 

33 ‘‘(5) Provision for temporary or emergency employment of the vessel 

34 (instead of lay-up) as may be practicable, with such arrangements for 

35 management of the vessel, payment of expenses, and application of the 

36 proceeds of the employment, as the Secretary may approve, with any pe37 riod of operation being included as part of the lay-up period. 

38 ‘‘(6) Payment to the Secretary, on termination of the arrangements 

39 with the applicant, of the applicant’s net profits (earned while the ar40 rangements were in effect) in excess of 10 percent a year on the capital 

41 necessarily employed in the applicant’s business, as reimbursement for 
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1 obligations postponed or canceled and expenses incurred or paid by the 

2 Secretary under this section. 

3 ‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the applicant 

4 represented by a vessel of the applicant laid-up or operated under this section 

5 shall be included in capital necessarily employed in the applicant’s business. 

6 The Secretary may require a vessel laid-up or operated under this section to 

7 be security for reimbursement. 

8 ‘‘§ 56504. Changes in adjustments and arrangements 

9 ‘‘The Secretary of Transportation may change an adjustment or arrange10 ment made under this chapter as the Secretary considers necessary to carry 

11 out this chapter. 

12 ‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS

13 ‘‘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. 

14 ‘‘§ 57101. Placement of vessels in National Defense Reserve 

15 Fleet 

16 ‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime Administration 

17 shall be placed in the National Defense Reserve Fleet maintained under sec18 tion 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744). 

19 ‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under subsection 

20 (a) may not be traded out or sold from the Fleet, except as provided in section 

21 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this title. 

22 ‘‘§ 57102. Disposition of vessels not worth preserving 

23 ‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that a 

24 vessel owned by the Maritime Administration is of insufficient value for com25 mercial or military operation to warrant its further preservation, the Sec26 retary may scrap the vessel or sell the vessel for cash. 

27 ‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection (a) shall 

28 be made on the basis of competitive sealed bids, after an appraisal and due 

29 advertisement. The purchaser does not have to be a citizen of the United 

30 States. The purchaser shall provide a surety bond, with a surety approved 

31 by the Secretary, to ensure that the vessel will not be operated in the foreign 

32 trade of the United States at any time within 10 years after the sale, in com33 petition with a vessel owned by a citizen of the United States and documented 

34 under the laws of the United States. 
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1 ‘‘§ 57103. Sale of obsolete vessels in National Defense Reserve 

2 Fleet 

3 ‘‘(a) IN GENERAL.—The Secretary of Transportation may convey the right, 

4 title, and interest of the United States Government in any vessel of the Na5 tional Defense Reserve Fleet that has been identified by the Secretary as an 

6 obsolete vessel of insufficient value to warrant its further preservation, if the 

7 recipient— 

8 ‘‘(1) is a non-profit organization, a State, or a municipal corporation 

9 or political subdivision of a State; 

10 ‘‘(2) agrees not to use, or allow others to use, the vessel for commercial 

11 transportation purposes; 

12 ‘‘(3) agrees to make the vessel available to the Government whenever 

13 the Secretary indicates that it is needed by the Government; 

14 ‘‘(4) agrees to hold the Government harmless for any claims arising 

15 from exposure to asbestos, polychlorinated biphenyls, lead paint, or other 

16 hazardous substances after conveyance of the vessel, except for claims 

17 arising from use of the vessel by the Government; 

18 ‘‘(5) has a conveyance plan and a business plan that describes the in19 tended use of the vessel, each of which has been submitted to and ap20 proved by the Secretary; 

21 ‘‘(6) has provided proof, as determined by the Secretary, of resources 

22 sufficient to accomplish the transfer, necessary repairs and modifica23 tions, and initiation of the intended use of the vessel; and 

24 ‘‘(7) agrees that when the recipient no longer requires the vessel for 

25 use as described in the business plan required under clause (5)— 

26 ‘‘(A) the recipient will, at the discretion of the Secretary, re27 convey the vessel to the Government in good condition except for or28 dinary wear and tear; or 

29 ‘‘(B) if the Board of Trustees of the recipient has decided to dis30 solve the recipient according to the laws of the State in which the 

31 recipient is incorporated, then— 

32 ‘‘(i) the recipient shall distribute the vessel, as an asset of 

33 the recipient, to a person that has been determined exempt 

34 from taxation under section 501(c)(3) of the Internal Revenue 

35 Code of 1986 (26 U.S.C. 501(c)(3)), or to the Federal Govern36 ment or a State or local government for a public purpose; and 

37 ‘‘(ii) the vessel shall be disposed of by a court of competent 

38 jurisdiction of the county in which the principal office of the 

39 recipient is located, for such purposes as the court shall deter40 mine, or to such organizations as the court shall determine are 

41 organized exclusively for public purposes. 
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1 ‘‘(b) OTHER EQUIPMENT.—At the Secretary’s discretion, additional equip2 ment from other obsolete vessels of the Fleet may be conveyed to assist the re3 cipient with maintenance, repairs, or modifications. 

4 ‘‘(c) ADDITIONAL TERMS.—The Secretary may require any additional 

5 terms the Secretary considers appropriate. 

6 ‘‘(d) DELIVERY OF VESSEL.—If conveyance is made under this section, the 

7 vessel shall be delivered to the recipient at a time and place to be determined 

8 by the Secretary. The vessel shall be conveyed in an ‘as is’ condition. 

9 ‘‘(e) LIMITATIONS.—If at any time prior to delivery of the vessel to the re10 cipient, the Secretary determines that a different disposition of the vessel 

11 would better serve the interests of the Government, the Secretary shall pursue 

12 the more favorable disposition of the obsolete vessel and shall not be liable for 

13 any damages that may result from an intended recipient’s reliance upon a 

14 proposed transfer. 

15 ‘‘(f) REVERSION.—The Secretary shall include in any conveyance under 

16 this section terms under which all right, title, and interest conveyed by the 

17 Secretary shall revert to the Government if the Secretary determines the vessel 

18 has been used other than as described in the business plan required under sub19 section (a)(5). 

20 ‘‘§ 57104. Acquisition of vessels from sale of obsolete vessels 

21 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire suitable 

22 documented vessels with amounts in the Vessel Operations Revolving Fund de23 rived from the sale of obsolete vessels in the National Defense Reserve Fleet. 

24 ‘‘(b) VALUATION.—The acquired and obsolete vessels shall be valued at their 

25 scrap value in domestic or foreign markets as of the date of the acquisition 

26 for or sale from the Fleet. However, the value assigned to those vessels shall 

27 be determined on the same basis, with consideration given to the fair value 

28 of the cost of moving the vessel sold from the Fleet to the place of scrapping. 

29 ‘‘(c) COSTS INCIDENT TO LAY-UP.—Costs incident to the lay-up of the ves30 sel acquired under this section may be paid from amounts in the Fund. 

31 ‘‘(d) TRANSFERS TO NON-CITIZENS.—A vessel sold from the Fleet under 

32 this section may be scrapped in an approved foreign market without obtain33 ing additional separate approval from the Secretary to transfer the vessel to 

34 a person not a citizen of the United States. 

35 ‘‘§ 57105. Acquisition of vessels for essential services, routes, 

36 or lines 

37 ‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire a vessel, 

38 by purchase or otherwise, if— 

39 ‘‘(1) the Secretary considers the vessel necessary to establish, maintain, 

40 improve, or serve as a replacement on an essential service, route, or line 
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1 in the foreign commerce of the United States, as determined under sec2 tion 50103 of this title; 

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

4 ‘‘(3) the Secretary of the Navy has certified to the Secretary of Trans5 portation that the vessel is suitable for economical and speedy conversion 

6 into a naval or military auxiliary or otherwise suitable for use by the 

7 United States Government in time of war or national emergency. 

8 ‘‘(b) PRICE.—The price paid for the vessel shall be based on a fair and rea9 sonable valuation. However, the price may not exceed by more than 5 percent 

10 the cost of the vessel to the owner (excluding any construction-differential sub11 sidy and the cost of national defense features paid by the Secretary of Trans12 portation) plus the actual cost previously expended for reconditioning, less de13 preciation based on a 25-year life for a dry-cargo or passenger vessel and a 

14 20-year life for a tanker or other liquid bulk carrier vessel. 

15 ‘‘(c) DOCUMENTATION.—A vessel acquired under this section that is not 

16 documented under the laws of the United States at the time of acquisition 

17 shall be so documented as soon as practicable. 

18 ‘‘§ 57106. Maintenance, improvement, and operation of ves19 sels 

20 ‘‘(a) IN GENERAL.—The Secretary of Transportation may maintain, re21 pair, recondition, remodel, and improve vessels owned by the United States 

22 Government and in the possession or under the control of the Secretary, to 

23 equip them adequately for competition in the foreign trade of the United 

24 States. The Secretary may operate such a vessel or charter the vessel on terms 

25 and conditions the Secretary considers appropriate to carry out the purposes 

26 of this subtitle. 

27 ‘‘(b) DOCUMENTATION AND RESTRICTIONS ON OPERATION.—A vessel recon28 ditioned, remodeled, or improved under subsection (a) shall be documented 

29 under the laws of the United States and remain so documented for at least 

30 5 years after completion of the reconditioning, remodeling, or improvement. 

31 During that period, it shall be operated on voyages that are not exclusively 

32 coastwise. 

33 ‘‘§ 57107. Vessels for other agencies 

34 ‘‘(a) IN GENERAL.—The Secretary of Transportation may construct, recon35 struct, repair, equip, and outfit, by contract or otherwise, vessels or parts 

36 thereof, for any other department or agency of the United States Government 

37 to the extent the other department or agency is authorized by law to do so 

38 for its own account. 

39 ‘‘(b) EFFECT ON CONTRACT AUTHORIZATION.—An obligation incurred or 

40 expenditure made by the Secretary under this section does not affect any con-
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1 tract authorization of the Secretary, but instead shall be charged against the 

2 existing appropriation or contract authorization of the department or agency. 

3 ‘‘§ 57108. Consideration of ballast and equipment in deter4 mining selling price 

5 ‘‘The Maritime Administration may not sell a vessel until its ballast and 

6 equipment have been inventoried and their value considered in determining 

7 the selling price of the vessel. 

8 ‘‘§ 57109. Operation of vessels purchased, chartered, or 

9 leased from Secretary of Transportation 

10 ‘‘Unless otherwise authorized by the Secretary of Transportation, a vessel 

11 purchased, chartered, or leased from the Secretary may be operated only 

12 under a certificate of documentation with a registry or coastwise endorsement. 

13 Such a vessel, while employed solely as a merchant vessel, is subject to the 

14 laws, regulations, and liabilities governing merchant vessels, whether the 

15 United States Government has an interest in the vessel as an owner or holds 

16 a mortgage, lien, or other interest. 

17 ‘‘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. 

18 ‘‘§ 57301. Definitions 

19 ‘‘In this chapter: 

20 ‘‘(1) NEW VESSEL.—The term ‘new vessel’ means a vessel— 

21 ‘‘(A) constructed under this subtitle and acquired within 2 years 

22 after the date of completion; or 

23 ‘‘(B) constructed in a domestic shipyard on private account and 

24 not under this subtitle, and documented under the laws of the 

25 United States. 

26 ‘‘(2) OBSOLETE VESSEL.—The term ‘obsolete vessel’ means a vessel 

27 that— 

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

29 ‘‘(B) the Secretary of Transportation believes should, because of 

30 its age, obsolescence, or other reasons, be replaced in the public in31 terest; and 

32 ‘‘(C) has been owned by a citizen of the United States for at least 

33 3 years immediately before its acquisition under this chapter. 
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1 ‘‘§ 57302. Authority to acquire vessels 

2 ‘‘To promote the construction of new, safe, and efficient vessels to carry the 

3 domestic and foreign waterborne commerce of the United States, the Secretary 

4 of Transportation may acquire an obsolete vessel in exchange for an allowance 

5 of credit toward the cost of construction or purchase of a new vessel as pro6 vided in this chapter. 

7 ‘‘§ 57303. Utility value and tonnage requirements 

8 ‘‘(a) UTILITY VALUE.—The utility value of a new vessel to be acquired 

9 under this chapter for operation in the domestic or foreign commerce of the 

10 United States may not be substantially less than that of the obsolete vessel 

11 acquired in exchange under this chapter. 

12 ‘‘(b) TONNAGE.—If the Secretary of Transportation finds that the new ves13 sel will have a utility value at least equal to that of the obsolete vessel, the 

14 new vessel may be of lesser gross tonnage than the obsolete vessel. However, 

15 the gross tonnage of the new vessel must be at least one-third the gross tonnage 

16 of the obsolete vessel. 

17 ‘‘§ 57304. Eligible acquisition dates 

18 ‘‘At the option of the owner, the acquisition of an obsolete vessel under this 

19 chapter shall occur— 

20 ‘‘(1) when the owner contracts for the construction or purchase of a 

21 new vessel; or 

22 ‘‘(2) within 5 days of the actual date of delivery of the new vessel to 

23 the owner. 

24 ‘‘§ 57305. Determination of trade-in allowance 

25 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall determine the 

26 trade-in allowance for an obsolete vessel at the time of acquisition of the ves27 sel. The allowance shall be the fair value of the vessel. In determining the 

28 value, the Secretary shall consider— 

29 ‘‘(1) the scrap value of the obsolete vessel in American and foreign 

30 markets; 

31 ‘‘(2) the depreciated value based on a 20-year or 25-year life, which32 ever applies to the obsolete vessel; and 

33 ‘‘(3) the market value of the obsolete vessel for operation in world com34 merce or in the domestic or foreign commerce of the United States. 

35 ‘‘(b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete vessel oc36 curs when the owner contracts for the construction of the new vessel, and the 

37 owner uses the obsolete vessel during the period of construction of the new ves38 sel, the Secretary shall reduce the trade-in allowance by an amount rep39 resenting the fair value of that use. The Secretary shall establish the rate for 

40 use of the obsolete vessel when the contract for construction of the new vessel 

41 is made. 
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1 ‘‘§ 57306. Payment of trade-in allowance 

2 ‘‘(a) ACQUISITION AT TIME OF CONTRACT.—If acquisition of an obsolete 

3 vessel under this chapter occurs when the owner contracts for the construction 

4 or purchase of the new vessel, the Secretary of Transportation shall apply the 

5 trade-in allowance to the purchase price of the new vessel rather than paying 

6 it to the owner. If the new vessel is constructed under this subtitle, the Sec7 retary may apply the trade-in allowance to the required cash payments on 

8 terms and conditions the Secretary may prescribe. If the new vessel is not 

9 constructed under this subtitle, the Secretary shall pay the trade-in allowance 

10 to the builder of the vessel for the account of the owner when the Secretary 

11 acquires the obsolete vessel. 

12 ‘‘(b) ACQUISITION AT TIME OF DELIVERY.—If acquisition of the obsolete 

13 vessel occurs when the new vessel is delivered to the owner, the Secretary shall 

14 deposit the trade-in allowance in the owner’s capital construction fund. 

15 ‘‘§ 57307. Recognition of gain for tax purposes 

16 ‘‘The owner of an obsolete vessel does not recognize a gain under the Federal 

17 income tax laws when the vessel is transferred to the Secretary of Transpor18 tation in exchange for a trade-in allowance under this chapter. The basis of 

19 the new vessel acquired with the allowance is the same as the basis of the obso20 lete vessel— 

21 ‘‘(1) increased by the difference between the cost of the new vessel and 

22 the trade-in allowance of the obsolete vessel; and 

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

24 ‘‘§ 57308. Use of vessels at least 25 years old 

25 ‘‘An obsolete vessel acquired under this chapter that is or becomes at least 

26 25 years old may not be used for commercial operation. However, the vessel 

27 may be used— 

28 ‘‘(1) during a period in which vessels may be requisitioned under 

29 chapter 563 of this title; or 

30 ‘‘(2) except as otherwise provided in this subtitle, on trade routes serv31 ing only the foreign trade of the United States. 

32 ‘‘CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE 

33 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. 
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‘‘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. 

1 ‘‘SUBCHAPTER I—GENERAL 

2 ‘‘§ 57501. Completion of long-range program 

3 ‘‘Whenever the Secretary of Transportation determines that the objectives 

4 and policies declared in sections 50101 and 50102 of this title cannot be fully 

5 realized within a reasonable time under titles V and VI of the Merchant Ma6 rine Act, 1936, and the President approves the determination, the Secretary, 

7 in accordance with this chapter, shall complete the long-range program de8 scribed in section 50102 of this title. 

9 ‘‘§ 57502. Construction, reconditioning, and remodeling of 

10 vessels 

11 ‘‘(a) IN GENERAL.—The Secretary of Transportation may have new vessels 

12 constructed, and have old vessels reconditioned or remodeled, as the Secretary 

13 determines necessary to carry out the objectives of this subtitle. 

14 ‘‘(b) PLACE OF WORK.—Construction, reconditioning, and remodeling of 

15 vessels under subsection (a) shall take place in shipyards in the continental 

16 United States (including Alaska and Hawaii). However, if satisfactory con17 tracts cannot be obtained from private shipbuilders, the Secretary may have 

18 the work done in navy yards. 

19 ‘‘(c) APPLICABILITY OF CONSTRUCTION-DIFFERENTIAL SUBSIDY PROVI20 SIONS.—Contracts for the construction, reconstruction, or reconditioning of a 

21 vessel by a private shipbuilder under this chapter are subject to the provisions 

22 of title V of the Merchant Marine Act, 1936, applicable to a contract with 

23 a private shipbuilder for the construction of a vessel under title V of that Act. 

24 ‘‘§ 57503. Competitive bidding 

25 ‘‘(a) ADVERTISEMENT AND BIDDING.—The Secretary of Transportation 

26 may make a contract with a private shipbuilder for the construction of a new 

27 vessel, or for the reconstruction or reconditioning of an existing vessel, only 

28 after due advertisement and upon sealed competitive bids. 

29 ‘‘(b) OPENING OF BIDS.—Bids required under this section shall be opened 

30 at the time and place stated in the advertisement for bids. All interested per31 sons, including representatives of the press, shall be permitted to attend. The 

32 results of the bidding shall be publicly announced. 
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1 ‘‘§ 57504. Charter or sale of vessels acquired by Department 

2 of Transportation 

3 ‘‘Vessels transferred to or otherwise acquired by the Department of Trans4 portation in any manner may be chartered or sold by the Secretary of Trans5 portation as provided in this chapter. 

6 ‘‘§ 57505. Employment of vessels on foreign trade routes 

7 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall arrange for the 

8 employment of the Department of Transportation’s vessels in steamship lines 

9 on such trade routes, exclusively serving the foreign trade of the United States, 

10 as the Secretary determines are essential for the development and mainte11 nance of the commerce of the United States and the national defense. How12 ever, the Secretary shall first determine that those routes are not being ade13 quately served by existing steamship lines privately owned and operated by 

14 citizens of the United States and documented under the laws of the United 

15 States. 

16 ‘‘(b) POLICY TO ENCOURAGE PRIVATE OPERATION.—The Secretary shall 

17 have a policy of encouraging private operation of each essential steamship 

18 line now owned by the United States Government by— 

19 ‘‘(1) selling the line to a citizen of the United States; or 

20 ‘‘(2) demising the Secretary’s vessels on bareboat charter to citizens of 

21 the United States who agree to maintain the line in the manner provided 

22 in this chapter. 

23 ‘‘§ 57506. Minimum selling price of vessels 

24 ‘‘(a) IN GENERAL.—A vessel constructed under this subtitle or the Merchant 

25 Marine Act, 1936, may not be sold by the Secretary of Transportation for 

26 less than the price specified in this section. 

27 ‘‘(b) OPERATION IN FOREIGN TRADE.—If the vessel is to be operated in for28 eign trade, the minimum price is the estimated foreign construction cost (ex29 clusive of national defense features) determined as of the date the construction 

30 contract is executed, less depreciation under subsection (d). 

31 ‘‘(c) OPERATION IN DOMESTIC TRADE.—If the vessel is to be operated in 

32 domestic trade, the minimum price is the cost of construction in the United 

33 States (exclusive of national defense features), less depreciation under sub34 section (d). 

35 ‘‘(d) DEPRECIATION.—Depreciation under subsections (b) and (c) shall be 

36 based on— 

37 ‘‘(1) a 25-year life for dry-cargo and passenger vessels; and 

38 ‘‘(2) a 20-year life for tankers and other bulk liquid carrier vessels. 
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1 ‘‘SUBCHAPTER II—CHARTERS 

2 ‘‘§ 57511. Demise charters 

3 ‘‘A charter by the Secretary of Transportation under this chapter shall de4 mise the vessel to the charterer subject to all usual conditions contained in 

5 a bareboat charter. The charter shall be for a term the Secretary considers 

6 to be in the best interest of the United States Government and the merchant 

7 marine. 

8 ‘‘§ 57512. Competitive bidding 

9 ‘‘(a) IN GENERAL.—The Secretary of Transportation may charter a vessel 

10 of the Department of Transportation to a private operator only on the basis 

11 of competitive sealed bidding. The bids must be submitted in strict compliance 

12 with the terms and conditions of a public advertisement soliciting the bids. 

13 ‘‘(b) ADVERTISEMENT FOR BIDS.—An advertisement for bids shall state— 

14 ‘‘(1) the number, type, and tonnage of the vessels being offered for 

15 bareboat charter for operation as a steamship line on a designated trade 

16 route; 

17 ‘‘(2) the minimum number of sailings required; 

18 ‘‘(3) the length of time of the charter; 

19 ‘‘(4) the right of the Secretary to reject all bids; and 

20 ‘‘(5) other information the Secretary considers necessary for the infor21 mation of prospective bidders. 

22 ‘‘(c) OPENING OF BIDS.—Bids required under this section shall be opened 

23 at the time and place stated in the advertisement for bids. All interested per24 sons, including representatives of the press, shall be permitted to attend. The 

25 results of the bidding shall be publicly announced. 

26 ‘‘§ 57513. Minimum bid 

27 ‘‘The Secretary of Transportation shall reject any bid for the charter under 

28 this subchapter of a vessel constructed under this subtitle or the Merchant Ma29 rine Act, 1936, if the charter hire offered is lower than the minimum charter 

30 hire would be if the vessel were chartered under section 57531 of this title. 

31 ‘‘§ 57514. Qualifications of bidders 

32 ‘‘(a) CONSIDERATIONS.—In deciding whether to award a charter to a bid33 der, the Secretary of Transportation shall consider— 

34 ‘‘(1) the bidder’s financial resources, credit standing, and practical ex35 perience in operating vessels; and 

36 ‘‘(2) other factors a prudent business person would consider in enter37 ing into a transaction involving a large capital investment. 

38 ‘‘(b) DISQUALIFICATIONS.—The Secretary may not charter a vessel to a 

39 person appearing to lack sufficient capital, credit, and experience to operate 

40 the vessel successfully over the period covered by the charter. 
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1 ‘‘§ 57515. Awarding of charters 

2 ‘‘(a) IN GENERAL.—The Secretary of Transportation shall award the char3 ter to the bidder proposing to pay the highest monthly charter hire. However, 

4 the Secretary may reject the highest or most advantageous or any other bid 

5 if the Secretary considers the charter hire offered too low or determines that 

6 the bidder lacks the qualifications required by section 57514 of this title. 

7 ‘‘(b) HIGHEST BID REJECTED.—If the Secretary rejects the highest bid, the 

8 Secretary may— 

9 ‘‘(1) award the charter to the next highest bidder; or 

10 ‘‘(2) reject all bids and either readvertise the line or operate the line 

11 until conditions appear more favorable to reoffer the line for private 

12 charter. 

13 ‘‘(c) REASON FOR REJECTION.—On request of a bidder, the reason for rejec14 tion shall be stated in writing to the bidder. 

15 ‘‘§ 57516. Operating-differential subsidies 

16 ‘‘If the Secretary of Transportation considers it necessary, the Secretary 

17 may make a contract with a charterer of a vessel owned by the Secretary for 

18 payment of an operating-differential subsidy, on the same terms and condi19 tions, and subject to the same limitations and restrictions, as otherwise pro20 vided with respect to payment of operating-differential subsidies to operators 

21 of privately-owned vessels. 

22 ‘‘§ 57517. Recovery of excess profits 

23 ‘‘(a) IN GENERAL.—A charter under this chapter shall provide that if, at 

24 the end of a calendar year subsequent to the execution of the charter, the cu25 mulative net voyage profit (after payment of the charter hire reserved in the 

26 charter and payment of the charterer’s fair and reasonable overhead expenses 

27 applicable to operation of the chartered vessel) exceeds 10 percent a year of 

28 the charterer’s capital necessarily employed in the business of the chartered 

29 vessel, the charterer shall pay to the Secretary of Transportation, as addi30 tional charter hire, half the cumulative net voyage profit in excess of 10 per31 cent a year. However, any cumulative net voyage profit accounted for under 

32 this subsection is not to be included in the calculation of cumulative net voy33 age profit in any subsequent year. 

34 ‘‘(b) TERMS TO BE DEFINED AND USED.—The Secretary shall define the 

35 terms ‘net voyage profit’, ‘fair and reasonable overhead expenses’, and ‘capital 

36 necessarily employed’ for this section. Each advertisement for bids and each 

37 charter shall contain these definitions, stating the formula for determining 

38 each of these three amounts. 

39 ‘‘§ 57518. Performance bond 

40 ‘‘The Secretary of Transportation shall require a charterer of a vessel of 

41 the Secretary to deposit with the Secretary an undertaking, with approved 
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1 sureties, in such amount as the Secretary may require as security for the 

2 faithful performance of the terms of the charter, including indemnity against 

3 liens on the chartered vessel. 

4 ‘‘§ 57519. Insurance 

5 ‘‘A charter under this chapter shall require the charterer to carry, at the 

6 charterer’s expense, insurance on the chartered vessel covering all marine and 

7 port risks, protection and indemnity risks, and all other hazards and liabil8 ities, adequate to cover damages claimed against and losses sustained by the 

9 chartered vessel arising during the term of the charter. The insurance shall 

10 be in such form, in such amount, and with such companies as the Secretary 

11 of Transportation may require. In accordance with law, any of the insurance 

12 risks may be underwritten by the Secretary. 

13 ‘‘§ 57520. Vessel maintenance 

14 ‘‘(a) IN GENERAL.—A charter under this chapter shall require the 

15 charterer, at the charterer’s expense, to— 

16 ‘‘(1) keep the chartered vessel in good repair and efficient operating 

17 condition; and 

18 ‘‘(2) make any repairs required by the Secretary of Transportation. 

19 ‘‘(b) INSPECTION.—The charter shall provide that the Secretary has the 

20 right to inspect the vessel at any time to ascertain its condition. 

21 ‘‘§ 57521. Termination of charter during national emergency 

22 ‘‘A charter under this chapter shall provide that during a national emer23 gency proclaimed by the President or a period for which the President has 

24 proclaimed that the security of the national defense makes it advisable, the 

25 Secretary of Transportation may terminate the charter without cost to the 

26 United States Government on such notice to the charterer as the President 

27 determines. 

28 ‘‘SUBCHAPTER III—MISCELLANEOUS 

29 ‘‘§ 57531. Construction and charter of vessels for unsuccess30 ful routes 

31 ‘‘(a) IN GENERAL.—If the Secretary of Transportation finds that a trade 

32 route determined to be essential under section 50103 of this title cannot be 

33 successfully developed and maintained and the Secretary’s replacement pro34 gram cannot be achieved under private operation of the trade route by a cit35 izen of the United States with vessels documented under the laws of the 

36 United States, without further aid by the United States Government in addi37 tion to the financial aid authorized under titles V and VI of the Merchant 

38 Marine Act, 1936, the Secretary, without advertisement or competition, 

39 may— 

40 ‘‘(1) have constructed, in private shipyards or in navy yards, vessels 

41 of the types necessary for the trade route; and 
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1 ‘‘(2) demise those new vessels or bareboat charter them to the Amer2 ican-flag operator established on the trade route. 

3 ‘‘(b) AMOUNT OF CHARTER HIRE.— 

4 ‘‘(1) IN GENERAL.—The annual charter hire under subsection (a) shall 

5 be at least 4 percent of the price (referred to in this section as the ‘for6 eign cost’) at which the vessel would be sold if constructed under title 

7 V of the Merchant Marine Act, 1936, plus— 

8 ‘‘(A) a percentage of the depreciated foreign cost computed annu9 ally determined by the Secretary of the Treasury, taking into con10 sideration the current average market yield on outstanding market11 able obligations of the Government with remaining periods to matu12 rity comparable to the term of the charter, adjusted to the nearest 

13 one-eighth percent; and 

14 ‘‘(B) an allowance adequate in the judgment of the Secretary of 

15 Transportation to cover administrative costs. 

16 ‘‘(2) DEPRECIATION.—Depreciation under paragraph (1)(A) shall be 

17 based on— 

18 ‘‘(A) a 25-year life for dry-cargo and passenger vessels; and 

19 ‘‘(B) a 20-year life for tankers and other bulk liquid carrier ves20 sels. 

21 ‘‘(c) OPTION TO PURCHASE.—The charter may contain an option to the 

22 charterer to purchase the vessels from the Secretary of Transportation within 

23 5 years after delivery under the charter, on the same terms and conditions 

24 as provided in title V of the Merchant Marine Act, 1936, for the purchase 

25 of new vessels from the Secretary. However— 

26 ‘‘(1) the purchase price shall be the foreign cost less depreciation to 

27 the date of purchase based on the useful life specified in subsection (b)(2); 

28 ‘‘(2) the required cash payment payable at the time of the purchase 

29 shall be 25 percent of the purchase price; 

30 ‘‘(3) the charter may provide that any part of the charter hire paid 

31 in excess of the minimum charter hire provided for in this section may 

32 be credited against the cash payment payable at the time of the purchase; 

33 ‘‘(4) the balance of the purchase price shall be paid within the remain34 ing years of useful life (as specified in subsection (b)(2)) after the date 

35 of delivery of the vessel under the charter and in approximately equal 

36 annual installments, except that the first installment, which shall be 

37 payable on the next ensuing anniversary date of the delivery under the 

38 charter, shall be a proportionate part of the annual installment; and 

39 ‘‘(5) interest shall be payable on the unpaid balances from the date 

40 of purchase, at a rate not less than— 
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1 ‘‘(A) a rate determined by the Secretary of the Treasury, taking 

2 into consideration the current average market yield on outstanding 

3 marketable obligations of the Government with remaining periods to 

4 maturity comparable to the average maturities of the loans, adjusted 

5 to the nearest one-eighth percent; plus 

6 ‘‘(B) an allowance adequate in the judgment of the Secretary of 

7 Transportation to cover administrative costs. 

8 ‘‘(d) OPERATION OF VESSEL.— 

9 ‘‘(1) PERMISSIBLE VOYAGES.—The charter shall provide for operation 

10 of the vessel exclusively— 

11 ‘‘(A) in foreign trade; 

12 ‘‘(B) on a round-the-world voyage; 

13 ‘‘(C) on a round voyage from the west coast of the United States 

14 to a European port that includes an intercoastal port of the United 

15 States; 

16 ‘‘(D) on a round voyage from the Atlantic coast of the United 

17 States to the Orient that includes an intercoastal port of the United 

18 States; or 

19 ‘‘(E) on a voyage in foreign trade on which the vessel may stop 

20 at Hawaii or an island territory or possession of the United States. 

21 ‘‘(2) DOMESTIC TRADE.—The charter shall provide if the vessel is op22 erated in domestic trade on any of the services specified in paragraph 

23 (1), the charterer will pay annually to the Secretary of Transportation 

that proportion of 1 24 ⁄25 of the difference between the domestic and foreign 

25 cost of the vessel as the gross revenue derived from the domestic trade 

26 bears to the gross revenue derived from the entire voyages completed dur27 ing the preceding year. 

28 ‘‘§ 57532. Operation of experimental vessels 

29 ‘‘(a) DEFINITION.—In this section, the term ‘experimental vessel’ means a 

30 vessel owned by the United States Government (including a vessel in the Na31 tional Defense Reserve Fleet) that has been constructed, reconditioned, or re32 modeled for experimental or testing purposes. 

33 ‘‘(b) AUTHORITY TO OPERATE.—The Secretary of Transportation, for the 

34 purpose of practical development, trial, and testing, may operate an experi35 mental vessel under a bareboat charter or general agency agreement in the 

36 foreign or domestic trade of the United States or for use for the account of 

37 a department or agency of the Government, without regard to other provisions 

38 of this subtitle and other laws related to chartering and general agency oper39 ations. Not more than 10 vessels may be operated and tested under this sec40 tion in any one year. 
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1 ‘‘(c) TERMS OF OPERATION.—Operation of a vessel under this section shall 

2 be on terms the Secretary considers appropriate to carry out the purposes of 

3 this subtitle. A bareboat charter under this section shall be at reasonable rates 

4 and include restrictions the Secretary considers appropriate to protect the 

5 public interest, including provisions for recapture of profits under section 

6 57517 of this title. A charter or general agency agreement under this section 

7 shall be reviewed annually to determine whether conditions exist to justify 

8 continuance of the charter or agreement. 

9 ‘‘(d) RIGHTS OF SEAMEN.—A seaman engaged in vessel operations of the 

10 Secretary under this section and employed through a general agent in connec11 tion with a charter or agreement under this section is entitled to all the rights 

12 and remedies provided in sections 1(a) and (c), 3(c), and 4 of the Act of 

13 March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294). 

14 ‘‘PART G—RESTRICTIONS AND PENALTIES

15 ‘‘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. 

16 ‘‘§ 58101. Operating in domestic intercoastal or coastwise 

17 service 

18 ‘‘(a) PROHIBITION.—A subsidy may not be awarded or paid to a contractor 

19 under the operating-differential subsidy program, and a vessel may not be 

20 chartered to a person under chapter 575 of this title, if the contractor or 

21 charterer, or a holding company, subsidiary, affiliate, or associate of the con22 tractor or charterer, or an officer, director, agent, or executive thereof, directly 

23 or indirectly— 

24 ‘‘(1) owns, charters, or operates a vessel engaged in the domestic inter25 coastal or coastwise service; or 

26 ‘‘(2) owns a pecuniary interest in a person that owns, charters, or op27 erates a vessel in the domestic intercoastal or coastwise service. 

28 ‘‘(b) WAIVER.—A person may apply to the Secretary of Transportation for 

29 a waiver of subsection (a). Before deciding on the waiver, the Secretary shall 

30 give the applicant and other interested persons an opportunity for a hearing. 

31 The Secretary may not grant the waiver if the Secretary finds it would— 

32 ‘‘(1) result in unfair competition to a person operating exclusively in 

33 the domestic intercoastal or coastwise service; or 

34 ‘‘(2) be prejudicial to the objectives and policy of this subtitle. 
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1 ‘‘(c) CONTINUOUS OPERATION SINCE 1935.—The Secretary shall grant an 

2 application under subsection (b) without requiring further proof that the pub3 lic interest and convenience will be served and without further proceedings 

4 as to the competition in the route or trade, if the contractor or other person, 

5 or a predecessor in interest, was in bona-fide operation as a common carrier 

6 by water in the domestic intercoastal or coastwise trade in 1935 over the route 

7 or in the trade for which the application is made and has so operated since 

8 that time or, if engaged in furnishing seasonal service only, was in bona-fide 

9 operation in 1935 during the season ordinarily covered by its operation, ex10 cept in either event as to interruptions of service over which the applicant 

11 or its predecessor in interest had no control. 

12 ‘‘(d) DIVERSION INTO INTERCOASTAL OR COASTWISE OPERATIONS.—If an 

13 application under subsection (b) is approved, a person referred to in this sec14 tion may not divert, directly or indirectly, money, property, or any other 

15 thing of value, used in a foreign-trade operation for which a subsidy is paid 

16 by the United States Government, into intercoastal or coastwise operations. 

17 ‘‘§ 58102. Default on payment or maintenance of reserves 

18 ‘‘The Secretary of Transportation may supervise the number and com19 pensation of all officers and employees of a contractor under the operating20 differential subsidy program or a charterer under chapter 575 of this title, 

21 receiving an operating-differential subsidy, if the contractor or charterer— 

22 ‘‘(1) is in default on a mortgage, note, purchase contract, or other obli23 gation to the Secretary; or 

24 ‘‘(2) has not maintained, in a manner satisfactory to the Secretary, 

25 all of the reserves provided for in this subtitle. 

26 ‘‘§ 58103. Employing another person as managing or oper27 ating agent 

28 ‘‘(a) PROHIBITION.—Except with the written consent of the Secretary of 

29 Transportation, a contractor holding a contract under the operating-differen30 tial subsidy program or under chapter 575 of this title may not— 

31 ‘‘(1) employ another person as the managing or operating agent of the 

32 operator; or 

33 ‘‘(2) charter a vessel, on which an operating-differential subsidy is to 

34 be paid, for operation by another person. 

35 ‘‘(b) APPLICABILITY OF PROVISIONS TO CHARTERER.—If a charter prohib36 ited by this section is made, the person operating the chartered vessel is sub37 ject to all the provisions of this subtitle and the operating-differential subsidy 

38 program, including limitations of profits and salaries. 
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1 ‘‘§ 58104. Willful violation constitutes breach of contract or 

2 charter 

3 ‘‘A willful violation of any provision of sections 58101–58103 of this title 

4 constitutes a breach of the contract or charter. On determining that a viola5 tion has occurred, the Secretary of Transportation may declare the contract 

6 or charter rescinded. 

7 ‘‘§ 58105. Preferences for cargo in which charterer has inter8 est 

9 ‘‘A contractor receiving an operating-differential subsidy, or a charterer 

10 under chapter 575 of this title, may not unjustly discriminate in any manner 

11 so as to give preference, directly or indirectly, to cargo in which the con12 tractor or charterer has a direct or indirect ownership, purchase, or vending 

13 interest. 

14 ‘‘§ 58106. Concerted discriminatory activities 

15 ‘‘(a) PROHIBITION.—A contractor receiving an operating-differential sub16 sidy, or a charterer under chapter 575 of this title, may not continue as a 

17 party to or conform to an agreement with another carrier by water, or engage 

18 in a practice in concert with another carrier by water, that is unjustly dis19 criminatory or unfair to any other citizen of the United States operating a 

20 common carrier by water employing only vessels documented under the laws 

21 of the United States on an established trade route from and to a United 

22 States port. 

23 ‘‘(b) GOVERNMENT PAYMENT PROHIBITED.—No payment or subsidy of any 

24 kind may be paid, directly or indirectly, out of funds of the United States 

25 Government to a contractor or charterer that has violated subsection (a). 

26 ‘‘(c) CIVIL ACTION.—A person whose business or property is injured by a 

27 violation of subsection (a) may bring a civil action in the district court of 

28 the United States for the district in which the defendant resides, is found, or 

29 has an agent. If the person prevails, the person shall be awarded— 

30 ‘‘(1) 3 times the damages; and 

31 ‘‘(2) costs, including reasonable attorney fees. 

32 ‘‘§ 58107. Discrimination at ports by water common carriers 

33 ‘‘(a) PROHIBITION.—A common carrier by water may not, directly or indi34 rectly, through an agreement, conference, association, understanding, or other35 wise, prevent or attempt to prevent any other common carrier by water from 

36 serving any port described in subsection (b) at the same rates the first carrier 

37 charges at the nearest port already regularly served by it. 

38 ‘‘(b) PORTS.—A port referred to in subsection (a) is one that is— 

39 ‘‘(1) designed for the accommodation of ocean-going vessels; 

40 ‘‘(2) located on an improvement project authorized by law or by a 

41 Federal agency; and 
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1 ‘‘(3) located within the continental limits of the United States. 

2 ‘‘(c) OTHER AUTHORITY NOT LIMITED.—This section does not limit the au3 thority otherwise vested in the Secretary of Transportation and the Federal 

4 Maritime Commission. 

5 ‘‘§ 58108. Charges for transportation subject to subtitle IV of 

6 title 49 

7 ‘‘(a) PROHIBITION.—A carrier may not charge, collect, or receive for trans8 portation subject to subtitle IV of title 49 of persons or property, under any 

9 joint rate, fare, or charge, or under any export, import, or other proportional 

10 rate, fare, or charge, that is based in whole or in part on the fact that the 

11 persons or property affected are to be transported to, or have been transported 

12 from, a port in a territory or possession of the United States or in a foreign 

13 country, by a carrier by water in foreign commerce, any lower rate, fare, or 

14 charge than the carrier charges, collects, or receives for the transportation of 

15 persons or similar property for the same distance, in the same direction, and 

16 over the same route, in commerce wholly within the United States, unless the 

17 vessel used for the transportation is or was at the time of the transportation 

18 documented under the laws of the United States. 

19 ‘‘(b) SUSPENSION OF PROHIBITION.—Whenever the Secretary of Transpor20 tation believes that adequate shipping facilities to or from any port in a terri21 tory or possession of the United States or a foreign country are not being pro22 vided by vessels documented under the laws of the United States, the Secretary 

23 shall certify this fact to the Surface Transportation Board. On receiving the 

24 certification, the Board may by order suspend the operation of subsection (a) 

25 with respect to the rates, fares, and charges for the transportation by rail of 

26 persons and property transported from or to be transported to those ports, for 

27 such time and under such terms and conditions as the Secretary may specify 

28 in the order or in any supplemental order. 

29 ‘‘(c) TERMINATION OF SUSPENSION.—Whenever the Secretary believes that 

30 adequate shipping facilities are being provided to those ports by vessels docu31 mented under the laws of the United States, and certifies that fact to the 

32 Board, the Board may order the termination of the suspension. 

33 ‘‘§ 58109. Penalties 

34 ‘‘(a) INDIVIDUALS.—An individual convicted of violating section 58101(d), 

35 58103, or 58105 of this title shall be fined under title 18, imprisoned for at 

36 least one year but not more than 5 years, or both. 

37 ‘‘(b) ORGANIZATIONS.—An organization convicted of committing an act 

38 prohibited by this subtitle shall be fined under title 18. 

39 ‘‘(c) INELIGIBILITY TO RECEIVE BENEFITS.—An individual or organiza40 tion convicted of violating a section referred to in subsection (a) is ineligible, 

41 at the discretion of the Secretary of Transportation, to receive any benefit 
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1 under the construction-differential subsidy or operating-differential subsidy 

2 programs, or a charter under chapter 575 of this title, for 5 years after the 

3 conviction.’’. 

4 SEC. 8. SUBTITLE VI OF TITLE 46. 

5 (a) REDESIGNATION.—Title 46, United States Code, is amended by redesig6 nating subtitle VI as subtitle VII. 

7 (b) NEW SUBTITLE.—Title 46, United States Code, is amended by inserting 

8 after subtitle V the following: 

9 ‘‘Subtitle VI—Clearance, Tonnage Taxes, and 

10 Duties 

‘‘Chapter Sec. 

‘‘601. Arrival and Departure Requirements ................................................... 60101 

‘‘603. Tonnage Taxes and Light Money ............................................................. 60301 

‘‘605. Discriminating Duties and Reciprocal Privileges .......................... 60501 

11 ‘‘CHAPTER 601—ARRIVAL AND DEPARTURE 

12 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. 

13 ‘‘§ 60101. Boarding arriving vessels before inspection 

14 ‘‘(a) REGULATIONS.—The Secretary of Homeland Security shall prescribe 

15 and enforce regulations on the boarding of a vessel arriving at a port of the 

16 United States before the vessel has been inspected and secured. 

17 ‘‘(b) CRIMINAL PENALTY.—A person violating a regulation prescribed 

18 under this section shall be fined under title 18, imprisoned for not more than 

19 6 months, or both. 

20 ‘‘(c) RELATIONSHIP TO OTHER LAW.—This section shall be construed as 

21 supplementary to section 2279 of title 18. 

22 ‘‘§ 60102. Production of certificate on entry 

23 ‘‘On entry of a vessel documented under chapter 121 of this title, the master 

24 or other individual in charge of the vessel shall produce the certificate of docu25 mentation to the customs officer at the place where the vessel is entered. If 

26 the certificate is not produced, the vessel is not entitled to the privileges of 

27 a documented vessel. 

28 ‘‘§ 60103. Oath of ownership on entry 

29 ‘‘(a) REQUIRED STATEMENT.—On entry of a vessel of the United States 

30 from a foreign port, the individual designated under subsection (b) shall state 

31 under oath that— 
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1 ‘‘(1) the vessel’s certificate of documentation contains the names of all 

2 the owners of the vessel; or 

3 ‘‘(2) part of the ownership has been transferred since the certificate 

4 was issued and, to the best of the individual’s knowledge and belief, the 

5 vessel is still owned only by citizens of the United States. 

6 ‘‘(b) PERSON TO MAKE STATEMENT.—The statement under subsection (a) 

7 shall be made by— 

8 ‘‘(1) an owner if one resides at the port of entry; or 

9 ‘‘(2) the master if an owner does not reside at the port of entry. 

10 ‘‘(c) CONSEQUENCE OF NOT MAKING STATEMENT.—If the appropriate indi11 vidual does not make the statement required by this section, the vessel is not 

12 entitled to the privileges of a vessel of the United States. 

13 ‘‘§ 60104. Depositing certificates of documentation with con14 sular officers 

15 ‘‘(a) REQUIREMENT OF MASTER.—When a vessel owned by citizens of the 

16 United States, on a voyage from a port in the United States, arrives at a 

17 foreign port, the master of the vessel shall deposit the vessel’s certificate of doc18 umentation with a consular officer at the foreign port if there is a consular 

19 officer at that port. 

20 ‘‘(b) RETURN OF CERTIFICATE.—When the master produces a clearance 

21 from the appropriate officer of the foreign port, the consular officer shall re22 turn the certificate of documentation to the master if the master has complied 

23 with the provisions of law related to the discharge of seamen in a foreign 

24 country and the payment of fees of consular officers. 

25 ‘‘(c) CIVIL PENALTY AND COLLECTION.—The master of a vessel failing to 

26 deposit the certificate of documentation as required by subsection (a) is liable 

27 to the United States Government for a civil penalty of $500. The consular 

28 officer shall bring an action to recover the penalty in any court of competent 

29 jurisdiction. The action shall be brought in the name of the consular officer 

30 for the benefit of the Government. 

31 ‘‘§ 60105. Clearance of vessels 

32 ‘‘(a) VESSELS OF THE UNITED STATES.—Except as otherwise provided by 

33 law, a vessel of the United States shall obtain clearance from the Secretary 

34 of Homeland Security before proceeding from a port or place in the United 

35 States— 

36 ‘‘(1) for a foreign port or place; 

37 ‘‘(2) for another port or place in the United States if the vessel has 

38 on board foreign merchandise for which entry has not been made; or 

39 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

40 merchandise while outside the territorial sea. 
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1 ‘‘(b) OTHER VESSELS.—Except as otherwise provided by law, a vessel that 

2 is not a vessel of the United States shall obtain clearance from the Secretary 

3 before proceeding from a port or place in the United States— 

4 ‘‘(1) for a foreign port or place; 

5 ‘‘(2) for another port or place in the United States; or 

6 ‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 

7 or deliver merchandise while outside the territorial sea. 

8 ‘‘(c) REGULATIONS.—The Secretary may by regulation— 

9 ‘‘(1) prescribe the manner in which clearance under this section is to 

10 be obtained, including the documents, data, or information which shall 

11 be submitted or transmitted, pursuant to an authorized data interchange 

12 system, to obtain the clearance; 

13 ‘‘(2) permit clearance to be obtained before all requirements for clear14 ance are complied with, but only if the owner or operator of the vessel 

15 files a bond in an amount set by the Secretary conditioned on the com16 pliance by the owner or operator with all specified requirements for 

17 clearance within a time period (not exceeding 4 business days) estab18 lished by the Secretary; and 

19 ‘‘(3) permit clearance to be obtained at a place other than a des20 ignated port of entry, under conditions the Secretary may prescribe. 

21 ‘‘§ 60106. State inspection laws 

22 ‘‘When State law requires a certificate of inspection for goods carried on 

23 a vessel, a vessel transporting the goods may not be cleared until the certifi24 cate is produced. 

25 ‘‘§ 60107. Payment of fees on departing vessel 

26 ‘‘A departing vessel may be cleared only when all legal fees that have ac27 crued on the vessel are paid and proof of payment is presented to the indi28 vidual granting the clearance. 

29 ‘‘§ 60108. Duty to transport tendered cargo 

30 ‘‘Clearance may be refused to a vessel or vehicle transporting cargo destined 

31 for a domestic or foreign port when the owner, master, or other individual 

32 in charge refuses to accept cargo tendered in good condition, with proper 

33 charges, for the same or an intermediate port by a citizen of the United 

34 States. This section does not apply if the vessel or vehicle is already fully 

35 loaded (giving appropriate consideration to its proper loading) or is not 

36 adaptable to transport the tendered cargo. 

37 ‘‘§ 60109. Duty to transport money and securities of the 

38 United States Government 

39 ‘‘Before being given clearance, a vessel owned by a citizen of the United 

40 States and bound on a voyage from a port in the United States to another 

41 port in the United States or in a foreign country, or on a voyage from a 
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1 port in a foreign country to a port in the United States, shall receive on 

2 board any bullion, coin, notes, bonds, or other securities of the United States 

3 Government that an agency, consular officer, or other agent of the Govern4 ment offers. The vessel shall transport the items securely and deliver them 

5 promptly to the proper authorities or consignees on arriving at the port of 

6 destination. Compensation shall be paid for services provided under this sec7 tion that is equal to compensation paid to other carriers in the ordinary 

8 transaction of business. 

9 ‘‘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. 

10 ‘‘§ 60301. Regular tonnage taxes 

11 ‘‘(a) LOWER RATE.—A tax is imposed at the rate of 2 cents per ton (but 

12 not more than a total of 10 cents per ton per year) at each entry in a port 

13 of the United States of— 

14 ‘‘(1) a vessel entering from a foreign port or place in North America, 

15 Central America, the West Indies Islands, the Bahama Islands, the Ber16 muda Islands, or the coast of South America bordering the Caribbean 

17 Sea; or 

18 ‘‘(2) a vessel returning to the same port or place in the United States 

19 from which it departed, and not entering the United States from another 

20 port or place, except— 

21 ‘‘(A) a vessel of the United States; 

22 ‘‘(B) a recreational vessel (as defined in section 2101 of this title); 

23 or 

24 ‘‘(C) a barge. 

25 ‘‘(b) HIGHER RATE.—A tax is imposed at the rate of 6 cents per ton (but 

26 not more than a total of 30 cents per ton per year) on a vessel at each entry 

27 in a port of the United States from a foreign port or place not named in 

28 subsection (a)(1). 

29 ‘‘(c) EXCEPTION FOR VESSELS ENTERING OTHER THAN BY SEA.—Sub30 section (a) does not apply to a vessel entering other than by sea from a for31 eign port or place at which tonnage, lighthouse, or other equivalent taxes are 

32 not imposed on vessels of the United States. 
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1 ‘‘§ 60302. Special tonnage taxes 

2 ‘‘(a) ENTRY FROM FOREIGN PORT OR PLACE.—Regardless of whether a tax 

3 is imposed under section 60301 of this title, a tax is imposed on a vessel at 

4 each entry in a port of the United States from a foreign port or place at 

5 the following rates: 

6 ‘‘(1) 30 cents per ton on a vessel built in the United States but owned 

7 in any part by a subject of a foreign country. 

8 ‘‘(2) 50 cents per ton on other vessels not of the United States. 

9 ‘‘(3) 50 cents per ton on a vessel of the United States having an officer 

10 who is not a citizen of the United States. 

11 ‘‘(4) $2 per ton on a foreign vessel entering from a foreign port or 

12 place at which vessels of the United States are not ordinarily allowed 

13 to enter and trade. 

14 ‘‘(b) VESSELS NOT OF THE UNITED STATES TRANSPORTING PROPERTY BE15 TWEEN DISTRICTS.—Regardless of whether a tax is imposed under section 

16 60301 of this title, a tax of 50 cents per ton is imposed on a vessel not of 

17 the United States at each entry in one customs district from another district 

18 when transporting goods loaded in one district to be delivered in another dis19 trict. 

20 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—The tax of 50 

21 cents per ton under this section does not apply to a vessel that— 

22 ‘‘(1) is owned only by citizens of the United States; and 

23 ‘‘(2) after entering a port of the United States, becomes documented 

24 as a vessel of the United States before leaving that port. 

25 ‘‘§ 60303. Light money 

26 ‘‘(a) IMPOSITION OF TAX.—A tax of 50 cents per ton, to be called ‘light 

27 money’, is imposed on a vessel not of the United States at each entry in a 

28 port of the United States. This tax shall be imposed and collected under the 

29 same regulations that apply to tonnage taxes. 

30 ‘‘(b) EXCEPTION FOR VESSELS OWNED BY CITIZENS.— 

31 ‘‘(1) IN GENERAL.—Subsection (a) does not apply to a vessel owned 

32 only by citizens of the United States if— 

33 ‘‘(A) the vessel is carrying a regular document issued by a cus34 tomhouse of the United States proving the vessel to be owned only 

35 by citizens of the United States; and 

36 ‘‘(B) on entry of the vessel from a foreign port, the individual 

37 designated under paragraph (2) states under oath that— 

38 ‘‘(i) the document contains the names of all the owners of 

39 the vessel; or 

40 ‘‘(ii) part of the ownership has been transferred since the 

41 document was issued and, to the best of that individual’s 
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1 knowledge and belief, the vessel is still owned only by citizens 

2 of the United States. 

3 ‘‘(2) PERSON TO MAKE STATEMENT.—The statement under paragraph 

4 (1)(B) shall be made by— 

5 ‘‘(A) an owner if one resides at the port of entry; or 

6 ‘‘(B) the master if an owner does not reside at the port of entry. 

7 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) 

8 section does not apply to a vessel that— 

9 ‘‘(1) is owned only by citizens of the United States; and 

10 ‘‘(2) after entering a port of the United States, becomes documented 

11 as a vessel of the United States before leaving that port. 

12 ‘‘§ 60304. Presidential suspension of tonnage taxes and light 

13 money 

14 ‘‘If the President is satisfied that the government of a foreign country does 

15 not impose discriminating or countervailing duties to the disadvantage of the 

16 United States, the President shall suspend the imposition of special tonnage 

17 taxes and light money under sections 60302 and 60303 of this title on vessels 

18 of that country. 

19 ‘‘§ 60305. Vessels in distress 

20 ‘‘A vessel is exempt from tonnage taxes and light money when it enters be21 cause it is in distress. 

22 ‘‘§ 60306. Vessels not engaged in trade 

23 ‘‘A vessel is exempt from tonnage taxes and light money when not engaged 

24 in trade. 

25 ‘‘§ 60307. Vessels engaged in coastwise trade or the fisheries 

26 ‘‘A vessel with a registry endorsement or a coastwise endorsement, trading 

27 from one port in the United States to another port in the United States or 

28 employed in the bank, whale, or other fisheries, is exempt from tonnage taxes 

29 and light money. 

30 ‘‘§ 60308. Vessels engaged in Great Lakes trade 

31 ‘‘A documented vessel with a registry endorsement, engaged in foreign trade 

32 on the Great Lakes or their tributary or connecting waters in trade with Can33 ada, does not become subject to tonnage taxes or light money because of that 

34 trade. 

35 ‘‘§ 60309. Passenger vessels making trips between ports of the 

36 United States and foreign ports 

37 ‘‘A passenger vessel making at least 3 trips per week between a port of the 

38 United States and a foreign port is exempt from tonnage taxes and light 

39 money. 
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1 ‘‘§ 60310. Vessels making daily trips on interior waters 

2 ‘‘A vessel making regular daily trips between a port of the United States 

3 and a port of Canada only on interior waters not navigable to the ocean is 

4 exempt from tonnage taxes and light money, except on its first clearing each 

5 year. 

6 ‘‘§ 60311. Hospital vessels in time of war 

7 ‘‘In time of war, a hospital vessel is exempt from tonnage taxes, light 

8 money, and pilotage charges in the ports of the United States if the vessel 

9 is one for which the conditions of the international convention for the exemp10 tion of hospital ships from taxation in time of war, concluded at The Hague 

11 on December 21, 1904, are satisfied. The President by proclamation shall 

12 name the vessels for which the conditions are satisfied and state when the ex13 emption begins and ends. 

14 ‘‘§ 60312. Rights under treaties preserved 

15 ‘‘This chapter and chapter 605 of this title do not affect a right or privilege 

16 of a foreign country relating to tonnage taxes or other duties on vessels under 

17 a law or treaty of the United States. 

18 ‘‘CHAPTER 605—DISCRIMINATING DUTIES AND 

19 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. 

20 ‘‘§ 60501. Vessels allowed to import 

21 ‘‘(a) IN GENERAL.—Except as otherwise provided by treaty, goods may be 

22 imported into the United States from a foreign port or place only in— 

23 ‘‘(1) a vessel of the United States; or 

24 ‘‘(2) a foreign vessel owned only by citizens or subjects of the coun25 try— 

26 ‘‘(A) in which the goods are grown, produced, or manufactured; 

27 or 

28 ‘‘(B) from which the goods can only be, or most usually are, first 

29 shipped for transportation. 

30 ‘‘(b) EXCEPTION FOR VESSELS OF COUNTRIES NOT MAINTAINING SIMILAR

31 RESTRICTIONS.—Subsection (a) does not apply to a vessel of a foreign coun32 try that does not maintain a similar restriction against United States docu33 mented vessels. 

34 ‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection (a) 

35 does not apply to a vessel that— 

36 ‘‘(1) is owned only by citizens of the United States; and 
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1 ‘‘(2) after entering a port of the United States, becomes documented 

2 as a vessel of the United States before leaving that port. 

3 ‘‘(d) SEIZURE AND FORFEITURE.—If goods are imported in violation of 

4 this section, the goods and the vessel in which they are imported, along with 

5 its equipment and other cargo, may be seized by and forfeited to the United 

6 States Government. 

7 ‘‘§ 60502. Discriminating duty on goods imported in foreign 

8 vessels or from contiguous countries 

9 ‘‘(a) IMPOSITION OF DUTY.—A discriminating duty of 10 percent ad valo10 rem (in addition to other duties imposed by law) is imposed on goods— 

11 ‘‘(1) imported in a vessel not of the United States unless the vessel— 

12 ‘‘(A) is entitled by law or treaty to enter the ports of the United 

13 States on payment of the same duties as are payable on goods im14 ported in a vessel of the United States; or 

15 ‘‘(B)(i) is owned only by citizens of the United States; and 

16 ‘‘(ii) after entering a port of the United States, becomes docu17 mented as a vessel of the United States before leaving that port; or 

18 ‘‘(2) produced or manufactured in a foreign country not contiguous 

19 to the United States and imported from a country contiguous to the 

20 United States, unless imported in the usual course of strictly retail trade. 

21 ‘‘(b) SEIZURE AND FORFEITURE.—If goods are imported without payment 

22 of the duty required by this section, the goods and the vessel in which they 

23 are imported may be seized by, and forfeited to, the United States Govern24 ment. 

25 ‘‘§ 60503. Reciprocal suspension of discriminating duties 

26 ‘‘(a) GENERAL AUTHORITY.—On receiving satisfactory proof from the gov27 ernment of a foreign country that it has suspended, in any part, the imposi28 tion of discriminating duties for any class of vessels owned by citizens of the 

29 United States or goods imported in those vessels, the President may proclaim 

30 a reciprocal suspension of discriminating duties for the same class of vessels 

31 owned by citizens of that country or goods imported in those vessels. 

32 ‘‘(b) EFFECTIVE AND EXPIRATION DATES.—A suspension under this section 

33 takes effect retroactively from the date the President received the proof from 

34 the foreign government, and expires when that government stops granting the 

35 reciprocal suspension. 

36 ‘‘§ 60504. Reciprocal privileges for recreational vessels 

37 ‘‘When the President is satisfied that yachts owned by residents of the 

38 United States and used only for pleasure are allowed to arrive at, depart 

39 from, and cruise in the waters of a foreign port without entering, clearing, 

40 or paying any duties or fees (including cruising license fees), the Secretary 

41 of Homeland Security may allow yachts from that foreign port used only for 
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1 pleasure to arrive at and depart from the ports of the United States and to 

2 cruise in the waters of the United States without paying any duties or fees. 

3 However, the Secretary may require foreign yachts to obtain a license to 

4 cruise in the waters of the United States. The license shall be in the form 

5 prescribed by the Secretary and contain limitations about length of time, di6 rection, place of cruising and action, and other matters the Secretary con7 siders appropriate. The license shall be issued without cost to the yacht. 

8 ‘‘§ 60505. Retaliatory suspension of commercial privileges 

9 ‘‘(a) GENERAL AUTHORITY.—The President may proclaim a suspension of 

10 commercial privileges to vessels of a foreign country when— 

11 ‘‘(1) vessels of that country have been given the same commercial 

12 privileges in the ports and waters of the United States given to vessels 

13 of the United States (except the privilege of engaging in coastwise com14 merce); and 

15 ‘‘(2) vessels of the United States are denied commercial privileges in 

16 the ports or waters of that country given to vessels of that country. 

17 ‘‘(b) APPLICATION.—A suspension under this section shall apply to the 

18 same commercial privileges denied to vessels of the United States in the ports 

19 or waters of the foreign country, and to the same class of vessels of that coun20 try as the class of vessels of the United States denied the privileges. 

21 ‘‘(c) EFFECTIVE DATE.—The President shall designate the effective date of 

22 the suspension in the proclamation. 

23 ‘‘(d) PENALTIES.— 

24 ‘‘(1) SEIZURE AND FORFEITURE.—If the master, officer, or agent of 

25 a vessel of a foreign country does an act for the vessel in the ports or 

26 waters of the United States in violation of a proclamation issued under 

27 this section, the vessel and the goods on the vessel may be seized by, and 

28 forfeited to, the United States Government. 

29 ‘‘(2) FINE OR IMPRISONMENT.—A person opposing an official of the 

30 Government enforcing this section shall be fined under title 18, impris31 oned for not more than 2 years, or both. 

32 ‘‘§ 60506. Retaliation against British dominions of North 

33 America 

34 ‘‘(a) GENERAL AUTHORITY.—The President by proclamation may prohibit 

35 vessels of the British dominions of North America, their masters and crews, 

36 and products of or coming from those dominions, from entering waters, ports, 

37 or places of the United States when the President is satisfied that— 

38 ‘‘(1) fishermen or fishing vessels of the United States in waters, ports, 

39 or places of the British dominions of North America are being or recently 

40 have been— 

41 ‘‘(A) denied rights provided by law or treaty; 
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1 ‘‘(B) subjected to unreasonable restrictions in the exercise of those 

2 rights; or 

3 ‘‘(C) otherwise harassed; 

4 ‘‘(2) fishermen or fishing vessels of the United States, having a permit 

5 under the laws of the United States to dock or trade at a port or place 

6 in the British dominions of North America, are being or recently have 

7 been— 

8 ‘‘(A) denied the privilege of entering the port or place in the same 

9 manner and under the same regulations applicable to trading ves10 sels of the most-favored-nation; 

11 ‘‘(B) prevented from buying supplies allowed to be sold to trading 

12 vessels of the most-favored-nation; or 

13 ‘‘(C) otherwise harassed; or 

14 ‘‘(3) other vessels of the United States or their masters or crews in wa15 ters, ports, or places of the British dominions of North America are being 

16 or recently have been— 

17 ‘‘(A) denied privileges given to vessels of the most-favored-nation 

18 or their masters or crews; or 

19 ‘‘(B) otherwise harassed. 

20 ‘‘(b) COVERAGE AND EXCEPTIONS.—The President may apply a proclama21 tion under this section to any of the subjects named, and may include excep22 tions for vessels in distress or need of supplies. The President may change, 

23 revoke, and renew the proclamation. 

24 ‘‘(c) PENALTIES.—A person violating a proclamation issued under this sec25 tion shall be fined under title 18, imprisoned for not more than 2 years, or 

26 both. A vessel or goods found in waters, ports, or places of the United States 

27 in violation of the proclamation may be seized by, and forfeited to, the United 

28 States Government. 

29 ‘‘§ 60507. Suspension of free passage through Saint Marys 

30 Falls Canal 

31 ‘‘(a) PURPOSE.—The purpose of this section is to secure reciprocal advan32 tages for the citizens, ports, and vessels of the United States. 

33 ‘‘(b) GENERAL AUTHORITY.—When the President is satisfied that vessels of 

34 the United States, or passengers or cargo being transported to a port of the 

35 United States, are prohibited from passing through a canal or lock connected 

36 with the navigation of the Saint Lawrence River, the Great Lakes, or their 

37 connecting waterways, or burdened in that passage by tolls or other means 

38 that are unreasonable in view of the free passage through the Saint Marys 

39 Falls Canal allowed to vessels of all countries, the President by proclamation 

40 may suspend the right of free passage through the Saint Marys Falls Canal 

41 for vessels owned by subjects of the country imposing the prohibition, tolls, 
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1 or other burdens and for passengers and cargo being transported to the ports 

2 of that country, even when carried in vessels of the United States. The suspen3 sion shall apply to the extent and for the time the President considers appro4 priate. 

5 ‘‘(c) IMPOSITION OF TOLL.— 

6 ‘‘(1) IN GENERAL.—During a suspension under this section, the Presi7 dent shall impose a toll of not more than $2 per ton on cargo and not 

8 more than $5 on each passenger. 

9 ‘‘(2) EXCEPTIONS.—Notwithstanding paragraph (1), a toll may not be 

10 imposed on passengers or cargo landed at Ogdensburg, New York, or any 

11 port west of Ogdensburg and south of a line drawn from the northern 

12 boundary of New York through the Saint Lawrence River, the Great 

13 Lakes, and their connecting channels to the northern boundary of Min14 nesota. 

15 ‘‘(d) COLLECTION OF TOLL.— 

16 ‘‘(1) IN GENERAL.—A toll imposed under this section shall be collected 

17 under regulations prescribed by the Secretary of Homeland Security. The 

18 Secretary may require the master of a vessel to provide a sworn state19 ment of the amount and kind of cargo, the number of passengers, and 

20 the destination of the passengers and cargo. 

21 ‘‘(2) PROOF OF LANDING.—When applicable, the Secretary also may 

22 require satisfactory proof that the passengers and cargo were landed at 

23 a port described in subsection (c)(2). Until that proof is provided, the 

24 Secretary may assume the passengers and cargo were not landed at such 

25 a port, and the amount of a toll that otherwise would be imposed is a 

26 lien enforceable against the vessel when found in the waters of the United 

27 States.’’. 

28 SEC. 9. SUBTITLE VII OF TITLE 46. 

29 Subtitle VII of title 46, United States Code, as redesignated by section 8(a) 

30 of this Act, is amended as follows: 

31 (1) The subtitle heading and analysis are amended to read as follows: 

32 ‘‘Subtitle VII—Security and Drug Enforcement 

‘‘Chapter Sec. 

‘‘701. Port Security ....................................................................................................... 70101 

‘‘703. Maritime Security ............................................................................................ 70301 

‘‘705. Maritime Drug Law Enforcement ............................................................ 70501’’. 

33 (2) Add after chapter 701 the following: 

34 ‘‘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. 
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1 ‘‘§ 70301. Definitions 

2 ‘‘In this chapter: 

3 ‘‘(1) COMMON CARRIER.—The term ‘common carrier’ has the meaning 

4 given that term in section 40102 of this title. 

5 ‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ has the mean6 ing given that term in section 2101 of this title. 

7 ‘‘(3) SECRETARY.—The term ‘Secretary’ means the Secretary of the de8 partment in which the Coast Guard is operating. 

9 ‘‘§ 70302. International measures for seaport and vessel secu10 rity 

11 ‘‘Congress encourages the President to continue to seek agreement on inter12 national seaport and vessel security through the International Maritime Or13 ganization. In developing an agreement, each member country of the Inter14 national Maritime Organization should consult with appropriate private sec15 tor interests in that country. The agreement would establish seaport and vessel 

16 security measures and could include— 

17 ‘‘(1) seaport screening of cargo and baggage similar to that done at 

18 airports; 

19 ‘‘(2) security measures to restrict access to cargo, vessels, and dockside 

20 property to authorized personnel only; 

21 ‘‘(3) additional security on board vessels; 

22 ‘‘(4) licensing or certification of compliance with appropriate security 

23 standards; and 

24 ‘‘(5) other appropriate measures to prevent unlawful acts against pas25 sengers and crews on vessels. 

26 ‘‘§ 70303. Security standards at foreign ports 

27 ‘‘(a) GENERAL REQUIREMENTS.—The Secretary shall develop and imple28 ment a plan to assess the effectiveness of the security measures maintained 

29 at foreign ports that the Secretary, in consultation with the Secretary of 

30 State, determines pose a high risk of acts of terrorism against passenger ves31 sels. In carrying out this subsection, the Secretary shall consult with the Sec32 retary of State about the terrorist threat that exists in each country and poses 

33 a high risk of acts of terrorism against passenger vessels. 

34 ‘‘(b) NOTICE AND RECOMMENDATIONS TO OTHER COUNTRIES.—If the Sec35 retary, after implementing the plan under subsection (a), determines that a 

36 port does not maintain and administer effective security measures, the Sec37 retary of State (after being informed by the Secretary) shall— 

38 ‘‘(1) notify the appropriate government authorities of the country in 

39 which the port is located of the determination; and 
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1 ‘‘(2) recommend steps necessary to bring the security measures at that 

2 port up to the standard used by the Secretary in making the assessment 

3 under subsection (a). 

4 ‘‘(c) ANTITERRORISM ASSISTANCE.—The President is encouraged to provide 

5 antiterrorism assistance related to maritime security under chapter 8 of part 

6 II of the Foreign Assistance Act of 1961 (22 U.S.C. 2349aa et seq.) to foreign 

7 countries, especially for a port that the Secretary determines under subsection 

8 (b) does not maintain and administer effective security measures. 

9 ‘‘§ 70304. Travel advisories on security at foreign ports 

10 ‘‘(a) GENERAL REQUIREMENTS.—On being notified by the Secretary that 

11 the Secretary has determined that a condition exists that threatens the safety 

12 or security of passengers, passenger vessels, or crew traveling to or from a for13 eign port that the Secretary has determined under section 70303(b) of this 

14 title does not maintain and administer effective security measures, the Sec15 retary of State immediately shall issue a travel advisory for that port. The 

16 Secretary of State shall take the necessary steps to widely publicize the travel 

17 advisory. 

18 ‘‘(b) LIFTING ADVISORIES.—A travel advisory issued under subsection (a) 

19 may be lifted only if the Secretary, in consultation with the Secretary of 

20 State, has determined that effective security measures are maintained and ad21 ministered at the port. 

22 ‘‘(c) NOTICE TO CONGRESS.—The Secretary of State shall notify Congress 

23 immediately of any change in the status of a travel advisory issued under 

24 this section. 

25 ‘‘§ 70305. Suspension of passenger services 

26 ‘‘(a) GENERAL AUTHORITY.—Whenever the President determines that a for27 eign nation permits the use of territory under its jurisdiction as a base of 

28 operations or training for, or as a sanctuary for, or in any way arms, aids, 

29 or abets, a terrorist or terrorist group that knowingly uses the illegal seizure 

30 of passenger vessels or the threat thereof as an instrument of policy, the Presi31 dent may suspend the right of any passenger vessel common carrier to operate 

32 to or from, and the right of any passenger vessel of the United States to use, 

33 a port in that foreign nation for passenger service. The suspension may be 

34 without notice or hearing and for as long as the President determines is nec35 essary to ensure the security of passenger vessels against unlawful seizure. 

36 ‘‘(b) PROHIBITION.—A passenger vessel common carrier, or a passenger ves37 sel of the United States, may not operate in violation of a suspension under 

38 this section. 

39 ‘‘(c) PENALTIES.— 
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1 ‘‘(1) DENIAL OF ENTRY.—If a person operates a vessel in violation of 

2 this section, the Secretary may deny the vessels of that person entry to 

3 ports of the United States. 

4 ‘‘(2) CIVIL PENALTY.—A person violating this section is liable to the 

5 United States Government for a civil penalty of not more than $50,000. 

6 Each day a vessel uses a prohibited port is a separate violation. 

7 ‘‘§ 70306. Report on terrorist threats 

8 ‘‘(a) CONTENT.—Not later than February 28 of each year, the Secretary 

9 shall submit a report to Congress on the threat from acts of terrorism to 

10 United States ports and vessels operating from those ports. The Secretary 

11 shall include a description of activities undertaken under title I of the Mari12 time Transportation Security Act of 2002 (Public Law 107–295, 116 Stat. 

13 2066) and an analysis of the effect of those activities on port security against 

14 acts of terrorism. 

15 ‘‘(b) SUBMISSION.—The report shall be submitted to the Committee on 

16 International Relations and the Committee on Transportation and Infra17 structure of the House of Representatives and the Committee on Foreign Rela18 tions and the Committee on Commerce, Science, and Transportation of the 

19 Senate. Any classified information in the report shall be submitted separately 

20 as an addendum. 

21 ‘‘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. 

22 ‘‘§ 70501. Findings and declarations 

23 ‘‘Congress finds and declares that trafficking in controlled substances 

24 aboard vessels is a serious international problem, is universally condemned, 

25 and presents a specific threat to the security and societal well-being of the 

26 United States. 

27 ‘‘§ 70502. Definitions 

28 ‘‘(a) APPLICATION OF OTHER DEFINITIONS.—The definitions in section 102 

29 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 

30 U.S.C. 802) apply to this chapter. 

31 ‘‘(b) VESSEL OF THE UNITED STATES.—In this chapter, the term ‘vessel 

32 of the United States’ means— 

33 ‘‘(1) a vessel documented under chapter 121 of this title or numbered 

34 as provided in chapter 123 of this title; 

35 ‘‘(2) a vessel owned in any part by an individual who is a citizen 

36 of the United States, the United States Government, the government of 
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1 a State or political subdivision of a State, or a corporation incorporated 

2 under the laws of the United States or of a State, unless— 

3 ‘‘(A) the vessel has been granted the nationality of a foreign na4 tion under article 5 of the 1958 Convention on the High Seas; and 

5 ‘‘(B) a claim of nationality or registry for the vessel is made by 

6 the master or individual in charge at the time of the enforcement 

7 action by an officer or employee of the United States who is author8 ized to enforce applicable provisions of United States law; and 

9 ‘‘(3) a vessel that was once documented under the laws of the United 

10 States and, in violation of the laws of the United States, was sold to 

11 a person not a citizen of the United States or placed under foreign reg12 istry or a foreign flag, whether or not the vessel has been granted the 

13 nationality of a foreign nation. 

14 ‘‘(c) VESSEL SUBJECT TO THE JURISDICTION OF THE UNITED STATES.— 

15 ‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel subject to the ju16 risdiction of the United States’ includes— 

17 ‘‘(A) a vessel without nationality; 

18 ‘‘(B) a vessel assimilated to a vessel without nationality under 

19 paragraph (2) of article 6 of the 1958 Convention on the High Seas; 

20 ‘‘(C) a vessel registered in a foreign nation if the flag nation has 

21 consented or waived objection to the enforcement of United States 

22 law by the United States; 

23 ‘‘(D) a vessel in the customs waters of the United States; 

24 ‘‘(E) a vessel in the territorial waters of a foreign nation if the 

25 nation consents to the enforcement of United States law by the 

26 United States; and 

27 ‘‘(F) a vessel in the contiguous zone of the United States, as de28 fined in Presidential Proclamation 7219 of September 2, 1999 (43 

29 U.S.C. 1331 note), that— 

30 ‘‘(i) is entering the United States; 

31 ‘‘(ii) has departed the United States; or 

32 ‘‘(iii) is a hovering vessel as defined in section 401 of the 

33 Tariff Act of 1930 (19 U.S.C. 1401). 

34 ‘‘(2) CONSENT OR WAIVER OF OBJECTION.—Consent or waiver of objec35 tion by a foreign nation to the enforcement of United States law by the 

36 United States under paragraph (1)(C) or (E)— 

37 ‘‘(A) may be obtained by radio, telephone, or similar oral or elec38 tronic means; and 

39 ‘‘(B) is proved conclusively by certification of the Secretary of 

40 State or the Secretary’s designee. 

41 ‘‘(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 flag nation whose 

5 registry 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 en8 force 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 vessel 

13 is of its nationality. 

14 ‘‘(2) CLAIM OF REGISTRY.—A claim of registry under paragraph 

15 (1)(A) or (C) may be verified or denied by radio, telephone, or similar 

16 oral or electronic means. The denial of such a claim by the claimed flag 

17 nation is proved conclusively by certification of the Secretary of State 

18 or the Secretary’s designee. 

19 ‘‘(e) CLAIM OF NATIONALITY OR REGISTRY.—A claim of nationality or reg20 istry 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 Con23 vention on the High Seas; 

24 ‘‘(2) flying its flag 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 distribute, 

31 a controlled substance on board— 

32 ‘‘(1) a vessel of the United States or a vessel subject to the jurisdiction 

33 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) ap37 plies even though the act is committed outside the territorial jurisdiction of 

38 the United States. 

39 ‘‘(c) NONAPPLICATION.— 

40 ‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection (a) does not 

41 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 and 

3 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 substance 

6 in the lawful course of the individual’s duties. 

7 ‘‘(2) ENTERED IN MANIFEST.—Paragraph (1) applies only if the con8 trolled substance is part of the cargo entered in the vessel’s manifest and 

9 is intended to be imported lawfully into the country of destination for 

10 scientific, medical, or other lawful purposes. 

11 ‘‘(d) BURDEN OF PROOF.—The United States Government is not required 

12 to negative a defense provided by subsection (c) in a complaint, information, 

13 indictment, or other pleading or in a trial or other proceeding. The burden 

14 of going forward with the evidence supporting the defense is on the person 

15 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 deter20 mined 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 fail31 ure to comply with international law does not divest a court of jurisdiction 

32 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 Pre36 vention and Control Act of 1970 (21 U.S.C. 960). However, if the offense is 

37 a second or subsequent offense as provided in section 1012(b) of that Act (21 

38 U.S.C. 962(b)), the person shall be punished as provided in section 1012 of 

39 that Act (21 U.S.C. 962). 
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1 ‘‘(b) ATTEMPTS AND CONSPIRACIES.—A person attempting or conspiring to 

2 violate section 70503 of this title is subject to the same penalties as provided 

3 for violating section 70503. 

4 ‘‘§ 70507. Forfeitures 

5 ‘‘(a) IN GENERAL.—Property described in section 511(a) of the Comprehen6 sive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 881(a)) that 

7 is used or intended for use to commit, or to facilitate the commission of, an 

8 offense under section 70503 of this title may be seized and forfeited in the 

9 same manner that similar property may be seized and forfeited under section 

10 511 of that Act (21 U.S.C. 881). 

11 ‘‘(b) PRIMA FACIE EVIDENCE OF VIOLATION.—Practices commonly recog12 nized as smuggling tactics may provide prima facie evidence of intent to use 

13 a vessel to commit, or to facilitate the commission of, an offense under section 

14 70503 of this title, and may support seizure and forfeiture of the vessel, even 

15 in the absence of controlled substances aboard the vessel. The following indi16 cia, among others, may be considered, in the totality of the circumstances, to 

17 be prima facie evidence that a vessel is intended to be used to commit, or 

18 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 built 

25 or fitted out for smuggling, not including items such as a safe or 

26 lock-box reasonably used for the storage of personal valuables; 

27 ‘‘(C) the presence of an auxiliary tank not installed in accordance 

28 with applicable law or installed in such a manner as to enhance 

29 the vessel’s smuggling capability; 

30 ‘‘(D) the presence of engines that are excessively over-powered in 

31 relation to the design and size of the vessel; 

32 ‘‘(E) the presence of materials used to reduce or alter the heat or 

33 radar signature of the vessel and avoid detection; 

34 ‘‘(F) the presence of a camouflaging paint scheme, or of materials 

35 used to camouflage the vessel, to avoid detection; or 

36 ‘‘(G) the display of false vessel registration numbers, false indicia 

37 of vessel nationality, false vessel name, or false vessel homeport. 

38 ‘‘(2) The presence or absence of equipment, personnel, or cargo incon39 sistent with the type or declared purpose of the vessel. 

40 ‘‘(3) The presence of excessive fuel, lube oil, food, water, or spare parts, 

41 inconsistent with legitimate vessel operation, inconsistent with the con-
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1 struction or equipment of the vessel, or inconsistent with the character 

2 of the vessel’s stated purpose. 

3 ‘‘(4) The operation of the vessel without lights during times lights are 

4 required to be displayed under applicable law or regulation and in a 

5 manner of navigation consistent with smuggling tactics used to avoid de6 tection by law enforcement authorities. 

7 ‘‘(5) The failure of the vessel to stop or respond or heave to when 

8 hailed by government authority, especially where the vessel conducts eva9 sive maneuvering when hailed. 

10 ‘‘(6) The declaration to government authority of apparently false in11 formation about the vessel, crew, or voyage or the failure to identify the 

12 vessel by name or country of registration when requested to do so by gov13 ernment authority. 

14 ‘‘(7) The presence of controlled substance residue on the vessel, on an 

15 item aboard the vessel, or on an individual aboard the vessel, of a quan16 tity or other nature that reasonably indicates manufacturing or distribu17 tion activity. 

18 ‘‘(8) The use of petroleum products or other substances on the vessel 

19 to foil the detection of controlled substance residue. 

20 ‘‘(9) The presence of a controlled substance in the water in the vicinity 

21 of the vessel, where given the currents, weather conditions, and course 

22 and speed of the vessel, the quantity or other nature is such that it rea23 sonably indicates manufacturing or distribution activity.’’. 

24 SEC. 10. SUBTITLE VIII OF TITLE 46. 

25 Title 46, United States Code, is amended by adding after subtitle VII the 

26 following: 

27 ‘‘Subtitle VIII—Miscellaneous 

‘‘Chapter Sec. 

‘‘801. Wrecks and Salvage ........................................................................................ 80101 

‘‘803. Ice and Derelicts .............................................................................................. 80301 

‘‘805. Safe Containers for International Cargo ............................................ 80501 

28 ‘‘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. 

29 ‘‘§ 80101. Vessel stranded on foreign coast 

30 ‘‘(a) DUTIES OF CONSULAR OFFICER.—When a vessel of the United States 

31 is stranded on a coast of a foreign country, the consular officer in that coun32 try shall take proper measures, to the extent the laws of that country allow, 

33 to— 
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1 ‘‘(1) save and secure the vessel and property on the vessel; and 

2 ‘‘(2) prepare an inventory of the property that is saved. 

3 ‘‘(b) DELIVERY TO OWNER.—After deducting the expenses, the consular offi4 cer shall deliver the property, with an inventory, to the owner of the property. 

5 ‘‘(c) LIMITATION ON TAKING POSSESSION.—A consular officer may not take 

6 possession of property under this section when the owner, master, or consignee 

7 is present or able to take possession of the property. 

8 ‘‘§ 80102. License to salvage on Florida coast 

9 ‘‘(a) LICENSING REQUIREMENTS.—To be regularly employed in the busi10 ness of salvaging on the coast of Florida, a vessel and its master each must 

11 have a license issued by a judge of the district court of the United States for 

12 a judicial district of Florida. 

13 ‘‘(b) JUDICIAL FINDINGS.—Before issuing a license under this section, the 

14 judge must be satisfied, when the license is for— 

15 ‘‘(1) a vessel, that the vessel is seaworthy and properly equipped for 

16 the business of saving property shipwrecked and in distress; or 

17 ‘‘(2) a master, that the master is trustworthy and innocent of any 

18 fraud or misconduct related to property shipwrecked or saved on the 

19 coast. 

20 ‘‘§ 80103. Property on Florida coast to be taken to port of 

21 entry 

22 ‘‘(a) IN GENERAL.—Property taken from a wreck, the sea, or a key or 

23 shoal, on the coast of Florida and within the jurisdiction of the United States, 

24 shall be brought to a port of entry of the United States. 

25 ‘‘(b) SEIZURE AND FORFEITURE.—A vessel transporting property described 

26 in subsection (a) to a foreign port may be seized by, and forfeited to, the 

27 United States Government. A forfeiture under this subsection accrues half to 

28 the informer and half to the Government. 

29 ‘‘§ 80104. Salvaging operations by foreign vessels 

30 ‘‘(a) PROHIBITION.—Except as provided in this section or section 80105 of 

31 this title, a foreign vessel may not, under penalty of forfeiture, engage in sal32 vaging operations on the Atlantic or Pacific coast of the United States, in 

33 any portion of the Great Lakes or their connecting or tributary waters, in34 cluding any portion of the Saint Lawrence River through which the inter35 national boundary line extends, or in territorial waters of the United States 

36 on the Gulf of Mexico. 

37 ‘‘(b) WHEN SUITABLE VESSEL NOT AVAILABLE.—The Secretary of Home38 land Security may authorize a foreign vessel to engage in salvaging oper39 ations in a particular locality if, on investigation, the Secretary is satisfied 

40 that there is not available in that locality a suitable vessel that is— 
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1 ‘‘(1) owned only by citizens of the United States (including a 

2 Bowaters corporation under section 12118 of this title); and 

3 ‘‘(2) documented under chapter 121 of this title or numbered under 

4 chapter 123 of this title. 

5 ‘‘(c) OPERATIONS AUTHORIZED BY TREATY.—This section does not prohibit 

6 or restrict assistance to vessels or salvaging operations authorized by treaty, 

7 including— 

8 ‘‘(1) article II of the Treaty between the United States and Great Brit9 ain concerning reciprocal rights for United States and Canada in the 

10 conveyance of prisoners and wrecking and salvage, signed at Washington, 

11 May 18, 1908 (35 Stat. 2036); or 

12 ‘‘(2) the Treaty between the United States of America and Mexico to 

13 facilitate assistance to and salvage of vessels in territorial waters, signed 

14 at Mexico City, June 13, 1935 (49 Stat. 3359). 

15 ‘‘§ 80105. Canadian vessels aiding vessels in United States 

16 waters 

17 ‘‘(a) IN GENERAL.—Canadian vessels and wrecking equipment may give 

18 aid to Canadian or other vessels and property wrecked, disabled, or in distress 

19 in the waters of the United States contiguous to Canada, including— 

20 ‘‘(1) the canal and improvement of the waters between Lake Erie and 

21 Lake Huron; and 

22 ‘‘(2) the Saint Marys River and canal. 

23 ‘‘(b) RECIPROCITY.—This section does not apply after the President pro24 claims that privileges reciprocal to those under subsection (a) have been with25 drawn or rendered inoperative by the Government of Canada. 

26 ‘‘§ 80106. International agreement on derelicts 

27 ‘‘The President may make an international agreement with other govern28 ments interested in the navigation of the North Atlantic Ocean, providing for 

29 the reporting, marking, and removal of dangerous wrecks, derelicts, and other 

30 menaces to navigation outside the coast waters of the countries bordering the 

31 North Atlantic Ocean. 

32 ‘‘§ 80107. Salvors of life to share in remuneration 

33 ‘‘(a) ENTITLEMENT OF SALVORS.—A salvor of human life, who gave aid 

34 following an accident giving rise to salvage, is entitled to a fair share of the 

35 payment awarded to the salvor for salvaging the vessel or other property or 

36 preventing or minimizing damage to the environment. 

37 ‘‘(b) COMMON OWNERSHIP OF VESSELS.—The right to remuneration for 

38 aid or salvage services is not affected by common ownership of the vessels giv39 ing and receiving the aid or salvage services. 

40 ‘‘(c) TIME LIMIT ON BRINGING ACTIONS.—A civil action to recover remu41 neration for giving aid or salvage services must be brought within 2 years 
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1 after the date the aid or salvage services were given, unless the court in which 

2 the action is brought is satisfied that during that 2-year period there had not 

3 been a reasonable opportunity to seize the aided or salvaged vessel within the 

4 jurisdiction of the court or within the territorial waters of the country of the 

5 plaintiff’s residence or principal place of business. 

6 ‘‘(d) NONAPPLICATION.—This section does not apply to a vessel of war or 

7 a vessel owned by the United States Government appropriated only to a pub8 lic service. 

9 ‘‘CHAPTER 803—ICE AND DERELICTS 

‘‘Sec. 

‘‘80301. International agreements. 

‘‘80302. Patrol services. 

‘‘80303. Speed of vessel in ice region. 

10 ‘‘§ 80301. International agreements 

11 ‘‘(a) GENERAL AUTHORITY.—The President may make agreements with in12 terested maritime countries to— 

13 ‘‘(1) maintain in the North Atlantic Ocean a service of ice patrol, of 

14 study and observation of ice and current conditions, and of assistance 

15 to vessels and their crews requiring assistance within the limits of the 

16 patrol; 

17 ‘‘(2) maintain a service of study and observation of ice and current 

18 conditions in the waters affecting the set and drift of ice in the North 

19 Atlantic Ocean; and 

20 ‘‘(3) take all practicable steps to ensure the destruction or removal of 

21 derelicts in the northern part of the Atlantic Ocean, east of the line 

22 drawn from Cape Sable to a point in latitude 34 degrees north, longitude 

23 70 degrees west, if the destruction or removal is necessary. 

24 ‘‘(b) PAYMENT BETWEEN COUNTRIES.—The President may include in an 

25 agreement under subsection (a) a provision for— 

26 ‘‘(1) payment to the United States Government by other countries for 

27 their proportionate share of the expense of maintaining the services; or 

28 ‘‘(2) contribution by the Government for its proportionate share if the 

29 agreement provides for another country to maintain the services. 

30 ‘‘§ 80302. Patrol services 

31 ‘‘(a) GENERAL REQUIREMENTS.—Unless the agreements made under sec32 tion 80301 of this title provide otherwise, an ice patrol shall be maintained 

33 during the entire ice season in guarding the southeastern, southern, and 

34 southwestern limits of the region of icebergs in the vicinity of the Grand 

35 Banks of Newfoundland. The patrol shall inform trans-Atlantic and other 

36 passing vessels by radio and other available means of the ice conditions and 

37 the extent of the dangerous region. During the ice season, there shall be main38 tained a service of study of ice and current conditions, a service of providing 
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1 assistance to vessels and crews requiring assistance, and a service of removing 

2 and destroying derelicts. Any of these services may be maintained during the 

3 remainder of the year as may be advisable. 

4 ‘‘(b) WARNINGS TO VESSELS.—An ice patrol vessel shall warn any vessel 

5 known to be approaching a dangerous area and recommend safe routes. 

6 ‘‘(c) RECORDING AND REPORTING INCIDENTS.— 

7 ‘‘(1) RECORDING.—An ice patrol vessel shall record the name of a ves8 sel and the facts of the case when the patrol observes or knows that the 

9 vessel— 

10 ‘‘(A) is on other than a regular recognized or advertised route 

11 crossing the North Atlantic Ocean; 

12 ‘‘(B) has crossed the fishing banks of Newfoundland north of lati13 tude 43 degrees north during the fishing season; or 

14 ‘‘(C) has passed through regions known or believed to be endan15 gered by ice when proceeding to and from ports of North America. 

16 ‘‘(2) REPORTING.—The name of the vessel and all pertinent informa17 tion about the incident shall be reported to the government of the country 

18 to which the vessel belongs if that government requests. 

19 ‘‘(d) ADMINISTRATION.—The Commandant of the Coast Guard, under the 

20 direction of the Secretary of the department in which the Coast Guard is op21 erating, shall carry out the services provided for in this section and shall as22 sign necessary vessels, material, and personnel of the Coast Guard. On request 

23 of such Secretary, the head of an agency may detail personnel, lend or con24 tribute material or equipment, or otherwise assist in carrying out the services 

25 provided for in this section. 

26 ‘‘(e) ANNUAL REPORT.—The Commandant shall publish an annual report 

27 of the activities of the services provided for in this section. A copy of the re28 port shall be provided to each interested foreign government and to each agen29 cy assisting in the work. 

30 ‘‘§ 80303. Speed of vessel in ice region 

31 ‘‘(a) REQUIREMENT.—The master of a vessel of the United States, when ice 

32 is reported on or near the vessel’s course, shall proceed at a moderate speed 

33 or change the course of the vessel to go well clear of the danger zone. 

34 ‘‘(b) CIVIL PENALTY.—A master violating this section is liable to the 

35 United States Government for a civil penalty of not more than $500. 

36 ‘‘CHAPTER 805—SAFE CONTAINERS FOR 

37 INTERNATIONAL CARGO 

‘‘Sec. 

‘‘80501. Definitions. 

‘‘80502. Application of Convention. 

‘‘80503. General authority of the Secretary. 

‘‘80504. Approval and examination. 

‘‘80505. Enforcement. 

‘‘80506. Delegation of authority. 
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‘‘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 transport’ 

9 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 con15 tainer if a written lease or bailment provides for the lessee or bailee to 

16 exercise the owner’s responsibility for maintaining and examining the 

17 container. 

18 ‘‘(5) SAFETY APPROVAL PLATE.—The term ‘safety approval plate’ has 

19 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 out 

29 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 for 

35 the periodic examination of containers as provided in the Convention; 

36 and 

37 ‘‘(3) provide a method for developing, collecting, and disseminating in38 formation about container safety and the international transport of con39 tainers. 
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1 ‘‘(c) SAFETY APPROVAL PLATES.—If the owner of a container without a 

2 safety approval plate establishes that the container satisfies the standards of 

3 the Convention, the Secretary may authorize a safety approval plate to be at4 tached to the container. 

5 ‘‘(d) SCHEDULE OF FEES.—The Secretary may prescribe a schedule of fees 

6 for services performed by the Secretary, or by a person delegated authority 

7 under section 80506 of this title, for the testing, inspection, and initial ap8 proval of containers and container designs. 

9 ‘‘(e) ENCOURAGING INTERMODAL TRANSPORT.—To the maximum extent 

10 possible, the Secretary shall encourage the development and use of intermodal 

11 transport, using containers built to facilitate economical, safe, and expedi12 tious handling of containerized cargo without intermediate reloading when it 

13 is being transported over land, air, and sea areas. 

14 ‘‘§ 80504. Approval and examination 

15 ‘‘(a) DOMICILE AND PRINCIPAL OFFICE IN UNITED STATES.—A container 

16 owner domiciled and having its principal office in the United States shall 

17 have the container— 

18 ‘‘(1) approved initially under procedures prescribed by the Secretary 

19 of the department in which the Coast Guard is operating or by the gov20 ernment of another country that is a party to the Convention; and 

21 ‘‘(2) examined periodically as provided in the Convention under pro22 cedures prescribed by the Secretary. 

23 ‘‘(b) DOMICILE OR PRINCIPAL OFFICE IN UNITED STATES.—A container 

24 owner domiciled or having its principal office in the United States shall have 

25 the container— 

26 ‘‘(1) approved initially under procedures prescribed by the Secretary 

27 or by the government of another country that is a party to the Conven28 tion; and 

29 ‘‘(2) examined periodically as provided in the Convention, under pro30 cedures prescribed by the government of the country in which the owner 

31 is domiciled or has its principal office, as long as that country is a 

32 party to the Convention. 

33 ‘‘(c) NEITHER DOMICILE NOR PRINCIPAL OFFICE IN UNITED STATES.—A 

34 container owner neither domiciled nor having its principal office in the 

35 United States or another country that is a party to the Convention may sub36 mit a container for initial approval and periodic examination under proce37 dures prescribed by the Secretary. 

38 ‘‘§ 80505. Enforcement 

39 ‘‘(a) IN GENERAL.—To enforce the Convention, this chapter, and regula40 tions prescribed under this chapter, the Secretary of the department in which 

41 the Coast Guard is operating may— 
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1 ‘‘(1) examine, or require to be examined, containers in international 

2 transport; 

3 ‘‘(2) approve designs for containers; 

4 ‘‘(3) inspect and test containers being manufactured; 

5 ‘‘(4) issue a detention order removing or excluding a container from 

6 service until the container owner satisfies the Secretary that the con7 tainer meets the standards of the Convention, if the container— 

8 ‘‘(A) does not have a safety approval plate attached to it; or 

9 ‘‘(B) has a safety approval plate attached but there is significant 

10 evidence that the container is in a condition that creates an obvious 

11 risk to safety; 

12 ‘‘(5) take other appropriate action, including issuing necessary orders, 

13 to remove a container from service or restrict its use if the container is 

14 not in compliance with the Convention, this chapter, or regulations pre15 scribed under this chapter, but does not present an obvious risk to safety; 

16 and 

17 ‘‘(6) allow a container found to be unsafe or without a safety approval 

18 plate to be moved to another location for repair or other disposition, 

19 under restrictions consistent with the intent of the Convention. 

20 ‘‘(b) PAYMENT OF EXPENSES.— 

21 ‘‘(1) EXAMINATION.—The owner of a container involved in an action 

22 by the Secretary under this section related to an examination of the con23 tainer shall pay or reimburse the Secretary for the expenses arising from 

24 that action, except for the costs of routine examinations of the container 

25 or a safety approval plate. 

26 ‘‘(2) TESTING, INSPECTION, AND INITIAL APPROVAL.—The owner of a 

27 container submitted to the procedure established by the Secretary for test28 ing, inspection, and initial approval, and the manufacturer of a con29 tainer that submits a design to the procedure established by the Secretary 

30 for testing, inspection, and initial approval, shall pay or reimburse the 

31 Secretary for the expenses arising from the testing, inspection, or ap32 proval. 

33 ‘‘(3) CREDIT TO APPROPRIATION.—Amounts received by the Secretary 

34 as reimbursement shall be credited to the appropriation for operating ex35 penses of the Coast Guard. 

36 ‘‘(c) PRESUMPTION BASED ON SAFETY APPROVAL PLATE.—A container 

37 bearing a safety approval plate authorized by a country that is a party to 

38 the Convention is presumed to be in a safe condition unless there is signifi39 cant evidence that the container is in a condition that creates an obvious risk 

40 to safety. 

41 ‘‘(d) NOTICE OF ORDERS.— 
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1 ‘‘(1) IN GENERAL.—When the Secretary issues a detention or other 

2 order under this section, the Secretary promptly shall notify in writ3 ing— 

4 ‘‘(A) the owner of the container; 

5 ‘‘(B) the owner’s agent; or 

6 ‘‘(C) if the identity of the owner is not apparent from the con7 tainer or shipping documents, the custodian. 

8 ‘‘(2) INFORMATION TO INCLUDE.—The notification shall identify the 

9 container involved, give the location of the container, and describe the 

10 condition or situation giving rise to the order. 

11 ‘‘(e) DURATION OF ORDERS.—An order issued by the Secretary under this 

12 section remains in effect until— 

13 ‘‘(1) the Secretary declares the container to be in compliance with the 

14 standards of the Convention; or 

15 ‘‘(2) the container is removed permanently from service. 

16 ‘‘(f) NOTICE OF DEFECTIVE CONTAINER TO COUNTRY ISSUING SAFETY AP17 PROVAL PLATE.—If the Secretary has reason to believe that a container bear18 ing a safety approval plate issued by another country was defective at the 

19 time of approval, the Secretary shall notify that country. 

20 ‘‘§ 80506. Delegation of authority 

21 ‘‘(a) IN GENERAL.—The Secretary of the department in which the Coast 

22 Guard is operating may delegate to any person, including a public or private 

23 agency or nonprofit organization, authority to grant initial approval for con24 tainers and designs and to attach safety approval plates. 

25 ‘‘(b) REGULATIONS.—Before making a delegation under this section, the 

26 Secretary shall prescribe regulations establishing— 

27 ‘‘(1) criteria to be followed in selecting a person to whom authority 

28 is to be delegated; 

29 ‘‘(2) a detailed description of the duties and powers to be carried out 

30 by the person to whom authority is delegated, including the records the 

31 person shall keep; and 

32 ‘‘(3) the review the Secretary will conduct to decide whether the person 

33 is carrying out the delegated duties and powers properly. 

34 ‘‘(c) INSPECTION OF RECORDS.—A person delegated authority under this 

35 section shall make available to the Secretary for inspection, on request, 

36 records the person is required to keep. 

37 ‘‘(d) PENALTIES AND ORDERS.—A person delegated authority under this 

38 section may not— 

39 ‘‘(1) assess or collect, or attempt to assess or collect, a penalty for vio40 lation of the Convention, this chapter, or an order issued by the Sec41 retary under this chapter; or 
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1 ‘‘(2) issue or attempt to issue a detention or other order. 

2 ‘‘(e) PUBLICATION.—The Secretary shall publish in the Federal Register or 

3 other appropriate publication— 

4 ‘‘(1) the name and address of each person to whom authority is dele5 gated; 

6 ‘‘(2) the duties and powers delegated; and 

7 ‘‘(3) the period of the delegation. 

8 ‘‘(f) REVOCATION.—The Secretary may revoke a delegation of authority 

9 under this section at any time. 

10 ‘‘§ 80507. Employee protection 

11 ‘‘(a) PROHIBITION.—A person may not discharge or discriminate against 

12 an employee because the employee has reported the existence of an unsafe con13 tainer or a violation of this chapter or a regulation prescribed under this 

14 chapter. 

15 ‘‘(b) COMPLAINTS.—An employee alleging to have been discharged or dis16 criminated against in violation of subsection (a) may file a complaint with 

17 the Secretary of Labor. The complaint must be filed within 60 days after the 

18 violation. 

19 ‘‘(c) ENFORCEMENT.—The Secretary of Labor may investigate the com20 plaint. If the Secretary of Labor finds there has been a violation, the Sec21 retary of Labor may bring a civil action in an appropriate district court of 

22 the United States. The court has jurisdiction to restrain violations of sub23 section (a) and order appropriate relief, including reinstatement of the em24 ployee to the employee’s former position with back pay. 

25 ‘‘(d) NOTICE TO COMPLAINANT.—Within 30 days after receiving a com26 plaint under this section, the Secretary of Labor shall notify the complainant 

27 of the intended action on the complaint. 

28 ‘‘§ 80508. Amendments to Convention 

29 ‘‘(a) PROPOSALS BY UNITED STATES GOVERNMENT.—The Secretary of 

30 State, with the concurrence of the Secretary of the department in which the 

31 Coast Guard is operating, may propose amendments to the Convention or re32 quest a conference for amending the Convention as provided in article IX of 

33 the Convention. 

34 ‘‘(b) PROPOSALS BY OTHER COUNTRIES.—An amendment communicated to 

35 the United States Government under article IX(2) of the Convention may be 

36 accepted for the Government by the President, with the advice and consent 

37 of the Senate. The President may declare that the Government does not accept 

38 an amendment. 

39 ‘‘(c) AMENDMENTS TO ANNEXES.— 

40 ‘‘(1) IN GENERAL.—The Secretary of State, with the concurrence of the 

41 Secretary of the department in which the Coast Guard is operating— 
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1 ‘‘(A) may propose amendments to the annexes to the Convention; 

2 ‘‘(B) may propose a conference for amending annexes to the Con3 vention; and 

4 ‘‘(C) shall consider and act on amendments to the annexes to the 

5 Convention adopted by the Maritime Safety Committee of the Inter6 national Maritime Organization and communicated to the Govern7 ment under article X(2) of the Convention. 

8 ‘‘(2) ACTION FOLLOWING APPROVAL OR OBJECTION.—If a proposed 

9 amendment to an annex is approved by the Government, the amendment 

10 shall enter into force as provided in article X of the Convention. If a 

11 proposed amendment is objected to, the Secretary of State promptly shall 

12 communicate the objection as provided in article X(3) of the Convention. 

13 ‘‘(d) APPOINTMENT OF ARBITRATOR.—The Secretary of State, with the con14 currence of the Secretary of the department in which the Coast Guard is oper15 ating, shall appoint an arbitrator when one is required to resolve a dispute 

16 within the meaning of article XIII of the Convention. 

17 ‘‘§ 80509. Civil penalty 

18 ‘‘(a) IN GENERAL.—An owner, agent, or custodian who has been notified 

19 of an order issued under section 80505 of this title and fails to take reasonable 

20 and prompt action to prevent or stop a container subject to the order from 

21 being moved in violation of the order is liable to the United States Govern22 ment for a civil penalty of not more than $5,000 for each container moved. 

23 Each day the container remains in service while the order is in effect is a 

24 separate violation. 

25 ‘‘(b) ASSESSMENT AND COLLECTION.— 

26 ‘‘(1) IN GENERAL.—After notice and an opportunity for a hearing, the 

27 Secretary of the department in which the Coast Guard is operating shall 

28 assess and collect any penalty under this section. 

29 ‘‘(2) FACTORS TO CONSIDER.—In determining the amount of the pen30 alty, the Secretary shall consider the gravity of the violation, the hazards 

31 involved, and the record of the person charged with respect to violations 

32 of the Convention, this chapter, or regulations prescribed under this 

33 chapter. 

34 ‘‘(3) REMISSION, MITIGATION, OR COMPROMISE.—The Secretary may 

35 remit, mitigate, or compromise a penalty under this section. 

36 ‘‘(4) ENFORCEMENT.—If a person fails to pay a penalty under this 

37 section, the Secretary shall refer the matter to the Attorney General for 

38 collection in an appropriate district court of the United States.’’. 

39 SEC. 11. MARITIME ADMINISTRATION. 

40 Section 109 of title 49, United States Code, is amended to read as follows: 
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1 ‘‘§ 109. Maritime Administration 

2 ‘‘(a) ORGANIZATION.—The Maritime Administration is an administration 

3 in the Department of Transportation. 

4 ‘‘(b) MARITIME ADMINISTRATOR.—The head of the Maritime Administra5 tion is the Maritime Administrator, who is appointed by the President by 

6 and with the advice and consent of the Senate. The Administrator shall report 

7 directly to the Secretary of Transportation and carry out the duties pre8 scribed by the Secretary. 

9 ‘‘(c) DEPUTY MARITIME ADMINISTRATOR.—The Maritime Administration 

10 shall have a Deputy Maritime Administrator, who is appointed in the com11 petitive service by the Secretary, after consultation with the Administrator. 

12 The Deputy Administrator shall carry out the duties prescribed by the Ad13 ministrator. The Deputy Administrator shall be Acting Administrator during 

14 the absence or disability of the Administrator and, unless the Secretary des15 ignates another individual, during a vacancy in the office of Administrator. 

16 ‘‘(d) DUTIES AND POWERS VESTED IN SECRETARY.—All duties and powers 

17 of the Maritime Administration are vested in the Secretary. 

18 ‘‘(e) REGIONAL OFFICES.—The Maritime Administration shall have re19 gional offices for the Atlantic, Gulf, Great Lakes, and Pacific port ranges, and 

20 may have other regional offices as necessary. The Secretary shall appoint a 

21 qualified individual as Director of each regional office. The Secretary shall 

22 carry out appropriate activities and programs of the Maritime Administra23 tion through the regional offices. 

24 ‘‘(f) INTERAGENCY AND INDUSTRY RELATIONS.—The Secretary shall estab25 lish and maintain liaison with other agencies, and with representative trade 

26 organizations throughout the United States, concerned with the transportation 

27 of commodities by water in the export and import foreign commerce of the 

28 United States, for the purpose of securing preference to vessels of the United 

29 States for the transportation of those commodities. 

30 ‘‘(g) DETAILING OFFICERS FROM ARMED FORCES.—To assist the Secretary 

31 in carrying out duties and powers relating to the Maritime Administration, 

32 not more than five officers of the armed forces may be detailed to the Sec33 retary at any one time, in addition to details authorized by any other law. 

34 During the period of a detail, the Secretary shall pay the officer an amount 

35 that, when added to the officer’s pay and allowances as an officer in the 

36 armed forces, makes the officer’s total pay and allowances equal to the amount 

37 that would be paid to an individual performing work the Secretary considers 

38 to be of similar importance, difficulty, and responsibility as that performed 

39 by the officer during the detail. 

40 ‘‘(h) CONTRACTS AND AUDITS.— 
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1 ‘‘(1) CONTRACTS.—In the same manner that a private corporation 

2 may make a contract within the scope of its authority under its charter, 

3 the Secretary may make contracts for the United States Government and 

4 disburse amounts to— 

5 ‘‘(A) carry out the Secretary’s duties and powers under this sec6 tion and subtitle V of title 46; and 

7 ‘‘(B) protect, preserve, and improve collateral held by the Sec8 retary to secure indebtedness. 

9 ‘‘(2) AUDITS.—The financial transactions of the Secretary under 

10 paragraph (1) shall be audited by the Comptroller General. The Comp11 troller General shall allow credit for an expenditure shown to be nec12 essary because of the nature of the business activities authorized by this 

13 section or subtitle V of title 46. At least once a year, the Comptroller 

14 General shall report to Congress any departure by the Secretary from 

15 this section or subtitle V of title 46. 

16 ‘‘(i) AUTHORIZATION OF APPROPRIATIONS.— 

17 ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, 

18 there are authorized to be appropriated such amounts as may be nec19 essary to carry out the duties and powers of the Secretary relating to 

20 the Maritime Administration. 

21 ‘‘(2) LIMITATIONS.—Only those amounts specifically authorized by 

22 law may be appropriated for the use of the Maritime Administration 

23 for— 

24 ‘‘(A) acquisition, construction, or reconstruction of vessels; 

25 ‘‘(B) construction-differential subsidies incident to the construc26 tion, reconstruction, or reconditioning of vessels; 

27 ‘‘(C) costs of national defense features; 

28 ‘‘(D) payments of obligations incurred for operating-differential 

29 subsidies; 

30 ‘‘(E) expenses necessary for research and development activities, 

31 including reimbursement of the Vessel Operations Revolving Fund 

32 for losses resulting from expenses of experimental vessel operations; 

33 ‘‘(F) the Vessel Operations Revolving Fund; 

34 ‘‘(G) National Defense Reserve Fleet expenses; 

35 ‘‘(H) expenses necessary to carry out part B of subtitle V of title 

36 46; and 

37 ‘‘(I) other operations and training expenses related to the develop38 ment of waterborne transportation systems, the use of waterborne 

39 transportation systems, and general administration. 

40 ‘‘(3) TRAINING VESSELS.—Amounts may not be appropriated for the 

41 purchase or construction of training vessels for State maritime academies 
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1 unless the Secretary has approved a plan for sharing training vessels be2 tween State maritime academies.’’. 

3 SEC. 12. AMENDMENTS RELATING TO MARITIME SECURITY ACT OF 

4 2003. 

5 (a) AMENDMENTS TO CHAPTER 531.—Chapter 531 of title 46, United 

6 States Code, is amended as follows: 

7 (1) In section 53102— 

8 (A) in the headings of paragraphs (1), (2), and (4) of subsection 

9 (c), strike ‘‘SECTION 2’’ and substitute ‘‘SECTION 50501’’; 

10 (B) in subsection (c)(1), (2)(A)(i) and (ii)(II) and (B), and 

11 (4)(B), strike ‘‘section 2 of the Shipping Act, 1916 (46 U.S.C. App. 

12 802)’’ and substitute ‘‘section 50501 of this title’’; 

13 (C) in subsection (d), strike ‘‘the first section of Public Law 81– 

14 891 (64 Stat. 1120; 46 U.S.C. App. note prec. 3)’’ and substitute 

15 ‘‘section 501 of this title’’; and 

16 (D) in subsection (e)(1)— 

17 (i) strike ‘‘a documented vessel (as that term is defined in 

18 section 12101 of this title)’’ and substitute ‘‘documented under 

19 chapter 121 of this title,’’; and 

20 (ii) in clause (B), strike ‘‘a documented vessel (as defined in 

21 that section)’’ and substitute ‘‘documented under chapter 121’’. 

22 (2) In section 53103(c)— 

23 (A) in the heading of paragraph (1)(C), strike ‘‘SECTION 2’’ and 

24 substitute ‘‘SECTION 50501’’; 

25 (B) in paragraphs (1)(A)(iii) and (C)(i) and (ii), strike ‘‘section 

26 2 of the Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute 

27 ‘‘section 50501 of this title’’; 

28 (C) in paragraph (1)(B), strike ‘‘subparagraphs’’ and substitute 

29 ‘‘subparagraph’’; and 

30 (D) in paragraph (3)(B), strike ‘‘agreement’’ and substitute 

31 ‘‘agreements’’. 

32 (3) In section 53104— 

33 (A) in subsection (c)(3)(B)(ii)(I) and (II), strike ‘‘section 2 of the 

34 Shipping Act, 1916 (46 U.S.C. App. 802)’’ and substitute ‘‘section 

35 50501 of this title’’; 

36 (B) in subsection (e)(2), strike ‘‘section 9 of the Shipping Act, 

37 1916 (46 U.S.C. App. 808)’’ and substitute ‘‘section 56101 of this 

38 title’’; and 

39 (C) in subsection (e)(3), strike ‘‘section 902 of the Merchant Ma40 rine Act, 1936 (46 U.S.C. App. 1242)’’ and ‘‘section 902 of such 
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1 Act’’ and substitute ‘‘chapter 563 of this title’’ and ‘‘chapter 563’’, 

2 respectively. 

3 (4) In section 53105— 

4 (A) in subsection (a)(1)(A), strike ‘‘section 12105’’ and substitute 

5 ‘‘section 12111’’; and 

6 (B) in subsection (f), strike ‘‘approve’’ and substitute ‘‘approves’’. 

7 (5) In section 53106— 

8 (A) in subsection (d)(1), strike ‘‘section 2631 of title 10, United 

9 States Code, the Act of March 26, 1934 (46 U.S.C. App. 1241–1), 

10 section 901(a), 901(b), or 901b of the Merchant Marine Act, 1936 

11 (46 U.S.C. App. 1241(a), 1241(b), or 1241f)’’ and substitute ‘‘sec12 tion 55302(a), 55304, 55305, or 55314 of this title, section 2631 of 

13 title 10’’; 

14 (B) in subsection (d)(2), strike ‘‘section 901(a), 901(b), or 901b 

15 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a), 

16 1241(b), or 1241f),’’ and substitute ‘‘section 55302(a), 55305, or 

17 55314 of this title’’; and 

18 (C) in subsection (e)(2), strike ‘‘section 2(c) of the Shipping Act, 

19 1916 (46 U.S.C. App. 802(c))’’ and substitute ‘‘section 50501 of this 

20 title, applying the 75 percent ownership requirement of that sec21 tion’’. 

22 (6) In section 53107(f)— 

23 (A) strike ‘‘section 2631 of title 10, United States Code, the Act 

24 of March 26, 1934 (46 U.S.C. App. 1241–1), section 901(a), 901(b), 

25 or 901b of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(a), 

26 1241(b), or 1241f)’’ and substitute ‘‘section 55302(a), 55304, 55305, 

27 or 55314 of this title, section 2631 of title 10’’; and 

28 (B) strike ‘‘section 2631 of title 10, United States Code, the Act 

29 of March 26, 1934 (46 U.S.C. App. 1241–1), and sections 901(a), 

30 901(b), and 901b of the Merchant Marine Act, 1936 (46 U.S.C. App. 

31 1241(a), 1241(b), and 1241b)’’ and substitute ‘‘sections 55302(a), 

32 55304, 55305, and 55314 of this title and section 2631 of title 10’’; 

33 and 

34 (7) In section 53108(b), strike ‘‘section 901(b)(1) of the Merchant Ma35 rine Act, 1936 (46 U.S.C. App. 1241(b)(1))’’ and substitute ‘‘section 

36 55305(a) of this title’’. 

37 (b) OTHER CONFORMING AMENDMENTS.— 

38 (1) SECTION 12111.— 

39 (A) AMENDMENT.—Section 12111(c)(3) of title 46, United States 

40 Code, as enacted by this Act, is amended by striking ‘‘subtitle B of 
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1 title VI of the Merchant Marine Act, 1936’’ and substituting ‘‘chap2 ter 531 of this title’’. 

3 (B) EFFECTIVE DATE.—The amendment made by subparagraph 

4 (A) is effective the date of enactment of this Act, or the effective date 

5 of section 3534(b)(1) of the Maritime Security Act of 2003 (117 

6 Stat. 1818), whichever is later. 

7 (2) REPEAL.—If this Act takes effect before the amendment made by 

8 section 3534(b)(1) of the Maritime Security Act of 2003 (Public Law 

9 108–136, 117 Stat. 1818), such section 3534(b)(1) is repealed. 

10 SEC. 13. AMENDMENTS TO PARTIALLY RESTATED PROVISIONS. 

11 (a) Section 2793 of the Revised Statutes (19 U.S.C. 288, 46 App. U.S.C. 

12 111, 123) is amended by striking ‘‘or tonnage tax’’. 

13 (b) Section 809(a) of the Merchant Marine Act, 1936 (46 App. U.S.C. 

14 1213(a)), is amended by striking ‘‘and section 211(a)’’. 

15 SEC. 14. ADDITIONAL AMENDMENTS TO TITLE 46. 

16 Title 46, United States Code, is amended as follows: 

17 (1) The analysis of subtitle II is amended as follows: 

18 (A) In each chapter item, capitalize the first letter of each word 

19 containing 4 or more letters. 

20 (B) Strike the item for chapter 39. 

21 (C) The item for chapter 45 is amended to read as follows: 

‘‘45. Uninspected Commercial Fishing Industry Vessels ....................... 4501’’. 

22 (2) Section 2101 is amended as follows: 

23 (A) Clauses (2), (3), (3a), (6), (10), (10a), (12), (17b), (36), (41), 

24 (44), (45), and (46) are repealed. 

25 (B) In clause (8a), insert ‘‘Prevention’’ after ‘‘Abuse’’. 

26 (C) In clause (18), strike ‘‘those’’. 

27 (D) In clause (34)— 

28 (i) strike ‘‘, except in part H,’’; and 

29 (ii) strike ‘‘head’’ and substitute ‘‘Secretary’’. 

30 (3) In section 2102— 

31 (A) in subsection (a)(2), strike ‘‘section 2101(36) and (44)’’ and 

32 substitute ‘‘chapter 1’’; and 

33 (B) in subsection (b), strike ‘‘West’’ and ‘‘East’’ and substitute 

34 ‘‘west’’ and ‘‘east’’, respectively. 

35 (4) In section 2106, strike ‘‘a district court of the United States’’ and 

36 substitute ‘‘the district court of the United States for any district’’. 

37 (5) Section 2108 is repealed. 

38 (6) In section 2110— 

39 (A) in subsection (a)(2), strike ‘‘part B of this title’’ and sub40 stitute ‘‘part B of this subtitle’’; 
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1 (B) in subsection (b)(2)(A)(iii), strike the period at the end and 

2 substitute ‘‘; and’’; 

3 (C) in subsection (b)(5), strike ‘‘fees’’ and substitute ‘‘fee’’; 

4 (D) In subsection (f), strike ‘‘Secretary of the Treasury shall deny 

5 the clearance required by section 4197 of the Revised Statutes of the 

6 United States (46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of 

7 Homeland Security shall deny the clearance required by section 

8 60105 of this title’’; and 

9 (E) In subsection (j), strike ‘‘state’’ and substitute ‘‘State’’. 

10 (7) In section 2301, strike ‘‘section’’ and substitute ‘‘sections 2304 

11 and’’. 

12 (8) In section 2304— 

13 (A) insert the paragraph designation ‘‘(1)’’ after ‘‘(a)’’; and 

14 (B) insert at the end of subsection (a) the following new para15 graph: 

16 ‘‘(2) Paragraph (1) does not apply to a vessel of war or a vessel owned 

17 by the United States Government appropriated only to a public service.’’. 

18 (9) In section 2306(a)(2), strike ‘‘section 212(A) of the Merchant Ma19 rine Act, 1936 (46 App. U.S.C. 1122a),’’ and substitute ‘‘section 50113 

20 of this title’’. 

21 (10) In section 3205(d), strike ‘‘Secretary of the Treasury shall with22 hold or revoke the clearance required by section 4197 of the Revised Stat23 utes (46 App. U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Secu24 rity shall withhold or revoke the clearance required by section 60105 of 

25 this title’’. 

26 (11) In section 3302— 

27 (A) in subsection (b), insert a comma after ‘‘fishing vessel’’; 

28 (B) in subsection (j)(2)(B), strike ‘‘section 1304 of the Merchant 

29 Marine Act, 1936 (46 App. U.S.C. 1295c)’’ and substitute ‘‘chapter 

30 515 of this title’’; and 

31 (C) in subsection (l)(1)(C), strike ‘‘Inc..’’ and substitute ‘‘Inc.’’. 

32 (12) In section 3306(d), strike ‘‘section 1302(3) of the Merchant Ma33 rine Act, 1936 (46 App. U.S.C. 1295a(3))’’ and substitute ‘‘section 51102 

34 of this title’’. 

35 (13) In section 3318(f), strike the period after ‘‘felony’’. 

36 (14) In section 3505, strike ‘‘section 3303(a)’’ and substitute ‘‘section 

37 3303’’. 

38 (15) In the analysis of chapter 37, the item for section 3719 is amend39 ed to read as follows: 

‘‘3719. Reduction of oil spills from single hull non-self-propelled tank vessels.’’. 
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1 (16) In paragraphs (1)(C), (2), and (3) of section 3703a(c), strike 

2 ‘‘documentation under section 4136 of the Revised Statutes of the United 

3 States (46 App. U.S.C. 14)’’ and substitute ‘‘documentation as a wrecked 

4 vessel under section 12112 of this title’’. 

5 (17) 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 title’’. 

7 (18) In section 3718(e)(1), strike ‘‘Secretary of the Treasury’’ and 

8 ‘‘section 4197 of the Revised Statutes of the United States (46 App. 

9 U.S.C. 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and ‘‘sec10 tion 60105 of this title’’, respectively. 

11 (19) In section 4702, strike the subsection ‘‘(a)’’ designation. 

12 (20) In section 4705— 

13 (A) strike ‘‘subcontractor not’’ and substitute ‘‘subcontractor are 

14 not’’; 

15 (B) strike ‘‘(a)(1)’’ and substitute ‘‘(a)’’; 

16 (C) strike ‘‘(2) Paragraph (1)’’ and substitute ‘‘(b) Subsection 

17 (a)’’; 

18 (D) strike ‘‘(A)’’ and substitute ‘‘(1)’’; and 

19 (E) strike ‘‘(B)’’ and substitute ‘‘(2)’’. 

20 (21) In section 5113(b), strike ‘‘section 4197 of the Revised Statutes 

21 (46 App. U.S.C. 91)’’ and substitute ‘‘section 60105 of this title’’. 

22 (22) In section 6101, redesignate the second subsection (g) and sub23 section (h) as subsections (h) and (i), respectively. 

24 (23) In section 8103(a), strike ‘‘Only’’ and substitute ‘‘Except as oth25 erwise provided in this title, only’’. 

26 (24) In section 9307(b)(2)(A), strike ‘‘The’’ and substitute ‘‘the’’. 

27 (25) In section 12503(a), in the matter before clause (1), strike 

28 ‘‘delegee’’ and substitute ‘‘delegate’’. 

29 (26) In section 13102(a), insert ‘‘(26 U.S.C. 9504)’’ after ‘‘Internal 

30 Revenue Code of 1986’’. 

31 (27) In section 14305(a)— 

32 (A) in clause (1), strike ‘‘and sections 12106(c) and 12108(c)’’ 

33 and substitute ‘‘of this subtitle and section 12116’’; 

34 (B) in clause (5), strike ‘‘section 4283 of the Revised Statutes of 

35 the United States (46 App. U.S.C. 183)’’ and substitute ‘‘section 

36 30506 of this title’’; 

37 (C) in clause (6), strike ‘‘sections 27 and 27A of the Act of June 

38 5, 1920 (46 App. U.S.C. 883 and 883–1)’’ and substitute ‘‘sections 

39 12118 and 12132 of this title’’; and 

40 (D) in clause (7), strike ‘‘Act of July 14, 1956 (46 App. U.S.C. 

41 883a)’’ and substitute ‘‘section 12139(b) of this title’’. 
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1 (28) In section 31306(a), strike ‘‘section 9 or 37 of the Shipping Act, 

2 1916 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56102 or 56103 

3 of this title’’. 

4 (29) In section 31308, strike ‘‘title XI of the Merchant Marine Act, 

5 1936 (46 App. U.S.C. 1271 et seq.)’’ and substitute ‘‘chapter 537 of this 

6 title’’. 

7 (30) In section 31322— 

8 (A) in subsection (a)(4)(A), strike ‘‘section 12102(c)’’ and sub9 stitute ‘‘section 12113(c)’’; 

10 (B) in subsection (a)(4)(E), strike ‘‘under section 12102(a)’’ and 

11 substitute ‘‘for purposes of documentation under section 12103’’; 

12 (C) in subsection (f)(2), strike ‘‘section 12102(c)’’ and substitute 

13 ‘‘section 12113(c)’’. 

14 (31) In section 31325(b)(3)(B), strike ‘‘section 9 or 37 of the Shipping 

15 Act, 1936 (46 App. U.S.C. 808, 835)’’ and substitute ‘‘section 56101 or 

16 56102 of this title’’. 

17 (32) In section 31326(b)— 

18 (A) in clause (1), strike ‘‘title XI of the Merchant Marine Act, 

19 1936 (46 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘chapter 537 

20 of this title,’’; and 

21 (B) in clause (2), strike ‘‘title XI of that Act’’ and substitute 

22 ‘‘chapter 537 of this title’’. 

23 (33) In section 31329— 

24 (A) in subsection (a)(1), strike ‘‘section 12102’’ and substitute 

25 ‘‘section 12103’’; and 

26 (B) in subsection (b)— 

27 (i) in clause (2), strike ‘‘section 902 of the Merchant Marine 

28 Act, 1936 (46 App. U.S.C. 1242)’’ and substitute ‘‘chapter 563 

29 of this title’’; and 

30 (ii) in clause (3), strike ‘‘sale foreign within the terms of the 

31 first proviso of section 27 of the Merchant Marine Act, 1920 

32 (46 App. U.S.C. 883)’’ and substitute ‘‘sale to a person not a 

33 citizen of the United States under section 12132 of this title’’. 

34 (34)(A) Sections 70118 and 70119, as added by section 801 of the 

35 Coast Guard and Maritime Transportation Act of 2004 (Public Law 

36 108–293, 118 Stat. 1078), are redesignated as sections 70117 and 70118, 

37 respectively, and moved to appear immediately after section 70116 of 

38 title 46, United States Code. 

39 (B) Sections 70117 and 70118, as added by section 802 of such Act, 

40 are redesignated as sections 70120 and 70121, respectively, and moved 
257 

•HR 4319 RH 

1 to appear immediately after section 70119 of title 46, United States 

2 Code. 

3 (C) In section 70120(a) (as redesignated by subparagraph (B)), strike 

4 ‘‘section 70120’’ and substitute ‘‘section 70119’’. 

5 (D) In section 70121(a) (as redesignated by subparagraph (B))— 

6 (i) strike ‘‘section 70120’’ and substitute ‘‘section 70119’’; and 

7 (ii) strike ‘‘section 4197 of the Revised Statutes of the United 

8 States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 of this 

9 title’’. 

10 (E) In the analysis of chapter 701, strike the items relating to sections 

11 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.’’. 

12 SEC. 15. CONFORMING AMENDMENTS TO OTHER LAWS. 

13 (a) TITLE 10.—Title 10, United States Code, is amended as follows: 

14 (1) In section 374(b)(4)(A)(iv), strike ‘‘The Maritime Drug Law En15 forcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘Chapter 

16 705 of title 46’’ 

17 (2) In section 2218(d)(2), strike ‘‘sections 508 and 510 of the Merchant 

18 Marine Act of 1936 (46 U.S.C. App. 1158, 1160), shall be deposited in 

19 the Fund’’ and substitute ‘‘sections 57101–57104 and chapter 573 of title 

20 46’’. 

21 (3) In section 2350b(g)(2), strike ‘‘section 901(b) of the Merchant Ma22 rine Act, 1936 (46 U.S.C. App. 1241(b))’’ and substitute ‘‘section 55305 

23 of title 46’’. 

24 (4) In section 2645— 

25 (A) in subsection (c), strike ‘‘the second sentence of section 

26 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

27 1288(a))’’ and substitute ‘‘section 53909(b) of title 46’’; 

28 (B) in subsection (h)(1), strike ‘‘title XII of the Merchant Marine 

29 Act, 1936 (46 U.S.C. App. 1281 et seq.),’’ and substitute ‘‘chapter 

30 539 of title 46’’; and 

31 (C) in subsection (h)(2), strike ‘‘the first sentence of section 

32 1208(a) of the Merchant Marine Act, 1936 (46 U.S.C. App. 

33 1288(a))’’ and substitute ‘‘section 53909(a) of title 46’’. 

34 (5) In section 2664(a)(3), strike ‘‘transferred to the Secretary of 

35 Transportation under section 3 of the Maritime Act of 1981 (46 U.S.C. 

36 App. 1602)’’ and substitute ‘‘of the Secretary of Transportation relating 

37 to the Maritime Administration’’. 
258 

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1 (6) In section 5985, strike ‘‘section 1304 of the Merchant Marine Act, 

2 1936 (46 U.S.C. App. 1295c),’’ and substitute ‘‘chapter 515 of title 46’’. 

3 (7) In section 7721(a), strike ‘‘the Act of March 3, 1925 (commonly 

4 referred to as the ‘Public Vessels Act’) (46 U.S.C. App. 781–790)’’ and 

5 substitute ‘‘chapter 311 of title 46’’. 

6 (b) TITLE 11.—Title 11, United States Code, is amended as follows: 

7 (1) In section 362(b)— 

8 (A) in clause (12), strike ‘‘section 207 or title XI of the Merchant 

9 Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 46 or section 

10 109(h) of title 49’’; and 

11 (B) in clause (13), strike ‘‘section 207 or title XI of the Merchant 

12 Marine Act, 1936’’ and substitute ‘‘chapter 537 of title 46’’. 

13 (2) In section 1110(a)(3)(A)(ii), strike ‘‘documented vessel (as defined 

14 in section 30101(1) of title 46)’’ and substitute ‘‘vessel documented under 

15 chapter 121 of title 46’’. 

16 (c) TITLE 14.—Sections 821(b) and 823a(b) of title 14, United States Code, 

17 are each amended by striking clauses (3)–(5) and substituting the following: 

18 ‘‘(3) Section 30101 of title 46 (popularly known as the Admiralty Ex19 tension Act). 

20 ‘‘(4) Chapter 309 of title 46 (known as the Suits in Admiralty Act). 

21 ‘‘(5) Chapter 311 of title 46 (known as the Public Vessels Act).’’. 

22 (d) TITLE 18.—Title 18, United States Code, is amended as follows: 

23 (1) In section 229F(9)(C), strike ‘‘section 3(b) of the Maritime Drug 

24 Enforcement Act, as amended (46 U.S.C., App. sec. 1903(b))’’ and sub25 stitute ‘‘section 70502(b) of title 46, United States Code’’. 

26 (2) In section 507— 

27 (A) in the first paragraph, strike ‘‘recording, registry, or enroll28 ment of any vessel, in the office of any collector of the customs, or 

29 a license to any vessel for carrying on the coasting trade or fisheries 

30 of the United States’’ and substitute ‘‘documentation of any vessel’’; 

31 (B) in the first paragraph, strike ‘‘collector or other’’; and 

32 (C) in the second paragraph, strike ‘‘license,’’. 

33 (3) In section 924— 

34 (A) in subsections (c)(2), (e)(2)(A)(i), (g)(2), and (k)(1), strike 

35 ‘‘the Maritime Drug Law Enforcement Act (46 U.S.C. App. 1901 

36 et seq.)’’ and substitute ‘‘chapter 705 of title 46’’; and 

37 (B) in subsection (g)(2), strike ‘‘802 et seq.’’ and substitute ‘‘801 

38 et seq.’’. 

39 (4) In section 929(a)(2), strike ‘‘the Maritime Drug Law Enforcement 

40 Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chapter 705 of title 

41 46’’. 
259 

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1 (5) In section 965(a), strike ‘‘section 4197 of the Revised Statutes of 

2 the United States (46 U.S.C. App. 91)’’ and substitute ‘‘section 60105 

3 of title 46’’. 

4 (6) In section 2277(a), strike ‘‘registered, enrolled, or licensed’’ and 

5 substitute ‘‘documented’’. 

6 (7) In section 3142(e) and (f)(1)(C), strike ‘‘the Maritime Drug Law 

7 Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute ‘‘chapter 

8 705 of title 46’’. 

9 (e) INTERNAL REVENUE CODE OF 1986.—The Internal Revenue Code of 

10 1986 (26 U.S.C. 1 et seq.) is amended as follows: 

11 (1) In section 56(c)(2)— 

12 (A) strike ‘‘section 607 of the Merchant Marine Act, 1936 (46 

13 U.S.C. 1177)’’ and substitute ‘‘chapter 535 of title 46, United States 

14 Code’’; and 

15 (B) in clauses (A) and (B), strike ‘‘such section 607’’ substitute 

16 ‘‘such chapter 535’’. 

17 (2) In section 140(a)(4), strike ‘‘section 607(d) of the Merchant Marine 

18 Act, 1936 (46 U.S.C. 1177)’’ and substitute ‘‘section 53507 of title 46, 

19 United States Code’’. 

20 (3) In section 543(a)(1)(B), strike ‘‘section 511 or 607 of the Merchant 

21 Marine Act, 1936 (46 U.S.C. App. 1161 or 1177)’’ and substitute ‘‘chap22 ter 533 or 535 of title 46, United States Code’’. 

23 (4) In section 1023(2), strike ‘‘section 511 of the Merchant Marine Act, 

24 1936, as amended (46 U.S.C. 1161)’’ and substitute ‘‘chapter 533 of title 

25 46, United States Code’’. 

26 (5) In section 1061— 

27 (A) in clause (1), strike ‘‘section 510 of the Merchant Marine Act, 

28 1936, see subsection (e) of that section, as amended August 4, 1939 

29 (46 U.S.C. App. 1160)’’ and substitute ‘‘chapter 573 of title 46, 

30 United States Code, see section 57307 of title 46’’; 

31 (B) in clause (2), strike ‘‘section 511 of such Act, as amended (46 

32 U.S.C. App. 1161)’’ and substitute ‘‘chapter 533 of title 46, United 

33 States Code’’; and 

34 (C) strike clause (3). 

35 (6) In section 7518— 

36 (A) in subsection (a)(1), strike ‘‘section 607 of the Merchant Ma37 rine Act, 1936’’ and substitute ‘‘chapter 535 of title 46 of the United 

38 States Code’’; 

39 (B) in subsections (a)(2) and (c)(1)(A) and (D), strike ‘‘section 

40 607 of the Merchant Marine Act, 1936’’ and substitute ‘‘chapter 535 

41 of title 46, United States Code’’; and 
260 

•HR 4319 RH 

1 (C) in subsection (g)(3)(C)(iii), strike ‘‘Merchant Marine Act of 

2 1936’’ and substitute ‘‘Merchant Marine Act, 1936,’’. 

3 (f) TITLE 28.—Title 28, United States Code, is amended as follows: 

4 (1) In section 994(h)(1)(B) and (2)(B), strike ‘‘the Maritime Drug 

5 Law Enforcement Act (46 U.S.C. App. 1901 et seq.)’’ and substitute 

6 ‘‘chapter 705 of title 46’’. 

7 (2) In section 1605(d), strike ‘‘the Ship Mortgage Act, 1920 (46 U.S.C. 

8 911 and following)’’ and ‘‘that Act’’ and substitute ‘‘section 31301 of title 

9 46’’ and ‘‘chapter 313 of title 46’’, respectively. 

10 (3) In section 2342(3)— 

11 (A) in clause (A), strike ‘‘section 2, 9, 37, or 41 of the Shipping 

12 Act, 1916 (46 U.S.C. App. 802, 803, 808, 835, 839, and 841a)’’ and 

13 substitute ‘‘section 50501, 50502, 56101–56104, or 57109 of title 

14 46’’; and 

15 (B) strike clause (B) and substitute the following: 

16 ‘‘(B) the Federal Maritime Commission issued pursuant to sec17 tion 305, 41304, 41308, or 41309 or chapter 421 or 441 of title 

18 46;’’. 

19 (4) In section 2680(d), strike ‘‘sections 741–752, 781–790 of Title 46,’’ 

20 and substitute ‘‘chapter 309 or 311 of title 46’’. 

21 (g) TITLE 40.—Title 40, United States Code, is amended as follows: 

22 (1) In section 548, strike ‘‘the Merchant Marine Act, 1936 (46 App. 

23 U.S.C. 1101 et seq.),’’ and substitute ‘‘part F of subtitle V of title 46’’. 

24 (2) In section 3134(b), strike ‘‘the Merchant Marine Act, 1936 (46 

25 App. U.S.C. 1101 et seq.)’’ and substitute ‘‘subtitle V of title 46’’. 

26 (h) TITLE 49.—Title 49, United States Code, is amended as follows: 

27 (1) In section 5122(c)(1), strike ‘‘Secretary of the Treasury’’ and ‘‘sec28 tion 4197 of the Revised Statutes of the United States (46 App. U.S.C. 

29 91)’’ and substitute ‘‘Secretary of Homeland Security’’ and ‘‘section 

30 60105 of title 46’’, respectively. 

31 (2) In section 5901(3)(B), strike ‘‘section 3 of the Shipping Act of 

32 1984 (46 App. U.S.C. 1702)’’ and substitute ‘‘section 40102 of title 46’’. 

33 (i) MISCELLANEOUS.—Section 5501(a) of the Oceans Act of 1992 (Public 

34 Law 102–587, 106 Stat. 5084) is amended by adding the following: 

35 ‘‘(3) The exceptions provided by paragraph (2) shall apply under section 

36 55109 of title 46, United States Code, to the same extent as under former sec37 tion 1 of the Act of May 28, 1906, as amended by paragraph (1).’’ 
261 

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1 SEC. 16. LEGISLATIVE CONSTRUCTION AND TRANSITIONAL PROVI2 SIONS. 

3 (a) IN GENERAL.—The purpose of this Act is to complete the codification 

4 of title 46, United States Code, ‘‘Shipping’’, as positive law, in accordance 

5 with section 285b(1) of title 2, United States Code. 

6 (b) CONFORMITY WITH ORIGINAL INTENT.—In the codification of laws en7 compassed by this Act, the intent is to conform to the understood policy, in8 tent, and purpose of the Congress in the original enactments, with such 

9 amendments and corrections as will remove ambiguities, contradictions, and 

10 other imperfections both of substance and of form. 

11 (c) CUTOFF DATE.—This Act codifies certain laws enacted as of August 31, 

12 2004. Any law enacted after that date that is inconsistent with this Act, in13 cluding any law purporting to amend or repeal a provision that is repealed 

14 by this Act, supersedes this Act to the extent of the inconsistency. 

15 (d) ORIGINAL DATE OF ENACTMENT UNCHANGED.—For purposes of deter16 mining whether one provision of law supersedes another based on enactment 

17 later in time, the date of enactment of a provision codified by this Act is 

18 deemed to remain unchanged, continuing to be the date of enactment of the 

19 underlying provision that is codified. 

20 (e) REFERENCES IN OTHER PROVISIONS.—A reference to a provision of law 

21 codified by this Act, including a reference in another law or in a rule, regula22 tion, or order, is deemed to refer to the corresponding provision enacted by 

23 this Act. 

24 (f) SAVINGS PROVISIONS.— 

25 (1) RULES, REGULATIONS, AND ORDERS.—A rule, regulation, or order 

26 in effect under a provision of law codified by this Act continues in effect 

27 under the corresponding provision enacted by this Act. 

28 (2) ACTIONS TAKEN AND OFFENSES COMMITTED.—An action taken or 

29 an offense committed under a provision of law codified by this Act is 

30 deemed to have been taken or committed under the corresponding provi31 sion enacted by this Act. 

32 SEC. 17. REPEALS. 

33 The following laws are repealed, except with respect to rights and duties 

34 that matured, penalties that were incurred, or proceedings that were begun 

35 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 
262 

•HR 4319 RH 

Revised Statutes—Continued 

Revised Statutes Section 

United States Code 

Title Section 

4204 ......................................................................................... 46 App. 98 

4206 ......................................................................................... 46 App. 100 

4219 ......................................................................................... 46 App. 121 

4220 ......................................................................................... 46 App. 122 

4221 ......................................................................................... 46 App. 125 

4225 ......................................................................................... 46 App. 128 

4226 ......................................................................................... 46 App. 129 

4227 ......................................................................................... 46 App. 135 

4228 ......................................................................................... 46 App. 141 

4238 ......................................................................................... 46 App. 721 

4239 ......................................................................................... 46 App. 722 

4240 ......................................................................................... 46 App. 723 

4241 ......................................................................................... 46 App. 724 

4281 ......................................................................................... 46 App. 181 

4282 ......................................................................................... 46 App. 182 

4283 ......................................................................................... 46 App. 183 

4283A ...................................................................................... 46 App. 183b 

4283B ...................................................................................... 46 App. 183c 

4284 ......................................................................................... 46 App. 184 

4285 ......................................................................................... 46 App. 185 

4286 ......................................................................................... 46 App. 186 

4287 ......................................................................................... 46 App. 187 

4289 ......................................................................................... 46 App. 188 

4309 ......................................................................................... 46 App. 354 

4310 ......................................................................................... 46 App. 355 

4311 ......................................................................................... 46 App. 251 

4320 ......................................................................................... 46 App. 262 

4336 ......................................................................................... 46 App. 277 

4370 ......................................................................................... 46 App. 316 

4373 ......................................................................................... 46 App. 321 

4374 ......................................................................................... 46 App. 322 

4375 ......................................................................................... 46 App. 323 

4376 ......................................................................................... 46 App. 324 

4378 ......................................................................................... 46 App. 326 

4379 ......................................................................................... 46 App. 327 

4380 ......................................................................................... 46 App. 328 

4493 ......................................................................................... 46 App. 491 

Statutes at Large 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

1874 

Apr. 18 110 ................................................................... 18 31 ................... 336 

1878 

June 19 324 ................................................................... 20 175 ................. 725 

1884 

June 26 121 14 .............................................................. 23 57 ................... 121 

18 .............................................................. 23 57 ................... 189 

July 5 221 3 ................................................................ 23 119 ................. 3 

8(c) ............................................................ ........ ........................ 9 

1886 

June 19 421 8 ................................................................ 24 81 ................... 289 

9 ................................................................ 24 81 ................... 320 

17 .............................................................. 24 82 ................... 142 

1887 Mar. 3 339 ................................................................... 24 475 ................. 143 

1892 July 26 248 1 ................................................................ 27 267 ................. 144 2 ................................................................ 27 268 ................. 145 

1893 Feb. 13 105 1 ................................................................ 27 445 ................. 190 2 ................................................................ 27 445 ................. 191 

3 ................................................................ 27 445 ................. 192 

4 ................................................................ 27 445 ................. 193 

5 ................................................................ 27 446 ................. 194 

6 ................................................................ 27 446 ................. 196 

7 ................................................................ 27 446 ................. 195 

8 ................................................................ 27 446 ................. 190 nt 

Oct. 31 No. 13 ................................................................... 28 13 ................... 726 

1898 

Feb. 17 26 1 ................................................................ 30 248 ................. 290 

3 ................................................................ 30 248 ................. 291 
263 

•HR 4319 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

1900 Mar. 31 120 1–3 ............................................................ 31 58 ................... 163 

1906 May 28 2566 1 (except as may be applicable under 

section 5501(a)(2) of Pub. L. 102– 

587).

34 204 ................. 292 

1908 Mar. 24 96 1 ................................................................ 35 46 ................... 133 2 ................................................................ 35 46 ................... 134 

May 28 212 5 ................................................................ 35 425 ................. 104 

1909 Aug. 5 6 36 .............................................................. 36 111 ................. 121 

1910 Mar. 8 86 ................................................................... 36 234 ................. 132 

1912 Aug. 1 268 1 ................................................................ 37 242 ................. 727 3 ................................................................ 37 242 ................. 729 

4 ................................................................ 37 242 ................. 730 

5 ................................................................ 37 242 ................. 731 

1913 Oct. 3 16 IV(J)(1)–(3) ............................................. 38 195 ................. 19 U.S.C. 

128, 130, 

131; 

46 App. 146 

1915 Mar. 4 153 20 .............................................................. 38 1185 ............... 688 

171 ................................................................... 38 1193 ............... 19 U.S.C. 

128, 131; 

46 App. 121, 

128, 146 

1916 Sept. 7 451 1 ................................................................ 39 728 ................. 801 

2(a)–(c) ..................................................... 39 729 ................. 802 

2(d) ........................................................... 39 729 ................. 803 

9 ................................................................ 39 730 ................. 808 

12 .............................................................. 39 732 ................. 811 

34 .............................................................. 39 738 ................. 833 

36 .............................................................. 39 738 ................. 834 

37 .............................................................. ........ ........................ 835 

38 .............................................................. ........ ........................ 836 

39 .............................................................. ........ ........................ 837 

41 .............................................................. ........ ........................ 839 

46 .............................................................. ........ ........................ 842 

1920 

Mar. 9 95 1 ................................................................ 41 525 ................. 741 

2 ................................................................ 41 525 ................. 742 

3 ................................................................ 41 526 ................. 743 

4 ................................................................ 41 526 ................. 744 

5 ................................................................ 41 526 ................. 745, 745 nt 

6 ................................................................ 41 527 ................. 746 

7 ................................................................ 41 527 ................. 747 

8 ................................................................ 41 527 ................. 748 

9 ................................................................ 41 527 ................. 749 

10 .............................................................. 41 528 ................. 750 

11 .............................................................. 41 528 ................. 751 

12 .............................................................. 41 528 ................. 752 

Mar. 30 111 1 ................................................................ 41 537 ................. 761 

2 ................................................................ 41 537 ................. 762 

4 ................................................................ 41 537 ................. 764 

5 ................................................................ 41 537 ................. 765 

6 ................................................................ 41 537 ................. 766 

7 ................................................................ 41 538 ................. 767 

8 ................................................................ 41 538 ................. 768 

June 5 250 1 ................................................................ 41 988 ................. 861 6 ................................................................ 41 991 ................. 865 

7 ................................................................ 41 991 ................. 866 

8 ................................................................ 41 992 ................. 867 

9 ................................................................ 41 992 ................. 868 

10 .............................................................. 41 992 ................. 869 

12 .............................................................. 41 993 ................. 871 

13 .............................................................. 41 993 ................. 872 

17 .............................................................. 41 994 ................. 875 

19 .............................................................. 41 995 ................. 876 

21 .............................................................. 41 997 ................. 877 
264 

•HR 4319 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 28 523 ................................................................... 48 963 ................. 48 U.S.C. 1664 

1936 June 25 807 1 ................................................................ 49 1922 ............... 738 2 ................................................................ 49 1922 ............... 738a 

4 ................................................................ 49 1923 ............... 738c 

June 29 858 101 ............................................................ 49 1985 ............... 1101 201 ............................................................ 49 1985 ............... 1111 

202 ............................................................ 49 1986 ............... 1112 

204 ............................................................ 49 1987 ............... 1114 

205 ............................................................ 49 1987 ............... 1115 

206 ............................................................ 49 1987 ............... 1116 

207 ............................................................ 49 1988 ............... 1117 

208 ............................................................ 49 1988 ............... 1118 

209 ............................................................ 49 1988 ............... 1119 

210 ............................................................ 49 1989 ............... 1120 

211 ............................................................ 49 1989 ............... 1121 

212 ............................................................ 49 1990 ............... 1122 

212(A) ....................................................... ........ ........................ 1122a 

212(B) ...................................................... ........ ........................ 1122b 

213 ............................................................ 49 1991 ............... 1123 

214 ............................................................ 49 1991 ............... 1124 

215 ............................................................ ........ ........................ 1125 

302 ............................................................ ........ ........................ 1132 

508 ............................................................ 49 2000 ............... 1158 

510 ............................................................ ........ ........................ 1160 

511 (added by Act Oct. 10, 1940) .......... ........ ........................ 1161 

607 ............................................................ 49 2005 ............... 1177 

701 ............................................................ 49 2008 ............... 1191 

702 ............................................................ 49 2008 ............... 1192 

703 ............................................................ 49 2008 ............... 1193 

704 ............................................................ 49 2008 ............... 1194 

705 ............................................................ 49 2009 ............... 1195 

706 ............................................................ 49 2009 ............... 1196 

707 ............................................................ 49 2009 ............... 1197 

708 ............................................................ 49 2009 ............... 1198 

709 ............................................................ 49 2010 ............... 1199 

710 ............................................................ 49 2010 ............... 1200 

711 ............................................................ 49 2010 ............... 1201 

712 ............................................................ 49 2010 ............... 1202 

713 ............................................................ 49 2010 ............... 1203 

714 ............................................................ 49 2011 ............... 1204 

715 ............................................................ ........ ........................ 1205 

805 ............................................................ 49 2012 ............... 1223 

806(b)–(d) ................................................ 49 2014 ............... 1228 

808 ............................................................ 49 2015 ............... 1226 

809(b) ....................................................... ........ ........................ 1213 

810 ............................................................ 49 2015 ............... 1227 

901 ............................................................ 49 2015 ............... 1241 
265 

•HR 4319 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 June 25 681 1st proviso on p. 1119 ............................. 52 1119 ............... 1111a 

1940 June 29 442 ................................................................... 54 684 ................. 1242a 

1941 Feb. 6 5 4 ................................................................ 55 6 ..................... 1125a 

1947 Mar. 22 20 proviso under heading ‘‘Independent Offices’’.

61 18 ................... 1116a 

1948 

June 19 526 ................................................................... 62 496 ................. 740 

June 30 775 101 (last proviso on p. 1199) ................. 62 1199 ............... 864a 

1949 

June 29 281 1 (proviso) ................................................ 63 349 ................. 864b 

1950 

Dec. 27 1155 1, 2 ............................................................ 64 1120 ............... 3 nt prec. 

1951 

June 2 121 pars. under heading ‘‘Vessel Operations 

Revolving Fund’’.

65 59 ................... 1241a 

Nov. 1 664 par. under heading ‘‘War-Risk Insurance Revolving Fund’’.65 746 ................. 1288a 

1956 June 20 415 101 (par. beginning with ‘‘Vessel operations revolving fund’’).

70 319 ................. 1241b, 

1241b nt 

July 14 600 2 ................................................................ 70 544 ................. 883a 
266 

•HR 4319 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

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 Sept. 13 87–220 2 ................................................................ 75 493 ................. 251a 

3 ................................................................ 75 493 ................. 251b 

1965 June 30 89–56 ................................................................... 79 195 ................. 1111 nt 

July 30 89–99 1 ................................................................ 79 424 ................. 441 3 ................................................................ 79 424 ................. 443 

4 ................................................................ 79 424 ................. 444 

1966 Nov. 6 89–777 2 ................................................................ 80 1356 ............... 817d 3 ................................................................ 80 1357 ............... 817e 

1976 July 14 94–361 603 ............................................................ 90 929 ................. 1126–1 

Oct. 4 94–455 807 ............................................................ 90 1606 ............... 1177–1 

1977 Dec. 13 95–208 1 ................................................................ 91 1475 ............... 1501 nt 2 ................................................................ 91 1475 ............... 1501 

3 ................................................................ 91 1476 ............... 1502 

4 ................................................................ 91 1476 ............... 1503 

5 ................................................................ 91 1477 ............... 1504 

6 ................................................................ 91 1478 ............... 1505 

7 ................................................................ 91 1479 ............... 1506 

8 ................................................................ 91 1479 ............... 1507 

1980 

Sept. 15 96–350 1 ................................................................ 94 1159 ............... 1901 

2 ................................................................ 94 1160 ............... 1902 

3 ................................................................ 94 1160 ............... 1903 

4 ................................................................ 94 1160 ............... 1904 

Oct. 6 96–382 1 ................................................................ 94 1525 ............... 763a 

Oct. 7 96–387 5 ................................................................ 94 1546 ............... 1121–1 

1981 Aug. 6 97–31 2 ................................................................ 95 151 ................. 1601 

3 ................................................................ 95 151 ................. 1602 

4 ................................................................ 95 151 ................. 1603 

5 ................................................................ 95 151 ................. 1604 

6 ................................................................ 95 151 ................. 1605 

8 ................................................................ 95 152 ................. 1607 

9 ................................................................ 95 152 ................. 1608 

1982 

Oct. 15 97–322 201 ............................................................ 96 1588 ............... 446 nt 

204 ............................................................ 96 1589 ............... 446 

205 ............................................................ 96 1589 ............... 446a 

206 ............................................................ 96 1590 ............... 446b 

207 ............................................................ 96 1590 ............... 446c 

1984 

Mar. 20 98–237 1 ................................................................ 98 67 ................... 1701 nt 2 ................................................................ 98 67 ................... 1701 

3 ................................................................ 98 67 ................... 1702 

4 ................................................................ 98 70 ................... 1703 

5 ................................................................ 98 70 ................... 1704 

6 ................................................................ 98 72 ................... 1705 

7 ................................................................ 98 73 ................... 1706 

8 ................................................................ 98 74 ................... 1707 

9 ................................................................ 98 76 ................... 1708 

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 
267 

•HR 4319 RH 

Statutes at Large—Continued 

Date Chapter or 

Public Law Section 

Statutes at Large U.S. Code 

(46 App. unless otherwise 

specified) 

Volume Page 

17 .............................................................. 98 84 ................... 1716 

19 .............................................................. 98 87 ................... 1718 

20(e) .......................................................... 98 90 ................... 1719 

Oct. 5 98–454 302 ............................................................ 98 1734 ............... 808a 

Oct. 30 98–563 ................................................................... 98 2916 ............... 289c 

1985 

Dec. 23 99–198 1141 .......................................................... 99 1490 ............... 1241d 

1143 .......................................................... 99 1496 ............... 1241p 

1986 

Aug. 27 99–399 902 ............................................................ 100 889 ................. 1801 

905 ............................................................ 100 890 ................. 1802 

907 ............................................................ 100 891 ................. 1803 

908 ............................................................ 100 891 ................. 1804 

909 ............................................................ 100 892 ................. 1805 

910 ............................................................ 100 892 ................. 1806 

911 ............................................................ 100 892 ................. 1807 

912 ............................................................ 100 892 ................. 1808 

913 ............................................................ 100 892 ................. 1809 

1987 

Dec. 22 100–202 101(a) [title V (par. under heading 

‘‘Ocean Freight Differential’’)].

101 1329, .............. 1329–27 .........1241h nt 

101(a) [title V (4th proviso on p. 1329- 

28)].

101 1329, .............. 1329–28 .........1295c–1 

1988 

May 30 100–324 1 ................................................................ 102 576 ................. 2001 nt 

2 ................................................................ 102 576 ................. 2001 

3 ................................................................ 102 576 ................. 2002 

4 ................................................................ 102 576 ................. 2003 

5 ................................................................ 102 576 ................. 2004 

6 ................................................................ 102 577 ................. 2005 

7 ................................................................ 102 577 ................. 2006 

8 ................................................................ 102 577 ................. 2007 

Aug. 23 100–418 10002 ........................................................ 102 1570 ............... 1710a 

1989 

Oct. 13 101–115 4 ................................................................ 103 692 ................. 1295c nt 

8 ................................................................ 103 694 ................. 1121–2 

1990 

Nov. 28 101–624 1521 .......................................................... 104 3665 ............... 1241q 

1522 .......................................................... 104 3665 ............... 1241r 

1523 .......................................................... 104 3666 ............... 1241s 

1524 .......................................................... 104 3667 ............... 1241t 

1526 .......................................................... 104 3668 ............... 1241u 

1527 .......................................................... 104 3668 ............... 1241v 

1993 

Nov. 30 103–160 1358 .......................................................... 107 1816 ............... 1280a 

1996 

Oct. 19 104–324 1117 .......................................................... 110 3973 ............... 46 U.S.C. 

12101 nt 

1120(f) ...................................................... 110 3978 ............... 883 nt 

1998 

Oct. 14 105–258 401 ............................................................ 112 1916 ............... 1273a 

Oct. 21 105–277 203(b)–(e) ................................................. 112 2681–619 ....... 46 U.S.C. 

12102 nt 

Nov. 13 105–383 502–504 .................................................... 112 3445 ............... 46 U.S.C. 

12106 nt 

2000 

Oct. 30 106–398 1 [§ 3506] ................................................. 114 1654, ..............

1654A–494 ....

1118 nt 

2002 

Nov. 25 107–295 403 ............................................................ 116 2114 ............... 46 U.S.C. 

12119 nt 

404 ............................................................ 116 2114 ............... 316a 

2003 

Nov. 24 108–136 3527 .......................................................... 117 1802 ............... 1280b 
268 

•HR 4319 RH 

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 

1 SEC. 18. EFFECTIVE DATE. 

2 This Act shall take effect on October 1, 2004, or the date of enactment of 

3 this Act, whichever is later. 

House Calendar No. 224 

108TH CONGRESS 

2D SESSION H. R. 4319 

[Report No. 108–690] 

A BILL 

To complete the codification of title 46, United 

States Code, ‘‘Shipping’’, as positive law. 

SEPTEMBER 17, 2004 

Reported with an amendment, referred to the House 

Calendar, and ordered to be printed