211 
‘‘(d) TRANSFERS TO NON-CITIZENS.—A vessel sold from the Fleet under 
this section may be scrapped in an approved foreign market without obtain-
ing additional separate approval from the Secretary to transfer the vessel 
to a person not a citizen of the United States. 
‘‘§ 57105. Acquisition of vessels for essential services, routes, 
or lines 
‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire a ves-
sel, by purchase or otherwise, if— 
‘‘(1) the Secretary considers the vessel necessary to establish, main-
tain, improve, or serve as a replacement on an essential service, route, 
or line in the foreign commerce of the United States, as determined 
under section 50103 of this title; 
‘‘(2) the vessel was constructed in the United States; and 
‘‘(3) the Secretary of the Navy has certified to the Secretary of 
Transportation that the vessel is suitable for economical and speedy 
conversion into a naval or military auxiliary or otherwise suitable for 
use by the United States Government in time of war or national emer-
gency. 
‘‘(b) PRICE.—The price paid for the vessel shall be based on a fair and 
reasonable valuation. However, the price may not exceed by more than 5 
percent the cost of the vessel to the owner (excluding any construction-dif-
ferential subsidy and the cost of national defense features paid by the Sec-
retary of Transportation) plus the actual cost previously expended for recon-
ditioning, less depreciation based on a 25-year life for a dry-cargo or pas-
senger vessel and a 20-year life for a tanker or other liquid bulk carrier 
vessel. 
‘‘(c) DOCUMENTATION.—A vessel acquired under this section that is not 
documented under the laws of the United States at the time of acquisition 
shall be so documented as soon as practicable. 
‘‘§ 57106. Maintenance, improvement, and operation of ves-
sels 
‘‘(a) IN GENERAL.—The Secretary of Transportation may maintain, re-
pair, recondition, remodel, and improve vessels owned by the United States 
Government and in the possession or under the control of the Secretary, to 
equip them adequately for competition in the foreign trade of the United 
States. The Secretary may operate such a vessel or charter the vessel on 
terms and conditions the Secretary considers appropriate to carry out the 
purposes of this subtitle. 
‘‘(b) DOCUMENTATION AND RESTRICTIONS ON OPERATION.—A vessel re-
conditioned, remodeled, or improved under subsection (a) shall be docu-
mented under the laws of the United States and remain so documented for 
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at least 5 years after completion of the reconditioning, remodeling, or im-
provement. During that period, it shall be operated on voyages that are not 
exclusively coastwise. 
‘‘§ 57107. Vessels for other agencies 
‘‘(a) IN GENERAL.—The Secretary of Transportation may construct, re-
construct, repair, equip, and outfit, by contract or otherwise, vessels or 
parts thereof, for any other department or agency of the United States Gov-
ernment to the extent the other department or agency is authorized by law 
to do so for its own account. 
‘‘(b) EFFECT ON CONTRACT AUTHORIZATION.—An obligation incurred or 
expenditure made by the Secretary under this section does not affect any 
contract authorization of the Secretary, but instead shall be charged against 
the existing appropriation or contract authorization of the department or 
agency. 
‘‘§ 57108. Consideration of ballast and equipment in deter-
mining selling price 
‘‘The Maritime Administration may not sell a vessel until its ballast and 
equipment have been inventoried and their value considered in determining 
the selling price of the vessel. 
‘‘§ 57109. Operation of vessels purchased, chartered, or 
leased from Secretary of Transportation 
‘‘Unless otherwise authorized by the Secretary of Transportation, a vessel 
purchased, chartered, or leased from the Secretary may be operated only 
under a certificate of documentation with a registry or coastwise endorse-
ment. Such a vessel, while employed solely as a merchant vessel, is subject 
to the laws, regulations, and liabilities governing merchant vessels, whether 
the United States Government has an interest in the vessel as an owner or 
holds a mortgage, lien, or other interest. 
‘‘CHAPTER 573—VESSEL TRADE-IN PROGRAM 
‘‘Sec. 
‘‘57301.
Definitions. 
‘‘57302.
Authority to acquire vessels. 
‘‘57303.
Utility value and tonnage requirements. 
‘‘57304.
Eligible acquisition dates. 
‘‘57305.
Determination of trade-in allowance. 
‘‘57306.
Payment of trade-in allowance. 
‘‘57307.
Recognition of gain for tax purposes. 
‘‘57308.
Use of vessels at least 25 years old. 
‘‘§ 57301. Definitions 
‘‘In this chapter: 
‘‘(1) NEW VESSEL.—The term ‘new vessel’ means a vessel— 
‘‘(A) constructed under this subtitle and acquired within 2 years 
after the date of completion; or 
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‘‘(B) constructed in a domestic shipyard on private account and 
not under this subtitle, and documented under the laws of the 
United States. 
‘‘(2) OBSOLETE VESSEL.—The term ‘obsolete vessel’ means a vessel 
that— 
‘‘(A) is of at least 1,350 gross tons; 
‘‘(B) the Secretary of Transportation believes should, because of 
its age, obsolescence, or other reasons, be replaced in the public 
interest; and 
‘‘(C) has been owned by a citizen of the United States for at 
least 3 years immediately before its acquisition under this chapter. 
‘‘§ 57302. Authority to acquire vessels 
‘‘To promote the construction of new, safe, and efficient vessels to carry 
the domestic and foreign waterborne commerce of the United States, the 
Secretary of Transportation may acquire an obsolete vessel in exchange for 
an allowance of credit toward the cost of construction or purchase of a new 
vessel as provided in this chapter. 
‘‘§ 57303. Utility value and tonnage requirements 
‘‘(a) UTILITY VALUE.—The utility value of a new vessel to be acquired 
under this chapter for operation in the domestic or foreign commerce of the 
United States may not be substantially less than that of the obsolete vessel 
acquired in exchange under this chapter. 
‘‘(b) TONNAGE.—If the Secretary of Transportation finds that the new 
vessel will have a utility value at least equal to that of the obsolete vessel, 
the new vessel may be of lesser gross tonnage than the obsolete vessel. How-
ever, the gross tonnage of the new vessel must be at least one-third the 
gross tonnage of the obsolete vessel. 
‘‘§ 57304. Eligible acquisition dates 
‘‘At the option of the owner, the acquisition of an obsolete vessel under 
this chapter shall occur— 
‘‘(1) when the owner contracts for the construction or purchase of 
a new vessel; or 
‘‘(2) within 5 days of the actual date of delivery of the new vessel 
to the owner. 
‘‘§ 57305. Determination of trade-in allowance 
‘‘(a) IN GENERAL.—The Secretary of Transportation shall determine the 
trade-in allowance for an obsolete vessel at the time of acquisition of the 
vessel. The allowance shall be the fair value of the vessel. In determining 
the value, the Secretary shall consider— 
‘‘(1) the scrap value of the obsolete vessel in American and foreign 
markets; 
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‘‘(2) the depreciated value based on a 20-year or 25-year life, which-
ever applies to the obsolete vessel; and 
‘‘(3) the market value of the obsolete vessel for operation in world 
commerce or in the domestic or foreign commerce of the United States. 
‘‘(b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete vessel 
occurs when the owner contracts for the construction of the new vessel, and 
the owner uses the obsolete vessel during the period of construction of the 
new vessel, the Secretary shall reduce the trade-in allowance by an amount 
representing the fair value of that use. The Secretary shall establish the 
rate for use of the obsolete vessel when the contract for construction of the 
new vessel is made. 
‘‘§ 57306. Payment of trade-in allowance 
‘‘(a) ACQUISITION AT TIME OF CONTRACT.—If acquisition of an obsolete 
vessel under this chapter occurs when the owner contracts for the construc-
tion or purchase of the new vessel, the Secretary of Transportation shall 
apply the trade-in allowance to the purchase price of the new vessel rather 
than paying it to the owner. If the new vessel is constructed under this sub-
title, the Secretary may apply the trade-in allowance to the required cash 
payments on terms and conditions the Secretary may prescribe. If the new 
vessel is not constructed under this subtitle, the Secretary shall pay the 
trade-in allowance to the builder of the vessel for the account of the owner 
when the Secretary acquires the obsolete vessel. 
‘‘(b) ACQUISITION AT TIME OF DELIVERY.—If acquisition of the obsolete 
vessel occurs when the new vessel is delivered to the owner, the Secretary 
shall deposit the trade-in allowance in the owner’s capital construction fund. 
‘‘§ 57307. Recognition of gain for tax purposes 
‘‘The owner of an obsolete vessel does not recognize a gain under the 
Federal income tax laws when the vessel is transferred to the Secretary of 
Transportation in exchange for a trade-in allowance under this chapter. The 
basis of the new vessel acquired with the allowance is the same as the basis 
of the obsolete vessel— 
‘‘(1) increased by the difference between the cost of the new vessel 
and the trade-in allowance of the obsolete vessel; and 
‘‘(2) decreased by the amount of loss recognized on the transfer. 
‘‘§ 57308. Use of vessels at least 25 years old 
‘‘An obsolete vessel acquired under this chapter that is or becomes at 
least 25 years old may not be used for commercial operation. However, the 
vessel may be used— 
‘‘(1) during a period in which vessels may be requisitioned under 
chapter 563 of this title; or 
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