207 
‘‘(B) compatible with maintaining the availability of the vessel 
for national defense and commerce; 
‘‘(2) it is not feasible under existing law to employ the vessel in any 
other service or operation in foreign or domestic trade (except tem-
porary or emergency operation under section 56503(b)(5) of this title); 
and 
‘‘(3) the applicant, because of the restrictions of the Neutrality Act 
of 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for na-
tional defense under paragraph (1), is not earning or will not earn a 
reasonable return on the capital necessarily employed in its business. 
‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under sub-
section (a) shall continue in effect only as long as the circumstances de-
scribed in subsection (a) continue to exist. 
‘‘§ 56503. Types of adjustments and arrangements 
‘‘(a) SUSPENSION
REQUIREMENTS.—An adjustment or arrangement 
under this chapter shall include suspension of— 
‘‘(1) the requirement to operate the vessel in foreign trade under the 
applicable operating-differential or construction-differential subsidy 
contract or mortgage or other agreement; and 
‘‘(2) the right to operating-differential subsidy for the vessel. 
‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To the ex-
tent the Secretary of Transportation considers appropriate to carry out the 
purposes of this subtitle, an adjustment or arrangement under this chapter 
may include any of the following: 
‘‘(1) Lay-up of the vessel by the owner or in the custody of the Sec-
retary, with payment or reimbursement by the Secretary of necessary 
and proper expenses (including reasonable overhead and insurance) or 
a fixed periodic allowance instead of payment or reimbursement. 
‘‘(2) Postponement, for not more than the total period of the lay- 
up, of the maturity date of each installment of the principal of obliga-
tions to the United States Government for the vessel (regardless of 
whether the maturity date is during a lay-up period), or rearrangement 
of those maturities. 
‘‘(3) Postponement or cancellation of interest accruing on the obliga-
tions during a lay-up period. 
‘‘(4) Extension, for not more than the total period of the lay-up, of 
the 20-year life limitation for the vessel and other limitations and pro-
visions of this subtitle based on a 20-year life. 
‘‘(5) Provision for temporary or emergency employment of the vessel 
(instead of lay-up) as may be practicable, with such arrangements for 
management of the vessel, payment of expenses, and application of the 
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proceeds of the employment, as the Secretary may approve, with any 
period of operation being included as part of the lay-up period. 
‘‘(6) Payment to the Secretary, on termination of the arrangements 
with the applicant, of the applicant’s net profits (earned while the ar-
rangements were in effect) in excess of 10 percent a year on the capital 
necessarily employed in the applicant’s business, as reimbursement for 
obligations postponed or canceled and expenses incurred or paid by the 
Secretary under this section. 
‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the appli-
cant represented by a vessel of the applicant laid-up or operated under this 
section shall be included in capital necessarily employed in the applicant’s 
business. The Secretary may require a vessel laid-up or operated under this 
section to be security for reimbursement. 
‘‘§ 56504. Changes in adjustments and arrangements 
‘‘The Secretary of Transportation may change an adjustment or arrange-
ment made under this chapter as the Secretary considers necessary to carry 
out this chapter. 
‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS 
‘‘CHAPTER 571—GENERAL AUTHORITY 
‘‘Sec. 
‘‘57101.
Placement of vessels in National Defense Reserve Fleet. 
‘‘57102.
Disposition of vessels not worth preserving. 
‘‘57103.
Sale of obsolete vessels in National Defense Reserve Fleet. 
‘‘57104.
Acquisition of vessels from sale of obsolete vessels. 
‘‘57105.
Acquisition of vessels for essential services, routes, or lines. 
‘‘57106.
Maintenance, improvement, and operation of vessels. 
‘‘57107.
Vessels for other agencies. 
‘‘57108.
Consideration of ballast and equipment in determining selling price. 
‘‘57109.
Operation of vessels purchased, chartered, or leased from Secretary of Transpor-
tation. 
‘‘§ 57101. Placement of vessels in National Defense Reserve 
Fleet 
‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime Administration 
shall be placed in the National Defense Reserve Fleet maintained under sec-
tion 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744). 
‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under sub-
section (a) may not be traded out or sold from the Fleet, except as provided 
in section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this 
title. 
‘‘§ 57102. Disposition of vessels not worth preserving 
‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that 
a vessel owned by the Maritime Administration is of insufficient value for 
commercial or military operation to warrant its further preservation, the 
Secretary may scrap the vessel or sell the vessel for cash. 
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‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection (a) 
shall be made on the basis of competitive sealed bids, after an appraisal and 
due advertisement. The purchaser does not have to be a citizen of the 
United States. The purchaser shall provide a surety bond, with a surety ap-
proved by the Secretary, to ensure that the vessel will not be operated in 
the foreign trade of the United States at any time within 10 years after 
the sale, in competition with a vessel owned by a citizen of the United 
States and documented under the laws of the United States. 
‘‘§ 57103. Sale of obsolete vessels in National Defense Re-
serve Fleet 
‘‘(a) IN GENERAL.—The Secretary of Transportation may convey the 
right, title, and interest of the United States Government in any vessel of 
the National Defense Reserve Fleet that has been identified by the Sec-
retary as an obsolete vessel of insufficient value to warrant its further pres-
ervation, if the recipient— 
‘‘(1) is a non-profit organization, a State, or a municipal corporation 
or political subdivision of a State; 
‘‘(2) agrees not to use, or allow others to use, the vessel for commer-
cial transportation purposes; 
‘‘(3) agrees to make the vessel available to the Government whenever 
the Secretary indicates that it is needed by the Government; 
‘‘(4) agrees to hold the Government harmless for any claims arising 
from exposure to asbestos, polychlorinated biphenyls, lead paint, or 
other hazardous substances after conveyance of the vessel, except for 
claims arising from use of the vessel by the Government; 
‘‘(5) has a conveyance plan and a business plan that describes the 
intended use of the vessel, each of which has been submitted to and 
approved by the Secretary; 
‘‘(6) has provided proof, as determined by the Secretary, of resources 
sufficient to accomplish the transfer, necessary repairs and modifica-
tions, and initiation of the intended use of the vessel; and 
‘‘(7) agrees that when the recipient no longer requires the vessel for 
use as described in the business plan required under paragraph (5)— 
‘‘(A) the recipient will, at the discretion of the Secretary, re-
convey the vessel to the Government in good condition except for 
ordinary wear and tear; or 
‘‘(B) if the Board of Trustees of the recipient has decided to 
dissolve the recipient according to the laws of the State in which 
the recipient is incorporated, then— 
‘‘(i) the recipient shall distribute the vessel, as an asset of 
the recipient, to a person that has been determined exempt 
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from taxation under section 501(c)(3) of the Internal Rev-
enue Code of 1986 (26 U.S.C. 501(c)(3)), or to the Federal 
Government or a State or local government for a public pur-
pose; and 
‘‘(ii) the vessel shall be disposed of by a court of competent 
jurisdiction of the county in which the principal office of the 
recipient is located, for such purposes as the court shall de-
termine, or to such organizations as the court shall determine 
are organized exclusively for public purposes. 
‘‘(b) OTHER EQUIPMENT.—At the Secretary’s discretion, additional 
equipment from other obsolete vessels of the Fleet may be conveyed to assist 
the recipient with maintenance, repairs, or modifications. 
‘‘(c) ADDITIONAL TERMS.—The Secretary may require any additional 
terms the Secretary considers appropriate. 
‘‘(d) DELIVERY OF VESSEL.—If conveyance is made under this section, 
the vessel shall be delivered to the recipient at a time and place to be deter-
mined by the Secretary. The vessel shall be conveyed in an ‘as is’ condition. 
‘‘(e) LIMITATIONS.—If at any time prior to delivery of the vessel to the 
recipient, the Secretary determines that a different disposition of the vessel 
would better serve the interests of the Government, the Secretary shall pur-
sue the more favorable disposition of the obsolete vessel and shall not be 
liable for any damages that may result from an intended recipient’s reliance 
upon a proposed transfer. 
‘‘(f) REVERSION.—The Secretary shall include in any conveyance under 
this section terms under which all right, title, and interest conveyed by the 
Secretary shall revert to the Government if the Secretary determines the 
vessel has been used other than as described in the business plan required 
under subsection (a)(5). 
‘‘§ 57104. Acquisition of vessels from sale of obsolete vessels 
‘‘(a) IN GENERAL.—The Secretary of Transportation may acquire suit-
able documented vessels with amounts in the Vessel Operations Revolving 
Fund derived from the sale of obsolete vessels in the National Defense Re-
serve Fleet. 
‘‘(b) VALUATION.—The acquired and obsolete vessels shall be valued at 
their scrap value in domestic or foreign markets as of the date of the acqui-
sition for or sale from the Fleet. However, the value assigned to those ves-
sels shall be determined on the same basis, with consideration given to the 
fair value of the cost of moving the vessel sold from the Fleet to the place 
of scrapping. 
‘‘(c) COSTS INCIDENT TO LAY-UP.—Costs incident to the lay-up of the 
vessel acquired under this section may be paid from amounts in the Fund. 
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