168
laws of the United States and operating in the domestic or foreign 
commerce of the United States. The Secretary has sole discretion in 
making the determination. In making the determination, the Secretary 
shall consider—
‘‘(A) the status and economic soundness of pending applications 
for commitments to guarantee obligations for vessels documented 
under the laws of the United States that are operating or will be 
operating in the domestic or foreign commerce of the United 
States; and 
‘‘(B) the amount of guarantee authority available.
‘‘(d) RESTRICTION ON TRANSFER OF VESSEL.—The Secretary may not 
guarantee or make a commitment to guarantee an obligation for an eligible 
export vessel unless the owner of the vessel agrees with the Secretary that 
the vessel will not be transferred to a country designated by the Secretary 
of Defense as a country whose interests are hostile to the interests of the 
United States. 
‘‘(e) REVIEW BY SECRETARY OF DEFENSE.—
‘‘(1) NOTIFICATION.—The Secretary shall promptly notify the Sec-
retary of Defense of the receipt of an application for a loan guarantee 
for an eligible export vessel. 
‘‘(2) DISAPPROVAL.—The Secretary of Defense, within 30 days after 
receiving the notice, may disapprove the guarantee based on an assess-
ment of the potential use of the vessel in a manner that may harm the 
national security interests of the United States. The Secretary may not 
disapprove a guarantee solely because of the type of vessel to be con-
structed. 
‘‘(3) DELEGATION.—The authority of the Secretary of Defense to 
disapprove a guarantee under this subsection may be delegated only to 
a civilian officer of the Department of Defense appointed by the Presi-
dent by and with the advice and consent of the Senate. 
‘‘(4) PROHIBITION.—The Secretary may not make a loan guarantee 
disapproved by the Secretary of Defense under this subsection. 
‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary may not issue a com-
mitment to guarantee an obligation for an eligible export vessel under this 
chapter after the last date on which such a commitment may be issued 
under any treaty or convention entered into after November 30, 1993, that 
prohibits guarantee of such an obligation. 
‘‘§ 53733. Shipyard modernization and improvement 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ADVANCED SHIPBUILDING TECHNOLOGY.—The term ‘advanced 
shipbuilding technology’ includes—
169
‘‘(A) numerically controlled machine tools, robots, automated 
process control equipment, computerized flexible manufacturing 
systems, associated computer software, and other technology for 
improving shipbuilding and related industrial production that ad-
vance the state-of-the-art; and 
‘‘(B) novel techniques and processes designed to improve ship-
building quality, productivity, and practice, and to promote sus-
tainable development, including engineering design, quality assur-
ance, concurrent engineering, continuous process production tech-
nology, 
energy 
efficiency, 
waste 
minimization, 
design 
for 
recyclability or parts reuse, inventory management, upgraded 
worker skills, and communications with customers and suppliers. 
‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard fa-
cility’ means—
‘‘(A) for operations on land—
‘‘(i) a structure or appurtenance thereto designed for the 
construction, reconstruction, repair, rehabilitation, or refur-
bishment of a vessel, including a graving dock, building way, 
ship lift, wharf, or pier crane; 
‘‘(ii) the land necessary for the structure or appurtenance; 
and 
‘‘(iii) equipment that is for use with the structure or ap-
purtenance and that is necessary for performing a function 
referred to in subclause (i); and 
‘‘(B) for operations not on land, a vessel, floating drydock, or 
barge built in the United States and used for, equipped to be used 
for, or of a type normally used for, performing a function referred 
to in subclause (A)(i). 
‘‘(3) MODERN
SHIPBUILDING
TECHNOLOGY.—The term ‘modern 
shipbuilding technology’ means the best available proven technology, 
techniques, and processes appropriate to enhancing the productivity of 
shipyards. 
‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter, the 
Secretary may guarantee or make a commitment to guarantee the payment 
of the principal of and interest on an obligation for advanced shipbuilding 
technology and modern shipbuilding technology of a general shipyard facility 
in the United States. Only a private shipyard is eligible to receive a guar-
antee. 
‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise pro-
vided in this section, a guarantee or commitment to guarantee under this
170
section is subject to all the provisions applicable to a guarantee or commit-
ment to guarantee under subchapter I of this chapter. 
‘‘(d) AMOUNT OF OBLIGATION.—The principal amount of an obligation 
guaranteed under this chapter may not exceed 87.5 percent of the actual 
cost of the advanced shipbuilding technology or modern shipbuilding tech-
nology. 
‘‘(e) TRANSFER OF AMOUNTS.—The Secretary may accept the transfer 
of amounts from a department, agency, or instrumentality of the United 
States Government and may use those amounts to cover the cost (as defined 
in section 502 of the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) 
of making guarantees or commitments to guarantee under this section. 
‘‘§ 53734. Replacement of vessels because of changes in oper-
ating standards 
‘‘(a) GENERAL AUTHORITY.—Notwithstanding any other provision of this 
chapter, the Secretary, on terms the Secretary may prescribe, may guar-
antee or make a commitment to guarantee the payment of the principal of 
and interest on an obligation that aids in financing or refinancing (including 
reimbursement of an obligor for expenditures previously made for) a con-
tract for the construction or reconstruction of a vessel if—
‘‘(1) the vessel is designed and to be used for commercial use in 
coastwise, intercoastal, or foreign trade; 
‘‘(2) the construction or reconstruction is necessary to replace a ves-
sel that cannot continue to be operated because of a change required 
by law in the standards for the operation of vessels, and the applicant 
for the guarantee or commitment would not otherwise legally be able 
to continue operating vessels in the trades in which the applicant oper-
ated vessels before the change; 
‘‘(3) the applicant is presently engaged in transporting cargoes in 
vessels of the type and class that will be constructed or reconstructed 
under this section and agrees to employ vessels constructed or recon-
structed under this section as replacements only for vessels made obso-
lete by the change in operating standards; 
‘‘(4) the capacity of the vessels to be constructed or reconstructed 
under this section will not increase the cargo carrying capacity of the 
vessels being replaced; 
‘‘(5) the Secretary has not determined that the market demand for 
the vessel over its useful life will diminish so as to make granting the 
guarantee fiduciarily imprudent; 
‘‘(6) the vessel, if to be reconstructed, will have a useful life of at 
least 15 years after the reconstruction; and
171
‘‘(7) the Secretary has considered the criteria specified in section 
53708(a)(3)–(5) of this title. 
‘‘(b) TERM AND AMOUNT OF OBLIGATION.—
‘‘(1) TERM.—The term of an obligation guaranteed under this sec-
tion may not exceed 25 years. 
‘‘(2) AMOUNT.—The amount of an obligation guaranteed under this 
section may not exceed 87.5 percent of the actual cost or depreciated 
actual cost to the applicant for the construction or reconstruction of 
the vessel. The Secretary may not establish a percentage under this 
paragraph that is to be applied uniformly to all guarantees or commit-
ments to guarantee made under this section. 
‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—
‘‘(1) IN GENERAL.—A guarantee or commitment to guarantee under 
this section is also subject to sections 53701, 53702(a), 53704, 53705, 
53707(a), 53708(d) and (e), 53709(a), 53710(a)(1), (2), and (4) and 
(c), 53711(a), 53713, 53714, 53717, and 53721–53725 of this title. 
‘‘(2) LIABILITY OF CERTAIN ACCOUNTS.—The account under section 
53717 of this title is not liable for a guarantee or commitment to guar-
antee made under this section. 
‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by reg-
ulation that an applicant under this section provide adequate security 
against default. 
‘‘(e) GUARANTEE FEES.—The Secretary may establish a fee for the guar-
antee of an obligation under this section that is in addition to the fee estab-
lished under section 53714 of this title. The fee may be—
‘‘(1) an annual fee of not more than an additional 1 percent added 
to the fee established under section 53714 of this title; or 
‘‘(2) a fee based on the amount of the obligation versus the percent-
age of the obligor’s fleet being replaced by vessels constructed or recon-
structed under this section. 
‘‘(f) VESSEL REPLACEMENT GUARANTEE FUND.—
‘‘(1) IN GENERAL.—The Secretary may establish a Vessel Replace-
ment Guarantee Fund as a subaccount in the account established 
under section 53717(a)(1) of this title. 
‘‘(2) DEPOSITS.—The Secretary shall deposit in the Fund—
‘‘(A) amounts received by the Secretary under subchapter I of 
this chapter (except sections 53715 and 53716) related to guaran-
tees or commitments to guarantee made under this section; 
‘‘(B) amounts received by the Secretary under subchapter I of 
this chapter (except sections 53715 and 53716) from applicants 
under this section when obligations issued by the Secretary under
172
section 53723 of this title related to the Fund are outstanding; 
and 
‘‘(C) fees collected under subsection (e). 
‘‘(3) DEPOSIT OF ADMINISTRATIVE FEES.—Fees payable under sec-
tion 53713 of this title shall be deposited in the account established 
under section 53717(a)(1) of this title and not in the Fund. 
‘‘(4) LIABILITY.—The account established under section 53717(a)(1) 
of this title is not liable for a guarantee or commitment to guarantee 
made under this section. 
‘‘§ 53735. Fisheries financing and capacity reduction 
‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing 
capacity reduction program established under section 312 of the Magnuson-
Stevens Fishery Conservation and Management Act (16 U.S.C. 1861a). 
‘‘(b) GUARANTEE AUTHORITY.—The Secretary may guarantee the repay-
ment of debt obligations issued by entities under this section. Debt obliga-
tions to be guaranteed may be issued by any entity that has been approved 
by the Secretary and has agreed with the Secretary to conditions the Sec-
retary considers necessary for this section to achieve the objective of the 
program and to protect the interest of the United States. 
‘‘(c) REQUIREMENTS OF OBLIGATIONS.—A debt obligation guaranteed 
under this section shall—
‘‘(1) be treated in the same manner and to the same extent as other 
obligations guaranteed under this chapter, except with respect to provi-
sions of this chapter that by their nature cannot be applied to obliga-
tions guaranteed under this section; 
‘‘(2) have the fishing fees established under the program paid into 
a separate subaccount of the fishing capacity reduction fund estab-
lished under this section; 
‘‘(3) not exceed $100,000,000 in an unpaid principal amount out-
standing at any one time for a program; 
‘‘(4) have such maturity (not to exceed 20 years), take such form, 
and contain such conditions as the Secretary determines necessary for 
the program to which they relate; 
‘‘(5) have as the exclusive source of repayment (subject to the second 
sentence of subsection (d)(2)) and as the exclusive payment security, 
the fishing fees established under the program; and 
‘‘(6) at the discretion of the Secretary be issued in the public market 
or sold to the Federal Financing Bank. 
‘‘(d) FISHING CAPACITY REDUCTION FUND.—
‘‘(1) IN GENERAL.—There is a separate account in the Treasury, 
known as the Fishing Capacity Reduction Fund. Within the Fund, at
173
least one subaccount shall be established for each program into which 
shall be paid all fishing fees established under the program and other 
amounts authorized for the program. 
‘‘(2) AVAILABILITY OF AMOUNTS.—Amounts in the Fund shall be 
available, without appropriation or fiscal year limitation, to the Sec-
retary to pay the cost of the program, including payments to financial 
institutions to pay debt obligations incurred by entities under this sec-
tion. Funds available for this purpose from other amounts available for 
the program may also be used to pay those debt obligations. 
‘‘(3) INVESTMENT.—Amounts in the Fund that are not currently 
needed for the purpose of this section shall be kept on deposit or in-
vested in obligations of the United States Government. 
‘‘(e) REGULATIONS.—The Secretary shall prescribe regulations the Sec-
retary considers necessary to carry out this section.
‘‘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. 
‘‘§ 53901. Definitions 
‘‘In this chapter: 
‘‘(1) AMERICAN VESSEL.—The term ‘American vessel’ includes—
‘‘(A) a documented vessel with a registry or coastwise endorse-
ment under chapter 121 of this title; 
‘‘(B) an undocumented vessel owned or chartered by or made 
available to the United States Government; and 
‘‘(C) a tug, barge, or other watercraft (whether or not docu-
mented) owned by a citizen of the United States and used in es-
sential water transportation or in the fisheries, except only for 
sport fishing. 
‘‘(2) CARGO.—The term ‘cargo’ includes a loaded or empty container 
on a vessel. 
‘‘(3) TRANSPORTATION IN THE WATERBORNE COMMERCE OF THE 
UNITED STATES.—The term ‘transportation in the waterborne com-
merce of the United States’ includes the operation of a vessel in the 
fisheries, except only for sport fishing.
174
‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the 
Secretary of Transportation determines—
‘‘(A) any part of a loss excluded from marine insurance cov-
erage under a ‘free of capture or seizure’ clause or analogous 
clause; and 
‘‘(B) any other loss from a hostile act, including confiscation, 
expropriation, nationalization, or deprivation.
‘‘§ 53902. Authority to provide insurance 
‘‘(a) IN GENERAL.—With the approval of the President, and after such 
consultation with interested agencies of United States Government as the 
President may require, the Secretary of Transportation may provide insur-
ance and reinsurance against loss or damage from war risks as provided by 
this chapter whenever it appears to the Secretary that insurance adequate 
for the needs of the waterborne commerce of the United States cannot be 
obtained on reasonable terms and conditions from companies authorized to 
do insurance business in a State of the United States. 
‘‘(b) CONSIDERATION OF RISK.—Insurance or reinsurance under this 
chapter shall be based, insofar as practicable, on consideration of the risk 
involved. 
‘‘(c) AVAILABILITY
OF VESSEL DURING WAR
OR NATIONAL EMER-
GENCY.—Insurance or reinsurance for a vessel may be provided under this 
chapter only on the condition that the vessel will be available to the Govern-
ment in time of war or national emergency. 
‘‘§ 53903. Insurable interests 
‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur-
ance and reinsurance under this chapter for—
‘‘(1) an American vessel, including a vessel under construction; 
‘‘(2) a foreign vessel—
‘‘(A) owned by a citizen of the United States; or 
‘‘(B) engaged in transportation in the waterborne commerce of 
the United States or in such other transportation by water or such 
other services as the Secretary considers to be in the interest of 
the national defense or national economy of the United States, 
when so engaged; 
‘‘(3) cargo—
‘‘(A) shipped or to be shipped on a vessel insurable under this 
section, including by express or registered mail; 
‘‘(B) owned by a citizen or resident of the United States; 
‘‘(C) imported to or exported from the United States, or sold 
or purchased by a citizen or resident of the United States, under 
a contract of sale or purchase the terms of which provide that the
175
risk of loss by war risks or the obligation to provide insurance 
against war risks is on a citizen or resident of the United States; 
or 
‘‘(D) shipped between ports in the United States; 
‘‘(4) disbursements, including advances to masters and general aver-
age disbursements, and freight and passage money of a vessel insurable 
under this section; 
‘‘(5) personal effects of an individual on a vessel insurable under this 
section; 
‘‘(6) loss of life, injury, or detention by an enemy of the United 
States after capture, with respect to an individual on a vessel insurable 
under this section; and 
‘‘(7) statutory or contractual obligations or other liabilities of a ves-
sel insurable under this section or of the owner or charterer of such 
a vessel, of a nature customarily covered by insurance. 
‘‘(b) CONSIDERATIONS FOR FOREIGN VESSELS.—In determining whether 
to provide insurance or reinsurance for a foreign vessel, the Secretary shall 
consider the characteristics, employment, and general management of the 
vessel by the owner or charterer. 
‘‘(c) NON-WAR RISKS.—Insurance of a risk under subsection (a)(5)–(7), 
insofar as it involves a liability related to an individual on the vessel, may 
include risks other than war risks to the extent the Secretary considers ad-
visable. 
‘‘§ 53904. Liability insurance for persons involved in war or 
defense efforts 
‘‘(a) IN GENERAL.—The Secretary of Transportation may provide insur-
ance under this chapter against legal liability that a person may incur in 
providing services or facilities for a vessel if, in the opinion of the Secretary, 
the insurance—
‘‘(1) is required in prosecuting a war or for national defense; and 
‘‘(2) cannot be obtained at reasonable rates or on reasonable terms 
and conditions from approved companies authorized to do insurance 
business in a State of the United States. 
‘‘(b) LIMITATIONS.—Employer liability insurance and worker compensa-
tion insurance against legal liability to employees may not be provided under 
this section. 
‘‘§ 53905. Agency insurance 
‘‘(a) IN GENERAL.—With the approval of the President, an agency of the 
United States Government may obtain insurance provided for by this chap-
ter from the Secretary of Transportation, except as provided in sections 
17302 and 17303 of title 40.
176
‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec-
retary of Transportation may provide insurance under this chapter at the 
request of the Secretary of Defense and other agencies the President may 
prescribe, without payment of an insurance premium if the Secretary of De-
fense or agency agrees to indemnify the Secretary of Transportation against 
loss covered by the insurance. The Secretary of Defense and agencies may 
make such an indemnity agreement. 
‘‘(c) PRESIDENTIAL APPROVAL.—The signature of the President (or an 
official designated by the President) on the agreement shall be treated as 
the approval required by section 53902(a) of this title. 
‘‘§ 53906. Hull insurance valuation 
‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for 
actual or constructive total loss of the insured vessel shall be a stated valu-
ation determined by the Secretary of Transportation. The stated valu-
ation—
‘‘(1) shall exclude national defense features paid for by the United 
States Government; and 
‘‘(2) may not exceed the amount that would be payable if the owner-
ship of the vessel had been requisitioned under chapter 563 of this title 
at the time the insurance attached under the policy. 
‘‘(b) REJECTING STATED VALUATION.—Within 60 days after the insur-
ance attaches under a policy referred to in subsection (a) or within 60 days 
after the Secretary determines the valuation, whichever is later, the insured 
may reject the valuation and pay, at the rate provided in the policy, pre-
miums based on the asserted valuation the insured specifies at the time of 
rejection. However, the asserted valuation is not binding on the Government 
in any subsequent action on the policy. 
‘‘(c) AMOUNT OF CLAIM.—If a vessel is actually or constructively totally 
lost and the insured under a policy referred to in subsection (a) has not 
rejected the stated valuation determined by the Secretary, the amount of a 
claim adjusted, compromised, settled, adjudged, or paid may not exceed the 
stated valuation. However, if the insured has rejected the valuation, the in-
sured—
‘‘(1) shall be paid, as a tentative advance only, 75 percent of the 
stated valuation; and 
‘‘(2) may bring a civil action against the Government in a court hav-
ing jurisdiction of the claim to recover a valuation equal to the just 
compensation the court determines would have been payable if the own-
ership of the vessel had been requisitioned under chapter 563 of this 
title at the time the insurance attached under the policy.
177
‘‘(d) ADJUSTING PREMIUMS.—If a court makes a determination as pro-
vided under subsection (c)(2), premiums paid under the policy shall be ad-
justed based on the court’s determination and the rates provided for in the 
policy. 
‘‘§ 53907. Reinsurance 
‘‘(a) IN GENERAL.—To the extent the Secretary of Transportation is au-
thorized to provide insurance under this chapter, the Secretary may provide 
reinsurance to a company authorized to do insurance business in a State
of the United States. The Secretary may obtain reinsurance from such a 
company for any insurance provided by the Secretary under this chapter. 
‘‘(b) RATES.—The Secretary may not provide reinsurance at rates less 
than, nor obtain reinsurance at rates more than, the rates established by 
the Secretary on the same or similar risks or the rates charged by the insur-
ance company for the insurance reinsured, whichever is more advantageous 
to the Secretary. However, the Secretary may provide an allowance to the 
insurance company for the costs of services and facilities the company pro-
vides, in an amount the Secretary considers reasonable according to good 
business practice. The allowance to the company may not include any 
amount for soliciting or stimulating insurance business. 
‘‘§ 53908. Additional insurance privately obtained 
‘‘With the approval of the Secretary of Transportation, a person having 
an insurable interest in a vessel may obtain insurance on the vessel with 
other underwriting agents in addition to the insurance with the Secretary. 
The Secretary is not entitled to the benefit of the additional insurance. 
‘‘§ 53909. War risk insurance revolving fund 
‘‘(a) IN GENERAL.—There is a war risk insurance revolving fund in the 
Treasury. 
‘‘(b) DEPOSITS.—There shall be deposited in the fund amounts appro-
priated to carry out this chapter and amounts received in carrying out this 
chapter. 
‘‘(c) PAYMENTS.—There shall be paid from the fund amounts for return 
premiums, losses, settlements, judgments, and all liabilities incurred by the 
United States Government under this chapter. 
‘‘(d) INVESTMENT.—On request of the Secretary of Transportation, the 
Secretary of the Treasury may invest or reinvest any part of the fund in 
securities of the Government or securities whose principal and interest are 
guaranteed by the Government. Interest and benefits from the securities 
shall be deposited in the fund.
178
‘‘§ 53910. Administrative 
‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 
chapter, the Secretary of Transportation may act in accordance with com-
mercial practice in the marine insurance business. 
‘‘(b) REGULATIONS.—The Secretary may prescribe regulations the Sec-
retary considers appropriate to carry out this chapter. 
‘‘(c) POLICIES, RATES, AND ANNUAL FEES.—The Secretary may pre-
scribe and change forms and policies, and fix and change the amounts in-
sured and rates of premium, under this chapter. 
‘‘(d) ANNUAL FEES.—The Secretary may charge and collect an annual 
fee in an amount calculated to cover the expenses of processing applications 
for insurance, employing underwriting agents, and appointing experts under 
this chapter. 
‘‘(e) PAYMENT OF CLAIMS AND JUDGMENTS.—The Secretary may settle 
and pay claims, and pay judgments against the United States Government, 
related to insurance under this chapter. 
‘‘(f) UNDERWRITING AGENTS.—
‘‘(1) IN GENERAL.—The Secretary may, and when the Secretary 
finds it practical to do so shall, employ a domestic company or group 
of domestic companies, authorized to do marine insurance business in 
a State of the United States, to act as underwriting agent for the Sec-
retary. The services of an underwriting agent may be used in adjusting 
claims, but a claim may not be paid until approved by the Secretary. 
‘‘(2) COMPENSATION.—The Secretary may allow the company or 
group of companies reasonable compensation for services as the under-
writing agent. The compensation may include an allowance for expenses 
reasonably incurred by the agent, but may not include any amount for 
soliciting or stimulating business. 
‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in sub-
section (f)(2), the Secretary may not pay an insurance broker or other per-
son acting in a similar intermediary capacity a fee or other consideration 
for participating in arranging insurance when the Secretary directly insures 
any of the risk. 
‘‘(h) EMPLOYMENT OF MARINE INSURANCE EXPERTS.—The Secretary, 
without regard to the laws and regulations on the employment of Federal 
employees, may appoint and prescribe the duties of experts in marine insur-
ance as the Secretary considers necessary to carry out this chapter. 
‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the consent of 
another Government agency, the Secretary may use information, services, 
facilities, officers, and employees of the agency in carrying out this chapter.
179
‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by 
regulation vessel location reporting requirements for a vessel insured under 
this chapter. 
‘‘§ 53911. Civil actions for losses 
‘‘(a) IN GENERAL.—If there is a disagreement about a loss insured under 
this chapter, a civil action in admiralty may be brought against the United 
States Government in the district court of the United States for the district 
in which the plaintiff or the plaintiff’s agent resides. If the plaintiff has no 
residence in the United States, the action may be brought in the United 
States District Court for the District of Columbia or in the district court 
for any district in which the Attorney General agrees to accept service. Any 
person who may have an interest in the insurance may be made a party, 
either initially or on the motion of either party. 
‘‘(b) EXCLUSIVE REMEDY.—A civil action against the Government under 
this section is exclusive of any other action by reason of the same subject 
matter against an officer, employee, or agent employed or retained by the 
Government under this chapter. 
‘‘(c) PROCEDURE.—A civil action under this section shall be heard and 
determined under chapter 309 of this title. 
‘‘(d) TOLLING OF LIMITATIONS PERIOD.—If a claim is filed with the Sec-
retary of Transportation, the running of the limitations period for bringing 
a civil action is suspended until the Secretary denies the claim, and for 60 
days thereafter. The Secretary is deemed to have denied the claim if the 
Secretary does not act on the claim within 6 months after the claim is filed, 
unless the Secretary for good cause shown agrees with the claimant on a 
different period for the Secretary to act on the claim. 
‘‘(e) INTERPLEADER.—If the Secretary acknowledges the indebtedness of 
the Government under the insurance and there is a dispute about the per-
sons entitled to receive payment, the Government may bring a civil action 
interpleading those persons. The action shall be brought in the United 
States District Court for the District of Columbia or in the district court 
for the district in which any of those persons resides. A person not residing 
or found in the district may be made a party by service in any reasonable 
manner the court directs. If the court is satisfied that unknown persons 
might make a claim under the insurance, the court may direct service on 
those unknown persons by publication in the Federal Register. Judgment 
after service by publication in the Federal Register discharges the Govern-
ment from further liability to all persons. 
‘‘§ 53912. Expiration date 
‘‘The authority of the Secretary of Transportation to provide insurance 
and reinsurance under this chapter expires on June 30, 2005.
180
‘‘PART D—PROMOTIONAL PROGRAMS 
‘‘CHAPTER 551—COASTWISE TRADE
‘‘Sec. 
‘‘55101.
Application of coastwise laws. 
‘‘55102.
Transportation of merchandise. 
‘‘55103.
Transportation of passengers. 
‘‘55104.
Transportation of passengers between Puerto Rico and other ports in the United 
States. 
‘‘55105.
Transportation of hazardous waste. 
‘‘55106.
Merchandise transferred between barges. 
‘‘55107.
Empty cargo containers and barges. 
‘‘55108.
Platform jackets. 
‘‘55109.
Dredging. 
‘‘55110.
Transportation of dredged material. 
‘‘55111.
Towing. 
‘‘55112.
Vessel escort operations and towing assistance. 
‘‘55113.
Use of foreign documented oil spill response vessels. 
‘‘55114.
Unloading fish from foreign vessels. 
‘‘55115.
Supplies on fish processing vessels. 
‘‘55116.
Canadian rail lines. 
‘‘55117.
Great Lakes rail route. 
‘‘55118.
Foreign railroads whose road enters by ferry, tugboat, or towboat. 
‘‘55119.
Yukon River. 
‘‘55120.
Transshipment of imported merchandise intended for immediate exportation. 
‘‘§ 55101. Application of coastwise laws 
‘‘(a) IN GENERAL.—Except as provided in subsection (b), the coastwise 
laws apply to the United States, including the island territories and posses-
sions of the United States. 
‘‘(b) EXCEPTIONS.—The coastwise laws do not apply to—
‘‘(1) the Virgin Islands until the President declares by proclamation 
that the coastwise laws apply to the Virgin Islands; or 
‘‘(2) American Samoa. 
‘‘§ 55102. Transportation of merchandise 
‘‘(a) DEFINITION.—In this section, the term ‘merchandise’ includes—
‘‘(1) merchandise owned by the United States Government, a State, 
or a subdivision of a State; and 
‘‘(2) valueless material. 
‘‘(b) REQUIREMENTS.—Except as otherwise provided in this chapter or 
chapter 121 of this title, a vessel may not provide any part of the transpor-
tation of merchandise by water, or by land and water, between points in 
the United States to which the coastwise laws apply, either directly or via 
a foreign port, unless the vessel has been issued a certificate of documenta-
tion with a coastwise endorsement under chapter 121. 
‘‘(c) PENALTY.—Merchandise transported in violation of subsection (b) is 
liable to seizure by and forfeiture to the Government. Alternatively, an 
amount equal to the value of the merchandise (as determined by the Sec-
retary of Homeland Security) or the actual cost of the transportation, 
whichever is greater, may be recovered from any person transporting the 
merchandise or causing the merchandise to be transported.
181
‘‘§ 55103. Transportation of passengers 
‘‘(a) IN GENERAL.—Except as otherwise provided in this chapter or chap-
ter 121 of this title, a foreign vessel may not transport passengers between 
ports or places in the United States, either directly or via a foreign port. 
‘‘(b) PENALTY.—The penalty for violating subsection (a) is $200 for each 
passenger transported and landed. 
‘‘§ 55104. Transportation of passengers between Puerto Rico 
and other ports in the United States 
‘‘(a) DEFINITIONS.—In this section:
‘‘(1) CERTIFICATE.—The term ‘certificate’ means a certificate of fi-
nancial responsibility for indemnification of passengers for nonperform-
ance of transportation issued by the Federal Maritime Commission 
under section 44102 of this title. 
‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ means a ves-
sel of similar size, or offering similar service, as any other vessel trans-
porting passengers under subsection (b). 
‘‘(b) EXEMPTION.—Except as otherwise provided in this section, a vessel 
not qualified to engage in the coastwise trade may transport passengers be-
tween a port in Puerto Rico and another port in the United States. 
‘‘(c) EXPIRATION OF EXEMPTION.—
‘‘(1) WHEN COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.—On 
a showing to the Secretary of the department in which the Coast Guard 
is operating, by the vessel owner or charterer, that a United States 
passenger vessel qualified to engage in the coastwise trade is offering 
or advertising passenger service between a port in Puerto Rico and an-
other port in the United States pursuant to a certificate, the Secretary 
shall notify the owner or operator of each vessel transporting pas-
sengers under subsection (b) to terminate that transportation within 
270 days after the Secretary’s notification. Except as provided in sub-
section (d), the authority to transport passengers under subsection (b) 
expires at the end of that 270-day period. 
‘‘(2) WHEN
NON-COASTWISE-QUALIFIED
VESSEL
OFFERING
SERV-
ICE.—On a showing to the Secretary, by the vessel owner or charterer, 
that a United States passenger vessel not qualified to engage in the 
coastwise trade is offering or advertising passenger service between a 
port in Puerto Rico and another port in the United States pursuant 
to a certificate, the Secretary shall notify the owner or operator of each 
foreign vessel transporting passengers under subsection (b) to termi-
nate that transportation within 270 days after the Secretary’s notifica-
tion. Except as provided in subsection (d), the authority of a foreign
182
vessel to transport passengers under subsection (b) expires at the end 
of that 270-day period. 
‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising the 
service described in subsection (c) has not begun that service within 270 
days after the Secretary’s notification, the expiration provided by subsection 
(c) is delayed until 90 days after the vessel offering or advertising the serv-
ice begins that service. 
‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that the 
service on which an expiration was based is no longer available, the expired 
authority to transport passengers is reinstated. 
‘‘§ 55105. Transportation of hazardous waste 
‘‘(a) IN GENERAL.—The transportation of hazardous waste, as defined in 
section 1004(5) of the Resource Conservation and Recovery Act of 1976 (42 
U.S.C. 6903(5)), from a point in the United States to sea for incineration 
is deemed to be transportation of merchandise under section 55102 of this 
title. 
‘‘(b) NONAPPLICATION TO CERTAIN FOREIGN VESSELS.—
‘‘(1) IN GENERAL.—Subsection (a) does not apply to transportation 
performed by a foreign-flag ocean incineration vessel owned by or 
under construction on May 1, 1982, for a corporation wholly owned by 
citizens of the United States under section 50501(a)–(c) of this title. 
‘‘(2) STANDARDS
FOR
INCINERATION
EQUIPMENT.—Incineration 
equipment on a vessel described in paragraph (1) must meet standards 
of the Coast Guard and the Environmental Protection Agency. 
‘‘(3) INSPECTION.—A vessel described in paragraph (1) shall be in-
spected by the Coast Guard, regardless of whether inspected by the flag 
nation. The inspection shall be the same as would be required of a ves-
sel of the United States, including drydock inspection and internal ex-
amination of tanks and void spaces. The inspection may be made con-
currently with an inspection by the country of documentation or within 
one year after the initial issuance or next scheduled issuance of the 
Safety of Life at Sea Safety Construction Certificate. In making the 
inspection, the Coast Guard shall refer to the condition of the hull and 
superstructure established by the initial foreign certification as the 
basis for evaluating the current condition of the hull and super-
structure. The Coast Guard shall allow the substitution of fittings, ma-
terial, apparatus, equipment, and appliances different from those re-
quired for vessels of the United States if satisfied they are equivalent 
and at least as effective as those required for vessels of the United 
States. A satisfactory inspection under this paragraph shall be certified
183
in writing by the Secretary of the department in which the Coast 
Guard is operating. 
‘‘(c) EFFECTIVE DATE.—This section is not effective until an appropriate 
vessel has been built and documented under chapter 121 of this title. 
‘‘§ 55106. Merchandise transferred between barges 
‘‘(a) IN GENERAL.—On terms and conditions the Secretary of Homeland 
Security may prescribe by regulation, the Secretary may suspend the appli-
cation of section 55102 of this title to the transportation of merchandise 
that is transferred, when moving in the foreign trade of the United States, 
from a barge certified by the owner or operator as designed specifically for 
carriage on a vessel and carried regularly on a vessel in foreign trade, to 
another such barge owned or leased by the same owner or operator. How-
ever, this subsection does not apply to transportation between the conti-
nental United States and noncontiguous States, territories, or possessions 
to which the coastwise laws apply. 
‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 
applies to a foreign vessel only if the Secretary of Homeland Security finds, 
based on information from the Secretary of State, that the government of 
the country of documentation extends reciprocal privileges to vessels of the 
United States. 
‘‘§ 55107. Empty cargo containers and barges 
‘‘(a) IN GENERAL.—Subject to subsections (b) and (c), and on terms and 
conditions the Secretary of Homeland Security may prescribe by regulation, 
section 55102 of this title does not apply to the transportation of—
‘‘(1) empty cargo vans, empty lift vans, or empty shipping tanks; 
‘‘(2) equipment for use with cargo vans, lift vans, or shipping tanks; 
‘‘(3) empty barges specifically designed for carriage aboard a vessel 
and equipment (except propulsion equipment) for use with those 
barges; 
‘‘(4) empty instruments for international traffic exempted from the 
customs laws under section 322(a) of the Tariff Act of 1930 (19 
U.S.C. 1322(a)); or 
‘‘(5) stevedoring equipment and material. 
‘‘(b) CONDITIONS.—
‘‘(1) CLAUSES (1)–(4).—Clauses (1)–(4) of subsection (a) apply only 
if the items named are owned or leased by the owner or operator of 
the vessel and transported for use in handling the cargo of that owner 
or operator in foreign trade. 
‘‘(2) CLAUSE (5).—Clause (5) of subsection (a) applies only if the 
items named are—
184
‘‘(A) owned or leased by the owner or operator of the vessel or 
by the stevedoring company having the contract for the loading or 
unloading of the vessel; and 
‘‘(B) transported without charge for use in the handling of 
cargo in foreign trade. 
‘‘(c) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 
applies to a foreign vessel only if the Secretary of Homeland Security finds, 
based on information from the Secretary of State, that the government of 
the country of documentation extends reciprocal privileges to vessels of the 
United States.
‘‘§ 55108. Platform jackets 
‘‘(a) DEFINITION.—In this section, the term ‘platform jacket’ includes 
any type of offshore drilling or production structure or components, includ-
ing platform jackets, tension leg or SPAR platform superstructures (includ-
ing the deck, drilling rig and support utilities, and supporting structure), 
hull (including vertical legs and connecting pontoons or vertical cylinder), 
tower and base sections of a platform jacket, jacket structures, and deck 
modules (known as ‘topsides’) of a hydrocarbon development and production 
platform. 
‘‘(b) EXEMPTION.—Section 55102 of this title does not apply to the 
transportation of a platform jacket in or on a launch barge between points 
in the United States, at one of which there is an installation or other device 
described by section 4(a) of the Outer Continental Shelf Lands Act (43 
U.S.C. 1333(a)), if—
‘‘(1) the launch barge has a launch capacity of at least 12,000 long 
tons, was built not later than June 7, 1988, and is documented under 
chapter 121 of this title; and 
‘‘(2) the platform jacket cannot be transported on and launched from 
a launch barge of lesser launch capacity that is on the list published 
under subsection (c) and is available for the transportation. 
‘‘(c) LIST OF LAUNCH BARGES.—The Secretary of Transportation shall 
publish periodically in the Federal Register a current list of launch barges 
with a capacity of less than 12,000 long tons that are qualified to engage 
in the coastwise trade. For each launch barge, the Secretary shall include 
the name, launch capacity, length, beam, depth, and other distinguishing 
characteristics, and the name and address of the person to whom inquiries 
may be made. 
‘‘§ 55109. Dredging 
‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel may 
engage in dredging in the navigable waters of the United States only if—
‘‘(1) the vessel—
185
‘‘(A) has been issued a certificate of documentation with a 
coastwise endorsement under chapter 121 of this title; or 
‘‘(B) is less than 5 net tons and is otherwise qualified to engage 
in the coastwise trade; and 
‘‘(2) the owner and charterer, if any, are citizens of the United 
States under section 50501 of this title for purposes of engaging in the 
coastwise trade. 
‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with a reg-
istry endorsement may engage in the dredging of gold in Alaska. 
‘‘(c) PENALTY.—If a vessel is operated in knowing violation of this sec-
tion, the vessel and its equipment are liable to seizure by and forfeiture to 
the United States Government. 
‘‘§ 55110. Transportation of dredged material 
‘‘Section 55102 of this title applies to the transportation of valueless ma-
terial or dredged material, regardless of whether it has commercial value, 
from a point in the United States or on the high seas within the exclusive 
economic zone, to another point in the United States or on the high seas 
within the exclusive economic zone. 
‘‘§ 55111. Towing 
‘‘(a) IN GENERAL.—A vessel may not do any part of any towing de-
scribed in subsection (b) unless the vessel has been issued a certificate of 
documentation with a coastwise endorsement under chapter 121 of this title. 
This prohibition does not apply to the towing of a vessel in distress. 
‘‘(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of—
‘‘(1) a vessel between ports or places in the United States to which 
the coastwise laws apply, either directly or via a foreign port or place; 
‘‘(2) a vessel from point to point within the harbors of ports or 
places to which the coastwise laws apply; or 
‘‘(3) a vessel transporting valueless material or dredged material, re-
gardless of whether it has commercial value, from a point in the United 
States or on the high seas within the exclusive economic zone, to an-
other point in the United States or on the high seas within the exclu-
sive economic zone. 
‘‘(c) PENALTIES.—
‘‘(1) OWNER AND MASTER.—The owner and master of a vessel tow-
ing another vessel in violation of this section are each liable for a pen-
alty of at least $250 but not more than $1,000. A penalty under this 
paragraph constitutes a lien on the vessel. The lien is enforceable in 
a district court of the United States for any district in which the vessel 
is found. Clearance may not be granted to the vessel until the penalties 
have been paid.
186
‘‘(2) VESSEL.—In addition to the penalties under paragraph (1), the 
towing vessel is liable for a penalty of $50 per ton based on the ton-
nage of each towed vessel. 
‘‘§ 55112. Vessel escort operations and towing assistance 
‘‘(a) IN GENERAL.—Except in the case of a vessel in distress, only a ves-
sel of the United States may perform the following escort vessel operations 
within the navigable waters of the United States: 
‘‘(1) Operations that commence or terminate at a port or place in 
the United States. 
‘‘(2) Operations required by United States law or regulation. 
‘‘(3) Operations provided in whole or in part within or through navi-
gation facilities owned, maintained, or operated by the United States 
Government or the approaches to those facilities, other than facilities 
operated by the St. Lawrence Seaway Development Corporation on the 
St. Lawrence River portion of the Seaway. 
‘‘(b) ESCORT VESSELS.—For purposes of this section, an escort vessel 
is—
‘‘(1) any vessel that is assigned and dedicated to assist another ves-
sel, whether or not tethered to that vessel, solely as a safety precaution 
to assist in controlling the speed or course of the assisted vessel in the 
event of a steering or propulsion equipment failure, or any other simi-
lar emergency circumstance, or in restricted waters where additional 
assistance in maneuvering the vessel is required to ensure its safe oper-
ation; and 
‘‘(2) in the case of a vessel being towed under section 55111 of this 
title, any vessel that is assigned and dedicated to the vessel being towed 
in addition to any towing vessel required under that section. 
‘‘(c) RELATIONSHIP TO OTHER LAW.—This section does not affect sec-
tion 55111 of this title. 
‘‘(d) PENALTY.—A person violating this section is liable to the Govern-
ment for a civil penalty of not more than $10,000 for each day during which 
the violation occurs. 
‘‘§ 55113. Use of foreign documented oil spill response ves-
sels 
‘‘Notwithstanding any other provision of law, an oil spill response vessel 
documented under the laws of a foreign country may operate in waters of 
the United States on an emergency and temporary basis, for the purpose 
of recovering, transporting, and unloading in a United States port oil dis-
charged as a result of an oil spill in or near those waters, if—
‘‘(1) an adequate number and type of oil spill response vessels docu-
mented under the laws of the United States cannot be engaged to re-
187
cover oil from an oil spill in or near those waters in a timely manner, 
as determined by the Federal On-Scene Coordinator for a discharge or 
threat of a discharge of oil; and 
‘‘(2) the foreign country has by its laws accorded to vessels of the 
United States the same privileges accorded to vessels of the foreign 
country under this section.
‘‘§ 55114. Unloading fish from foreign vessels 
‘‘(a) PROHIBITIONS.—Except as otherwise provided by this section or a 
treaty or convention to which the United States Government is a party, a 
foreign vessel may not unload, in a port of the United States—
‘‘(1) its catch of fish taken on board on the high seas or fish prod-
ucts processed from that catch of fish; or 
‘‘(2) fish or fish products taken on board that vessel on the high seas 
from a vessel engaged in fishing operations or the processing of fish 
or fish products. 
‘‘(b) REGULATIONS
ON OBTAINING INFORMATION.—The Secretary of 
Commerce may prescribe regulations the Secretary considers necessary to 
obtain information on the transportation of fish products by vessels of the 
United States for foreign fish processing vessels to points in the United 
States. 
‘‘(c) VIRGIN ISLANDS EXEMPTION.—A foreign vessel of not more than 50 
feet overall in length may unload its catch of fresh fish (whole or with the 
heads, viscera, or fins removed, but not frozen, otherwise processed, or fur-
ther advanced) in a port of the Virgin Islands for immediate consumption 
in those islands. Fish unloaded under this subsection may be sold or trans-
ferred only for immediate consumption. In the absence of satisfactory evi-
dence that a sale or transfer to an agent, representative, or employee of a 
freezer or cannery is for immediate consumption, the sale or transfer is 
deemed not to be for immediate consumption. This subsection does not pro-
hibit the freezing, smoking, or other processing of fresh fish by the ultimate 
consumer of the fish. 
‘‘(d) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded in the Vir-
gin Islands that are retained, sold, or transferred, except as allowed by sub-
section (c), are liable to seizure by and forfeiture to the Government. A per-
son retaining, selling, transferring, buying, or receiving the fish is liable to 
the Government for a civil penalty of not more than $1,000 for each viola-
tion. A penalty or forfeiture under this section may be compromised, modi-
fied, or remitted under section 2107(b) of this title.
188
‘‘§ 55115. Supplies on fish processing vessels 
‘‘Section 55102 of this title does not apply to supplies aboard a United 
States documented fish processing vessel that are necessary and used for 
processing or assembling fishery products aboard the vessel. 
‘‘§ 55116. Canadian rail lines 
‘‘Section 55102 of this title does not apply to the transportation of mer-
chandise between points in the continental United States, including Alaska, 
over through routes in part over Canadian rail lines and connecting water 
facilities if the routes have been recognized by the Surface Transportation 
Board and rate tariffs for the routes have been filed with the Board. 
‘‘§ 55117. Great Lakes rail route 
‘‘Section 55102 of this title does not apply to the transportation of mer-
chandise loaded on a railroad car or to a motor vehicle with or without a 
trailer, and with its passengers or contents when accompanied by the oper-
ator, when the railroad car or motor vehicle is transported in a railroad car 
ferry operated between fixed terminals on the Great Lakes as part of a rail 
route, if—
‘‘(1) the car ferry is owned by a common carrier by water and oper-
ated as part of a rail route with the approval of the Surface Transpor-
tation Board; 
‘‘(2) the stock of the common carrier by water, or its predecessor, 
was owned or controlled by a common carrier by rail prior to June 5, 
1920; 
‘‘(3) the stock of the common carrier owning the car ferry is, with 
the approval of the Board, now owned or controlled by a common car-
rier by rail; and 
‘‘(4) the car ferry is built in and documented under the laws of the 
United States. 
‘‘§ 55118. Foreign railroads whose road enters by ferry, tug-
boat, or towboat 
‘‘A foreign railroad, whose road enters the United States by ferry, tug-
boat, or towboat, may own and operate a vessel not having a coastwise en-
dorsement in connection with the water transportation of the passenger, 
freight, express, baggage, and mail cars used by that road, together with 
the passengers, freight, express matter, baggage, and mails transported in 
those cars. However, the foreign railroad is subject to the same restrictions 
imposed by law on a vessel of the United States entering a port of the 
United States from the same foreign country. Except as otherwise author-
ized by this chapter, the ferry, tugboat, or towboat may not, under penalty 
of forfeiture, be used in the transportation of merchandise between ports 
or places in the United States to which the coastwise laws apply.
189
‘‘§ 55119. Yukon River 
‘‘Section 55102 of this title does not apply to the transportation of mer-
chandise on the Yukon River until the Alaska Railroad is completed and the 
Secretary of Transportation finds that proper facilities will be available for 
transportation by citizens of the United States to properly handle the traf-
fic. 
‘‘§ 55120. Transshipment of imported merchandise intended 
for immediate exportation 
‘‘The Secretary of Homeland Security may prescribe regulations for the 
transshipment and transportation of merchandise that is imported into the 
United States by sea for immediate exportation to a foreign port by sea, 
or by a river, the right to ascend or descend which for the purposes of com-
merce is secured by treaty to the citizens of the United States and the sub-
jects of a foreign power.
‘‘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 Agri-
culture. 
‘‘55315.
Minimum tonnage. 
‘‘55316.
Financing the transportation of agricultural commodities. 
‘‘55317.
Termination of subchapter. 
‘‘55318.
Effect on other law. 
‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 
‘‘55331.
Definitions. 
‘‘55332.
Designating American Great Lakes vessels. 
‘‘55333.
Exemption from restriction on transporting certain cargo. 
‘‘55334.
Restrictions on operations. 
‘‘55335.
Revocations and terminations of designations. 
‘‘55336.
Civil penalty.
‘‘SUBCHAPTER I—GENERAL 
‘‘§ 55301. Priority loading for coal 
‘‘A vessel engaged in the coastwise transportation of coal produced in the 
United States, from a port in the United States to another port in the 
United States, shall be given priority in loading at any of those ports ahead 
of a waiting vessel engaged in the export transportation of coal produced 
in the United States. However, if the Secretary of Transportation finds that 
it is in the national interest, the Secretary may eliminate this priority load-
190
ing at any port. The Secretary shall report to Congress within 30 days an 
action eliminating priority loading under this section. 
‘‘§ 55302. Transportation of United States Government per-
sonnel 
‘‘(a) IN GENERAL.—An officer or employee of the United States Govern-
ment traveling by sea on official business overseas or to or from a territory 
or possession of the United States shall travel and transport personal effects
on a vessel documented under the laws of the United Sates if such a vessel 
is available, unless the necessity of the mission requires the use of a foreign 
vessel. 
‘‘(b) REGULATIONS.—The Administrator of General Services shall pre-
scribe regulations under which agencies may not pay for or reimburse an 
officer or employee for travel or transportation expenses incurred on a for-
eign vessel in the absence of satisfactory proof of the necessity of using the 
vessel. 
‘‘§ 55303. Motor vehicles owned by United States Govern-
ment personnel 
‘‘Notwithstanding any other law, privately-owned American shipping serv-
ices may be used to transport motor vehicles owned by personnel of the 
United States Government whenever transportation of those vehicles at Gov-
ernment expense is otherwise authorized by law. 
‘‘§ 55304. Exports financed by the United States Government 
‘‘It is the sense of Congress that any loans made by an instrumentality 
of the United States Government to foster the exporting of agricultural or 
other products shall provide that the products may be transported only on 
vessels of the United States unless, as to any or all of those products, the 
Secretary of Transportation, after investigation, certifies to the instrumen-
tality that vessels of the United States are not available in sufficient num-
ber, in sufficient tonnage capacity, on necessary schedules, or at reasonable 
rates. 
‘‘§ 55305. Cargoes procured, furnished, or financed by the 
United States Government 
‘‘(a) DEFINITION.—In this section, the term ‘privately-owned United 
States-flag commercial vessel’ does not include a vessel that, after Sep-
tember 21, 1961, was built or rebuilt outside the United States or docu-
mented under the laws of a foreign country, until the vessel has been docu-
mented under the laws of the United States for at least 3 years. 
‘‘(b) MINIMUM TONNAGE.—When the United States Government pro-
cures, contracts for, or otherwise obtains for its own account, or furnishes 
to or for the account of a foreign country without provision for reimburse-
ment, any equipment, materials, or commodities, within or without the
191
United States, or advances funds or credits, or guarantees the convertibility 
of foreign currencies in connection with the furnishing of the equipment, 
materials, or commodities, the appropriate agencies shall take steps nec-
essary and practicable to ensure that at least 50 percent of the gross ton-
nage of the equipment, materials, or commodities (computed separately for 
dry bulk carriers, dry cargo liners, and tankers) which may be transported 
on ocean vessels is transported on privately-owned United States-flag com-
mercial vessels, to the extent those vessels are available at fair and reason-
able rates for United States-flag commercial vessels, in a manner that will 
ensure a fair and reasonable participation of United States-flag commercial 
vessels in those cargoes by geographic areas. 
‘‘(c) WAIVERS.—The President, the Secretary of Defense, or Congress (by 
concurrent resolution or otherwise) may waive this section temporarily by—
‘‘(1) declaring the existence of an emergency justifying a waiver; and 
‘‘(2) notifying the appropriate agencies of the waiver. 
‘‘(d) PROGRAMS OF OTHER AGENCIES.—An agency having responsibility 
under this section shall administer its programs with respect to this section 
under regulations prescribed by the Secretary of Transportation. The Sec-
retary shall review the administration of those programs and report annu-
ally to Congress on their administration. 
‘‘SUBCHAPTER II—EXPORT TRANSPORTATION OF 
AGRICULTURAL COMMODITIES 
‘‘§ 55311. Findings and purposes 
‘‘(a) FINDINGS.—Congress finds that—
‘‘(1) a productive and healthy agricultural industry and a strong and 
active United States maritime industry are vitally important to the eco-
nomic well-being and security of the United States; 
‘‘(2) both industries must compete in international markets increas-
ingly dominated by foreign trade barriers and the subsidization prac-
tices of foreign governments; and 
‘‘(3) increased agricultural exports and the use of merchant vessels 
of the United States contribute positively to the United States balance 
of trade and generate employment opportunities in the United States. 
‘‘(b) PURPOSES.—The purposes of this subchapter are to—
‘‘(1) enable the Secretary of Agriculture to plan export programs ef-
fectively, by clarifying the ocean transportation requirements applicable 
to those programs; 
‘‘(2) take immediate and positive steps to promote the growth of the 
cargo-carrying capacity of the United States merchant marine;
192
‘‘(3) expand international trade in United States agricultural com-
modities and products and develop, maintain, and expand markets for 
United States agricultural exports; 
‘‘(4) improve the efficiency of administration of both the commodity 
purchasing and selling activities and the ocean transportation activities 
associated with export programs sponsored by the Secretary; 
‘‘(5) stimulate and promote the agricultural and maritime industries 
of the United States and encourage cooperative efforts by both indus-
tries to address their common problems; and 
‘‘(6) provide for the appropriate disposition of these findings and 
purposes. 
‘‘§ 55312. Determining prevailing world market price 
‘‘(a) AGRICULTURAL COMMODITIES
AND PRODUCTS.—The prevailing 
world market price for agricultural commodities or their products shall be 
determined under this subchapter under procedures prescribed by the Sec-
retary of Agriculture. The Secretary shall prescribe the procedures by regu-
lation, with notice and opportunity for public comment under section 553 
of title 5. 
‘‘(b) SERVICES
AND NON-AGRICULTURAL COMMODITIES
AND PROD-
UCTS.—If a determination of the prevailing world market price of any other 
type of materials, goods, equipment, or service is required to determine 
whether a barter or exchange transaction is subject to section 55314(b)(6) 
or (7) of this title, the determination shall be made by the Secretary of Ag-
riculture in consultation with the heads of other appropriate agencies. 
‘‘§ 55313. Exemption of certain agricultural exports from 
cargo preference provisions 
‘‘Sections 55304 and 55305 of this title do not apply to export activities 
of the Secretary of Agriculture or the Commodity Credit Corporation under 
which—
‘‘(1) agricultural commodities or their products acquired by the Cor-
poration are made available to United States exporters, users, proc-
essors, or foreign purchasers for the purpose of developing, maintain-
ing, or expanding export markets for United States agricultural com-
modities or their products at prevailing world market prices; 
‘‘(2) payments are made available to United States exporters, users, 
or processors or, except as provided in section 55314 of this title, cash 
grants are made available to foreign purchasers, for the purpose de-
scribed in clause (1); 
‘‘(3) commercial credit guarantees are blended with direct credits 
from the Corporation to reduce the effective rate of interest on export 
sales of United States agricultural commodities or their products;
193
‘‘(4) credit or credit guarantees for not more than 3 years are ex-
tended by the Corporation to finance or guarantee export sales of 
United States agricultural commodities or their products; or 
‘‘(5) agricultural commodities or their products owned or controlled 
by or under loan from the Corporation are exchanged or bartered for 
materials, goods, equipment, or services at least equal in value to the 
agricultural commodities or their products for which they are ex-
changed or bartered (determined on the basis of prevailing world mar-
ket prices at the time of the exchange or barter), but this clause does
not exempt from the cargo preference provisions referred to in section 
55314(b) of this title any requirement otherwise applicable to the mate-
rials, goods, equipment, or services imported under the transaction. 
‘‘§ 55314. Transportation requirements for certain exports 
sponsored by the Secretary of Agriculture 
‘‘(a) MINIMUM TONNAGE.—
‘‘(1) IN GENERAL.—In addition to the requirement under section 
55305 of this title for the transportation of a percentage of gross ton-
nage on United States-flag vessels, 25 percent of the gross tonnage of 
agricultural commodities or their products specified in subsection (b) 
shall be transported each calendar year on United States-flag commer-
cial vessels that—
‘‘(A) are necessary for national security; and 
‘‘(B) if more than 25 years old, were rebuilt within the last 5 
years and certified by the Secretary of Transportation as having 
a useful life of at least 5 years after that rebuilding. 
‘‘(2) CALENDAR YEAR.—To provide for effective and equitable ad-
ministration of the cargo preference laws, the calendar year for the 
purpose of compliance with minimum percentage requirements is the 
12-month period beginning October 1 of each year. 
‘‘(b) APPLICABLE EXPORT ACTIVITY.—This section applies to export ac-
tivity (except inspection or weighing activities, other activities carried out 
for health or safety, or technical assistance provided in the handling of com-
mercial transactions) of the Secretary of Agriculture or the Commodity 
Credit Corporation—
‘‘(1) carried out under the Agricultural Trade Development and As-
sistance Act of 1954 (7 U.S.C. 1691 et seq.); 
‘‘(2) carried out under section 416 of the Agricultural Act of 1949 
(7 U.S.C. 1431); 
‘‘(3) carried out under the Bill Emerson Humanitarian Trust Act (7 
U.S.C. 1736f–1); 
‘‘(4) under which agricultural commodities or their products are—
194
‘‘(A) donated through foreign governments or private or public 
agencies, including intergovernmental organizations; or 
‘‘(B) sold for foreign currencies or for dollars on credit terms 
of more than 10 years; 
‘‘(5) under which agricultural commodities or their products are 
made available for emergency food relief at less than prevailing world 
market prices; 
‘‘(6) under which a cash grant is made directly or through an inter-
mediary to a foreign purchaser to enable the purchaser to obtain 
United States agricultural commodities or their products in an amount 
greater than the difference between the prevailing world market price 
and the United States market price, free along side vessel at a United 
States port; or 
‘‘(7) under which agricultural commodities owned or controlled by or 
under loan from the Corporation are exchanged or bartered for mate-
rials, goods, equipment, or services produced in foreign countries, ex-
cept export activities described in section 55313(5) of this title. 
‘‘(c) ADDITIONAL REQUIREMENTS.—
‘‘(1) APPLICATION OF SECTION 55305.—The requirement for United 
States-flag transportation under subsection (a) is subject to the same 
terms and conditions as provided in section 55305 of this title. 
‘‘(2) ALLOCATION OF COMMODITIES.—Subject to paragraph (3), in 
carrying out this section and section 55305 of this title, the Corpora-
tion shall take steps necessary and practicable, and consistent with this 
section and section 55305, without detriment to any port range to allo-
cate, on the principle of lowest landed cost without regard to the coun-
try of documentation of the vessel, 25 percent of the bagged, processed, 
or fortified commodities provided under title II of the Agricultural 
Trade Development and Assistance Act of 1954 (7 U.S.C. 1721 et 
seq.). 
‘‘(3) CALCULATIONS.—In carrying out paragraph (2), first there 
shall be calculated the allocation of 100 percent of the quantity to be 
procured on an overall lowest landed cost basis without regard to the 
country of documentation of the vessel, and then there shall be allo-
cated to the Great Lakes port range any cargoes for which it has the 
lowest landed cost under that calculation. The requirements for United 
States-flag transportation under this section and section 55305 of this 
title do not apply to commodities allocated to the Great Lakes port 
range under paragraph (2). To the extent that the Great Lakes port 
range is used to furnish and transport less than 25 percent of the total 
annual tonnage of commodities to which paragraph (2) applies, the
195
commodities allocated to the Great Lakes port range under paragraph 
(2) may not be reallocated or diverted to another port range to meet 
the requirements for United States-flag transportation under this sec-
tion and section 55305 of this title. 
‘‘(4) AWARDING CONTRACTS.—In awarding a contract for the trans-
portation by vessel of commodities from the Great Lakes port range 
pursuant to an export activity referred to in subsection (b), an agen-
cy—
‘‘(A) shall consider expressions of freight interest for any vessel 
from a vessel operator who meets reasonable requirements for fi-
nancial and operational integrity; and 
‘‘(B) may not deny award of the contract to a person based on 
the type of vessel on which the transportation would be provided 
(including on the basis that the transportation would not be pro-
vided on a liner vessel, as that term is used in the Shipping Act 
of 1984, as in effect on November 14, 1995), if the person other-
wise satisfies reasonable requirements for financial and operational 
integrity. 
‘‘(5) NONAVAILABILITY OF VESSELS.—A determination of nonavail-
ability of United States-flag vessels resulting from the application of 
this subsection may not reduce the gross tonnage of commodities re-
quired by this section and section 55305 of this title to be transported 
on United States-flag vessels. 
‘‘§ 55315. Minimum tonnage 
‘‘(a) DEFINITION.—In this section, the term ‘base period’ means the 5-
year period running from the sixth through the second prior fiscal years. 
‘‘(b) REQUIREMENT.—For each fiscal year, the minimum quantity of ag-
ricultural commodities to be exported under programs subject to section 
55314 of this title is the average of the tonnage exported under those pro-
grams during the base period, discarding the high and low years. 
‘‘(c) WAIVERS.—The President may waive the minimum quantity for a 
fiscal year under this section if the President determines and reports to 
Congress, together with reasons, that the quantity cannot be used effectively 
for the purposes of those programs or, based on a certification by the Sec-
retary of Agriculture, that the commodities are not available for reasons 
that include the unavailability of funds. 
‘‘§ 55316. Financing the transportation of agricultural com-
modities 
‘‘(a) IN GENERAL.—The Secretary of Transportation shall finance any 
increased ocean freight charges incurred in a fiscal year because of section 
55314 of this title.
196
‘‘(b) AMOUNT OF REIMBURSEMENT.—
‘‘(1) IN GENERAL.—The Secretary of Transportation shall reimburse 
the Secretary of Agriculture and the Commodity Credit Corporation for 
the amount by which, in any fiscal year—
‘‘(A) the total cost of ocean freight and ocean freight differen-
tial for which obligations are incurred by the Secretary of Agri-
culture and the Corporation on exports of agricultural commodities
and their products under the agricultural export programs speci-
fied in section 55314(b) of this title; exceeds 
‘‘(B) 20 percent of the value of the commodities and their prod-
ucts and the cost of the ocean freight and ocean freight differen-
tial on which obligations are incurred by the Secretary of Agri-
culture and the Corporation during that fiscal year. 
‘‘(2) COMMODITIES SHIPPED FROM INVENTORY.—Under this sub-
section, commodities shipped from the inventory of the Corporation 
shall be valued as provided in section 412(e) of the Agricultural Trade 
Development and Assistance Act of 1954 (7 U.S.C. 1736f(e)). 
‘‘(c) ISSUANCE AND PURCHASE OF OBLIGATIONS.—
‘‘(1) ISSUANCE.—To meet the expenses required to be assumed 
under subsections (a) and (b), the Secretary of Transportation shall 
issue obligations to the Secretary of the Treasury. The Secretary of 
Transportation, with the approval of the Secretary of the Treasury, 
shall prescribe the form, denomination, maturity, and other terms (ex-
cept the interest rate) of the obligations. The Secretary of the Treasury 
shall set the interest rate for the obligations, considering the average 
market yield on outstanding marketable obligations of the United 
States Government of comparable maturities during the month before 
the obligations are issued. 
‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the 
obligations issued under this subsection. To purchase the obligations, 
the Secretary of the Treasury may use as a public debt transaction the 
proceeds from the sale of securities issued under chapter 31 of title 31. 
The purposes for which securities may be issued under that chapter are 
extended to include the purchase of obligations under this subsection. 
A redemption or purchase of the obligations by the Secretary of the 
Treasury is a public debt transaction of the Government. 
‘‘(d) REIMBURSEMENT.—Reimbursement of the Secretary of Transpor-
tation for costs incurred under this section shall be made with appropriated 
funds rather than through cancellation of notes. 
‘‘(e) APPROPRIATIONS.—
197
‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized to be 
appropriated an amount sufficient to reimburse the Secretary of Trans-
portation for the costs incurred under this section, including adminis-
trative expenses and the principal and interest due on obligations 
issued to the Secretary of the Treasury. 
‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each fiscal 
year, such amounts as may be necessary are hereby appropriated to 
pay interest and to liquidate debt on obligations issued to the Secretary 
of the Treasury under this section. 
‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary 
of Transportation is unable to obtain the funds necessary to finance the in-
creased ocean freight charges resulting from the requirements of subsections 
(a) and (b) and section 55314(a) of this title, the Secretary shall notify 
Congress within 10 working days of the discovery of the insufficiency. 
‘‘§ 55317. Termination of subchapter 
‘‘This subchapter terminates 90 days after the date on which a notifica-
tion is made under section 55316(f) of this title, except for shipments of 
agricultural commodities and their products subject to contracts made be-
fore the end of that 90-day period, unless within that 90-day period the Sec-
retary of Transportation proclaims that funds are available to finance in-
creased freight charges resulting from the requirements of sections 
55314(a) and 55316(a) and (b) of this title. On the termination of this sub-
chapter under this section—
‘‘(1) this subchapter does not exempt export activities from, or sub-
ject export activities to, the cargo preference laws; and 
‘‘(2) the 50-percent requirement in section 55305 of this title re-
mains in effect. 
‘‘§ 55318. Effect on other law 
‘‘This subchapter does not affect chapter 5 of title 5. 
‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 
‘‘§ 55331. Definitions 
‘‘In this subchapter: 
‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American Great 
Lakes vessel’ means a vessel so designated under section 55332 of this 
title, but only during the period the designation is in effect. 
‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake Superior, 
Lake Michigan, Lake Huron, Lake Erie, Lake Ontario, the Saint Law-
rence River west of Saint Regis, New York, and their connecting and 
tributary waters. 
‘‘(3) GREAT
LAKES
SHIPPING
SEASON.—The term ‘Great Lakes 
shipping season’ means the period each year during which the Saint
198
Lawrence Seaway is open for navigation by vessels, as declared by the 
Saint Lawrence Seaway Development Corporation. 
‘‘§ 55332. Designating American Great Lakes vessels 
‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a 
vessel as an American Great Lakes vessel if—
‘‘(1) an application for designation is submitted to the Secretary 
under regulations prescribed by the Secretary; 
‘‘(2) the vessel is documented under the laws of the United States; 
‘‘(3) the vessel, on the effective date of the designation, is—
‘‘(A) at least 1, but not more than 6, years old; or 
‘‘(B) at least 1, but not more than 11, years old if the Secretary 
finds that suitable vessels are not available to provide the type of 
service for which the vessel will be used after the designation; 
‘‘(4) the vessel has not previously been designated as an American 
Great Lakes vessel; and 
‘‘(5) the owner makes an agreement as provided under subsection 
(b). 
‘‘(b) AGREEMENTS.—A vessel may be designated as an American Great 
Lakes vessel only if the person that will be the owner of the vessel at the 
time of the designation makes an agreement with the Secretary providing 
that if the Secretary determines that the vessel is necessary to the defense 
of the United States, the United States Government will have an exclusive 
right, during the 120-day period following the date of a revocation of the 
designation under section 55335 of this title, to purchase the vessel for a 
price equal to the greater of—
‘‘(1) the approximate world market value of the vessel; or 
‘‘(2) the cost of the vessel to the owner less a reasonable amount 
for depreciation. 
‘‘(c) CERTAIN FOREIGN DOCUMENTATION
AND SALE NOT PROHIB-
ITED.—Notwithstanding any other law, if the Government does not exercise 
its right of purchase under an agreement under subsection (b), the owner 
of the vessel is not prohibited from—
‘‘(1) documenting the vessel under the laws of a foreign country; or 
‘‘(2) selling the vessel to a person not a citizen of the United States. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations estab-
lishing requirements for submitting applications under this section. 
‘‘§ 55333. Exemption from restriction on transporting cer-
tain cargo 
‘‘The 3-year documentation requirement of section 55305(a) of this title 
does not apply to a vessel designated as an American Great Lakes vessel 
during the period of its designation.
199
‘‘§ 55334. Restrictions on operations 
‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an American 
Great Lakes vessel may not be used to—
‘‘(1) engage in trade—
‘‘(A) from a port in the United States that is not located on 
the Great Lakes; or 
‘‘(B) between ports in the United States;
‘‘(2) transport bulk cargo (as defined in section 40102 of this title) 
that is subject to section 55305 or 55314 of this title or section 2631 
of title 10; or 
‘‘(3) provide a service (except ocean freight service) as—
‘‘(A) a contract carrier; or 
‘‘(B) a common carrier on a fixed advertised schedule offering 
frequent sailings at regular intervals in the foreign trade of the 
United States. 
‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel may be 
used for not more than 90 days during any 12-month period to engage in 
trade prohibited by subsection (a)(1)(A), except during the Great Lakes 
shipping season. 
‘‘§ 55335. Revocations and terminations of designations 
‘‘(a) REVOCATIONS.—After notice and an opportunity for a hearing, the 
Secretary of Transportation may revoke a designation of a vessel as an 
American Great Lakes vessel if the Secretary finds that—
‘‘(1) the vessel does not meet a requirement for the designation; 
‘‘(2) the vessel has been operated in violation of this subchapter; or 
‘‘(3) the owner or operator of the vessel has violated an agreement 
made under section 55332(b) of this title. 
‘‘(b) TERMINATIONS.—On petition and a showing of good cause by the 
owner of a vessel, the Secretary may terminate the designation of a vessel 
as an American Great Lakes vessel. The Secretary may impose conditions 
in a termination order to prevent significant adverse effects on other opera-
tors of United States-flag vessels. 
‘‘§ 55336. Civil penalty 
‘‘After notice and an opportunity for a hearing, the Secretary of Trans-
portation may impose a civil penalty of not more than $1,000,000 on the 
owner of an American Great Lakes vessel for any act for which the designa-
tion may be revoked under section 55335 of this title.
‘‘CHAPTER 555—MISCELLANEOUS
‘‘Sec. 
‘‘55501.
Mobile trade fairs.
200
‘‘§ 55501. Mobile trade fairs 
‘‘(a) IN GENERAL.—The Secretary of Commerce shall encourage and pro-
mote the development and use of mobile trade fairs designed to show and 
sell the products of United States business and agriculture at foreign ports 
and at other commercial centers throughout the world where the operators 
of the fairs use, insofar as practicable, vessels and aircraft of the United 
States in transporting their exhibits. 
‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary de-
termines that a mobile trade fair provides an economical and effective 
means of promoting export sales, the Secretary may provide to the operator 
of the fair—
‘‘(1) technical assistance and support; and 
‘‘(2) financial assistance to defray certain expenses incurred outside 
the United States, except the cost of transportation on foreign vessels 
and aircraft. 
‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section, the 
President may use, in addition to amounts appropriated to carry out trade 
promotion activities, foreign currencies owned by or owed to the United 
States Government.
‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES 
‘‘CHAPTER 561—RESTRICTIONS ON TRANSFERS
‘‘Sec. 
‘‘56101.
Definition. 
‘‘56102.
Approval required to transfer vessel to noncitizen. 
‘‘56103.
Additional controls during war or national emergency. 
‘‘56104.
Conditional approvals. 
‘‘56105.
Penalty for false statements. 
‘‘56106.
Forfeiture procedure. 
‘‘§ 56101. Definition 
‘‘In this chapter, the term ‘citizen of the United States’ includes a citizen 
of the United States as defined in section 12118 of this title. 
‘‘§ 56102. Approval required to transfer vessel to noncitizen 
‘‘(a) IN GENERAL.—Except as otherwise provided in this section, section 
12119 of this title, or section 611 of the Merchant Marine Act, 1936, a per-
son may not, without the approval of the Secretary of Transportation—
‘‘(1) sell, lease, charter, deliver, or in any other manner transfer, or 
agree to sell, lease, charter, deliver, or in any other manner transfer, 
to a person not a citizen of the United States, an interest in or control 
of a documented vessel or a vessel last documented under the laws of 
the United States, except a vessel that has been operated only for 
pleasure or only as a fishing vessel, fish processing vessel, or fish ten-
der vessel (as defined in section 2101 of this title); or
201
‘‘(2) place under foreign registry, or operate under the authority of 
a foreign country, a documented vessel or a vessel last documented 
under the laws of the United States. 
‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing with 
respect to a vessel to be documented under chapter 121 of this title, the 
Secretary may grant approval under subsection (a) before the vessel is docu-
mented. 
‘‘(c) EXCEPTIONS.—Notwithstanding any other provision of this subtitle, 
the Merchant Marine Act, 1936, or any contract with the Secretary made 
under this subtitle or that Act, a person may place a vessel under foreign 
registry without the approval of the Secretary if—
‘‘(1)(A) the Secretary determines that at least one replacement ves-
sel of a capacity that is equivalent or greater, as measured by dead-
weight tons, gross tons, or container equivalent units, as appropriate, 
is documented under chapter 121 of this title by the owner of the vessel 
placed under foreign registry; and 
‘‘(B) the replacement vessel is not more than 10 years old on the 
date of that documentation; 
‘‘(2)(A) an application for an operating agreement under subtitle B 
of title VI of the Merchant Marine Act, 1936, has been filed for a ves-
sel that is eligible to be included in the Maritime Security Fleet under 
section 651(b)(1) of that Act; and 
‘‘(B) the Secretary has not awarded an operating agreement for that 
vessel within 90 days after the date of that application; 
‘‘(3) a contract covering the vessel under subtitle A of title VI of the 
Merchant Marine Act, 1936, has expired and the vessel was more than 
15 years old on the date the contract expired; or 
‘‘(4) an operating agreement covering the vessel under subtitle B of 
title VI of the Merchant Marine Act, 1936, has expired. 
‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or trans-
fer of a vessel, or of an interest in or control of a vessel, in violation of 
this section is void. 
‘‘(e) PENALTIES.—
‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells, charters, 
or transfers a vessel, or an interest in or control of a vessel, in violation 
of this section shall be fined under title 18, imprisoned for not more 
than 5 years, or both. 
‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a 
vessel, or an interest in or control of a vessel, in violation of this sec-
tion is liable to the United States Government for a civil penalty of 
not more than $10,000 for each violation.
202
‘‘(3) FORFEITURE.—A documented vessel may be seized by and for-
feited to the Government if, in violation of this section, a person—
‘‘(A) knowingly sells, charters, or transfers the vessel or an in-
terest in or control of the vessel; or 
‘‘(B) places the vessel under foreign registry or operates the 
vessel under the authority of a foreign country.
‘‘§ 56103. Additional controls during war or national emer-
gency 
‘‘(a) IN GENERAL.—During war, or a national emergency declared by 
Presidential proclamation, a person may not, without the approval of the 
Secretary of Transportation—
‘‘(1) place under foreign registry or flag a vessel owned in whole or 
in part by a citizen of the United States or a corporation incorporated 
under the laws of the United States or of a State; 
‘‘(2) sell, mortgage, lease, charter, deliver, or in any other manner 
transfer, or agree to sell, mortgage, lease, charter, deliver, or in any 
other manner transfer, to a person not a citizen of the United States—
‘‘(A) a vessel owned as described in clause (1), or an interest 
therein; 
‘‘(B) a vessel documented under the laws of the United States, 
or an interest therein; or 
‘‘(C) a facility for building or repairing vessels, or an interest 
therein; 
‘‘(3) issue, assign, or transfer to a person not a citizen of the United 
States an instrument of indebtedness secured by a mortgage of a vessel 
to a trustee, by an assignment of an owner’s interest in a vessel under 
construction to a trustee, or by a mortgage of a facility for building 
or repairing vessels to a trustee, unless the trustee or a substitute 
trustee is approved by the Secretary under subsection (b); 
‘‘(4) enter into an agreement or understanding to construct a vessel 
in the United States for, or to be delivered to, a person not a citizen 
of the United States without expressly stipulating that construction will 
not begin until after the war or national emergency has ended; 
‘‘(5) enter into an agreement or understanding whereby there is vest-
ed in, or for the benefit of, a person not a citizen of the United States 
the controlling interest in a corporation that is incorporated under the 
laws of the United States or a State and that owns a vessel or facility 
for building or repairing vessels; or 
‘‘(6) cause or procure a vessel, constructed in whole or in part in 
the United States and never cleared for a foreign port, to depart from
203
a port of the United States before it has been documented under the 
laws of the United States. 
‘‘(b) TRUSTEES.—
‘‘(1) APPROVAL.—The Secretary shall approve a trustee or sub-
stitute trustee under subsection (a)(3) if and only if the trustee is a 
bank or trust company that—
‘‘(A) is organized as a corporation, and is doing business, under 
the laws of the United States or a State; 
‘‘(B) is authorized under those laws to exercise corporate trust 
powers; 
‘‘(C) is a citizen of the United States; 
‘‘(D) is subject to supervision or examination by Federal or 
State authority; and 
‘‘(E) has a combined capital and surplus (as set forth in its 
most recent published report of condition) of at least $3,000,000. 
‘‘(2) DISAPPROVAL.—If a trustee or substitute trustee ceases to meet 
the conditions in paragraph (1), the Secretary shall disapprove the 
trustee or substitute trustee. After the disapproval, the restrictions on 
transfer or assignment without the Secretary’s approval in subsection 
(a)(3) apply. 
‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) 
applies, a trustee referred to in subsection (a)(3), even though ap-
proved as a trustee by the Secretary, may not operate the vessel under 
the mortgage or assignment without the Secretary’s approval. 
‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in violation 
of this section is void. 
‘‘(d) RECOVERY OF CONSIDERATION.—
‘‘(1) IN GENERAL.—A person that deposited or paid consideration in 
connection with a transaction prohibited by this section may recover 
the consideration after tender of the vessel, facility, stock, or other se-
curity, or interest therein, to the person entitled to it, or the forfeiture 
thereof to the United States Government. 
‘‘(2) EXCEPTION.—Paragraph (1) does not apply if the person in 
whose interest the consideration was deposited, or to whom it was paid, 
entered into the transaction in the belief that the person depositing or 
paying the consideration was a citizen of the United States. 
‘‘(e) PENALTIES.—
‘‘(1) CRIMINAL PENALTY.—A person that violates, or attempts or 
conspires to violate, this section shall be fined under title 18, impris-
oned for not more than 5 years, or both.
204
‘‘(2) FORFEITURE.—The following shall be forfeited to the Govern-
ment: 
‘‘(A) A vessel, a facility for building or repairing vessels, or an 
interest in a vessel or such a facility, that is sold, mortgaged, 
leased, chartered, delivered, transferred, or documented, or agreed 
to be sold, mortgaged, leased, chartered, delivered, transferred, or 
documented, in violation of this section. 
‘‘(B) Stock and other securities sold or transferred, or agreed 
to be sold or transferred, in violation of this section. 
‘‘(C) A vessel departing in violation of subsection (a)(6). 
‘‘§ 56104. Conditional approvals 
‘‘(a) IN GENERAL.—In approving an act or transaction under section 
56102 or 56103 of this title, the Secretary of Transportation may do so 
absolutely or upon conditions the Secretary considers advisable. The Sec-
retary shall state the conditions in the notice of approval. 
‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the 
same penalties as a violation resulting from an act done without the re-
quired approval. The violation occurs at the time the condition is violated. 
‘‘§ 56105. Penalty for false statements 
‘‘A person that knowingly makes a false statement of a material fact to 
the Secretary of Transportation or another officer, employee, or agent of the 
Department of Transportation, to obtain the Secretary’s approval under sec-
tion 56102 or 56103 of this title, shall be fined under title 18, imprisoned 
for not more than 5 years, or both. 
‘‘§ 56106. Forfeiture procedure 
‘‘(a) IN GENERAL.—A forfeiture under this chapter may be enforced in 
the same way as a forfeiture under the laws on the collection of duties. 
However, such a forfeiture may be remitted without seizure of the vessel. 
‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter to enforce 
a forfeiture, a prior criminal conviction of a person for a violation of this 
chapter with respect to the subject matter of the forfeiture is prima facie 
evidence of the violation against the person convicted.
‘‘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.
‘‘§ 56301. General authority 
‘‘During a national emergency declared by Presidential proclamation, or 
a period for which the President has proclaimed that the security of the na-
205
tional defense makes it advisable, the Secretary of Transportation may req-
uisition or purchase, or requisition or charter the use of, a vessel owned by 
citizens of the United States, a documented vessel, or a vessel under con-
struction in the United States.
‘‘§ 56302. Charter terms 
‘‘(a) IN GENERAL.—If a vessel is requisitioned for use but not ownership 
under this chapter, the Secretary of Transportation, at the time of requisi-
tion or as soon thereafter as the situation allows, shall offer the person enti-
tled to possession of the vessel a charter containing—
‘‘(1) the terms the Secretary believes should govern the relationship 
between the United States Government and the person; and 
‘‘(2) the rate of hire the Secretary considers just compensation for 
the use of the vessel and the services required under the charter. 
‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the charter 
and rate of hire, the parties shall proceed as provided in section 56304 of 
this title. 
‘‘§ 56303. Compensation 
‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of Transpor-
tation shall determine and pay just compensation for a vessel requisitioned 
under this chapter. 
‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel may not 
be considered enhanced by the circumstances requiring its requisition. Con-
sequential damages arising from the requisition may not be paid. 
‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.—
‘‘(1) IF PAID.—If a construction-differential subsidy has been paid 
for the vessel, the value of the vessel at the time of requisition shall 
be determined under section 802 of the Merchant Marine Act, 1936. 
‘‘(2) IF NOT PAID.—If a construction-differential subsidy has not 
been paid for the vessel, the value of any national defense features pre-
viously paid for by the United States Government shall be excluded. 
‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost or dam-
aged by a risk assumed by the Government under the charter, but a valu-
ation for the vessel or a means of compensation has not been agreed to, 
the Secretary shall pay just compensation for the loss or damage, to the 
extent the person is not reimbursed through insurance. 
‘‘§ 56304. Disputed compensation 
‘‘If the person entitled to compensation disputes the amount of just com-
pensation determined by the Secretary of Transportation under this chapter, 
the Secretary shall pay the person, as a tentative advance, 75 percent of 
the amount determined. The person may bring a civil action against the 
United States Government to recover just compensation. If the tentative ad-
206
vance paid under this section is greater than the amount of the court’s 
judgment, the person shall refund the difference. 
‘‘§ 56305. Vessel encumbrances 
‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel does 
not prevent the requisition of the vessel under this chapter. 
‘‘(b) DEPOSIT IN TREASURY.—
‘‘(1) IN
GENERAL.—If an encumbrance exists, the Secretary of 
Transportation may deposit part of the compensation or advance of 
compensation to be paid under this chapter (but not more than the 
total amount of all encumbrances) in a fund in the Treasury. The Sec-
retary shall publish notice of the creation of the fund in the Federal 
Register. 
‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts deposited in 
the fund shall be available to pay the compensation or any of the en-
cumbrances (including encumbrances stipulated to in a court of the 
United States or a State) existing at the time the vessel was requi-
sitioned. 
‘‘(c) CIVIL ACTION.—
‘‘(1) IN GENERAL.—Within 6 months after publication of notice 
under subsection (b), the holder of an encumbrance may bring a civil 
action in admiralty, according to the principles of libels in rem, against 
the fund. 
‘‘(2) VENUE.—The action must be brought in the district court of 
the United States—
‘‘(A) from whose custody the vessel was or may be requisitioned; 
or 
‘‘(B) in whose district the vessel was located when it was requi-
sitioned. 
‘‘(3) SERVICE OF PROCESS.—Service of process shall be made on the 
appropriate United States Attorney, the Attorney General, and the Sec-
retary, in the manner provided by the Federal Rules of Civil Procedure 
(28 App. U.S.C.). Notice of the action shall be given to all interested 
persons as ordered by the court. 
‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and 
be determined according to the principles of law and the rules of prac-
tice applicable in like cases between private parties. 
‘‘§ 56306. Use and transfer of vessels 
‘‘(a) IN GENERAL.—The Secretary of Transportation may repair, recon-
dition, reconstruct, operate, or charter for operation, a vessel acquired under 
this chapter.
207
‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may transfer the 
possession or control of a vessel acquired under this chapter to another de-
partment or agency of the United States Government on terms and condi-
tions approved by the President. The department or agency shall promptly 
reimburse the Secretary for expenditures for just compensation, purchase 
price, charter hire, repairs, reconditioning, or reconstruction. 
‘‘§ 56307. Return of vessels 
‘‘When a vessel requisitioned for use but not ownership is returned to the 
owner, the Secretary of Transportation shall—
‘‘(1) return the vessel in a condition at least as good as when taken, 
less ordinary wear and tear; or 
‘‘(2) pay the owner an amount sufficient to recondition the vessel to 
that condition, less ordinary wear and tear.
‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY 
NEUTRALITY ACT
‘‘Sec. 
‘‘56501.
Definition. 
‘‘56502.
Adjusting obligations and arranging maintenance. 
‘‘56503.
Types of adjustments and arrangements. 
‘‘56504.
Changes in adjustments and arrangements.
‘‘§ 56501. Definition 
‘‘In this chapter, the term ‘essential vessel’ means a vessel that is—
‘‘(1)(A) security for a mortgage indebtedness to the United States 
Government; or 
‘‘(B) constructed under this subtitle or required by a contract under 
this subtitle to be operated on a certain essential foreign trade route; 
and 
‘‘(2) necessary in the interests of commerce and national defense to 
be maintained in condition for prompt use. 
‘‘§ 56502. Adjusting obligations and arranging maintenance 
‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of 
Transportation may adjust obligations and arrange for maintenance of an 
essential vessel as provided in this chapter if the Secretary determines, after 
any investigation or proceeding the Secretary considers desirable, that—
‘‘(1) the operation of the vessel in the service, route, or line to which 
it is assigned under this subtitle, or in which it otherwise would be op-
erated, is not—
‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 
et seq.) or a proclamation issued under that Act; or 
‘‘(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-
208
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 clause (1), is not earning or will not earn a rea-
sonable 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 
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-
209
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. 
‘‘(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
210
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 clause (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 
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
211
‘‘(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. 
‘‘(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.
212
‘‘§ 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 
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.
213
‘‘§ 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 
‘‘(B) constructed in a domestic shipyard on private account and 
not under this subtitle, and documented under the laws of the 
United States.
214
‘‘(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; 
‘‘(2) the depreciated value based on a 20-year or 25-year life, which-
ever applies to the obsolete vessel; and
215
‘‘(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 
‘‘(2) except as otherwise provided in this subtitle, on trade routes 
serving only the foreign trade of the United States.
216
‘‘CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE 
OF VESSELS
‘‘SUBCHAPTER I—GENERAL 
‘‘Sec. 
‘‘57501.
Completion of long-range program. 
‘‘57502.
Construction, reconditioning, and remodeling of vessels. 
‘‘57503.
Competitive bidding. 
‘‘57504.
Charter or sale of vessels acquired by Department of Transportation. 
‘‘57505.
Employment of vessels on foreign trade routes. 
‘‘57506.
Minimum selling price of vessels. 
‘‘SUBCHAPTER II—CHARTERS 
‘‘57511.
Demise charters. 
‘‘57512.
Competitive bidding. 
‘‘57513.
Minimum bid. 
‘‘57514.
Qualifications of bidders. 
‘‘57515.
Awarding of charters. 
‘‘57516.
Operating-differential subsidies. 
‘‘57517.
Recovery of excess profits. 
‘‘57518.
Performance bond. 
‘‘57519.
Insurance. 
‘‘57520.
Vessel maintenance. 
‘‘57521.
Termination of charter during national emergency. 
‘‘SUBCHAPTER III—MISCELLANEOUS 
‘‘57531.
Construction and charter of vessels for unsuccessful routes. 
‘‘57532.
Operation of experimental vessels.
‘‘SUBCHAPTER I—GENERAL 
‘‘§ 57501. Completion of long-range program 
‘‘Whenever the Secretary of Transportation determines that the objectives 
and policies declared in sections 50101 and 50102 of this title cannot be 
fully realized within a reasonable time under titles V and VI of the Mer-
chant Marine Act, 1936, and the President approves the determination, the 
Secretary, in accordance with this chapter, shall complete the long-range 
program described in section 50102 of this title. 
‘‘§ 57502. Construction, reconditioning, and remodeling of 
vessels 
‘‘(a) IN GENERAL.—The Secretary of Transportation may have new ves-
sels constructed, and have old vessels reconditioned or remodeled, as the 
Secretary determines necessary to carry out the objectives of this subtitle. 
‘‘(b) PLACE OF WORK.—Construction, reconditioning, and remodeling of 
vessels under subsection (a) shall take place in shipyards in the continental 
United States (including Alaska and Hawaii). However, if satisfactory con-
tracts cannot be obtained from private shipbuilders, the Secretary may have 
the work done in navy yards. 
‘‘(c) APPLICABILITY OF CONSTRUCTION-DIFFERENTIAL SUBSIDY PROVI-
SIONS.—Contracts for the construction, reconstruction, or reconditioning of 
a vessel by a private shipbuilder under this chapter are subject to the provi-
sions of title V of the Merchant Marine Act, 1936, applicable to a contract
with a private shipbuilder for the construction of a vessel under title V of 
that Act.
217
‘‘§ 57503. Competitive bidding 
‘‘(a) ADVERTISEMENT AND BIDDING.—The Secretary of Transportation 
may make a contract with a private shipbuilder for the construction of a 
new vessel, or for the reconstruction or reconditioning of an existing vessel, 
only after due advertisement and upon sealed competitive bids. 
‘‘(b) OPENING
OF BIDS.—Bids required under this section shall be 
opened at the time and place stated in the advertisement for bids. All inter-
ested persons, including representatives of the press, shall be permitted to 
attend. The results of the bidding shall be publicly announced. 
‘‘§ 57504. Charter or sale of vessels acquired by Department 
of Transportation 
‘‘Vessels transferred to or otherwise acquired by the Department of 
Transportation in any manner may be chartered or sold by the Secretary 
of Transportation as provided in this chapter. 
‘‘§ 57505. Employment of vessels on foreign trade routes 
‘‘(a) IN GENERAL.—The Secretary of Transportation shall arrange for 
the employment of the Department of Transportation’s vessels in steamship 
lines on such trade routes, exclusively serving the foreign trade of the 
United States, as the Secretary determines are essential for the development 
and maintenance of the commerce of the United States and the national de-
fense. However, the Secretary shall first determine that those routes are not 
being adequately served by existing steamship lines privately owned and op-
erated by citizens of the United States and documented under the laws of 
the United States. 
‘‘(b) POLICY TO ENCOURAGE PRIVATE OPERATION.—The Secretary shall 
have a policy of encouraging private operation of each essential steamship 
line now owned by the United States Government by—
‘‘(1) selling the line to a citizen of the United States; or 
‘‘(2) demising the Secretary’s vessels on bareboat charter to citizens 
of the United States who agree to maintain the line in the manner pro-
vided in this chapter. 
‘‘§ 57506. Minimum selling price of vessels 
‘‘(a) IN GENERAL.—A vessel constructed under this subtitle or the Mer-
chant Marine Act, 1936, may not be sold by the Secretary of Transpor-
tation for less than the price specified in this section. 
‘‘(b) OPERATION IN FOREIGN TRADE.—If the vessel is to be operated in 
foreign trade, the minimum price is the estimated foreign construction cost 
(exclusive of national defense features) determined as of the date the con-
struction contract is executed, less depreciation under subsection (d). 
‘‘(c) OPERATION IN DOMESTIC TRADE.—If the vessel is to be operated 
in domestic trade, the minimum price is the cost of construction in the
218
United States (exclusive of national defense features), less depreciation 
under subsection (d). 
‘‘(d) DEPRECIATION.—Depreciation under subsections (b) and (c) shall be 
based on—
‘‘(1) a 25-year life for dry-cargo and passenger vessels; and 
‘‘(2) a 20-year life for tankers and other bulk liquid carrier vessels. 
‘‘SUBCHAPTER II—CHARTERS 
‘‘§ 57511. Demise charters 
‘‘A charter by the Secretary of Transportation under this chapter shall 
demise the vessel to the charterer subject to all usual conditions contained 
in a bareboat charter. The charter shall be for a term the Secretary con-
siders to be in the best interest of the United States Government and the 
merchant marine. 
‘‘§ 57512. Competitive bidding 
‘‘(a) IN GENERAL.—The Secretary of Transportation may charter a ves-
sel of the Department of Transportation to a private operator only on the 
basis of competitive sealed bidding. The bids must be submitted in strict 
compliance with the terms and conditions of a public advertisement solic-
iting the bids. 
‘‘(b) ADVERTISEMENT
FOR BIDS.—An advertisement for bids shall 
state—
‘‘(1) the number, type, and tonnage of the vessels being offered for 
bareboat charter for operation as a steamship line on a designated 
trade route; 
‘‘(2) the minimum number of sailings required; 
‘‘(3) the length of time of the charter; 
‘‘(4) the right of the Secretary to reject all bids; and 
‘‘(5) other information the Secretary considers necessary for the in-
formation of prospective bidders. 
‘‘(c) OPENING
OF BIDS.—Bids required under this section shall be 
opened at the time and place stated in the advertisement for bids. All inter-
ested persons, including representatives of the press, shall be permitted to 
attend. The results of the bidding shall be publicly announced. 
‘‘§ 57513. Minimum bid 
‘‘The Secretary of Transportation shall reject any bid for the charter 
under this subchapter of a vessel constructed under this subtitle or the Mer-
chant Marine Act, 1936, if the charter hire offered is lower than the min-
imum charter hire would be if the vessel were chartered under section 
57531 of this title.
219
‘‘§ 57514. Qualifications of bidders 
‘‘(a) CONSIDERATIONS.—In deciding whether to award a charter to a bid-
der, the Secretary of Transportation shall consider—
‘‘(1) the bidder’s financial resources, credit standing, and practical 
experience in operating vessels; and 
‘‘(2) other factors a prudent business person would consider in enter-
ing into a transaction involving a large capital investment. 
‘‘(b) DISQUALIFICATIONS.—The Secretary may not charter a vessel to a 
person appearing to lack sufficient capital, credit, and experience to operate 
the vessel successfully over the period covered by the charter. 
‘‘§ 57515. Awarding of charters 
‘‘(a) IN GENERAL.—The Secretary of Transportation shall award the 
charter to the bidder proposing to pay the highest monthly charter hire. 
However, the Secretary may reject the highest or most advantageous or any 
other bid if the Secretary considers the charter hire offered too low or deter-
mines that the bidder lacks the qualifications required by section 57514 of 
this title. 
‘‘(b) HIGHEST BID REJECTED.—If the Secretary rejects the highest bid, 
the Secretary may—
‘‘(1) award the charter to the next highest bidder; or 
‘‘(2) reject all bids and either readvertise the line or operate the line 
until conditions appear more favorable to reoffer the line for private 
charter. 
‘‘(c) REASON FOR REJECTION.—On request of a bidder, the reason for 
rejection shall be stated in writing to the bidder. 
‘‘§ 57516. Operating-differential subsidies 
‘‘If the Secretary of Transportation considers it necessary, the Secretary 
may make a contract with a charterer of a vessel owned by the Secretary 
for payment of an operating-differential subsidy, on the same terms and 
conditions, and subject to the same limitations and restrictions, as otherwise 
provided with respect to payment of operating-differential subsidies to oper-
ators of privately-owned vessels. 
‘‘§ 57517. Recovery of excess profits 
‘‘(a) IN GENERAL.—A charter under this chapter shall provide that if, 
at the end of a calendar year subsequent to the execution of the charter, 
the cumulative net voyage profit (after payment of the charter hire reserved 
in the charter and payment of the charterer’s fair and reasonable overhead 
expenses applicable to operation of the chartered vessel) exceeds 10 percent 
a year of the charterer’s capital necessarily employed in the business of the 
chartered vessel, the charterer shall pay to the Secretary of Transportation, 
as additional charter hire, half the cumulative net voyage profit in excess
220
of 10 percent a year. However, any cumulative net voyage profit accounted 
for under this subsection is not to be included in the calculation of cumu-
lative net voyage profit in any subsequent year. 
‘‘(b) TERMS TO BE DEFINED AND USED.—The Secretary shall define the 
terms ‘net voyage profit’, ‘fair and reasonable overhead expenses’, and ‘cap-
ital necessarily employed’ for this section. Each advertisement for bids and 
each charter shall contain these definitions, stating the formula for deter-
mining each of these three amounts. 
‘‘§ 57518. Performance bond 
‘‘The Secretary of Transportation shall require a charterer of a vessel of 
the Secretary to deposit with the Secretary an undertaking, with approved 
sureties, in such amount as the Secretary may require as security for the 
faithful performance of the terms of the charter, including indemnity 
against liens on the chartered vessel. 
‘‘§ 57519. Insurance 
‘‘A charter under this chapter shall require the charterer to carry, at the 
charterer’s expense, insurance on the chartered vessel covering all marine 
and port risks, protection and indemnity risks, and all other hazards and 
liabilities, adequate to cover damages claimed against and losses sustained 
by the chartered vessel arising during the term of the charter. The insur-
ance shall be in such form, in such amount, and with such companies as 
the Secretary of Transportation may require. In accordance with law, any 
of the insurance risks may be underwritten by the Secretary. 
‘‘§ 57520. Vessel maintenance 
‘‘(a) IN GENERAL.—A charter under this chapter shall require the 
charterer, at the charterer’s expense, to—
‘‘(1) keep the chartered vessel in good repair and efficient operating 
condition; and 
‘‘(2) make any repairs required by the Secretary of Transportation. 
‘‘(b) INSPECTION.—The charter shall provide that the Secretary has the 
right to inspect the vessel at any time to ascertain its condition. 
‘‘§ 57521. Termination of charter during national emergency 
‘‘A charter under this chapter shall provide that during a national emer-
gency proclaimed by the President or a period for which the President has 
proclaimed that the security of the national defense makes it advisable, the 
Secretary of Transportation may terminate the charter without cost to the 
United States Government on such notice to the charterer as the President 
determines.
221
‘‘SUBCHAPTER III—MISCELLANEOUS 
‘‘§ 57531. Construction and charter of vessels for unsuccess-
ful routes 
‘‘(a) IN GENERAL.—If the Secretary of Transportation finds that a trade 
route determined to be essential under section 50103 of this title cannot be 
successfully developed and maintained and the Secretary’s replacement pro-
gram cannot be achieved under private operation of the trade route by a 
citizen of the United States with vessels documented under the laws of the 
United States, without further aid by the United States Government in ad-
dition to the financial aid authorized under titles V and VI of the Merchant 
Marine Act, 1936, the Secretary, without advertisement or competition, 
may—
‘‘(1) have constructed, in private shipyards or in navy yards, vessels 
of the types necessary for the trade route; and 
‘‘(2) demise those new vessels or bareboat charter them to the Amer-
ican-flag operator established on the trade route. 
‘‘(b) AMOUNT OF CHARTER HIRE.—
‘‘(1) IN GENERAL.—The annual charter hire under subsection (a) 
shall be at least 4 percent of the price (referred to in this section as 
the ‘foreign cost’) at which the vessel would be sold if constructed 
under title V of the Merchant Marine Act, 1936, plus—
‘‘(A) a percentage of the depreciated foreign cost computed an-
nually determined by the Secretary of the Treasury, taking into 
consideration the current average market yield on outstanding 
marketable obligations of the Government with remaining periods 
to maturity comparable to the term of the charter, adjusted to the 
nearest one-eighth percent; and 
‘‘(B) an allowance adequate in the judgment of the Secretary 
of Transportation to cover administrative costs. 
‘‘(2) DEPRECIATION.—Depreciation under paragraph (1)(A) shall be 
based on—
‘‘(A) a 25-year life for dry-cargo and passenger vessels; and 
‘‘(B) a 20-year life for tankers and other bulk liquid carrier ves-
sels. 
‘‘(c) OPTION TO PURCHASE.—The charter may contain an option to the 
charterer to purchase the vessels from the Secretary of Transportation with-
in 5 years after delivery under the charter, on the same terms and condi-
tions as provided in title V of the Merchant Marine Act, 1936, for the pur-
chase of new vessels from the Secretary. However—
222
‘‘(1) the purchase price shall be the foreign cost less depreciation to 
the date of purchase based on the useful life specified in subsection 
(b)(2); 
‘‘(2) the required cash payment payable at the time of the purchase 
shall be 25 percent of the purchase price; 
‘‘(3) the charter may provide that any part of the charter hire paid 
in excess of the minimum charter hire provided for in this section may 
be credited against the cash payment payable at the time of the pur-
chase; 
‘‘(4) the balance of the purchase price shall be paid within the re-
maining years of useful life (as specified in subsection (b)(2)) after the 
date of delivery of the vessel under the charter and in approximately 
equal annual installments, except that the first installment, which shall 
be payable on the next ensuing anniversary date of the delivery under 
the charter, shall be a proportionate part of the annual installment; 
and 
‘‘(5) interest shall be payable on the unpaid balances from the date 
of purchase, at a rate not less than—
‘‘(A) a rate determined by the Secretary of the Treasury, taking 
into consideration the current average market yield on outstanding 
marketable obligations of the Government with remaining periods 
to maturity comparable to the average maturities of the loans, ad-
justed to the nearest one-eighth percent; plus 
‘‘(B) an allowance adequate in the judgment of the Secretary 
of Transportation to cover administrative costs. 
‘‘(d) OPERATION OF VESSEL.—
‘‘(1) PERMISSIBLE VOYAGES.—The charter shall provide for oper-
ation of the vessel exclusively—
‘‘(A) in foreign trade; 
‘‘(B) on a round-the-world voyage; 
‘‘(C) on a round voyage from the west coast of the United 
States to a European port that includes an intercoastal port of the 
United States; 
‘‘(D) on a round voyage from the Atlantic coast of the United 
States to the Orient that includes an intercoastal port of the 
United States; or 
‘‘(E) on a voyage in foreign trade on which the vessel may stop 
at Hawaii or an island territory or possession of the United 
States. 
‘‘(2) DOMESTIC TRADE.—The charter shall provide if the vessel is 
operated in domestic trade on any of the services specified in para-
223
graph (1), the charterer will pay annually to the Secretary of Transpor-
tation that proportion of 1⁄25 of the difference between the domestic 
and foreign cost of the vessel as the gross revenue derived from the 
domestic trade bears to the gross revenue derived from the entire voy-
ages completed during the preceding year. 
‘‘§ 57532. Operation of experimental vessels 
‘‘(a) DEFINITION.—In this section, the term ‘experimental vessel’ means 
a vessel owned by the United States Government (including a vessel in the 
National Defense Reserve Fleet) that has been constructed, reconditioned, 
or remodeled for experimental or testing purposes. 
‘‘(b) AUTHORITY TO OPERATE.—The Secretary of Transportation, for 
the purpose of practical development, trial, and testing, may operate an ex-
perimental vessel under a bareboat charter or general agency agreement in 
the foreign or domestic trade of the United States or for use for the account 
of a department or agency of the Government, without regard to other pro-
visions of this subtitle and other laws related to chartering and general 
agency operations. Not more than 10 vessels may be operated and tested 
under this section in any one year. 
‘‘(c) TERMS OF OPERATION.—Operation of a vessel under this section 
shall be on terms the Secretary considers appropriate to carry out the pur-
poses of this subtitle. A bareboat charter under this section shall be at rea-
sonable rates and include restrictions the Secretary considers appropriate to 
protect the public interest, including provisions for recapture of profits 
under section 57517 of this title. A charter or general agency agreement 
under this section shall be reviewed annually to determine whether condi-
tions exist to justify continuance of the charter or agreement. 
‘‘(d) RIGHTS OF SEAMEN.—A seaman engaged in vessel operations of the 
Secretary under this section and employed through a general agent in con-
nection with a charter or agreement under this section is entitled to all the 
rights and remedies provided in sections 1(a) and (c), 3(c), and 4 of the 
Act of March 24, 1943 (50 App. U.S.C. 1291(a), (c), 1293(c), 1294).
‘‘PART G—RESTRICTIONS AND PENALTIES 
‘‘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.
224
‘‘§ 58101. Operating in domestic intercoastal or coastwise 
service 
‘‘(a) PROHIBITION.—A subsidy may not be awarded or paid to a con-
tractor under the operating-differential subsidy program, and a vessel may 
not be chartered to a person under chapter 575 of this title, if the con-
tractor or charterer, or a holding company, subsidiary, affiliate, or associate 
of the contractor or charterer, or an officer, director, agent, or executive 
thereof, directly or indirectly—
‘‘(1) owns, charters, or operates a vessel engaged in the domestic 
intercoastal or coastwise service; or 
‘‘(2) owns a pecuniary interest in a person that owns, charters, or 
operates a vessel in the domestic intercoastal or coastwise service. 
‘‘(b) WAIVER.—A person may apply to the Secretary of Transportation 
for a waiver of subsection (a). Before deciding on the waiver, the Secretary 
shall give the applicant and other interested persons an opportunity for a 
hearing. The Secretary may not grant the waiver if the Secretary finds it 
would—
‘‘(1) result in unfair competition to a person operating exclusively in 
the domestic intercoastal or coastwise service; or 
‘‘(2) be prejudicial to the objectives and policy of this subtitle. 
‘‘(c) CONTINUOUS OPERATION SINCE 1935.—The Secretary shall grant 
an application under subsection (b) without requiring further proof that the 
public interest and convenience will be served and without further pro-
ceedings as to the competition in the route or trade, if the contractor or 
other person, or a predecessor in interest, was in bona-fide operation as a 
common carrier by water in the domestic intercoastal or coastwise trade in 
1935 over the route or in the trade for which the application is made and 
has so operated since that time or, if engaged in furnishing seasonal service 
only, was in bona-fide operation in 1935 during the season ordinarily cov-
ered by its operation, except in either event as to interruptions of service 
over which the applicant or its predecessor in interest had no control. 
‘‘(d) DIVERSION INTO INTERCOASTAL OR COASTWISE OPERATIONS.—If 
an application under subsection (b) is approved, a person referred to in this 
section may not divert, directly or indirectly, money, property, or any other 
thing of value, used in a foreign-trade operation for which a subsidy is paid 
by the United States Government, into intercoastal or coastwise operations. 
‘‘§ 58102. Default on payment or maintenance of reserves 
‘‘The Secretary of Transportation may supervise the number and com-
pensation of all officers and employees of a contractor under the operating-
differential subsidy program or a charterer under chapter 575 of this title, 
receiving an operating-differential subsidy, if the contractor or charterer—
225
‘‘(1) is in default on a mortgage, note, purchase contract, or other 
obligation to the Secretary; or 
‘‘(2) has not maintained, in a manner satisfactory to the Secretary, 
all of the reserves provided for in this subtitle. 
‘‘§ 58103. Employing another person as managing or oper-
ating agent 
‘‘(a) PROHIBITION.—Except with the written consent of the Secretary of 
Transportation, a contractor holding a contract under the operating-dif-
ferential subsidy program or under chapter 575 of this title may not—
‘‘(1) employ another person as the managing or operating agent of 
the operator; or 
‘‘(2) charter a vessel, on which an operating-differential subsidy is 
to be paid, for operation by another person. 
‘‘(b) APPLICABILITY OF PROVISIONS TO CHARTERER.—If a charter pro-
hibited by this section is made, the person operating the chartered vessel 
is subject to all the provisions of this subtitle and the operating-differential 
subsidy program, including limitations of profits and salaries. 
‘‘§ 58104. Willful violation constitutes breach of contract or 
charter 
‘‘A willful violation of any provision of sections 58101–58103 of this title 
constitutes a breach of the contract or charter. On determining that a viola-
tion has occurred, the Secretary of Transportation may declare the contract 
or charter rescinded. 
‘‘§ 58105. Preferences for cargo in which charterer has inter-
est 
‘‘A contractor receiving an operating-differential subsidy, or a charterer 
under chapter 575 of this title, may not unjustly discriminate in any man-
ner so as to give preference, directly or indirectly, to cargo in which the con-
tractor or charterer has a direct or indirect ownership, purchase, or vending 
interest. 
‘‘§ 58106. Concerted discriminatory activities 
‘‘(a) PROHIBITION.—A contractor receiving an operating-differential sub-
sidy, or a charterer under chapter 575 of this title, may not continue as 
a party to or conform to an agreement with another carrier by water, or 
engage in a practice in concert with another carrier by water, that is un-
justly discriminatory or unfair to any other citizen of the United States op-
erating a common carrier by water employing only vessels documented 
under the laws of the United States on an established trade route from and 
to a United States port. 
‘‘(b) GOVERNMENT PAYMENT PROHIBITED.—No payment or subsidy of 
any kind may be paid, directly or indirectly, out of funds of the United
226
States Government to a contractor or charterer that has violated subsection 
(a). 
‘‘(c) CIVIL ACTION.—A person whose business or property is injured by 
a violation of subsection (a) may bring a civil action in the district court 
of the United States for the district in which the defendant resides, is 
found, or has an agent. If the person prevails, the person shall be award-
ed—
‘‘(1) 3 times the damages; and 
‘‘(2) costs, including reasonable attorney fees. 
‘‘§ 58107. Discrimination at ports by water common carriers 
‘‘(a) PROHIBITION.—A common carrier by water may not, directly or in-
directly, through an agreement, conference, association, understanding, or 
otherwise, prevent or attempt to prevent any other common carrier by water 
from serving any port described in subsection (b) at the same rates the first 
carrier charges at the nearest port already regularly served by it. 
‘‘(b) PORTS.—A port referred to in subsection (a) is one that is—
‘‘(1) designed for the accommodation of ocean-going vessels; 
‘‘(2) located on an improvement project authorized by law or by a 
Federal agency; and 
‘‘(3) located within the continental limits of the United States. 
‘‘(c) OTHER AUTHORITY NOT LIMITED.—This section does not limit the 
authority otherwise vested in the Secretary of Transportation and the Fed-
eral Maritime Commission. 
‘‘§ 58108. Charges for transportation subject to subtitle IV of 
title 49
‘‘(a) PROHIBITION.—A carrier may not charge, collect, or receive for 
transportation subject to subtitle IV of title 49 of persons or property, 
under any joint rate, fare, or charge, or under any export, import, or other 
proportional rate, fare, or charge, that is based in whole or in part on the 
fact that the persons or property affected are to be transported to, or have 
been transported from, a port in a territory or possession of the United 
States or in a foreign country, by a carrier by water in foreign commerce, 
any lower rate, fare, or charge than the carrier charges, collects, or receives 
for the transportation of persons or similar property for the same distance, 
in the same direction, and over the same route, in commerce wholly within 
the United States, unless the vessel used for the transportation is or was 
at the time of the transportation documented under the laws of the United 
States. 
‘‘(b) SUSPENSION OF PROHIBITION.—Whenever the Secretary of Trans-
portation believes that adequate shipping facilities to or from any port in 
a territory or possession of the United States or a foreign country are not
227
being provided by vessels documented under the laws of the United States, 
the Secretary shall certify this fact to the Surface Transportation Board. 
On receiving the certification, the Board may by order suspend the oper-
ation of subsection (a) with respect to the rates, fares, and charges for the 
transportation by rail of persons and property transported from or to be 
transported to those ports, for such time and under such terms and condi-
tions as the Secretary may specify in the order or in any supplemental 
order. 
‘‘(c) TERMINATION OF SUSPENSION.—Whenever the Secretary believes 
that adequate shipping facilities are being provided to those ports by vessels 
documented under the laws of the United States, and certifies that fact to 
the Board, the Board may order the termination of the suspension. 
‘‘§ 58109. Penalties 
‘‘(a) INDIVIDUALS.—An individual convicted of violating section 
58101(d), 58103, or 58105 of this title shall be fined under title 18, impris-
oned for at least one year but not more than 5 years, or both. 
‘‘(b) ORGANIZATIONS.—An organization convicted of committing an act 
prohibited by this subtitle shall be fined under title 18. 
‘‘(c) INELIGIBILITY TO RECEIVE BENEFITS.—An individual or organiza-
tion convicted of violating a section referred to in subsection (a) is ineligible, 
at the discretion of the Secretary of Transportation, to receive any benefit 
under the construction-differential subsidy or operating-differential subsidy 
programs, or a charter under chapter 575 of this title, for 5 years after 
the conviction.’’.
SEC. 8. SUBTITLE VI OF TITLE 46. 
(a) REDESIGNATION.—Title 46, United States Code, is amended by re-
designating subtitle VI as subtitle VII. 
(b) NEW SUBTITLE.—Title 46, United States Code, is amended by insert-
ing after subtitle V the following: 
‘‘Subtitle VI—Clearance, Tonnage Taxes, and 
Duties
‘‘Chapter 
Sec. 
‘‘601. Arrival and Departure Requirements ...............................................
60101
‘‘603. Tonnage Taxes and Light Money ........................................................
60301
‘‘605. Discriminating Duties and Reciprocal Privileges ........................
60501
‘‘CHAPTER 601—ARRIVAL AND DEPARTURE 
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.
228
‘‘60108.
Duty to transport tendered cargo. 
‘‘60109.
Duty to transport money and securities of the United States Government. 
‘‘§ 60101. Boarding arriving vessels before inspection 
‘‘(a) REGULATIONS.—The Secretary of Homeland Security shall prescribe 
and enforce regulations on the boarding of a vessel arriving at a port of 
the United States before the vessel has been inspected and secured. 
‘‘(b) CRIMINAL PENALTY.—A person violating a regulation prescribed 
under this section shall be fined under title 18, imprisoned for not more 
than 6 months, or both. 
‘‘(c) RELATIONSHIP TO OTHER LAW.—This section shall be construed as 
supplementary to section 2279 of title 18. 
‘‘§ 60102. Production of certificate on entry 
‘‘On entry of a vessel documented under chapter 121 of this title, the 
master or other individual in charge of the vessel shall produce the certifi-
cate of documentation to the customs officer at the place where the vessel 
is entered. If the certificate is not produced, the vessel is not entitled to 
the privileges of a documented vessel. 
‘‘§ 60103. Oath of ownership on entry 
‘‘(a) REQUIRED STATEMENT.—On entry of a vessel of the United States 
from a foreign port, the individual designated under subsection (b) shall 
state under oath that—
‘‘(1) the vessel’s certificate of documentation contains the names of 
all the owners of the vessel; or 
‘‘(2) part of the ownership has been transferred since the certificate 
was issued and, to the best of the individual’s knowledge and belief, 
the vessel is still owned only by citizens of the United States. 
‘‘(b) PERSON TO MAKE STATEMENT.—The statement under subsection 
(a) shall be made by—
‘‘(1) an owner if one resides at the port of entry; or 
‘‘(2) the master if an owner does not reside at the port of entry. 
‘‘(c) CONSEQUENCE OF NOT MAKING STATEMENT.—If the appropriate 
individual does not make the statement required by this section, the vessel 
is not entitled to the privileges of a vessel of the United States. 
‘‘§ 60104. Depositing certificates of documentation with con-
sular officers 
‘‘(a) REQUIREMENT OF MASTER.—When a vessel owned by citizens of the 
United States, on a voyage from a port in the United States, arrives at a 
foreign port, the master of the vessel shall deposit the vessel’s certificate 
of documentation with a consular officer at the foreign port if there is a 
consular officer at that port.
‘‘(b) RETURN OF CERTIFICATE.—When the master produces a clearance 
from the appropriate officer of the foreign port, the consular officer shall
229
return the certificate of documentation to the master if the master has com-
plied with the provisions of law related to the discharge of seamen in a for-
eign country and the payment of fees of consular officers. 
‘‘(c) CIVIL PENALTY AND COLLECTION.—The master of a vessel failing 
to deposit the certificate of documentation as required by subsection (a) is 
liable to the United States Government for a civil penalty of $500. The con-
sular officer shall bring an action to recover the penalty in any court of 
competent jurisdiction. The action shall be brought in the name of the con-
sular officer for the benefit of the Government. 
‘‘§ 60105. Clearance of vessels 
‘‘(a) VESSELS OF THE UNITED STATES.—Except as otherwise provided 
by law, a vessel of the United States shall obtain clearance from the Sec-
retary of Homeland Security before proceeding from a port or place in the 
United States—
‘‘(1) for a foreign port or place; 
‘‘(2) for another port or place in the United States if the vessel has 
on board foreign merchandise for which entry has not been made; or 
‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 
merchandise while outside the territorial sea. 
‘‘(b) OTHER VESSELS.—Except as otherwise provided by law, a vessel 
that is not a vessel of the United States shall obtain clearance from the Sec-
retary before proceeding from a port or place in the United States—
‘‘(1) for a foreign port or place; 
‘‘(2) for another port or place in the United States; or 
‘‘(3) outside the territorial sea to visit a hovering vessel or to receive 
or deliver merchandise while outside the territorial sea. 
‘‘(c) REGULATIONS.—The Secretary may by regulation—
‘‘(1) prescribe the manner in which clearance under this section is 
to be obtained, including the documents, data, or information which 
shall be submitted or transmitted, pursuant to an authorized data 
interchange system, to obtain the clearance; 
‘‘(2) permit clearance to be obtained before all requirements for 
clearance are complied with, but only if the owner or operator of the 
vessel files a bond in an amount set by the Secretary conditioned on 
the compliance by the owner or operator with all specified requirements 
for clearance within a time period (not exceeding 4 business days) es-
tablished by the Secretary; and 
‘‘(3) permit clearance to be obtained at a place other than a des-
ignated port of entry, under conditions the Secretary may prescribe.
230
‘‘§ 60106. State inspection laws 
‘‘When State law requires a certificate of inspection for goods carried on 
a vessel, a vessel transporting the goods may not be cleared until the certifi-
cate is produced. 
‘‘§ 60107. Payment of fees on departing vessel 
‘‘A departing vessel may be cleared only when all legal fees that have ac-
crued on the vessel are paid and proof of payment is presented to the indi-
vidual granting the clearance. 
‘‘§ 60108. Duty to transport tendered cargo 
‘‘Clearance may be refused to a vessel or vehicle transporting cargo des-
tined for a domestic or foreign port when the owner, master, or other indi-
vidual in charge refuses to accept cargo tendered in good condition, with 
proper charges, for the same or an intermediate port by a citizen of the 
United States. This section does not apply if the vessel or vehicle is already 
fully loaded (giving appropriate consideration to its proper loading) or is not 
adaptable to transport the tendered cargo. 
‘‘§ 60109. Duty to transport money and securities of the 
United States Government 
‘‘Before being given clearance, a vessel owned by a citizen of the United 
States and bound on a voyage from a port in the United States to another 
port in the United States or in a foreign country, or on a voyage from a 
port in a foreign country to a port in the United States, shall receive on 
board any bullion, coin, notes, bonds, or other securities of the United 
States Government that an agency, consular officer, or other agent of the 
Government offers. The vessel shall transport the items securely and deliver 
them promptly to the proper authorities or consignees on arriving at the 
port of destination. Compensation shall be paid for services provided under 
this section that is equal to compensation paid to other carriers in the ordi-
nary transaction of business.
‘‘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.
231 
‘‘§ 60301. Regular tonnage taxes 
‘‘(a) LOWER RATE.—A tax is imposed at the rate of 2 cents per ton (but 
not more than a total of 10 cents per ton per year) at each entry in a port 
of the United States of— 
‘‘(1) a vessel entering from a foreign port or place in North America, 
Central America, the West Indies Islands, the Bahama Islands, the 
Bermuda Islands, or the coast of South America bordering the Carib-
bean Sea; or 
‘‘(2) a vessel returning to the same port or place in the United 
States from which it departed, and not entering the United States from 
another port or place, except— 
‘‘(A) a vessel of the United States; 
‘‘(B) a recreational vessel (as defined in section 2101 of this 
title); or 
‘‘(C) a barge. 
‘‘(b) HIGHER RATE.—A tax is imposed at the rate of 6 cents per ton 
(but not more than a total of 30 cents per ton per year) on a vessel at each 
entry in a port of the United States from a foreign port or place not named 
in subsection (a)(1). 
‘‘(c) EXCEPTION FOR VESSELS ENTERING OTHER THAN BY SEA.—Sub-
section (a) does not apply to a vessel entering other than by sea from a 
foreign port or place at which tonnage, lighthouse, or other equivalent taxes 
are not imposed on vessels of the United States. 
‘‘§ 60302. Special tonnage taxes 
‘‘(a) ENTRY FROM FOREIGN PORT OR PLACE.—Regardless of whether a 
tax is imposed under section 60301 of this title, a tax is imposed on a vessel 
at each entry in a port of the United States from a foreign port or place 
at the following rates: 
‘‘(1) 30 cents per ton on a vessel built in the United States but 
owned in any part by a subject of a foreign country. 
‘‘(2) 50 cents per ton on other vessels not of the United States. 
‘‘(3) 50 cents per ton on a vessel of the United States having an 
officer who is not a citizen of the United States. 
‘‘(4) $2 per ton on a foreign vessel entering from a foreign port or 
place at which vessels of the United States are not ordinarily allowed 
to enter and trade. 
‘‘(b) VESSELS NOT OF THE UNITED STATES TRANSPORTING PROPERTY 
BETWEEN DISTRICTS.—Regardless of whether a tax is imposed under sec-
tion 60301 of this title, a tax of 50 cents per ton is imposed on a vessel 
not of the United States at each entry in one customs district from another
232
district when transporting goods loaded in one district to be delivered in an-
other district. 
‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—The tax of 50 
cents per ton under this section does not apply to a vessel that—
‘‘(1) is owned only by citizens of the United States; and 
‘‘(2) after entering a port of the United States, becomes documented 
as a vessel of the United States before leaving that port. 
‘‘§ 60303. Light money 
‘‘(a) IMPOSITION OF TAX.—A tax of 50 cents per ton, to be called ‘light 
money’, is imposed on a vessel not of the United States at each entry in 
a port of the United States. This tax shall be imposed and collected under 
the same regulations that apply to tonnage taxes. 
‘‘(b) EXCEPTION FOR VESSELS OWNED BY CITIZENS.—
‘‘(1) IN GENERAL.—Subsection (a) does not apply to a vessel owned 
only by citizens of the United States if—
‘‘(A) the vessel is carrying a regular document issued by a cus-
tomhouse of the United States proving the vessel to be owned only 
by citizens of the United States; and 
‘‘(B) on entry of the vessel from a foreign port, the individual 
designated under paragraph (2) states under oath that—
‘‘(i) the document contains the names of all the owners of 
the vessel; or 
‘‘(ii) part of the ownership has been transferred since the 
document was issued and, to the best of that individual’s 
knowledge and belief, the vessel is still owned only by citizens 
of the United States. 
‘‘(2) PERSON TO MAKE STATEMENT.—The statement under para-
graph (1)(B) shall be made by—
‘‘(A) an owner if one resides at the port of entry; or 
‘‘(B) the master if an owner does not reside at the port of 
entry. 
‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection 
(a) section does not apply to a vessel that—
‘‘(1) is owned only by citizens of the United States; and 
‘‘(2) after entering a port of the United States, becomes documented 
as a vessel of the United States before leaving that port. 
‘‘§ 60304. Presidential suspension of tonnage taxes and light 
money 
‘‘If the President is satisfied that the government of a foreign country 
does not impose discriminating or countervailing duties to the disadvantage 
of the United States, the President shall suspend the imposition of special
233
tonnage taxes and light money under sections 60302 and 60303 of this title 
on vessels of that country. 
‘‘§ 60305. Vessels in distress 
‘‘A vessel is exempt from tonnage taxes and light money when it enters 
because it is in distress. 
‘‘§ 60306. Vessels not engaged in trade 
‘‘A vessel is exempt from tonnage taxes and light money when not en-
gaged in trade. 
‘‘§ 60307. Vessels engaged in coastwise trade or the fisheries 
‘‘A vessel with a registry endorsement or a coastwise endorsement, trad-
ing from one port in the United States to another port in the United States 
or employed in the bank, whale, or other fisheries, is exempt from tonnage 
taxes and light money. 
‘‘§ 60308. Vessels engaged in Great Lakes trade 
‘‘A documented vessel with a registry endorsement, engaged in foreign 
trade on the Great Lakes or their tributary or connecting waters in trade 
with Canada, does not become subject to tonnage taxes or light money be-
cause of that trade. 
‘‘§ 60309. Passenger vessels making trips between ports of 
the United States and foreign ports 
‘‘A passenger vessel making at least 3 trips per week between a port of 
the United States and a foreign port is exempt from tonnage taxes and light 
money. 
‘‘§ 60310. Vessels making daily trips on interior waters 
‘‘A vessel making regular daily trips between a port of the United States 
and a port of Canada only on interior waters not navigable to the ocean 
is exempt from tonnage taxes and light money, except on its first clearing 
each year. 
‘‘§ 60311. Hospital vessels in time of war 
‘‘In time of war, a hospital vessel is exempt from tonnage taxes, light 
money, and pilotage charges in the ports of the United States if the vessel 
is one for which the conditions of the international convention for the ex-
emption of hospital ships from taxation in time of war, concluded at The 
Hague on December 21, 1904, are satisfied. The President by proclamation 
shall name the vessels for which the conditions are satisfied and state when 
the exemption begins and ends. 
‘‘§ 60312. Rights under treaties preserved 
‘‘This chapter and chapter 605 of this title do not affect a right or privi-
lege of a foreign country relating to tonnage taxes or other duties on vessels 
under a law or treaty of the United States.
234
‘‘CHAPTER 605—DISCRIMINATING DUTIES AND 
RECIPROCAL PRIVILEGES
‘‘Sec. 
‘‘60501.
Vessels allowed to import. 
‘‘60502.
Discriminating duty on goods imported in foreign vessels or from contiguous coun-
tries. 
‘‘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.
‘‘§ 60501. Vessels allowed to import 
‘‘(a) IN GENERAL.—Except as otherwise provided by treaty, goods may 
be imported into the United States from a foreign port or place only in—
‘‘(1) a vessel of the United States; or 
‘‘(2) a foreign vessel owned only by citizens or subjects of the coun-
try—
‘‘(A) in which the goods are grown, produced, or manufactured; 
or 
‘‘(B) from which the goods can only be, or most usually are, 
first shipped for transportation. 
‘‘(b) EXCEPTION FOR VESSELS OF COUNTRIES NOT MAINTAINING SIMI-
LAR RESTRICTIONS.—Subsection (a) does not apply to a vessel of a foreign 
country that does not maintain a similar restriction against United States 
documented vessels. 
‘‘(c) EXCEPTION FOR VESSELS BECOMING DOCUMENTED.—Subsection 
(a) does not apply to a vessel that—
‘‘(1) is owned only by citizens of the United States; and 
‘‘(2) after entering a port of the United States, becomes documented 
as a vessel of the United States before leaving that port. 
‘‘(d) SEIZURE AND FORFEITURE.—If goods are imported in violation of 
this section, the goods and the vessel in which they are imported, along with 
its equipment and other cargo, may be seized by and forfeited to the United 
States Government. 
‘‘§ 60502. Discriminating duty on goods imported in foreign 
vessels or from contiguous countries 
‘‘(a) IMPOSITION OF DUTY.—A discriminating duty of 10 percent ad valo-
rem (in addition to other duties imposed by law) is imposed on goods—
‘‘(1) imported in a vessel not of the United States unless the ves-
sel—
‘‘(A) is entitled by law or treaty to enter the ports of the United 
States on payment of the same duties as are payable on goods im-
ported in a vessel of the United States; or 
‘‘(B)(i) is owned only by citizens of the United States; and
235
‘‘(ii) after entering a port of the United States, becomes docu-
mented as a vessel of the United States before leaving that port; 
or 
‘‘(2) produced or manufactured in a foreign country not contiguous 
to the United States and imported from a country contiguous to the 
United States, unless imported in the usual course of strictly retail 
trade. 
‘‘(b) SEIZURE AND FORFEITURE.—If goods are imported without pay-
ment of the duty required by this section, the goods and the vessel in which 
they are imported may be seized by, and forfeited to, the United States Gov-
ernment. 
‘‘§ 60503. Reciprocal suspension of discriminating duties 
‘‘(a) GENERAL AUTHORITY.—On receiving satisfactory proof from the 
government of a foreign country that it has suspended, in any part, the im-
position of discriminating duties for any class of vessels owned by citizens 
of the United States or goods imported in those vessels, the President may 
proclaim a reciprocal suspension of discriminating duties for the same class 
of vessels owned by citizens of that country or goods imported in those ves-
sels. 
‘‘(b) EFFECTIVE AND EXPIRATION DATES.—A suspension under this sec-
tion takes effect retroactively from the date the President received the proof 
from the foreign government, and expires when that government stops 
granting the reciprocal suspension. 
‘‘§ 60504. Reciprocal privileges for recreational vessels 
‘‘When the President is satisfied that yachts owned by residents of the 
United States and used only for pleasure are allowed to arrive at, depart 
from, and cruise in the waters of a foreign port without entering, clearing, 
or paying any duties or fees (including cruising license fees), the Secretary 
of Homeland Security may allow yachts from that foreign port used only 
for pleasure to arrive at and depart from the ports of the United States 
and to cruise in the waters of the United States without paying any duties 
or fees. However, the Secretary may require foreign yachts to obtain a li-
cense to cruise in the waters of the United States. The license shall be in 
the form prescribed by the Secretary and contain limitations about length 
of time, direction, place of cruising and action, and other matters the Sec-
retary considers appropriate. The license shall be issued without cost to the 
yacht. 
‘‘§ 60505. Retaliatory suspension of commercial privileges 
‘‘(a) GENERAL AUTHORITY.—The President may proclaim a suspension 
of commercial privileges to vessels of a foreign country when—
236
‘‘(1) vessels of that country have been given the same commercial 
privileges in the ports and waters of the United States given to vessels 
of the United States (except the privilege of engaging in coastwise com-
merce); and 
‘‘(2) vessels of the United States are denied commercial privileges in 
the ports or waters of that country given to vessels of that country. 
‘‘(b) APPLICATION.—A suspension under this section shall apply to the 
same commercial privileges denied to vessels of the United States in the 
ports or waters of the foreign country, and to the same class of vessels of 
that country as the class of vessels of the United States denied the privi-
leges. 
‘‘(c) EFFECTIVE DATE.—The President shall designate the effective date 
of the suspension in the proclamation. 
‘‘(d) PENALTIES.—
‘‘(1) SEIZURE AND FORFEITURE.—If the master, officer, or agent of 
a vessel of a foreign country does an act for the vessel in the ports 
or waters of the United States in violation of a proclamation issued 
under this section, the vessel and the goods on the vessel may be seized 
by, and forfeited to, the United States Government. 
‘‘(2) FINE OR IMPRISONMENT.—A person opposing an official of the 
Government enforcing this section shall be fined under title 18, impris-
oned for not more than 2 years, or both. 
‘‘§ 60506. Retaliation against British dominions of North 
America 
‘‘(a) GENERAL AUTHORITY.—The President by proclamation may pro-
hibit vessels of the British dominions of North America, their masters and 
crews, and products of or coming from those dominions, from entering wa-
ters, ports, or places of the United States when the President is satisfied 
that—
‘‘(1) fishermen or fishing vessels of the United States in waters, 
ports, or places of the British dominions of North America are being 
or recently have been—
‘‘(A) denied rights provided by law or treaty; 
‘‘(B) subjected to unreasonable restrictions in the exercise of 
those rights; or 
‘‘(C) otherwise harassed; 
‘‘(2) fishermen or fishing vessels of the United States, having a per-
mit under the laws of the United States to dock or trade at a port 
or place in the British dominions of North America, are being or re-
cently have been—
237
‘‘(A) denied the privilege of entering the port or place in the 
same manner and under the same regulations applicable to trading 
vessels of the most-favored-nation; 
‘‘(B) prevented from buying supplies allowed to be sold to trad-
ing vessels of the most-favored-nation; or 
‘‘(C) otherwise harassed; or 
‘‘(3) other vessels of the United States or their masters or crews in 
waters, ports, or places of the British dominions of North America are 
being or recently have been—
‘‘(A) denied privileges given to vessels of the most-favored-na-
tion or their masters or crews; or 
‘‘(B) otherwise harassed. 
‘‘(b) COVERAGE AND EXCEPTIONS.—The President may apply a procla-
mation under this section to any of the subjects named, and may include 
exceptions for vessels in distress or need of supplies. The President may 
change, revoke, and renew the proclamation. 
‘‘(c) PENALTIES.—A person violating a proclamation issued under this 
section shall be fined under title 18, imprisoned for not more than 2 years, 
or both. A vessel or goods found in waters, ports, or places of the United 
States in violation of the proclamation may be seized by, and forfeited to, 
the United States Government. 
‘‘§ 60507. Suspension of free passage through Saint Marys 
Falls Canal 
‘‘(a) PURPOSE.—The purpose of this section is to secure reciprocal ad-
vantages for the citizens, ports, and vessels of the United States. 
‘‘(b) GENERAL AUTHORITY.—When the President is satisfied that vessels 
of the United States, or passengers or cargo being transported to a port 
of the United States, are prohibited from passing through a canal or lock 
connected with the navigation of the Saint Lawrence River, the Great 
Lakes, or their connecting waterways, or burdened in that passage by tolls 
or other means that are unreasonable in view of the free passage through 
the Saint Marys Falls Canal allowed to vessels of all countries, the Presi-
dent by proclamation may suspend the right of free passage through the 
Saint Marys Falls Canal for vessels owned by subjects of the country impos-
ing the prohibition, tolls, or other burdens and for passengers and cargo 
being transported to the ports of that country, even when carried in vessels 
of the United States. The suspension shall apply to the extent and for the 
time the President considers appropriate. 
‘‘(c) IMPOSITION OF TOLL.—
238
‘‘(1) IN GENERAL.—During a suspension under this section, the 
President shall impose a toll of not more than $2 per ton on cargo and 
not more than $5 on each passenger. 
‘‘(2) EXCEPTIONS.—Notwithstanding paragraph (1), a toll may not 
be imposed on passengers or cargo landed at Ogdensburg, New York, 
or any port west of Ogdensburg and south of a line drawn from the 
northern boundary of New York through the Saint Lawrence River, the 
Great Lakes, and their connecting channels to the northern boundary 
of Minnesota. 
‘‘(d) COLLECTION OF TOLL.—
‘‘(1) IN GENERAL.—A toll imposed under this section shall be col-
lected under regulations prescribed by the Secretary of Homeland Secu-
rity. The Secretary may require the master of a vessel to provide a 
sworn statement of the amount and kind of cargo, the number of pas-
sengers, and the destination of the passengers and cargo. 
‘‘(2) PROOF OF LANDING.—When applicable, the Secretary also may 
require satisfactory proof that the passengers and cargo were landed 
at a port described in subsection (c)(2). Until that proof is provided, 
the Secretary may assume the passengers and cargo were not landed 
at such a port, and the amount of a toll that otherwise would be im-
posed is a lien enforceable against the vessel when found in the waters 
of the United States.’’.
SEC. 9. SUBTITLE VII OF TITLE 46. 
Subtitle VII of title 46, United States Code, as redesignated by section 
8(a) of this Act, is amended as follows: 
(1) The subtitle heading and analysis are amended to read as fol-
lows: 
‘‘Subtitle VII—Security and Drug Enforcement
‘‘Chapter 
Sec. 
‘‘701. Port Security ...............................................................................................
70101
‘‘703. Maritime Security .....................................................................................
70301
‘‘705. Maritime Drug Law Enforcement ......................................................
70501’’.
(2) Add after chapter 701 the following:
‘‘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.
‘‘§ 70301. Definitions 
‘‘In this chapter: 
‘‘(1) COMMON CARRIER.—The term ‘common carrier’ has the mean-
ing given that term in section 40102 of this title.
239
‘‘(2) PASSENGER
VESSEL.—The term ‘passenger vessel’ has the 
meaning given that term in section 2101 of this title. 
‘‘§ 70302. International measures for seaport and vessel se-
curity 
‘‘Congress encourages the President to continue to seek agreement on 
international seaport and vessel security through the International Maritime 
Organization. In developing an agreement, each member country of the 
International Maritime Organization should consult with appropriate private 
sector interests in that country. The agreement would establish seaport and 
vessel security measures and could include—
‘‘(1) seaport screening of cargo and baggage similar to that done at 
airports; 
‘‘(2) security measures to restrict access to cargo, vessels, and dock-
side property to authorized personnel only; 
‘‘(3) additional security on board vessels; 
‘‘(4) licensing or certification of compliance with appropriate security 
standards; and 
‘‘(5) other appropriate measures to prevent unlawful acts against 
passengers and crews on vessels. 
‘‘§ 70303. Security standards at foreign ports 
‘‘(a) DEFINITION.—In this section, except when referring to the Secretary 
of State, the term ‘Secretary’ means the Secretary of the department in 
which the Coast Guard is operating. 
‘‘(b) GENERAL REQUIREMENTS.—The Secretary shall develop and imple-
ment a plan to assess the effectiveness of the security measures maintained 
at foreign ports that the Secretary, in consultation with the Secretary of 
State, determines pose a high risk of acts of terrorism against passenger 
vessels. In carrying out this subsection, the Secretary shall consult with the 
Secretary of State about the terrorist threat that exists in each country and 
poses a high risk of acts of terrorism against passenger vessels. 
‘‘(c) NOTICE AND RECOMMENDATIONS TO OTHER COUNTRIES.—If the 
Secretary, after implementing the plan under subsection (b), determines 
that a port does not maintain and administer effective security measures, 
the Secretary of State (after being informed by the Secretary) shall—
‘‘(1) notify the appropriate government authorities of the country in 
which the port is located of the determination; and 
‘‘(2) recommend steps necessary to bring the security measures at 
that port up to the standard used by the Secretary in making the as-
sessment under subsection (b). 
‘‘(d) ANTITERRORISM ASSISTANCE.—The President is encouraged to pro-
vide antiterrorism assistance related to maritime security under chapter 8
240
of part II of the Foreign Assistance Act of 1961 (22 U.S.C. 2349aa et seq.) 
to foreign countries, especially for a port that the Secretary determines 
under subsection (c) does not maintain and administer effective security 
measures. 
‘‘§ 70304. Travel advisories on security at foreign ports 
‘‘(a) GENERAL REQUIREMENTS.—On being notified by the Secretary of 
Transportation that the Secretary has determined that a condition exists 
that threatens the safety or security of passengers, passenger vessels, or 
crew traveling to or from a foreign port that the Secretary has determined 
under section 70303(c) of this title does not maintain and administer effec-
tive security measures, the Secretary of State immediately shall issue a trav-
el advisory for that port. The Secretary of State shall take the necessary 
steps to widely publicize the travel advisory. 
‘‘(b) LIFTING ADVISORIES.—A travel advisory issued under subsection (a) 
may be lifted only if the Secretary of Transportation, in consultation with 
the Secretary of State, has determined that effective security measures are 
maintained and administered at the port. 
‘‘(c) NOTICE TO CONGRESS.—The Secretary of State shall notify Con-
gress immediately of any change in the status of a travel advisory issued 
under this section. 
‘‘§ 70305. Suspension of passenger services 
‘‘(a) GENERAL AUTHORITY.—Whenever the President determines that a 
foreign nation permits the use of territory under its jurisdiction as a base 
of operations or training for, or as a sanctuary for, or in any way arms, 
aids, or abets, a terrorist or terrorist group that knowingly uses the illegal 
seizure of passenger vessels or the threat thereof as an instrument of policy, 
the President may suspend the right of any passenger vessel common car-
rier to operate to or from, and the right of any passenger vessel of the 
United States to use, a port in that foreign nation for passenger service. 
The suspension may be without notice or hearing and for as long as the 
President determines is necessary to ensure the security of passenger vessels 
against unlawful seizure. 
‘‘(b) PROHIBITION.—A passenger vessel common carrier, or a passenger 
vessel of the United States, may not operate in violation of a suspension 
under this section. 
‘‘(c) PENALTIES.—
‘‘(1) DENIAL OF ENTRY.—If a person operates a vessel in violation 
of this section, the Secretary of the department in which the Coast
Guard is operating may deny the vessels of that person entry to ports 
of the United States.
241
‘‘(2) CIVIL PENALTY.—A person violating this section is liable to the 
United States Government for a civil penalty of not more than 
$50,000. Each day a vessel uses a prohibited port is a separate viola-
tion. 
‘‘§ 70306. Report on terrorist threats 
‘‘(a) CONTENT.—Not later than February 28 of each year, the Secretary 
of Transportation shall submit a report to Congress on the threat from acts 
of terrorism to United States ports and vessels operating from those ports. 
The Secretary shall include a description of activities undertaken under title 
I of the Maritime Transportation Security Act of 2002 (Public Law 107–
295, 116 Stat. 2066) and an analysis of the effect of those activities on 
port security against acts of terrorism. 
‘‘(b) SUBMISSION.—The report shall be submitted to the Committee on 
International Relations and the Committee on Transportation and Infra-
structure of the House of Representatives and the Committee on Foreign 
Relations and the Committee on Commerce, Science, and Transportation of 
the Senate. Any classified information in the report shall be submitted sepa-
rately as an addendum.
‘‘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. 
‘‘§ 70501. Findings and declarations 
‘‘Congress finds and declares that trafficking in controlled substances 
aboard vessels is a serious international problem, is universally condemned, 
and presents a specific threat to the security and societal well-being of the 
United States. 
‘‘§ 70502. Definitions 
‘‘(a) APPLICATION OF OTHER DEFINITIONS.—The definitions in section 
102 of the Comprehensive Drug Abuse Prevention and Control Act of 1970 
(21 U.S.C. 802) apply to this chapter. 
‘‘(b) VESSEL OF THE UNITED STATES.—In this chapter, the term ‘vessel 
of the United States’ means—
‘‘(1) a vessel documented under chapter 121 of this title or num-
bered as provided in chapter 123 of this title; 
‘‘(2) a vessel owned in any part by an individual who is a citizen 
of the United States, the United States Government, the government 
of a State or political subdivision of a State, or a corporation incor-
porated under the laws of the United States or of a State, unless—
242
‘‘(A) the vessel has been granted the nationality of a foreign na-
tion under article 5 of the 1958 Convention on the High Seas; and 
‘‘(B) a claim of nationality or registry for the vessel is made 
by the master or individual in charge at the time of the enforce-
ment action by an officer or employee of the United States who 
is authorized to enforce applicable provisions of United States law; 
and 
‘‘(3) a vessel that was once documented under the laws of the United 
States and, in violation of the laws of the United States, was sold to 
a person not a citizen of the United States or placed under foreign reg-
istry or a foreign flag, whether or not the vessel has been granted the 
nationality of a foreign nation. 
‘‘(c) VESSEL
SUBJECT
TO
THE
JURISDICTION
OF
THE
UNITED 
STATES.—
‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel subject to the 
jurisdiction of the United States’ includes—
‘‘(A) a vessel without nationality; 
‘‘(B) a vessel assimilated to a vessel without nationality under 
paragraph (2) of article 6 of the 1958 Convention on the High 
Seas; 
‘‘(C) a vessel registered in a foreign nation if the flag nation 
has consented or waived objection to the enforcement of United 
States law by the United States; 
‘‘(D) a vessel in the customs waters of the United States; 
‘‘(E) a vessel in the territorial waters of a foreign nation if the 
nation consents to the enforcement of United States law by the 
United States; and 
‘‘(F) a vessel in the contiguous zone of the United States, as 
defined in Presidential Proclamation 7219 of September 2, 1999 
(43 U.S.C. 1331 note), that—
‘‘(i) is entering the United States; 
‘‘(ii) has departed the United States; or 
‘‘(iii) is a hovering vessel as defined in section 401 of the 
Tariff Act of 1930 (19 U.S.C. 1401). 
‘‘(2) CONSENT OR WAIVER OF OBJECTION.—Consent or waiver of ob-
jection by a foreign nation to the enforcement of United States law by 
the United States under paragraph (1)(C) or (E)—
‘‘(A) may be obtained by radio, telephone, or similar oral or 
electronic means; and 
‘‘(B) is proved conclusively by certification of the Secretary of 
State or the Secretary’s designee.
243
‘‘(d) VESSEL WITHOUT NATIONALITY.—
‘‘(1) IN GENERAL.—In this chapter, the term ‘vessel without nation-
ality’ includes—
‘‘(A) a vessel aboard which the master or individual in charge 
makes a claim of registry that is denied by the flag nation whose 
registry is claimed; 
‘‘(B) a vessel aboard which the master or individual in charge 
fails, on request of an officer of the United States authorized to 
enforce applicable provisions of United States law, to make a claim 
of nationality or registry for that vessel; and 
‘‘(C) a vessel aboard which the master or individual in charge 
makes a claim of registry and for which the claimed nation of reg-
istry does not affirmatively and unequivocally assert that the ves-
sel is of its nationality. 
‘‘(2) CLAIM OF REGISTRY.—A claim of registry under paragraph 
(1)(A) or (C) may be verified or denied by radio, telephone, or similar 
oral or electronic means. The denial of such a claim by the claimed flag 
nation is proved conclusively by certification of the Secretary of State 
or the Secretary’s designee. 
‘‘(e) CLAIM OF NATIONALITY OR REGISTRY.—A claim of nationality or 
registry under this section includes only—
‘‘(1) possession on board the vessel and production of documents evi-
dencing the vessel’s nationality as provided in article 5 of the 1958 
Convention on the High Seas; 
‘‘(2) flying its flag nation’s ensign or flag; or 
‘‘(3) a verbal claim of nationality or registry by the master or indi-
vidual in charge of the vessel. 
‘‘§ 70503. Manufacture, distribution, or possession of con-
trolled substances on vessels 
‘‘(a) PROHIBITIONS.—An individual may not knowingly or intentionally 
manufacture or distribute, or possess with intent to manufacture or dis-
tribute, a controlled substance on board—
‘‘(1) a vessel of the United States or a vessel subject to the jurisdic-
tion of the United States; or 
‘‘(2) any vessel if the individual is a citizen of the United States or 
a resident alien of the United States.
‘‘(b) EXTENSION BEYOND TERRITORIAL JURISDICTION.—Subsection (a) 
applies even though the act is committed outside the territorial jurisdiction 
of the United States. 
‘‘(c) NONAPPLICATION.—
244
‘‘(1) IN GENERAL.—Subject to paragraph (2), subsection (a) does 
not apply to—
‘‘(A) a common or contract carrier or an employee of the carrier 
who possesses or distributes a controlled substance in the lawful 
and usual course of the carrier’s business; or 
‘‘(B) a public vessel of the United States or an individual on 
board the vessel who possesses or distributes a controlled sub-
stance in the lawful course of the individual’s duties. 
‘‘(2) ENTERED IN MANIFEST.—Paragraph (1) applies only if the 
controlled substance is part of the cargo entered in the vessel’s mani-
fest and is intended to be imported lawfully into the country of destina-
tion for scientific, medical, or other lawful purposes. 
‘‘(d) BURDEN OF PROOF.—The United States Government is not re-
quired to negative a defense provided by subsection (c) in a complaint, in-
formation, indictment, or other pleading or in a trial or other proceeding. 
The burden of going forward with the evidence supporting the defense is 
on the person claiming its benefit. 
‘‘§ 70504. Jurisdiction and venue 
‘‘(a) JURISDICTION.—Jurisdiction of the United States with respect to a 
vessel subject to this chapter is not an element of an offense. Jurisdictional 
issues arising under this chapter are preliminary questions of law to be de-
termined solely by the trial judge. 
‘‘(b) VENUE.—A person violating section 70503 of this title shall be tried 
in the district court of the United States for—
‘‘(1) the district at which the person enters the United States; or 
‘‘(2) the District of Columbia. 
‘‘§ 70505. Failure to comply with international law as a de-
fense 
‘‘A person charged with violating section 70503 of this title does not have 
standing to raise a claim of failure to comply with international law as a 
basis for a defense. A claim of failure to comply with international law in 
the enforcement of this chapter may be made only by a foreign nation. A 
failure to comply with international law does not divest a court of jurisdic-
tion and is not a defense to a proceeding under this chapter. 
‘‘§ 70506. Penalties 
‘‘(a) VIOLATIONS.—A person violating section 70503 of this title shall be 
punished as provided in section 1010 of the Comprehensive Drug Abuse 
Prevention and Control Act of 1970 (21 U.S.C. 960). However, if the of-
fense is a second or subsequent offense as provided in section 1012(b) of 
that Act (21 U.S.C. 962(b)), the person shall be punished as provided in 
section 1012 of that Act (21 U.S.C. 962).
245
‘‘(b) ATTEMPTS AND CONSPIRACIES.—A person attempting or conspiring 
to violate section 70503 of this title is subject to the same penalties as pro-
vided for violating section 70503. 
‘‘§ 70507. Forfeitures 
‘‘(a) IN GENERAL.—Property described in section 511(a) of the Com-
prehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 
881(a)) that is used or intended for use to commit, or to facilitate the com-
mission of, an offense under section 70503 of this title may be seized and 
forfeited in the same manner that similar property may be seized and for-
feited under section 511 of that Act (21 U.S.C. 881). 
‘‘(b) PRIMA FACIE EVIDENCE OF VIOLATION.—Practices commonly rec-
ognized as smuggling tactics may provide prima facie evidence of intent to 
use a vessel to commit, or to facilitate the commission of, an offense under 
section 70503 of this title, and may support seizure and forfeiture of the 
vessel, even in the absence of controlled substances aboard the vessel. The 
following indicia, among others, may be considered, in the totality of the 
circumstances, to be prima facie evidence that a vessel is intended to be 
used to commit, or to facilitate the commission of, such an offense: 
‘‘(1) The construction or adaptation of the vessel in a manner that 
facilitates smuggling, including—
‘‘(A) the configuration of the vessel to ride low in the water or 
present a low hull profile to avoid being detected visually or by 
radar; 
‘‘(B) the presence of any compartment or equipment that is 
built or fitted out for smuggling, not including items such as a 
safe or lock-box reasonably used for the storage of personal 
valuables; 
‘‘(C) the presence of an auxiliary tank not installed in accord-
ance with applicable law or installed in such a manner as to en-
hance the vessel’s smuggling capability; 
‘‘(D) the presence of engines that are excessively over-powered 
in relation to the design and size of the vessel; 
‘‘(E) the presence of materials used to reduce or alter the heat 
or radar signature of the vessel and avoid detection; 
‘‘(F) the presence of a camouflaging paint scheme, or of mate-
rials used to camouflage the vessel, to avoid detection; or 
‘‘(G) the display of false vessel registration numbers, false indi-
cia of vessel nationality, false vessel name, or false vessel home-
port. 
‘‘(2) The presence or absence of equipment, personnel, or cargo in-
consistent with the type or declared purpose of the vessel.
246
‘‘(3) The presence of excessive fuel, lube oil, food, water, or spare 
parts, inconsistent with legitimate vessel operation, inconsistent with 
the construction or equipment of the vessel, or inconsistent with the 
character of the vessel’s stated purpose. 
‘‘(4) The operation of the vessel without lights during times lights 
are required to be displayed under applicable law or regulation and in 
a manner of navigation consistent with smuggling tactics used to avoid 
detection by law enforcement authorities. 
‘‘(5) The failure of the vessel to stop or respond or heave to when 
hailed by government authority, especially where the vessel conducts 
evasive maneuvering when hailed. 
‘‘(6) The declaration to government authority of apparently false in-
formation about the vessel, crew, or voyage or the failure to identify 
the vessel by name or country of registration when requested to do so 
by government authority. 
‘‘(7) The presence of controlled substance residue on the vessel, on 
an item aboard the vessel, or on an individual aboard the vessel, of a 
quantity or other nature that reasonably indicates manufacturing or 
distribution activity. 
‘‘(8) The use of petroleum products or other substances on the vessel 
to foil the detection of controlled substance residue. 
‘‘(9) The presence of a controlled substance in the water in the vicin-
ity of the vessel, where given the currents, weather conditions, and 
course and speed of the vessel, the quantity or other nature is such 
that it reasonably indicates manufacturing or distribution activity.’’.
SEC. 10. SUBTITLE VIII OF TITLE 46. 
Title 46, United States Code, is amended by adding after subtitle VII the 
following: 
‘‘Subtitle VIII—Miscellaneous
‘‘Chapter 
Sec. 
‘‘801. Wrecks and Salvage .................................................................................
80101
‘‘803. Ice and Derelicts .......................................................................................
80301
‘‘805. Safe Containers for International Cargo .........................................
80501
‘‘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.
‘‘§ 80101. Vessel stranded on foreign coast 
‘‘(a) DUTIES OF CONSULAR OFFICER.—When a vessel of the United 
States is stranded on a coast of a foreign country, the consular officer in
247
that country shall take proper measures, to the extent the laws of that coun-
try allow, to—
‘‘(1) save and secure the vessel and property on the vessel; and 
‘‘(2) prepare an inventory of the property that is saved. 
‘‘(b) DELIVERY TO OWNER.—After deducting the expenses, the consular 
officer shall deliver the property, with an inventory, to the owner of the 
property. 
‘‘(c) LIMITATION ON TAKING POSSESSION.—A consular officer may not 
take possession of property under this section when the owner, master, or 
consignee is present or able to take possession of the property. 
‘‘§ 80102. License to salvage on Florida coast 
‘‘(a) LICENSING REQUIREMENTS.—To be regularly employed in the busi-
ness of salvaging on the coast of Florida, a vessel and its master each must 
have a license issued by a judge of the district court of the United States 
for a judicial district of Florida. 
‘‘(b) JUDICIAL FINDINGS.—Before issuing a license under this section, 
the judge must be satisfied, when the license is for—
‘‘(1) a vessel, that the vessel is seaworthy and properly equipped for 
the business of saving property shipwrecked and in distress; or 
‘‘(2) a master, that the master is trustworthy and innocent of any 
fraud or misconduct related to property shipwrecked or saved on the 
coast. 
‘‘§ 80103. Property on Florida coast to be taken to port of 
entry 
‘‘(a) IN GENERAL.—Property taken from a wreck, the sea, or a key or 
shoal, on the coast of Florida and within the jurisdiction of the United 
States, shall be brought to a port of entry of the United States. 
‘‘(b) SEIZURE AND FORFEITURE.—A vessel transporting property de-
scribed in subsection (a) to a foreign port may be seized by, and forfeited 
to, the United States Government. A forfeiture under this subsection ac-
crues half to the informer and half to the Government. 
‘‘§ 80104. Salvaging operations by foreign vessels 
‘‘(a) PROHIBITION.—Except as provided in this section or section 80105 
of this title, a foreign vessel may not, under penalty of forfeiture, engage 
in salvaging operations on the Atlantic or Pacific coast of the United States, 
in any portion of the Great Lakes or their connecting or tributary waters, 
including any portion of the Saint Lawrence River through which the inter-
national boundary line extends, or in territorial waters of the United States 
on the Gulf of Mexico. 
‘‘(b) WHEN SUITABLE VESSEL NOT AVAILABLE.—The Secretary of 
Homeland Security may authorize a foreign vessel to engage in salvaging
248
operations in a particular locality if, on investigation, the Secretary is satis-
fied that there is not available in that locality a suitable vessel that is—
‘‘(1) owned only by citizens of the United States (including a cor-
poration that is a citizen of the United States under section 12118 of 
this title); and 
‘‘(2) documented under chapter 121 of this title or numbered under 
chapter 123 of this title. 
‘‘(c) OPERATIONS AUTHORIZED BY TREATY.—This section does not pro-
hibit or restrict assistance to vessels or salvaging operations authorized by 
treaty, including—
‘‘(1) article II of the Treaty between the United States and Great 
Britain concerning reciprocal rights for United States and Canada in 
the conveyance of prisoners and wrecking and salvage, signed at Wash-
ington, May 18, 1908 (35 Stat. 2036); or 
‘‘(2) the Treaty between the United States of America and Mexico 
to facilitate assistance to and salvage of vessels in territorial waters, 
signed at Mexico City, June 13, 1935 (49 Stat. 3359). 
‘‘§ 80105. Canadian vessels aiding vessels in United States 
waters 
‘‘(a) IN GENERAL.—Canadian vessels and wrecking equipment may give 
aid to Canadian or other vessels and property wrecked, disabled, or in dis-
tress in the waters of the United States contiguous to Canada, including—
‘‘(1) the canal and improvement of the waters between Lake Erie 
and Lake Huron; and 
‘‘(2) the Saint Marys River and canal. 
‘‘(b) RECIPROCITY.—This section does not apply after the President pro-
claims that privileges reciprocal to those under subsection (a) have been 
withdrawn or rendered inoperative by the Government of Canada. 
‘‘§ 80106. International agreement on derelicts 
‘‘The President may make an international agreement with other govern-
ments interested in the navigation of the North Atlantic Ocean, providing 
for the reporting, marking, and removal of dangerous wrecks, derelicts, and 
other menaces to navigation outside the coast waters of the countries bor-
dering the North Atlantic Ocean. 
‘‘§ 80107. Salvors of life to share in remuneration 
‘‘(a) ENTITLEMENT OF SALVORS.—A salvor of human life, who gave aid 
following an accident giving rise to salvage, is entitled to a fair share of 
the payment awarded to the salvor for salvaging the vessel or other property 
or preventing or minimizing damage to the environment.