150 
quirements for additional collateral or greater equity contributions that are 
effective upon the occurrence of verifiable conditions relating to the obligor’s 
financial condition or the status of the vessel or shipyard project. 
‘‘§ 53713. Administrative fees 
‘‘(a) IN GENERAL.—The Secretary shall charge and collect from the obligor 
fees the Secretary considers reasonable for— 
‘‘(1) investigating an application for a guarantee; 
‘‘(2) appraising property offered as security for a guarantee; 
‘‘(3) issuing a commitment; 
‘‘(4) providing services related to an escrow fund under section 53715 
of this title; and 
‘‘(5) inspecting property during construction, reconstruction, or recon-
ditioning. 
‘‘(b) TOTAL FEE LIMITATION.—The total fees under subsection (a) may not 
exceed 0.5 percent of the original principal amount of the obligations to be 
guaranteed. 
‘‘(c) FEES FOR INDEPENDENT ANALYSIS.—The Secretary may charge and 
collect fees to cover the costs of independent analysis under section 53708(d) 
of this title. Notwithstanding section 3302 of title 31, any fee collected under 
this subsection shall— 
‘‘(1) be credited as an offsetting collection to the account that finances 
the administration of the loan guarantee program; 
‘‘(2) be available for expenditure only to pay the costs of activities and 
services for which the fee is imposed; and 
‘‘(3) remain available until expended. 
‘‘§ 53714. Guarantee fees 
‘‘(a) REGULATIONS.—Subject to this section, the Secretary shall prescribe 
regulations to assess a fee for guaranteeing an obligation under this chapter. 
‘‘(b) COMPUTATION OF FEE.— 
‘‘(1) IN GENERAL.—The amount of the fee for a guarantee under this 
chapter shall be equal to the sum of the amounts determined under para-
graph (2) for the years in which the guarantee is in effect. 
‘‘(2) PRESENT VALUE FOR EACH YEAR.—The amount referred to in 
paragraph (1) for a year in which the guarantee is in effect is the 
present value of the amount calculated under paragraph (3). To deter-
mine the present value, the Secretary shall apply a discount rate deter-
mined by the Secretary of the Treasury, considering current market 
yields on outstanding obligations of the United States Government hav-
ing periods to maturity comparable to the period to maturity for the 
guaranteed obligation.
151 
‘‘(3) CALCULATION OF AMOUNT.—The amount referred to in para-
graph (2) shall be calculated by multiplying— 
‘‘(A) the estimated average unpaid principal amount of the obli-
gation that will be outstanding during the year (excluding the aver-
age amount, other than interest, on deposit during the year in an 
escrow fund under section 53715 of this title); by 
‘‘(B) the fee rate set under paragraph (4). 
‘‘(4) SETTING FEE RATES.—To set the fee rate referred to in para-
graph (3)(B), the Secretary shall establish a formula that— 
‘‘(A) takes into account the security provided for the guaranteed 
obligation; and 
‘‘(B) is a sliding scale based on the creditworthiness of the obli-
gor, using— 
‘‘(i) the lowest allowable rate under paragraph (5) for the 
most creditworthy obligors; and 
‘‘(ii) the highest allowable rate under paragraph (5) for the 
least creditworthy obligors. 
‘‘(5) PERMISSIBLE RANGE OF RATES.—The fee rate set under para-
graph (4) shall be— 
‘‘(A) for a delivered vessel or equipment, at least 0.5 percent and 
not more than 1 percent; and 
‘‘(B) for a vessel to be constructed, reconstructed, or reconditioned 
or equipment to be delivered, at least 0.25 percent and not more 
than 0.5 percent. 
‘‘(c) WHEN FEE COLLECTED.—A fee for the guarantee of an obligation 
under this chapter shall be collected not later than the date on which an 
amount is first paid on the obligation. 
‘‘(d) FINANCING THE FEE.—A fee paid under this section is eligible to be 
financed under this chapter and shall be included in the actual cost of the 
obligation guaranteed. 
‘‘(e) NOT REFUNDABLE.—A fee paid under this section is not refundable. 
However, an obligor shall receive credit for the amount paid for the remain-
ing term of the obligation if the obligation is refinanced and guaranteed 
under this chapter after the refinancing. 
‘‘§ 53715. Escrow fund 
‘‘(a) IN GENERAL.—If the proceeds of an obligation guaranteed under this 
chapter are to be used to finance the construction, reconstruction, or recondi-
tioning of a vessel that will serve as security for a guarantee under this chap-
ter, the Secretary may accept and hold in escrow, under an escrow agreement 
with the obligor, a portion of the proceeds of all obligations guaranteed under 
this chapter whose proceeds are to be so used which is equal to—
152 
‘‘(1) the excess of— 
‘‘(A) the principal amount of all obligations whose proceeds are 
to be so used; over 
‘‘(B) 75 percent or 87.5 percent, whichever is applicable under 
section 53709(b) of this title, of the amount paid by or for the ac-
count of the obligor for the construction, reconstruction, or recondi-
tioning of the vessel; plus 
‘‘(2) any interest the Secretary may require on the amount described 
in paragraph (1). 
‘‘(b) SECURITY INVOLVING BOTH UNCOMPLETED AND DELIVERED VES-
SELS.—If the security for the guarantee of an obligation relates both to a ves-
sel to be constructed, reconstructed, or reconditioned and to a delivered vessel, 
the principal amount of the obligation shall be prorated for purposes of sub-
section (a) under regulations prescribed by the Secretary. 
‘‘(c) DISBURSEMENT BEFORE TERMINATION OF AGREEMENT.— 
‘‘(1) PURPOSES.—The Secretary shall disburse amounts in the escrow 
fund, as specified in the escrow agreement, to— 
‘‘(A) pay amounts the obligor is obligated to pay for— 
‘‘(i) the construction, reconstruction, or reconditioning of a 
vessel used as security for the guarantee; and 
‘‘(ii) interest on the obligations; 
‘‘(B) redeem the obligations under a refinancing guaranteed 
under this chapter; and 
‘‘(C) pay any excess interest deposits to the obligor at times pro-
vided for in the escrow agreement. 
‘‘(2) MANNER OF PAYMENT.—If a payment becomes due under the 
guarantee before the termination of the escrow agreement, the amount in 
the escrow fund at the time the payment becomes due, including realized 
income not yet paid to the obligor, shall be paid into the appropriate 
account under section 53717 of this title. The amount shall be credited 
against amounts due or to become due from the obligor to the Secretary 
on the guaranteed obligations or, to the extent not so required, be paid 
to the obligor. 
‘‘(d) PAYMENTS REQUIRED BEFORE DISBURSEMENT.— 
‘‘(1) IN GENERAL.—No disbursement shall be made under subsection 
(c) to any person until the total amount paid by or for the account of 
the obligor from sources other than the proceeds of the obligation equals 
at least 25 percent or 12.5 percent, whichever is applicable under section 
53709(b) of this title, of the aggregate actual cost of the vessel, as pre-
viously approved by the Secretary. If the aggregate actual cost of the ves-
sel has increased since the Secretary’s initial approval or if it increases
153 
after the first disbursement is permitted under this subsection, then no 
further disbursements shall be made under subsection (c) until the total 
amount paid by or for the account of the obligor from sources other than 
the proceeds of the obligation equals at least 25 percent or 12.5 percent, 
as applicable, of the increase, as determined by the Secretary, in the ag-
gregate actual cost of the vessel. This paragraph does not require the Sec-
retary to consent to finance any increase in actual cost unless the Sec-
retary determines that such an increase in the obligation meets all the 
terms and conditions of this chapter or other applicable law. 
‘‘(2) DOCUMENTED PROOF OF PROGRESS REQUIREMENT.—The Sec-
retary shall, by regulation, establish a transparent, independent, and 
risk-based process for verifying and documenting the progress of projects 
under construction before disbursing guaranteed loan funds. At a min-
imum, the process shall require documented proof of progress in connec-
tion with the construction, reconstruction, or reconditioning of a vessel 
or vessels before disbursements are made from the escrow fund. The Sec-
retary may require that the obligor provide a certificate from an inde-
pendent party certifying that the requisite progress in construction, re-
construction, or reconditioning has taken place. 
‘‘(e) DISBURSEMENT ON TERMINATION OF AGREEMENT.— 
‘‘(1) IN GENERAL.—If a payment has not become due under the guar-
antee before the termination of the escrow agreement, the balance of the 
escrow fund at the time of termination shall be disbursed to— 
‘‘(A) prepay the excess of— 
‘‘(i) the principal amount of all obligations whose proceeds 
are to be used to finance the construction, reconstruction, or re-
conditioning of the vessel used or to be used as security for the 
guarantee; over 
‘‘(ii) 75 percent or 87.5 percent, whichever is applicable 
under section 53709(b) of this title, of the actual cost of the ves-
sel to the extent paid; and 
‘‘(B) pay interest on that prepaid amount of principal. 
‘‘(2) REMAINING
BALANCE.—Any remaining balance of the escrow 
fund shall be paid to the obligor. 
‘‘(f) INVESTMENT.—The Secretary may invest and reinvest any part of an 
escrow fund in obligations of the United States Government with maturities 
such that the escrow fund will be available as required for purposes of the 
escrow agreement. Investment income shall be paid to the obligor when re-
ceived.
154 
‘‘(g) TERMS TO PROTECT GOVERNMENT.—The escrow agreement shall con-
tain other terms the Secretary considers necessary to protect fully the interests 
of the Government. 
‘‘§ 53716. Deposit fund 
‘‘(a) IN GENERAL.—There is a deposit fund in the Treasury for purposes 
of this section. The Secretary, in accordance with an agreement under sub-
section (b), may deposit into and hold in the fund cash belonging to an obli-
gor to serve as collateral for a guarantee made under this chapter with respect 
to the obligor. 
‘‘(b) AGREEMENT.—The Secretary and an obligor shall make a reserve fund 
or other collateral account agreement to govern the deposit, withdrawal, reten-
tion, use, and reinvestment of cash of the obligor held in the fund. The agree-
ment shall contain— 
‘‘(1) terms and conditions required by this section; 
‘‘(2) terms that grant to the United States Government a security in-
terest in all amounts deposited into the fund; and 
‘‘(3) any additional terms considered by the Secretary to be necessary 
to protect fully the interests of the Government. 
‘‘(c) INVESTMENT.—The Secretary may invest and reinvest any part of the 
amounts in the fund in obligations of the Government with maturities such 
that amounts in the fund will be available as required for purposes of the 
agreement under subsection (b). Cash balances in the fund in excess of current 
requirements shall be maintained in a form of uninvested funds, and the Sec-
retary of the Treasury shall pay interest on these funds. 
‘‘(d) WITHDRAWALS.— 
‘‘(1) IN GENERAL.—Cash deposited into the fund may not be with-
drawn without the consent of the Secretary. 
‘‘(2) USE OF INCOME.—Subject to paragraph (3), the Secretary may 
pay any income earned on cash of an obligor deposited into the fund 
in accordance with the agreement with the obligor under subsection (b). 
‘‘(3) RETENTION AGAINST DEFAULT.—The Secretary may retain and 
offset any or all of the cash of an obligor in the fund, and any income 
realized thereon, as part of the Secretary’s recovery against the obligor 
in case of a default by the obligor on an obligation. 
‘‘§ 53717. Management of funds in the Treasury 
‘‘(a) DEFINITION.—In this section, the term ‘FCRA’ means the Federal 
Credit Reform Act of 1990 (2 U.S.C. 661 et seq.). 
‘‘(b) LOAN GUARANTEES BY SECRETARY OF TRANSPORTATION.— 
‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Transportation 
shall account for payments and disbursements involving obligations 
guaranteed under this chapter and not subject to FCRA in an account
155 
in the Treasury entitled the Federal Ship Financing Fund Liquidating 
Account (a liquidating account as defined in FCRA). 
‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Transportation shall 
account for payments and disbursements involving obligations guaran-
teed under this chapter and subject to FCRA in a separate account in 
the Treasury entitled the Federal Ship Financing Guaranteed Loan Fi-
nancing Account (a financing account as defined in FCRA). 
‘‘(c) LOAN GUARANTEES BY SECRETARY OF COMMERCE.— 
‘‘(1) WHEN NOT SUBJECT TO FCRA.—The Secretary of Commerce shall 
account for payments and disbursements involving obligations guaran-
teed under this chapter and not subject to FCRA in a separate account 
in the Treasury established for this purpose. 
‘‘(2) WHEN SUBJECT TO FCRA.—The Secretary of Commerce shall ac-
count for payments and disbursements involving obligations guaranteed 
under this chapter and subject to FCRA in a separate account in the 
Treasury established for this purpose. 
‘‘(d) DIRECT LOANS BY SECRETARY OF COMMERCE.—The Secretary of 
Commerce shall account for payments and disbursements involving direct 
loans made under this chapter in a separate account in the Treasury estab-
lished for this purpose. 
‘‘§ 53718. Annual report to Congress 
‘‘The Secretary of Transportation shall report to Congress annually on the 
loan guarantee program under this chapter. Each report shall include— 
‘‘(1) the size, in dollars, of the portfolio of loans guaranteed; 
‘‘(2) the size, in dollars, of projects in the portfolio facing financial 
difficulties; 
‘‘(3) the number and type of projects covered; 
‘‘(4) a profile of pending loan applications; 
‘‘(5) the amount of appropriations available for new guarantees; 
‘‘(6) a profile of each project approved since the last report; and 
‘‘(7) a profile of any defaults since the last report. 
‘‘SUBCHAPTER II—DEFAULT PROVISIONS 
‘‘§ 53721. Rights of obligee 
‘‘(a) DEMANDS BY OBLIGEES.—Except as provided in subsection (c), if an 
obligor has continued in default for 30 days in the payment of principal or 
interest on an obligation guaranteed under this chapter, the obligee or the 
obligee’s agent may demand that the Secretary pay the unpaid principal 
amount of the obligation and the unpaid interest on the obligation to the date 
of payment. The demand must be made within the earlier of— 
‘‘(1) a period that may be specified in the guarantee or a related 
agreement; or
156 
‘‘(2) 90 days from the date of the default. 
‘‘(b) PAYMENTS BY SECRETARY.— 
‘‘(1) IN GENERAL.—If a demand is made under subsection (a), the 
Secretary shall pay to the obligee or the obligee’s agent the unpaid prin-
cipal amount of the obligation and the unpaid interest on the obligation 
to the date of payment. Payment shall be made within the earlier of— 
‘‘(A) a period that may be specified in the guarantee or a related 
agreement; or 
‘‘(B) 30 days from the date of the demand. 
‘‘(2) IF NO EXISTING DEFAULT.—The Secretary is not required to 
make payment under this subsection if, within the appropriate period 
under paragraph (1), the Secretary finds that the obligor was not in de-
fault or that the default was remedied before the demand. 
‘‘(c) ASSUMPTION OF RIGHTS AND OBLIGATIONS BEFORE DEMAND.—An 
obligee or the obligee’s agent may not demand payment under this section if 
the Secretary, before the demand and on terms that may be provided in the 
obligation or a related agreement, has assumed the obligor’s rights and duties 
under the obligation and any related agreement and made any payment in 
default. However, the guarantee of the obligation remains in effect after the 
Secretary’s assumption. 
‘‘§ 53722. Actions by Secretary 
‘‘(a) GENERAL AUTHORITY.—On default under an obligation or related 
agreement between the Secretary and the obligor, the Secretary, on terms that 
may be provided in the obligation or agreement, may— 
‘‘(1) assume the obligor’s rights and duties under the obligation or 
agreement, make any payment in default, and notify the obligee or the 
obligee’s agent of the default and the Secretary’s assumption; or 
‘‘(2) notify the obligee or the obligee’s agent of the default. 
‘‘(b) DEMANDS BY OBLIGEES.— 
‘‘(1) DEMAND.—If the Secretary proceeds under subsection (a)(2), the 
obligee or the obligee’s agent may demand that the Secretary pay the un-
paid principal amount of the obligation and the unpaid interest on the 
obligation. The demand must be made within the earlier of— 
‘‘(A) a period that may be specified in the guarantee or a related 
agreement; or 
‘‘(B) 60 days from the date of the Secretary’s notice. 
‘‘(2) PAYMENT.—If a demand is made under paragraph (1), the Sec-
retary shall pay to the obligee or the obligee’s agent the unpaid principal 
amount of the obligation and the unpaid interest on the obligation to 
the date of payment. Payment shall be made within the earlier of—
157 
‘‘(A) a period that may be specified in the guarantee or a related 
agreement; or 
‘‘(B) 30 days from the date of the demand. 
‘‘(c) CONTINUED EFFECT OF GUARANTEE.—A guarantee of an obligation 
remains in effect after an assumption of the obligation by the Secretary. 
‘‘(d) ADDITIONAL RESPONSES.—If there is a default on an obligation, the 
Secretary shall conduct operations under this chapter in a manner that— 
‘‘(1) maximizes the net present value return from the sale or disposi-
tion of assets associated with the obligation, including prompt referral 
to the Attorney General for collection as appropriate; 
‘‘(2) minimizes the amount of any loss realized in the resolution of 
the guarantee; 
‘‘(3) ensures adequate competition and fair and consistent treatment 
of offerors; and 
‘‘(4) requires appraisal of assets by an independent appraiser. 
‘‘§ 53723. Payments by Secretary and issuance of obligations 
‘‘(a) CASH PAYMENT.—Amounts required to be paid by the Secretary under 
section 53721 or 53722 of this title shall be paid in cash. 
‘‘(b) ISSUANCE OF OBLIGATIONS.—If amounts in the appropriate account 
under section 53717 of this title are not sufficient to make a payment re-
quired under section 53721 or 53722 of this title, the Secretary may issue 
obligations to the Secretary of the Treasury. The Secretary, with the approval 
of the Secretary of the Treasury, shall prescribe the form, denomination, ma-
turity, and other terms (except the interest rate) of the obligations. The Sec-
retary of the Treasury shall set the interest rate for the obligations, consid-
ering the current average market yield on outstanding marketable obligations 
of the United States Government of comparable maturities during the month 
before the obligations are issued. 
‘‘(c) PURCHASE OF OBLIGATIONS.—The Secretary of the Treasury shall 
purchase the obligations issued under this section. To purchase the obliga-
tions, 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. The Secretary of 
the Treasury may sell obligations purchased under this section. A redemption, 
purchase, or sale of the obligations by the Secretary of the Treasury is a pub-
lic debt transaction of the Government. 
‘‘(d) DEPOSITS AND REDEMPTIONS.—The Secretary shall deposit amounts 
borrowed under this section in the appropriate account under section 53717 
of this title and make redemptions of the obligations from that account.
158 
‘‘§ 53724. Rights to secured property 
‘‘(a) ACQUISITION OF SECURITY RIGHTS.—When the Secretary makes a 
payment on, or assumes, an obligation under section 53721 or 53722 of this 
title, the Secretary acquires the rights under the security agreement with the 
obligor in the security held by the Secretary to guarantee the obligation. 
‘‘(b) USE AND DISPOSITION OF SECURED PROPERTY.—Notwithstanding 
any other law relating to the acquisition, handling, or disposal of property 
by the United States Government, the Secretary has the right, in the Sec-
retary’s discretion, to complete, reconstruct, recondition, renovate, repair, 
maintain, operate, charter, or sell any property acquired under a security 
agreement with an obligor, or to place a vessel so acquired in the National 
Defense Reserve Fleet. The terms of a sale under this subsection shall be as 
approved by the Secretary. 
‘‘§ 53725. Actions against obligor 
‘‘(a) IN GENERAL.—For a default under a guaranteed obligation or related 
agreement, the Secretary may take any action against the obligor or another 
liable party that the Secretary considers necessary to protect the interests of 
the United States Government. A civil action may be brought in the name 
of the United States or the obligee. The obligee shall make available to the 
Government all records and evidence necessary to prosecute the action. 
‘‘(b) TITLE, POSSESSION, AND PURCHASE.— 
‘‘(1) IN GENERAL.—The Secretary may— 
‘‘(A) accept a conveyance of title to and possession of property 
from the obligor or another party liable to the Secretary; and 
‘‘(B) purchase the property for an amount not greater than the 
unpaid principal amount of the obligation and interest thereon. 
‘‘(2) PAYMENT OF EXCESS.—If, through the sale of property, the Sec-
retary receives an amount of cash greater than the unpaid principal 
amount of the obligation, the unpaid interest on the obligation, and the 
expenses of collecting those amounts, the Secretary shall pay the excess 
to the obligor. 
‘‘SUBCHAPTER III—PARTICULAR PROJECTS 
‘‘§ 53731. Commercial demonstration ocean thermal energy 
conversion facilities and plantships 
‘‘(a) IN GENERAL.—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 that aids in financing (including reimburse-
ment of an obligor for expenditures previously made for) the construction, re-
construction, or reconditioning of a commercial demonstration ocean thermal 
energy conversion facility or plantship. This section may be used to guarantee
159 
obligations for a total of not more than 5 separate facilities and plantships 
or a demonstrated 400 megawatt capacity, whichever comes first. 
‘‘(b) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 
in this section, a guarantee or commitment to guarantee under this section 
is subject to all the provisions applicable to a guarantee or commitment to 
guarantee under subchapter I of this chapter. 
‘‘(c) ECONOMIC SOUNDNESS.—The required determination of economic 
soundness under section 53708 of this title applies to a guarantee or commit-
ment to guarantee for that portion of a facility or plantship not to be sup-
ported with appropriated Federal funds. 
‘‘(d) REASONABLENESS OF RISK.—A guarantee or commitment to guar-
antee may not be made under this section unless the Secretary of Energy, in 
consultation with the Secretary, certifies to the Secretary that, for the facility 
or plantship for which the guarantee or commitment to guarantee is sought, 
there is sufficient guarantee of performance and payment to lower the risk 
to the United States Government to a reasonable level. In deciding whether 
to issue such a certification, the Secretary of Energy shall consider— 
‘‘(1) the successful demonstration of the technology to be used in the 
facility at a scale sufficient to establish the likelihood of technical and 
economic viability in the proposed market; and 
‘‘(2) the need of the United States to develop new and renewable 
sources of energy and the benefits to be realized from the construction 
and successful operation of the facility or plantship. 
‘‘(e) AMOUNT OF OBLIGATION.—The total principal amount of an obliga-
tion guaranteed under this section may not exceed 87.5 percent of— 
‘‘(1) the actual cost or depreciated actual cost of the facility or 
plantship; or 
‘‘(2) if the facility or plantship is supported with appropriated Fed-
eral funds, the total principal amount of that portion of the actual cost 
or depreciated actual cost for which the obligor is obligated to secure fi-
nancing under the agreement between the obligor and the Department of 
Energy or other Federal agency. 
‘‘(f) OTEC DEMONSTRATION FUND.— 
‘‘(1) IN GENERAL.—There is a special subaccount, known as the OTEC 
Demonstration Fund, in the account established under section 
53717(b)(1) of this title. 
‘‘(2) USE AND OPERATION.—The OTEC Demonstration Fund shall be 
used for obligation guarantees authorized under this section that do not 
qualify under subchapter I of this chapter. Except as otherwise provided 
in this section, the OTEC Demonstration Fund shall be operated in the 
same manner as the parent account. However—
160 
‘‘(A) amounts received by the Secretary under subchapter I of this 
chapter related to guarantees or commitments to guarantee made 
under this section shall be deposited only in the OTEC Demonstra-
tion Fund; and 
‘‘(B) when obligations issued by the Secretary under section 
53723 of this title related to the OTEC Demonstration Fund are 
outstanding, any amount received by the Secretary under sub-
chapter I of this chapter related to ocean thermal energy conversion 
facilities or plantships shall be deposited in the OTEC Demonstra-
tion Fund. 
‘‘(3) TRANSFERS.—Assets in the OTEC Demonstration Fund may be 
transferred to the parent account when and to the extent the balance in 
the OTEC Demonstration Fund exceeds the total guarantees or commit-
ments to guarantee made under this section then outstanding, plus obli-
gations issued by the Secretary under section 53723 of this title related 
to the OTEC Demonstration Fund. 
‘‘(4) LIABILITY.—The parent account is not liable for a guarantee or 
commitment to guarantee made under this section. 
‘‘(5) MAXIMUM UNPAID PRINCIPAL AMOUNT.—The total unpaid prin-
cipal amount of the obligations guaranteed with the backing of the 
OTEC Demonstration Fund and outstanding at any one time may not 
exceed $1,650,000,000. 
‘‘(g) ISSUANCE AND PAYMENT OF OBLIGATIONS.—Section 53723 of this title 
applies to the OTEC Demonstration Fund. However, obligations issued by the 
Secretary under that section related to the OTEC Demonstration Fund shall 
be payable only from proceeds realized by the OTEC Demonstration Fund. 
‘‘(h) TAXATION OF INTEREST.—Interest on an obligation guaranteed under 
this section shall be included in gross income under chapter 1 of the Internal 
Revenue Code of 1986 (26 U.S.C. ch. 1). 
‘‘§ 53732. Eligible export vessels 
‘‘(a) APPLICABLE TERMS.—The Secretary may guarantee an obligation for 
an eligible export vessel in accordance with— 
‘‘(1) the terms applicable under this chapter for vessels documented 
under the laws of the United States; or 
‘‘(2) other terms the Secretary determines are more favorable than 
those terms and compatible with export credit terms offered by foreign 
governments for the sale of vessels built in foreign shipyards. 
‘‘(b) INTERAGENCY COUNCIL.— 
‘‘(1) ESTABLISHMENT.—There is an interagency council to carry out 
this section.
161 
‘‘(2) COMPOSITION.—The council is composed of the following individ-
uals or their designees: 
‘‘(A) The Secretary of Transportation, who is the chairman of the 
council. 
‘‘(B) The Secretary of the Treasury. 
‘‘(C) The Secretary of State. 
‘‘(D) The Assistant to the President for Economic Policy. 
‘‘(E) The United States Trade Representative. 
‘‘(F) The President and Chairman of the Export-Import Bank of 
the United States. 
‘‘(3) FUNCTIONS.—The council shall— 
‘‘(A) obtain information on shipbuilding loan guarantees, direct 
and indirect subsidies, and other favorable treatment of shipyards 
provided by foreign governments to shipyards in competition with 
United States shipyards; 
‘‘(B) consult regularly with United States shipbuilders to obtain 
the essential information about international shipbuilding competi-
tion on which to set terms for loan guarantees under subsection 
(a)(2); and 
‘‘(C) provide guidance to the Secretary in establishing terms for 
loan guarantees under subsection (a)(2). 
‘‘(4) ANNUAL REPORT.—Not later than January 31 of each year, the 
Secretary shall submit to Congress a report on activities of the Secretary 
under this section during the preceding year. The report shall include— 
‘‘(A) documentation of sources of information about assistance by 
governments of other countries to shipyards in those countries; and 
‘‘(B) a summary of recommendations made to the Secretary dur-
ing the preceding year about applications submitted to the Sec-
retary during that year for loan guarantees to construct eligible ex-
port vessels. 
‘‘(c) REQUIRED FINDINGS.— 
‘‘(1) BENEFIT TO SHIPBUILDING INDUSTRY.—The Secretary may not 
guarantee or make a commitment to guarantee an obligation for an eli-
gible export vessel unless the Secretary finds that the construction, recon-
struction, or reconditioning of the vessel will aid in the transition of 
United States shipyards to commercial activities or will preserve ship-
building assets that would be essential in time of war or national emer-
gency. 
‘‘(2) PRIORITY OF DOCUMENTED VESSELS.—The Secretary may not 
make a commitment to guarantee an obligation for an eligible export ves-
sel unless the Secretary determines that making the commitment will not
162 
result in denial of an economically sound application for a commitment 
to guarantee an obligation for a vessel documented under the 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 deter-
mination. 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 De-
fense 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 dis-
approve a guarantee under this subsection may be delegated only to a 
civilian officer of the Department of Defense appointed by the President 
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 commit-
ment to guarantee an obligation for an eligible export vessel under this chap-
ter 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:
163 
‘‘(1) ADVANCED
SHIPBUILDING
TECHNOLOGY.—The term ‘advanced 
shipbuilding technology’ includes— 
‘‘(A) numerically controlled machine tools, robots, automated 
process control equipment, computerized flexible manufacturing sys-
tems, associated computer software, and other technology for im-
proving 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 work-
er skills, and communications with customers and suppliers. 
‘‘(2) GENERAL SHIPYARD FACILITY.—The term ‘general shipyard facil-
ity’ 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 appur-
tenance and that is necessary for performing a function re-
ferred to in clause (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 subparagraph (A)(i). 
‘‘(3) MODERN SHIPBUILDING TECHNOLOGY.—The term ‘modern ship-
building technology’ means the best available proven technology, tech-
niques, and processes appropriate to enhancing the productivity of ship-
yards. 
‘‘(b) GENERAL AUTHORITY.—Under subchapter I of this chapter, the Sec-
retary may guarantee or make a commitment to guarantee the payment of 
the principal of and interest on an obligation for advanced shipbuilding tech-
nology and modern shipbuilding technology of a general shipyard facility in 
the United States. Only a private shipyard is eligible to receive a guarantee. 
‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—Except as otherwise provided 
in this section, a guarantee or commitment to guarantee under this section
164 
is subject to all the provisions applicable to a guarantee or commitment 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 technology. 
‘‘(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 sec-
tion 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 guarantee 
or make a commitment to guarantee the payment of the principal of and in-
terest on an obligation that aids in financing or refinancing (including reim-
bursement of an obligor for expenditures previously made for) a contract for 
the construction or reconstruction of a vessel if— 
‘‘(1) the vessel is designed and to be used for commercial use in coast-
wise, intercoastal, or foreign trade; 
‘‘(2) the construction or reconstruction is necessary to replace a vessel 
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 operated vessels 
before the change; 
‘‘(3) the applicant is presently engaged in transporting cargoes in ves-
sels of the type and class that will be constructed or reconstructed under 
this section and agrees to employ vessels constructed or reconstructed 
under this section as replacements only for vessels made obsolete 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 guar-
antee fiduciarily imprudent; 
‘‘(6) the vessel, if to be reconstructed, will have a useful life of at least 
15 years after the reconstruction; and 
‘‘(7) the Secretary has considered the criteria specified in section 
53708(a)(3)–(5) of this title.
165 
‘‘(b) TERM AND AMOUNT OF OBLIGATION.— 
‘‘(1) TERM.—The term of an obligation guaranteed under this section 
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 ac-
tual cost to the applicant for the construction or reconstruction of the 
vessel. The Secretary may not establish a percentage under this para-
graph that is to be applied uniformly to all guarantees or commitments 
to guarantee made under this section. 
‘‘(c) APPLICABILITY OF OTHER PROVISIONS.—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. 
‘‘(d) SECURITY AGAINST DEFAULT.—The Secretary shall require by regula-
tion 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 percentage 
of the obligor’s fleet being replaced by vessels constructed or reconstructed 
under this section. 
‘‘§ 53735. Fisheries financing and capacity reduction 
‘‘(a) DEFINITION.—In this section, the term ‘program’ means a fishing ca-
pacity reduction program established under section 312 of the Magnuson-Ste-
vens 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 obligations 
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 Secretary con-
siders 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 obligations 
guaranteed under this section;
166 
‘‘(2) have the fishing fees established under the program paid into a 
separate subaccount of the fishing capacity reduction fund established 
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 
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 need-
ed for the purpose of this section shall be kept on deposit or invested 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:
167 
‘‘(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 essen-
tial 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 commerce 
of the United States’ includes the operation of a vessel in the fisheries, 
except only for sport fishing. 
‘‘(4) WAR RISKS.—The term ‘war risks’ includes, to the extent the Sec-
retary of Transportation determines— 
‘‘(A) any part of a loss excluded from marine insurance coverage 
under a ‘free of capture or seizure’ clause or analogous clause; and 
‘‘(B) any other loss from a hostile act, including confiscation, ex-
propriation, nationalization, or deprivation. 
‘‘§ 53902. Authority to provide insurance 
‘‘(a) IN GENERAL.—With the approval of the President, and after such con-
sultation with interested agencies of United States Government as the Presi-
dent may require, the Secretary of Transportation may provide insurance 
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 chap-
ter shall be based, insofar as practicable, on consideration of the risk involved. 
‘‘(c) AVAILABILITY OF VESSEL DURING WAR OR NATIONAL EMERGENCY.— 
Insurance or reinsurance for a vessel may be provided under this chapter only 
on the condition that the vessel will be available to the Government 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—
168 
‘‘(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 con-
tract of sale or purchase the terms of which provide that the 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 average 
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 vessel 
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 con-
sider 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), in-
sofar as it involves a liability related to an individual on the vessel, may in-
clude risks other than war risks to the extent the Secretary considers advis-
able. 
‘‘§ 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—
169 
‘‘(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 chapter 
from the Secretary of Transportation, except as provided in sections 17302 
and 17303 of title 40. 
‘‘(b) PREMIUM WAIVERS.—With the approval of the President, the Sec-
retary of Transportation may provide insurance under this chapter at the re-
quest of the Secretary of Defense and other agencies the President may pre-
scribe, without payment of an insurance premium if the Secretary of Defense 
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 offi-
cial designated by the President) on the agreement shall be treated as the ap-
proval required by section 53902(a) of this title. 
‘‘§ 53906. Hull insurance valuation 
‘‘(a) STATED VALUATION.—The valuation in a hull insurance policy for ac-
tual or constructive total loss of the insured vessel shall be a stated valuation 
determined by the Secretary of Transportation. The stated valuation— 
‘‘(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 insurance 
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, premiums 
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 re-
jected the stated valuation determined by the Secretary, the amount of a claim
170 
adjusted, compromised, settled, adjudged, or paid may not exceed the stated 
valuation. However, if the insured has rejected the valuation, the insured— 
‘‘(1) shall be paid, as a tentative advance only, 75 percent of the stated 
valuation; and 
‘‘(2) may bring a civil action against the United States in a court 
having jurisdiction of the claim to recover a valuation equal to the just 
compensation the court determines would have been 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. 
‘‘(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 com-
pany 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 insurance 
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 provides, in an 
amount the Secretary considers reasonable according to good business prac-
tice. The allowance to the company may not include any amount for solic-
iting 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 Sec-
retary 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.
171 
‘‘(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.—The Secretary of Transportation may request the Sec-
retary of the Treasury to invest such portion of the fund as is not, in the 
judgment of the Secretary of Transportation, required to meet the current 
needs of the fund. These investments shall be made by the Secretary of the 
Treasury in public debt securities of the Government, with maturities suitable 
to the needs of the fund, and bearing interest rates determined by the Sec-
retary of the Treasury, taking into consideration current market yields on 
outstanding marketable obligations of the Government of comparable matu-
rity. Interest and benefits from the securities shall be deposited in the fund. 
‘‘§ 53910. Administrative 
‘‘(a) ACCORDANCE WITH COMMERCIAL PRACTICE.—In carrying out this 
chapter, the Secretary of Transportation may act in accordance with commer-
cial 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 prescribe 
and change forms and policies, and fix and change the amounts insured 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, related to insur-
ance 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 do-
mestic companies, authorized to do marine insurance business in a State 
of the United States, to act as underwriting agent for the Secretary. 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.
172 
‘‘(g) FEES FOR ARRANGING INSURANCE.—Except as provided in subsection 
(f)(2), the Secretary may not pay an insurance broker or other person acting 
in a similar intermediary capacity a fee or other consideration for partici-
pating 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 em-
ployees, may appoint and prescribe the duties of experts in marine insurance 
as the Secretary considers necessary to carry out this chapter. 
‘‘(i) SERVICES OF OTHER GOVERNMENT AGENCIES.—With the consent of 
another agency of the United States Government, the Secretary may use infor-
mation, services, facilities, officers, and employees of the agency in carrying 
out this chapter. 
‘‘(j) VESSEL LOCATION REPORTING.—The Secretary may prescribe by regu-
lation 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 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 United States under 
this section is exclusive of any other action by reason of the same subject mat-
ter against an officer, employee, or agent employed or retained by the Govern-
ment under this chapter. 
‘‘(c) PROCEDURE.—A civil action under this section shall be heard and de-
termined 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 Sec-
retary does not act on the claim within 6 months after the claim is filed, un-
less the Secretary for good cause shown agrees with the claimant on a dif-
ferent 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 persons en-
173 
titled to receive payment, the Government may bring a civil action inter-
pleading those persons. The action shall be brought in the United States Dis-
trict 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 Government 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 December 31, 2010. 
‘‘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. 
‘‘55121.
Transportation of merchandise and passengers on Canadian vessels. 
‘‘§ 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) American Samoa; 
‘‘(2) the Northern Mariana Islands, except as provided in section 
502(b) of the Covenant To Establish a Commonwealth of the Northern 
Mariana Islands in Political Union With the United States of America 
(48 U.S.C. 1801 note); 
‘‘(3) Canton Island until the President declares by proclamation that 
the coastwise laws apply to Canton Island; or
174 
‘‘(4) the Virgin Islands until the President declares by proclamation 
that the coastwise laws apply to the Virgin Islands. 
‘‘§ 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 for-
eign port, unless the vessel— 
‘‘(1) is wholly owned by citizens of the United States for purposes of 
engaging in the coastwise trade; and 
‘‘(2) has been issued a certificate of documentation with a coastwise 
endorsement under chapter 121 or is exempt from documentation but 
would otherwise be eligible for such a certificate and endorsement. 
‘‘(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 Secretary 
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. 
‘‘§ 55103. Transportation of passengers 
‘‘(a) IN GENERAL.—Except as otherwise provided in this chapter or chap-
ter 121 of this title, a vessel may not transport passengers between ports or 
places in the United States to which the coastwise laws apply, either directly 
or via a foreign port, unless the vessel— 
‘‘(1) is wholly owned by citizens of the United States for purposes of 
engaging in the coastwise trade; and 
‘‘(2) has been issued a certificate of documentation with a coastwise 
endorsement under chapter 121 or is exempt from documentation but 
would otherwise be eligible for such a certificate and endorsement. 
‘‘(b) PENALTY.—The penalty for violating subsection (a) is $300 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 finan-
cial responsibility for indemnification of passengers for nonperformance
175 
of transportation issued by the Federal Maritime Commission under sec-
tion 44102 of this title. 
‘‘(2) PASSENGER VESSEL.—The term ‘passenger vessel’ means a vessel 
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 pas-
senger vessel qualified to engage in the coastwise trade is offering or ad-
vertising 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 vessel transporting passengers under 
subsection (b) to terminate that transportation within 270 days after the 
Secretary’s notification. Except as provided in subsection (d), the author-
ity to transport passengers under subsection (b) expires at the end of that 
270-day period. 
‘‘(2) WHEN NON-COASTWISE-QUALIFIED VESSEL OFFERING SERVICE.— 
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 Puer-
to 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 terminate that transpor-
tation within 270 days after the Secretary’s notification. Except as pro-
vided in subsection (d), the authority of a foreign vessel to transport pas-
sengers under subsection (b) expires at the end of that 270-day period. 
‘‘(d) DELAYING EXPIRATION.—If the vessel offering or advertising the serv-
ice 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 service begins 
that service. 
‘‘(e) REINSTATEMENT OF EXEMPTION.—If the Secretary finds that the serv-
ice on which an expiration was based is no longer available, the expired au-
thority 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
176 
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 ocean incineration vessel owned by or under con-
struction 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 equip-
ment 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 nation 
in which it is registered. The inspection shall be the same as would be 
required of a vessel of the United States, including drydock inspection 
and internal examination of tanks and void spaces. The inspection may 
be made concurrently with an inspection by that nation 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 super-
structure established by the initial foreign certification as the basis for 
evaluating the current condition of the hull and superstructure. The 
Coast Guard shall allow the substitution of fittings, material, apparatus, 
equipment, and appliances different from those required 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 in writing by the Secretary of 
the department in which the Coast Guard is operating. 
‘‘(c) EFFECTIVE DATE.—Subsection (a) is not effective until an appro-
priate 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 applica-
tion 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. However, this sub-
section does not apply to transportation between the continental United States 
and noncontiguous States, territories, or possessions to which the coastwise 
laws apply.
177 
‘‘(b) RECIPROCITY REQUIREMENT FOR FOREIGN VESSELS.—This section 
applies to a vessel of foreign registry only if the Secretary of Homeland Secu-
rity finds, based on information from the Secretary of State, that the govern-
ment of the nation of registry 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) PARAGRAPHS (1)–(4).—Paragraphs (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 its use in handling its cargo in foreign 
trade. 
‘‘(2) PARAGRAPH (5).—Paragraph (5) of subsection (a) applies only if 
the items named are— 
‘‘(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 vessel of foreign registry only if the Secretary of Homeland Secu-
rity finds, based on information from the Secretary of State, that the govern-
ment of the nation of registry extends reciprocal privileges to vessels of the 
United States. 
‘‘§ 55108. Platform jackets 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) COASTWISE QUALIFIED VESSEL.—The term ‘coastwise qualified 
vessel’ means a vessel that has been issued a certificate of documentation 
with a coastwise endorsement under chapter 121 of this title.
178 
‘‘(2) PLATFORM JACKET.—The term ‘platform jacket’ refers to a single 
physical component and includes any type of offshore exploration, devel-
opment, or production structure or component thereof, including— 
‘‘(A) platform jackets; 
‘‘(B) tension leg or SPAR platform superstructures (including the 
deck, drilling rig and support utilities, and supporting structure); 
‘‘(C) hull (including vertical legs and connecting pontoons or 
vertical cylinder); 
‘‘(D) tower and base sections of a platform jacket; 
‘‘(E) jacket structures; and 
‘‘(F) deck modules (known as ‘topsides’). 
‘‘(b) AUTHORIZED TRANSPORTATION.—Section 55102 of this title does not 
apply to the transportation of a platform jacket in or on a non-coastwise 
qualified launch barge between two points in the United States, at one of 
which there is an installation or other device within the meaning of section 
4(a) of the Outer Continental Shelf Lands Act (43 U.S.C. 1333(a)), if— 
‘‘(1) the launch barge was built before December 31, 2000, and has a 
launch capacity of at least 12,000 long tons; and 
‘‘(2) the Secretary of Transportation makes a determination, in ac-
cordance with procedures established under subsection (c), that a suitable 
coastwise qualified vessel is not available for use in the transportation 
and, if needed, launch or installation of a platform jacket. 
‘‘(c) PROCEDURES TO MAXIMIZE USE OF COASTWISE QUALIFIED VES-
SELS.—The Secretary of Transportation shall adopt procedures implementing 
this section that are reasonably designed to provide timely information so as 
to maximize the use of coastwise qualified vessels. The procedures shall, among 
other things, establish that for purposes of this section, a coastwise qualified 
vessel shall be deemed to be not available only if— 
‘‘(1) on application by an owner or operator for the use of a non- 
coastwise qualified launch barge for transportation of a platform jacket 
under this section (which application shall include all relevant informa-
tion, including engineering details and timing requirements), the Sec-
retary promptly publishes a notice in the Federal Register— 
‘‘(A) describing the project and the platform jacket involved; 
‘‘(B) advising that all relevant information reasonably needed to 
assess the transportation requirements for the platform jacket will 
be made available to interested parties on request; and 
‘‘(C) requesting that information on the availability of coastwise 
qualified vessels be submitted within 30 days after publication of 
that notice; and
179 
‘‘(2)(A) no information is submitted to the Secretary within that 30 
day period; or 
‘‘(B) the owner or operator of a coastwise qualified vessel submits in-
formation to the Secretary asserting that the owner or operator has a 
suitable coastwise qualified vessel available for the transportation, but 
the Secretary determines, within 90 days after the notice is first pub-
lished, that the coastwise qualified vessel is not suitable or reasonably 
available for the transportation. 
‘‘§ 55109. Dredging 
‘‘(a) IN GENERAL.—Except as provided in subsection (b), a vessel may en-
gage in dredging in the navigable waters of the United States only if— 
‘‘(1) the vessel is wholly owned by citizens of the United States for 
purposes of engaging in the coastwise trade; 
‘‘(2) the charterer, if any, is a citizen of the United States for purposes 
of engaging in the coastwise trade; and 
‘‘(3) the vessel has been issued a certificate of documentation with a 
coastwise endorsement under chapter 121 of this title or is exempt from 
documentation but would otherwise be eligible for such a certificate and 
endorsement. 
‘‘(b) DREDGING OF GOLD IN ALASKA.—A documented vessel with a registry 
endorsement may engage in the dredging of gold in Alaska. 
‘‘(c) PENALTY.—If a vessel is operated in knowing violation of this section, 
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 mate-
rial 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.—Except when towing a vessel in distress, a vessel may 
not do any part of any towing described in subsection (b) unless the towing 
vessel— 
‘‘(1) is wholly owned by citizens of the United States for purposes of 
engaging in the coastwise trade; and 
‘‘(2) has been issued a certificate of documentation with a coastwise 
endorsement under chapter 121 of this title or is exempt from docu-
mentation but would otherwise be eligible for such a certificate and en-
dorsement. 
‘‘(b) APPLICABLE TOWING.—Subsection (a) applies to the towing of—
180 
‘‘(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 another 
point in the United States or on the high seas within the exclusive eco-
nomic zone. 
‘‘(c) PENALTIES.— 
‘‘(1) OWNER AND MASTER.—The owner and master of a vessel towing 
another vessel in violation of this section are each liable for a penalty 
of at least $350 but not more than $1,100. A penalty under this para-
graph 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. 
‘‘(2) VESSEL.—In addition to the penalties under paragraph (1), the 
towing vessel is liable for a penalty of $60 per ton based on the tonnage 
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 vessel 
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 op-
erated 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 vessel, 
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 similar emer-
gency circumstance, or in restricted waters where additional assistance 
in maneuvering the vessel is required to ensure its safe operation; and
181 
‘‘(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 section 
55111 of this title. 
‘‘(d) PENALTY.—A person violating this section is liable to the Government 
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 vessels 
‘‘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 recov-
ering, transporting, and unloading in a United States port oil discharged 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 recover 
oil from an oil spill in or near those waters in a timely manner, as de-
termined 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 coun-
try 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 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 products 
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 Com-
merce 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.— 
‘‘(1) IN GENERAL.—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 further 
advanced) in a port of the Virgin Islands for immediate consumption 
in those islands. Fish unloaded under this paragraph may be sold or
182 
transferred only for immediate consumption. In the absence of satisfac-
tory evidence that a sale or transfer to an agent, representative, or em-
ployee of a freezer or cannery is for immediate consumption, the sale or 
transfer is deemed not to be for immediate consumption. This paragraph 
does not prohibit the freezing, smoking, or other processing of fresh fish 
by the ultimate consumer of the fish. 
‘‘(2) SEIZURE, FORFEITURE, AND PENALTY.—Fish unloaded in the 
Virgin Islands that are retained, sold, or transferred, except as allowed 
by paragraph (1), are liable to seizure by and forfeiture to the United 
States Government. A person 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 violation. A penalty or forfeiture under this 
paragraph may be compromised, modified, or remitted under section 
2107(b) of this title. 
‘‘(d) NORTHERN MARIANA ISLANDS.—Subsection (a) does not apply to the 
Northern Mariana Islands. 
‘‘§ 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 proc-
essing or assembling fishery products aboard such a 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 are 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 carrier 
by rail; and
183 
‘‘(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, tugboat, 
or towboat, may own and operate a vessel not having a coastwise endorsement 
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. How-
ever, 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 authorized 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. 
‘‘§ 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 traffic. 
‘‘§ 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 commerce 
is secured by treaty to the citizens of the United States and the subjects of 
a foreign power. 
‘‘§ 55121. Transportation of merchandise and passengers on 
Canadian vessels 
‘‘(a) BETWEEN ROCHESTER AND ALEXANDRIA BAY.—Until passenger serv-
ice is established by vessels of the United States between the port of Rochester, 
New York, and the port of Alexandria Bay, New York, the Secretary of Home-
land Security may issue annually permits to Canadian passenger vessels to 
transport passengers between those ports. Canadian vessels holding such a per-
mit are not subject to section 55103 of this title. 
‘‘(b) WITHIN ALASKA OR BETWEEN ALASKA AND OTHER POINTS IN THE 
UNITED STATES.—Until the Secretary of Transportation determines that 
service by vessels of the United States is available to provide the transpor-
tation described in paragraph (1) or (2), sections 55102 and 55103 of this 
title do not apply to the transportation on Canadian vessels of—