215 
‘‘(2) except as otherwise provided in this subtitle, on trade routes 
serving only the foreign trade of the United States. 
‘‘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 
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with a private shipbuilder for the construction of a vessel under title V of 
that Act. 
‘‘§ 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). 
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‘‘(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 
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. 
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‘‘§ 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 
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