194 
market yield on outstanding marketable obligations of the United 
States Government of comparable maturities during the month before 
the obligations are issued. 
‘‘(2) PURCHASE.—The Secretary of the Treasury shall purchase the 
obligations issued under this subsection. To purchase the obligations, 
the Secretary of the Treasury may use as a public debt transaction the 
proceeds from the sale of securities issued under chapter 31 of title 31. 
The purposes for which securities may be issued under that chapter are 
extended to include the purchase of obligations under this subsection. 
A redemption or purchase of the obligations by the Secretary of the 
Treasury is a public debt transaction of the Government. 
‘‘(d) SOURCE OF FUNDS FOR REIMBURSEMENT.—Reimbursement of the 
Secretary of Transportation for costs incurred under this section shall be 
made with appropriated funds rather than through cancellation of notes. 
‘‘(e) APPROPRIATIONS.— 
‘‘(1) AUTHORIZATION.—Each fiscal year, there is authorized to be 
appropriated an amount sufficient to reimburse the Secretary of Trans-
portation for the costs incurred under this section, including adminis-
trative expenses and the principal and interest due on obligations 
issued to the Secretary of the Treasury. 
‘‘(2) APPROPRIATION FOR ADMINISTRATIVE EXPENSES.—Each fiscal 
year, such amounts as may be necessary are hereby appropriated to 
pay interest and to liquidate debt on obligations issued to the Secretary 
of the Treasury under this section. 
‘‘(f) NOTIFICATION TO CONGRESS OF INSUFFICIENCY.—If the Secretary 
of Transportation is unable to obtain the funds necessary to finance the in-
creased ocean freight charges resulting from the requirements of subsections 
(a) and (b) and section 55314(a) of this title, the Secretary shall notify 
Congress within 10 working days of the discovery of the insufficiency. 
‘‘§ 55317. Termination of subchapter 
‘‘This subchapter terminates 90 days after the date on which a notifica-
tion is made under section 55316(f) of this title, except for shipments of 
agricultural commodities and their products subject to contracts made be-
fore the end of that 90-day period, unless within that 90-day period the Sec-
retary of Transportation proclaims that funds are available to finance in-
creased freight charges resulting from the requirements of sections 
55314(a) and 55316(a) and (b) of this title. On the termination of this sub-
chapter under this section— 
‘‘(1) this subchapter does not exempt export activities from, or sub-
ject export activities to, the cargo preference laws; and
195 
‘‘(2) the 50-percent requirement in section 55305 of this title re-
mains in effect. 
‘‘§ 55318. Effect on other law 
‘‘This subchapter does not affect chapter 5 of title 5. 
‘‘SUBCHAPTER III—AMERICAN GREAT LAKES VESSELS 
‘‘§ 55331. Definitions 
‘‘In this subchapter: 
‘‘(1) AMERICAN GREAT LAKES VESSEL.—The term ‘American Great 
Lakes vessel’ means a vessel so designated under section 55332 of this 
title, but only during the period the designation is in effect. 
‘‘(2) GREAT LAKES.—The term ‘Great Lakes’ means Lake Superior, 
Lake Michigan, Lake Huron, Lake Erie, Lake Ontario, the Saint Law-
rence River west of Saint Regis, New York, and their connecting and 
tributary waters. 
‘‘(3) GREAT
LAKES
SHIPPING
SEASON.—The term ‘Great Lakes 
shipping season’ means the period each year during which the Saint 
Lawrence Seaway is open for navigation by vessels, as declared by the 
Saint Lawrence Seaway Development Corporation. 
‘‘§ 55332. Designating American Great Lakes vessels 
‘‘(a) DESIGNATIONS.—The Secretary of Transportation shall designate a 
vessel as an American Great Lakes vessel if— 
‘‘(1) an application for designation is submitted to the Secretary 
under regulations prescribed by the Secretary; 
‘‘(2) the vessel is documented under the laws of the United States; 
‘‘(3) the vessel, on the effective date of the designation, is— 
‘‘(A) at least 1, but not more than 6, years old; or 
‘‘(B) at least 1, but not more than 11, years old if the Secretary 
finds that suitable vessels are not available to provide the type of 
service for which the vessel will be used after the designation; 
‘‘(4) the vessel has not previously been designated as an American 
Great Lakes vessel; and 
‘‘(5) the owner makes an agreement as provided under subsection 
(b). 
‘‘(b) AGREEMENTS.—A vessel may be designated as an American Great 
Lakes vessel only if the person that will be the owner of the vessel at the 
time of the designation makes an agreement with the Secretary providing 
that if the Secretary determines that the vessel is necessary to the defense 
of the United States, the United States Government will have an exclusive 
right, during the 120-day period following the date of a revocation of the 
designation under section 55335 of this title, to purchase the vessel for a 
price equal to the greater of—
196 
‘‘(1) the approximate world market value of the vessel; or 
‘‘(2) the cost of the vessel to the owner less a reasonable amount 
for depreciation. 
‘‘(c) CERTAIN FOREIGN DOCUMENTATION
AND SALE NOT PROHIB-
ITED.—Notwithstanding any other law, if the Government does not exercise 
its right of purchase under an agreement under subsection (b), the owner 
of the vessel is not prohibited from— 
‘‘(1) documenting the vessel under the laws of a foreign country; or 
‘‘(2) selling the vessel to a person not a citizen of the United States. 
‘‘(d) REGULATIONS.—The Secretary shall prescribe regulations estab-
lishing requirements for submitting applications under this section. 
‘‘§ 55333. Exemption from restriction on transporting cer-
tain cargo 
‘‘The 3-year documentation requirement of section 55305(a) of this title 
does not apply to a vessel designated as an American Great Lakes vessel 
during the period of its designation. 
‘‘§ 55334. Restrictions on operations 
‘‘(a) PROHIBITIONS.—Except as provided in subsection (b), an American 
Great Lakes vessel may not be used to— 
‘‘(1) engage in trade— 
‘‘(A) from a port in the United States that is not located on 
the Great Lakes; or 
‘‘(B) between ports in the United States; 
‘‘(2) transport bulk cargo (as defined in section 40102 of this title) 
that is subject to section 55305 or 55314 of this title or section 2631 
of title 10; or 
‘‘(3) provide a service (except ocean freight service) as— 
‘‘(A) a contract carrier; or 
‘‘(B) a common carrier on a fixed advertised schedule offering 
frequent sailings at regular intervals in the foreign trade of the 
United States. 
‘‘(b) OFF-SEASON EXCEPTION.—An American Great Lakes vessel may be 
used for not more than 90 days during any 12-month period to engage in 
trade prohibited by subsection (a)(1)(A), except during the Great Lakes 
shipping season. 
‘‘§ 55335. Revocations and terminations of designations 
‘‘(a) REVOCATIONS.—After notice and an opportunity for a hearing, the 
Secretary of Transportation may revoke a designation of a vessel as an 
American Great Lakes vessel if the Secretary finds that— 
‘‘(1) the vessel does not meet a requirement for the designation; 
‘‘(2) the vessel has been operated in violation of this subchapter; or
197 
‘‘(3) the owner or operator of the vessel has violated an agreement 
made under section 55332(b) of this title. 
‘‘(b) TERMINATIONS.—On petition and a showing of good cause by the 
owner of a vessel, the Secretary may terminate the designation of a vessel 
as an American Great Lakes vessel. The Secretary may impose conditions 
in a termination order to prevent significant adverse effects on other opera-
tors of United States documented vessels. 
‘‘§ 55336. Civil penalty 
‘‘After notice and an opportunity for a hearing, the Secretary of Trans-
portation may impose a civil penalty of not more than $1,000,000 on the 
owner of an American Great Lakes vessel for any act for which the designa-
tion may be revoked under section 55335 of this title. 
‘‘CHAPTER 555—MISCELLANEOUS 
‘‘Sec. 
‘‘55501.
Mobile trade fairs. 
‘‘§ 55501. Mobile trade fairs 
‘‘(a) IN GENERAL.—The Secretary of Commerce shall encourage and pro-
mote the development and use of mobile trade fairs designed to show and 
sell the products of United States business and agriculture at foreign ports 
and at other commercial centers throughout the world where the operators 
of the fairs use, insofar as practicable, vessels and aircraft of the United 
States in transporting their exhibits. 
‘‘(b) TECHNICAL AND FINANCIAL ASSISTANCE.—When the Secretary de-
termines that a mobile trade fair provides an economical and effective 
means of promoting export sales, the Secretary may provide to the operator 
of the fair— 
‘‘(1) technical assistance and support; and 
‘‘(2) financial assistance to defray certain expenses incurred outside 
the United States, except the cost of transportation on foreign vessels 
and aircraft. 
‘‘(c) USE OF FOREIGN CURRENCIES.—To carry out this section, the 
President may use, in addition to amounts appropriated to carry out trade 
promotion activities, foreign currencies owned by or owed to the United 
States Government. 
‘‘PART E—CONTROL OF MERCHANT MARINE CAPABILITIES 
‘‘CHAPTER 561—RESTRICTIONS ON TRANSFERS 
‘‘Sec. 
‘‘56101.
Approval required to transfer vessel to noncitizen. 
‘‘56102.
Additional controls during war or national emergency. 
‘‘56103.
Conditional approvals. 
‘‘56104.
Penalty for false statements. 
‘‘56105.
Forfeiture procedure. 
‘‘§ 56101. Approval required to transfer vessel to noncitizen 
‘‘(a) RESTRICTIONS.—
198 
‘‘(1) IN GENERAL.—Except as otherwise provided in this section, 
section 12119 of this title, or section 611 of the Merchant Marine Act, 
1936, a person may not, without the approval of the Secretary of 
Transportation— 
‘‘(A) sell, lease, charter, deliver, or in any other manner trans-
fer, or agree to sell, lease, charter, deliver, or in any other manner 
transfer, to a person not a citizen of the United States, an interest 
in or control of— 
‘‘(i) a documented vessel owned by a citizen of the United 
States; or 
‘‘(ii) a vessel last documented under the laws of the United 
States; or 
‘‘(B) place under foreign registry, or operate under the author-
ity of a foreign country, a documented vessel or a vessel last docu-
mented under the laws of the United States. 
‘‘(2) EXCEPTIONS.—Paragraph (1)(A) does not apply to a vessel 
that has been operated only for pleasure or only as a fishing vessel, 
fish processing vessel, or fish tender vessel (as defined in section 2101 
of this title). 
‘‘(b) APPROVAL BEFORE DOCUMENTATION.—To promote financing with 
respect to a vessel to be documented under chapter 121 of this title, the 
Secretary may grant approval under subsection (a) before the vessel is docu-
mented. 
‘‘(c) EXCEPTIONS.—Notwithstanding any other provision of this subtitle, 
the Merchant Marine Act, 1936, or any contract with the Secretary made 
under this subtitle or that Act, a person may place a vessel under foreign 
registry without the approval of the Secretary if— 
‘‘(1)(A) the Secretary, in conjunction with the Secretary of Defense, 
determines that at least one replacement vessel of equal or greater mili-
tary capability and of a capacity that is equivalent or greater, as meas-
ured by deadweight tons, gross tons, or container equivalent units, as 
appropriate, is documented under chapter 121 of this title by the owner 
of the vessel placed under foreign registry; and 
‘‘(B) the replacement vessel is not more than 10 years old on the 
date of that documentation; or 
‘‘(2) an operating agreement covering the vessel under chapter 531 
of this title has expired. 
‘‘(d) STATUS OF PROHIBITED TRANSACTION.—A charter, sale, or trans-
fer of a vessel, or of an interest in or control of a vessel, in violation of 
this section is void. 
‘‘(e) PENALTIES.—
199 
‘‘(1) CRIMINAL PENALTY.—A person that knowingly sells, charters, 
or transfers a vessel, or an interest in or control of a vessel, in violation 
of this section shall be fined under title 18, imprisoned for not more 
than 5 years, or both. 
‘‘(2) CIVIL PENALTY.—A person that sells, charters, or transfers a 
vessel, or an interest in or control of a vessel, in violation of this sec-
tion is liable to the United States Government for a civil penalty of 
not more than $10,000 for each violation. 
‘‘(3) FORFEITURE.—A documented vessel may be seized by and for-
feited to the Government if, in violation of this section, a person— 
‘‘(A) knowingly sells, charters, or transfers the vessel or an in-
terest in or control of the vessel; or 
‘‘(B) places the vessel under foreign registry or operates the 
vessel under the authority of a foreign country. 
‘‘§ 56102. Additional controls during war or national emer-
gency 
‘‘(a) IN GENERAL.—During war, or a national emergency declared by 
Presidential proclamation, a person may not, without the approval of the 
Secretary of Transportation— 
‘‘(1) place under foreign registry a vessel owned in whole or in part 
by a citizen of the United States or a corporation incorporated under 
the laws of the United States or of a State; 
‘‘(2) sell, mortgage, lease, charter, deliver, or in any other manner 
transfer, or agree to sell, mortgage, lease, charter, deliver, or in any 
other manner transfer, to a person not a citizen of the United States— 
‘‘(A) a vessel owned as described in paragraph (1), or an inter-
est therein; 
‘‘(B) a vessel documented under the laws of the United States, 
or an interest therein; or 
‘‘(C) a facility for building or repairing vessels, or an interest 
therein; 
‘‘(3) issue, assign, or transfer to a person not a citizen of the United 
States an instrument of indebtedness secured by a mortgage of a vessel 
to a trustee, by an assignment of an owner’s interest in a vessel under 
construction to a trustee, or by a mortgage of a facility for building 
or repairing vessels to a trustee, unless the trustee or a substitute 
trustee is approved by the Secretary under subsection (b); 
‘‘(4) enter into an agreement or understanding to construct a vessel 
in the United States for, or to be delivered to, a person not a citizen 
of the United States without expressly stipulating that construction will 
not begin until after the war or national emergency has ended;
200 
‘‘(5) enter into an agreement or understanding whereby there is vest-
ed in, or for the benefit of, a person not a citizen of the United States 
the controlling interest in a corporation that is incorporated under the 
laws of the United States or a State and that owns a vessel or facility 
for building or repairing vessels; or 
‘‘(6) cause or procure a vessel, constructed in whole or in part in 
the United States and never cleared for a foreign port, to depart from 
a port of the United States before it has been documented under the 
laws of the United States. 
‘‘(b) TRUSTEES.— 
‘‘(1) APPROVAL.—The Secretary shall approve a trustee or sub-
stitute trustee under subsection (a)(3) if and only if the trustee is a 
bank or trust company that— 
‘‘(A) is organized as a corporation, and is doing business, under 
the laws of the United States or a State; 
‘‘(B) is authorized under those laws to exercise corporate trust 
powers; 
‘‘(C) is a citizen of the United States; 
‘‘(D) is subject to supervision or examination by Federal or 
State authority; and 
‘‘(E) has a combined capital and surplus (as set forth in its 
most recent published report of condition) of at least $3,000,000. 
‘‘(2) DISAPPROVAL.—If a trustee or substitute trustee ceases to meet 
the conditions in paragraph (1), the Secretary shall disapprove the 
trustee or substitute trustee. After the disapproval, the restrictions on 
transfer or assignment without the Secretary’s approval in subsection 
(a)(3) apply. 
‘‘(3) OPERATION OF VESSEL.—During a period when subsection (a) 
applies, a trustee referred to in subsection (a)(3), even though ap-
proved as a trustee by the Secretary, may not operate the vessel under 
the mortgage or assignment without the Secretary’s approval. 
‘‘(c) STATUS OF PROHIBITED TRANSACTION.—A transaction in violation 
of this section is void. 
‘‘(d) RECOVERY OF CONSIDERATION.— 
‘‘(1) IN GENERAL.—A person that deposited or paid consideration in 
connection with a transaction prohibited by this section may recover 
the consideration after tender of the vessel, facility, stock, or other se-
curity, or interest therein, to the person entitled to it, or the forfeiture 
thereof to the United States Government. 
‘‘(2) EXCEPTION.—Paragraph (1) does not apply if the person in 
whose interest the consideration was deposited, or to whom it was paid,
201 
entered into the transaction in the belief that the person depositing or 
paying the consideration was a citizen of the United States. 
‘‘(e) PENALTIES.— 
‘‘(1) CRIMINAL PENALTY.—A person that violates, or attempts or 
conspires to violate, this section shall be fined under title 18, impris-
oned for not more than 5 years, or both. 
‘‘(2) FORFEITURE.—The following shall be forfeited to the Govern-
ment: 
‘‘(A) A vessel, a facility for building or repairing vessels, or an 
interest in a vessel or such a facility, that is sold, mortgaged, 
leased, chartered, delivered, transferred, or documented, or agreed 
to be sold, mortgaged, leased, chartered, delivered, transferred, or 
documented, in violation of this section. 
‘‘(B) Stock and other securities sold or transferred, or agreed 
to be sold or transferred, in violation of this section. 
‘‘(C) A vessel departing in violation of subsection (a)(6). 
‘‘§ 56103. Conditional approvals 
‘‘(a) IN GENERAL.—In approving an act or transaction under section 
56101 or 56102 of this title, the Secretary of Transportation may do so 
absolutely or upon conditions the Secretary considers advisable. The Sec-
retary shall state the conditions in the notice of approval. 
‘‘(b) VIOLATIONS.—A violation of a condition of approval is subject to the 
same penalties as a violation resulting from an act done without the re-
quired approval. The violation occurs at the time the condition is violated. 
‘‘§ 56104. Penalty for false statements 
‘‘A person that knowingly makes a false statement of a material fact to 
the Secretary of Transportation or another officer, employee, or agent of the 
Department of Transportation, to obtain the Secretary’s approval under sec-
tion 56101 or 56102 of this title, shall be fined under title 18, imprisoned 
for not more than 5 years, or both. 
‘‘§ 56105. Forfeiture procedure 
‘‘(a) IN GENERAL.—A forfeiture under this chapter may be enforced in 
the same way as a forfeiture under the laws on the collection of duties. 
However, such a forfeiture may be remitted without seizure of the vessel. 
‘‘(b) PRIOR CONVICTIONS.—In a proceeding under this chapter to enforce 
a forfeiture, a prior criminal conviction of a person for a violation of this 
chapter with respect to the subject matter of the forfeiture is prima facie 
evidence of the violation against the person convicted. 
‘‘CHAPTER 563—EMERGENCY ACQUISITION OF VESSELS 
‘‘Sec. 
‘‘56301.
General authority. 
‘‘56302.
Charter terms.
202 
‘‘56303.
Compensation. 
‘‘56304.
Disputed compensation. 
‘‘56305.
Vessel encumbrances. 
‘‘56306.
Use and transfer of vessels. 
‘‘56307.
Return of vessels. 
‘‘§ 56301. General authority 
‘‘During a national emergency declared by Presidential proclamation, or 
a period for which the President has proclaimed that the security of the na-
tional defense makes it advisable, the Secretary of Transportation may req-
uisition or purchase, or requisition or charter the use of, a vessel owned by 
citizens of the United States, a documented vessel, or a vessel under con-
struction in the United States. 
‘‘§ 56302. Charter terms 
‘‘(a) IN GENERAL.—If a vessel is requisitioned for use but not ownership 
under this chapter, the Secretary of Transportation, at the time of requisi-
tion or as soon thereafter as the situation allows, shall offer the person enti-
tled to possession of the vessel a charter containing— 
‘‘(1) the terms the Secretary believes should govern the relationship 
between the United States Government and the person; and 
‘‘(2) the rate of hire the Secretary considers just compensation for 
the use of the vessel and the services required under the charter. 
‘‘(b) REFUSAL TO ACCEPT.—If the person does not accept the charter 
and rate of hire, the parties shall proceed as provided in section 56304 of 
this title. 
‘‘§ 56303. Compensation 
‘‘(a) IN GENERAL.—As soon as practicable, the Secretary of Transpor-
tation shall determine and pay just compensation for a vessel requisitioned 
under this chapter. 
‘‘(b) FACTORS NOT AFFECTING VALUE.—The value of a vessel may not 
be considered enhanced by the circumstances requiring its requisition. Con-
sequential damages arising from the requisition may not be paid. 
‘‘(c) EFFECT OF CONSTRUCTION-DIFFERENTIAL SUBSIDY.— 
‘‘(1) IF PAID.—If a construction-differential subsidy has been paid 
for the vessel, the value of the vessel at the time of requisition shall 
be determined under section 802 of the Merchant Marine Act, 1936. 
‘‘(2) IF NOT PAID.—If a construction-differential subsidy has not 
been paid for the vessel, the value of any national defense features pre-
viously paid for by the United States Government shall be excluded. 
‘‘(d) LOSS OR DAMAGE DURING CHARTER.—If a vessel is lost or dam-
aged by a risk assumed by the Government under the charter, but a valu-
ation for the vessel or a means of compensation has not been agreed to, 
the Secretary shall pay just compensation for the loss or damage, to the 
extent the person is not reimbursed through insurance.
203 
‘‘§ 56304. Disputed compensation 
‘‘If the person entitled to compensation disputes the amount of just com-
pensation determined by the Secretary of Transportation under this chapter, 
the Secretary shall pay the person, as a tentative advance, 75 percent of 
the amount determined. The person may bring a civil action against the 
United States to recover just compensation. If the tentative advance paid 
under this section is greater than the amount of the court’s judgment, the 
person shall refund the difference. 
‘‘§ 56305. Vessel encumbrances 
‘‘(a) IN GENERAL.—The existence of an encumbrance on a vessel does 
not prevent the requisition of the vessel under this chapter. 
‘‘(b) DEPOSIT IN TREASURY.— 
‘‘(1) IN
GENERAL.—If an encumbrance exists, the Secretary of 
Transportation may deposit part of the compensation or advance of 
compensation to be paid under this chapter (but not more than the 
total amount of all encumbrances) in a fund in the Treasury. The Sec-
retary shall publish notice of the creation of the fund in the Federal 
Register. 
‘‘(2) AVAILABILITY OF AMOUNTS DEPOSITED.—Amounts deposited in 
the fund shall be available to pay the compensation or any of the en-
cumbrances (including encumbrances stipulated to in a court of the 
United States or a State) existing at the time the vessel was requi-
sitioned. 
‘‘(c) CIVIL ACTION.— 
‘‘(1) IN GENERAL.—Within 6 months after publication of notice 
under subsection (b), the holder of an encumbrance may bring a civil 
action in admiralty, according to the principles of libels in rem, against 
the fund. 
‘‘(2) VENUE.—The action must be brought in the district court of 
the United States— 
‘‘(A) from whose custody the vessel was or may be requisitioned; 
or 
‘‘(B) in whose district the vessel was located when it was requi-
sitioned. 
‘‘(3) SERVICE OF PROCESS.—Service of process shall be made on the 
appropriate United States Attorney, the Attorney General, and the Sec-
retary, in the manner provided by the Federal Rules of Civil Procedure 
(28 App. U.S.C.). Notice of the action shall be given to all interested 
persons as ordered by the court.
204 
‘‘(4) AS BETWEEN PRIVATE PARTIES.—The action shall proceed and 
be determined according to the principles of law and the rules of prac-
tice applicable in like cases between private parties. 
‘‘§ 56306. Use and transfer of vessels 
‘‘(a) IN GENERAL.—The Secretary of Transportation may repair, recon-
dition, reconstruct, operate, or charter for operation, a vessel acquired under 
this chapter. 
‘‘(b) TRANSFER TO OTHER AGENCIES.—The Secretary may transfer the 
possession or control of a vessel acquired under this chapter to another de-
partment or agency of the United States Government on terms and condi-
tions approved by the President. The department or agency shall promptly 
reimburse the Secretary for expenditures for just compensation, purchase 
price, charter hire, repairs, reconditioning, or reconstruction. 
‘‘§ 56307. Return of vessels 
‘‘When a vessel requisitioned for use but not ownership is returned to the 
owner, the Secretary of Transportation shall— 
‘‘(1) return the vessel in a condition at least as good as when taken, 
less ordinary wear and tear; or 
‘‘(2) pay the owner an amount sufficient to recondition the vessel to 
that condition, less ordinary wear and tear. 
‘‘CHAPTER 565—ESSENTIAL VESSELS AFFECTED BY 
NEUTRALITY ACT 
‘‘Sec. 
‘‘56501.
Definition. 
‘‘56502.
Adjusting obligations and arranging maintenance. 
‘‘56503.
Types of adjustments and arrangements. 
‘‘56504.
Changes in adjustments and arrangements. 
‘‘§ 56501. Definition 
‘‘In this chapter, the term ‘essential vessel’ means a vessel that is— 
‘‘(1)(A) security for a mortgage indebtedness to the United States 
Government; or 
‘‘(B) constructed under this subtitle or required by a contract under 
this subtitle to be operated on a certain essential foreign trade route; 
and 
‘‘(2) necessary in the interests of commerce and national defense to 
be maintained in condition for prompt use. 
‘‘§ 56502. Adjusting obligations and arranging maintenance 
‘‘(a) GENERAL AUTHORITY.—On written application, the Secretary of 
Transportation may adjust obligations and arrange for maintenance of an 
essential vessel as provided in this chapter if the Secretary determines, after 
any investigation or proceeding the Secretary considers desirable, that—
205 
‘‘(1) the operation of the vessel in the service, route, or line to which 
it is assigned under this subtitle, or in which it otherwise would be op-
erated, is not— 
‘‘(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 
et seq.) or a proclamation issued under that Act; or 
‘‘(B) compatible with maintaining the availability of the vessel 
for national defense and commerce; 
‘‘(2) it is not feasible under existing law to employ the vessel in any 
other service or operation in foreign or domestic trade (except tem-
porary or emergency operation under section 56503(b)(5) of this title); 
and 
‘‘(3) the applicant, because of the restrictions of the Neutrality Act 
of 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for na-
tional defense under paragraph (1), is not earning or will not earn a 
reasonable return on the capital necessarily employed in its business. 
‘‘(b) EFFECTIVE PERIOD.—Adjustments and arrangements under sub-
section (a) shall continue in effect only as long as the circumstances de-
scribed in subsection (a) continue to exist. 
‘‘§ 56503. Types of adjustments and arrangements 
‘‘(a) SUSPENSION
REQUIREMENTS.—An adjustment or arrangement 
under this chapter shall include suspension of— 
‘‘(1) the requirement to operate the vessel in foreign trade under the 
applicable operating-differential or construction-differential subsidy 
contract or mortgage or other agreement; and 
‘‘(2) the right to operating-differential subsidy for the vessel. 
‘‘(b) DISCRETIONARY ADJUSTMENTS AND ARRANGEMENTS.—To the ex-
tent the Secretary of Transportation considers appropriate to carry out the 
purposes of this subtitle, an adjustment or arrangement under this chapter 
may include any of the following: 
‘‘(1) Lay-up of the vessel by the owner or in the custody of the Sec-
retary, with payment or reimbursement by the Secretary of necessary 
and proper expenses (including reasonable overhead and insurance) or 
a fixed periodic allowance instead of payment or reimbursement. 
‘‘(2) Postponement, for not more than the total period of the lay- 
up, of the maturity date of each installment of the principal of obliga-
tions to the United States Government for the vessel (regardless of 
whether the maturity date is during a lay-up period), or rearrangement 
of those maturities. 
‘‘(3) Postponement or cancellation of interest accruing on the obliga-
tions during a lay-up period.
206 
‘‘(4) Extension, for not more than the total period of the lay-up, of 
the 20-year life limitation for the vessel and other limitations and pro-
visions of this subtitle based on a 20-year life. 
‘‘(5) Provision for temporary or emergency employment of the vessel 
(instead of lay-up) as may be practicable, with such arrangements for 
management of the vessel, payment of expenses, and application of the 
proceeds of the employment, as the Secretary may approve, with any 
period of operation being included as part of the lay-up period. 
‘‘(6) Payment to the Secretary, on termination of the arrangements 
with the applicant, of the applicant’s net profits (earned while the ar-
rangements were in effect) in excess of 10 percent a year on the capital 
necessarily employed in the applicant’s business, as reimbursement for 
obligations postponed or canceled and expenses incurred or paid by the 
Secretary under this section. 
‘‘(c) LAID-UP VESSELS.—Under subsection (b)(6), capital of the appli-
cant represented by a vessel of the applicant laid-up or operated under this 
section shall be included in capital necessarily employed in the applicant’s 
business. The Secretary may require a vessel laid-up or operated under this 
section to be security for reimbursement. 
‘‘§ 56504. Changes in adjustments and arrangements 
‘‘The Secretary of Transportation may change an adjustment or arrange-
ment made under this chapter as the Secretary considers necessary to carry 
out this chapter. 
‘‘PART F—GOVERNMENT-OWNED MERCHANT VESSELS 
‘‘CHAPTER 571—GENERAL AUTHORITY 
‘‘Sec. 
‘‘57101.
Placement of vessels in National Defense Reserve Fleet. 
‘‘57102.
Disposition of vessels not worth preserving. 
‘‘57103.
Sale of obsolete vessels in National Defense Reserve Fleet. 
‘‘57104.
Acquisition of vessels from sale of obsolete vessels. 
‘‘57105.
Acquisition of vessels for essential services, routes, or lines. 
‘‘57106.
Maintenance, improvement, and operation of vessels. 
‘‘57107.
Vessels for other agencies. 
‘‘57108.
Consideration of ballast and equipment in determining selling price. 
‘‘57109.
Operation of vessels purchased, chartered, or leased from Secretary of Transpor-
tation. 
‘‘§ 57101. Placement of vessels in National Defense Reserve 
Fleet 
‘‘(a) IN GENERAL.—Any vessel acquired by the Maritime Administration 
shall be placed in the National Defense Reserve Fleet maintained under sec-
tion 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744). 
‘‘(b) REMOVAL FROM FLEET.—A vessel placed in the Fleet under sub-
section (a) may not be traded out or sold from the Fleet, except as provided 
in section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this 
title.
207 
‘‘§ 57102. Disposition of vessels not worth preserving 
‘‘(a) IN GENERAL.—If the Secretary of Transportation determines that 
a vessel owned by the Maritime Administration is of insufficient value for 
commercial or military operation to warrant its further preservation, the 
Secretary may scrap the vessel or sell the vessel for cash. 
‘‘(b) SELLING PROCEDURE.—The sale of a vessel under subsection (a) 
shall be made on the basis of competitive sealed bids, after an appraisal and 
due advertisement. The purchaser does not have to be a citizen of the 
United States. The purchaser shall provide a surety bond, with a surety ap-
proved by the Secretary, to ensure that the vessel will not be operated in 
the foreign trade of the United States at any time within 10 years after 
the sale, in competition with a vessel owned by a citizen of the United 
States and documented under the laws of the United States. 
‘‘§ 57103. Sale of obsolete vessels in National Defense Re-
serve Fleet 
‘‘(a) IN GENERAL.—The Secretary of Transportation may convey the 
right, title, and interest of the United States Government in any vessel of 
the National Defense Reserve Fleet that has been identified by the Sec-
retary as an obsolete vessel of insufficient value to warrant its further pres-
ervation, if the recipient— 
‘‘(1) is a non-profit organization, a State, or a municipal corporation 
or political subdivision of a State; 
‘‘(2) agrees not to use, or allow others to use, the vessel for commer-
cial transportation purposes; 
‘‘(3) agrees to make the vessel available to the Government whenever 
the Secretary indicates that it is needed by the Government; 
‘‘(4) agrees to hold the Government harmless for any claims arising 
from exposure to asbestos, polychlorinated biphenyls, lead paint, or 
other hazardous substances after conveyance of the vessel, except for 
claims arising from use of the vessel by the Government; 
‘‘(5) has a conveyance plan and a business plan that describes the 
intended use of the vessel, each of which has been submitted to and 
approved by the Secretary; 
‘‘(6) has provided proof, as determined by the Secretary, of resources 
sufficient to accomplish the transfer, necessary repairs and modifica-
tions, and initiation of the intended use of the vessel; and 
‘‘(7) agrees that when the recipient no longer requires the vessel for 
use as described in the business plan required under paragraph (5)— 
‘‘(A) the recipient will, at the discretion of the Secretary, re-
convey the vessel to the Government in good condition except for 
ordinary wear and tear; or