An Act to amend title XI of the Merchant Marine Act, 1936, as amended, with respect to insurance of ship mortgages, and for other purposes.
PL 86-123 (S.1434), enacted 07/31/1959

Y3STAT.] 
PXJBLIC LAW 86-123-JULY 31, 1959 
269 
Public Law 86-123 
AN ACT 
To amend title XI of the Merchant Marine Act, 1936, as amended, with respect 
to insurance of ship niortgaj;es, and for other purposes. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That title XI of the 
Merchant Marine Act, 1936, as amended (46 U.S.C. 1271-1279), is 
amended— 
(1) by redesignating sections 1107, 1108, and 1109 as sections 
1108,1109, and 1110; 
(2) by striking out of section 1102 the reference "section 1109" 
and inserting in lieu thereof the reference "section 1110"; 
(3) by striking out of section 1104(f) the reference "sections 
1101-1109" and inserting in lieu thereof the reference "sections 
1101-1110"; 
(4) by striking out of section 1106, before the dash, the word 
"except and inserting in lieu thereof the words "except as pro-
vided in section 1107 or"; and 
(5) by inserting after section 1106 a new section 1107 to read 
as follows: 
"SEC. 1107. The Secretary of Commerce is authorized, upon such 
terms as he may prescribe, to make a commitment to the prospective 
owner of a vessel who is a citizen of the United States, prior to the 
time when the keel of such vessel is laid under a contract which such 
prospective owner has made with the shipbuilder for the construc-
tion of the vessel (or if the keel of the vessel was laid under such 
contract prior to the enactment of this Act, and the vessel owner or 
prospective owner has an unexpired commitment from the Secretary 
of Commerce to insure a mortgage on the vessel, issued prior to enact-
ment of this Act under the law then existing, then prior to the expira-
tion of such commitment), to insure the interest on and the unpaid 
balance of the principal of a mortgage or mortgages which such pros-
pective owner, as mortgagor, may at any time place on the vessel in 
order to finance the construction, reconstruction, or reconditioning 
of other vessels or both to refinance a mortgage insured by the Secre-
tary of Commerce on the vessel and to finance the construction, recon-
struction, or reconditioning of other vessels, subject to the following 
conditions— 
" (1) the commitment shall not be assignable without the prior 
written approval of the Secretary of Commerce; 
"(2) the vessel is not, at the time of insuring the mortgage pur-
suant to the commitment, subject to a mortgage which has not 
been insured by the Secretary of Commerce; 
"(3) within a reasonable period prior to, or at the time of, 
insuring the mortgage pursuant to the commitment, the Secretary 
of Commerce makes the finding required by section 1104(c) of 
this Act (which requires a findmg that the mortgaged vessel or 
the project with respect to which the mortgaged vessel is to be 
operated will be, in the opinion of the Secretary of Commerce, 
economically sound) ; 
"(4) the mortgage involves a principal obligation which when 
added to the unpaid balance of the principal obligations of prior 
mortgages on the vessel (other than mortgages that are being 
refinanced by this mortgage) will result in a sum which will not, 
(a) if the vessel was not built with the aid of construction-differ-
ential subsidy and complies with the requirements of section 509 
of this Act exceed (A) if the vessel has not been reconstructed 
July 31, 1959 
[S. 1434] 
Vessels. 
Insurance of ship 
tnort gages.. 
52 Stat. 973. 
Commitment. 
Conditions. 
Finding,, 
46 u s e 1274. 
Principsil o b l i -
gation. 
46 u s e 1159. 
270 
PUBLIC LAW 86-123-JULY 31, 1959 
[73 S T A T , 
46 u s e 1159. 
Maturity dates. 
Agreement pro-
visions. 
or reconditioned before such mortgage is executed, 871^ per centum 
of all amounts the mortgagor has paid or is obligated to pay for 
the construction (including designing, inspecting, outfitting, or 
equipping) of the vessel, depreciated at the rate of 5 per centum 
per annum from the date the vessel was delivered by the ship-
builder to the date such mortgage iS executed, or (B) if the 
vessel has been reconstructed or reconditioned before such mort-
gage is executed, 871^ per centum of all amounts the mortgagor 
has paid or is obligated to pay for the construction (including 
designing, inspecting, outfitting, and equipping) of the vessel, 
depreciated at the rate of 5 per centum per annum from the date 
the vessel was delivered by the shipbuilder to the date of such 
reconstruction or reconditioning, and depreciated, from the date 
of such reconstruction or reconditioning to the date such mort-
gage is executed, on a straight-line basis and on the basis of a 
useful life of the vessel determined jointly by the Secretary of 
Commerce and the Secretary of the Treasury, plus 87i/^ per centum 
of all amounts the mortgagor has paid or is obligated to pay for 
the reconstruction or reconditioning of the vessel (if such recon-
struction or reconditioning was done without aid of construction 
subsidy and the vessel complies with the requirements of sec-
tion 509 of this Act; otherwise, 75 per centum of such amount), 
depreciated, from the date of such reconstruction or recondition-
ing to the date such mortgage is executed, on a straight-line basis 
and on the basis of a useful life of the vessel determined jointly 
by the Secretary of Commerce and the Secretary of the Treasury, 
and (b) if the vessel was built with the aid of construction-dif-
ferential subsidy, or does not comply with the requirements of 
section 509 of this Act, exceed the amount computed under (a) 
above except that, where (a) above provides for 871^ P^r centum 
of the construction cost of the vessel, the percentage shall be 75 
per centum; 
"(5) the mortgage has maturity dates which, if the vessel has 
not been reconstructed or reconditioned, do not exceed the re-
maining years of a useful life of the mortgaged vessel of twenty 
years computed from the date the vessel was delivered by the ship-
builder or, if the vessel has been reconstructed or reconditioned, 
do not exceed the remaining years of a useful life of the vessel 
determined jointly by the Secretary of the Treasury and the 
Secretary of Commerce; 
"(6) the loan agreement for the making of the loan secured 
by the mortgage, or the mortgage, provides that the underwriter 
or mortgagee will disburse the loan for one or more of the follow-
ing purposes: (a) to pay one of the components of actual cost 
of tHe vessels to be constructed, reconstructed, or reconditioned 
and, if any such payment is to reimburse the operator for pay-
ments made from his capital reserve fund, to deposit such pay-
ment in his capital reserve fund, or (h) to pay part of the loan 
to discharge an existing mortgage which is insured by the Secre-
tary of Commerce on the vessel that is subject to the mortgage 
which is to be insured, or (c) to deposit part or all of the loan 
in the operators capital reserve fund, if he is a subsidized oper-
ator, and in a construction reserve fund, if he is an unsubsidized 
operator; if any deposit is made in a capital reserve fund, or con-
struction reserve fund under (c) hereof, such deposit may be 
withdrawn only to pay one of the components of actual cost of the 
vessels that are to be constructed, reconstructed, or reconditioned, 
or if for any reason such payments do not exhaust the deposit, 
then to pay off the loan secured by the mortgage that is to be 
insured; 
73 S T A T . ] 
PUBLIC LAW 8 6 - 1 2 5 - J U L Y 31, 1959 
271 
"(7) the mortgage complies with all of the requirements of 
section 1104(a) of this Act (which defines an eligible mortgage) 
| | stat. i269. 
except subdivision 2 thereof (which specifies the maximum prin- 
Requirements, 
cipal amount of the mortgage), subdivision 3 thereof (^which compliance. 
specifies the maximum duration of the mortgage), and subdivision 
8 thereof (which specifies the purpose of the loan secured by the 
mortgage) ; 
"(8) the mortgaged vessel shall be in class A-1, American ic^^*.^ ^'^^*"^"' 
Bureau of Shipping, with all required certificates, including but 
not limited to marine inspection certificates of the United States 
Coast Guard, with all outstanding requirements and recommenda-
tions necessary for retention of class accomplished, unless the 
Secretary of Commerce permits a deferment of such repairs, and 
shall be tight, stanch, strong and well and sufficiently tackled, 
appareled, furnished and equipped^ and in every respect sea-
worthy and in good running condition and repair and in all 
respects fit for service." 
SEC. 2. Section 1104(a) (2) of the Merchant Marine Act, 1936, as 
'^^ "^c 1274, 
amended, is amended by striking out of the proviso the words: 
"That in the case of 'a vessel, the size and speed of which are 
approved by the Secretary of Commerce, which is eligible for mort-
gage aid" and inserting in lieu thereof the words: "That in the case of 
a vessel, the size and speed of which are approved by the Secretary 
of Commerce, and which is, or in the case of a vessel to be recon-
structed or reconditioned would have been, eligible for mortgage aid 
for construction". 
Approved July 31, 1959. 
Public Law 86-124 
AN ACT 
juiv3i,i9i 
To provide for equal treatment of all State-owned hydroelectric power projects 
L^' ^^^^ 
with respect to the taking over of such projects by the United States. 
power projects. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled^ That the Act en- ^}}X.flZ.1^ l''^^^^ 
titled "An Act to facilitate the development and construction of 
water conservation facilities by States and municipalities, and for 
other purposes", approved August 15,1953 (Public Law 278, Eighty-
third Congress, 67 Stat. 587; 16 U.S.C. 828) is hereby amended by 
deleting from section 3 thereof the following: ", except that the pro-
visions of section 14 and section 4(b) shall continue to be applicable 
to any license issued for a hydroelectric development in the Interna-
tional Rapids section of the Saint Lawrence River". 
Approved July 31, 1959. 
Public Law 86-125 
AN ACT 
July 31^ 1959 
To make payments to Indians for destruction of fishing rights at Celilo Falls 
[s. 19 76] 
exempt from income tax. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assemoled^ That the funds paid 
by the United States to Indian tribes, the portion of such funds sub-
sequently distributed to members of the tribes or to trustees for or 
representatives of such members, and the funds paid by the United 
Indians.