An Act to amend the Merchant Marine Act, 1936, to provide a national defense reserve of tankers and to promote the construction of new tankers, and for other purposes
PL 83-574 (S.2408), enacted 08/10/1954

680 
PUBLIC LAW 574-AUG. 10, 1954 
[68 STAT. 
of the contract approved by section 1 of this Act, does not exceed the 
maximum construction charge obligation of the North Unit irrigation 
district. 
Approved August 10, 1954. 
August 10, 1954 
[S, 2408] 
Public Law 574 
CHAPTER 664 
AN ACT 
To amend the Merchant Marine Act, 1936, to provide a national defense reserve 
of tankers and to promote the construction of new tankers, and for other 
purposes. 
Tankers. 
53 Stat. 1183. 
46 u s e 1160. 
Acquisition for 
national d ef en se 
reserve. 
Limitations. 
'New vessel. 
Payment. 
C r e d i t allow-
ance. 
60 Stat. 41. 
50USCapp. 1735 
note. 
50 U S C a p p . 
1742. 
Depreciation. 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assembled., That section 510 
of the Merchant Marine Act, 1936, as amended, is amended by adding 
at the end thereof the following new subsection: 
"(h) The Secretary of Commerce is authorized until July 1, 1958 
(subject to the provisions of this section as herein amended), to 
acquire a tanker or tankers, determined by him to be desirable for 
inclusion in the national defense reserve, in exchange for an allowance 
of credit to be applied upon the purchase price of a new tanker or 
tankers: Provided^ That each of the tankers to be traded in (1) is not 
less than one thousand three hundred and fifty gross tons; (2) is not 
less than ten years old; (3) is owned by a citizen or citizens of the 
United States; (4) and preference shall be given to those tankers 
which have been documented under the laws of the United States for 
not less than three years immediately preceding; and (5) is in class 
with respect to hull and machinery satisfactory to the Secretary of 
Commerce on the date of its physical delivery to the United States 
and shall be considered an 'obsolete vessel' for purposes of this sec-
tion : And provided further^ That only a tanker which is constructed 
after the date of enactment of this subsection and documented under 
the laws of the United States shall be considered a 'new vessel' for 
purposes of this section. 
"The Secretary of Commerce is authorized to pay the cost of national 
defense features incorporated in any such new tanker. 
In the event 
that the United States acquires ownership of such new tanker, the 
price paid therefor shall not include any amount for national defense 
features paid for by the United States. 
The foregoing provisions 
shall run with the title to each new tanker and be binding on all 
owners thereof. 
"The allow^ance of credit for a traded-in tanker which was sold 
under the Merchant Ship Sales Act of 1946, as amended, or which 
was eligible for a price adjustment under section 9 of such Act, shall 
be: (1) in the case of tankers sold under such Act, the depreciated 
net sales price paid to the United States, and (2) in the case of 
tankers which were eligible for price adjustment under such Act, the 
statutory sales price of such tanker as of March 8, 1946, depreciated: 
plus the depreciated cost of any additions or betterments to the tanker 
which were capitalized by the owner and allowed for Federal income 
tax purposes. Such allowance shall be determined as of the date the 
owner contracts for the construction of a new tanker. In each case, 
depreciation shall be computed on the basis of the life of the tanker 
adopted or accepted by the Internal Revenue Service for determining 
depreciation for income-tax purposes to the date the owner contracts 
for the construction of a new tanker. 
"The allowance of credit for any other traded-in tanker shall be 
determined in accordance with the provisions of subsection (d) of 
this section. 
68 
S T A T . ] 
PUBLIC LAW 575~AUG. 10, 1954 
681 
"In no event shall the amount of credit allowed under this subsection 
or subsection (d) for a traded-in tanker exceed the price paid by the 
owner for such tanker, plus the cost of any additions or betterments 
to the tanker capitalized by such owner and allowed for income-tax 
purposes. 
"If an owner uses any tanker traded in pursuant to this section sub-
sequent to the date of the contract for construction of a new tanker, 
the allowance determined shall be reduced by an amount equal to 
depreciation for the period of such use and computed in accordance 
with the schedule adopted or accepted by the Internal Kevenue Serv-
ice. Title to the traded-in tanker shall in all instances vest in the 
United States, and the allowance of credit shall be applied at the 
time of physical delivery of such tanker to the United States, which 
shall be no later than ninety days after delivery of the new tanker. 
The traded-in tanker shall thereupon be placed in the national defense 
reserve subject to the provisions of section 11 of the Merchant Ship 
Sales Act of 1946, as amended." 
Approved August 10, 1954. 
Restriction. 
Title, 
50 U S C 
1744. 
Public Law 575 
C H A P T E R 665 
AN ACT 
To authorize the long term time chartering of tankers and the construction of 
tanljers by the Secretary of the Navy, and for other purposes. 
August 10, 1954 
[S. 3458] 
Be it enacted hy the Senate and House of Representatives 
of the 
United States of America in Congress assenibled^ That (a) the Secre-
tary of the Navy or such officer as he shall designate is authorized to 
enter into contracts upon such terms as the Secretary of the Navy shall 
determine to be in the best interests of the Government for the time 
charter to the Navy of not to exceed fifteen tankers not now in being 
for periods of not more than ten years to commence upon tender of 
the tankers for service after completion of construction. 
The Secre-
tary of the Navy shall (1) award such contracts on a competitive basis 
to the lowest responsible bidder, and (2) give preference to operators 
who are exclusively engaged in the operation of American flag ships. 
(b) The hire stipulated with respect to any tanker in any charter 
party entered into under this section shall not exceed an average rate 
for the life of the charter party of $5 per deadweight ton per month: 
Provided^ That such average rate will not result in the recovery of more 
than two-thirds of the construction cost of such tanker. 
(c) No contract shall be entered into by the Secretary of the Navy 
pursuant to the provisions of this section unless the contractor agrees 
(1) that during the period of such contract he will not transfer to 
foreign registry any tanker owned by him at the time of entering into 
such contract, and (2) that the tanker or tankers contracted for shall 
remain under United States registry during the period in which such 
tanker or tankers are under charter to the United States. 
(d) Any contract entered into pursuant to this section shall grant to 
the Secretary of the Navy an option to purchase any tanker chartered 
pursuant to this section at the expiration of such contract at its then 
depreciated value or fair market value, whichever is less, and shall 
contain a provision that such option shall not be exercised later than one 
year prior to the expiration of such contract. 
SEC. 2. The President is authorized to undertake the construction of 
not to exceed five tankers, and there is hereby authorized to be appro-
priated not to exceed $37,500,000 for such purpose. 
T a n k e r ! 
Navy. 
Charter. 
f o r 
Hire. 
U. S. registry. 
Pure has e opt ion, 
Construction. 
Appropriation.