An Act to amend section 502 of the Merchant Marine Act, 1936, as amended, and for other purposes
PL 87-877 (H.R.11586), enacted 10/24/1962

1200 
October 24, 1962 
[H. R. 11S86] 
Merchant Marine 
Act, 1936, amend-
ment. 
52 Stat. 956. 
Construction 
differential sti)-
sidy. 
46 u s e 1153. 
46 u s e 1152. 
46 u s e l l S l -
1161. 
49 Stat. 2000. 
PUBLIC LAW 87-877-OCT. 24, 1962 
[76 STAT. 
Public Law 87-877 
. 
, 
, , , ^ , 
AN ACT 
To amend section 502 of the Merchant Marine Act, 1936, as amended, and for 
other purposes. 
Be it enacted hy the Seriate and House of Representatives 
of the 
United States of America in Congress assembled^ That section 502 (b) 
of the Merchant Marine Act, 1936, as amended (46 U.S.C. 1152(b)), 
is hereby further amended to read as follows: 
"(b) The amount of the reduction in selling price which is herein 
termed 'construction differential subsidy' may equal, but not exceed, 
the excess of the bid of the shipbuilder constructing the proposed 
vessel (excluding the cost of any features incorporated in the vessel 
for national defense uses, which shall be paid by the Secretary in 
addition to the subsidy), over the fair and reasonable estimate of cost, 
as determined by the Secretary, of the construction of the proposed 
vessel if it were constructed under similar plans and specifications 
(excluding national defense features as above provided) m a foreign 
shipbuilding center which is deemed by the Secretary to furnish a 
fair and representative example for the determination of the estimated 
foreign cost of construction of vessels of the type proposed to be con-
structed. The construction differential approved and paid by the 
Secretary shall not exceed 55 per centum of the construction cost of 
the vessel, except that in the case of reconstruction or reconditioning 
of a passenger vessel having the tonnage, speed, passenger accommo-
dations and other characteristics set forth in section 503 of this Act, 
the construction differential approved and paid shall not exceed 60 
per centum of the reconstruction or reconditioning cost (excluding the 
cost of national defense features as above provided) : Provided^ 
however. That after June 30, 1964, the construction differential ap-
proved by the Secretary shall not exceed in the casp of the construc-
tion, reconstruction or reconditioning of any vessel, 50 per centum of 
such cost. When the Secretary finds that the construction differential 
in any case exceeds the foregoing applicable percentage of such cost, 
the Secretary may negotiate and contract on behalf of the applicant 
to construct, reconstruct, or recondition such vessel in a domestic 
shipyard at a cost which will reduce the construction differential to 
such applicable percentage or less. In the event that the Secretary 
has reason to believe that the bidding in any instance is collusive, he 
shall report all of the evidence on which he acted (1) to the Attorney 
General of the United States, and (2) to the President of the Senate 
and to the Speaker of the House of Representatives if the Congress 
shall be in session or if the Congress shall not be in session, then to the 
Secretary of the Senate and Clerk of the House, respectively." 
SEC. 2. (a) The Merchant Marine Act, 1936 (49 Stat. 1985), is 
amended by striking out subsection (d) of section 502: Provided, 
however, That the repeal of subsection (d) of section 502 of the 
Merchant Marine Act, 1936, shall not be effective with respect to 
contracts for new ship construction under title V of said Act awarded 
on the basis of bids opened prior to the date of the enactment of 
this Act. 
(b) Section 509 of the Merchant Marine Act, 1936 (46 U.S.C. 
1159), is amended by striking out ": And provided, That in case a 
vessel is to be constructed under this section for an applicant who 
has as his principal place of business a place on the Pacific coast of 
the United States" and all that follows in that section down through 
and including "maintains his principal place of business at any place 
on the Pacific coast." and insert in lieu thereof a period. 
76 STAT.] 
PUBLIC LAW 87-877-OCT. 24, 1962 
1201 
(c) Section 213 of the Merchant Marine Act, 1936, as amended 
(46 U.S.C. 1123), is amended by striking out "a report" and inserting 
49 stat. 1991. 
in lieu thereof "reports" and by striking out "as soon as practicable". 
(d) Paragraph (c) of said section 213 is amended by striking out 
the period at the end thereof and adding the following "; reports 
under this paragraph shall be made annually on the first day of July 
of each year.". 
(e) The first sentence of subsection (f) of section 502 of the Mer-
chant Marine Act, 1936, as amended (46 U.S.C. 1152), is amended 
52 stat. 957. 
by striking out "periodically" and inserting in lieu thereof "at least 
once each year". 
(f) The second sentence of subsection (f) of section 502 of the 
Merchant Marine Act, 1936, as amended (46 U.S.C. 1152), is amended 
(1) by striking out the words ", with the approval of the President," 
and (2) by striking out "existing inadequacy" and inserting in lieu 
thereof "existing or impending inadequacy". 
SEC. 3. The Act entitled "An Act to amend title V of the Merchant 
Marine Act, 1936, in order to change the limitation of the construction 
differential subsidy under such title, and for other purposes", approved 
July 7,1960 (74 Stat. 362), is amended by inserting at the end thereof 
a new section as follows: 
"SEC. 4. No official or employee of the United States Government 
nor any member of their immediate families may accept directly or 
indirectly free or at a reduced rate passenger travel or carriage of 
personal property on any ship sailing under a flag other than that of 
the United States. This restriction shall not apply to persons injured 
in accidents at sea and physicians and nurses attending such persons, 
and persons rescued at sea, and this restriction shall not apply to 
persons referred to in section 405(b) of the Merchant Marine Act, 
1936, as amended (46 U.S.C. 1145(b)), relating to steamship com-
panies carrying the mails of the United States. 
Any person who 
knowingly violates this section shall upon conviction thereof be fined 
not less than $500 nor more than $10,000 at the discretion of the 
courts for each such violation." 
SEC. 4. (a) During the one-year period which begins on the date 
of enactment of this Act, the provisions of section 27 of the Merchant 
Marine Act, 1920 (46 U.S.C. 883) shall be suspended with respect 
49 stat. 442. 
to the transportation of lumber to the Commonwealth of Puerto Rico 
from any ports or terminal areas in the United States whenever the 
Secretary of Commerce, after notice and opportunity for hearing, 
determines that there is no domestic vessel reasonably available to 
serve between such ports or terminal areas for the transportation of 
such lumber. 
Such determination shall be made within 45 days after 
application for suspension and shall be final and conclusive and no 
other official or any court of the United States shall have power or 
jurisdiction to review any such determination. 
Upon making the 
determination provided for in this section, the Secretary of Commerce 
shall establish such terms, conditions, and regulations with respect 
to operations under such suspension as he determines to be in the 
national interest. 
(b) Any suspension under the provisions of this Act shall terminate 
whenever the Secretary of Commerce determines that conditions 
required in the subsection (a) of this section for such suspension no 
longer exist, or upon the expiration of the one-year period which 
begins on the date of enactment of this Act, whichever first occurs. 
(c) No Federal laws shall apply to any water carrier because of 
operations under a suspension provided for in this Act if such laws 
did not apply to such carrier prior to such suspension. 
78135 0-63—79 
1202 
PUBLIC LAW 87-878-OCT. 24, 1962 
[76 STAT. 
Effective date. 
SKC. 5. Tile amendment made by the first section of this Act shall 
be effective only with respect to contracts entered into with respect 
to (a) the construction of a vessel the keel of which was laid after 
June 30, 1959, or (b) the reconstruction or reconditioning of a vessel 
the shipyard contract for which was entered into after June 30, 1959, 
and the Secretary may, with the consent of the parties thereto, modify 
any such contract entered into prior to the date of the enactment of 
this Act to the extent authorized by the amendment made by this Act. 
Approved October 24, 1962. 
October 24, 1962 
[H. R. 12820] 
Public Law 87-878 
AN ACT 
To validate the coverage of certain State and local employees in the State of 
Arkansas under the agreement entered into by such State pursuant to section 
218 of the Social Security Act, and for other purposes. 
Social security. 
Coverage valida-
tion. 
64 Stat. 514. 
42 u s e 418. 
70 Stat. 826. 
Tariff Act of 
1930, amend-
ment. 
19 u s e 1001, 
par. 1518. 
19 u s e 1201, 
par. 1722. 
Effective 
date. 
Be it enacted hy the Senate and House of Repre-sentatives of the 
Vmted /States of America in Congress assembled, That, for purposes 
of the agreement under section 218 of the Social Security Act entered 
into by the State of Arkansas, where employees of an integral unit 
of a political subdivision of the State of Arkansas liave in good faith 
been included under the State's agreement as a coverage group on 
the basis that such integral unit of a political subdivision was a 
political subdivision, then such unit of the political subdivision shall, 
for purposes of section 218(b)(2) of such Act, be deemed to be a 
political subdivision, and employees performing services within such 
unit shall be deemed to be a coverage group, effective with the effective 
date specified in such agi'eement or modification of such agreement 
with resj^ect to such coverage group and ending with the last day of 
the year in which this Act is enacted. 
SEC. 2. Section 218{p) of the Social Security Act is amended by 
inserting "Maine," after "Kansas,". 
SEC. 3. (a) Paragraph 1518(a) of the Tariff Act of 1930 is 
amended— 
(1) by striking out^ "when bleached, 50 per centum ad 
valorem;", and 
(2) by striking out "or other material above mentioned, shall 
be subject to the rate of duty provided in this paragraph for such 
materials" and inserting in lieu thereof "or other material above 
mentioned, or wholly or in chief value of any bleached natural 
grasses, grains, leaves, plants, shrubs, herbs, trees, or parts thereof 
provided for in paragraph 1722, shall be subject to the rate of 
duty provided for such materials". 
(b) Paragraph 1722 of the Tariff Act of 1930 is amended by striking 
out "and" before "seaweeds", and by inserting before the period at 
the end of such paragraph the following: "; and natural grasses, 
grains, leases, plants, shrubs, herbs, trees, and parts thereof, not 
specially provided for, not further advanced than bleached". 
SEC. 4. The amendments made by section 3 of this Act shall apply 
to articles entered, or withdrawn from warehouse, for consumption, 
after the date of the enactment of this Act. 
Approved October 24, 1962.