§ 53101. Definitions

“Sec. 509. Any citizen of the United States may make application to the Secretary of Transportation for aid in the construction of a new vessel to be operated in the foreign or domestic trade (excepting vessels engaged solely in the transportation of property on inland rivers and canals exclusively). If such application is approved by the Secretary of Transportation, the vessel may be constructed under the terms and conditions of this title, but no construction-differential subsidy shall be allowed. The Secretary of Transportation shall pay for the cost of national-defense features incorporated in such vessel. In case the vessel is designed to be of not less than three thousand five hundred gross tons and to be capable of sustained speed of not less than ten knots, or in the case of a passenger vessel operating solely on the inland rivers and waterways which is designed to be of not less than one thousand gross tons and to be capable of sustained speed of not less than eight knots, or in the case of a ferry operating solely in point-to-point transportation which is designed to be of not less than seventy-five gross tons and to be capable of a sustained speed of not less than eight knots, in the case of an oceangoing tug of more than two thousand five hundred horsepower or oceangoing barge of more than two thousand five hundred gross tons, or in the case of a vessel of more than two thousand five hundred horsepower designed to be capable of sustained speed of not less than forty knots, the purchaser shall be required to pay the Secretary of Transportation not less than 12½ per centum of the cost of such vessel, and in the case of any other vessel the purchaser shall be required to pay the Secretary of Transportation not less than 25 per centum of the cost of such vessel (excluding from such cost, in either case, the cost of national defense features); and the balance of such purchase price shall be paid by the purchaser within twenty-five years in not to exceed twenty-five equal annual installments, with interest at a rate not less than (i) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted to the nearest one-eighth of 1 per centum, plus (ii) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs, the balance of such purchase price being secured by a preferred mortgage on the vessel sold and otherwise secured as the Secretary of Transportation may determine: Provided, That, notwithstanding any other provisions of law, the balance of the purchase price of a passenger vessel constructed under this section which is delivered subsequent to March 8, 1946, and which has the tonnage, speed, passenger accommodations, and other characteristics set forth in section 503 of this Act, may, with the approval of the Secretary of Transportation, be secured as provided in such section, and the obligation of the purchaser of such a vessel shall be satisfied and discharged as provided in such section.”

(As amended June 23, 1938, ch. 600, § 20, 52 Stat. 959; June 6, 1939, ch. 186, 53 Stat. 810; July 17, 1952, ch. 939, § 6, 66 Stat. 761; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 87–877, § 2(b), Oct. 24, 1962, 76 Stat. 1200; Pub. L. 90–183, Dec. 10, 1967, 81 Stat. 559; Pub. L. 90–214, Dec. 18, 1967, 81 Stat. 660; Pub. L. 91–469, § 11, Oct. 21, 1970, 84 Stat. 1022; Pub. L. 92–374, Aug. 10, 1972, 86 Stat. 528; Pub. L. 95–173, § 8, Nov. 12, 1977, 91 Stat. 1360; Pub. L. 95–505, Oct. 24, 1978, 92 Stat. 1755; Pub. L. 97–31, § 12(90), Aug. 6, 1981, 95 Stat. 161.)

Acquisition of Obsolete Vessels

[Section 510 was classified to section 1160 of the former Appendix to this title and was primarily repealed and restated in subtitle V of this title by Pub. L. 109–304, §§ 8(b), (c), 19, Oct. 6, 2006, 120 Stat. 1556, 1586, 1710. For disposition of sections of the former Appendix to this title, see Disposition Table preceding section 101 of this title.]

Reserve Funds for Construction or Acquisition of Vessels; Taxation

[Section 511 was classified to section 1161 of the former Appendix to this title and was primarily repealed and restated as chapter 533 of this title by Pub. L. 109–304, §§ 8(c), 19, Oct. 6, 2006, 120 Stat. 1586, 1710. For disposition of sections of the former Appendix to this title, see Disposition Table preceding section 101 of this title.]

Limitation on Restrictions

“Sec. 512. (a) Except as provided in subsection (b), notwithstanding any other provision of law or contract, all restrictions and requirements under sections 503, 506, and 802 [set out below] applicable to a liner vessel constructed, reconstructed, or reconditioned with the aid of construction-differential subsidy shall terminate upon the expiration of the 25-year period beginning on the date of the original delivery of the vessel from the shipyard.

“(b)(1) Except as provided in paragraph (2), the restrictions and requirements of section 506 shall terminate upon the expiration of the 20-year period beginning on the date of the original delivery of the vessel from the shipyard for operation of a vessel in any domestic trade in which it has operated at any time since 1996.

“(2) Paragraph (1) shall not affect any requirement to make payments under section 506.”

(As added Pub. L. 104–239, § 7, Oct. 8, 1996, 110 Stat. 3133; amended Pub. L. 108–136, div. C, title XXXV, § 3532(b), Nov. 24, 2003, 117 Stat. 1818.)

[Title V of act June 29, 1936, ch. 858, comprising this note, consisted of sections 501 to 512 which were classified to sections 1151 to 1162, respectively, of the former Appendix to this title, prior to the enactment of Pub. L. 109–304 and elimination of that Appendix. For complete disposition of those sections, see Disposition Table preceding section 101 of this title.]

[Pub. L. 87–877, § 5, Oct. 24, 1962, 76 Stat. 1202, provided that: “The amendment made by the first section of this Act [amending section 502 of act June 29, 1936, ch. 858, set out above] 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 [Oct. 24, 1962] to the extent authorized by the amendment made by this Act.” ]

[Pub. L. 86–607, § 2, July 7, 1960, 74 Stat. 362, as amended by Pub. L. 87–222, Sept. 13, 1961, 75 Stat. 494, provided that: “The amendment made by this Act [amending section 502 of act June 29, 1936, ch. 858, set out above] shall be effective only with respect to any contract entered into not later than two years after the date of enactment of this Act [July 7, 1960] under the provisions of section 502 of the Merchant Marine Act, 1936 [act June 29, 1936, ch. 858], with respect to (a) the construction of a vessel the keel of which was laid, or (b) the reconstruction or reconditioning of a vessel the shipyard contract for which was entered into after June 30, 1959, and the Federal Maritime Board may, with the consent of the parties thereto, modify any such contract entered into prior to the date of enactment of the first amendment to Public Law 86–607 (74 Stat. 362) [Sept. 13, 1961], to the extent authorized by the amendment made by this Act, as amended.” ]

[Pub. L. 86–518, § 8(a), June 12, 1960, 74 Stat. 216, provided that: “The amendments made by this Act [amending sections 502, 503, 506, 507, 509, 605, and 611 of act June 29, 1936, ch. 858, set out above and below] shall apply only to vessels delivered by the shipbuilder on or after January 1, 1946, and with respect to such vessels shall become effective on January 1, 1960. With respect to vessels delivered by the shipbuilder before January 1, 1946, the provisions of the Merchant Marine Act, 1936 [act June 29, 1936, ch. 858, see Tables for classification], existing immediately before the date of enactment of this Act [June 12, 1960] shall continue in effect.” ]

Operating-Differential Subsidy

Act June 29, 1936, ch. 858, title VI, 49 Stat. 2001, as amended, was repealed by Pub. L. 114–120, title III, § 313(a), Feb. 8, 2016, 130 Stat. 58.

[Subtitle A—Operating-Differential Subsidy Program]

Section 601, amended Pub. L. 87–45, § 2, May 27, 1961, 75 Stat. 90; Pub. L. 91–469, §§ 14, 35(a), (h), Oct. 21, 1970, 84 Stat. 1023, 1035, 1036; Pub. L. 91–603, § 4(c), (d), Dec. 31, 1970, 84 Stat. 1675; Pub. L. 97–31, § 12(93), Aug. 6, 1981, 95 Stat. 161, related to subsidy authorized for operation of vessels in foreign trade or in off-season cruises.

Section 602, amended June 23, 1938, ch. 600, § 40(b), 52 Stat. 964; Pub. L. 87–45, § 3, May 27, 1961, 75 Stat. 91; Pub. L. 91–469, § 35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, § 12(94), Aug. 6, 1981, 95 Stat. 161, related to determination of necessity of subsidy to meet competition.

Section 603, amended Aug. 4, 1939, ch. 417, § 8, 53 Stat. 1185; Pub. L. 87–45, § 4, May 27, 1961, 75 Stat. 91; Pub. L. 87–243, Sept. 14, 1961, 75 Stat. 513; Pub. L. 91–469, §§ 15–17, 35(a), (i), Oct. 21, 1970, 84 Stat. 1023, 1024, 1035, 1036; Pub. L. 97–31, § 12(94), Aug. 6, 1981, 95 Stat. 161, related to contracts for payment of subsidy.

Section 604, amended June 23, 1938, ch. 600, § 21, 52 Stat. 959; Aug. 4, 1939, ch. 417, § 9, 53 Stat. 1185; Pub. L. 97–31, § 12(95), Aug. 6, 1981, 95 Stat. 162, related to authorization of additional subsidy.

Section 605, amended July 17, 1952, ch. 939, § 15, 66 Stat. 764; Pub. L. 86–3, § 18(b)(2), Mar. 18, 1959, 73 Stat. 12; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 89–348, § 1(9), Nov. 8, 1965, 79 Stat. 1310; Pub. L. 91–469, §§ 18, 19, 26(b), 35(a), (j), Oct. 21, 1970, 84 Stat. 1025, 1026, 1034–1036; Pub. L. 97–31, § 12(96), Aug. 6, 1981, 95 Stat. 162; Pub. L. 104–239, § 3(a), Oct. 8, 1996, 110 Stat. 3126, related to vessels excluded from subsidy.

Section 606, amended June 23, 1938, ch. 600, § 22, 52 Stat. 960; July 17, 1952, ch. 939, § 16, 66 Stat. 764; May 10, 1956, ch. 247, § 1, 70 Stat. 148; Pub. L. 86–624, § 35(b), July 12, 1960, 74 Stat. 421; Pub. L. 87–45, § 5, May 27, 1961, 75 Stat. 91; Pub. L. 91–469, §§ 20, 35(a), (k), Oct. 21, 1970, 84 Stat. 1026, 1035, 1036; Pub. L. 97–31, § 12(96), Aug. 6, 1981, 95 Stat. 162, related to readjustments, change in service, withdrawal from service, payment of excess profits, wages, etc., and American materials.

Section 607 was classified to section 1177 of the former Appendix to this title and was primarily repealed and restated as chapter 535 of this title by Pub. L. 109–304, §§ 8(c), 19, Oct. 6, 2006, 120 Stat. 1586, 1710. For disposition of sections of the former Appendix to this title, see Disposition Table preceding section 101 of this title.

Section 608, amended Pub. L. 97–31, § 12(98), Aug. 6, 1981, 95 Stat. 162, related to sale or assignment of contract, consent of Secretary, purchaser subject to terms of contract, and rescinding contract on transfer without consent.

Section 609, amended June 23, 1938, ch. 600, § 29, 52 Stat. 961; Pub. L. 97–31, § 12(99), Aug. 6, 1981, 95 Stat. 162, related to withholding payment to defaulting contractor.

Section 610, amended Pub. L. 97–31, § 12(99), Aug. 6, 1981, 95 Stat. 162, related to vessels eligible for subsidy.

Section 611, added June 23, 1938, ch. 600, § 30, 52 Stat. 961; and amended Pub. L. 85–791, § 17, Aug. 28, 1958, 72 Stat. 947; Pub. L. 86–518, § 4, June 12, 1960, 74 Stat. 216; Pub. L. 97–31, § 12(100), Aug. 6, 1981, 95 Stat. 162, related to transfer of vessels to foreign registry on default of United States.

Section 612 was classified to section 1182 of the former Appendix to this title and was repealed by Pub. L. 101–225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925.

Section 613, added Pub. L. 87–45, § 1, May 27, 1961, 75 Stat. 89; and amended Pub. L. 90–358, §§ 1, 2, June 22, 1968, 82 Stat. 248; Pub. L. 91–250, May 14, 1970, 84 Stat. 215; Pub. L. 92–323, June 30, 1972, 86 Stat. 389; Pub. L. 97–31, § 12(102), Aug. 6, 1981, 95 Stat. 162, related to off-season cruises by passenger vessels.

Section 614, added Pub. L. 97–35, title XVI, § 1603, Aug. 13, 1981, 95 Stat. 751, related to suspension of operating differential subsidy contracts by operator recipients.

Section 615, added Pub. L. 97–35, title XVI, § 1610, Aug. 13, 1981, 95 Stat. 753, related to construction, reconstruction, or acquisition of vessels over five thousand deadweight tons in foreign shipyards and preconditions.

Section 616, added Pub. L. 104–239, § 3(b), Oct. 8, 1996, 110 Stat. 3127, related to wind-up of program.

Title VI of act June 29, 1936, ch. 858, which comprised this note, consisted of sections 601 to 611 and 613 to 616 which were classified to sections 1171 to 1181 and 1183 to 1185a, respectively, of the former Appendix to this title, prior to the enactment of Pub. L. 109–304 and elimination of that Appendix. For complete disposition of those sections, see Disposition Table preceding section 101 of this title.

Contract Provisions

Act June 29, 1936, ch. 858, title VIII, §§ 801, 802, 809, 49 Stat. 2011, 2015, as amended, was repealed or transferred by Pub. L. 114–120, title III, § 313(a), (c)(1)(A), Feb. 8, 2016, 130 Stat. 58.

Section 801, amended Pub. L. 97–31, § 12(119), Aug. 6, 1981, 95 Stat. 164, which related to provision for books and records, filing balance sheets, inspection and auditing by Secretary, and rescission of contract on failure to comply with provisions, was transferred to section 57522 of this title by Pub. L. 114–120, title III, § 313(c)(1)(A), Feb. 8, 2016, 130 Stat. 58.

Section 802, amended June 29, 1936, ch. 858, title VIII, § 802, 49 Stat. 2011; June 23, 1938, ch. 600, § 33, 52 Stat. 962; Aug. 7, 1939, ch. 555, § 2, 53 Stat. 1254; Pub. L. 97–31, § 12(120), Aug. 6, 1981, 95 Stat. 164, related to purchase or requisition of vessels by United States and amount of payment, prior to repeal by Pub. L. 114–120, title III, § 313(a), Feb. 8, 2016, 130 Stat. 58.

Section 809, amended Pub. L. 91–469, § 26(a), Oct. 21, 1970, 84 Stat. 1034; Pub. L. 94–10, § 3, Mar. 23, 1975, 89 Stat. 16; Pub. L. 94–127, § 4, Nov. 13, 1975, 89 Stat. 680; Pub. L. 96–470, title II, § 201(a), Oct. 19, 1980, 94 Stat. 2241; Pub. L. 97–31, § 12(121), Aug. 6, 1981, 95 Stat. 164; Pub. L. 97–35, title XVI, § 1604, Aug. 13, 1981, 95 Stat. 751; Pub. L. 109–304, §§ 14(b), 19, Oct. 6, 2006, 120 Stat. 1702, 1710, which consisted of subsecs. (a) and (b), related to requirement that contracts designed equitably for all ports, minimum allocation of funds, report to Congress, and preference to citizens of United States, prior to repeal by Pub. L. 114–120, title III, § 313(a), Feb. 8, 2016, 130 Stat. 58. Subsec. (b) of section 809 had already been repealed by Pub. L. 109–304, § 19, Oct. 6, 2006, 120 Stat. 1710.

Enrollment in Sealift Readiness Program

Act June 29, 1936, ch. 858, title IX, § 909, as added by Pub. L. 97–35, title XVI, § 1605, Aug. 13, 1981, 95 Stat. 752, provided that: “No vessel may receive construction differential subsidy or operating differential subsidy if it is not offered for enrollment in a sealift readiness program approved by the Secretary of Defense.”