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46 U.S.C. § 57531 — Construction and charter of vessels for unsuccessful routes

Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 57531 — Construction and charter of vessels for unsuccessful routes

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Source file: Laws/federal/codes/united-states-code/title-46/section-57531-construction-and-charter-of-vessels-for-unsuccessful-routes--1d5c26b9df.md
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Source location: Title 46, Chapter 575, § 57531; chapter-575-construction-charter-and-sale-of-vessels.md

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**(a) In General.—** If the Secretary of Transportation finds that a trade route determined to be essential under [section 50103 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section50103&num=0&edition=prelim) cannot be successfully developed and maintained and the Secretary’s replacement program cannot be achieved under private operation of the trade route by a citizen of the United States with vessels documented under chapter 121 of this title, without further aid by the United States Government in addition to the financial aid authorized under title V of the Merchant Marine Act, 1936, the Secretary, without advertisement or competition, may— (1) have constructed, in private shipyards or in navy yards, vessels of the types necessary for the trade route; and (2) demise charter those new vessels to the operator of vessels of the United States established on the trade route. **(b) Amount of Charter Hire.—** (1) **In general.—** — The annual charter hire under subsection (a) shall be at least 4 percent of the price (referred to in this section as the “foreign cost”) at which the vessel would be sold if constructed under title V of the Merchant Marine Act, 1936, plus— (A) a percentage of the depreciated foreign cost computed annually determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the term of the charter, adjusted to the nearest one-eighth percent; and (B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs. (2) **Depreciation.—** — Depreciation under paragraph (1)(A) shall be based on— (A) a 25-year life for dry-cargo and passenger vessels; and (B) a 20-year life for tankers and other bulk liquid carrier vessels. **(c) Option To Purchase.—** The charter may contain an option to the charterer to purchase the vessels from the Secretary of Transportation within 5 years after delivery under the charter, on the same terms and conditions as provided in title V of the Merchant Marine Act, 1936, for the purchase of new vessels from the Secretary. However— (1) the purchase price shall be the foreign cost less depreciation to the date of purchase based on the useful life specified in subsection (b)(2); (2) the required cash payment payable at the time of the purchase shall be 25 percent of the purchase price; (3) the charter may provide that any part of the charter hire paid in excess of the minimum charter hire provided for in this section may be credited against the cash payment payable at the time of the purchase; (4) the balance of the purchase price shall be paid within the remaining years of useful life (as specified in subsection (b)(2)) after the date of delivery of the vessel under the charter and in approximately equal annual installments, except that the first installment, which shall be payable on the next ensuing anniversary date of the delivery under the charter, shall be a proportionate part of the annual installment; and (5) interest shall be payable on the unpaid balances from the date of purchase, at a rate not less than— (A) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the average maturities of the loans, adjusted to the nearest one-eighth percent; plus (B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs. **(d) Operation of Vessel.—** (1) **Permissible voyages.—** — The charter shall provide for operation of the vessel exclusively— (A) in foreign trade; (B) on a round-the-world voyage; (C) on a round voyage from the west coast of the United States to a European port that includes an intercoastal port of the United States; (D) on a round voyage from the Atlantic coast of the United States to the Orient that includes an intercoastal port of the United States; or (E) on a voyage in foreign trade on which the vessel may stop at Hawaii or an island territory or possession of the United States. (2) **Domestic trade.—** — The charter shall provide if the vessel is operated in domestic trade on any of the services specified in paragraph (1), the charterer will pay annually to the Secretary of Transportation that proportion of 1⁄25 of the difference between the domestic and foreign cost of the vessel as the gross revenue derived from the domestic trade bears to the gross revenue derived from the entire voyages completed during the preceding year.

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Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 50103 — Determinations of essential services

**(a) Essential Services, Routes, and Lines.—** (1) **In general.—** — The Secretary of Transportation shall investigate, determine, and keep current records of the ocean services, routes, and lines from ports in the United States, or in the territories and possessions of the United States, to foreign markets, which the Secretary determines to be essential for the promotion, development, expansion, and maintenance of the foreign commerce of the United States. In making such a determination, the Secretary shall consider and give due weight to— (A) the cost of maintaining each line; (B) the probability that a line cannot be maintained except at a heavy loss disproportionate to the benefit to foreign trade; (C) the number of voyages and types of vessels that should be employed in a line; (D) the intangible benefit of maintaining a line to the foreign commerce of the United States, the national defense, and other national requirements; and (E) any other facts and conditions a prudent business person would consider when dealing with the person’s own business. (2) **Saint lawrence seaway.—** — For purposes of paragraph (1), the Secretary shall establish services, routes, and lines that reflect the seasonal closing of the Saint Lawrence Seaway and provide for alternate routing of vessels through a different range of ports during that closing to maintain continuity of service on a year-round basis. **(b) Bulk Cargo Carrying Services.—** The Secretary shall investigate, determine, and keep current records of the bulk cargo carrying services that should be provided by vessels of the United States (whether or not operating on particular services, routes, or lines) for the promotion, development, expansion, and maintenance of the foreign commerce of the United Sta

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Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 53101 — Definitions

In this chapter: (1) **Bulk cargo.—** — The term “bulk cargo” means cargo that is loaded and carried in bulk without mark or count. (2) **Contractor.—** — The term “contractor” means an owner or operator of a vessel that enters into an operating agreement for the vessel with the Secretary under section 53103. (3) **Fleet.—** — The term “Fleet” means the Maritime Security Fleet established under section 53102(a). (4) **Foreign commerce.—** — The term “foreign commerce” means— (A) commerce or trade between the United States, its territories or possessions, or the District of Columbia, and a foreign country; and (B) commerce or trade between foreign countries. (5) **Participating fleet vessel.—** — The term “participating fleet vessel” means any vessel that— (A) on October 1, 2015— (i) meets the requirements of paragraph (1), (2), (3), or (4) of section 53102(c); and (ii) is less than 20 years of age if the vessel is a tank vessel, or is less than 25 years of age for all other vessel types; and (B) on December 31, 2014, is covered by an operating agreement under this chapter. (6) **Person.—** — The term “person” includes corporations, partnerships, and associations existing under or authorized by the laws of the United States, or any State, Territory, District, or possession thereof, or of any foreign country. (7) **Product tank vessel.—** — The term “product tank vessel” means a double hulled tank vessel capable of carrying simultaneously more than 2 separated grades of refined petroleum products. (8) **Secretary.—** — The term “Secretary” means the Secretary of Transportation. (9) **Tank vessel.—** — The term “tank vessel” has the meaning that term has under [section 2101 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-

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Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 101 — Agency

In this title, the term “agency” means a department, agency, or instrumentality of the United States Government.

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Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 57513 — Minimum bid

The Secretary of Transportation shall reject any bid for the charter under this subchapter of a vessel constructed under this subtitle or the Merchant Marine Act, 1936, if the charter hire offered is lower than the minimum charter hire would be if the vessel were chartered under [section 57531 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title46-section57531&num=0&edition=prelim).

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Federal law — U.S. Code and appendices · legal_authorities

46 U.S.C. § 57531 — Construction and charter of vessels for

Page 522 TITLE 46—SHIPPING § 57522 § 57522. Books and records, balance sheets, and inspection and auditing Every contract executed by the Secretary of Transportation under this chapter shall contain provisions requiring (1) that, the contractor and every affiliate, domestic agent, subsidiary, or holding company connected with, or directly or indirectly controlling or controlled by, the con- tractor, to keep its books, records, and ac- counts, relating to the maintenance, operation, and servicing of the vessels, services, routes, and lines covered by the contract, in such form and under such regulations as may be prescribed by the Secretary of Transportation; (2) that the contractor and every affiliate, domestic agent, subsidiary, or holding company connected with, or directly or indirectly controlling or con- trolled by, the contractor, to file, upon notice from the Secretary of Transportation, balance sheets, profit and loss statements, and such other statements of financial operations, special report, memoranda of any facts and trans- actions, which in the opinion of the Secretary of Transportation affect the financial results in, the performance of, or transactions or oper- ations under, such contract; (3) that the Sec- retary of Transportation shall be authorized to examine and audit the books, records, and ac- counts of all persons referred to in this section whenever he may deem it necessary or desirable; and (4) that upon the willful failure or refusal of any person described in this section to comply with the contract provisions required by this section, the Secretary of Transportation shall have the right to rescind the contract, and upon such rescission, the United States shall be re- lieved of all further liability on such contract

Source: Supplied 2024 U.S. Code historical extraction · 46 U.S.C. § 57531

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