46 U.S.C. § 31329 — Court sales of documented vessels

Page 286 TITLE 46—SHIPPING [§ 31328 [§ 31328. Repealed. Pub. L. 104–324, title XI, § 1113(b)(1), Oct. 19, 1996, 110 Stat. 3970] Section, Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4746, related to limitations on parties serving as trustees of mortgaged vessel interests. § 31329. Court sales of documented vessels (a) A documented vessel may be sold by order of a district court only to— (1) a person eligible to own a documented vessel under section 12103 of this title; or (2) a mortgagee of that vessel. (b) When a vessel is sold to a mortgagee not el- igible to own a documented vessel— (1) the vessel must be held by the mortgagee for resale; (2) the vessel held by the mortgagee is sub- ject to chapter 563 of this title; and (3) the sale of the vessel to the mortgagee is not a sale to a person not a citizen of the United States under section 12132 of this title. (c) Unless waived by the Secretary of Trans- portation, a person purchasing a vessel by court order under subsection (a)(1) of this section or from a mortgagee under subsection (a)(2) of this section must document the vessel under chapter 121 of this title. (d) The vessel may be operated by the mort- gagee not eligible to own a documented vessel only with the approval of the Secretary of Transportation. (e) A sale of a vessel contrary to this section is void. (f) This section does not apply to a docu- mented vessel that has been operated only for pleasure. (Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4747; Pub. L. 104–324, title XI, § 1118, Oct. 19, 1996, 110 Stat. 3973; Pub. L. 109–304, § 15(32), Oct. 6, 2006, 120 Stat. 1704; Pub. L. 111–281, title IX, § 913(c), Oct. 15, 2010, 124 Stat. 3017.) HISTORICAL AND REVISION NOTES Revised section Source section (U.S. Code) 31329 ............................................ 46:961(f) Section 31329 sets out certain restrictions on the court sale of a documented vessel. Section 31329(a) restricts the sale only to a person eli- gible to own a documented vessel under section 12102 of title 46 or to the mortgagee, which may be a trustee acting as a holder of a preferred mortgage on a docu- mented vessel for the benefit of a person not eligible to be the holder of a preferred mortgage on that vessel. Section 31329(b) sets out conditions on the sale to a trustee acting as a holder of a preferred mortgage on a documented vessel for the benefit of a person not eligi- ble to be the holder of a preferred mortgage on that vessel. First, the vessel must be held by the trustee for resale. Second, while being held for resale, the vessel is subject to requisition or purchase during a national emergency under section 902 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1242). And third, the sale of the vessel to the trustee is not a sale foreign within the terms of the First Proviso of section 27 of the Merchant Marine Act, 1920 (46 App. U.S.C. 883). Section 31329(c) requires a person that is eligible to document the vessel that purchases a vessel from the court to document the vessel. This subsection also re- quires the person purchasing the vessel from the trust- ee to document it, thereby restricting to whom the trustee can sell the vessel. Many documented vessels have no national defense utility, such as recreational vessels and fishing vessels. Therefore, both of these re- strictions can be waived by the Secretary. As pre- viously discussed, these waivers can be on a case-by- case basis or with a blanket waiver. Section 31329(d) prohibits a trustee from operating the vessel without the approval of the Secretary. Section 31329(e) voids any sale that is done contrary to this section. HOUSE FLOOR STATEMENT Under section 31329(d) a vessel may be operated by the trustee only with the approval of the Secretary. Under current law a vessel may be documented by a trust if all of the members of the trust are citizens of the United States. If the trust buying the vessel at the court sale includes foreign investors, the vessel cannot be documented. The Committee intends in this section that the vessel will only be ‘‘operated’’ in a mainte- nance manner, but not in a commercial service. Editorial Notes AMENDMENTS 2010—Subsec. (d). Pub. L. 111–281 substituted ‘‘Sec- retary of Transportation’’ for ‘‘Secretary’’. 2006—Subsec. (a)(1). Pub. L. 109–304, § 15(32)(A), sub- stituted ‘‘section 12103’’ for ‘‘section 12102’’. Subsec. (b)(2). Pub. L. 109–304, § 15(32)(B)(i), sub- stituted ‘‘chapter 563 of this title’’ for ‘‘section 902 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1242)’’. Subsec. (b)(3). Pub. L. 109–304, § 15(32)(B)(ii), sub- stituted ‘‘sale to a person not a citizen of the United States under section 12132 of this title’’ for ‘‘sale for- eign within the terms of the first proviso of section 27 of the Merchant Marine Act, 1920 (46 App. U.S.C. 883)’’. 1996—Subsec. (f). Pub. L. 104–324 added subsec. (f). Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Jan. 1, 1989, with certain exceptions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title. § 31330. Penalties (a)(1) A mortgagor shall be fined under title 18, imprisoned for not more than 2 years, or both, if the mortgagor— (A) with intent to defraud, does not disclose an obligation on a vessel as required by sec- tion 31323(a) of this title; (B) with intent to defraud, incurs a contrac- tual obligation in violation of section 31323(b) of this title; or (C) with intent to hinder or defraud an exist- ing or future creditor of the mortgagor or a lienor of the vessel, files a mortgage with the Secretary. (2) A mortgagor is liable to the United States Government for a civil penalty of not more than $10,000 if the mortgagor— (A) does not disclose an obligation on a ves- sel as required by section 31323(a) of this title; (B) incurs a contractual obligation in viola- tion of section 31323(b) of this title; or (C) files with the Secretary a mortgage made not in good faith. (b)(1) A person that knowingly violates section 31329 of this title shall be fined under title 18, imprisoned for not more than 3 years, or both. (2) A person violating section 31329 of this title is liable to the Government for a civil penalty of not more than $25,000.