46 U.S.C. § 12119 — Owners engaged primarily in leasing or

Page 215 TITLE 46—SHIPPING § 12119 (Pub. L. 109–304, § 5, Oct. 6, 2006, 120 Stat. 1500.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 12118(a)(1) .. 46 App.:883–1 (1st par. words through cl. (e) less citizenship, 4th par. 1st sen- tence). June 5, 1920, ch. 250, § 27A, as added Pub. L. 85–902, Sept. 2, 1958, 72 Stat. 1736; Pub. L. 104–88, title III, § 321(2), Dec. 29, 1995, 109 Stat. 950; Pub. L. 104–324, title VII, § 706, Oct. 19, 1996, 110 Stat. 3934. 12118(a)(2), (3). 46 App.:883–1 (2d par., 4th par. 2d sentence). 12118(b) ...... 46 App.:883–1 (1st par. related to citizenship). 12118(c) ...... 46 App.:883–1 (3d par. words before 5th comma). 12118(d)(1) .. 46 App.:883–1 (3d par. words after 5th comma). 12118(d)(2) .. 46 App.:883–1 (1st par. words after cl. (e)). 12118(e) ...... 46 App.:883–1 (last par.). 12118(f) ....... 46 App.:883–1 (4th par. 3d–6th sen- tences). In this section, the word ‘‘Secretary’’ is substituted for ‘‘Secretary of the Treasury’’, thereby incorporating the definition of ‘‘Secretary’’ in section 2101 of title 46. The functions of the Secretary of the Treasury relating to the Coast Guard previously were transferred to the Secretary of Transportation by section 6(b) of the De- partment of Transportation Act (Pub. L. 89–670, Oct. 15, 1966, 80 Stat. 938). The Coast Guard and the functions of the Secretary of Transportation relating to the Coast Guard were again transferred to the Department of Homeland Security by section 888(b) of the Homeland Security Act of 2002 (Pub. L. 107–296, Nov. 25, 2002, 116 Stat. 2135). In subsection (a)(1), the words ‘‘seeking hereunder to document a vessel under the laws of the United States or to operate a vessel exempt from documentation under the laws of the United States’’ are omitted as un- necessary because of the reorganization of the section. Subsection (d)(1)(B) is substituted for ‘‘together with their owners or masters, shall be entitled to all the other benefits and privileges and shall be subject to the same requirements, penalties, and forfeitures as may be applicable in the case of vessels built in the United States and otherwise documented or exempt from docu- mentation under the laws of the United States’’ to eliminate unnecessary words. In subsection (d)(2), the words before subparagraph (A) are substituted for ‘‘no vessel owned by any such corporation shall engage in the fisheries or in the transportation of merchandise or passengers for hire between points in the United States, including Terri- tories, Districts, and possessions thereof, embraced within the coastwise laws, except’’ to eliminate unnec- essary words. See the definition of ‘‘United States’’ in chapter 1 of the revised title. Editorial Notes PRIOR PROVISIONS A prior section 12118, Pub. L. 98–89, Aug. 26, 1983, 97 Stat. 589, originally derived from section 65r of former Title 46, Shipping, related to registration of funnel marks and house flags, prior to being repealed by Pub. L. 100–710, title I, §§ 106(b)(5), 107(a), Nov. 23, 1988, 102 Stat. 4752, effective Jan. 1, 1989. § 12119. Owners engaged primarily in leasing or financing transactions (a) DEFINITIONS.—In this section: (1) AFFILIATE.—The term ‘‘affiliate’’ means, with respect to any person, any other person that is— (i) directly or indirectly controlled by, under common control with, or controlling that person; or (ii) named as being part of the same con- solidated group in any report or other docu- ment submitted to the United States Securi- ties and Exchange Commission or the Inter- nal Revenue Service. (2) CARGO.—The term ‘‘cargo’’ does not in- clude cargo to which title is held for non-com- mercial reasons and primarily for the purpose of evading the requirements of subsection (c)(3). (3) OIL.—The term ‘‘oil’’ has the meaning given that term in section 2101(26) of this title. (4) PASSIVE INVESTMENT.—The term ‘‘passive investment’’ means an investment in which neither the investor nor any affiliate of the in- vestor is involved in, or has the power to be in- volved in, the formulation, determination, or direction of any activity or function con- cerning the management, use, or operation of the asset that is the subject of the investment. (5) QUALIFIED PROPRIETARY CARGO.—The term ‘‘qualified proprietary cargo’’ means— (A) oil, petroleum products, petrochemi- cals, or liquefied natural gas cargo that is beneficially owned by the person that sub- mits to the Secretary an application or an- nual certification under subsection (c)(3), or by an affiliate of that person, immediately before, during, or immediately after the cargo is carried in coastwise trade on a ves- sel owned by that person; (B) oil, petroleum products, petrochemi- cals, or liquefied natural gas cargo not bene- ficially owned by the person that submits to the Secretary an application or an annual certification under subsection (c)(3), or by an affiliate of that person, but which is car- ried in coastwise trade by a vessel owned by that person and which is part of an arrange- ment in which vessels owned by that person and at least one other person are operated collectively as one fleet, to the extent that an equal amount of oil, petroleum products, petrochemicals, or liquefied natural gas cargo beneficially owned by that person, or by an affiliate of that person, is carried in coastwise trade on one or more other ves- sels, not owned by that person, or by an af- filiate of that person, if the other vessel or vessels are also part of the same arrange- ment; (C) in the case of a towing vessel associ- ated with a non-self-propelled tank vessel where both vessels function as a single self- propelled vessel, oil, petroleum products, pe- trochemicals, or liquefied natural gas cargo that is beneficially owned by the person that owns both the towing vessel and the non- self-propelled tank vessel, or any United States affiliate of that person, immediately before, during, or immediately after the cargo is carried in coastwise trade on either of those vessels; or (D) any oil, petroleum products, petro- chemicals, or liquefied natural gas cargo Page 216 TITLE 46—SHIPPING § 12119 carried on any vessel that is either a self- propelled tank vessel having a length of at least 210 meters or a tank vessel that is a liquefied natural gas carrier that— (i) was delivered by the builder of the vessel to the owner of the vessel after De- cember 31, 1999; and (ii) was purchased by a person for the purpose, and with the reasonable expecta- tion, of transporting on the vessel lique- fied natural gas or unrefined petroleum beneficially owned by the owner of the ves- sel, or an affiliate of the owner, from Alas- ka to the continental United States. (6) UNITED STATES AFFILIATE.—The term ‘‘United States affiliate’’ means, with respect to any person, an affiliate the principal place of business of which is located in the United States. (b) REQUIREMENTS.—A coastwise endorsement may be issued for a vessel if— (1) the vessel satisfies the requirements for a coastwise endorsement, except for the owner- ship requirement otherwise applicable without regard to this section; (2) the person that owns the vessel (or, if the vessel is owned by a trust or similar arrange- ment, the beneficiary of the trust or similar arrangement) meets the requirements of sub- section (c); (3) the vessel is under a demise charter to a person that certifies to the Secretary that the person is a citizen of the United States under section 50501 of this title for engaging in the coastwise trade; and (4) the demise charter is for a period of at least 3 years or a shorter period as may be pre- scribed by the Secretary. (c) OWNERSHIP CERTIFICATION.— (1) IN GENERAL.—A person meets the require- ments of this subsection if the person trans- mits to the Secretary each year the certifi- cation required by paragraph (2) or (3) with re- spect to a vessel. (2) INVESTMENT CERTIFICATION.—To meet the certification requirement of this paragraph, a person shall certify that it— (A) is a leasing company, bank, or finan- cial institution; (B) owns, or holds the beneficial interest in, the vessel solely as a passive investment; (C) does not operate any vessel for hire and is not an affiliate of any person that oper- ates any vessel for hire; and (D) is independent from, and not an affil- iate of, any charterer of the vessel or any other person that has the right, directly or indirectly, to control or direct the move- ment or use of the vessel. (3) CERTAIN TANK VESSELS.— (A) IN GENERAL.—To meet the certification requirement of this paragraph, a person shall certify that— (i) the aggregate book value of the ves- sels owned by the person and United States affiliates of the person does not ex- ceed 10 percent of the aggregate book value of all assets owned by the person and its United States affiliates; (ii) not more than 10 percent of the ag- gregate revenues of the person and its United States affiliates is derived from the ownership, operation, or management of vessels; (iii) at least 70 percent of the aggregate tonnage of all cargo carried by all vessels owned by the person and its United States affiliates and documented with a coastwise endorsement is qualified proprietary cargo; (iv) any cargo other than qualified pro- prietary cargo carried by all vessels owned by the person and its United States affili- ates and documented with a coastwise en- dorsement consists of oil, petroleum prod- ucts, petrochemicals, or liquified natural gas; (v) no vessel owned by the person or any of its United States affiliates and docu- mented with a coastwise endorsement car- ries molten sulphur; and (vi) the person owned one or more ves- sels documented under this section as of August 9, 2004. (B) APPLICATION ONLY TO CERTAIN VES- SELS.—A person may make a certification under this paragraph only with respect to— (i) a tank vessel having a tonnage of at least 6,000 gross tons, as measured under section 14502 of this title (or an alternative tonnage measured under section 14302 of this title as prescribed by the Secretary under section 14104 of this title); or (ii) a towing vessel associated with a non-self-propelled tank vessel that meets the requirements of clause (i), where both vessels function as a single self-propelled vessel. (d) FILING OF DEMISE CHARTER.—The demise charter and any amendments to the charter shall be filed with the certification required by subsection (b)(3) or within 10 days after filing an amendment to the charter. The charter and amendments shall be made available to the pub- lic. (e) CONTINUATION OF ENDORSEMENT AFTER TER- MINATION OF CHARTER.—When a charter required by subsection (b)(3) is terminated for default by the charterer, the Secretary may continue the coastwise endorsement for not more than 6 months on terms and conditions the Secretary may prescribe. (f) DEEMED OWNED BY CITIZENS.—A vessel sat- isfying the requirements of this section is deemed to be owned only by citizens of the United States under sections 12103 and 50501 of this title. (Pub. L. 109–304, § 5, Oct. 6, 2006, 120 Stat. 1501; Pub. L. 115–232, div. C, title XXXV, § 3541(b)(15), Aug. 13, 2018, 132 Stat. 2324.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 12119(a) ...... 46:12106(f)(4). 12119(b) ...... 46:12106(e)(1). 12119(c) ...... 46:12106(f)(1)–(3). 12119(d) ...... 46:12106(e)(2). 12119(e) ...... 46:12106(e)(3). 12119(f) ....... 46:12106(e)(4). Page 217 TITLE 46—SHIPPING § 12121 In subsection (b), in paragraph (1), the words ‘‘satis- fies the requirements for a coastwise endorsement, ex- cept for the ownership requirement otherwise applica- ble without regard to this section’’ are substituted for ‘‘otherwise eligible for documentation under this sec- tion’’ in 46 U.S.C. 12106(e)(1)(E) for clarity. Subpara- graph (A) of 46 U.S.C. 12106(e)(1) is omitted as redun- dant to the general requirements in revised section 12112 on coastwise endorsements. In subsection (c)(3), the words ‘‘documented with a coastwise endorsement’’ are substituted for ‘‘docu- mented under this section’’ because former section 12106 is being divided into multiple sections. Subsection (e) is substituted for ‘‘(3) Upon termi- nation by a demise charterer required under paragraph (1)(C), the coastwise endorsement of the vessel may, in the sole discretion of the Secretary, be continued after the termination for default of the demise charter for a period not to exceed 6 months on such terms and condi- tions as the Secretary may prescribe’’ for clarity and to eliminate unnecessary words. Editorial Notes PRIOR PROVISIONS A prior section 12119, Pub. L. 98–89, Aug. 26, 1983, 97 Stat. 589; Pub. L. 100–710, title I, § 104(a)(4), Nov. 23, 1988, 102 Stat. 4750, originally derived from sections 65s and 881 of former Title 46, Shipping, related to list of docu- mented vessels, prior to the general amendment of this chapter by Pub. L. 109–304. See section 12138 of this title. AMENDMENTS 2018—Subsec. (a)(3). Pub. L. 115–232 substituted ‘‘sec- tion 2101(26)’’ for ‘‘section 2101(20)’’. Statutory Notes and Related Subsidiaries APPLICATION TO CERTAIN CERTIFICATES Pub. L. 108–293, title VI, § 608(c), Aug. 9, 2004, 118 Stat. 1057, provided that: ‘‘(1) IN GENERAL.—The amendments made by this sec- tion [amending provisions from which this section was derived], and any regulations published after February 4, 2004, with respect to coastwise endorsements, shall not apply to a certificate of documentation, or renewal thereof, endorsed with a coastwise endorsement for a vessel under section 12106(e) [now section 12119(b), (d)–(f)] of title 46, United States Code, or a replacement vessel of a similar size and function, that was issued prior to the date of enactment of this Act [Aug. 9, 2004] as long as the vessel is owned by the person named therein, or by a subsidiary or affiliate of that person, and the controlling interest in such owner has not been transferred to a person that was not an affiliate of such owner as of the date of enactment of this Act. Notwith- standing the preceding sentence, however, the amend- ments made by this section shall apply, beginning 3 years after the date of enactment of this Act, with re- spect to offshore supply vessels (as defined in section 2101(19) [now 2101(25)] of title 46, United States Code, as that section was in effect on the date of enactment of this Act) with a certificate of documentation endorsed with a coastwise endorsement as of the date of enact- ment of this Act, and the Secretary of the Department in which the Coast Guard is operating shall revoke any such certificate if the vessel does not by then meet the requirements of section 12106(e) of title 46, United States Code, as amended by this section. ‘‘(2) REPLACEMENT VESSEL.—For the purposes of this subsection, ‘replacement vessel’ means— ‘‘(A) a temporary replacement vessel for a period of not to exceed 180 days if the vessel described in para- graph (1) is unavailable due to an act of God or a ma- rine casualty; or ‘‘(B) a permanent replacement vessel if— ‘‘(i) the vessel described in paragraph (1) is un- available for more than 180 days due to an act of God or a marine casualty; or ‘‘(ii) a contract to purchase or construct such re- placement vessel is executed not later than Decem- ber 31, 2004.’’ WAIVER OF QUALIFIED PROPRIETARY CARGO REQUIREMENT Pub. L. 108–293, title VI, § 608(d), Aug. 9, 2004, 118 Stat. 1057, provided that: ‘‘The Secretary of Transportation shall waive or reduce the qualified proprietary cargo requirement of section 12106(f)(3)(A)(iii) [now section 12119(c)(3)(A)(iii)] of title 46, United States Code, for a vessel if the person that owns the vessel (or, if the ves- sel is owned by a trust or similar arrangement, the ben- eficiary of the trust or similar arrangement) notifies the Secretary that circumstances beyond the direct control of such person or its affiliates prevent, or rea- sonably threaten to prevent, such person from satis- fying such requirement, and the Secretary does not, with good cause, determine otherwise. The waiver or reduction shall apply during the period of time that such circumstances exist.’’ § 12120. Liquified gas tankers Notwithstanding any agreement with the United States Government, the Secretary may issue a certificate of documentation with a coastwise endorsement for a vessel to transport liquified natural gas or liquified petroleum gas to Puerto Rico from other ports in the United States, if the vessel— (1) is a foreign built vessel that was built be- fore October 19, 1996; or (2) was documented under this chapter be- fore that date, even if the vessel is placed under a foreign registry and subsequently re- documented under this chapter for operation under this section. (Pub. L. 109–304, § 5, Oct. 6, 2006, 120 Stat. 1504.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 12120 .......... 46 App.:883 note. Pub. L. 104–324, title VII, § 1120(f), Oct. 19, 1996, 110 Stat. 3978. The words ‘‘Notwithstanding section 27 of the Mer- chant Marine Act, 1920 (46 App. U.S.C. 883), section 12106 of title 46, United States Code, section 506 of the Mer- chant Marine Act, 1936 (46 App. U.S.C. 1156)’’ are omit- ted as unnecessary. The words ‘‘the Commonwealth of’’ are omitted as unnecessary and for consistency in the revised title. Editorial Notes PRIOR PROVISIONS A prior section 12120, Pub. L. 98–89, Aug. 26, 1983, 97 Stat. 589; Pub. L. 100–710, title I, § 104(a)(4), Nov. 23, 1988, 102 Stat. 4750; Pub. L. 108–293, title IV, § 401, Aug. 9, 2004, 118 Stat. 1042; Pub. L. 109–241, title III, § 308, July 11, 2006, 120 Stat. 528, originally derived from section 65t of former Title 46, Shipping, related to reports, prior to the general amendment of this chapter by Pub. L. 109–304. See section 12139 of this title. § 12121. Small passenger vessels and uninspected passenger vessels (a) DEFINITIONS.—In this section: (1) ELIGIBLE VESSEL.—The term ‘‘eligible vessel’’ means a vessel that— (A) was built in the United States; (B) was not built in the United States and is at least 3 years old; or