CODIFICATION

AMENDMENTS

TRANSFER OF FUNCTIONS

CODIFICATION

AMENDMENTS

TRANSFER OF FUNCTIONS

The Secretary of Transportation is authorized and empowered to sell to aliens, at such prices and on such terms and conditions as he may determine, not inconsistent with the provisions of section 864 of this title (except that completion of the payment of the purchase price and interest shall not be deferred more than ten years after the making of the contract of sale), such vessels as he shall, after careful investigation, deem unnecessary to the promotion and maintenance of an efficient American merchant marine; but no such sale shall be made unless the Secretary of Transportation, after diligent effort, has been unable to sell, in accordance with the terms and conditions of section 864 of this title, such vessels to persons citizens of the United States, and has determined to make such sale; and he shall make as a part of his records a full statement of his reasons for making such sale. Deferred payments of purchase price of vessels under this section shall bear interest at the rate of not less than 5 per centum per annum, payable semiannually.

(June 5, 1920, ch. 250, § 6, 41 Stat. 991; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936,

ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; Aug. 6, 1981, Pub. L. 97-31, § 12(37), 95 Stat. 156.)

AMENDMENTS

1981-Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" in two instances, "he" for "it" in three instances, and "his" for "its" in two instances, and struck out "upon an affirmative vote of not less than five of its members, spread upon the minutes of the board," preceding "determined to make such sale". For prior transfers of functions, see Transfer of Functions note below.

TRANSFER OF FUNCTIONS

"Commission" (meaning United States Maritime Commission) was substituted for "board" (meaning United States Shipping Board). For dissolution of the Board and transfer of its functions to the United States Maritime Commission, see Ex. Ord. No. 6166 and act June 29, 1936. Ex. Ord. No. 6166 is set out as a note under section 901 of Title 5, Government Organization and Employees. For subsequent transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under section 1111 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 864 of this title. § 865a. Sale of inactive passenger vessels to foreigners; conditions; requisition in emergency; surety bond

Notwithstanding any other provision of law or of prior contract with the United States, any vessel heretofore operated as a passenger vessel, as defined in section 613(a) of the Merchant Marine Act, 1936, as amended [46 U.S.C. 1183(a)], under an operating-differential subsidy contract with the United States and now in inactive or layup status, except the steamship Independence and the steamship United States, may be sold and transferred to foreign ownership, registry, and flag, with the prior approval of the Secretary of Transportation. Such approval shall require (1) approval of the purchaser; (2) payment of existing debt and private obligations related to the vessel; (3) approval of the price, including terms of payment, for the sale of the vessel; (4) the seller to enter into an agreement with the Secretary whereby an amount equal to the net proceeds received from such sale in excess of existing obligations and expenses incident to the sale shall within a reasonable period not to exceed twelve months of receipt be committed and thereafter be used as equity capital for the construction of new vessels which the Secretary determines are built to effectuate the purposes and policy of the Merchant Marine Act, 1936, as amended [46 U.S.C. 1101 et seq.]; and (5) the purchaser to enter into an agreement with the Secretary, binding upon such purchaser and any later owner of the vessel and running with title to the vessel, that (a) the vessel will not carry passengers or cargo in competition, as determined by the Secretary, with any United States-flag passenger vessel for a period of two years from the date the transferred vessel goes into operation; (b) the vessel will be made available to the United States in time of emergency and just compensation for title or use; as the case may be, shall be paid in accordance with section 902 of the Mer

chant Marine Act, 1936, as amended (46 U.S.C. 1242); (c) the purchaser will comply with such further conditions as the Secretary may impose as authorized by sections 808, 835 and 839 of this title; and (d) the purchaser will furnish a surety bond in an amount and with a surety satisfactory to the Secretary to secure performance of the foregoing agreements.

In addition to any other provision such agreements may contain for enforcement of (4) and (5) above, the agreements therein required may be specifically enforced by decree for specific performance or injunction in any district court of the United States. In the agreement with the Secretary the purchaser shall irrevocably appoint a corporate agent within the United States for service of process upon such purchaser in any action to enforce the agreement.

(Pub. L. 92-296, § 1, May 16, 1972, 86 Stat. 140; Pub. L. 97-31, § 12(38), Aug. 6, 1981, 95 Stat. 156.)

REFERENCES IN TEXT

The Merchant Marine Act, 1936, referred to in text, is act June 29, 1936, ch. 858, 49 Stat. 1985, as amended, which is classified principally to chapter 27 (§ 1101 et seq.) of this title. For complete classification of this Act to the Code, see section 1245 of this title and Tables.

CODIFICATION

Section was not enacted as part of the Merchant Marine Act, 1920, which comprises this chapter.

AMENDMENTS

1981-Pub. L. 97-31 substituted “Secretary of Transportation" for "Secretary of Commerce".

§ 866. Establishment and operation of steamship lines between ports of United States

Investigation and determination by Secretary-The Secretary of Transportation is authorized and directed to investigate and determine as promptly as possible after June 5, 1920, and from time to time thereafter what steamship lines should be established and put in operation from ports in the United States or any Territory, District, or possession thereof to such world and domestic markets as in his judgment are desirable for the promotion, development, expansion, and maintenance of the foreign and coastwise trade of the United States and an adequate postal service, and to determine the type, size, speed, and other requirements of the vessels to be employed upon such lines and the frequency and regularity of their sailings, with a view to furnishing adequate, regular, certain, and permanent service.

Sale or charter of vessels-The Secretary of Transportation is authorized to sell, and if a satisfactory sale cannot be made, to charter such of the vessels referred to in section 863 of this title or otherwise acquired by the Secretary of Transportation, as will meet these requirements to responsible persons who are citizens of the United States who agree to establish and maintain such lines upon such terms of payment and other conditions as the Secretary of Transportation may deem just and necessary to secure and maintain the service desired; and if any such steamship line is deemed desirable

and necessary, and if no such citizen can be secured to supply such service by the purchase or charter of vessels on terms satisfactory to the Secretary of Transportation, the Secretary of Transportation shall operate vessels on such line until the business is developed so that such vessels may be sold on satisfactory terms and the service maintained, or unless it shall appear within a reasonable time that such line cannot be made self-sustaining.

Preference in sales or charters-Preference in the sale or assignment of vessels for operation on such steamship lines shall be given to persons who are citizens of the United States who have the support, financial and otherwise, of the domestic communities primarily interested in such lines if the Secretary of Transportation is satisfied of the ability of such persons to maintain the service desired and proposed to be maintained, or to persons who are citizens of the United States who may then be maintaining a service from the port of the United States to or in the general direction of the worldmarket port to which the Secretary of Transportation has determined that such service should be established.

Lines established by shipping board; continued operation-Where steamship lines and regular service had been established and were being maintained by ships of the United States Shipping Board on June 5, 1920, such lines and service shall be maintained by the Secretary of Commerce until, in the opinion of the Secretary, the maintenance thereof is unbusinesslike and against the public interests.

Additional lines established by Secretary; rates and charges-Whenever the Secretary of Transportation shall determine, as provided in this Act, that trade conditions warrant the establishment of a service or additional service under Government administration where a service is already being given by persons, citizens of the United States, the rates and charges for such Government service shall not be less than the cost thereof, including a proper interest and depreciation charge on the value of Government vessels and equipment employed therein.

(June 5, 1920, ch. 250, § 7, 41 Stat. 991; May 22, 1928, ch. 675, § 414(b), 45 Stat. 696; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; 1950 Reorg. Plan No. 21, § 204, eff. May 24, 1950, 15 F.R. 3178, 64 Stat. 1276; Aug. 6, 1981, Pub. L. 97-31, § 12(39), 95 Stat. 156.)

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250, 41 Stat. 988, as amended, known as the Merchant Marine Act, 1920, which enacted sections 13, 813, 861 to 864, 865, 866 to 870, 871 to 883-1, 884 to 889, and 911 to 984 of this title, and amended sections 597, 599, 688, 802 to 804, 805, 808 and 812 of this title. For complete classification of this Act to the Code, see section 889 of this title and Tables.

Section 863 of this title, referred to in text, was omitted from the Code.

CODIFICATION

The United States Shipping Board, referred to in fourth undesignated paragraph, was dissolved and its

AMENDMENTS

1981-Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" wherever appearing except the fourth paragraph and "his" for "its". For prior transfers of functions, see Transfer of Functions note below.

1928-Act May 22, 1928, struck out paragraph which related to contracts for carrying mails.

TRANSFER OF FUNCTIONS

All the functions conferred upon the Secretary of Commerce by the provisions of Reorg. Plan No. 21 of 1950 are to remain vested in the Secretary except to the extent inconsistent with sections 101(b) and 104(b) of Reorg. Plan No. 7 of 1961. See section 202 of Reorg. Plan No. 7 of 1961, set out under section 1111 of this title.

In the fourth undesignated paragraph, “Secretary of Commerce" and "Secretary" were substituted for "Commission" (meaning the United States Maritime Commission) on the authority of Reorg. Plan No. 21 of 1950, set out under section 1111 of this title, section 306 of which abolished the United States Maritime Commission and section 204 of which transferred to the Secretary of Commerce such Commission's functions not transferred to the Federal Maritime Board. All executive and administrative functions of the United States Maritime Commission were transferred to the Chairman thereof by Reorg. Plan No. 6 of 1949, eff. Aug. 20, 1949, 14 F.R. 5228, 63 Stat. 1069, set out under section 1111 of this title.

"Commission" (meaning United States Maritime Commission) was substituted for "board" (meaning United States Shipping Board). For dissolution of the Board and transfer of its functions to the United States Maritime Commission, see Ex. Ord. No. 6166 and act June 29, 1936. Ex. Ord. No. 6166 is set out as a note under section 901 of Title 5, Government Organization and Employees.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 891v, 1195 of this title.

§ 867. Investigation of port, terminal, and warehouse facilities

It shall be the duty of the Secretary of Transportation, in cooperation with the Secretary of the Army, with the object of promoting, encouraging, and developing ports and transportation facilities in connection with water commerce over which he has jurisdiction, to investigate territorial regions and zones tributary to such ports, taking into consideration the economies of transportation by rail, water, and highway and the natural direction of the flow of commerce; to investigate the causes of the congestion of commerce at ports and the remedies applicable thereto; to investigate the subject of water terminals, including the necessary docks, warehouses, apparatus, equipment, and appliances in connection therewith, with a view to devising and suggesting the types most appropriate for different locations and for the most expeditious and economical transfer or interchange of passengers or property between carriers by water and carriers by rail; to advise with

communities regarding the appropriate location and plan of construction of wharves, piers, and water terminals; to investigate the practicability and advantages of harbor, river, and port improvements in connection with foreign and coastwise trade; and to investigate any other matter that may tend to promote and encourage the use by vessels of ports adequate to care for the freight which would naturally pass through such ports: Provided, That if after such investigation the Secretary of Transportation shall be of the opinion that rates, charges, rules, or regulations of common carriers by rail subject to the jurisdiction of the Interstate Commerce Commission are detrimental to the declared object of this section, or that new rates, charges, rules, or regulations, new or additional port terminal facilities, or affirmative action on the part of such common carriers by rail is necessary to promote the objects of this section, the Secretary of Transportation may submit his findings to the Interstate Commerce Commission for such action as such commission may consider proper under existing law.

(June 5, 1920, ch. 250, § 8, 41 Stat. 992; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; Aug. 6, 1981, Pub. L. 97-31, § 12(40), 95 Stat. 156.)

AMENDMENTS

1981-Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" in three instances, "his" for "its", and "he" for "it". For prior transfers of functions, see Transfer of Functions note below.

CHANGE OF NAME

The Department of War was designated the Department of the Army and the title of the Secretary of War was changed to Secretary of the Army by section 205(a) of act July 26, 1947, ch. 343, title II, 61 Stat. 501. Section 205(a) of act July 26, 1947, was repealed by section 53 of act Aug. 10, 1956, ch. 1041, 70A Stat. 641. Section 1 of act Aug. 10, 1956, enacted "Title 10, Armed Forces", which in sections 3010 to 3013 continued the Department of the Army under the administrative supervision of a Secretary of the Army.

TRANSFER OF FUNCTIONS

surance

sociations or underwriters, and under such forms of policies, and to such an amount, as the Secretary of Transportation may prescribe or approve; and (b) by protection and indemnity insurance with such insurance companies, associations, or underwriters and under such forms of policies, and to such an amount as the Secretary of Transportation may prescribe or approve. The insurance required to be carried under this section shall be made payable to the Secretary of Transportation and/or to the parties as interest may appear. The Secretary of Transportation is authorized to enter into any agreement that he deems wise in respect to the payment and/or the guarantee of premiums of insurance.

(June 5, 1920, ch. 250, § 9, 41 Stat. 992; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; Aug. 6, 1981, Pub. L. 97-31, § 12(41), 95 Stat. 156.)

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250, 41 Stat. 988, as amended, known as the Merchant Marine Act, 1920, which enacted sections 13, 861 to 864, 865, 866 to 870, 871 to 883-1, 884 to 889, 911, 921 to 927, 941, 951 to 954, 961, 971 to 975, and 981 to 984 of this title and amended sections 597, 599, 688, 802 to 804, 805, 808, 812, and 813 of this title. For complete classification of this Act to the Code, see section 889 of this title and Tables.

AMENDMENTS

1981-Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" in six instances and "he" for "it". For prior transfers of functions, see Transfer of Functions note below.

TRANSFER OF FUNCTIONS

"Commission" (meaning United States Maritime Commission) was substituted for "board" (meaning United States Shipping Board). For dissolution of the Board and transfer of its functions to the United States Maritime Commission, see Ex. Ord. No. 6166 and act June 29, 1936. Ex. Ord. No. 6166 is set out as a note under section 901 of Title 5, Government Organization and Employees. For subsequent transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under section 1111 of this title.

SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in section 1153 of this title.

§ 869. Creation of fund for insurance of interests of United States

The Secretary of Transportation may create out of insurance premiums, and revenue from operations and sales, and maintain and administer separate insurance funds which he may use to insure in whole or in part against all hazards commonly covered by insurance policies in such cases, any legal or equitable interest of the United States (1) in any vessel constructed or in process of construction; and (2) in any plants or property in the possession or under the authority of the Secretary of Transportation. The United States shall be held to have such an interest in any vessel toward the construction, reconditioning, remodeling, improving, or equipping of which a loan has been made under the authority of this Act, in any

vessel upon which he holds a mortgage or lien of any character, or in any vessel which is obligated by contract with the owner to perform any service in behalf of the United States, to the extent of the Government's interest therein.

(June 5, 1920, ch. 250, § 10, 41 Stat. 992; May 22, 1928, ch. 675, § 501, 45 Stat. 697; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; Aug 6, 1981, Pub. L. 97-31, § 12(42), Aug. 6, 1981, 95 Stat. 156.)

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250, 41 Stat. 988, as amended, known as the Merchant Marine Act, 1920, which enacted sections 13, 861 to 864, 865, 866 to 870, 871 to 883-1, 884 to 889, 911, 921 to 927, 941, 951 to 954, 961, 971 to 975, and 981 to 984 of this title and amended sections 597, 599, 688, 802 to 804, 805, 808, 812, and 813 of this title. For complete classification of this Act to the Code, see section 889 of this title and Tables.

AMENDMENTS

1981-Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" in two instances and "he" for "it" in two instances. For prior transfers of functions, see Transfer of Functions note below.

1928-Act May 22, 1928, added sentence relating to extent of interest of United States, among other changes.

TRANSFER OF FUNCTIONS

"Commission" (meaning United States Maritime Commission) was substituted for "board" (meaning United States Shipping Board). For dissolution of the Board and transfer of its functions to the United States Maritime Commission, see Ex. Ord. No. 6166 and act June 29, 1936. Ex. Ord. No. 6166 is set out as a note under section 901 of Title 5, Government Organization and Employees. For subsequent transfers of functions, see Reorg. Plan No. 6 of 1949, Reorg. Plan No. 21 of 1950, and Reorg. Plan No. 7 of 1961, set out under section 1111 of this title.

CROSS REFERENCES

War risk insurance, see section 1281 et seq. of this title.

§ 870. Repealed. June 29, 1936, ch. 858, § 903(b), (c), 49 Stat. 2016

Section, acts June 5, 1920, ch. 250, § 11, 41 Stat. 993; June 6, 1924, ch. 273, § 1, 43 Stat. 467; Mar. 4, 1927, ch. 512, § 1, 44 Stat. 1451; May 22, 1928, ch. 675, § 301(a), 45 Stat. 690; Feb. 2, 1931, ch. 100, 46 Stat. 1059, provided for a construction loan fund for aiding in the construction of vessels. See section 1116 of this title.

§§ 870a to 870d. Omitted

CODIFICATION

Section 870a, act Mar. 4, 1927, ch. 512, § 2, 44 Stat. 1451, related to disposition of funds received in repayment of loans, under section 870 of this title, as interest on said loans and from sales of vessels and was omitted in view of the repeal of section 870 of this title. See section 1116 of this title.

Section 870b, act Apr. 16, 1934, ch. 148, § 1, 48 Stat. 596, related to extension of construction loan fund to whaling and/or fishing vessels, and was impliedly repealed by act June 29, 1936, ch. 858, § 903(b), 49 Stat. 2016, according to a letter dated Feb. 26, 1941, from the chairman of the United States Maritime Commission.

Section 870c, act Apr. 16, 1934, ch. 148, § 2, 48 Stat. 596, related to vessels suitable as naval auxiliaries, and was impliedly repealed by act June 29, 1936, ch. 858, § 903(b), 49 Stat. 2016. See note for section 870b of this title.

Section 870d, act Apr. 16, 1934, ch. 148, § 3, 48 Stat. 596, related to the definition of the term "citizens of the United States" as used in section 870b of this title. See note for section 870b of this title.

§ 871. Repair and operation of vessels until sale

All vessels may be reconditioned and kept in suitable repair and until sold shall be managed and operated by the Secretary of Transportation or chartered or leased by him on such terms and conditions as the Secretary of Transportation shall deem wise for the promotion and maintenance of an efficient merchant marine, pursuant to the policy and purposes declared in sections 861 and 864 of this title.

The term "reconditioned" as used in this section includes the substitution of the most modern, most efficient, and most economical types of internal-combustion engines as the main propulsive power of vessels. Should the Secretary of Transportation have any such engines built in the United States and installed, in private shipyards or navy yards of the United States, in one or more merchant vessels owned by the United States, and the cost to the Secretary of Transportation of such installation exceeds the amount of funds otherwise available to him for that use, the Secretary of Transportation may transfer to his funds from which expenditures under this section may be paid, from his construction fund authorized by section 870 of this title, so much as in his judgment may be necessary to meet obligations under contracts for such installation; and the Treasurer of the United States shall, at the request of the Secretary of Transportation, make the transfer accordingly: Provided, That the total amount expended by the Secretary of Transportation for this purpose shall not in the aggregate exceed $25,000,000. Any such vessel after June 5, 1920, so equipped by the Secretary of Transportation under the provisions of this section shall not be sold for a period of five years from the date the installation thereof is completed, unless it is sold for a price not less than the cost of the installation thereof and of any other work of reconditioning done at the same time plus an amount not less than $10 for each dead-weight ton of the vessel as computed before such reconditioning thereof is commenced. The date of the completion of such installation and the amount of the dead-weight tonnage of the vessel shall be fixed by the Secretary of Transportation: Provided further, That in fixing the minimum price at which the vessel may thus be sold the Secretary of Transportation may deduct from the aggregate amount above prescribed 5 per centum thereof per annum from the date of the installation to the date of sale as depreciation: And provided further, That no part of such fund shall be expended upon the reconditioning of any vessel unless the Secretary of Transportation shall have first made a binding contract for a satisfactory sale of such vessel in accordance with the provisions of this Act, or for the charter or lease of such vessels for a period of not less than five years by a ca

pable, solvent operator; or unless the Secretary of Transportation is prepared and intends to directly put such vessel in operation immediately upon completion. Such vessel, in any of the enumerated instances, shall be documented under the laws of the United States and shall remain documented under such laws for a period of not less than five years from the date of the completion of the installation, and during such period it shall be operated only on voyages which are not exclusively coastwise. (June 5, 1920, ch. 250, § 12, 41 Stat. 993; June 6, 1924, ch. 273, § 2, 43 Stat. 468; Feb. 11, 1927, ch. 104, § 1, 44 Stat. 1083; Ex. Ord. No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, §§ 204, 904, 49 Stat. 1987, 2016; Aug. 6, 1981, Pub. L. 97-31, § 12(43), 95 Stat. 157.)

REFERENCES IN TEXT

This Act, referred to in text, means act June 5, 1920, ch. 250, 41 Stat. 988, as amended, known as the Merchant Marine Act, 1920, which enacted sections 13, 861 to 864, 865, 866 to 870, 871 to 883-1, 884 to 889, 911, 921 to 927, 941, 951 to 954, 961, 971 to 975, and 981 to 984 of this title and amended sections 597, 599, 688, 802 to 804, 805, 808, 812, and 813 of this title. For complete classification of this Act to the Code, see section 889 of this title and Tables.

Section 870 of this title, referred to in text, was repealed by act June 29, 1936, ch. 858, § 903(b), (c), 49 Stat. 2016. See section 1116 of this title.

CODIFICATION

The first paragraph of this section originally contained a further provision continuing the United States Shipping Board Merchant Fleet Corporation in existence with authority to operate vessels. The corporation was subsequently dissolved by section 203 of act June 29, 1936.

AMENDMENTS

TRANSFER OF FUNCTIONS