1. U.S. Code
  2. title 46
  3. subtitle V
  4. part E
  5. chapter 565
  6. § 56503

Collapse to view only § 56503. Types of adjustments and arrangements

§ 56501. Definition
In this chapter, the term “essential vessel” means a vessel that is—
(1)
(A) security for a mortgage indebtedness to the United States Government; or
(B) constructed under this subtitle or required by a contract under this subtitle to be operated on a certain essential foreign trade route; and
(2) necessary in the interests of commerce and national defense to be maintained in condition for prompt use.
(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1656.)

CITE AS: 46 USC 56501

§ 56502. Adjusting obligations and arranging maintenance
(a)General Authority.—On written application, the Secretary of Transportation may adjust obligations and arrange for maintenance of an essential vessel as provided in this chapter if the Secretary determines, after any investigation or proceeding the Secretary considers desirable, that—
(1) the operation of the vessel in the service, route, or line to which it is assigned under this subtitle, or in which it otherwise would be operated, is not—
(A) lawful under the Neutrality Act of 1939 (22 U.S.C. 441 et seq.) or a proclamation issued under that Act; or
(B) compatible with maintaining the availability of the vessel for national defense and commerce;
(2) it is not feasible under existing law to employ the vessel in any other service or operation in foreign or domestic trade (except temporary or emergency operation under section 56503(b)(5) of this title); and
(3) the applicant, because of the restrictions of the Neutrality Act of 1939 (22 U.S.C. 441 et seq.) or the withdrawal of vessels for national defense under paragraph (1), is not earning or will not earn a reasonable return on the capital necessarily employed in its business.
(b)Effective Period.—Adjustments and arrangements under subsection (a) shall continue in effect only as long as the circumstances described in subsection (a) continue to exist.
(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1657.)

CITE AS: 46 USC 56502

§ 56503. Types of adjustments and arrangements
(a)Suspension Requirements.—An adjustment or arrangement under this chapter shall include suspension of—
(1) the requirement to operate the vessel in foreign trade under the applicable operating-differential or construction-differential subsidy contract or mortgage or other agreement; and
(2) the right to operating-differential subsidy for the vessel.
(b)Discretionary Adjustments and Arrangements.—To the extent the Secretary of Transportation considers appropriate to carry out the purposes of this subtitle, an adjustment or arrangement under this chapter may include any of the following:
(1) Lay-up of the vessel by the owner or in the custody of the Secretary, with payment or reimbursement by the Secretary of necessary and proper expenses (including reasonable overhead and insurance) or a fixed periodic allowance instead of payment or reimbursement.
(2) Postponement, for not more than the total period of the lay-up, of the maturity date of each installment of the principal of obligations to the United States Government for the vessel (regardless of whether the maturity date is during a lay-up period), or rearrangement of those maturities.
(3) Postponement or cancellation of interest accruing on the obligations during a lay-up period.
(4) Extension, for not more than the total period of the lay-up, of the 20-year life limitation for the vessel and other limitations and provisions of this subtitle based on a 20-year life.
(5) Provision for temporary or emergency employment of the vessel (instead of lay-up) as may be practicable, with such arrangements for management of the vessel, payment of expenses, and application of the proceeds of the employment, as the Secretary may approve, with any period of operation being included as part of the lay-up period.
(6) Payment to the Secretary, on termination of the arrangements with the applicant, of the applicant’s net profits (earned while the arrangements were in effect) in excess of 10 percent a year on the capital necessarily employed in the applicant’s business, as reimbursement for obligations postponed or canceled and expenses incurred or paid by the Secretary under this section.
(c)Laid-Up Vessels.—Under subsection (b)(6), capital of the applicant represented by a vessel of the applicant laid-up or operated under this section shall be included in capital necessarily employed in the applicant’s business. The Secretary may require a vessel laid-up or operated under this section to be security for reimbursement.
(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1657.)

CITE AS: 46 USC 56503

§ 56504. Changes in adjustments and arrangements

The Secretary of Transportation may change an adjustment or arrangement made under this chapter as the Secretary considers necessary to carry out this chapter.

(Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1658.)

CITE AS: 46 USC 56504