84 STAT. 1031

68A Stat. 124. 26 USC 381.

26 USC 701771.

"Eligible vessel."

(4)) from the last date prescribed for payment of the tax for the taxable year for which such item was deposited in the fund, and

(iii) no interest shall be payable on amounts referred to in clauses (i) and (ii) of paragraph (2) or in the case of any nonqualified withdrawal arising from the application of the recapture provision of section 606 (5) of the Merchant Marine Act of 1936 as in effect on December 31, 1969.

"(4) For purposes of paragraph (3) (C) (ii), the applicable rate of interest for any nonqualified withdrawal

“(A) made in a taxable year beginning in 1970 or 1971 is 8 percent, or

"(B) made in a taxable year beginning after 1971, shall be determined and published jointly by the Secretary of the Treasury and the Secretary of Commerce and shall bear a relationship to 8 percent which the Secretaries determine under joint regulations to be comparable to the relationship which the money rates and investment yields for the calendar year immediately preceding the beginning of the taxable year bear to the money rates and investment yields for the calendar year 1970.

"(i) Certain Corporate Reorganizations and Changes in Partnerships.

"Under joint regulations

"(1) a transfer of a fund from one person to another person in a transaction to which section 381 of the Internal Revenue Code of 1954 applies may be treated as if such transaction did not constitute a nonqualified withdrawal, and

"(2) a similar rule shall be applied in the case of a continuation of a partnership (within the meaning of subchapter K of such Code).

"(j) Treatment of Existing Funds.

"(1) Any person who was maintaining a fund or funds (hereinafter in this subsection referred to as 'old fund') under this section (as in effect before the enactment of this subsection) may elect to continue such old fund but

66

'(A) may not hold moneys in the old fund beyond the expiration date provided in the agreement under which such old fund is maintained (determined without regard to any extension or renewal entered into after April 14, 1970),

"(B) may not simultaneously maintain such old fund and a new fund established under this section, and

"(C) if he enters into an agreement under this section to establish a new fund, may agree to the extension of such agreement to some or all of the amounts in the old fund.

"(2) In the case of any extension of an agreement pursuant to paragraph (1)(C), each item in the old fund to be transferred shall be transferred in a nontaxable transaction to the appropriate account in the new fund established under this section. For purposes of subsection (h) (3) (C), the date of the deposit of any item so transferred shall be July 1, 1971, or the date of the deposit in the old fund, whichever is the later.

"(k) Definitions.

"For purposes of this section

"(1) The term 'eligible vessel' means any ressel

"(A) constructed in the United States and, if reconstructed, reconstructed in the United States,

"(B) documented under the laws of the United States, and

"(C) operated in the foreign or domestic commerce of the

Any vessel which (i) was constructed outside of the United States but documented under the laws of the United States on April 15, 1970, or (ii) constructed outside the United States for use in the United States foreign trade pursuant to a contract entered into before April 15, 1970, shall be treated as satisfying the requirements of sub|paragraph (A) of this paragraph and the requirements of subparagraph (A) of paragraph (2).

"(2) The term 'qualified vessel' means any vessel

84 STAT. 1032

"Qualified

"(A) constructed in the United States and, if reconstructed, vessel." reconstructed in the United States,

"(B) documented under the laws of the United States, and "(C) which the person maintaining the fund agrees with the Secretary of Commerce will be operated in the United States foreign, Great Lakes, or noncontiguous domestic trade or in the fisheries of the United States.

"(3) The term 'agreement vessel' means any eligible vessel or qualified vessel which is subject to an agreement entered into under this section.

"(4) The term 'United States', when used in a geographical sense, means the continental United States including Alaska, Hawaii, and Puerto Rico.

"(5) The term 'United States foreign trade' includes (but is not limited to) those areas in domestic trade in which a vessel built with construction-differential subsidy is permitted to operate under the first sentence of section 506 of this Act.

"(6) The term 'joint regulations' means regulations prescribed under subsection (1).

"(7) The term 'vessel' includes cargo handling equipment which the Secretary of Commerce determines is intended for use primarily on the vessel. The term 'vessel' also includes an ocean-going towing vessel or an ocean-going barge or comparable towing vessel or barge operated on the Great Lakes.

"Agreement
vessel."

"United States."

"United States foreign trade."

52 Stat. 958.

46 USC 1156.

"Joint

regulations."

"Vessel."

trade."

"(8) The term 'noncontiguous trade' means (i) trade between the "Noncontiguous contiguous forty-eight States on the one hand and Alaska, Hawaii, Puerto Rico and the insular territories and possessions of the United States on the other hand, and (ii) trade between Alaska, Hawaii, and Puerto Rico and such territories and possessions and (iii) trade between the islands of Hawaii.

"(1) Records; Reports; Changes in Regulations.

"Each person maintaining a fund under this section shall keep such records and shall make such reports as the Secretary of Commerce or the Secretary of the Treasury shall require. The Secretary of the Treasury and the Secretary of Commerce shall jointly prescribe all rules and regulations, not inconsistent with the foregoing provisions of this section, as may be necessary or appropriate to the determination of tax liability under this section. If, after an agreement has been entered into under this section, a change is made either in the joint regulations or in the regulations prescribed by the Secretary of Čommerce under this section which could have a substantial effect on the rights or obligations of any person maintaining a fund under this section, such person may terminate such agreement."

(b) The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1969.

SEC. 22. Section 714 of the Merchant Marine Act, 1936 is amended as follows:

(a) By striking out the words "Commission" and "Commission's" wherever they appear and inserting in lieu thereof the words "Secretary of Commerce" and "Secretary of Commerce's" respectively.

Effective date.

53 Stat. 1186. 46 USC 1204.

84 STAT. 1033

49 Stat. 2012;

52 Stat. 963.

46 USC 1171. 46 USC 1191.

Ante, p. 1018.

(b) By striking out in the first sentence the words "312 per centum of the depreciated foreign cost computed annually upon the basis of a twenty-five year life of the vessel." and inserting in lieu thereof "an amount equal to (i) the sum of a percentage of the depreciated foreign cost computed annually upon the basis of a twenty-five year life of the vessel determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the term of the charter, adjusted to the nearest one-eighth of 1 per centum, plus (ii) an allowance adequate in the judgment of the Secretary of Commerce to cover administrative costs."

(c) By striking out of the last sentence of the first paragraph thereof the words "of 312 per centum per annum from the date of purchase." and inserting in lieu thereof, "from the date of purchase, at a rate not less than (i) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such loans, adjusted to the nearest oneeighth of 1 per centum, plus (ii) an allowance adequate in the judgment of the Secretary of Commerce to cover administrative costs."

SEC. 23. Section 803 of the Merchant Marine Act, 1936 (46 U.S.C. 1221), is amended by striking out the section in its entirety.

SEC. 24. Section 804 of the Merchant Marine Act, 1936 (46 U.S.C. 1222), is amended to read as follows:

"SEC. 804. (a) Except as provided in subsections (b) and (c) of this section, it shall be unlawful for any contractor receiving an operatingdifferential subsidy under title VI or for any charterer of vessels under title VII of this Act, or any holding company, subsidiary, affiliate, or associate of such contractor or such charterer, or any officer, director, agent, or executive thereof, directly or indirectly to own, charter, act as agent or broker for, or operate any foreign-flag vessel which competes with any American-flag service determined by the Secretary of Commerce to be essential as provided in section 211 of this Act.

"(b) Under special circumstances and for good cause shown, the Secretary of Commerce may, in his discretion, waive the provisions of subsection (a) of this section as to any contractor, for a specific period of time.

"(c) Upon application to the Secretary of Commerce the provisions of subsection (a) of this section shall not apply to the following specified activities of any contractor under title VI, or those in the foregoing specified relationship to him, who was not such a contractor on April 15, 1970, and who shall have complied with the requirement set forth in subsection (d) of this section:

"(1) Until April 15, 1990–

"(A) the continued ownership, charter, or operation of a foreign-flag vessel engaged in the carriage of dry or liquid cargoes in bulk which was owned, chartered, or operated by such contractor, or those in the foregoing specified relationship to him, on April 15, 1970;

(B) the continued acting as agent or broker for a vessel described in subsection (c)(1)(A) of this section which is owned, chartered, or operated by such contractor, or those in the foregoing specified relationship to him, and for which

such contractor, or those in the foregoing specified relationship to him, were acting as agent or broker on April 15, 1970; "(2) Until April 15, 1972, the continued acting as agent or broker for a foreign-flag vessel engaged in the carriage of dry or liquid cargoes in bulk (other than one described in subsection (c) (1) (A)), for which the contractor, or those in the foregoing specified relationship to him, were acting as agent or broker on April 15, 1970.

"(d) No contractor under title VI, whether he shall have become such a contractor before or after the date of enactment of this section, shall avail himself of the provisions of subsection (c) of this section unless not later than ninety days after the enactment of this section there shall have been filed with the Secretary of Commerce a full and complete statement, satisfactory in form and substance to the Secretary, of all foreign-flag vessels which he, or those in the foregoing specified relationship to him, directly or indirectly owned, chartered, acted as agent or broker for, or operated on April 15, 1970.

"(e) During the period of time provided for in subsection (c) of this section, the Secretary of Commerce shall, at the beginning of each regular session, make a report to the Congress on the activities of contractors under such subsection, including but not limited to, the nature and extent of such activities; its effect, if any, upon carrying forward the national policy declared in section 101 of this Act; and the Secretary's recommendations for legislation, if such is deemed to be necessary.

99

SEC. 25. Section 805 of the Merchant Marine Act, 1936 (46 U.S.C. 1223), is amended by striking out subsection (c) thereof.

SEC. 26. (a) Section 809 of the Merchant Marine Act, 1936 (46 U.S.C. 1213) is amended by inserting after the comma following the word "Gulf" the words "Great Lakes" and a comma.

(b) Section 605 (a) of the Merchant Marine Act, 1936 (46 U.S.C. 1175), is amended by deleting from the last sentence thereof the words "on the Great Lakes or".

SEC. 27. Section 901 of the Merchant Marine Act, 1936 (46 U.S.C. 1241) is amended as follows:

(a) By redesignating subsection (b) as subsection (b)(1). (b) By striking the words "section 901 (b)" in redesignated subsection (b) (1) and inserting in lieu thereof the words "section 901 (b) (1)".

66

(c) By adding a new subsection (b) (2) to read as follows: (2) Every department or agency having responsibility under this subsection shall administer its programs with respect to this subsection under regulations issued by the Secretary of Commerce. The Secretary of Commerce shall review such administration and shall annually report to the Congress with respect thereto."

SEC. 28. Section 905 (a) of the Merchant Marine Act, 1936 (46 U.S.C. 1244 (a)), is amended by striking the period at the end thereof, substituting a comma therefor, and adding the words "except that in the context of title V of this Act concerning construction-differential subsidy, the said words 'foreign commerce' or 'foreign trade' shall to the extent provided in uniform regulations promulgated by the Secretary of Commerce also include, in the case of liquid and dry bulk cargo carrying services, trading between foreign ports in accordance with normal commercial bulk shipping practices in such manner as will permit U.S.-flag bulk vessels freely to compete with foreign-flag bulk carrying vessels."

84 STAT. 1034

46 USC 1171.

49 Stat. 1985. 46 USC 1101.

66 Stat. 765.

49 Stat. 2015.

68 Stat. 832; 75 Stat. 565.

52 Stat. 964.

46 USC 1151.

84 STAT. 1035

SEC. 29. Section 1101 (c) of the Merchant Marine Act, 1936 (46 68 Stat. 1267; U.S.C. 1271 (c)), is amended as follows:

74 Stat. 733.

(1) By striking out the word "and" immediately before the words "floating drydocks".

(2) By inserting after the word "walls" and before the word. "owned" a comma and the words "and oceanographic research or instruction vessels,".

SEC. 30. Section 1103 (e) of the Merchant Marine Act, 1936 (46 68 Stat. 1268. U.S.C. 1273 (e)), is amended by striking the figure "$1,000,000,000" and inserting in lieu thereof the figure "$3,000,000,000".

Ante, p. 1022.

79 Stat. 264.

46 USC 1120, 1121, 11511155, 1160, 1171-1173, 1175, 1176.

SEC. 31. Section 1104 (a) of the Merchant Marine Act, 1936 (46) U.S.C. 1274(a)), is amended by inserting in paragraph (8) immediately before the words "commercial use" the words "research, or for". SEC. 32. Section 1104 (b) of the Merchant Marine Act, 1936 (46 U.S.C. 1274 (b)), is amended as follows:

(1) By inserting in paragraph (2) immediately before the words "commercial use" the words "research or for".

(2) By striking from paragraph (4) the words "be less than” and inserting in lieu thereof the words "not exceed".

(3) By inserting at the end of paragraph (4), immediately before the semicolon, a colon and a proviso to read as follows: "Provided, however, That in the case of a vessel, the size and speed of which are approved by the Secretary of Commerce, and which is eligible for mortgage aid for construction under section 509 of this Act and in respect of which the minimum downpayment by the mortgagor required by that section would be 122 per centum of the cost of such vessel, the advance and the principal amount of all other advances under insured loans outstanding at the time of said advance shall not exceed 8712 per centum of such actual cost".

SEC. 33. Section 1105 (d) of the Merchant Marine Act, 1936 (46 U.S.C. 1275 (d)) is amended by striking the last sentence thereof and inserting a new sentence to read as follows: "Such installments shall include interest on the purchase price remaining unpaid at a rate not less than (i) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the average maturities of such installments, adjusted to the nearest one-eighth of 1 per centum, plus (ii) an allowance adequate in the judgment of the Secretary of Commerce to cover administrative costs."

SEC. 34. Section 1214 of the Merchant Marine Act, 1936 (46 U.S.C. 1294), is amended by striking out the words "20 years from the date of enactment of this title" and inserting in lieu thereof the date "September 7, 1975".

SEC. 35. (a) The word "Commission" is stricken out of sections 210, 211, 501, 502, 503, 504, 505, 510(b), 601(a), 602, 603, 605 (c), and 606 of the Merchant Marine Act, 1936, wherever it appears, and the words "Secretary of Commerce" are inserted in lieu thereof.

(b) Subsection (a) of section 211 of the Merchant Marine Act, 1936, is amended by striking out the word "its" and inserting in lieu thereof the word "his".

(c) The second sentence of section 501 (a) of the Merchant Marine Act, 1936, is amended by striking out the word "it" and inserting the word "he" in lieu thereof.

(d) The second sentence of section 501 (c) of the Merchant Marine Act, 1936, is amended by striking out the word "its" and inserting the word "his" in lieu thereof.

(e) The first sentence of section 502 (a) of the Merchant Marine Act, 1936, is amended by striking out the word "it" and inserting the