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§ 1222. Operating competing foreign-flag vessel forbidden

(a) Operating-differential subsidy; competition with essential American-flag service

Except as provided in subsections (b) and (c) of this section, it shall be unlawful for any contractor receiving an operating-differential subsidy under subchapter VI of this chapter or for any charterer of vessels under subchapter VII of this chapter, 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 Transportation to be essential as provided in section 1121 of this Appendix.

(b) Waiver; special circumstances

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

(c) Exceptions

Upon application to the Secretary of Transportation the provisions of subsection (a) of this section shall not apply to the following specified activities of any contractor under subchapter VI of this chapter, 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(2) Repealed. Pub. L. 101-225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925.

(d) Statement to be filed with Secretary

No contractor under subchapter VI of this chapter, whether he shall have become such a contractor before or after October 21, 1970, shall avail himself of the provisions of subsection (c) of this section unless not later than ninety days after October 21, 1970, there shall have been filed with the Secretary of Transportation 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) Report to Congress

During the period of time provided for in subsection (c) of this section, the Secretary of Transportation shall include in the annual report pursuant to section 1118 of this Appendix, a report 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 1101 of this Appendix; and the Secretary's recommendations for legislation, if such is deemed to be necessary.

(f) Use of foreign-flag vessels

The provisions of subsection (a) of this section shall not preclude a contractor receiving assistance under part A or B of subchapter VI of this chapter, or any holding company, subsidiary, or affiliate of the contractor, or any officer, director, agent, or executive thereof, from--

(1) owning, chartering, or operating any foreign-flag vessel on a voyage or a segment of a voyage that does not call at a port in the United States;

(2) owning, chartering, or operating any foreign-flag vessel in line haul service between the United States and foreign ports if--

(A) the foreign-flag vessel was owned, chartered, or operated by, or is a replacement for a foreign-flag vessel owned, chartered, or operated by, such owner or operator, or any holding company, subsidiary, affiliate, or associate of such owner or operator, on October 8, 1996;

(B) the owner or operator, with respect to each additional foreign-flag vessel, other than a time chartered vessel, has first applied to have that vessel covered by an operating agreement under part B of subchapter VI of this chapter, and the Secretary has not awarded an operating agreement with respect to that vessel within 90 days after the filing of the application; or

(C) the vessel has been placed under foreign documentation pursuant to section 808 of this Appendix, except that any foreign-flag vessel, other than a time chartered vessel, a replacement vessel under section 1187b(d) of this Appendix, or a vessel operated by the owner or operator on October 8, 1996, in line haul service between the United States and foreign ports is registered under the flag of an effective United States-controlled foreign flag, and available to be requisitioned by the Secretary of Transportation pursuant to section 1242 of this Appendix;

(3) owning, chartering, or operating foreign-flag bulk cargo vessels that are operated in foreign-to-foreign service or the foreign commerce of the United States;

(4) chartering or operating foreign-flag vessels that are operated solely as replacement vessels for United States-flag vessels or vessel capacity that are made available to the Secretary of Defense pursuant to section 1187b of this Appendix; or

(5) entering into time or space charter or other cooperative agreements with respect to foreign-flag vessels or acting as agent or broker for a foreign-flag vessel or vessels.

(June 29, 1936, ch. 858, title VIII, § 804, 49 Stat. 2012; June 23, 1938, ch. 600, § 35, 52 Stat. 963; Pub. L. 91-469, § 24, Oct. 21, 1970, 84 Stat. 1033; Pub. L. 96-470, title II, § 201(b), Oct. 19, 1980, 94 Stat. 2241; Pub. L. 97-31, § 12(121), Aug. 6, 1981, 95 Stat. 164; Pub. L. 101-225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925; Pub. L. 104-239, § 5(a), Oct. 8, 1996, 110 Stat. 3131.)

1996--Subsec. (f). Pub. L. 104-239 added subsec. (f).

1989--Subsec. (c)(2). Pub. L. 101-225 struck out par. (2) which specified as exempt activities, until Apr. 15, 1972, the continued acting as agent or broker for foreign-flag vessel engaged in carriage of dry or liquid cargoes in bulk, other than one described in subsec. (c)(1)(A) of this section, for which contractor, or those in foregoing specified relationship to him, were acting as agent or broker on Apr. 15, 1970.

1981--Pub. L. 97-31 which directed the amendment of section 810 of the Merchant Marine Act, 1936, and indicated that it was classified to this section, was executed to this section by substituting "Secretary of Transportation" for "Secretary of Commerce" wherever appearing to reflect the probable intent of Congress, because section 810 of the Act is classified to section 1227 of this Appendix and does not contain references to the Secretary of Commerce.

1980--Subsec. (e). Pub. L. 96-470 substituted "shall include in the annual report pursuant to section 1118 of this Appendix, a report" for "shall, at the beginning of each regular session, make a report to the Congress".

1970--Subsecs. (a) to (d). Pub. L. 91-469 designated existing provisions as subsecs. (a) and (b) and added subsecs. (c) to (e).

1938--Act June 23, 1938, inserted "for a specific period of time" after "contractor,".

Section 5(b) of Pub. L. 104-239 provided that: "The amendment made by subsection (a) [amending this section] shall apply to a contractor under subtitle B of title VI of the Merchant Marine Act, 1936 [46 App. U.S.C. 1187 et seq.], as amended by this Act, upon enactment of this Act [Oct. 8, 1996], and shall apply to a contractor under subtitle A of title VI of that Act [46 App. U.S.C. 1171 et seq.], upon the earlier of--

"(1) the date that a payment is made, under the Maritime Security Program under subtitle B of that title to a contractor under subtitle B of that title who is not party to an operating-differential subsidy contract under subtitle A of that title, with the Secretary of Transportation to cause notice of the date of such payment to be published in the Federal Register as soon as possible; or

"(2) with respect to a particular contractor under the operating-differential subsidy program under subtitle A of that title, the date that contractor enters into a contract with the Secretary under the Maritime Security Program established by subtitle B of that title."

§ 1223. Forbidden practices relating to coastwise service, salaries, officers, and employees

(a) Foreign trade subsidy contractor engaging in coastwise or intercoastal trade

It shall be unlawful to award or pay any subsidy to any contractor under authority of part A of subchapter VI of this chapter, or to charter any vessel to any person under subchapter VII of this chapter if said contractor or charterer, or any holding company, subsidiary, affiliate, or associate of such contractor or charterer, or any officer, director, agent, or executive thereof, directly or indirectly, shall own, operate, or charter any vessel or vessels engaged in the domestic intercoastal or coastwise service, or own any pecuniary interest, directly or indirectly, in any person or concern that owns, charters, or operates any vessel or vessels in the domestic intercoastal or coastwise service, without the written permission of the Secretary of Transportation. Every person, firm, or corporation having any interest in such application shall be permitted to intervene and the Secretary of Transportation shall give a hearing to the applicant and the intervenors. The Secretary of Transportation shall not grant any such application if the Secretary of Transportation finds it will result in unfair competition to any person, firm, or corporation operating exclusively in the coastwise or intercoastal service or that it would be prejudicial to the objects and policy of this chapter: Provided, That if such contractor or other person above-described or a predecessor in interest was in bona-fide operation as a common carrier by water in the domestic, intercoastal, or coastwise trade in 1935 over the route or routes or in the trade or trades for which application is made and has so operated since that time or if engaged in furnishing seasonal service only, was in bona-fide operation in 1935 during the season ordinarily covered by its operation, except in either event, as to interruptions of service over which the applicant or its predecessor in interest had no control, the Secretary of Transportation shall grant such permission without requiring further proof that public interest and convenience will be served by such operation, and without further proceedings as to the competition in such route or trade.

If such application be allowed, it shall be unlawful for any of the persons mentioned in this section to divert, directly or indirectly, any moneys, property, or other thing of value, used in foreign-trade operations, for which a subsidy is paid by the United States, into any such coastwise or intercoastal operations; and whosoever shall violate this provision shall be guilty of a misdemeanor.

(b) Contractor in default paying more than specified salary

Whenever any contractor under part A of subchapter VI of this chapter or subchapter VII of this chapter receiving an operating-differential subsidy is in default with respect to any mortgage, note, purchase contract, or other obligation to the Secretary of Transportation, or has not maintained, in a manner satisfactory to the Secretary of Transportation, all of the reserves provided for in this chapter, the Secretary of Transportation shall have the right to supervise the number and compensation of all officers and employees of the contractor.

(c) Repealed. Pub. L. 91-469, § 25, Oct. 21, 1970, 84 Stat. 1034

(d) Employing other persons or concerns as managing or operating agent

It shall be unlawful, without express written consent of the Secretary of Transportation, for any contractor holding a contract authorized under part A of subchapter VI or ¹ VII of this chapter to employ any other person or concern as the managing or operating agent of such operator, or to charter any vessel, on which an operating-differential subsidy is to be paid, for operation by another person or concern, and if such charter is made, the person or concern operating the chartered vessel or vessels shall be subject to all the terms and provisions of this chapter, including limitations of profits and salaries.
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¹ So in original. Probably should be followed by "subchapter".

(e) Repealed. Pub. L. 101-225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925

(f) Penalty

Any willful violation of any provision of this section shall constitute a breach of the contract or charter in force under this chapter, and upon determining that such a violation has occurred the Secretary of Transportation may forthwith declare such contract or charter rescinded and any person willfully violating the provisions of this section shall be guilty of a misdemeanor.

(June 29, 1936, ch. 858, title VIII, § 805, 49 Stat. 2012; June 23, 1938, ch. 600, § 36, 37, 52 Stat. 963; July 17, 1952, ch. 939, § 20, 66 Stat. 765; Pub. L. 91-469, § 25, Oct. 21, 1970, 84 Stat. 1034; Pub. L. 91-603, § 4(e), Dec. 31, 1970, 84 Stat. 1675; Pub. L. 97-31, § 12(122), Aug. 6, 1981, 95 Stat. 164; Pub. L. 101-225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925; Pub. L. 104-239, § 4(b), Oct. 8, 1996, 110 Stat. 3131.)

1996--Subsec. (a). Pub. L. 104-239, § 4(b)(1), substituted "part A of subchapter VI of this chapter" for "subchapter VI of this chapter".

Subsecs. (b), (d). Pub. L. 104-239, § 4(b)(2), substituted "under part A of subchapter VI" for "under subchapter VI".

1989--Subsec. (e). Pub. L. 101-225 struck out subsec. (e) which provided that it was unlawful for any contractor or charterer who holds any contract made under authority of this chapter to employ any Member of Congress, either with or without compensation, as an attorney, agent, officer, or director of such person.

1981--Pub. L. 97-31 substituted "Secretary of Transportation" for "Commission" wherever appearing. For prior transfers of functions of the Commission, meaning the United States Maritime Commission, see Transfer of Functions note below.

1970--Subsec. (c). Pub. L. 91-469 struck out restriction against taking into account for subsidy accounting purposes any salary for personal services in excess of $25,000 paid by the contractor and definition of terms "director", "officer", "employee", and "salary".

Subsec. (d). Pub. L. 91-603 struck out provisions which prohibited a contractor from receiving an operating-differential subsidy for the operation of any chartered vessel save and except during a period of actual emergency determined by the Secretary, or except as provided in section 1198 of this Appendix.

1952--Subsec. (c). Act July 17, 1952, removed limitation of amount of salaries paid to employers, and defined director, officer, or employee.

1938--Subsec. (d). Act June 23, 1938, substituted "contractor. (c) No director" for "contractor (c) no director", and inserted "or except as provided in section 1198 of this Appendix".

For transfer of functions of United States Maritime Commission, 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 Appendix.

This section is referred to in sections 1183, 1187a of this Appendix.

§ 1226. Discrimination in respect to cargo

It shall be unlawful for any contractor receiving an operating-differential subsidy under subchapter VI of this chapter or for any charterer under subchapter VII of this chapter unjustly to discriminate in any manner so as to give preference directly or indirectly in respect to cargo in which such contractor or charterer has a direct or indirect ownership, or purchase or vending interest; and whosoever shall violate this provision shall be guilty of a misdemeanor.

(June 29, 1936, ch. 858, title VIII, § 808, 49 Stat. 2015.)

This section is referred to in section 1187a of this Appendix.

§ 1227. Agreements with other carriers forbidden; withholding subsidies; actions by injured persons for damages

It shall be unlawful for any contractor receiving an operating-differential subsidy under subchapter VI of this chapter or for any charterer of vessels under subchapter VII of this chapter to continue as a party to or to conform to any agreement with another carrier or carriers by water, or to engage in any practice in concert with another carrier or carriers by water, which is unjustly discriminatory or unfair to any other citizen of the United States who operates a common carrier by water exclusively employing vessels registered under the laws of the United States on any established trade route from and to a United States port or ports.

No payment or subsidy of any kind shall be paid directly or indirectly out of funds of the United States or any agency of the United States to any contractor or charterer who shall violate this section. Any person who shall be injured in his business or property by reason of anything forbidden by this section may sue therefor in any district court of the United States in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.

(June 29, 1936, ch. 858, title VIII, § 810, 49 Stat. 2015.)

Judgment and costs, see rule 54, Title 28, Appendix, Judiciary and Judicial Procedure.

This section is referred to in section 1187a of this Appendix.

§ 1228. Fines and penalties; conviction as rendering persons ineligible to receive benefits of law

Whenever any natural person is found guilty in any district court of the United States of any act or acts declared in this chapter to constitute a misdemeanor, he shall be punished by a fine of not more than $10,000, or by imprisonment for not less than one year or more than five years, or by both fine and imprisonment. Whenever any corporation is found guilty of any act or acts declared in this chapter to be unlawful, such corporation shall be punished by a fine of not more than $25,000.

In addition to the punishment prescribed in section 1224 ¹ of this Appendix, any person or corporation convicted of a misdemeanor under the provisions of this chapter shall be ineligible, at the discretion of the Commission or the Secretary of Transportation, to receive any benefits under subchapters V and VI of this chapter, or to receive a charter under subchapter VII of this chapter for a period of five years after conviction.
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¹ See References in Text note below.

Whoever knowingly and willfully violates any order, rule, or regulation of the Federal Maritime Commission or the Secretary of Transportation made or issued in the exercise of the powers, duties, or functions transferred to it or him or vested in it or him by this chapter, as amended, for which no penalty is otherwise expressly provided, shall upon conviction thereof be subject to a fine of not more than $500. If such violation is a continuing one, each day of such violation shall constitute a separate offense.

(June 29, 1936, ch. 858, title VIII, § 806(b)-(d), 49 Stat. 2014; Aug. 4, 1939, ch. 417, § 13, 53 Stat. 1187; Pub. L. 97-31, § 12(125), Aug. 6, 1981, 95 Stat. 164.)

Section 1224 of this Appendix, referred to in text, was repealed by Pub. L. 101-225, title III, § 307(7), Dec. 12, 1989, 103 Stat. 1925.

Codification

Section is comprised of subsecs. (b) to (d) of section 806 of act June 29, 1936. Subsec. (a) of section 806 is classified to section 1224 of this Appendix.

1981--Pub. L. 97-31 substituted "Commission or the Secretary of Transportation" for "Commission", "Federal Maritime Commission or the Secretary of Transportation" for "United States Maritime Commission", and "it or him" for "it" in two places. For prior transfers of functions of the Commission, meaning the United States Maritime Commission, see Transfer of Functions note below.

1939--Act Aug. 4, 1939, added third par.

For transfer of functions of United States Maritime Commission, 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 Appendix.