TITLE IV-NEW CONSTRUCTION

SECTION 401. (a) In awarding contracts under this Act, the Authority shall require the construction of such new vessels as may be necessary to effectuate the purposes of this Act.

(b) In case the new vessel or vessels to be constructed will replace a vessel or vessels which are old, slow, or otherwise inadequate or obsolete for the service in which engaged, the Authority is authorized, in its discretion, to buy such vessel or vessels from the owner at a reasonable value (which in no event shall exceed the cost plus reconditioning expense and improvements of such vessel or vessels to the owner, less a reasonable and proper depreciation thereon), and apply the purchase price to that part of the cost of the construction of such new vessel or vessels to be borne by the owner. The Authority may lay up or scrap said vessel or vessels, or may sell, charter, or otherwise provide for the operation of said purchased vessel or vessels in some other service or route for which the vessel or vessels may be suitable.

TITLE V-FINANCIAL AID TO THE MERCHANT MARINE

PART I-CONSTRUCTION DIFFERENTIAL SUBSIDY

SECTION 501. (a) The Authority is authorized and directed to consider the application of any citizen of the United States as defined in section 38 of the Merchant Marine Act, 1920 (U. S. C., title 46, sec. 802), for financial aid in the construction, outfitting, and equipment of new vessels, or the reconditioning of vessels already built, to be used on an essential service, route, or line in the foreign commerce of the United States. If the Authority determines that (1) the service, route, or line requires a new vessel of modern and economical design or the reconditioning of a vessel already built, to meet competitive conditions or to further promote the foreign commerce of the United States, or if it is found after consultation with the Navy Department that the construction of such vessel is advisable for national-defense purposes; (2) the plans and specifications of the proposed vessel meet the requirements of commerce; and (3) the applicant possesses the ability, experience, financial re sources, and character necessary successfully to operate and maintain such vessel in the proposed service, the Authority shall then, pursuant to the provisions of this Act, determine the difference between the domestic and foreign construction cost of a vessel of the type proposed to be built, or the difference between the domestic and foreign reconditioning cost of a vessel of the type proposed to be reconditioned.

(b) (1) The said specifications shall be submitted to the Navy Department, who shall have the right to suggest such changes therein as it may deem necessary or proper in order that the proposed vessel may be adequate as a naval or military auxiliary and otherwise suitable for the use of the Government in case of national emergency or for the national defense.

(2) In case the said specifications shall be satisfactory to the Authority and shall be approved by the Authority and the Navy Department, the Authority shall have the authority to grant a subsidy of such amount as will equal, but not exceed, the difference between the cost of construction of the said vessel in an American shipyard and the cost of constructing the same, or an equivalent vessel, under the same specifications in a foreign shipyard of equal standing: Provided, however, That the said subsidy may be increased to the extent of the extra cost of constructing or equipping said vessel as a naval auxiliary, together with the estimated present value of the increased cost of operating such vessel over its economic life by reason of such naval provisions over the cost of operating such vessel for commercial purposes.

SEC. 502. (a) The Authority is authorized to enter into a contract with the applicant and a shipbuilder for (1) the construction, outfitting, and equipment, or the reconditioning of the proposed vessel; (2) the payment to the shipbuilder by the Authority of a construction subsidy based on the difference in cost determined in accordance with section 501 of this Act out of the construction loan fund created by section 11 of the Merchant Marine Act, 1920, as amended (U. S. C., title 46, sec. 870, Supp. VII, title 46, sec. 870), or out of other available funds; and (3) if the applicant is eligible and applies therefor, a construction loan in accordance with said section 11 of the Merchant Marine Act, 1920, as amended, and subject to the provisions of this Act with respect thereto.

(b) In case no construction loan is applied for by the applicant for financial aid, the construction subsidy shall be paid to the shipbuilder ratably with the payments made by the applicant, or otherwise as the Authority may determine. In case a construction loan is granted, such loan shall not be for a greater sum than three-fifths of the total cost of the construction, outfitting, and equipment, or reconditioning, less the construction subsidy, and no advance shall be made on such loan until the applicant for aid has paid to the shipbuilder not less than 25 per centum of such total cost not including the construction subsidy.

SEC. 503. The Authority shall require the proposed construction, outfitting, and equipment, or reconditioning to be done in a shipyard within the continental limits of the United States as the result of competitive bidding between the shipyards designated by agreement between the Authority and the applicant with the right in the Authority to reject any or all bids, or refuse a construction subsidy or a loan or both when the bids are considered excessive.

SEC. 504. No vessel in respect of which a construction subsidy has been paid shall be operated other than exclusively in foreign trade, unless the owner shall receive the consent of the Authority and furnish satisfactory bond or other security to the Authority to secure the repayment to the United States, in equal semiannual installments over the remaining assumed useful life of the ship (not exceeding twenty years), of an amount which bears the same proportion to the amount of the construction subsidy paid by reason of section 502 as such remaining period bears to the entire assumed life of the ship, with interest at 5 per centum per annum on the unpaid installments. No repayment shall be required for any semiannual period during which such vessel shall be operated wholly in foreign trade, or for any period after said vessel shall have become unusable. During the time as determined by the Authority such vessel is operated in the joint domestic and foreign trade the owner shall refund only a proportion of the repayments payable for such period equal to the ratio of the revenues derived from its domestic trade to the revenues derived from the foreign trade.

PART II-OPERATING DIFFERENTIAL SUBSIDY

SEC. 505. (a) The Authority is authorized and directed to consider the application of any citizen of the United States as defined in section 38 of the Merchant Marine Act, 1920, as amended (U. S. C., title 46, sec. 802), for financial aid in the operation of a vessel or vessels constructed or to be constructed within the continental United States, and to be used in the foreign commerce of the United States. If the Authority determines that (1) the operation of such vessel or vessels is required to meet competitive conditions or to further promote the foreign commerce of the United States; (2) the applicant possesses satisfactory ability, experience, financial resources and character, and already owns, or can and will build or purchase, a vessel or vessels of the size, type, speed, and number required, and has the proper equipment and other characteristics to enable him to operate and maintain a service, route, line, vessel, or vessels in such manner as may be necessary to meet competitive conditions; and (3) the payment of an operating differential subsidy is necessary to place the operation of such vessel or vessels on a parity with foreign competitors, it shall then determine the amount of operating differential as hereinafter provided.

(b) The Authority is authorized to enter into a contract with the applicant necessary to place the operation of such vessel or vessels on a parity with fordetermined to be necessary for a period not exceeding twenty years.

(c) Such contract shall provide that the operating differential subsidy shall be paid the applicant and shall be an amount per voyage for the operation and maintenance of said service, route, line, vessel, or vessels, based on the difference in cost of insurance, maintenance repairs, and the wages and subsistence of officers and crews, in the operation of comparable vessels under the laws, rules, and regulations of the United States as compared with those of the foreign countries whose vessels are competitors of such service, route, line, vessel, or vessels, including the effect of governmental aid or subsidies in such foreign countries, as determined by the Authority.

(d) The Authority shall require such security in such manner and form as it may determine to be reasonable and necessary to insure the performance of the contract by the owner.

SEC. 506. (a) When a new route is established, the authority shall endeavor to permit full and fair competition as far as possible consistent with the purposes of this Act, by requiring the inauguration of the service on such route sufficiently in the future as to enable prospective contractors to provide for the construction or acquisition of the vessels required.

(b) No such contract shall be made with respect to a vessel to be operated. on a service, route, or line, served by citizens of the United States, unless the Authority shall determine that the service already provided upon such routeor line is inadequate, and that in the public interest, additional vessels should be operated thereon.

SEC. 507. (a) Every contract executed under this part shall provide for the payment of the subsidy to the owner at stated intervals but not in advance. (b) Every such contract shall provide that the amount of the payments to the owner shall be subject to review and readjustment from time to time, but not more frequently than once a year, at the instance of the Authority or of the owner. If any such readjustment cannot be agreed to between the Authority and the owner, the Authority, on its own motion or on the application of the owner, shall determine the facts, and after a proper hearing it is authorized to make such adjustment in the amount of such payments as it may determine to be fair and reasonable and in the public interest. Its decision shall be based upon and governed by the changes which may have occurred since the date of the said contract, with respect to wages, operating costs, foreign subsidies or other conditions affecting shipping and shall be promulgated in a formal order.

(c) In case the owner shall not be satisfied with such determination, a suit to enjoin, set aside, annul, or suspend any order of the Authority shall be brought in the district court against the United States. The pending of such suit shall not of itself stay or suspend the order of the Authority but the court in its discretion may retain or suspend in whole or in part the operation of the Authority's order pending the determination of the suit.

No interlocutory injunction suspending or restraining the enforcement, operation, or execution of, or setting aside, in whole or in part, any order made or entered by the Authority shall be issued or granted by any District Court of the United States, or by any judge thereof, or by any circuit judge acting as district judge, unless the application for the same shall be presented to a circuit or district judge, and shall be heard and determined by three judges, of whom at least one shall be a circuit judge, and unless a majority of said three judges shall concur in granting such application. When such application as aforesaid is presented to a judge, he shall immediately call to his assistance to hear and determine the application two other judges. Said application shall not be heard or determined before at least five days' notice of the hearing has been given to the Authority, to the Attorney General of the United States, and to such other persons as may be defendants in the suit. In cases where irreparable damages would otherwise ensue to the petitioner, a majority of said three judges concurring, may, on hearing, after not less than three days' notice to the Authority and the Attorney General, allow a temporary stay or suspension, in whole or in part, of the operation of the order of the Authority for not more than sixty days/from the date of the order of said judges pending the application or the order or injunction, in which case the said order shall contain a specific finding, based upon evidence submitted to the judges making the order and identified by reference thereto, that such irreparable damage would result to the petitioner and specifying the nature of the damage. The said judges may, at the time of hearing such application, upon a like finding, continue the temporary stay or suspension in whole or in part until decision upon the application. The hearing upon such application for an interlocutory injunction shall be given precedence and shall be in every way expedited and be assigned for a hearing at the earliest practicable day after the expiration of the notice hereinbefore provided for. An appeal may be taken direct to the Supreme Court of the United States from the order granting or denying, after notice and hearing, an interlocutory injunction, in such case if such appeal be taken within thirty days after the order, in respect to which complaint is made, is granted or refused; and upon the final hearing of any suit brought to suspend or set aside, in whole or in part, any order of said Authority the same requirement as to judges and the same procedure as to expedition and appeal shall apply.

(d) Every such contract shall provide that the compensation to be paid under it shall be reduced, under such terms and in such amounts as the

Authority shall determine, for any periods in which the vessel or vessels are laid up without a reason satisfactory to the Authority, or are used in domestic commerce, either wholly or in conjunction with foreign commerce.

SEC. 508. (a) In case the Authority shall determine that a change in the service, route, or line is necessary in the public interest, it is authorized to agree with the owner to make such change upon such readjustment of payments to the owner as shall be arrived at by the method prescribed in (b) of section 507.

(b) If at any time the owner receiving an operating differential subsidy, finds that he cannot maintain and operate his vessels on such service, route, or line with a reasonable profit upon his investment, then he may, after sixty days' notice in writing to the Authority, withdraw such vessels from such service, route, or line, and thereupon the further payment of the operating differential subsidy shall cease and the owner be discharged from any further obligation under such contract.

SEC. 509. (a) No contract executed under this part or any interest therein shall be sold, assigned, or transferred, either directly or indirectly, or through any reorganization, merger, or consolidation, or pursuant to any involuntary proceeding against the holder thereof, without the consent of the Authority; nor shall any agreement or arrangement be made by the holder whereby the maintenance or operation of the service, route, line, vessel, or vessels is to be performed by any other person without the written consent of the Authority. In case the Authority consents to such agreement or arrangement, the agreement or arrangement shall make provision whereby the person undertaking such maintenance or operation agrees to be bound by all of the provisions of the contract and of this Act applicable thereto, and the rules and regulations prescribed pursuant to this Act. In case the holder of any such contract shall voluntarily sell such contract or any interest therein, or make such assignment, transfer, agreement, or arrangement whereby the maintenance or operation of the service, route, line, vessel, or vessels is to be performed by any other person, without the consent of the Authority, the Authority shall have the right to cancel such contract.

(b) Contracts executed under this part may be canceled by the Authority, for repeated and intentional violations of such contract, this Act, or rules and regulations prescribed pursuant to this Act. The Authority may impose appropriate penalties for violations of such contract. This Act, or rules and regulations prescribed pursuant thereto, not to exceed $ which shall be deducted from subsidy payments.

SEC. 510. (a) The vessels receiving financial aid under this part shall be of steel or other acceptable metal, shall be steam or motor propelled, shall be as nearly fireproof as practicable, and shall be American built and registered under the laws of the United States during the entire time of such employment or shall have been documented under the laws of the United States not later than February 1, 1928, and shall remain so documented during the entire time of such employment.

(b) A vessel for the service of which a contract is entered into under this part, and the construction of which is hereafter begun, shall be either (1) a vessel constructed according to plans and specifications approved by the Authority and the Secretary of the Navy, with particular reference to economical conversion into an auxiliary naval vessel; or (2) a vessel which will be otherwise useful to the United States in time of national emergency.

SEC. 511. No contractor under a contract in force under this part shall suffer or permit any insurance, stevedoring, terminal, ship repairing, towboat, or other services of like character to be supplied vessels operated under such contract, by any subsidiary or other corporation directly or indirectly controlled by such contractor, except with the written consent of the Authority.

SHO. 512. (a) Every vessel operating under a contract in force under this part, of less than ten thousand gross tons, shall be required to carry two cadets, and every vessel of ten thousand gross tons and over shall be required to carry three cadets. Such cadets shall be compensated by the contractor in the amount of not less than $30 per month; shall be provided with quarters separate from those occupied by unlicensed members of the crew; and shall be afforded every opportunity to serve an apprenticeship in, and be instructed concerning, the navigation and operation of the vessel.

(b) Naval officers of the United States on the active list may volunteer for service on any vessel employed in service under a contract made under the

provisions of this part, and when accepted by the owner or master thereof may be assigned to such duty by the Secretary of the Navy. While in such employment such officers shall receive from the Government half pay, exclusive of allowances, and such other compensation from the owner or master as may be agreed upon by the parties; but such officers while in such employment shall be required to perform only such duties as appertain to the merchant marine.

PART III-SHIPPING TRADE PROMOTION AID

SEC. 513. (1) Any citizen of the United States as hereinbefore defined may apply to the Authority for a subsidy to enable him to operate in foreign commerce a vessel or vessels owned by him and documented as a vessel of the United States, for the purpose of developing the foreign commerce of the United States in a service or on a route with respect to which the operating subsidy provided for in section 505 hereof would be inadequate. Such application shall contain all the information required of applicants for operating subsidies, and in addition thereto all the facts indicating the inadequacy of an operating subsidy. If the Authority shall determine that it is in the public interest and desirable for the further development of the commerce of the United States, and that an operating subsidy determined as hereinabove provided would be inadequate, then it is authorized to grant a subsidy of such amount as it may determine, for a period which it shall fix not exceeding five years, and upon such other terms and conditions as the Authority shall fix, consistent with the provisions of this Act, and it may enter into a contract with the applicant accordingly. The amount of such shipping trade promotion aid shall not exceed in any year the amount of the actual losses reasonably incurred in maintaining and operating such vessel in such service or route, together with interest, not exceeding 6 per centum, upon his capital actually invested therein. Except as herein otherwise provided the provisions of Part II hereof with respect to operating subsidies shall apply to contracts for shipping trade promotion aid.

PART IV-PROVISIONS APPLICABLE TO FINANCIAL AID GENERALLY

SEC. 514. Each application for financial aid under the provisions of this title shall be accompanied by statements disclosing the names of all persons having any pecuniary interest, direct or indirect, in such application, or the ownership or use of the vessel or vessels, services, routes, or lines covered thereby, and the nature and extent of any such interest, together with such financial statements as may be required by the Authority. All such statements shall be in such form as the Authority shall prescribe. Whoever knowingly files or causes to be filed with the Authority any statement false in any material particular shall be guilty of a misdemeanor and subject upon conviction to a fine of not more than $1,000, or imprisonment for not more than one year, or both such fine and imprisonment.

SEC. 515. (a) Every contract executed under this title shall contain provisions requiring:

(1) Each party to the contract (except the Authority) and every affiliate, subsidiary, or holding company connected with any such party, to keep its books, records, and accounts relating to such contract, and to the maintenance and operation of the vessels, services, routes, and lines covered by the contract, in such form and under such regulations as may be prescribed by the Authority; and

(2) Each party to the contract (except the Authority) and every affiliate, subsidiary, or holding company connected with any such party, to file, upon notice from the Authority, statements of financial operations, special reports. memoranda of any facts and transactions, appertaining to the performance of or transactions or operations under such contract directly or indirectly affecting the financial results of such operation, and including all transactions or operations appertaining or subsidiary thereto, insurance, stevedoring, handling of cargo, wharfage, terminal charges, and any other matters which in the opinion of the Authority affect the financial results in the performance of or transactions or operations under such contract.

(b) The Authority is authorized to examine and audit the books, records, and accounts referred to in this section, whenever it may deem it advisable, or whenever requested by either House of Congress. The parties to the contracts referred to in this section (except the Authority), and affiliate, sub