Part F - Government-Owned Merchant Vessels

TITLE 46 - US CODE - CHAPTER 571 - GENERAL AUTHORITY

46 USC 57101 - Placement of vessels in National Defense Reserve Fleet

(a) In General.— 
Any vessel acquired by the Maritime Administration shall be placed in the National Defense Reserve Fleet maintained under section 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C. 1744).
(b) Removal From Fleet.— 
A vessel placed in the Fleet under subsection (a) may not be traded out or sold from the Fleet, except as provided in section 57102, 57103, or 57104 or chapter 533section 57102, 57103, or 57104 or chapter 533, 537, 573, or 575 of this title.

46 USC 57102 - Disposition of vessels not worth preserving

(a) In General.— 
If the Secretary of Transportation determines that a vessel owned by the Maritime Administration is of insufficient value for commercial or military operation to warrant its further preservation, the Secretary may scrap the vessel or sell the vessel for cash.
(b) Selling Procedure.— 
The sale of a vessel under subsection (a) shall be made on the basis of competitive sealed bids, after an appraisal and due advertisement. The purchaser does not have to be a citizen of the United States. The purchaser shall provide a surety bond, with a surety approved by the Secretary, to ensure that the vessel will not be operated in the foreign trade of the United States at any time within 10 years after the sale, in competition with a vessel owned by a citizen of the United States and documented under the laws of the United States.

46 USC 57103 - Sale of obsolete vessels in National Defense Reserve Fleet

(a) In General.— 
The Secretary of Transportation may convey the right, title, and interest of the United States Government in any vessel of the National Defense Reserve Fleet that has been identified by the Secretary as an obsolete vessel of insufficient value to warrant its further preservation, if the recipient
(1) is a non-profit organization, a State, or a municipal corporation or political subdivision of a State;
(2) agrees not to use, or allow others to use, the vessel for commercial transportation purposes;
(3) agrees to make the vessel available to the Government whenever the Secretary indicates that it is needed by the Government;
(4) agrees to hold the Government harmless for any claims arising from exposure to asbestos, polychlorinated biphenyls, lead paint, or other hazardous substances after conveyance of the vessel, except for claims arising from use of the vessel by the Government;
(5) has a conveyance plan and a business plan that describes the intended use of the vessel, each of which has been submitted to and approved by the Secretary;
(6) has provided proof, as determined by the Secretary, of resources sufficient to accomplish the transfer, necessary repairs and modifications, and initiation of the intended use of the vessel; and
(7) agrees that when the recipient no longer requires the vessel for use as described in the business plan required under paragraph (5)
(A) the recipient will, at the discretion of the Secretary, reconvey the vessel to the Government in good condition except for ordinary wear and tear; or
(B) if the Board of Trustees of the recipient has decided to dissolve the recipient according to the laws of the State in which the recipient is incorporated, then
(i) the recipient shall distribute the vessel, as an asset of the recipient, to a person that has been determined exempt from taxation under section 501(c)(3) of the Internal Revenue Code of 1986 (26 U.S.C. 501 (c)(3)), or to the Federal Government or a State or local government for a public purpose; and
(ii) the vessel shall be disposed of by a court of competent jurisdiction of the county in which the principal office of the recipient is located, for such purposes as the court shall determine, or to such organizations as the court shall determine are organized exclusively for public purposes.
(b) Other Equipment.— 
At the Secretarys discretion, additional equipment from other obsolete vessels of the Fleet may be conveyed to assist the recipient with maintenance, repairs, or modifications.
(c) Additional Terms.— 
The Secretary may require any additional terms the Secretary considers appropriate.
(d) Delivery of Vessel.— 
If conveyance is made under this section, the vessel shall be delivered to the recipient at a time and place to be determined by the Secretary. The vessel shall be conveyed in an as is condition.
(e) Limitations.— 
If at any time prior to delivery of the vessel to the recipient, the Secretary determines that a different disposition of the vessel would better serve the interests of the Government, the Secretary shall pursue the more favorable disposition of the obsolete vessel and shall not be liable for any damages that may result from an intended recipients reliance upon a proposed transfer.
(f) Reversion.— 
The Secretary shall include in any conveyance under this section terms under which all right, title, and interest conveyed by the Secretary shall revert to the Government if the Secretary determines the vessel has been used other than as described in the business plan required under subsection (a)(5).

46 USC 57104 - Acquisition of vessels from sale of obsolete vessels

(a) In General.— 
The Secretary of Transportation may acquire suitable documented vessels with amounts in the Vessel Operations Revolving Fund derived from the sale of obsolete vessels in the National Defense Reserve Fleet.
(b) Valuation.— 
The acquired and obsolete vessels shall be valued at their scrap value in domestic or foreign markets as of the date of the acquisition for or sale from the Fleet. However, the value assigned to those vessels shall be determined on the same basis, with consideration given to the fair value of the cost of moving the vessel sold from the Fleet to the place of scrapping.
(c) Costs Incident to Lay-Up.— 
Costs incident to the lay-up of the vessel acquired under this section may be paid from amounts in the Fund.
(d) Transfers to Non-Citizens.— 
A vessel sold from the Fleet under this section may be scrapped in an approved foreign market without obtaining additional separate approval from the Secretary to transfer the vessel to a person not a citizen of the United States.

46 USC 57105 - Acquisition of vessels for essential services, routes, or lines

(a) In General.— 
The Secretary of Transportation may acquire a vessel, by purchase or otherwise, if
(1) the Secretary considers the vessel necessary to establish, maintain, improve, or serve as a replacement on an essential service, route, or line in the foreign commerce of the United States, as determined under section 50103 of this title;
(2) the vessel was constructed in the United States; and
(3) the Secretary of the Navy has certified to the Secretary of Transportation that the vessel is suitable for economical and speedy conversion into a naval or military auxiliary or otherwise suitable for use by the United States Government in time of war or national emergency.
(b) Price.— 
The price paid for the vessel shall be based on a fair and reasonable valuation. However, the price may not exceed by more than 5 percent the cost of the vessel to the owner (excluding any construction-differential subsidy and the cost of national defense features paid by the Secretary of Transportation) plus the actual cost previously expended for reconditioning, less depreciation based on a 25-year life for a dry-cargo or passenger vessel and a 20-year life for a tanker or other liquid bulk carrier vessel.
(c) Documentation.— 
A vessel acquired under this section that is not documented under the laws of the United States at the time of acquisition shall be so documented as soon as practicable.

46 USC 57106 - Maintenance, improvement, and operation of vessels

(a) In General.— 
The Secretary of Transportation may maintain, repair, recondition, remodel, and improve vessels owned by the United States Government and in the possession or under the control of the Secretary, to equip them adequately for competition in the foreign trade of the United States. The Secretary may operate such a vessel or charter the vessel on terms and conditions the Secretary considers appropriate to carry out the purposes of this subtitle.
(b) Documentation and Restrictions on Operation.— 
A vessel reconditioned, remodeled, or improved under subsection (a) shall be documented under the laws of the United States and remain so documented for at least 5 years after completion of the reconditioning, remodeling, or improvement. During that period, it shall be operated on voyages that are not exclusively coastwise.

46 USC 57107 - Vessels for other agencies

(a) In General.— 
The Secretary of Transportation may construct, reconstruct, repair, equip, and outfit, by contract or otherwise, vessels or parts thereof, for any other department or agency of the United States Government to the extent the other department or agency is authorized by law to do so for its own account.
(b) Effect on Contract Authorization.— 
An obligation incurred or expenditure made by the Secretary under this section does not affect any contract authorization of the Secretary, but instead shall be charged against the existing appropriation or contract authorization of the department or agency.

46 USC 57108 - Consideration of ballast and equipment in determining selling price

The Maritime Administration may not sell a vessel until its ballast and equipment have been inventoried and their value considered in determining the selling price of the vessel.

46 USC 57109 - Operation of vessels purchased, chartered, or leased from Secretary of Transportation

Unless otherwise authorized by the Secretary of Transportation, a vessel purchased, chartered, or leased from the Secretary may be operated only under a certificate of documentation with a registry or coastwise endorsement. Such a vessel, while employed solely as a merchant vessel, is subject to the laws, regulations, and liabilities governing merchant vessels, whether the United States Government has an interest in the vessel as an owner or holds a mortgage, lien, or other interest.

TITLE 46 - US CODE - CHAPTER 573 - VESSEL TRADE-IN PROGRAM

46 USC 57301 - Definitions

In this chapter:
(1) New vessel.— 
The term new vessel means a vessel
(A) constructed under this subtitle and acquired within 2 years after the date of completion; or
(B) constructed in a domestic shipyard on private account and not under this subtitle, and documented under the laws of the United States.
(2) Obsolete vessel.— 
The term obsolete vessel means a vessel that
(A) is of at least 1,350 gross tons;
(B) the Secretary of Transportation believes should, because of its age, obsolescence, or other reasons, be replaced in the public interest; and
(C) has been owned by a citizen of the United States for at least 3 years immediately before its acquisition under this chapter.

46 USC 57302 - Authority to acquire vessels

To promote the construction of new, safe, and efficient vessels to carry the domestic and foreign waterborne commerce of the United States, the Secretary of Transportation may acquire an obsolete vessel in exchange for an allowance of credit toward the cost of construction or purchase of a new vessel as provided in this chapter.

46 USC 57303 - Utility value and tonnage requirements

(a) Utility Value.— 
The utility value of a new vessel to be acquired under this chapter for operation in the domestic or foreign commerce of the United States may not be substantially less than that of the obsolete vessel acquired in exchange under this chapter.
(b) Tonnage.— 
If the Secretary of Transportation finds that the new vessel will have a utility value at least equal to that of the obsolete vessel, the new vessel may be of lesser gross tonnage than the obsolete vessel. However, the gross tonnage of the new vessel must be at least one-third the gross tonnage of the obsolete vessel.

46 USC 57304 - Eligible acquisition dates

At the option of the owner, the acquisition of an obsolete vessel under this chapter shall occur
(1) when the owner contracts for the construction or purchase of a new vessel; or
(2) within 5 days of the actual date of delivery of the new vessel to the owner.

46 USC 57305 - Determination of trade-in allowance

(a) In General.— 
The Secretary of Transportation shall determine the trade-in allowance for an obsolete vessel at the time of acquisition of the vessel. The allowance shall be the fair value of the vessel. In determining the value, the Secretary shall consider
(1) the scrap value of the obsolete vessel in American and foreign markets;
(2) the depreciated value based on a 20-year or 25-year life, whichever applies to the obsolete vessel; and
(3) the market value of the obsolete vessel for operation in world commerce or in the domestic or foreign commerce of the United States.
(b) Use of Obsolete Vessels.— 
If acquisition of the obsolete vessel occurs when the owner contracts for the construction of the new vessel, and the owner uses the obsolete vessel during the period of construction of the new vessel, the Secretary shall reduce the trade-in allowance by an amount representing the fair value of that use. The Secretary shall establish the rate for use of the obsolete vessel when the contract for construction of the new vessel is made.

46 USC 57306 - Payment of trade-in allowance

(a) Acquisition at Time of Contract.— 
If acquisition of an obsolete vessel under this chapter occurs when the owner contracts for the construction or purchase of the new vessel, the Secretary of Transportation shall apply the trade-in allowance to the purchase price of the new vessel rather than paying it to the owner. If the new vessel is constructed under this subtitle, the Secretary may apply the trade-in allowance to the required cash payments on terms and conditions the Secretary may prescribe. If the new vessel is not constructed under this subtitle, the Secretary shall pay the trade-in allowance to the builder of the vessel for the account of the owner when the Secretary acquires the obsolete vessel.
(b) Acquisition at Time of Delivery.— 
If acquisition of the obsolete vessel occurs when the new vessel is delivered to the owner, the Secretary shall deposit the trade-in allowance in the owners capital construction fund.

46 USC 57307 - Recognition of gain for tax purposes

The owner of an obsolete vessel does not recognize a gain under the Federal income tax laws when the vessel is transferred to the Secretary of Transportation in exchange for a trade-in allowance under this chapter. The basis of the new vessel acquired with the allowance is the same as the basis of the obsolete vessel
(1) increased by the difference between the cost of the new vessel and the trade-in allowance of the obsolete vessel; and
(2) decreased by the amount of loss recognized on the transfer.

46 USC 57308 - Use of vessels at least 25 years old

An obsolete vessel acquired under this chapter that is or becomes at least 25 years old may not be used for commercial operation. However, the vessel may be used
(1) during a period in which vessels may be requisitioned under chapter 563 of this title; or
(2) except as otherwise provided in this subtitle, on trade routes serving only the foreign trade of the United States.

TITLE 46 - US CODE - CHAPTER 575 - CONSTRUCTION, CHARTER, AND SALE OF VESSELS

TITLE 46 - US CODE - SUBCHAPTER I - GENERAL

46 USC 57501 - Completion of long-range program

Whenever the Secretary of Transportation determines that the objectives and policies declared in sections 50101 and 50102 of this title cannot be fully realized within a reasonable time under titles V and VI of the Merchant Marine Act, 1936, and the President approves the determination, the Secretary, in accordance with this chapter, shall complete the long-range program described in section 50102 of this title.

46 USC 57502 - Construction, reconditioning, and remodeling of vessels

(a) In General.— 
The Secretary of Transportation may have new vessels constructed, and have old vessels reconditioned or remodeled, as the Secretary determines necessary to carry out the objectives of this subtitle.
(b) Place of Work.— 
Construction, reconditioning, and remodeling of vessels under subsection (a) shall take place in shipyards in the continental United States (including Alaska and Hawaii). However, if satisfactory contracts cannot be obtained from private shipbuilders, the Secretary may have the work done in navy yards.
(c) Applicability of Construction-Differential Subsidy Provisions.— 
Contracts for the construction, reconstruction, or reconditioning of a vessel by a private shipbuilder under this chapter are subject to the provisions of title V of the Merchant Marine Act, 1936, applicable to a contract with a private shipbuilder for the construction of a vessel under title V of that Act.

46 USC 57503 - Competitive bidding

(a) Advertisement and Bidding.— 
The Secretary of Transportation may make a contract with a private shipbuilder for the construction of a new vessel, or for the reconstruction or reconditioning of an existing vessel, only after due advertisement and upon sealed competitive bids.
(b) Opening of Bids.— 
Bids required under this section shall be opened at the time and place stated in the advertisement for bids. All interested persons, including representatives of the press, shall be permitted to attend. The results of the bidding shall be publicly announced.

46 USC 57504 - Charter or sale of vessels acquired by Department of Transportation

Vessels transferred to or otherwise acquired by the Department of Transportation in any manner may be chartered or sold by the Secretary of Transportation as provided in this chapter.

46 USC 57505 - Employment of vessels on foreign trade routes

(a) In General.— 
The Secretary of Transportation shall arrange for the employment of the Department of Transportations vessels in steamship lines on such trade routes, exclusively serving the foreign trade of the United States, as the Secretary determines are essential for the development and maintenance of the commerce of the United States and the national defense. However, the Secretary shall first determine that those routes are not being adequately served by existing steamship lines privately owned and operated by citizens of the United States and documented under the laws of the United States.
(b) Policy To Encourage Private Operation.— 
The Secretary shall have a policy of encouraging private operation of each essential steamship line now owned by the United States Government by
(1) selling the line to a citizen of the United States; or
(2) demising the Secretarys vessels on bareboat charter to citizens of the United States who agree to maintain the line in the manner provided in this chapter.

46 USC 57506 - Minimum selling price of vessels

(a) In General.— 
A vessel constructed under this subtitle or the Merchant Marine Act, 1936, may not be sold by the Secretary of Transportation for less than the price specified in this section.
(b) Operation in Foreign Trade.— 
If the vessel is to be operated in foreign trade, the minimum price is the estimated foreign construction cost (exclusive of national defense features) determined as of the date the construction contract is executed, less depreciation under subsection (d).
(c) Operation in Domestic Trade.— 
If the vessel is to be operated in domestic trade, the minimum price is the cost of construction in the United States (exclusive of national defense features), less depreciation under subsection (d).
(d) Depreciation.— 
Depreciation under subsections (b) and (c) shall be based on
(1) a 25-year life for dry-cargo and passenger vessels; and
(2) a 20-year life for tankers and other bulk liquid carrier vessels.

TITLE 46 - US CODE - SUBCHAPTER II - CHARTERS

46 USC 57511 - Demise charters

A charter by the Secretary of Transportation under this chapter shall demise the vessel to the charterer subject to all usual conditions contained in a bareboat charter. The charter shall be for a term the Secretary considers to be in the best interest of the United States Government and the merchant marine.

46 USC 57512 - Competitive bidding

(a) In General.— 
The Secretary of Transportation may charter a vessel of the Department of Transportation to a private operator only on the basis of competitive sealed bidding. The bids must be submitted in strict compliance with the terms and conditions of a public advertisement soliciting the bids.
(b) Advertisement for Bids.— 
An advertisement for bids shall state
(1) the number, type, and tonnage of the vessels being offered for bareboat charter for operation as a steamship line on a designated trade route;
(2) the minimum number of sailings required;
(3) the length of time of the charter;
(4) the right of the Secretary to reject all bids; and
(5) other information the Secretary considers necessary for the information of prospective bidders.
(c) Opening of Bids.— 
Bids required under this section shall be opened at the time and place stated in the advertisement for bids. All interested persons, including representatives of the press, shall be permitted to attend. The results of the bidding shall be publicly announced.

46 USC 57513 - Minimum bid

The Secretary of Transportation shall reject any bid for the charter under this subchapter of a vessel constructed under this subtitle or the Merchant Marine Act, 1936, if the charter hire offered is lower than the minimum charter hire would be if the vessel were chartered under section 57531 of this title.

46 USC 57514 - Qualifications of bidders

(a) Considerations.— 
In deciding whether to award a charter to a bidder, the Secretary of Transportation shall consider
(1) the bidders financial resources, credit standing, and practical experience in operating vessels; and
(2) other factors a prudent business person would consider in entering into a transaction involving a large capital investment.
(b) Disqualifications.— 
The Secretary may not charter a vessel to a person appearing to lack sufficient capital, credit, and experience to operate the vessel successfully over the period covered by the charter.

46 USC 57515 - Awarding of charters

(a) In General.— 
The Secretary of Transportation shall award the charter to the bidder proposing to pay the highest monthly charter hire. However, the Secretary may reject the highest or most advantageous or any other bid if the Secretary considers the charter hire offered too low or determines that the bidder lacks the qualifications required by section 57514 of this title.
(b) Highest Bid Rejected.— 
If the Secretary rejects the highest bid, the Secretary may
(1) award the charter to the next highest bidder; or
(2) reject all bids and either readvertise the line or operate the line until conditions appear more favorable to reoffer the line for private charter.
(c) Reason for Rejection.— 
On request of a bidder, the reason for rejection shall be stated in writing to the bidder.

46 USC 57516 - Operating-differential subsidies

If the Secretary of Transportation considers it necessary, the Secretary may make a contract with a charterer of a vessel owned by the Secretary for payment of an operating-differential subsidy, on the same terms and conditions, and subject to the same limitations and restrictions, as otherwise provided with respect to payment of operating-differential subsidies to operators of privately-owned vessels.

46 USC 57517 - Recovery of excess profits

(a) In General.— 
A charter under this chapter shall provide that if, at the end of a calendar year subsequent to the execution of the charter, the cumulative net voyage profit (after payment of the charter hire reserved in the charter and payment of the charterers fair and reasonable overhead expenses applicable to operation of the chartered vessel) exceeds 10 percent a year of the charterers capital necessarily employed in the business of the chartered vessel, the charterer shall pay to the Secretary of Transportation, as additional charter hire, half the cumulative net voyage profit in excess of 10 percent a year. However, any cumulative net voyage profit accounted for under this subsection is not to be included in the calculation of cumulative net voyage profit in any subsequent year.
(b) Terms To Be Defined and Used.— 
The Secretary shall define the terms net voyage profit, fair and reasonable overhead expenses, and capital necessarily employed for this section. Each advertisement for bids and each charter shall contain these definitions, stating the formula for determining each of these three amounts.

46 USC 57518 - Performance bond

The Secretary of Transportation shall require a charterer of a vessel of the Secretary to deposit with the Secretary an undertaking, with approved sureties, in such amount as the Secretary may require as security for the faithful performance of the terms of the charter, including indemnity against liens on the chartered vessel.

46 USC 57519 - Insurance

A charter under this chapter shall require the charterer to carry, at the charterers expense, insurance on the chartered vessel covering all marine and port risks, protection and indemnity risks, and all other hazards and liabilities, adequate to cover damages claimed against and losses sustained by the chartered vessel arising during the term of the charter. The insurance shall be in such form, in such amount, and with such companies as the Secretary of Transportation may require. In accordance with law, any of the insurance risks may be underwritten by the Secretary.

46 USC 57520 - Vessel maintenance

(a) In General.— 
A charter under this chapter shall require the charterer, at the charterers expense, to
(1) keep the chartered vessel in good repair and efficient operating condition; and
(2) make any repairs required by the Secretary of Transportation.
(b) Inspection.— 
The charter shall provide that the Secretary has the right to inspect the vessel at any time to ascertain its condition.

46 USC 57521 - Termination of charter during national emergency

A charter under this chapter shall provide that during a national emergency proclaimed by the President or a period for which the President has proclaimed that the security of the national defense makes it advisable, the Secretary of Transportation may terminate the charter without cost to the United States Government on such notice to the charterer as the President determines.

TITLE 46 - US CODE - SUBCHAPTER III - MISCELLANEOUS

46 USC 57531 - Construction and charter of vessels for unsuccessful routes

(a) In General.— 
If the Secretary of Transportation finds that a trade route determined to be essential under section 50103 of this title cannot be successfully developed and maintained and the Secretarys replacement program cannot be achieved under private operation of the trade route by a citizen of the United States with vessels documented under chapter 121 of this title, without further aid by the United States Government in addition to the financial aid authorized under titles V and VI of the Merchant Marine Act, 1936, the Secretary, without advertisement or competition, may
(1) have constructed, in private shipyards or in navy yards, vessels of the types necessary for the trade route; and
(2) demise charter those new vessels to the operator of vessels of the United States established on the trade route.
(b) Amount of Charter Hire.— 

(1) In general.— 
The annual charter hire under subsection (a) shall be at least 4 percent of the price (referred to in this section as the foreign cost) at which the vessel would be sold if constructed under title V of the Merchant Marine Act, 1936, plus
(A) a percentage of the depreciated foreign cost computed annually determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the term of the charter, adjusted to the nearest one-eighth percent; and
(B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs.
(2) Depreciation.— 
Depreciation under paragraph (1)(A) shall be based on
(A) a 25-year life for dry-cargo and passenger vessels; and
(B) a 20-year life for tankers and other bulk liquid carrier vessels.
(c) Option To Purchase.— 
The charter may contain an option to the charterer to purchase the vessels from the Secretary of Transportation within 5 years after delivery under the charter, on the same terms and conditions as provided in title V of the Merchant Marine Act, 1936, for the purchase of new vessels from the Secretary. However
(1) the purchase price shall be the foreign cost less depreciation to the date of purchase based on the useful life specified in subsection (b)(2);
(2) the required cash payment payable at the time of the purchase shall be 25 percent of the purchase price;
(3) the charter may provide that any part of the charter hire paid in excess of the minimum charter hire provided for in this section may be credited against the cash payment payable at the time of the purchase;
(4) the balance of the purchase price shall be paid within the remaining years of useful life (as specified in subsection (b)(2)) after the date of delivery of the vessel under the charter and in approximately equal annual installments, except that the first installment, which shall be payable on the next ensuing anniversary date of the delivery under the charter, shall be a proportionate part of the annual installment; and
(5) interest shall be payable on the unpaid balances from the date of purchase, at a rate not less than
(A) a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the Government with remaining periods to maturity comparable to the average maturities of the loans, adjusted to the nearest one-eighth percent; plus
(B) an allowance adequate in the judgment of the Secretary of Transportation to cover administrative costs.
(d) Operation of Vessel.— 

(1) Permissible voyages.— 
The charter shall provide for operation of the vessel exclusively
(A) in foreign trade;
(B) on a round-the-world voyage;
(C) on a round voyage from the west coast of the United States to a European port that includes an intercoastal port of the United States;
(D) on a round voyage from the Atlantic coast of the United States to the Orient that includes an intercoastal port of the United States; or
(E) on a voyage in foreign trade on which the vessel may stop at Hawaii or an island territory or possession of the United States.
(2) Domestic trade.— 
The charter shall provide if the vessel is operated in domestic trade on any of the services specified in paragraph (1), the charterer will pay annually to the Secretary of Transportation that proportion of 1/25 of the difference between the domestic and foreign cost of the vessel as the gross revenue derived from the domestic trade bears to the gross revenue derived from the entire voyages completed during the preceding year.

46 USC 57532 - Operation of experimental vessels

(a) Definition.— 
In this section, the term experimental vessel means a vessel owned by the United States Government (including a vessel in the National Defense Reserve Fleet) that has been constructed, reconditioned, or remodeled for experimental or testing purposes.
(b) Authority To Operate.— 
The Secretary of Transportation, for the purpose of practical development, trial, and testing, may operate an experimental vessel under a bareboat charter or general agency agreement in the foreign or domestic trade of the United States or for use for the account of a department or agency of the Government, without regard to other provisions of this subtitle and other laws related to chartering and general agency operations. Not more than 10 vessels may be operated and tested under this section in any one year.
(c) Terms of Operation.— 
Operation of a vessel under this section shall be on terms the Secretary considers appropriate to carry out the purposes of this subtitle. A bareboat charter under this section shall be at reasonable rates and include restrictions the Secretary considers appropriate to protect the public interest, including provisions for recapture of profits under section 57517 of this title. A charter or general agency agreement under this section shall be reviewed annually to determine whether conditions exist to justify continuance of the charter or agreement.
(d) Rights of Seamen.— 
A seaman engaged in vessel operations of the Secretary under this section and employed through a general agent in connection with a charter or agreement under this section is entitled to all the rights and remedies provided in sections 1(a) and (c), 3(c), and 4 of the Act of March 24, 1943 (50 App. U.S.C. 1291 (a), (c), 1293 (c), 1294).