§56102 — Title 46 Shipping | U.S. Code

Summary

During war or when the President declares a national emergency, people must get approval from the Secretary of Transportation before they move U.S.-owned ships or shipyards into foreign control or change key ownership or financing. You cannot put a U.S.-owned ship under a foreign flag, or sell, lease, mortgage, charter, deliver, or agree to transfer a U.S.-owned or U.S.-registered ship, a shipyard, or interests in them to a non‑U.S. citizen without the Secretary’s OK. You also cannot give loan papers or trustee rights tied to those assets to a non‑U.S. person unless the trustee is approved, start building a ship in the U.S. for a foreign person unless the contract says work waits until after the emergency, give a foreign person control of a U.S. company that owns ships or shipyards, or let a U.S.-built ship leave before it is officially registered in the U.S. The Secretary will approve only a U.S. bank or trust company that is a U.S. corporation, allowed to act as trustee, a U.S. citizen, supervised by federal or state authorities, and with at least $3,000,000 in combined capital and surplus. Any deal that breaks these rules is void. People who paid money in prohibited deals can get it back after giving up the ship, facility, stock, or security to the rightful owner or letting the government seize it, unless they reasonably thought the other person was a U.S. citizen. Violators can be fined under federal law, jailed for up to 5 years, or both, and the government can seize the involved ships, shipyards, stock, or securities.

Title 46, §56102

Shipping — Source: USLM XML via OLRC

(a)During war, or a national emergency declared by Presidential proclamation, a person may not, without the approval of the Secretary of Transportation—

(1)place under foreign registry a vessel owned in whole or in part by a citizen of the United States or a corporation incorporated under the laws of the United States or of a State;

(2)sell, mortgage, lease, charter, deliver, or in any other manner transfer, or agree to sell, mortgage, lease, charter, deliver, or in any other manner transfer, to a person not a citizen of the United States—

(A)a vessel owned as described in paragraph (1), or an interest therein;

(B)a vessel documented under the laws of the United States, or an interest therein; or

(C)a facility for building or repairing vessels, or an interest therein;

(3)issue, assign, or transfer to a person not a citizen of the United States an instrument of indebtedness secured by a mortgage of a vessel to a trustee, by an assignment of an owner’s interest in a vessel under construction to a trustee, or by a mortgage of a facility for building or repairing vessels to a trustee, unless the trustee or a substitute trustee is approved by the Secretary under subsection (b);

(4)enter into an agreement or understanding to construct a vessel in the United States for, or to be delivered to, a person not a citizen of the United States without expressly stipulating that construction will not begin until after the war or national emergency has ended;

(5)enter into an agreement or understanding whereby there is vested in, or for the benefit of, a person not a citizen of the United States the controlling interest in a corporation that is incorporated under the laws of the United States or a State and that owns a vessel or facility for building or repairing vessels; or

(6)cause or procure a vessel, constructed in whole or in part in the United States and never cleared for a foreign port, to depart from a port of the United States before it has been documented under the laws of the United States.

(b)(1)The Secretary shall approve a trustee or substitute trustee under subsection (a)(3) if and only if the trustee is a bank or trust company that—

(A)is organized as a corporation, and is doing business, under the laws of the United States or a State;

(B)is authorized under those laws to exercise corporate trust powers;

(C)is a citizen of the United States;

(D)is subject to supervision or examination by Federal or State authority; and

(E)has a combined capital and surplus (as set forth in its most recent published report of condition) of at least $3,000,000.

(2)If a trustee or substitute trustee ceases to meet the conditions in paragraph (1), the Secretary shall disapprove the trustee or substitute trustee. After the disapproval, the restrictions on transfer or assignment without the Secretary’s approval in subsection (a)(3) apply.

(3)During a period when subsection (a) applies, a trustee referred to in subsection (a)(3), even though approved as a trustee by the Secretary, may not operate the vessel under the mortgage or assignment without the Secretary’s approval.

(c)A transaction in violation of this section is void.

(d)(1)A person that deposited or paid consideration in connection with a transaction prohibited by this section may recover the consideration after tender of the vessel, facility, stock, or other security, or interest therein, to the person entitled to it, or the forfeiture thereof to the United States Government.

(2)Paragraph (1) does not apply if the person in whose interest the consideration was deposited, or to whom it was paid, entered into the transaction in the belief that the person depositing or paying the consideration was a citizen of the United States.

(e)(1)A person that violates, or attempts or conspires to violate, this section shall be fined under title 18, imprisoned for not more than 5 years, or both.

(2)The following shall be forfeited to the Government:

(A)A vessel, a facility for building or repairing vessels, or an interest in a vessel or such a facility, that is sold, mortgaged, leased, chartered, delivered, transferred, or documented, or agreed to be sold, mortgaged, leased, chartered, delivered, transferred, or documented, in violation of this section.

(B)Stock and other securities sold or transferred, or agreed to be sold or transferred, in violation of this section.

(C)A vessel departing in violation of subsection (a)(6).

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 56102(a)46 App.:835(a)–(c) (less provisos), (d)–(f).Sept. 7, 1916, ch. 451, § 37, as added July 15, 1918, ch. 152, § 4, 40 Stat. 901; Exec. Order No. 6166, § 12, eff. June 10, 1933; June 29, 1936, ch. 858, title II, § 204, title IX, § 904, 49 Stat. 1987, 2016; Pub. L. 89–346, § 2, Nov. 8, 1965, 79 Stat. 1306; Pub. L. 97–31, § 12(30), Aug. 6, 1981, 95 Stat. 156. 56102(b)46 App.:835(c) (provisos). 56102(c)46 App.:835 (2d par. after cl. (f), last par. words before 9th comma). 56102(d)46 App.:835 (last par. words after 9th comma). 56102(e)46 App.:835 (1st, 3d pars. after cl. (f)). In this section, the words “facility for building or repairing vessels” are substituted for “shipyard, dry dock, shipbuilding or ship-repairing plant or facility” (or similar language) to eliminate unnecessary words. In subsection (a)(1), the words “transfer to” and “or flag” are omitted as surplus. The words “Territory, District, or possession thereof” are omitted as unnecessary because of the definition of “State” in chapter 1 of the revised title. In subsection (a)(3), the words “instrument of indebtedness” are substituted for “bond, note, or other evidence of indebtedness” to eliminate unnecessary words. The words “right, title, or” are omitted as unnecessary. In subsection (a)(5), the words “or the majority of the voting power” are omitted as covered by “controlling interest”. In subsection (b)(1), before subparagraph (A), the words “and only if” are added for clarity because the Secretary is required to disapprove a trustee that ceases to meet the specified conditions. Subsections (c) and (d) are substituted for the source provisions to eliminate unnecessary words. In subsection (e)(1), the words “guilty of a misdemeanor” are omitted, and the words “fined under title 18” are substituted for “punishable by a fine of not more than $5000”, because of chapter 227 of title 18.

§56102 Additional controls during war or national emergency

Summary

Title 46, §56102

Notes & Related Subsidiaries

Historical and Revision Notes

Citations & Metadata