B-131691, MAY 16, 1957, 36 COMP. GEN. 773

B-131691: May 16, 1957

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MARITIME MATTERS - TANKER CONSTRUCTION - DRY CARGO VESSEL CONVERTED TO TANKER-ORE CARRIER - TRADE-IN ALLOWANCE ELIGIBILITY A VESSEL WHICH WAS BUILT IN 1946 AS A DRY CARGO VESSEL BUT CONVERTED IN 1954 TO A TANKER-ORE CARRIER MAY BE CONSIDERED A TANKER OVER TEN YEARS OLD WITHIN THE PURVIEW OF THE TANKER TRADE-IN ALLOWANCE PROVISIONS OF SECTION 510 (H) OF THE MERCHANT MARINE ACT. 1957: REFERENCE IS MADE TO YOUR LETTER OF APRIL 29. THAT EACH OF THE TANKERS TO BE TRADED IN (1) IS NOT LESS THAN ONE THOUSAND THREE HUNDRED AND FIFTY GROSS TONS. (2) IS NOT LESS THAN TEN YEARS OLD. (3) IS OWNED BY A CITIZEN OR CITIZENS OF THE UNITED STATES. * * * (5) IS IN CLASS WITH RESPECT TO THE HULL AND MACHINERY SATISFACTORY TO THE SECRETARY OF COMMERCE ON THE DATE OF ITS PHYSICAL DELIVERY TO THE UNITED STATES AND SHALL BE CONSIDERED AN "OBSOLETE VESSEL" FOR PURPOSES OF THIS SECTION.'.

B-131691, MAY 16, 1957, 36 COMP. GEN. 773

MARITIME MATTERS - TANKER CONSTRUCTION - DRY CARGO VESSEL CONVERTED TO TANKER-ORE CARRIER - TRADE-IN ALLOWANCE ELIGIBILITY A VESSEL WHICH WAS BUILT IN 1946 AS A DRY CARGO VESSEL BUT CONVERTED IN 1954 TO A TANKER-ORE CARRIER MAY BE CONSIDERED A TANKER OVER TEN YEARS OLD WITHIN THE PURVIEW OF THE TANKER TRADE-IN ALLOWANCE PROVISIONS OF SECTION 510 (H) OF THE MERCHANT MARINE ACT, 1936, FOR APPLICATION OF THE TRADE-IN ALLOWANCE TO THE COST OF CONSTRUCTION OF A NEW TANKER.

TO THE ADMINISTRATOR, MARITIME ADMINISTRATION, MAY 16, 1957:

REFERENCE IS MADE TO YOUR LETTER OF APRIL 29, 1957, INQUIRING AS TO WHETHER WE WOULD BE REQUIRED TO OBJECT TO THE MARITIME ADMINISTRATION GRANTING A TRADE-IN ALLOWANCE TO ORE TRANSPORT, INC., UNDER THE PROVISIONS OF SECTION 510 (H) OF THE MERCHANT MARINE ACT, 1936, AS AMENDED, 46 U.S.C. 1160 (H), FOR THE TRADE-IN OF THE S.S. HAWAIIAN, A COMBINATION TANKER-ORE CARRIER, TO BE APPLIED TO THE OWNER'S PORTION OF THE COST OF A NEW COMBINATION TANKER-ORE CARRIER WHICH WOULD BE CONSTRUCTED WITH CONSTRUCTION-DIFFERENTIAL SUBSIDY AID UNDER THE PROVISIONS OF TITLE V OF THE MERCHANT MARINE ACT, 1936, AS AMENDED.

IN PERTINENT PART, SECTION 510 (H) OF THE MERCHANT MARINE ACT, 1936, AS AMENDED, AUTHORIZES THE SECRETARY, UNTIL JULY 1, 1958,"TO ACQUIRE A TANKER OR TANKERS, DETERMINED BY HIM TO BE DESIRABLE FOR INCLUSION IN THE NATIONAL DEFENSE RESERVE, IN EXCHANGE FOR AN ALLOWANCE OF CREDIT TO BE APPLIED UPON THE PURCHASE PRICE OF A NEW TANKER OR TANKERS: PROVIDED, THAT EACH OF THE TANKERS TO BE TRADED IN (1) IS NOT LESS THAN ONE THOUSAND THREE HUNDRED AND FIFTY GROSS TONS; (2) IS NOT LESS THAN TEN YEARS OLD; (3) IS OWNED BY A CITIZEN OR CITIZENS OF THE UNITED STATES; * * * (5) IS IN CLASS WITH RESPECT TO THE HULL AND MACHINERY SATISFACTORY TO THE SECRETARY OF COMMERCE ON THE DATE OF ITS PHYSICAL DELIVERY TO THE UNITED STATES AND SHALL BE CONSIDERED AN "OBSOLETE VESSEL" FOR PURPOSES OF THIS SECTION.'

THE BASIC QUESTION PRESENTED BY YOUR LETTER IS WHETHER THE 1.S.S. HAWAIIAN MAY BE TRADED IN PURSUANT TO THE PROVISIONS OF SECTION 510 (H) IN VIEW OF THE FACT THAT SHE WAS BUILT IN 1946 AS A DRY CARGO VESSEL AND CONVERTED TO A COMBINATION TANKER-ORE CARRIER IN 1954.

NOTWITHSTANDING THE "COMBINATION" CHARACTERISTIC OF THE VESSEL, WE PERCEIVE NO OBJECTION TO CONSIDERING IT A "TANKER" WITHIN THE INTENT OF SECTION 510 (H) INASMUCH AS YOU REPORT THAT IT IS PRESENTLY CERTIFIED AS A TANKER BY THE COAST GUARD. YOUR LETTER ALSO STATES THAT THE NEW VESSEL WILL BE BUILT TO SPECIFICATIONS INSURING THAT IT WILL RECEIVE COAST GUARD CERTIFICATION AS A TANKER.

WHILE THE CONVERSION OF THE S.S. HAWAIIAN TO A "TANKER" DID NOT OCCUR UNTIL 1954, WE CONCUR IN YOUR OPINION THAT, SINCE ALL BUT ABOUT 100 FEET OF ITS HULL AND ITS ENTIRE PROPULSION PLANT ARE ELEVEN YEARS OF AGE, THE BASIC VESSEL BEING TRADED IN (WHICH IS NOW CERTIFIED AS A TANKER) IS ELEVEN YEARS OF AGE AND MEETS THE TEN YEAR AGE REQUIREMENT OF SECTION 501 (H).

ACCORDINGLY, ASSUMING THAT THE OTHER PREREQUISITES OF SECTION 510 (H) RELATIVE TO A TRADE-IN ARE COMPLIED WITH, WE WILL NOT BE REQUIRED TO OBJECT TO YOUR PROPOSAL TO ACCEPT THE TRADE-IN OF THE S.S. HAWAIIAN AND ALLOW CREDIT THEREFOR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 510 (H).