46 U.S.C. § 57305 — Determination of trade-in allowance

(a) In General. The Secretary of Transportation must determine the trade-in allowance for an obsolete vessel^* at the time it's acquired. The allowance equals the vessel's fair value, which the Secretary works out by considering: (1) the vessel's scrap value in American and foreign markets; (2) its depreciated value, based on either a 20-year or 25-year life, whichever fits the vessel^*; and (3) its market value for operating in world commerce, or in U.S. domestic or foreign commerce.

(b) Use of Obsolete Vessels. If the trade-in happens when the owner signs the contract to build the new vessel^*, and the owner keeps using the obsolete vessel while the new one is being built, the Secretary must reduce the trade-in allowance by a fair amount reflecting that continued use. The Secretary sets the usage rate at the time the construction contract is signed.