52 STAT.] 75TH CONG., 3D SESS-CH. 600-JUNE 23, 1938 SEC. 28. Section 607 (f) of such Act is amended to read as follows: "(h) The earnings of any contractor receiving an operating-differ- ential subsidy under authority of this Act, which are deposited in the contractor's reserve funds as provided in this section, except earn- ings withdrawn from the special reserve funds and paid into the contractor's general funds or distributed as dividends or bonuses as provided in paragraph 4 of subsection (c) of this section, shall be exempt from all Federal taxes. Earnings withdrawn from such spe- cial reserve fund shall be taxable as if earned during the year of withdrawal from such fund." SEC. 29. Section 609 (b) of such Act is hereby repealed. Section 609 (a) of such Act is amended by striking out "(a)". SEC. 30. Title VI of such Act is amended by adding at the end thereof new sections to read as follows: "SEC. 611. (a) The contractor, upon compliance with the provisions of this section, may transfer to foreign registry the vessels covered by any operating-differential subsidy contract held by him, in the event that the United States defaults upon such contract or cancels it with- out just cause. Any contractor desiring to transfer any such vessel to foreign registry upon such default or cancelation shall file an appli- cation in writing with the Commission setting forth its contentions with respect to the lack of just cause or lawful grounds for such default or cancelation. The Commission shall afford the contractor an opportunity for a hearing within twenty days after such contractor files written application therefor, and after the testimony, if any, in such hearing has been reduced to writing and filed with the Commis- sion, it shall, within a reasonable time, grant or deny the application by order. "(b) If any such application is denied, the contractor may obtain a review of the order of denial in the United States Court of Appeals for the District of Columbia, by filing in such court, within twenty days after the entry of such order, a written petition praying that the order of the Commission be set aside. A copy of such petition shall be forthwith served upon any member of the Commission, or upon any officer thereof designated by the Commission for that pur- pose, and thereupon the Commission shall certify and file in the court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript such court shall have exclusive jurisdiction to determine whether such cancelation or default was without just cause, and to affirm or set aside such order. The judgment and decree of the court affirming or setting aside any such order of the Commission shall be final. "(c) No transfer of vessels to foreign registry under this section shall become effective until any indebtedness to the Government or to any citizen of the United States, secured by such vessels, has been paid or discharged, and until after the expiration of ninety days from the date of final determination of the application or the appeal, if any. Within such ninety-day period the Commission may (1) with the consent of the contractor purchase the vessels at cost to the contractor plus cost of capital improvements thereon, less 5 per centum annual depreciation upon such vessel, and the actual depreciated costs of capital improvements thereon, or (2) reinstate the contract and adjust or settle the default found by the Commission or the court to exist. "SEC. 612. The Commission is authorized to subordinate its interest as mortgagee in any vessel subsidized under the provisions of this title in favor of any loan for working capital made by the Reconstruction Finance Corporation under the Reconstruction Finance Corporation Act, as amended, if the Commission finds that the making of such 36525°- 3S --61 961 49 Stat. 2007. Tax exemptions. Exceptions. 49 Stat. 2007. Textual changes. 49 Stat. 2008 . Transfers to foreign registry, when per- mitted. Application. Hearings. Review of adverse decision. Service of petition. Court jurisdiction. Finality of Judg- ment and decree. Payment of In- debtedness due upon transfer. Purchase of vessels by Commission; rein- statement of contract, etc. Loans for working capital; subordination of Commission's in- terest, under specified conditions. 47Stat. 5. 15U.S.C. §601-617; Supp. III, ch. 14.
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