Seatrain Shipbuilding Corporation v. Shell Oil Company, U.S. Supreme Court 78-1651, Feb. 20, 1980

Effect of repayment of subsidy

In 1972 Seatrain Shipbuilding Corporation received a subsidy of $27 million to construct a supertanker. When the vessel was completed in 1977 the owners wanted to operate it in the U.S. domestic trade and asked the Secretary of Commerce for permission to repay the subsidy, thus freeing the vessel from the restrictions on its use that were imposed as a condition of the subsidy. These restrictions required the vessel to be used only in the export trade. The Secretary of Commerce agreed to receive a promissory note for the amount of the subsidy and removed the restrictions. Competitors in the domestic trade thereupon brought suit in Federal District Court seeking a declaration that the Secretary of Commerce was unable to grant a permanent release from the foreign-trade-only requirement. The District Court held that the Secretary did have the necessary authority, but the Court of Appeals reversed the judgment. The Supreme Court granted a writ of certiorari and reversed the Court of Appeal.