((a)) ** .—** The Secretary of Transportation shall determine the trade-in allowance for an obsolete vessel at the time of acquisition of the vessel. The allowance shall be the fair value of the vessel. In determining the value, the Secretary shall consider—

((1)) the scrap value of the obsolete vessel in American and foreign markets;

((2)) the depreciated value based on a 20-year or 25-year life, whichever applies to the obsolete vessel; and

((3)) the market value of the obsolete vessel for operation in world commerce or in the domestic or foreign commerce of the United States.

((b)) ** .—** If acquisition of the obsolete vessel occurs when the owner contracts for the construction of the new vessel, and the owner uses the obsolete vessel during the period of construction of the new vessel, the Secretary shall reduce the trade-in allowance by an amount representing the fair value of that use. The Secretary shall establish the rate for use of the obsolete vessel when the contract for construction of the new vessel is made.