SECTION 1. PROHIBITION ON SALE OF NAVAL VESSELS AND MARITIME 
              ADMINISTRATION VESSELS FOR DISMANTLING, BREAKING UP, OR 
              SCRAPPING ABROAD.

    (a) Prohibition.--Notwithstanding any other provision of law and 
except as provided in subsection (b), the Secretary of the Navy, in the 
case of vessels under the jurisdiction of such Secretary, and the 
Secretary of Transportation, in the case of vessels under the 
jurisdiction of the Maritime Administration, may not sell or otherwise 
dispose of any such vessel otherwise available for sale or disposal for 
purposes of dismantling, breaking up, or scrapping the vessel outside 
the United States.
    (b) Exception.--A vessel described in subsection (a) may be sold or 
otherwise disposed of for purposes of dismantling, breaking up, or 
scrapping abroad if--
            (1) the Administrator of the Environmental Protection 
        Agency certifies to Congress and the Secretaries referred to in 
        subsection (a) that the environmental standards imposed by law 
        and enforced in the country in which the vessel is to be 
        dismantled, broken up, or scrapped, as the case may be, are 
        similar to the environmental standards imposed under United 
        States law; and
            (2) the Secretary of Labor certifies to Congress and such 
        Secretaries that such country recognizes internationally 
        recognized worker rights (as that term is defined in section 
        507(4) of the Trade Act of 1974 (19 U.S.C. 2467(4)).

SEC. 2. DEMONSTRATION PROGRAM FOR BREAKING UP NAVAL VESSELS AND 
              MARITIME ADMINISTRATION VESSELS IN UNITED STATES 
              SHIPYARDS.

    (a) In General.--The Secretary of the Navy shall carry out a 
demonstration program in order to assess the feasibility and 
advisability of breaking up naval vessels and Maritime Administration 
vessels in United States shipyards. The Secretary shall carry out the 
demonstration program in accordance with this section.
    (b) Contract for Breaking Up.--(1) The Secretary shall carry out 
the demonstration program by competitively awarding a cost contract to 
each of two qualified United States shipyards to break up a group of 
vessels consisting of vessels that have been stricken from the Naval 
Vessel Register and vessels under the jurisdiction of the Maritime 
Administration.
    (2) Each contract under paragraph (1) shall be for a term of three 
years.
    (3) The aggregate tonnage of the vessels broken up each year under 
each contract under paragraph (1) shall exceed 80,000 tons. The 
Secretary shall identify the vessels to be covered by each contract 
before awarding the contract.
    (4) The Secretary shall award contracts under paragraph (1) not 
later than 6 months after the date of enactment of this Act.
    (5) For purposes of this subsection, the term ``qualified United 
States shipyard'' means a United States shipyard that--
            (A) is qualified to construct or repair naval vessels or 
        vessels under the jurisdiction of the Maritime Administration;
            (B) is covered by a current Navy Master Ship Repair 
        Agreement;
            (C) is in compliance with all applicable Federal, State, 
        and local license and other requirements relating to the 
        construction or repair of vessels referred to in subparagraph 
        (A);
            (D) has the capacity to provide the facilities and manpower 
        to perform all the activities required of a shipyard under a 
        contract under this section, including the removal of hazardous 
        and controlled substances (including polychlorinated biphenyls, 
        asbestos, and lead paint) in accordance with all applicable 
        Federal, State, and local laws; and
            (E) has the capacity to perform not less than 75 percent of 
        the man-hours of labor required for such activities within the 
        shipyard using employees of the shipyard.
    (c) Shipyard Activities.--Each shipyard awarded a contract under 
subsection (b) shall--
            (1) break up and domestically process all scrap associated 
        with each vessel covered by the contract in accordance with the 
        terms of the contract;
            (2) sell or otherwise dispose of such vessel (and its 
        equipment or other contents) for scrap upon its breaking up 
        under paragraph (1); and
            (3) pay to the United States an amount equal to 50 percent 
        of the amount, if any, by which the proceeds received by the 
        shipyard for the sale or disposal of such vessel under 
        paragraph (2) exceeds the cost incurred by the shipyard in 
        carrying out activities with respect to such vessel under 
        paragraphs (1) and (2).
    (d) Performance of Activities.--Each shipyard awarded a contract 
under subsection (a) shall perform not less than 75 percent of the man-
hours of labor required for the activities specified under subsection 
(c) within the shipyard using employees of the shipyard.
    (e) Report.--Not later than ____ after the date of enactment of 
this Act, the Secretary shall submit to Congress a report on the 
demonstration program. The report shall--
            (1) describe the activities under the demonstration 
        program;
            (2) assess the feasibility and advisability of breaking up 
        naval vessels and Maritime Administration vessels in United 
        States shipyards in light of such activities; and
            (3) include such other findings and recommendations as the 
        Secretary considers appropriate.
Prohibits the Secretaries of the Navy and of Transportation from selling or otherwise disposing of any naval vessel or Maritime Administration vessel, respectively, for purposes of dismantling, breaking up, or scrapping such vessels outside the United States, unless:  (1) the Administrator of the Environmental Protection Agency certifies to the Congress and the Secretaries that environmental standards imposed by law and enforced in the country in which the vessel is to be dismantled, broken up, or scrapped are similar to the environmental standards imposed under U.S. law; and (2) the Secretary of Labor certifies to the Congress and such Secretaries that such country recognizes internationally recognized worker rights. 
Directs the Secretary of the Navy, after assessing the feasibility and advisability of breaking up naval vessels and Maritime Administration vessels in U.S. shipyards, to carry out a demonstration program by competitively awarding a cost contract to each of two qualified U.S. shipyards to break up a group of vessels consisting of any stricken from the Naval Vessel Register and any under the jurisdiction of the Maritime Administration.
A bill to prohibit the sale of naval vessels and Maritime Administration vessels for purposes of scrapping abroad, to establish a demonstration program relating to the breaking up of such vessels in United States shipyards, and for other purposes.