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[House Report 110-437]
[From the U.S. Government Publishing Office]

110th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 1st Session                                                    110-437

======================================================================

 
  UPDATE AND IMPROVE THE CODIFICATION OF TITLE 46, UNITED STATES CODE

                                _______
                                

  November 8, 2007.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

    Mr. Conyers, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 3387]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 3387) to update and improve the codification of 
title 46, United States Code, having considered the same, 
reports favorably thereon with amendments and recommends that 
the bill as amended do pass.

                                CONTENTS

                                                                 Page
The Amendments.............................................           1
Purpose and Summary........................................           2
Background and Need for the Legislation....................           2
Hearings...................................................           3
Committee Consideration....................................           3
Committee Votes............................................           3
Committee Oversight Findings...............................           3
New Budget Authority and Tax Expenditures..................           3
Congressional Budget Office Cost Estimate..................           3
Performance Goals and Objectives...........................           4
Constitutional Authority Statement.........................           4
Advisory on Earmarks.......................................           4
Section-by-Section Analysis................................           4
Changes in Existing Law Made by the Bill, as Reported......           6

                             The Amendments

    The amendments are as follows:

    Page 2, line 2, strike ``(a) In General.--''.

    Page 2, strike lines 13 and 14.

    Page 2, strike line 16 through page 3, line 13 and insert 
the following:

  (a) Amendment.--Section 30104 of title 46, United States Code, is 
amended by--
          (1) striking ``(a) Cause of Action.--''; and
          (2) striking subsection (b).

    Page 3, line 14, strike ``(c)'' and insert ``(b)''.

    Page 11, line 18, insert ``such'' before ``section''.

    Page 12, after line 2, insert the following:

          (D) Subsection (h)(1) of such section 54101 is amended by 
        striking ``632)'' and inserting ``632))''.

    Page 12, line 3, strike ``(D)'' and insert ``(E)''.

    Page 17, line 25, strike ``subparagraph (A)'' and insert 
``paragraph (1)''.

    Page 21, line 11, strike ``App. U.S.C.'' and insert 
``U.S.C. App.''.

    Page 21, line 14, strike ``App. U.S.C.'' and insert 
``U.S.C. App.''.

    Page 22, after line 3, insert the following:

  (d) Large Passenger Vessel Crew Requirements.--Section 
8103(k)(3)(C)(iv) of title 46, United States Code, is amended by 
inserting ``and section 252 of the Immigration and Nationality Act (8 
U.S.C. 1282)'' after ``of such section''.

                          Purpose and Summary

    The purpose of H.R. 3387 is to update and improve the 
codification of title 46, United States Code. It was prepared 
by the Law Revision Counsel of the House of Representatives in 
accordance with 2 U.S.C. 285b.

                Background and Need for the Legislation

    On October 6, 2006, Congress enacted Public Law 109-304, 
which was an Act to complete the codification of title 46, 
United States Code, ``Shipping'', as positive law. As with all 
codification laws, that law restated and replaced existing law 
as in effect on a particular date, in this case April 30, 2005. 
It also provided that any amendments after that date to the 
provisions being replaced shall be given superseding effect. 
See section 18(a) of Public Law 109-304 (120 Stat. 1709).
    After that so-called ``cutoff date'', Congress amended 
certain of the provisions being replaced. Thus, those 
amendments do not appear in the newly codified version of those 
provisions. This bill updates the newly codified version to 
reflect those subsequent amendments. It also makes certain 
improvements based on public comments that were submitted too 
late to be reflected in Public Law 109-304 and makes technical 
corrections to that law.
    Except for the changes reflecting post-codification 
enactments to the laws codified in title 46, the provisions of 
this bill are not intended to make any substantive changes to 
the laws now codified in that title. Like the codification 
itself, these changes are intended to restate the law without 
substantive change, including applicable case law interpreting 
the earlier, pre-codification provisions. In a few instances, 
changes herein respond to comments, received too late to be 
incorporated into the codification, recommending clarifications 
to more clearly reflect the prior law.

                                Hearings

    No hearings were held on H.R. 3387.

                        Committee Consideration

    On October 10, 2007, the Committee met in open session and 
ordered the bill H.R. 3387 favorably reported with amendments, 
by a voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the Committee consideration of 
H.R. 3387.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 3387, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:
                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, October 22, 2007

Honorable John Conyers Jr.
Chairman
Committee on the Judiciary
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

    The Congressional Budget Office has prepared the enclosed 
cost estimate for H.R. 3387, a bill to update and improve the 
codification of title 46, United States Code.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis, 
who can be reached at 226-2860.

                  Sincerely,

                  Peter R. Orszag
Enclosure

cc: Honorable Lamar S. Smith
   Ranking Member

H.R. 3387--A bill to update and improve the codification of title 46, 
        United States Code
As ordered reported by the House Committee on the Judiciary on 
October 10, 2007

    H.R. 3387 would update and amend the codification of title 
46, United States Code, and would make technical changes to 
various shipping laws enforced by the Maritime Administration 
and the U.S. Coast Guard. CBO estimates that enacting this 
legislation would result in no cost to the federal government 
and would not affect direct spending or revenues.
    H.R. 3387 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would impose no cost on state, local, or tribal governments.
    On August 24, 2007, CBO transmitted a cost estimate for S. 
1778, the Maritime Administration Authorities Act of 2007, as 
ordered reported by the Senate Committee on Commerce, Science, 
and Transportation on July 19, 2007. The provisions of H.R. 
3387 are nearly identical to those of title II of S. 1778, and 
CBO's estimate of the costs of both versions is the same.
    The CBO staff contact for this estimate is Deborah Reis, 
who can be reached at 226-2860. This estimate was approved by 
Theresa Gullo, Deputy Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    In compliance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
bill, H.R. 3387, updates and improves the codification of title 
46, United States Code.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, section 8 of the Constitution.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 3387 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(d), 9(e), or 9(f) of rule XXI.

                      Section-by-Section Analysis

                      SECTION 1--TABLE OF CONTENTS

    Section 1 provides a table of contents.

                           SECTION 2--PURPOSE

    Section 2 provides a statement of purpose.

            SECTION 3--PERSONAL INJURY TO OR DEATH OF SEAMEN

    Section 3 repeals the venue provision for legal actions 
based on the injury or death of a seaman in the course of 
employment, now found in subsection (b) of 46 U.S.C 30104, as 
codified by Public Law 109-304. Section 30104 was intended as a 
codification without substantive change of section 20(a) of the 
Act of March 4, 1915, as amended by section 33 of the Act of 
June 5, 1920 (former 46 U.S.C. App. 688(a)), commonly known as 
the Jones Act. This subsection is being repealed to make 
clearer that the prior law regarding venue, including the 
holding of Pure Oil Co. v. Suarez, 384 U.S. 202 (1966) and 
cases following it, remains in effect, so that the action may 
be brought wherever the seaman's employer does business. 
Because the codified provision could be read to be inconsistent 
with that holding, the Committee believes it should be 
repealed, retroactive to the date of codification, to ensure 
that the codification has not inadvertently resulted, even 
temporarily, in a substantive change.
    Subsection (a) of codified section 30104 is left unchanged. 
Similar language in the earlier, pre-codification statute was 
interpreted to provide that seamen and their survivors not only 
could elect to bring an action at law, with right of trial by 
jury, but also retained an option to proceed in admiralty. 
E.g., Panama R.R. Co. v. Johnson, 264 U.S. 375 (1924). This 
interpretation, like other case law interpreting the earlier 
provision, remains applicable to the codified provision. 
Because the codified provision, like the earlier statute, is 
not inconsistent with this interpretation, the Committee 
believes it unnecessary to make any further clarification.

    SECTION 4--AMENDMENTS TO CHAPTER 537 BASED ON PUBLIC LAW 109-163

    Section 4 updates chapter 537 of title 46, United States 
Code, relating to ship mortgage loans and guarantees, to 
reflect the amendments made by section 3507 of the National 
Defense Authorization Act for Fiscal Year 2006 (Public Law 109-
163).

      SECTION 5--ADDITIONAL AMENDMENTS BASED ON PUBLIC LAW 109-163

    Section 5 updates various provisions codified in title 46, 
United States Code, to reflect the amendments made by sections 
515(g)(2), 3502, 3509, and 3510 of the National Defense 
Authorization Act for Fiscal Year 2006 (Public Law 109-163). It 
also adds a new section 54101 to title 46 based on section 3506 
of that Act.

           SECTION 6--AMENDMENTS BASED ON PUBLIC LAW 109-171

    Section 6 updates section 60301 of title 46, United States 
Code, to reflect the amendments made by section 4001 of the 
Deficit Reduction Act of 2005 (Public Law 109-171).

           SECTION 7--AMENDMENTS BASED ON PUBLIC LAW 109-241

    Section 7 updates various provisions codified in title 46, 
United States Code, to reflect the amendments made by sections 
303, 307, 308, 310, 901(q), and 902(o) of the Coast Guard and 
Maritime Transportation Act of 2006 (Public Law 109-241).

           SECTION 8--AMENDMENTS BASED ON PUBLIC LAW 109-364

    Section 8 updates cross references in section 1017(b)(2) of 
the John Warner National Defense Authorization Act for Fiscal 
Year 2007 (Public Law 109-364, 10 U.S.C. 2631 note) to reflect 
the codification in title 46, United States Code, of the 
provisions referenced.
    This section also updates various provisions codified in 
title 46, United States Code, to reflect the amendments made by 
sections 3505, 3506, 3508, and 3510(a) and (b) of that Act.

                  SECTION 9--MISCELLANEOUS AMENDMENTS

    Subsection (a) deletes the reference to Canton Island in 
section 55101(b) of title 46, United States Code, because 
Canton Island is no longer a territory or possession of the 
United States.
    Subsection (b) amends section 55110 of title 46, United 
States Code, to improve the heading.

   SECTION 10--APPLICATION OF SUNSET PROVISION TO CODIFIED PROVISION

    Section 301(a)(2)(E) of the Jobs and Growth Tax Relief 
Reconciliation Act of 2003 (Public Law 108-27) amended the 
second sentence of section 607(h)(6)(A) of the Merchant Marine 
Act, 1936 (former 46 U.S.C. App. 1177(h)(6)(A)), by striking 
``20 percent'' and inserting ``15 percent''. However, section 
303 of that amending law provided that the amendment shall not 
apply to taxable years beginning after December 31, 2008, and 
that the Internal Revenue Code of 1986 shall be applied to such 
years as if the amendment had never been enacted. The second 
sentence of section 607(h)(6)(A) of the Merchant Marine Act, 
1936, was codified in section 53511(f)(2) of title 46, United 
States Code. The purpose of this section is to ensure that the 
tax rate in section 53511(f)(2) is the same as it would have 
been under former section 607(h)(6)(A). This section does not 
amend section 53511(f)(2) directly in case of any further 
amendment to section 303 of Public Law 108-27.

                   SECTION 11--TECHNICAL CORRECTIONS

    Subsections (a) to (c) make technical corrections to Public 
Law 109-304 and to provisions enacted or amended by that law.
    Subsection (d) amends section 8103(k)(3)(C)(iv) of title 
46, United States Code, to clarify that the provision applies 
notwithstanding the section added to the cross reference.

         Changes in Existing Law Made by the Bill, as Reported

    As required by clause 3(e) of rule XIII of the Rules of the 
House of Representatives, changes in existing law proposed by 
the bill are shown below. Existing law to be stricken is shown 
in strikeout, new law to be inserted is shown in italic, and 
existing law in which no change is proposed is shown in roman.

                      Title 46, United States Code

                                 * * *

                    Subtitle II--Vessels and Seamen

                                 * * *

                       Part A--General Provisions

                                 * * *

                          CHAPTER 21--GENERAL

Sec.
2108.  Refund of penalties.

                                 * * *

                       Part F--Manning of Vessels

                                 * * *

                          CHAPTER 81--GENERAL

                                 * * *

Sec. 8103. Citizenship and Navy Reserve requirements

                                 * * *

  (k) Crew Requirements for Large Passenger Vessels.--

                                 * * *

          (3) Special rules for certain licensed seamen.--

                                 * * *

                  (C) Status, documentation, and employment.--
                An unlicensed seaman described in subparagraph 
                (C) or (D) of paragraph (1) of this 
                subsection--

                                 * * *

                          (iv) may be employed for a period of 
                        service on board not to exceed 36 
                        months in the aggregate as a 
                        nonimmigrant crewman described in 
                        section 101(a)(15)(D)(i) of the 
                        Immigration and Nationality Act (8 
                        U.S.C. 1101(a)(15)(D)(i)) on vessels 
                        engaged in domestic voyages 
                        notwithstanding the departure 
                        requirements and time limitations of 
                        such section and section 252 of the 
                        Immigration and Nationality Act (8 
                        U.S.C. 1282) and the regulations and 
                        rules promulgated thereunder.

                                 * * *

                   Part H--Identification of Vessels

                                 * * *

                 CHAPTER 121--DOCUMENTATION OF VESSELS

                                 * * *

Sec. 12111. Registry endorsement

                                 * * *

  (d) Activities Involving Mobile Offshore Drilling Units.--
          (1) In general.--Only a vessel for which a 
        certificate of documentation with a registry 
        endorsement is issued may engage in--
                  (A) the setting, relocation, or recovery of 
                the anchors or other mooring equipment of a 
                mobile offshore drilling unit that is located 
                over the outer Continental Shelf (as defined in 
                section 2(a) of the Outer Continental Shelf 
                Lands Act (43 U.S.C. 1331(a))); or
                  (B) the transportation of merchandise or 
                personnel to or from a point in the United 
                States from or to a mobile offshore drilling 
                unit located over the outer Continental Shelf 
                that is not attached to the seabed.
          (2) Coastwise trade not authorized.--Nothing in 
        paragraph (1) authorizes the employment in the 
        coastwise trade of a vessel that does not meet the 
        requirements of section 12112 of this title.

                                 * * *

Sec. 12113. Fishery endorsement

                                 * * *

  (g) Vessels Purchased Through Fishing Capacity Reduction 
Program.--A vessel purchased by the Secretary of Commerce 
through a fishing capacity reduction program under the 
Magnuson-Stevens Fishery Conservation and Management Act (16 
U.S.C. 1801 et seq.) or section 308 of the Interjurisdictional 
Fisheries Act of 1986 (16 U.S.C. 4107) is not eligible for a 
fishery endorsement, and any fishery endorsement issued for 
that vessel is invalid.

                                 * * *

Sec. 12131. Command of documented vessels

  (a) In General.--Except as provided in subsection (b), a 
documented vessel may be placed under the commmand command only 
of a citizen of the United States.

                                 * * *

Sec. 12139. Reports

  (a) In General.--To ensure compliance with this chapter and 
laws governing the qualifications of vessels to engage in the 
coastwise trade and the fisheries, the Secretary may require 
owners, masters, and charterers charterers, and mortgagees of 
documented vessels to submit reports in any reasonable form and 
manner the Secretary may prescribe.

                                 * * *

                    Subtitle III--Maritime Liability

                                 * * *

               CHAPTER 301--GENERAL LIABILITY PROVISIONS

                                 * * *

Sec. 30104. Personal injury to or death of seamen

  (a) Cause of Action.-- A seaman injured in the course of 
employment or, if the seaman dies from the injury, the personal 
representative of the seaman may elect to bring a civil action 
at law, with the right of trial by jury, against the employer. 
Laws of the United States regulating recovery for personal 
injury to, or death of, a railway employee apply to an action 
under this section.
  (b) Venue.--An action under this section shall be brought in 
the judicial district in which the employer resides or the 
employer's principal office is located.

                                 * * *

                      Subtitle V--Merchant Marine

                                 * * *

                 Part C--Financial Assistance Programs

Maritime Security Fleet............................................53101
Construction Reserve Funds.........................................53301
Capital Construction Funds.........................................53501
Loans and Guarantees...............................................53701
War Risk Insurance.................................................53901
Miscellaneous......................................................54101

                                 * * *

                    Part B--Merchant Marine Service

                                 * * *

           CHAPTER 513--UNITED STATES MERCHANT MARINE ACADEMY

Sec.
51311.  Midshipman status in the Naval Navy Reserve.

                                 * * *

Sec. 51306. Cadet commitment agreements

  (a) Agreement Requirements.--A citizen of the United States 
appointed as a cadet at the United States Merchant Marine 
Academy must sign, as a condition of the appointment, an 
agreement to--

                                 * * *

          (4) apply for, and accept if tendered, an appointment 
        as a commissioned officer in the Naval Navy Reserve 
        (including the Merchant Marine Reserve, Naval Navy 
        Reserve), the Coast Guard Reserve, or any other reserve 
        unit of an armed force of the United States, and, if 
        tendered the appointment, to serve for at least 6 years 
        after graduation from the Academy;

                                 * * *

  (e) Alternate Service.--
          (1) Service as commissioned officer.--An individual 
        who, for the 5-year period following graduation from 
        the Academy, serves as a commissioned officer on active 
        duty in an armed force of the United States or as a 
        commissioned officer of the National Oceanic and 
        Atmospheric Administration or the Public Health Service 
        shall be excused from the requirements of subsection 
        (a)(3)-(5).
          (2) Modification or waiver.--The Secretary may modify 
        or waive any of the terms and conditions set forth in 
        subsection (a) through the imposition of alternative 
        service requirements.
  (f) Service Obligation Performance Reporting Requirement.--
          (1) In general.--Subject to any otherwise applicable 
        restrictions on disclosure in section 552a of title 5, 
        the Secretary of Defense, the Secretary of the 
        department in which the Coast Guard is operating, the 
        Administrator of the National Oceanic and Atmospheric 
        Administration, and the Surgeon General of the Public 
        Health Service--
                  (A) shall report the status of obligated 
                service of an individual graduate of the 
                Academy upon request of the Secretary; and
                  (B) may, in their discretion, notify the 
                Secretary of any failure of the graduate to 
                perform the graduate's duties, either on active 
                duty or in the Ready Reserve component of their 
                respective service, or as a commissioned 
                officer of the National Oceanic and Atmospheric 
                Administration or the Public Health Service, 
                respectively.
          (2) Information to be provided.--A report or notice 
        under paragraph (1) shall identify any graduate 
        determined to have failed to comply with service 
        obligation requirements and provide all required 
        information as to why such graduate failed to comply.
          (3) Considered as in default.--Upon receipt of such a 
        report or notice, such graduate may be considered to be 
        in default of the graduate's service obligations by the 
        Secretary, and subject to all remedies the Secretary 
        may have with respect to such a default.

                                 * * *

Sec. 51307. Places of training

  The Secretary of Transportation may provide for the training 
of cadets at the United States Merchant Marine Academy--
          (1) on vessels owned or subsidized by the United 
        States Government;
          (2) on other documented vessels, with the permission 
        of the owner; and
          (3) in shipyards or plants and with industrial or 
        educational organizations. ; and
          (4) on any other vessel considered by the Secretary 
        to be necessary or appropriate or in the national 
        interest.

                                 * * *

Sec. 51311. Midshipman status in the Naval Navy Reserve

  (a) Application Requirement.--Before being appointed as a 
cadet at the United States Merchant Marine Academy, a citizen 
of the United States must agree to apply for midshipman status 
in the Naval Navy Reserve (including the Merchant Marine 
Reserve, Naval Navy Reserve).
  (b) Appointment.--
          (1) In general.--A citizen of the United States 
        appointed as a cadet at the Academy shall be appointed 
        by the Secretary of the Navy as a midshipman in the 
        Naval Navy Reserve (including the Merchant Marine 
        Reserve, Naval Navy Reserve).
          (2) Rights and privileges.--The Secretary of the Navy 
        shall provide for cadets of the Academy who are 
        midshipmen in the United States Naval Navy Reserve to 
        be--

                                 * * *

          CHAPTER 515--STATE MARITIME ACADEMY SUPPORT PROGRAM

Sec.
51511.  Midshipman status in the Naval Navy Reserve.

                                 * * *

Sec. 51504. Use of training vessels

                                 * * *

  (f) Fuel Costs.--The Secretary may pay to a State maritime 
academy the costs of fuel used by a vessel provided under this 
section while used for training.
  (f) Fuel Costs.--
          (1) In general.--Subject to the availability of 
        appropriations, the Secretary shall pay to each State 
        maritime academy the costs of fuel used by a vessel 
        provided under this section while used for training.
          (2) Maximum amounts.--The amount of the payment to a 
        State maritime academy under paragraph (1) may not 
        exceed--
                  (A) $100,000 for fiscal year 2006;
                  (B) $200,000 for fiscal year 2007; and
                  (C) $300,000 for fiscal year 2008 and each 
                fiscal year thereafter.

                                 * * *

Sec. 51505. Annual payments for maintenance and support

                                 * * *

  (b) Payments.--

                                 * * *

          (2) Maximum.--The amount under paragraph (1) may not 
        be more than $25,000. However, if the academy satisfies 
        section 51506(b) of this title, the amount shall be--
                  (A) $100,000 for a State maritime academy; 
                and
                  (B) $200,000 $300,000 for fiscal year 2006, 
                $400,000 for fiscal year 2007, and $500,000 for 
                fiscal year 2008 and each fiscal year 
                thereafter for a regional maritime academy.

                                 * * *

Sec. 51509. Student incentive payment agreements

                                 * * *

  (c) Midshipman and Enlisted Reserve Status.--An agreement 
under this section shall require the student to accept 
midshipman and enlisted reserve status in the Naval Navy 
Reserve (including the Merchant Marine Reserve, Naval Navy 
Reserve) or the Coast Guard Reserve before receiving any 
payments under the agreement.
  (d) Agreement Requirements.--An agreement under this section 
shall require the student to--

                                 * * *

          (4) accept, if tendered, an appointment as a 
        commissioned officer in the Naval Navy Reserve 
        (including the Merchant Marine Reserve, Naval Navy 
        Reserve), the Coast Guard Reserve, or any other reserve 
        unit of an armed force of the United States, and, if 
        tendered the appointment, to serve for at least 6 years 
        after graduation from the academy;

                                 * * *

Sec. 51511. Midshipman status in the Naval Navy Reserve

  A citizen of the United States attending a State maritime 
academy may be appointed by the Secretary of the Navy as a 
midshipman in the Naval Navy Reserve (including the Merchant 
Marine Reserve, Naval Navy Reserve).

                                 * * *

        CHAPTER 517--OTHER SUPPORT FOR MERCHANT MARINE TRAINING

                                 * * *

Sec. 51701. United States Maritime Service

  (a) General Authority.--The Secretary of Transportation may 
establish and maintain a voluntary organization, to be known as 
the United States Maritime Service, for the training of 
citizens of the United States to serve on merchant vessels of 
the United States and to perform functions to assist the United 
States merchant marine, as determined necessary by the 
Secretary.

                                 * * *

                  CHAPTER 519--MERCHANT MARINE AWARDS

Sec.
51907.  Manufacture and sale of awards and replacements.
51907.  Provision of decorations, medals, and replacements.

                                 * * *

Sec. 51907. Manufacture and sale of awards and replacements

  The Secretary of Transportation may--
          (1) authorize private persons to manufacture 
        decorations and medals authorized under this chapter or 
        a prior law; and
          (2) provide at cost, or authorize private persons to 
        sell at reasonable prices, replacements for those 
        decorations and medals.

51907. Provision of decorations, medals, and replacements

  The Secretary of Transportation may provide--
          (1) the decorations and medals authorized by this 
        chapter and replacements for those decorations and 
        medals; and
          (2) replacements for decorations and medals issued 
        under a prior law.

Sec. 51908. Prohibition against unauthorized manufacture, sale, 
                    possession, or display of awards

  (a) Prohibition.--Except as authorized under this chapter by 
this chapter or the Secretary of Transportation, a person may 
not manufacture, sell, possess, or display a decoration or 
medal provided for in this chapter.

                                 * * *

                 Part C--Financial Assistance Programs

                                 * * *

                  CHAPTER 531--MARITIME SECURITY FLEET

                                 * * *

Sec. 53105. Obligations and rights under operating agreements

                                 * * *

  (e) Transfer of Operating Agreements.--

                                 * * *

          (2) Limitation.--The Secretary of Defense may not 
        approve under paragraph (1) transfer of an operating 
        agreement to a person that is not a citizen of the 
        United States under section 2 of the Shipping Act, 1916 
        (46 U.S.C. App. 802), section 50501 of this title 
        unless the Secretary of Defense determines that there 
        is no person who is a citizen of the United States 
        under such section and is interested in obtaining the 
        operating agreement for a vessel that is otherwise 
        eligible to be included in the Fleet under section 
        53102(b) and meets the requirements of the Department 
        of Defense.

                                 * * *

                   CHAPTER 537--LOANS AND GUARANTEES

                          SUBCHAPTER I--GENERAL

Sec.
53701.  Definitions.
53702.  General authority.
53703.  Application procedures.
53704.  Funding limits.
53705.  Pledge of United States Government.
53706.  Eligible purposes of obligations.
53707.  Findings related to obligors and operators.
53708.  Findings related to economic soundness.
53709.  Amount of obligations.
53710.  Contents of obligations.
53711.  Security interest.
53712.  Monitoring financial condition and operations of obligor.
53713.  Administrative fees.
53714.  Guarantee fees.
53715.  Escrow fund.
53716.  Deposit fund.
53717.  Management of funds in the Treasury.
53718.  Annual report to Congress.

                    SUBCHAPTER II--DEFAULT PROVISIONS

53721.  Rights of obligee.
53722.  Actions by Secretary or Administrator.
53723.  Payments by Secretary or Administrator and issuance of 
          obligations.
53724.  Rights to secured property.
53725.  Actions against obligor.

                   SUBCHAPTER III--PARTICULAR PROJECTS

53731.  Commercial demonstration ocean thermal energy conversion 
          facilities and plantships.
53732.  Eligible export vessels.
53733.  Shipyard modernization and improvement.
53734.  Replacement of vessels because of changes in operating 
          standards.
53735.  Fisheries financing and capacity reduction.

                         SUBCHAPTER I--GENERAL

Sec. 53701. Definitions

  In this chapter:
          (1) Actual cost.--The term ``actual cost'' means the 
        sum of--
                  (A) all amounts paid by or for the account of 
                the obligor as of the date on which a 
                determination is made under section 53715(d)(1) 
                of this title; and
                  (B) all amounts that the Secretary or 
                Administrator reasonably estimates the obligor 
                will become obligated to pay from time to time 
                thereafter, for the construction, 
                reconstruction, or reconditioning of the 
                vessel, including guarantee fees that will 
                become payable under section 53714 of this 
                title in connection with all obligations issued 
                for construction, reconstruction, or 
                reconditioning of the vessel or equipment to be 
                delivered, and all obligations issued for the 
                delivered vessel or equipment.
          (2) Administrator.--The term ``Administrator'' means 
        the Administrator of the Maritime Administration.
          (2) (3) Construction, reconstruction, and 
        reconditioning.--The terms ``construction'', 
        ``reconstruction'', and ``reconditioning'' include 
        designing, inspecting, outfitting, and equipping.
          (3) (4) Depreciated actual cost.--The term 
        ``depreciated actual cost'' of a vessel means--
                  (A) if the vessel was not reconstructed or 
                reconditioned, the actual cost of the vessel 
                depreciated on a straight line basis over the 
                useful life of the vessel as determined by the 
                Secretary or Administrator, not to exceed 25 
                years from the date of delivery by the builder; 
                or
                  (B) if the vessel was reconstructed or 
                reconditioned, the sum of--
                          (i) the actual cost of the vessel 
                        depreciated on a straight line basis 
                        from the date of delivery by the 
                        builder to the date of the 
                        reconstruction or reconditioning, using 
                        the original useful life of the vessel, 
                        and from the date of the reconstruction 
                        or reconditioning, using a useful life 
                        of the vessel determined by the 
                        Secretary or Administrator; and
                          (ii) any amount paid or obligated to 
                        be paid for the reconstruction or 
                        reconditioning, depreciated on a 
                        straight line basis using a useful life 
                        of the vessel determined by the 
                        Secretary or Administrator.
          (4) (5) Eligible export vessel.--The term ``eligible 
        export vessel'' means a vessel that--
                  (A) is constructed, reconstructed, or 
                reconditioned in the United States for use in 
                world-wide trade; and
                  (B) will, on delivery or redelivery, become 
                or remain documented under the laws of a 
                country other than the United States.
          (5) (6) Fishery facility.--
                  (A) In general.--Subject to subparagraph (B), 
                the term ``fishery facility'' means--
                          (i) for operations on land--
                                  (I) a structure or 
                                appurtenance thereto designed 
                                for the unloading and receiving 
                                from vessels, the processing, 
                                the holding pending processing, 
                                the distribution after 
                                processing, or the holding 
                                pending distribution, of fish 
                                from a fishery;
                                  (II) the land necessary for 
                                the structure or appurtenance; 
                                and
                                  (III) equipment that is for 
                                use with the structure or 
                                appurtenance and that is 
                                necessary for performing a 
                                function referred to in 
                                subclause (I);
                          (ii) for operations not on land, a 
                        vessel built in the United States and 
                        used for, equipped to be used for, or 
                        of a type normally used for, the 
                        processing of fish; or
                          (iii) for aquaculture, including 
                        operations on land or elsewhere--
                                  (I) a structure or 
                                appurtenance thereto designed 
                                for aquaculture;
                                  (II) the land necessary for 
                                the structure or appurtenance;
                                  (III) equipment that is for 
                                use with the structure or 
                                appurtenance and that is 
                                necessary for performing a 
                                function referred to in 
                                subclause (I); and
                                  (IV) a vessel built in the 
                                United States and used for, 
                                equipped to be used for, or of 
                                a type normally used for, 
                                aquaculture.
                  (B) Required ownership.--Under subparagraph 
                (A), the structure, appurtenance, land, 
                equipment, or vessel must be owned by--
                          (i) an individual who is a citizen of 
                        the United States; or
                          (ii) an entity that is a citizen of 
                        the United States under section 50501 
                        of this title and that is at least 75 
                        percent owned (as determined under that 
                        section) by citizens of the United 
                        States.
          (6) (7) Fishing vessel.--The term ``fishing vessel'' 
        has the meaning given that term in section 3 of the 
        Magnuson-Stevens Fishery Conservation and Management 
        Act (16 U.S.C. 1802), and any reference in this chapter 
        to a vessel designed principally for commercial use in 
        the fishing trade or industry is deemed to be a 
        reference to a fishing vessel.
          (7) (8) Mortgage.--The term ``mortgage'' includes--
                  (A) a preferred mortgage as defined in 
                section 31301 of this title; and
                  (B) a mortgage on a vessel that will become a 
                preferred mortgage when filed or recorded under 
                chapter 313 of this title.
          (8) (9) Obligation.--The term ``obligation'' means an 
        instrument of indebtedness issued for a purpose 
        described in section 53706 of this title, except--
                  (A) an obligation issued by the Secretary or 
                Administrator under section 53723 of this 
                title; and
                  (B) an obligation eligible for investment of 
                funds under section 53715(f) or 53717 of this 
                title.
          (9) (10) Obligee.--The term ``obligee'' means the 
        holder of an obligation.
          (10) (11) Obligor.--The term ``obligor'' means a 
        party primarily liable for payment of the principal of 
        or interest on an obligation.
          (11) (12) Ocean thermal energy conversion facility or 
        plantship.--The term ``ocean thermal energy conversion 
        facility or plantship'' means an at-sea facility or 
        vessel, whether mobile, floating unmoored, moored, or 
        standing on the seabed, that uses temperature 
        differences in ocean water to produce electricity or 
        another form of energy capable of being used directly 
        to perform work, and includes--
                  (A) equipment installed on the facility or 
                vessel to use the electricity or other form of 
                energy to produce, process, refine, or 
                manufacture a product;
                  (B) a cable or pipeline used to deliver the 
                electricity, freshwater, or product to shore; 
                and
                  (C) other associated equipment and 
                appurtenances of the facility or vessel to the 
                extent they are located seaward of the high 
                water mark.
          (12) (13) Secretary.--The term ``Secretary'' means--
                  (A) the Secretary of Commerce with respect to 
                fishing vessels and fishery facilities; and
                  (B) the Secretary of Transportation with 
                respect to other vessels and general shipyard 
                facilities (as defined in section 53733(a) of 
                this title).
          (13) Secretary.--The term ``Secretary'' means the 
        Secretary of Commerce with respect to fishing vessels 
        and fishery facilities.
          (13) (14) Vessel.--The term ``vessel'' means any type 
        of vessel, whether in existence or under construction, 
        including--
                  (A) a cargo vessel;
                  (B) a passenger vessel;
                  (C) a combination cargo and passenger vessel;
                  (D) a tanker;
                  (E) a tug or towboat;
                  (F) a barge;
                  (G) a dredge;
                  (H) a floating drydock with a capacity of at 
                least 35,000 lifting tons and a beam of at 
                least 125 feet between the wing walls;
                  (I) an oceanographic research vessel;
                  (J) an instruction vessel;
                  (K) a pollution treatment, abatement, or 
                control vessel;
                  (L) a fishing vessel whose ownership meets 
                the citizenship requirements under section 
                50501 of this title for documenting vessels to 
                operate in the coastwise trade; and
                  (M) an ocean thermal energy conversion 
                facility or plantship that is or will be 
                documented under the laws of the United States.

Sec. 53702. General authority

  (a) In General.--The Secretary or Administrator, on terms the 
Secretary or Administrator may prescribe, may guarantee or make 
a commitment to guarantee the payment of the principal of and 
interest on an obligation eligible to be guaranteed under this 
chapter. A guarantee or commitment to guarantee shall cover 100 
percent of the principal and interest.
  (b) Direct Loans for Fisheries.--
          (1) In general.--Notwithstanding any other provision 
        of this chapter, any obligation involving a fishing 
        vessel, fishery facility, aquaculture facility, 
        individual fishing quota, or fishing capacity reduction 
        program issued under this chapter after October 11, 
        1996, shall be a direct loan obligation for which the 
        Secretary shall be the obligee, rather than an 
        obligation issued to an obligee other than the 
        Secretary and guaranteed by the Secretary. A direct 
        loan obligation under this subsection shall be treated 
        in the same manner and to the same extent as an 
        obligation guaranteed under this chapter except with 
        respect to provisions of this chapter that by their 
        nature can only be applied to obligations guaranteed 
        under this chapter.
          (2) Interest rate.--Notwithstanding any other 
        provision of this chapter, the annual rate of interest 
        an obligor shall pay on a direct loan obligation under 
        this subsection is 2 percent plus the additional 
        percent the Secretary must pay as interest to borrow 
        from the Treasury the funds to make the loan.

Sec. 53703. Application procedures

  (a) Time for Decision.--
          (1) In general.--The Secretary or Administrator shall 
        approve or deny an application for a loan guarantee 
        under this chapter within 270 days after the date on 
        which the signed application is received by the 
        Secretary or Administrator.
          (2) Extension.--On request by an applicant, the 
        Secretary or Administrator may extend the 270-day 
        period in paragraph (1) to a date not later than 2 
        years after the date on which the signed application 
        was received by the Secretary or Administrator.
  (b) Certification of Review.--The Secretary or Administrator 
may not guarantee or make a commitment to guarantee an 
obligation under this chapter unless the Secretary or 
Administrator certifies that a full and fair consideration of 
all the regulatory requirements, including economic soundness 
and financial requirements applicable to the obligor and 
related parties, and a thorough assessment of the technical, 
economic, and financial aspects of the loan application, has 
been made.

Sec. 53704. Funding limits

  (a) General Limitations.--The total unpaid principal amount 
of obligations guaranteed under this chapter and outstanding at 
one time may not exceed $12,000,000,000. Of that amount--
          (1) $850,000,000 shall be limited to obligations 
        related to fishing vessels and fishery facilities; and
          (2) $3,000,000,000 shall be limited to obligations 
        related to eligible export vessels.
  (b) Additional Limitations.--Additional limitations may not 
be imposed on new commitments to guarantee loans for any fiscal 
year, except in amounts established in advance by annual 
authorization laws. A vessel eligible for a guarantee under 
this chapter may not be denied eligibility because of its type.
  (c) Limits Based on Risk Factors.--
          (1) Definition.--In this subsection, the term 
        ``cost'' has the meaning given that term in section 502 
        of the Federal Credit Reform Act of 1990 (2 U.S.C. 
        661a).
          (2) System of risk categories.--The Secretary or 
        Administrator shall--
                  (A) establish, and update annually, a system 
                of risk categories for obligations guaranteed 
                under this chapter that categorizes the 
                relative risk of guarantees based on the risk 
                factors set forth in paragraph (4);
                  (B) determine annually for each risk category 
                a subsidy rate equivalent to the cost of 
                obligations in the category, expressed as a 
                percentage of the amount guaranteed for 
                obligations in the category; and
                  (C) ensure that each risk category is 
                comprised of loans that are relatively 
                homogeneous in cost and share characteristics 
                predictive of defaults and other costs, given 
                the facts known at the time of obligation or 
                commitment, using a risk category system that 
                is based on historical analysis of program data 
                and statistical evidence concerning the likely 
                costs of defaults or other costs that are 
                expected to be associated with the loans in the 
                category.
          (3) Use of system.--
                  (A) Placing obligation in category.--Before 
                making a guarantee under this chapter for an 
                obligation, and annually for projects subject 
                to a guarantee, the Secretary or Administrator 
                shall apply the risk factors specified in 
                paragraph (4) to place the obligation in a risk 
                category established under paragraph (2).
                  (B) Reduction of available amount.--The 
                Secretary or Administrator shall consider the 
                total amount available to the Secretary or 
                Administrator for making guarantees under this 
                chapter to be reduced by the amount determined 
                by multiplying--
                          (i) the amount guaranteed under this 
                        chapter for an obligation; by
                          (ii) the subsidy rate for the 
                        category in which the obligation is 
                        placed under subparagraph (A).
                  (C) Estimated cost.--The estimated cost to 
                the United States Government of a guarantee 
                under this chapter for an obligation is deemed 
                to be the amount determined under subparagraph 
                (B) for the obligation.
                  (D) Restriction on further guarantees.--The 
                Secretary or Administrator may not guarantee 
                obligations under this chapter after the total 
                amount available to the Secretary or 
                Administrator under appropriations laws for the 
                cost of loan guarantees is considered to be 
                reduced to zero under subparagraph (B).
          (4) Risk factors.--The risk factors referred to in 
        this subsection are--
                  (A) if applicable, the country risk for each 
                eligible export vessel financed or to be 
                financed by an obligation;
                  (B) the period for which an obligation is 
                guaranteed or to be guaranteed;
                  (C) the amount of an obligation guaranteed or 
                to be guaranteed in relation to the total cost 
                of the project financed or to be financed by 
                the obligation;
                  (D) the financial condition of an obligor or 
                applicant for a guarantee;
                  (E) if applicable, other guarantees related 
                to the project;
                  (F) if applicable, the projected employment 
                of each vessel or equipment to be financed with 
                an obligation;
                  (G) if applicable, the projected market that 
                will be served by each vessel or equipment to 
                be financed with an obligation;
                  (H) the collateral provided for a guarantee 
                for an obligation;
                  (I) the management and operating experience 
                of an obligor or applicant for a guarantee;
                  (J) whether a guarantee under this chapter is 
                or will be in effect during the construction 
                period of the project; and
                  (K) the concentration risk presented by an 
                unduly large percentage of loans outstanding by 
                any one borrower or group of affiliated 
                borrowers.

Sec. 53705. Pledge of United States Government

  (a) Full Faith and Credit.--The full faith and credit of the 
United States Government is pledged to the payment of a 
guarantee made under this chapter, for both principal and 
interest, including interest (as may be provided for in the 
guarantee) accruing between the date of default under a 
guaranteed obligation and the date of payment in full of the 
guarantee.
  (b) Incontestability.--A guarantee or commitment to guarantee 
made under this chapter is conclusive evidence of the 
eligibility of the obligation for the guarantee. The validity 
of a guarantee or commitment to guarantee made under this 
chapter is incontestable.

Sec. 53706. Eligible purposes of obligations

  (a) In General.--To be eligible for a guarantee under this 
chapter, an obligation must aid in any of the following:
          (1)(A) Financing (including reimbursement of an 
        obligor for expenditures previously made for) the 
        construction, reconstruction, or reconditioning of a 
        vessel (including an eligible export vessel) designed 
        principally for research, or for commercial use--
                  (i) in the coastwise or intercoastal trade;
                  (ii) on the Great Lakes, or on bays, sounds, 
                rivers, harbors, or inland lakes of the United 
                States;
                  (iii) in foreign trade as defined in section 
                109(b) of this title;
                  (iv) as an ocean thermal energy conversion 
                facility or plantship;
                  (v) as a floating drydock in the 
                construction, reconstruction, reconditioning, 
                or repair of vessels; or
                  (vi) as an eligible export vessel in 
                worldwide trade.
          (B) A guarantee under subparagraph (A) may not be 
        made more than one year after delivery of the vessel 
        (or redelivery if the vessel was reconstructed or 
        reconditioned) unless the proceeds of the obligation 
        are used to finance the construction, reconstruction, 
        or reconditioning of a vessel or of facilities or 
        equipment related to marine operations.
          (2) Financing (including reimbursement of an obligor 
        for expenditures previously made for) the construction, 
        reconstruction, reconditioning, or purchase of a vessel 
        owned by citizens of the United States and designed 
        principally for research, or for commercial use in the 
        fishing industry.
          (3) Financing the purchase, reconstruction, or 
        reconditioning of a vessel or fishery facility--
                  (A) for which an obligation was guaranteed 
                under this chapter; and
                  (B) that, under subchapter II of this 
                chapter--
                          (i) is a vessel or fishery facility 
                        for which an obligation was accelerated 
                        and paid;
                          (ii) was acquired by the Federal Ship 
                        Financing Fund or successor account 
                        under section 53717 of this title; or
                          (iii) was sold at foreclosure begun 
                        or intervened in by the Secretary or 
                        Administrator.
          (4) Financing any part of the repayment to the United 
        States Government of any amount of a construction-
        differential subsidy paid for a vessel.
          (5) Refinancing an existing obligation (regardless of 
        whether guaranteed under this chapter) issued for a 
        purpose described in paragraphs (1)-(4), including a 
        short-term obligation incurred to obtain temporary 
        funds with the intention of refinancing.
          (6) Financing or refinancing (including reimbursement 
        of an obligor for expenditures previously made for) the 
        construction, reconstruction, reconditioning, or 
        purchase of a fishery facility.
          (7) Financing or refinancing (including reimbursement 
        of an obligor for expenditures previously made for) the 
        purchase of an individual fishing quota in accordance 
        with section 303(d)(4) of the Magnuson-Stevens Fishery 
        Conservation and Management Act (16 U.S.C. 1853(d)(4)).
  (b) Non-Vessels Treated as Vessels.--An obligation guaranteed 
under subsection (a)(6) or (7) shall be treated, for purposes 
of this chapter, in the same manner and to the same extent as 
an obligation that aids in financing the construction, 
reconstruction, reconditioning, or purchase of a vessel, except 
with respect to provisions that by their nature can only be 
applied to vessels.
  (c) Priorities for Certain Vessels.--In guaranteeing or 
making a commitment to guarantee an obligation under this 
chapter, the Secretary shall give priority to--
          (1) a vessel that is otherwise eligible for a 
        guarantee and is constructed with assistance under 
        subtitle D of the Maritime Security Act of 2003 (46 
        U.S.C. 53101 note); and
          (2) after applying paragraph (1), a vessel that is 
        otherwise eligible for a guarantee and that the 
        Secretary of Defense determines--
                  (A) is suitable for service as a naval 
                auxiliary in time of war or national emergency; 
                and
                  (B) meets a shortfall in sealift capacity or 
                capability.
  (c) Priorities for Certain Vessels.--
          (1) Vessels.--In guaranteeing or making a commitment 
        to guarantee an obligation under this chapter, the 
        Administrator shall give priority to--
                  (A) a vessel that is otherwise eligible for a 
                guarantee and is constructed with assistance 
                under subtitle D of the Maritime Security Act 
                of 2003 (46 U.S.C. 53101 note); and
                  (B) after applying subparagraph (A), a vessel 
                that is otherwise eligible for a guarantee and 
                that the Secretary of Defense determines--
                          (i) is suitable for service as a 
                        naval auxiliary in time of war or 
                        national emergency; and
                          (ii) meets a shortfall in sealift 
                        capacity or capability.
          (2) Time for determination.--The Secretary of Defense 
        shall determine whether a vessel satisfies paragraph 
        (1)(B) not later than 30 days after receipt of a 
        request from the Administrator for such a 
        determination.

Sec. 53707. Findings related to obligors and operators

  (a) Responsible Obligor.--The Secretary or Administrator may 
not guarantee or make a commitment to guarantee an obligation 
under this chapter unless the Secretary or Administrator finds 
that the obligor is responsible and has the ability, 
experience, financial resources, and other qualifications 
necessary for the adequate operation and maintenance of each 
vessel that will serve as security for the guarantee.
  (b) Operators of Liner Vessels.--The Secretary of 
Transportation Administrator may not guarantee or make a 
commitment to guarantee a loan for the construction, 
reconstruction, or reconditioning of a liner vessel under this 
chapter unless the Chairman of the Federal Maritime Commission 
certifies that the operator of the vessel has not been found by 
the Commission to have committed, within the previous 5 years--
          (1) a violation of part A of subtitle IV of this 
        title that involves unjust or unfair discriminatory 
        treatment or undue or unreasonable prejudice or 
        disadvantage with respect to a United States shipper, 
        ocean transportation intermediary, ocean common 
        carrier, or port; or
          (2) a violation of part B of subtitle IV of this 
        title.
  (c) Operators of Fishing Vessels.--The Secretary of Commerce 
may not guarantee or make a commitment to guarantee a loan for 
the construction, reconstruction, or reconditioning of a 
fishing vessel under this chapter if the operator of the vessel 
has been--
          (1) held liable, or the vessel has been held liable 
        in rem, for a civil penalty under section 308 of the 
        Magnuson-Stevens Fishery Conservation and Management 
        Act (16 U.S.C. 1858) and the operator has not paid the 
        penalty;
          (2) found guilty of an offense under section 309 of 
        the Magnuson-Stevens Fishery Conservation and 
        Management Act (16 U.S.C. 1859) and not paid the 
        assessed fine or served the assessed sentence;
          (3) held liable for a civil or criminal penalty under 
        section 105 of the Marine Mammal Protection Act of 1972 
        (16 U.S.C. 1375) and not paid the assessed fine or 
        served the assessed sentence; or
          (4) held liable for a civil penalty by the Coast 
        Guard under this title or title 33 and not paid the 
        assessed fine.
  (d) Waivers Concerning Financial Condition.--The Secretary or 
Administrator shall prescribe regulations concerning 
circumstances under which waivers of, or exceptions to, 
otherwise applicable regulatory requirements concerning 
financial condition can be made. The regulations shall require 
that--
          (1) the economic soundness requirements in section 
        53708(a) of this title are met after the waiver of the 
        financial condition requirement; and
          (2) if the Secretary or Administrator considers 
        necessary, the waiver shall provide for the imposition 
        of other requirements on the obligor designed to 
        compensate for the increased any significant increase 
        in risk associated with the obligor's failure to meet 
        regulatory requirements applicable to financial 
        condition.

Sec. 53708. Findings related to economic soundness

  (a) By Secretary of Transportation Administrator.--The 
Secretary of Transportation Administrator may not guarantee or 
make a commitment to guarantee an obligation under this chapter 
unless the Secretary Administrator finds that the property or 
project for which the obligation will be executed will be 
economically sound. In making that finding, the Secretary 
Administrator shall consider--
          (1) the need in the particular segment of the 
        maritime industry for new or additional capacity, 
        including any impact on existing equipment for which a 
        guarantee under this chapter is in effect;
          (2) the market potential for employment of the vessel 
        over the life of the guarantee;
          (3) projected revenues and expenses associated with 
        employment of the vessel;
          (4) any charter, contract of affreightment, 
        transportation agreement, or similar agreement or 
        undertaking relevant to the employment of the vessel;
          (5) other relevant criteria; and
          (6) for inland waterways, the need for technical 
        improvements, including increased fuel efficiency or 
        improved safety.
  (b) By Secretary of Commerce.--The Secretary of Commerce may 
not guarantee or make a commitment to guarantee an obligation 
under this chapter unless the Secretary finds, at or prior to 
the time the commitment is made or the guarantee becomes 
effective, that--
          (1) the property or project for which the obligation 
        will be executed will be economically sound; and
          (2) for a fishing vessel, the purpose of the 
        financing or refinancing is consistent with--
                  (A) the wise use of the fisheries resources 
                and the development, advancement, management, 
                conservation, and protection of the fisheries 
                resources; or
                  (B) the need for technical improvements, 
                including increased fuel efficiency or improved 
                safety.
  (c) Used Fishing Vessels and Facilities.--The Secretary of 
Commerce may not guarantee or make a commitment to guarantee an 
obligation under this chapter for the purchase of a used 
fishing vessel or used fishery facility unless the vessel or 
facility will be--
          (1) reconstructed or reconditioned in the United 
        States and will contribute to the development of the 
        United States fishing industry; or
          (2) used--
                  (A) in the harvesting of fish from an 
                underused fishery; or
                  (B) for a purpose described in the definition 
                of ``fishery facility'' in section 53701 of 
                this title with respect to an underused 
                fishery.
  (d) Independent Analysis.--The Secretary or Administrator may 
make a determination that aspects of an application under this 
chapter require independent analysis to be conducted by third 
party experts due to risk factors associated with markets, 
technology, financial structures, or other risk factors 
identified by the Secretary. Any independent analysis conducted 
under this subsection shall be performed by a party chosen by 
the Secretary. or financial structures. A third party 
independent analysis conducted under this subsection shall be 
performed by a private sector expert in assessing such risk 
factors who is selected by the Secretary or Administrator.
  (e) Additional Equity Because of Increased Risks.--
Notwithstanding any other provision of this chapter, the 
Secretary or Administrator may make a determination that an 
application under this title requires additional equity because 
of increased risk factors associated with markets, technology, 
financial structures, or other risk factors identified by the 
Secretary or financial structures.

Sec. 53709. Amount of obligations

  (a) In General.--The principal of an obligation may not be 
guaranteed in an amount greater than the amount determined by 
multiplying the percentage applicable under subsection (b) by--
          (1) the amount paid by or for the account of the 
        obligor (as determined by the Secretary or 
        Administrator, which determination shall be conclusive) 
        for the construction, reconstruction, or reconditioning 
        of the vessel used as security for the guarantee; or
          (2) if the obligor creates an escrow fund under 
        section 53715 of this title, the actual cost of the 
        vessel.
  (b) Limitations on Amount Borrowed.--
          (1) In general.--Except as otherwise provided, the 
        principal amount of an obligation guaranteed under this 
        chapter may not exceed 75 percent of the actual cost or 
        depreciated actual cost, as determined by the Secretary 
        or Administrator, of the vessel used as security for 
        the guarantee.
          (2) Certain approved vessels.--The principal amount 
        may not exceed 87.5 percent of the actual cost or 
        depreciated actual cost if--
                  (A) the size and speed of the vessel are 
                approved by the Secretary or Administrator;
                  (B) the vessel is or would have been eligible 
                for mortgage aid for construction under section 
                509 of the Merchant Marine Act, 1936, or would 
                have been eligible except that the vessel was 
                built with a construction-differential subsidy 
                and the subsidy has been repaid; and
                  (C) the vessel is of a type described in that 
                section for which the minimum down payment 
                required by that section is 12.5 percent of the 
                cost of the vessel.
          (3) Barges.--For a barge constructed without a 
        construction-differential subsidy or for which the 
        subsidy has been repaid, the principal amount may not 
        exceed 87.5 percent of the actual cost or depreciated 
        actual cost.
          (4) Fishing vessels and fishery facilities.--For a 
        fishing vessel or fishery facility, the principal 
        amount may not exceed 80 percent of the actual cost or 
        depreciated actual cost. However, debt for the vessel 
        or facility may not be placed through the Federal 
        Financing Bank.
          (5) OTEC.--For an ocean thermal energy conversion 
        facility or plantship constructed without a 
        construction-differential subsidy, the principal amount 
        may not exceed 87.5 percent of the actual cost or 
        depreciated actual cost of the facility or plantship.
          (6) Eligible export vessels.--For an eligible export 
        vessel, the principal amount may not exceed 87.5 
        percent of the actual cost or depreciated actual cost.
  (c) Security Involving Multiple Vessels.--The principal 
amount of an obligation having more than one vessel as security 
for the guarantee may not exceed the sum of the principal 
amounts allowable for all the vessels.
  (d) Prohibition on Uniform Percentage Limitations.--The 
Secretary or Administrator may not establish a percentage under 
any provision of subsection (b) that is to be applied uniformly 
to all guarantees or commitments to guarantee made under that 
provision.
  (e) Prohibition on Minimum Principal Amount.--The Secretary 
may not establish, as a condition of eligibility for a 
guarantee under this chapter, a minimum principal amount for an 
obligation covering the reconstruction or reconditioning of a 
fishing vessel or fishery facility. For purposes of this 
chapter, the reconstruction or reconditioning of a fishing 
vessel or fishery facility does not include the routine minor 
repair or maintenance of the vessel or facility.

Sec. 53710. Contents of obligations

  (a) In General.--An obligation guaranteed under this chapter 
must--
          (1) provide for payments by the obligor satisfactory 
        to the Secretary or Administrator;
          (2) provide for interest (exclusive of guarantee fees 
        and other fees) at a rate not more than the annual rate 
        on the unpaid principal that the Secretary or 
        Administrator determines is reasonable, considering the 
        range of interest rates prevailing in the private 
        market for similar loans and the risks assumed by the 
        Secretary or Administrator;
          (3) have a maturity date satisfactory to the 
        Secretary or Administrator, but--
                  (A) not more than 25 years after the date of 
                delivery of the vessel used as security for the 
                guarantee; or
                  (B) if the vessel has been reconstructed or 
                reconditioned, not more than the later of--
                          (i) 25 years after the date of 
                        delivery of the vessel; or
                          (ii) the remaining years of useful 
                        life of the vessel as determined by the 
                        Secretary or Administrator; and
          (4) provide, or a related agreement must provide, 
        that if the vessel used as security for the guarantee 
        is a delivered vessel, the vessel shall be--
                  (A) in class A-1, American Bureau of 
                Shipping, or meet other standards acceptable to 
                the Secretary or Administrator, with all 
                required certificates, including marine 
                inspection certificates of the Coast Guard or, 
                in the case of an eligible export vessel, of 
                the appropriate foreign authorities under a 
                treaty, convention, or other international 
                agreement to which the United States is a 
                party, and with all outstanding requirements 
                and recommendations necessary for class 
                retention accomplished, unless the Secretary or 
                Administrator permits a deferment of repairs 
                necessary to meet these requirements; and
                  (B) well equipped, in good repair, and in 
                every respect seaworthy and fit for service.
  (b) Provisions for Certain Passenger Vessels.--
          (1) In general.--With the Secretary's Administrator's 
        approval, if the vessel used as security for the 
        guarantee is a passenger vessel having the tonnage, 
        speed, passenger accommodations, and other 
        characteristics described in section 503 of the 
        Merchant Marine Act, 1936, an obligation guaranteed 
        under this chapter or a related agreement may provide 
        that--
                  (A) the only recourse by the United States 
                Government against the obligor for payments 
                under the guarantee will be repossession of the 
                vessel and assignment of insurance claims; and
                  (B) the obligor's liability for payments 
                under the guarantee will be satisfied and 
                discharged by the surrender of the vessel and 
                all interest in the vessel to the Government in 
                the condition described in paragraph (2).
          (2) Surrender of vessel.--
                  (A) In general.--On surrender, the vessel 
                must be--
                          (i) free and clear of all liens and 
                        encumbrances except the security 
                        interest conveyed to the Secretary 
                        Administrator under this chapter;
                          (ii) in class; and
                          (iii) in as good order and condition 
                        (ordinary wear and tear excepted) as 
                        when acquired by the obligor.
                  (B) Covering deficiencies by insurance.--To 
                the extent covered by insurance, a deficiency 
                related to a requirement in subparagraph (A) 
                may be satisfied by assignment of the obligor's 
                insurance claims to the Government.
  (c) Other Provisions To Protect Security Interests.--An 
obligation guaranteed under this chapter and any related 
agreement must contain other provisions for the protection of 
the security interests of the Government (including 
acceleration, assumption, and subrogation provisions and the 
issuance of notes by the obligor to the Secretary or 
Administrator), liens and releases of liens, payment of taxes, 
and other matters that the Secretary or Administrator may 
prescribe.

Sec. 53711. Security interest

  (a) In General.--The Secretary or Administrator may guarantee 
an obligation under this chapter only if the obligor conveys or 
agrees to convey to the Secretary or Administrator a security 
interest the Secretary or Administrator considers necessary to 
protect the interest of the United States Government.
  (b) Multiple Vessels and Types of Security.--The security 
interest may relate to more than one vessel and may consist of 
more than one type of security. If the security interest 
relates to more than one vessel, the obligation may have the 
latest maturity date allowable under section 53710(a)(3) of 
this title for any of the vessels used as security for the 
guarantee. However, the Secretary or Administrator may require 
such payments of principal prior to maturity, with respect to 
all related obligations, as the Secretary or Administrator 
considers necessary to maintain adequate security for the 
guarantee.

Sec. 53712. Monitoring financial condition and operations of obligor

  (a) In General.--The Secretary or Administrator shall monitor 
the financial condition and operations of the obligor on a 
regular basis during the term of the guarantee. The Secretary 
or Administrator shall document the results of the monitoring 
on an annual or quarterly basis depending on the condition of 
the obligor. If the Secretary or Administrator determines that 
the financial condition of the obligor warrants additional 
protections to the Secretary or Administrator, the Secretary or 
Administrator shall take appropriate action under subsection 
(b). If the Secretary or Administrator determines that the 
financial condition of the obligor jeopardizes its continued 
ability to perform its responsibilities in connection with the 
guarantee of an obligation by the Secretary or Administrator, 
the Secretary or Administrator shall make an immediate 
determination whether default should take place and whether 
further measures described in subsection (b) should be taken to 
protect the interests of the Secretary or Administrator while 
ensuring that program objectives are met.
  (b) Contract Provisions To Protect Secretary or 
Administrator.--The Secretary or Administrator shall include 
provisions in a loan agreement with an obligor that provides 
additional authority to the Secretary or Administrator to take 
action to limit potential losses in connection with a defaulted 
loan or a loan that is in jeopardy due to the deteriorating 
financial condition of the obligor. These provisions include 
requirements for additional collateral or greater equity 
contributions that are effective upon the occurrence of 
verifiable conditions relating to the obligor's financial 
condition or the status of the vessel or shipyard project. If 
the Secretary or Administrator has waived a requirement under 
section 53707(d) of this title, the loan agreement shall 
include requirements for additional payments, collateral, or 
equity contributions to meet the waived requirement upon the 
occurrence of verifiable conditions indicating that the 
obligor's financial condition enables the obligor to meet the 
waived requirement.

Sec. 53713. Administrative fees

  (a) In General.--The Secretary or Administrator shall charge 
and collect from the obligor fees the Secretary or 
Administrator considers reasonable for--
          (1) investigating an application for a guarantee;
          (2) appraising property offered as security for a 
        guarantee;
          (3) issuing a commitment;
          (4) providing services related to an escrow fund 
        under section 53715 of this title; and
          (5) inspecting property during construction, 
        reconstruction, or reconditioning.
  (b) Total Fee Limitation.--The total fees under subsection 
(a) may not exceed 0.5 percent of the original principal amount 
of the obligations to be guaranteed.
  (c) Fees for Independent Analysis.--The Secretary or 
Administrator may charge and collect fees to cover the costs of 
independent analysis under section 53708(d) of this title. 
Notwithstanding section 3302 of title 31, any fee collected 
under this subsection shall--
          (1) be credited as an offsetting collection to the 
        account that finances the administration of the loan 
        guarantee program;
          (2) be available for expenditure only to pay the 
        costs of activities and services for which the fee is 
        imposed; and
          (3) remain available until expended.

Sec. 53714. Guarantee fees

  (a) Regulations.--Subject to this section, the Secretary or 
Administrator shall prescribe regulations to assess a fee for 
guaranteeing an obligation under this chapter.
  (b) Computation of Fee.--
          (1) In general.--The amount of the fee for a 
        guarantee under this chapter shall be equal to the sum 
        of the amounts determined under paragraph (2) for the 
        years in which the guarantee is in effect.
          (2) Present value for each year.--The amount referred 
        to in paragraph (1) for a year in which the guarantee 
        is in effect is the present value of the amount 
        calculated under paragraph (3). To determine the 
        present value, the Secretary or Administrator shall 
        apply a discount rate determined by the Secretary of 
        the Treasury, considering current market yields on 
        outstanding obligations of the United States Government 
        having periods to maturity comparable to the period to 
        maturity for the guaranteed obligation.
          (3) Calculation of amount.--The amount referred to in 
        paragraph (2) shall be calculated by multiplying--
                  (A) the estimated average unpaid principal 
                amount of the obligation that will be 
                outstanding during the year (excluding the 
                average amount, other than interest, on deposit 
                during the year in an escrow fund under section 
                53715 of this title); by
                  (B) the fee rate set under paragraph (4).
          (4) Setting fee rates.--To set the fee rate referred 
        to in paragraph (3)(B), the Secretary or Administrator 
        shall establish a formula that--
                  (A) takes into account the security provided 
                for the guaranteed obligation; and
                  (B) is a sliding scale based on the 
                creditworthiness of the obligor, using--
                          (i) the lowest allowable rate under 
                        paragraph (5) for the most creditworthy 
                        obligors; and
                          (ii) the highest allowable rate under 
                        paragraph (5) for the least 
                        creditworthy obligors.
          (5) Permissible range of rates.--The fee rate set 
        under paragraph (4) shall be--
                  (A) for a delivered vessel or equipment, at 
                least 0.5 percent and not more than 1 percent; 
                and
                  (B) for a vessel to be constructed, 
                reconstructed, or reconditioned or equipment to 
                be delivered, at least 0.25 percent and not 
                more than 0.5 percent.
  (c) When Fee Collected.--A fee for the guarantee of an 
obligation under this chapter shall be collected not later than 
the date on which an amount is first paid on the obligation.
  (d) Financing the Fee.--A fee paid under this section is 
eligible to be financed under this chapter and shall be 
included in the actual cost of the obligation guaranteed.
  (e) Not Refundable.--A fee paid under this section is not 
refundable. However, an obligor shall receive credit for the 
amount paid for the remaining term of the obligation if the 
obligation is refinanced and guaranteed under this chapter 
after the refinancing.

Sec. 53715. Escrow fund

  (a) In General.--If the proceeds of an obligation guaranteed 
under this chapter are to be used to finance the construction, 
reconstruction, or reconditioning of a vessel that will serve 
as security for a guarantee under this chapter, the Secretary 
or Administrator may accept and hold in escrow, under an escrow 
agreement with the obligor, a portion of the proceeds of all 
obligations guaranteed under this chapter whose proceeds are to 
be so used which is equal to--
          (1) the excess of--
                  (A) the principal amount of all obligations 
                whose proceeds are to be so used; over
                  (B) 75 percent or 87.5 percent, whichever is 
                applicable under section 53709(b) of this 
                title, of the amount paid by or for the account 
                of the obligor for the construction, 
                reconstruction, or reconditioning of the 
                vessel; plus
          (2) any interest the Secretary or Administrator may 
        require on the amount described in paragraph (1).
  (b) Security Involving Both Uncompleted and Delivered 
Vessels.--If the security for the guarantee of an obligation 
relates both to a vessel to be constructed, reconstructed, or 
reconditioned and to a delivered vessel, the principal amount 
of the obligation shall be prorated for purposes of subsection 
(a) under regulations prescribed by the Secretary or 
Administrator.
  (c) Disbursement Before Termination of Agreement.--
          (1) Purposes.--The Secretary or Administrator shall 
        disburse amounts in the escrow fund, as specified in 
        the escrow agreement, to--
                  (A) pay amounts the obligor is obligated to 
                pay for--
                          (i) the construction, reconstruction, 
                        or reconditioning of a vessel used as 
                        security for the guarantee; and
                          (ii) interest on the obligations;
                  (B) redeem the obligations under a 
                refinancing guaranteed under this chapter; and
                  (C) pay any excess interest deposits to the 
                obligor at times provided for in the escrow 
                agreement.
          (2) Manner of payment.--If a payment becomes due 
        under the guarantee before the termination of the 
        escrow agreement, the amount in the escrow fund at the 
        time the payment becomes due, including realized income 
        not yet paid to the obligor, shall be paid into the 
        appropriate account under section 53717 of this title. 
        The amount shall be credited against amounts due or to 
        become due from the obligor to the Secretary or 
        Administrator on the guaranteed obligations or, to the 
        extent not so required, be paid to the obligor.
  (d) Payments Required Before Disbursement.--
          (1) In general.--No disbursement shall be made under 
        subsection (c) to any person until the total amount 
        paid by or for the account of the obligor from sources 
        other than the proceeds of the obligation equals at 
        least 25 percent or 12.5 percent, whichever is 
        applicable under section 53709(b) of this title, of the 
        aggregate actual cost of the vessel, as previously 
        approved by the Secretary or Administrator. If the 
        aggregate actual cost of the vessel has increased since 
        the Secretary's or Administrator's initial approval or 
        if it increases after the first disbursement is 
        permitted under this subsection, then no further 
        disbursements shall be made under subsection (c) until 
        the total amount paid by or for the account of the 
        obligor from sources other than the proceeds of the 
        obligation equals at least 25 percent or 12.5 percent, 
        as applicable, of the increase, as determined by the 
        Secretary or Administrator, in the aggregate actual 
        cost of the vessel. This paragraph does not require the 
        Secretary or Administrator to consent to finance any 
        increase in actual cost unless the Secretary or 
        Administrator determines that such an increase in the 
        obligation meets all the terms and conditions of this 
        chapter or other applicable law.
          (2) Documented proof of progress requirement.--The 
        Secretary or Administrator shall, by regulation, 
        establish a transparent, independent, and risk-based 
        process for verifying and documenting the progress of 
        projects under construction before disbursing 
        guaranteed loan funds. At a minimum, the process shall 
        require documented proof of progress in connection with 
        the construction, reconstruction, or reconditioning of 
        a vessel or vessels before disbursements are made from 
        the escrow fund. The Secretary or Administrator may 
        require that the obligor provide a certificate from an 
        independent party certifying that the requisite 
        progress in construction, reconstruction, or 
        reconditioning has taken place.
  (e) Disbursement on Termination of Agreement.--
          (1) In general.--If a payment has not become due 
        under the guarantee before the termination of the 
        escrow agreement, the balance of the escrow fund at the 
        time of termination shall be disbursed to--
                  (A) prepay the excess of--
                          (i) the principal amount of all 
                        obligations whose proceeds are to be 
                        used to finance the construction, 
                        reconstruction, or reconditioning of 
                        the vessel used or to be used as 
                        security for the guarantee; over
                          (ii) 75 percent or 87.5 percent, 
                        whichever is applicable under section 
                        53709(b) of this title, of the actual 
                        cost of the vessel to the extent paid; 
                        and
                  (B) pay interest on that prepaid amount of 
                principal.
          (2) Remaining balance.--Any remaining balance of the 
        escrow fund shall be paid to the obligor.
  (f) Investment.--The Secretary or Administrator may invest 
and reinvest any part of an escrow fund in obligations of the 
United States Government with maturities such that the escrow 
fund will be available as required for purposes of the escrow 
agreement. Investment income shall be paid to the obligor when 
received.
  (g) Terms To Protect Government.--The escrow agreement shall 
contain other terms the Secretary or Administrator considers 
necessary to protect fully the interests of the Government.

Sec. 53716. Deposit fund

  (a) In General.--There is a deposit fund in the Treasury for 
purposes of this section. The Secretary or Administrator, in 
accordance with an agreement under subsection (b), may deposit 
into and hold in the fund cash belonging to an obligor to serve 
as collateral for a guarantee made under this chapter with 
respect to the obligor.
  (b) Agreement.--The Secretary or Administrator and an obligor 
shall make a reserve fund or other collateral account agreement 
to govern the deposit, withdrawal, retention, use, and 
reinvestment of cash of the obligor held in the fund. The 
agreement shall contain--
          (1) terms and conditions required by this section;
          (2) terms that grant to the United States Government 
        a security interest in all amounts deposited into the 
        fund; and
          (3) any additional terms considered by the Secretary 
        or Administrator to be necessary to protect fully the 
        interests of the Government.
  (c) Investment.--The Secretary or Administrator may invest 
and reinvest any part of the amounts in the fund in obligations 
of the Government with maturities such that amounts in the fund 
will be available as required for purposes of the agreement 
under subsection (b). Cash balances in the fund in excess of 
current requirements shall be maintained in a form of 
uninvested funds, and the Secretary of the Treasury shall pay 
interest on these funds.
  (d) Withdrawals.--
          (1) In general.--Cash deposited into the fund may not 
        be withdrawn without the consent of the Secretary or 
        Administrator.
          (2) Use of income.--Subject to paragraph (3), the 
        Secretary or Administrator may pay any income earned on 
        cash of an obligor deposited into the fund in 
        accordance with the agreement with the obligor under 
        subsection (b).
          (3) Retention against default.--The Secretary or 
        Administrator may retain and offset any or all of the 
        cash of an obligor in the fund, and any income realized 
        thereon, as part of the Secretary's or Administrator's 
        recovery against the obligor in case of a default by 
        the obligor on an obligation.

Sec. 53717. Management of funds in the Treasury

  (a) Definition.--In this section, the term ``FCRA'' means the 
Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.).
  (b) Loan Guarantees by Secretary of Transportation 
Administrator.--
          (1) When not subject to fcra.--The Secretary of 
        Transportation Administrator shall account for payments 
        and disbursements involving obligations guaranteed 
        under this chapter and not subject to FCRA in an 
        account in the Treasury entitled the Federal Ship 
        Financing Fund Liquidating Account (a liquidating 
        account as defined in FCRA).
          (2) When subject to fcra.--The Secretary of 
        Transportation Administrator shall account for payments 
        and disbursements involving obligations guaranteed 
        under this chapter and subject to FCRA in a separate 
        account in the Treasury entitled the Federal Ship 
        Financing Guaranteed Loan Financing Account (a 
        financing account as defined in FCRA).
  (c) Loan Guarantees by Secretary of Commerce.--
          (1) When not subject to fcra.--The Secretary of 
        Commerce shall account for payments and disbursements 
        involving obligations guaranteed under this chapter and 
        not subject to FCRA in a separate account in the 
        Treasury established for this purpose.
          (2) When subject to fcra.--The Secretary of Commerce 
        shall account for payments and disbursements involving 
        obligations guaranteed under this chapter and subject 
        to FCRA in a separate account in the Treasury 
        established for this purpose.
  (d) Direct Loans by Secretary of Commerce.--The Secretary of 
Commerce shall account for payments and disbursements involving 
direct loans made under this chapter in a separate account in 
the Treasury established for this purpose.

Sec. 53718. Annual report to Congress

  The Secretary of Transportation Administrator shall report to 
Congress annually on the loan guarantee program under this 
chapter. Each report shall include--
          (1) the size, in dollars, of the portfolio of loans 
        guaranteed;
          (2) the size, in dollars, of projects in the 
        portfolio facing financial difficulties;
          (3) the number and type of projects covered;
          (4) a profile of pending loan applications;
          (5) the amount of appropriations available for new 
        guarantees;
          (6) a profile of each project approved since the last 
        report; and
          (7) a profile of any defaults since the last report.

                   SUBCHAPTER II--DEFAULT PROVISIONS

Sec. 53721. Rights of obligee

  (a) Demands by Obligees.--Except as provided in subsection 
(c), if an obligor has continued in default for 30 days in the 
payment of principal or interest on an obligation guaranteed 
under this chapter, the obligee or the obligee's agent may 
demand that the Secretary or Administrator pay the unpaid 
principal amount of the obligation and the unpaid interest on 
the obligation to the date of payment. The demand must be made 
within the earlier of--
          (1) a period that may be specified in the guarantee 
        or a related agreement; or
          (2) 90 days from the date of the default.
  (b) Payments by Secretary or Administrator.--
          (1) In general.--If a demand is made under subsection 
        (a), the Secretary or Administrator shall pay to the 
        obligee or the obligee's agent the unpaid principal 
        amount of the obligation and the unpaid interest on the 
        obligation to the date of payment. Payment shall be 
        made within the earlier of--
                  (A) a period that may be specified in the 
                guarantee or a related agreement; or
                  (B) 30 days from the date of the demand.
          (2) If no existing default.--The Secretary or 
        Administrator is not required to make payment under 
        this subsection if, within the appropriate period under 
        paragraph (1), the Secretary or Administrator finds 
        that the obligor was not in default or that the default 
        was remedied before the demand.
  (c) Assumption of Rights and Obligations Before Demand.--An 
obligee or the obligee's agent may not demand payment under 
this section if the Secretary or Administrator, before the 
demand and on terms that may be provided in the obligation or a 
related agreement, has assumed the obligor's rights and duties 
under the obligation and any related agreement and made any 
payment in default. However, the guarantee of the obligation 
remains in effect after the Secretary's or Administrator's 
assumption.

Sec. 53722. Actions by Secretary or Administrator

  (a) General Authority.--On default under an obligation or 
related agreement between the Secretary or Administrator and 
the obligor, the Secretary or Administrator, on terms that may 
be provided in the obligation or agreement, may--
          (1) assume the obligor's rights and duties under the 
        obligation or agreement, make any payment in default, 
        and notify the obligee or the obligee's agent of the 
        default and the Secretary's or Administrator's 
        assumption; or
          (2) notify the obligee or the obligee's agent of the 
        default.
  (b) Demands by Obligees.--
          (1) Demand.--If the Secretary or Administrator 
        proceeds under subsection (a)(2), the obligee or the 
        obligee's agent may demand that the Secretary or 
        Administrator pay the unpaid principal amount of the 
        obligation and the unpaid interest on the obligation. 
        The demand must be made within the earlier of--
                  (A) a period that may be specified in the 
                guarantee or a related agreement; or
                  (B) 60 days from the date of the Secretary's 
                or Administrator's notice.
          (2) Payment.--If a demand is made under paragraph 
        (1), the Secretary or Administrator shall pay to the 
        obligee or the obligee's agent the unpaid principal 
        amount of the obligation and the unpaid interest on the 
        obligation to the date of payment. Payment shall be 
        made within the earlier of--
                  (A) a period that may be specified in the 
                guarantee or a related agreement; or
                  (B) 30 days from the date of the demand.
  (c) Continued Effect of Guarantee.--A guarantee of an 
obligation remains in effect after an assumption of the 
obligation by the Secretary or Administrator.
  (d) Additional Responses.--If there is a default on an 
obligation, the Secretary or Administrator shall conduct 
operations under this chapter in a manner that--
          (1) maximizes the net present value return from the 
        sale or disposition of assets associated with the 
        obligation, including prompt referral to the Attorney 
        General for collection as appropriate;
          (2) minimizes the amount of any loss realized in the 
        resolution of the guarantee;
          (3) ensures adequate competition and fair and 
        consistent treatment of offerors; and
          (4) requires appraisal of assets by an independent 
        appraiser.

Sec. 53723. Payments by Secretary or Administrator and issuance of 
                    obligations

  (a) Cash Payment.--Amounts required to be paid by the 
Secretary or Administrator under section 53721 or 53722 of this 
title shall be paid in cash.
  (b) Issuance of Obligations.--If amounts in the appropriate 
account under section 53717 of this title are not sufficient to 
make a payment required under section 53721 or 53722 of this 
title, the Secretary or Administrator may issue obligations to 
the Secretary of the Treasury. The Secretary or Administrator, 
with the approval of the Secretary of the Treasury, shall 
prescribe the form, denomination, maturity, and other terms 
(except the interest rate) of the obligations. The Secretary of 
the Treasury shall set the interest rate for the obligations, 
considering the current average market yield on outstanding 
marketable obligations of the United States Government of 
comparable maturities during the month before the obligations 
are issued.
  (c) Purchase of Obligations.--The Secretary of the Treasury 
shall purchase the obligations issued under this section. To 
purchase the obligations, the Secretary of the Treasury may use 
as a public debt transaction the proceeds from the sale of 
securities issued under chapter 31 of title 31. The purposes 
for which securities may be issued under that chapter are 
extended to include the purchase of obligations under this 
subsection. The Secretary of the Treasury may sell obligations 
purchased under this section. A redemption, purchase, or sale 
of the obligations by the Secretary of the Treasury is a public 
debt transaction of the Government.
  (d) Deposits and Redemptions.--The Secretary or Administrator 
shall deposit amounts borrowed under this section in the 
appropriate account under section 53717 of this title and make 
redemptions of the obligations from that account.

Sec. 53724. Rights to secured property

  (a) Acquisition of Security Rights.--When the Secretary or 
Administrator makes a payment on, or assumes, an obligation 
under section 53721 or 53722 of this title, the Secretary or 
Administrator acquires the rights under the security agreement 
with the obligor in the security held by the Secretary or 
Administrator to guarantee the obligation.
  (b) Use and Disposition of Secured Property.--Notwithstanding 
any other law relating to the acquisition, handling, or 
disposal of property by the United States Government, the 
Secretary or Administrator has the right, in the Secretary's or 
Administrator's discretion, to complete, reconstruct, 
recondition, renovate, repair, maintain, operate, charter, or 
sell any property acquired under a security agreement with an 
obligor, or to place a vessel so acquired in the National 
Defense Reserve Fleet. The terms of a sale under this 
subsection shall be as approved by the Secretary or 
Administrator.

Sec. 53725. Actions against obligor

  (a) In General.--For a default under a guaranteed obligation 
or related agreement, the Secretary or Administrator may take 
any action against the obligor or another liable party that the 
Secretary or Administrator considers necessary to protect the 
interests of the United States Government. A civil action may 
be brought in the name of the United States or the obligee. The 
obligee shall make available to the Government all records and 
evidence necessary to prosecute the action.
  (b) Title, Possession, and Purchase.--
          (1) In general.--The Secretary or Administrator may--
                  (A) accept a conveyance of title to and 
                possession of property from the obligor or 
                another party liable to the Secretary or 
                Administrator; and
                  (B) purchase the property for an amount not 
                greater than the unpaid principal amount of the 
                obligation and interest thereon.
          (2) Payment of excess.--If, through the sale of 
        property, the Secretary or Administrator receives an 
        amount of cash greater than the unpaid principal amount 
        of the obligation, the unpaid interest on the 
        obligation, and the expenses of collecting those 
        amounts, the Secretary or Administrator shall pay the 
        excess to the obligor.

                  SUBCHAPTER III--PARTICULAR PROJECTS

Sec. 53731. Commercial demonstration ocean thermal energy conversion 
                    facilities and plantships

  (a) In General.--Under subchapter I of this chapter, the 
Secretary Administrator may guarantee or make a commitment to 
guarantee the payment of the principal of and interest on an 
obligation that aids in financing (including reimbursement of 
an obligor for expenditures previously made for) the 
construction, reconstruction, or reconditioning of a commercial 
demonstration ocean thermal energy conversion facility or 
plantship. This section may be used to guarantee obligations 
for a total of not more than 5 separate facilities and 
plantships or a demonstrated 400 megawatt capacity, whichever 
comes first.
  (b) Applicability of Other Provisions.--Except as otherwise 
provided in this section, a guarantee or commitment to 
guarantee under this section is subject to all the provisions 
applicable to a guarantee or commitment to guarantee under 
subchapter I of this chapter.
  (c) Economic Soundness.--The required determination of 
economic soundness under section 53708 of this title applies to 
a guarantee or commitment to guarantee for that portion of a 
facility or plantship not to be supported with appropriated 
Federal funds.
  (d) Reasonableness of Risk.--A guarantee or commitment to 
guarantee may not be made under this section unless the 
Secretary of Energy, in consultation with the Secretary 
Administrator, certifies to the Secretary Administrator that, 
for the facility or plantship for which the guarantee or 
commitment to guarantee is sought, there is sufficient 
guarantee of performance and payment to lower the risk to the 
United States Government to a reasonable level. In deciding 
whether to issue such a certification, the Secretary of Energy 
shall consider--
          (1) the successful demonstration of the technology to 
        be used in the facility at a scale sufficient to 
        establish the likelihood of technical and economic 
        viability in the proposed market; and
          (2) the need of the United States to develop new and 
        renewable sources of energy and the benefits to be 
        realized from the construction and successful operation 
        of the facility or plantship.
  (e) Amount of Obligation.--The total principal amount of an 
obligation guaranteed under this section may not exceed 87.5 
percent of--
          (1) the actual cost or depreciated actual cost of the 
        facility or plantship; or
          (2) if the facility or plantship is supported with 
        appropriated Federal funds, the total principal amount 
        of that portion of the actual cost or depreciated 
        actual cost for which the obligor is obligated to 
        secure financing under the agreement between the 
        obligor and the Department of Energy or other Federal 
        agency.
  (f) OTEC Demonstration Fund.--
          (1) In general.--There is a special subaccount, known 
        as the OTEC Demonstration Fund, in the account 
        established under section 53717(b)(1) of this title.
          (2) Use and operation.--The OTEC Demonstration Fund 
        shall be used for obligation guarantees authorized 
        under this section that do not qualify under subchapter 
        I of this chapter. Except as otherwise provided in this 
        section, the OTEC Demonstration Fund shall be operated 
        in the same manner as the parent account. However--
                  (A) amounts received by the Secretary 
                Administrator under subchapter I of this 
                chapter related to guarantees or commitments to 
                guarantee made under this section shall be 
                deposited only in the OTEC Demonstration Fund; 
                and
                  (B) when obligations issued by the Secretary 
                Administrator under section 53723 of this title 
                related to the OTEC Demonstration Fund are 
                outstanding, any amount received by the 
                Secretary Administrator under subchapter I of 
                this chapter related to ocean thermal energy 
                conversion facilities or plantships shall be 
                deposited in the OTEC Demonstration Fund.
          (3) Transfers.--Assets in the OTEC Demonstration Fund 
        may be transferred to the parent account when and to 
        the extent the balance in the OTEC Demonstration Fund 
        exceeds the total guarantees or commitments to 
        guarantee made under this section then outstanding, 
        plus obligations issued by the Secretary Administrator 
        under section 53723 of this title related to the OTEC 
        Demonstration Fund.
          (4) Liability.--The parent account is not liable for 
        a guarantee or commitment to guarantee made under this 
        section.
          (5) Maximum unpaid principal amount.--The total 
        unpaid principal amount of the obligations guaranteed 
        with the backing of the OTEC Demonstration Fund and 
        outstanding at any one time may not exceed 
        $1,650,000,000.
  (g) Issuance and Payment of Obligations.--Section 53723 of 
this title applies to the OTEC Demonstration Fund. However, 
obligations issued by the Secretary Administrator under that 
section related to the OTEC Demonstration Fund shall be payable 
only from proceeds realized by the OTEC Demonstration Fund.
  (h) Taxation of Interest.--Interest on an obligation 
guaranteed under this section shall be included in gross income 
under chapter 1 of the Internal Revenue Code of 1986 (26 U.S.C. 
ch. 1).

Sec. 53732. Eligible export vessels

  (a) Applicable Terms.--The Secretary Administrator may 
guarantee an obligation for an eligible export vessel in 
accordance with--
          (1) the terms applicable under this chapter for 
        vessels documented under the laws of the United States; 
        or
          (2) other terms the Secretary Administrator 
        determines are more favorable than those terms and 
        compatible with export credit terms offered by foreign 
        governments for the sale of vessels built in foreign 
        shipyards.
  (b) Interagency Council.--
          (1) Establishment.--There is an interagency council 
        to carry out this section.
          (2) Composition.--The council is composed of the 
        following individuals or their designees:
                  (A) The Secretary of Transportation 
                Administrator, who is the chairman of the 
                council.
                  (B) The Secretary of the Treasury.
                  (C) The Secretary of State.
                  (D) The Assistant to the President for 
                Economic Policy.
                  (E) The United States Trade Representative.
                  (F) The President and Chairman of the Export-
                Import Bank of the United States.
          (3) Functions.--The council shall--
                  (A) obtain information on shipbuilding loan 
                guarantees, direct and indirect subsidies, and 
                other favorable treatment of shipyards provided 
                by foreign governments to shipyards in 
                competition with United States shipyards;
                  (B) consult regularly with United States 
                shipbuilders to obtain the essential 
                information about international shipbuilding 
                competition on which to set terms for loan 
                guarantees under subsection (a)(2); and
                  (C) provide guidance to the Secretary 
                Administrator in establishing terms for loan 
                guarantees under subsection (a)(2).
          (4) Annual report.--Not later than January 31 of each 
        year, the Secretary Administrator shall submit to 
        Congress a report on activities of the Secretary 
        Administrator under this section during the preceding 
        year. The report shall include--
                  (A) documentation of sources of information 
                about assistance by governments of other 
                countries to shipyards in those countries; and
                  (B) a summary of recommendations made to the 
                Secretary Administrator during the preceding 
                year about applications submitted to the 
                Secretary Administrator during that year for 
                loan guarantees to construct eligible export 
                vessels.
  (c) Required Findings.--
          (1) Benefit to shipbuilding industry.--The Secretary 
        Administrator may not guarantee or make a commitment to 
        guarantee an obligation for an eligible export vessel 
        unless the Secretary Administrator finds that the 
        construction, reconstruction, or reconditioning of the 
        vessel will aid in the transition of United States 
        shipyards to commercial activities or will preserve 
        shipbuilding assets that would be essential in time of 
        war or national emergency.
          (2) Priority of documented vessels.--The Secretary 
        Administrator may not make a commitment to guarantee an 
        obligation for an eligible export vessel unless the 
        Secretary Administrator determines that making the 
        commitment will not result in denial of an economically 
        sound application for a commitment to guarantee an 
        obligation for a vessel documented under the laws of 
        the United States and operating in the domestic or 
        foreign commerce of the United States. The Secretary 
        Administrator has sole discretion in making the 
        determination. In making the determination, the 
        Secretary Administrator shall consider--
                  (A) the status and economic soundness of 
                pending applications for commitments to 
                guarantee obligations for vessels documented 
                under the laws of the United States that are 
                operating or will be operating in the domestic 
                or foreign commerce of the United States; and
                  (B) the amount of guarantee authority 
                available.
  (d) Restriction on Transfer of Vessel.--The Secretary 
Administrator may not guarantee or make a commitment to 
guarantee an obligation for an eligible export vessel unless 
the owner of the vessel agrees with the Secretary Administrator 
that the vessel will not be transferred to a country designated 
by the Secretary of Defense as a country whose interests are 
hostile to the interests of the United States.
  (e) Review by Secretary of Defense.--
          (1) Notification.--The Secretary Administrator shall 
        promptly notify the Secretary of Defense of the receipt 
        of an application for a loan guarantee for an eligible 
        export vessel.
          (2) Disapproval.--The Secretary of Defense, within 30 
        days after receiving the notice, may disapprove the 
        guarantee based on an assessment of the potential use 
        of the vessel in a manner that may harm the national 
        security interests of the United States. The Secretary 
        of Defense may not disapprove a guarantee solely 
        because of the type of vessel to be constructed.
          (3) Delegation.--The authority of the Secretary of 
        Defense to disapprove a guarantee under this subsection 
        may be delegated only to a civilian officer of the 
        Department of Defense appointed by the President by and 
        with the advice and consent of the Senate.
          (4) Prohibition.--The Secretary Administrator may not 
        make a loan guarantee disapproved by the Secretary of 
        Defense under this subsection.
  (f) Expiration of Authority.--The Secretary Administrator may 
not issue a commitment to guarantee an obligation for an 
eligible export vessel under this chapter after the last date 
on which such a commitment may be issued under any treaty or 
convention entered into after November 30, 1993, that prohibits 
guarantee of such an obligation.

Sec. 53733. Shipyard modernization and improvement

  (a) Definitions.--In this section:
          (1) Advanced shipbuilding technology.--The term 
        ``advanced shipbuilding technology'' includes--
                  (A) numerically controlled machine tools, 
                robots, automated process control equipment, 
                computerized flexible manufacturing systems, 
                associated computer software, and other 
                technology for improving shipbuilding and 
                related industrial production that advance the 
                state-of-the-art; and
                  (B) novel techniques and processes designed 
                to improve shipbuilding quality, productivity, 
                and practice, and to promote sustainable 
                development, including engineering design, 
                quality assurance, concurrent engineering, 
                continuous process production technology, 
                energy efficiency, waste minimization, design 
                for recyclability or parts reuse, inventory 
                management, upgraded worker skills, and 
                communications with customers and suppliers.
          (2) General shipyard facility.--The term ``general 
        shipyard facility'' means--
                  (A) for operations on land--
                          (i) a structure or appurtenance 
                        thereto designed for the construction, 
                        reconstruction, repair, rehabilitation, 
                        or refurbishment of a vessel, including 
                        a graving dock, building way, ship 
                        lift, wharf, or pier crane;
                          (ii) the land necessary for the 
                        structure or appurtenance; and
                          (iii) equipment that is for use with 
                        the structure or appurtenance and that 
                        is necessary for performing a function 
                        referred to in clause (i); and
                  (B) for operations not on land, a vessel, 
                floating drydock, or barge built in the United 
                States and used for, equipped to be used for, 
                or of a type normally used for, performing a 
                function referred to in subparagraph (A)(i).
          (3) Modern shipbuilding technology.--The term 
        ``modern shipbuilding technology'' means the best 
        available proven technology, techniques, and processes 
        appropriate to enhancing the productivity of shipyards.
  (b) General Authority.--Under subchapter I of this chapter, 
the Secretary Administrator may guarantee or make a commitment 
to guarantee the payment of the principal of and interest on an 
obligation for advanced shipbuilding technology and modern 
shipbuilding technology of a general shipyard facility in the 
United States. Only a private shipyard is eligible to receive a 
guarantee.
  (c) Applicability of Other Provisions.--Except as otherwise 
provided in this section, a guarantee or commitment to 
guarantee under this section is subject to all the provisions 
applicable to a guarantee or commitment to guarantee under 
subchapter I of this chapter.
  (d) Amount of Obligation.--The principal amount of an 
obligation guaranteed under this chapter may not exceed 87.5 
percent of the actual cost of the advanced shipbuilding 
technology or modern shipbuilding technology.
  (e) Transfer of Amounts.--The Secretary Administrator may 
accept the transfer of amounts from a department, agency, or 
instrumentality of the United States Government and may use 
those amounts to cover the cost (as defined in section 502 of 
the Federal Credit Reform Act of 1990 (2 U.S.C. 661a)) of 
making guarantees or commitments to guarantee under this 
section.

Sec. 53734. Replacement of vessels because of changes in operating 
                    standards

  (a) General Authority.--Notwithstanding any other provision 
of this chapter, the Secretary or Administrator, on terms the 
Secretary or Administrator may prescribe, may guarantee or make 
a commitment to guarantee the payment of the principal of and 
interest on an obligation that aids in financing or refinancing 
(including reimbursement of an obligor for expenditures 
previously made for) a contract for the construction or 
reconstruction of a vessel if--
          (1) the vessel is designed and to be used for 
        commercial use in coastwise, intercoastal, or foreign 
        trade;
          (2) the construction or reconstruction is necessary 
        to replace a vessel that cannot continue to be operated 
        because of a change required by law in the standards 
        for the operation of vessels, and the applicant for the 
        guarantee or commitment would not otherwise legally be 
        able to continue operating vessels in the trades in 
        which the applicant operated vessels before the change;
          (3) the applicant is presently engaged in 
        transporting cargoes in vessels of the type and class 
        that will be constructed or reconstructed under this 
        section and agrees to employ vessels constructed or 
        reconstructed under this section as replacements only 
        for vessels made obsolete by the change in operating 
        standards;
          (4) the capacity of the vessels to be constructed or 
        reconstructed under this section will not increase the 
        cargo carrying capacity of the vessels being replaced;
          (5) the Secretary or Administrator has not determined 
        that the market demand for the vessel over its useful 
        life will diminish so as to make granting the guarantee 
        fiduciarily imprudent;
          (6) the vessel, if to be reconstructed, will have a 
        useful life of at least 15 years after the 
        reconstruction; and
          (7) the Secretary or Administrator has considered the 
        criteria specified in section 53708(a)(3)-(5) of this 
        title.
  (b) Term and Amount of Obligation.--
          (1) Term.--The term of an obligation guaranteed under 
        this section may not exceed 25 years.
          (2) Amount.--The amount of an obligation guaranteed 
        under this section may not exceed 87.5 percent of the 
        actual cost or depreciated actual cost to the applicant 
        for the construction or reconstruction of the vessel. 
        The Secretary or Administrator may not establish a 
        percentage under this paragraph that is to be applied 
        uniformly to all guarantees or commitments to guarantee 
        made under this section.
  (c) Applicability of Other Provisions.--A guarantee or 
commitment to guarantee under this section is also subject to 
sections 53701, 53702(a), 53704, 53705, 53707(a), 53708(d) and 
(e), 53709(a), 53710(a)(1), (2), and (4) and (c), 53711(a), 
53713, 53714, 53717, and 53721-53725 of this title.
  (d) Security Against Default.--The Secretary or Administrator 
shall require by regulation that an applicant under this 
section provide adequate security against default.
  (e) Guarantee Fees.--The Secretary or Administrator may 
establish a fee for the guarantee of an obligation under this 
section that is in addition to the fee established under 
section 53714 of this title. The fee may be--
          (1) an annual fee of not more than an additional 1 
        percent added to the fee established under section 
        53714 of this title; or
          (2) a fee based on the amount of the obligation 
        versus the percentage of the obligor's fleet being 
        replaced by vessels constructed or reconstructed under 
        this section.

Sec. 53735. Fisheries financing and capacity reduction

  (a) Definition.--In this section, the term ``program'' means 
a fishing capacity reduction program established under section 
312 of the Magnuson-Stevens Fishery Conservation and Management 
Act (16 U.S.C. 1861a).
  (b) Guarantee Authority.--The Secretary may guarantee the 
repayment of debt obligations issued by entities under this 
section. Debt obligations to be guaranteed may be issued by any 
entity that has been approved by the Secretary and has agreed 
with the Secretary to conditions the Secretary considers 
necessary for this section to achieve the objective of the 
program and to protect the interest of the United States.
  (c) Requirements of Obligations.--A debt obligation 
guaranteed under this section shall--
          (1) be treated in the same manner and to the same 
        extent as other obligations guaranteed under this 
        chapter, except with respect to provisions of this 
        chapter that by their nature cannot be applied to 
        obligations guaranteed under this section;
          (2) have the fishing fees established under the 
        program paid into a separate subaccount of the fishing 
        capacity reduction fund established under this section;
          (3) not exceed $100,000,000 in an unpaid principal 
        amount outstanding at any one time for a program;
          (4) have such maturity (not to exceed 20 years), take 
        such form, and contain such conditions as the Secretary 
        determines necessary for the program to which they 
        relate;
          (5) have as the exclusive source of repayment 
        (subject to the second sentence of subsection (d)(2)) 
        and as the exclusive payment security, the fishing fees 
        established under the program; and
          (6) at the discretion of the Secretary be issued in 
        the public market or sold to the Federal Financing 
        Bank.
  (d) Fishing Capacity Reduction Fund.--
          (1) In general.--There is a separate account in the 
        Treasury, known as the Fishing Capacity Reduction Fund. 
        Within the Fund, at least one subaccount shall be 
        established for each program into which shall be paid 
        all fishing fees established under the program and 
        other amounts authorized for the program.
          (2) Availability of amounts.--Amounts in the Fund 
        shall be available, without appropriation or fiscal 
        year limitation, to the Secretary to pay the cost of 
        the program, including payments to financial 
        institutions to pay debt obligations incurred by 
        entities under this section. Funds available for this 
        purpose from other amounts available for the program 
        may also be used to pay those debt obligations.
          (3) Investment.--Amounts in the Fund that are not 
        currently needed for the purpose of this section shall 
        be kept on deposit or invested in obligations of the 
        United States Government.
  (e) Regulations.--The Secretary shall prescribe regulations 
the Secretary considers necessary to carry out this section.

                                 * * *

                       CHAPTER 541--MISCELLANEOUS

Sec.
54101.  Assistance for small shipyards and maritime communities.

54101. Assistance for small shipyards and maritime communities

  (a) Establishment of Program.--Subject to the availability of 
appropriations, the Administrator of the Maritime 
Administration shall establish a program to provide assistance 
to State and local governments--
          (1) to provide assistance in the form of grants, 
        loans, and loan guarantees to small shipyards for 
        capital improvements; and
          (2) for maritime training programs in communities 
        whose economies are substantially related to the 
        maritime industry.
  (b) Awards.--In providing assistance under the program, the 
Administrator shall--
          (1) take into account--
                  (A) the economic circumstances and conditions 
                of maritime communities; and
                  (B) the local, State, and regional economy in 
                which the communities are located; and
          (2) strongly encourage State, local, and regional 
        efforts to promote economic development and training 
        that will enhance the economic viability of and quality 
        of life in maritime communities.
  (c) Use of Funds.--Assistance provided under this section may 
be used--
          (1) to make capital and related improvements in small 
        shipyards located in or near maritime communities;
          (2) to encourage, assist in, or provide training for 
        residents of maritime communities that will enhance the 
        economic viability of those communities; and
          (3) for such other purposes as the Administrator 
        determines to be consistent with and supplemental to 
        such activities.
  (d) Prohibited Uses.--Grants awarded under this section may 
not be used to construct buildings or other physical facilities 
or to acquire land unless such use is specifically approved by 
the Administrator in support of subsection (c)(3).
  (e) Matching Requirements.--
          (1) Federal funding.--Except as provided in paragraph 
        (2), Federal funds for any eligible project under this 
        section shall not exceed 75 percent of the total cost 
        of such project.
          (2) Exceptions.--
                  (A) Small projects.--Paragraph (1) shall not 
                apply to grants under this section for stand 
                alone projects costing not more than $25,000. 
                The amount under this subparagraph shall be 
                indexed to the consumer price index and 
                modified each fiscal year after the annual 
                publication of the consumer price index.
                  (B) Reduction in matching requirement.--If 
                the Administrator determines that a proposed 
                project merits support and cannot be undertaken 
                without a higher percentage of Federal 
                financial assistance, the Administrator may 
                award a grant for such project with a lesser 
                matching requirement than is described in 
                paragraph (1).
  (f) Application.--
          (1) In general.--The Administrator shall determine 
        who, as an eligible applicant, may submit an 
        application, at such time, in such form, and containing 
        such information and assurances as the Administrator 
        may require.
          (2) Minimum standards for payment or reimbursement.--
        Each application submitted under paragraph (1) shall 
        include--
                  (A) a comprehensive description of--
                          (i) the need for the project;
                          (ii) the methodology for implementing 
                        the project; and
                          (iii) any existing programs or 
                        arrangements that can be used to 
                        supplement or leverage assistance under 
                        the program.
          (3) Procedural safeguards.--The Administrator, in 
        consultation with the Office of the Inspector General, 
        shall issue guidelines to establish appropriate 
        accounting, reporting, and review procedures to ensure 
        that--
                  (A) grant funds are used for the purposes for 
                which they were made available;
                  (B) grantees have properly accounted for all 
                expenditures of grant funds; and
                  (C) grant funds not used for such purposes 
                and amounts not obligated or expended are 
                returned.
          (4) Project approval required.--The Administrator may 
        not award a grant under this section unless the 
        Administrator determines that--
                  (A) sufficient funding is available to meet 
                the matching requirements of subsection (e);
                  (B) the project will be completed without 
                unreasonable delay; and
                  (C) the recipient has authority to carry out 
                the proposed project.
  (g) Audits and Examinations.--All grantees under this section 
shall maintain such records as the Administrator may require 
and make such records available for review and audit by the 
Administrator.
  (h) Small Shipyard Defined.--In this section, the term 
``small shipyard'' means a shipyard that--
          (1) is a small business concern (within the meaning 
        of section 3 of the Small Business Act (15 U.S.C. 
        632)); and
          (2) does not have more than 600 employees.
  (i) Authorization of Appropriations.--There are authorized to 
be appropriated to the Administrator of the Maritime 
Administration for each of fiscal years 2006 through 2010 to 
carry out this section--
          (1) $5,000,000 for training grants; and
          (2) $25,000,000 for capital and related improvement 
        grants.

                      Part D--Promotional Programs

                      CHAPTER 551--COASTWISE TRADE

Sec.
55110.  Transportation of valueless material or dredged material.

                                 * * *

Sec. 55101. Application of coastwise laws

  (a) In General.--Except as provided in subsection (b), the 
coastwise laws apply to the United States, including the island 
territories and possessions of the United States.
  (b) Exceptions.--The coastwise laws do not apply to--
          (1) American Samoa;
          (2) the Northern Mariana Islands, except as provided 
        in section 502(b) of the Covenant To Establish a 
        Commonwealth of the Northern Mariana Islands in 
        Political Union With the United States of America (48 
        U.S.C. 1801 note); or
          (3) Canton Island until the President declares by 
        proclamation that the coastwise laws apply to Canton 
        Island; or
          (4) (3) the Virgin Islands until the President 
        declares by proclamation that the coastwise laws apply 
        to the Virgin Islands.

                                 * * *

Sec. 55105. Transportation of hazardous waste

                                 * * *

  (b) Nonapplication to Certain Foreign Vessels.--

                                 * * *

          (3) Inspection.--A vessel described in paragraph (1) 
        shall be inspected by the Coast Guard, regardless of 
        whether inspected by the nation in which it is 
        registered. The inspection shall be the same as would 
        be required of a vessel of the United States, including 
        drydock inspection and internal examination of tanks 
        and void spaces. The inspection may be made 
        concurrently with an inspection by that nation or 
        within one year after the initial issuance or next 
        scheduled issuance of the Safety of Life at Sea Safety 
        Construction Certificate. In making the inspection, the 
        Coast Guard shall refer to the condition of the hull 
        and superstructure established by the initial foreign 
        certification as the basis for evaluating the current 
        condition of the hull and superstructure. The Coast 
        Guard shall allow the substitution of fittings, 
        material, apparatus, equipment, and appliances 
        different from those required for vessels of the United 
        States if satisfied they are equivalent and at least as 
        effective as those required for vessels of the United 
        States. A satisfactory inspection under this paragraph 
        shall be certified in writing by the Secretary of the 
        department in which the Coast Guard is operating 
        Secretary of Homeland Security.

                                 * * *

Sec. 55110. Transportation of valueless material or dredged material

                                 * * *

           Subtitle VI--Clearance, Tonnage Taxes, and Duties

                                 * * *

               CHAPTER 603--TONNAGE TAXES AND LIGHT MONEY

                                 * * *

Sec. 60301. Regular tonnage taxes

  (a) Lower Rate.--A tax is imposed at the rate of 2 cents per 
ton (but not more than a total of 10 cents per ton per year) 
4.5 cents per ton, not to exceed a total of 22.5 cents per ton 
per year, for fiscal years 2006 through 2010, and 2 cents per 
ton, not to exceed a total of 10 cents per ton per year, for 
each fiscal year thereafter, at each entry in a port of the 
United States of--

                                 * * *

  (b) Higher Rate.--A tax is imposed at the rate of 6 cents per 
ton (but not more than a total of 30 cents per ton per year) 
13.5 cents per ton, not to exceed a total of 67.5 cents per ton 
per year, for fiscal years 2006 through 2010, and 6 cents per 
ton, not to exceed a total of 30 cents per ton per year, for 
each fiscal year thereafter, on a vessel at each entry in a 
port of the United States from a foreign port or place not 
named in subsection (a)(1).

                                 * * *

              Subtitle VII--Security and Drug Enforcement

                                 * * *

                     CHAPTER 703--MARITIME SECURITY

                                 * * *

Sec. 70306. Report on terrorist threats

  (a) Content.--Not later than February 28 of each year, the 
Secretary shall submit a report The Secretary shall submit an 
annual report to Congress on the threat from acts of terrorism 
to United States ports and vessels operating from those ports. 
The Secretary shall include a description of activities 
undertaken under title I of the Maritime Transportation 
Security Act of 2002 (Public Law 107-295, 116 Stat. 2066) and 
an analysis of the effect of those activities on port security 
against acts of terrorism.

                                 * * *

               CHAPTER 705--MARITIME DRUG LAW ENFORCEMENT

                                 * * *

Sec. 70502. Definitions

                                 * * *

  (d) Vessel Without Nationality.--

                                 * * *

          (2) Verification or denial.--A claim of registry 
        under paragraph (1)(A) or (C) may be verified or denied 
        by radio, telephone, or similar oral or electronic 
        means. The denial of such a claim is proved 
        conclusively by certification of the Secretary of State 
        or the Secretary's designee.
          (2) Response to claim of registry.--The response of a 
        foreign nation to a claim of registry under paragraph 
        (1)(A) or (C) may be made by radio, telephone, or 
        similar oral or electronic means, and is proved 
        conclusively by certification of the Secretary of State 
        or the Secretary's designee.

                                 * * *

                           Public Law 109-304

SEC. 9. SUBTITLE VI OF TITLE 46.

                                 * * *

  (a) Redesignation.--Title 46, United States Code, is amended 
by redesignating subtitle VI as subtitle VII.

                                 * * *

SEC. 15. ADDITIONAL AMENDMENTS TO TITLE 46.

                                 * * *

  Title 46, United States Code, is amended as follows:

                                 * * *

          (10) In section 3205(d), strike ``Secretary of the 
        Treasury shall withhold or revoke the clearance 
        required by section 4197 of the Revised Statutes (46 
        App. U.S.C. 46 U.S.C. App. 91)'' and substitute 
        ``Secretary of Homeland Security shall withhold or 
        revoke the clearance required by section 60105 of this 
        title''.

                                 * * *

          (21) In section 6101, redesignate the second 
        subsection (g) and subsection (h) as subsections (h) 
        and (i), respectively.

                                 * * *

          (30) In section 31325(b)(3)(B), strike ``section 9 or 
        37 of the Shipping Act, 1936 1916 (46 App. U.S.C. 808, 
        835)'' and substitute ``section 56101 or 56102 of this 
        title''.

                                 * * *

          (33)(A) Sections 70118 and 70119, as added by section 
        801(a) of the Coast Guard and Maritime Transportation 
        Act of 2004 (Public Law 108-293, 118 Stat. 1078), are 
        redesignated as sections 70117 and 70118, respectively, 
        and moved to appear immediately after section 70116 of 
        title 46, United States Code.
          (B) Sections 70117 and 70118, as added by section 
        802(a)(2) of such Act, are redesignated as sections 
        70120 and 70121, respectively, and moved to appear 
        immediately after section 70119 of title 46, United 
        States Code.
          (C) In section 70120(a) (as redesignated by 
        subparagraph (B)), strike ``section 70120'' and 
        substitute ``section 70119''.
          (D) In section 70121(a) (as redesignated by 
        subparagraph (B))--
                  (i) strike ``section 70120'' and substitute 
                ``section 70119''; and

                                 * * *

SEC. 16. RECREATIONAL BOATING SAFETY TECHNICAL AMENDMENTS.

                                 * * *

  (c) Cross References.--

                                 * * *

          (2) Section 9504(c) of the Internal Revenue Code of 
        1986 (26 U.S.C. 9504(c)) is amended by striking 
        ``section 13106'' and substituting ``section 13107''.

                                 * * *

SEC. 19. REPEALS.

                                 * * *

                                                Statutes at Large
----------------------------------------------------------------------------------------------------------------
                                                                          Statutes at Large       U.S. Code (46
                                 Chapter or                          --------------------------    App. unless
             Date                Public Law           Section                                       otherwise
                                                                      Volume        Page           specified)
----------------------------------------------------------------------------------------------------------------
             1936
June 29                         858           1111 1113.............  ......  ................  1279f
                                ............  1112 1114.............  ......  ................  1279g
----------------------------------------------------------------------------------------------------------------

                                 * * *

  National Defense Authorization Act for Fiscal Year 2006 (Public Law 
                                109-163)

SEC. 515. REDESIGNATION OF THE NAVAL RESERVE AS THE NAVY RESERVE.

  (g) Conforming Amendments to Other Laws.--

                                 * * *

          (2) The Merchant Marine Act, 1936 is amended--
                  (A) by striking ``Naval Reserve'' each place 
                it appears in sections 301(b) (46 U.S.C. App. 
                1131(b)), 1303 (46 U.S.C. App. 1295b), and 1304 
                (46 U.S.C. App. 1295c) and inserting ``Navy 
                Reserve''; and
                  (B) by striking ``Naval Reserve'' in sections 
                1303(c) and 1304(h) and inserting ``Navy 
                Reserve'':

                                 * * *

SEC. 3502. PAYMENTS FOR STATE AND REGIONAL MARITIME ACADEMIES.

  (a) Annual Payment.--Section 1304(d)(1)(C)(ii) of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1295c(d)(1)(C)(ii)) 
is amended by striking ``$200,000'' and inserting ``$300,000 
for fiscal year 2006, $400,000 for fiscal year 2007, and 
$500,000 for fiscal year 2008 and each fiscal year 
thereafter''.
  (b) School Ship Fuel Payment.--Section 1304(c)(2) of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1295c(c)(2)) is 
amended--
          (1) by striking ``The Secretary may pay to any State 
        maritime academy'' and inserting ``(A) The Secretary 
        shall, subject to the availability of appropriations, 
        pay to each State maritime academy''; and
          (2) by adding at the end the following:
                  ``(B) The amount of the payment to a State 
                maritime academy under this paragraph shall not 
                exceed--
                          ``(i) $100,000 for fiscal year 2006;
                          ``(ii) $200,000 for fiscal year 2007; 
                        and
                          ``(iii) $300,000 for fiscal year 2008 
                        and each fiscal year thereafter.''.

                                 * * *

SEC. 3507. TRANSFER OF AUTHORITY FOR TITLE XI NON-FISHING LOAN 
                    GUARANTEE DECISIONS TO MARITIME ADMINISTRATION.

  (a) In General.--Title XI of the Merchant Marine Act, 1936 
(46 U.S.C. App. 1271 et seq.), as amended by subsection (d) of 
this section, is amended--
          (1) by striking ``Secretary'' each place it appears 
        and inserting ``Secretary or Administrator'' in--
                  (A) section 1101(c), (f), and (g);
                  (B) section 1102;
                  (C) section 1103(a), (b), (c), (e), (g), and 
                (h);
                  (D) section 1104A, except in--
                          (i) subsection (b)(7) and the 
                        undesignated paragraph that follows;
                          (ii) paragraphs (1), (2), (3)(B), and 
                        (4) of subsection (d);
                          (iii) subsection (e)(2)(F) the second 
                        place it appears;
                          (iv) subsection (j); and
                          (v) subsection (n)(1) the first place 
                        it appears;
                  (E) section 1104B;
                  (F) section 1105(a), (b), (c), and (e);
                  (G) section 1105(d) the first, second, third, 
                fifth, and last places it appears; and
                  (H) sections 1108, 1109 (except the second 
                place it appears in subsection (c)), and 1113 
                (as redesignated by subsection (d) of this 
                section);
          (2) by striking ``Secretary'' and inserting 
        ``Administrator'' in--
                  (A) section 1103(i);
                  (B) section 1103(j) the first place it 
                appears;
                  (C) section 1104A(b)(7) each place it appears 
                but not in the undesignated paragraph that 
                follows subsection (b)(7);
                  (D) section 1104A(d)(1)(A) each place it 
                appears except the first;
                  (E) section 1104A(d)(3) each place it appears 
                except in subparagraph (B);
                  (F) section 1104A(j)(1) the first, fifth, and 
                seventh places it appears;
                  (G) section 1104A(n) each place it appears 
                except the first;
                  (H) section 1110 each place it appears except 
                the first and fourth places it appears in 
                subsection (b);
                  (I) section 1111(a) and (b)(2) each place it 
                appears;
                  (J) section 1111(b)(4) each place it appears 
                except the first; and
                  (K) section 1112 each place it appears; and
          (3) by striking ``Secretary's'' in sections 
        1108(g)(1) and 1109(d)(3) and inserting ``Secretary's 
        or Administrator's''.
  (b) Additional and Conforming Title XI Changes.--
          (1) Section 1101 of the Merchant Marine Act, 1936 (46 
        U.S.C. App. 1271) is amended--
                  (A) by striking ``title,'' and all that 
                follows in subsection (n) and inserting 
                ``title.''; and
                  (B) by adding at the end the following:
  ``(p) The term `Administrator' means the Administrator of the 
Maritime Administration.''.
          (2) Section 1103(j) of such Act (46 U.S.C. App. 
        1273(j)) is amended by adding at the end the following:
``The Secretary of Defense shall determine whether a vessel 
satisfies paragraphs (1) and (2) by not later than 30 days 
after receipt of a request from the Administrator for such a 
determination.''.
          (3) Section 1104A(d) of such Act (46 U.S.C. App. 
        1274(d)) is amended--
                  (A) by striking ``Secretary of 
                Transportation'' in paragraphs (1)(A) and 
                (3)(B) and inserting ``Administrator'';
                  (B) by striking ``the waiver'' in paragraph 
                (4)(B) and inserting ``if deemed necessary by 
                the Secretary or Administrator, the waiver'';
                  (C) by striking ``the increased'' in 
                paragraph (4)(B) and inserting ``any 
                significant increase in''.
          (4) Section 1104A(f) of such Act (46 U.S.C. App. 
        1273(f)) is amended--
                  (A) by striking ``financial structures, or 
                other risk factors identified by the Secretary 
                or Administrator.'' in paragraph (2), as 
                amended by subsection (a) of this section, and 
                inserting ``or financial structures.'';
                  (B) by striking ``financial structures, or 
                other risk factors identified by the Secretary 
                or Administrator.'' in paragraph (3), as 
                amended by subsection (a) of this section, and 
                inserting ``or financial structures.''; and
                  (C) by adding at the end the following:
          ``(5) A third party independent analysis conducted 
        under paragraph (2) shall be performed by a private 
        sector expert in assessing such risk factors who is 
        selected by the Administrator.''.
          (5) Section 1104A(j)(2) of such Act (46 U.S.C. App. 
        1273(j)(2)) is amended by striking ``The Secretary of 
        Transportation'' and inserting ``The Administrator''.
          (6) Section 1104A(m) of such Act (46 U.S.C. App. 
        1273(m)) is amended by striking the last sentence and 
        inserting ``If the Secretary or Administrator has 
        waived a requirement under section 1104A(d), the loan 
        agreement shall include requirements for additional 
        payments, collateral, or equity contributions to meet 
        such waived requirement upon the occurrence of 
        verifiable conditions indicating that the obligor's 
        financial condition enables the obligor to meet the 
        waived requirement.''.
          (7) Section 1104A(n)(1) of such Act (46 U.S.C. App. 
        1273(n)(1)) is amended by striking ``The Secretary of 
        Transportation'' and inserting ``The Administrator''.
          (8) Section 1111 of such Act (46 U.S.C. 1279(f)) is 
        amended by striking ``Secretary of Transportation'' 
        each place it appears and inserting ``Administrator''.
  (c) Conforming Changes in Other Statutes.--
          (1) Section 401(a) of the Ocean Shipping Reform Act 
        of 1998 (46 U.S.C. App. 1273a(a)) is amended by 
        striking ``Secretary of Transportation'' and inserting 
        ``Administrator of the Maritime Administration''.
          (2) Section 101 of Public Law 85-469 (46 U.S.C. 1280) 
        is amended by inserting ``or the Administrator of the 
        Maritime Administration'' after ``Secretary''.
          (3) Section 3527 of the Maritime Security Act of 2003 
        (46 U.S.C. App. 1280b) is amended by striking 
        ``Secretary of Transportation'' and inserting 
        ``Administrator of the Maritime Administration''.
          (4) Section 3528 of the Maritime Security Act of 2003 
        (46 U.S.C. App. 1271 note) is repealed.
  (d) Technical Correction of Section Numbering.--Title XI of 
the Merchant Marine Act, 1936 (46 U.S.C. App. 1271 et seq.) is 
amended by redesignating the second sections 1111 and 1112, as 
added by section 303 of the Sustainable Fisheries Act (Public 
Law 104-297; 110 Stat. 3616), as sections 1113 and 1114, 
respectively.

                                 * * *

SEC. 3509. UNITED STATES MARITIME SERVICE.

  Section 1306(a) of the Maritime Education and Training Act of 
1980 (46 U.S.C. App. 1295e(a)), is amended by inserting ``and 
to perform functions to assist the United States merchant 
marine, as determined necessary by the Secretary,'' after 
``United States'' the second place it appears.

SEC. 3510. AWARDS AND MEDALS.

  Section 5(c) of the Merchant Marine Decorations and Medals 
Act (46 U.S.C. App. 2004(c)) is amended by striking ``provide 
at cost, or authorize for the manufacture and sale at 
reasonable prices by private persons--'' and inserting 
``provide--''.

                                 * * *

           Deficit Reduction Act of 2005 (Public Law 109-171)

SEC. 4001. EXTENSION OF VESSEL TONNAGE DUTIES.

  (a) Extension of Duties.--Section 36 of the Act entitled ``An 
Act to provide revenue, equalize duties and encourage the 
industries of the United States, and for other purposes'', 
approved August 5, 1909 (36 Stat. 111; 46 U.S.C. App. 121), is 
amended--
          (1) by striking ``9 cents per ton'' and all that 
        follows through ``2002,'' the first place it appears 
        and inserting ``4.5 cents per ton, not to exceed in the 
        aggregate 22.5 cents per ton in any one year, for 
        fiscal years 2006 through 2010,''; and
          (2) by striking ``27 cents per ton'' and all that 
        follows through ``2002,'' and inserting ``13.5 cents 
        per ton, not to exceed 67.5 cents per ton per annum, 
        for fiscal years 2006 through 2010,''.
  (b) Conforming Amendment.--The Act entitled ``An Act 
concerning tonnage duties on vessels entering otherwise than by 
sea'', approved March 8, 1910 (36 Stat. 234; 46 U.S.C. App. 
132), is amended by striking ``9 cents per ton'' and all that 
follows through ``and 2 cents'' and inserting ``4.5 cents per 
ton, not to exceed in the aggregate 22.5 cents per ton in any 
one year, for fiscal years 2006 through 2010, and 2 cents''.

                                 * * *

  Coast Guard and Maritime Transportation Act of 2006 (Public Law 109-
                                  241)

SEC. 303. CERTIFICATION OF VESSEL NATIONALITY IN DRUG SMUGGLING CASES.

  Section 3(c)(2) of the Maritime Drug Law Enforcement Act (46 
U.S.C. App. 1903(c)(2)) is amended by striking the last two 
sentences and inserting the following: ``The response of a 
foreign nation to a claim of registry under subparagraph (A) or 
(C) may be made by radio, telephone, or similar oral or 
electronic means, and is conclusively proved by certification 
of the Secretary of State or the Secretary's designee.''.

                                 * * *

SEC. 307. TRAINING OF CADETS AT UNITED STATES MERCHANT MARINE ACADEMY.

  Section 1303(f) of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1295b(f)) is amended--
          (1) by striking ``and'' at the end of paragraph (2);
          (2) by striking the period at the end of paragraph 
        (3) and inserting ``; and''; and
          (3) by adding at the end the following:
          ``(4) on any other vessel considered by the Secretary 
        to be necessary or appropriate or in the national 
        interest.''.

SEC. 308. REPORTS FROM MORTGAGEES OF VESSELS.

  Section 12120 of title 46, United States Code, is amended by 
striking ``owners, masters, and charterers'' and inserting 
``owners, masters, charterers, and mortgagees''.

                                 * * *

SEC. 310. SETTING, RELOCATING, AND RECOVERING ANCHORS.

  Section 12105 of title 46, United States Code, is amended by 
adding at the end the following:
  ``(c)(1) Only a vessel for which a certificate of 
documentation with a registry endorsement is issued may engage 
in--
          ``(A) the setting, relocation, or recovery of the 
        anchors or other mooring equipment of a mobile offshore 
        drilling unit that is located over the outer 
        Continental Shelf (as defined in section 2(a) of the 
        Outer Continental Shelf Lands Act (43 U.S.C. 1331(a))); 
        or
          ``(B) the transportation of merchandise or personnel 
        to or from a point in the United States from or to a 
        mobile offshore drilling unit located over the outer 
        Continental Shelf that is not attached to the seabed.
  ``(2) Nothing in paragraph (1) authorizes the employment in 
the coastwise trade of a vessel that does not meet the 
requirements of section 12106 of this title.''.

                                 * * *

SEC. 901. MISCELLANEOUS TECHNICAL CORRECTIONS.

                                 * * *

  (q) Acts of Terrorism Report.--Section 905 of the Omnibus 
Diplomatic Security and Antiterrorism Act of 1986 (46 U.S.C. 
App. 1802; 100 Stat. 890) is amended by striking ``Not later 
than February 28, 1987, and annually thereafter, the Secretary 
of Transportation shall report'' and inserting ``The Secretary 
of the department in which the Coast Guard is operating shall 
report annually''.

                                 * * *

SEC. 902. CORRECTION OF REFERENCES TO SECRETARY OF TRANSPORTATION AND 
                    DEPARTMENT OF TRANSPORTATION; RELATED MATTERS.

                                 * * *

  (o) Merchant Marine Act, 1920.--Section 27 of the Merchant 
Marine Act, 1920 (46 U.S.C. App. 883) is amended in the matter 
following the ninth proviso (pertaining to transportation of a 
foreign-flag incineration vessel) by striking ``Satisfactory 
inspection shall be certified in writing by the Secretary of 
Transportation'' and inserting ``Satisfactory inspection shall 
be certified, in writing, by the Secretary of Homeland 
Security.''.

                                 * * *

  John Warner National Defense Authorization Act for Fiscal Year 2007 
                          (Public Law 109-364)

SEC. 1017. OBTAINING CARRIAGE BY VESSEL; CRITERION REGARDING OVERHAUL, 
                    REPAIR, AND MANTENANCE OF VESSELS IN THE UNITED 
                    STATES

                                 * * *

  (b) Covered Vessels.--A vessel is a covered vessel of an 
offeror under this section if the vessel is--
          (1) owned, operated, or controlled by the offeror; 
        and
          (2) qualified to engage in the carriage of cargo in 
        the coastwise or non-contiguous trade under section 27 
        of the Merchant Marine Act, 1920 (46 U.S.C. 883), 
        section 12106 of title 46, United States Code, and 
        section 2 of the Shipping Act, 1916 (46 U.S.C. App. 
        802) sections 12112, 50501, and 55102 of title 46, 
        United States Code.

                                 * * *

SEC. 3505. UNITED STATES MERCHANT MARINE ACADEMY GRADUATES: SERVICE 
                    REQUIREMENTS.

  (a) Alternate Service.--Section 1303(e) of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1295b(e)) is amended by adding 
at the end the following:
          ``(6)(A) An individual who for the 5-year period 
        following graduation from the Academy, serves as a 
        commissioned officer on active duty in an armed force 
        of the United States or as a commissioned officer of 
        the National Oceanic and Atmospheric Administration or 
        the Public Health Service shall be excused from the 
        requirements of subparagraphs (C), (D), and (E) of 
        paragraph (1).
          ``(B) The Secretary may modify or waive any of the 
        terms and conditions set forth in paragraph (1) through 
        the imposition of alternative service requirements.''.
  (b) Application.--Paragraph (6) of section 1303(e) of the 
Merchant Marine Act, 1936 (46 U.S.C. App. 1295b(e)), as added 
by this section, applies only to an individual who enrolls as a 
cadet at the United States Merchant Marine Academy, and signs 
an agreement under paragraph (1) of that section, after the 
date of the enactment of this Act.

SEC. 3506. UNITED STATES MERCHANT MARINE ACADEMY GRADUATES: SERVICE 
                    OBLIGATION PERFORMANCE REPORTING REQUIREMENT.

  (a) In General.--Section 1303(e) of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1295b(e)) is further amended by adding at 
the end the following:
          ``(7)(A) Subject to any otherwise applicable 
        restrictions on disclosure in section 552a of title 5, 
        United States Code, the Secretary of Defense, the 
        Secretary of the department in which the Coast Guard is 
        operating, the Administrator of the National Oceanic 
        and Atmospheric Administration, and the Surgeon General 
        of the Public Health Service--
                  ``(i) shall report the status of obligated 
                service of an individual graduate of the 
                Academy upon request of the Secretary; and
                  ``(ii) may, in their discretion, notify the 
                Secretary of any failure of the graduate to 
                perform the graduate's duties, either on active 
                duty or in the Ready Reserve component of their 
                respective service, or as a commissioned 
                officer of the National Oceanic and Atmospheric 
                Administration or the Public Health Service, 
                respectively.
          ``(B) A report or notice under subparagraph (A) shall 
        identify any graduate determined to have failed to 
        comply with service obligation requirements and provide 
        all required information as to why such graduate failed 
        to comply.
          ``(C) Upon receipt of such a report or notice, such 
        graduate may be considered to be in default of the 
        graduate's service obligations by the Secretary, and 
        subject to all remedies the Secretary may have with 
        respect to such a default.''.
  (b) Application.--The amendment made by this section does not 
apply with respect to an agreement entered into under section 
1303(e) of the Merchant Marine Act, 1936 (46 U.S.C. 1295b(e)) 
before the date of the enactment of this Act.

                                 * * *

SEC. 3508. QUALIFYING RESERVE DUTY FOR RECEIPT OF STUDENT INCENTIVE 
                    PAYMENTS.

  Section 1304(g)(2) of title XIII of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1295c(g)(2)) is amended to read as 
follows:
          ``(2) Each agreement entered into under paragraph (1) 
        shall require the individual to accept enlisted reserve 
        status in the United States Naval Reserve (including 
        the Merchant Marine Reserve, United States Naval 
        Reserve) or the United States Coast Guard Reserve 
        before receiving any student incentive payments under 
        this subsection.''.

                                 * * *

SEC. 3510. MISCELLANEOUS MARITIME ADMINISTRATION PROVISIONS.

  (a) Technical Correction Regarding War Risk Insurance for 
Merchant Marine Vessels.--
          (1) In general.--Section 1208(a) of the Merchant 
        Marine Act, 1936 (46 U.S.C. App. 1288(a)) is amended--
                  (A) by striking ``Upon the request of the 
                Secretary of Transportation, the Secretary of 
                the Treasury may invest or reinvest all or any 
                part of the fund in securities of the United 
                States or in securities guaranteed as to 
                principal and interest by the United States.''; 
                and
                  (B) by inserting after ``to the credit of 
                such fund.'' the following: ``Payments of 
                return premiums, losses, settlements, 
                judgments, and all liabilities incurred by the 
                United States under this title shall be made 
                from such fund through the Fiscal Service of 
                the Department of the Treasury.''.
          (2) Effective date.--The amendments made by paragraph 
        (1) shall be effective as if enacted by section 3502 of 
        the Ronald W. Reagan National Defense Authorization Act 
        for Fiscal Year 2005 (118 Stat. 2195).
  (b) Right to Use Maritime Administration Decoration.--Section 
8 of the Merchant Marine Decorations and Medals Act (46 U.S.C. 
App. 2007) is amended by inserting ``or the Secretary of 
Transportation,'' after ``Act,''.

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