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[Senate Report 114-158]
[From the U.S. Government Publishing Office]

                                                      Calendar No. 280
114th Congress   }                                       {      Report
                                 SENATE
 1st Session     }                                       {     114-158
                                                                
_______________________________________________________________________

                                     

                                                     

            MARITIME ADMINISTRATION ENHANCEMENT ACT OF 2015

                               __________

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 1326

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                October 27, 2015.--Ordered to be printed
                                   ______

                         U.S. GOVERNMENT PUBLISHING OFFICE 

59-010                         WASHINGTON : 2015                 
                
                
                
                
                
                
                
                
                
                
                
                
                
                
                
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                    one hundred fourteenth congress
                             first session

                   JOHN THUNE, South Dakota, Chairman
 ROGER F. WICKER, Mississippi         BILL NELSON, Florida
 ROY BLUNT, Missouri                  MARIA CANTWELL, Washington
 MARCO RUBIO, Florida                 CLAIRE McCASKILL, Missouri
 KELLY AYOTTE, New Hampshire          AMY KLOBUCHAR, Minnesota
 TED CRUZ, Texas                      RICHARD BLUMENTHAL, Connecticut
 DEB FISCHER, Nebraska                BRIAN SCHATZ, Hawaii
 JERRY MORAN, Kansas                  ED MARKEY, Massachusetts
 DAN SULLIVAN, Alaska                 CORY BOOKER, New Jersey
 RON JOHNSON, Wisconsin               TOM UDALL, New Mexico
 DEAN HELLER, Nevada                  JOE MANCHIN, West Virginia
 CORY GARDNER, Colorado               GARY PETERS, Michigan
 STEVE DAINES, Montana
                    David Schwietert, Staff Director
                   Nick Rossi, Deputy Staff Director
                    Rebecca Seidel, General Counsel
                 Kim Lipsky, Democratic Staff Director
           Christopher Day, Democratic Deputy Staff Director
                 Clint Odom, Democratic General Counsel
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                 
                                                      Calendar No. 280
114th Congress   }                                       {      Report
                                 SENATE
 1st Session     }                                       {     114-158

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

 
            MARITIME ADMINISTRATION ENHANCEMENT ACT OF 2015

                                _______
                                

                October 27, 2015.--Ordered to be printed

                                _______
                                

Mr. Thune, from the Committee on Commerce, Science, and Transportation, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 1326]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1326) to amend certain maritime 
programs of the Department of Transportation, and for other 
purposes, having considered the same, reports favorably thereon 
with an amendment (in the nature of a substitute) and 
recommends that the bill (as amended) do pass.

                          Purpose of the Bill

    The purpose of the Maritime Administration Enhancement Act 
of 2015 is to authorize appropriations for fiscal years (FYs) 
2016 and 2017 that reflect agency needs, and increase the 
efficiency and effectiveness of the Maritime Administration 
(MARAD). The bill would strengthen requirements for proper 
performance of reserve service obligations for United States 
Merchant Marine Academy (USMMA) graduates; clarify requirements 
for a graduate of the Student Incentive Payment (SIP) Program 
to perform service obligations; facilitate enforcement of the 
reserve duty service obligation; and promote the development of 
short sea shipping.

                          Background and Needs

    MARAD's mission is to foster, promote, and develop the 
merchant maritime industry of the United States. Its priorities 
are to help maintain economic and national security 
preparedness, invest in mariner training, enhance U.S.-flag 
competitiveness, and foster environmental sustainability. 
Specifically, MARAD:

     Manages a Department of Defense (DOD) funded Ready 
Reserve Force (RRF).

     Operates the Maritime Security Program (MSP).

     Administers the Maritime Guaranteed Loan Program, 
the Small Shipyard Grant Program, and the Deepwater Port 
Licensing Program for offshore liquefied natural gas and oil 
receiving port facilities.

     Manages the disposal of National Defense Reserve 
Fleet (NDRF) assets.

     Promotes port infrastructure development and 
congestion mitigation in the transportation system.

     Issues determinations to the Department of 
Homeland Security on the availability of coastwise qualified 
vessels.

    MARAD also oversees the USMMA at Kings Point, New York, and 
contributes funding to six State maritime academies.
    S. 1326 focuses on strengthening the service requirements 
for USMMA graduates. In particular, statutory changes are 
needed to clarify the existing licensing requirement for USMMA 
and State maritime academy graduates, including the requirement 
to maintain a valid transportation worker identification 
credential (TWIC) and a United States Coast Guard (USCG) 
approved medical certificate. Current law also contains an 
outdated reference to the Merchant Marine Reserve, which is now 
called the Strategic Sealift Officer Program. Furthermore, the 
current reserve service requirement for maritime academy 
graduates is for six years; however, the DOD requires 
reservists to serve a minimum of eight years. Making the 
reserve service requirement consistent with the DOD service 
requirement is needed to avoid confusion.
    In addition, the definition of short sea transportation is 
limited to containerized cargo as well as cargo loaded using 
wheeled technology. However, opportunities exist to move other 
types of unitized cargo by water, providing the same public 
benefits as the movement of containerized freight. Therefore, 
the bill would expand the definition of short sea 
transportation to include cargo moved in discreet units, and 
would increase overall efforts to mitigate landside congestion.
    Finally, of special concern is the operational condition of 
the training vessel fleet at the Nation's maritime academies. 
The quality and length of sea-time that students receive aboard 
these vessels is a critical educational component needed to 
qualify for their credentials. However, the vessels have either 
exceeded or are approaching their useful lives, which limits 
the overall quality of cadet training, as well as recruitment. 
The current condition of the ships reduces available days at 
sea, increases annual maintenance costs, and creates other 
obstacles to ensuring such vessels comply with international 
and domestic maritime statutes, rules, and regulations. 
Recapitalizing the training vessel fleet would improve mariner 
education, reduce operational risks and annual operation and 
maintenance costs, and ensure the maritime academies have 
modern and reliable training platforms for the future.

                         Summary of Provisions

    The Maritime Administration Enhancement Act of 2015 would 
authorize appropriations for FYs 2016 and 2017 that more 
closely reflect current appropriations and agency needs, and 
would increase the efficiency and effectiveness of MARAD by 
doing the following:

     Strengthening requirements for proper performance 
of reserve service obligations for USMMA graduates.

     Clarifying requirements for a graduate of the SIP 
Program to perform service obligations and facilitate 
enforcement of the reserve duty service obligation.

     Promoting the development of short sea shipping.

                          Legislative History

    The bill was introduced on May 13, 2015, by Senator Fischer 
and referred to the Committee on Commerce, Science, and 
Transportation of the Senate. On May 20, 2015, the Committee 
met in open Executive Session and, by a voice vote, ordered the 
bill reported favorably with an amendment in the nature of a 
substitute.
    The substitute amendment, offered by Senators Booker and 
Fischer, expanded authorization levels for appropriations to 
support the agency's priorities. MARAD was authorized at $377 
million in FY 2014 and appropriated $305 million in FY 2015. 
The amendment increases authorization levels to just over $379 
million. This represents an increase of just over half a 
percent above FY 2014 funding levels, but 19 percent above FY 
2015 appropriations.

                            Estimated Costs

    In accordance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

S. 1326--Maritime Administration Enhancement Act of 2015

    Summary: S. 1326 would authorize appropriations totaling 
$759 million, primarily for ongoing activities of the Maritime 
Administration (MARAD) within the Department of Transportation 
over the 2016-2017 period.
    Enacting S. 1326 would not affect direct spending or 
revenues; therefore, pay-as-you-go procedures do not apply.
    S. 1326 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary effect of S. 1326 is shown in the following table. 
The costs of this legislation fall within budget functions 050 
(national defense) and 400 (transportation).

 
----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                              --------------------------------------------------
                                                                2016    2017    2018    2019    2020   2016-2020
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Level..........................................     379     379       0       0       0        759
Estimated Outlays............................................     332     368      47      12       0       759
----------------------------------------------------------------------------------------------------------------
Note: Details do not sum to totals because of rounding.

    Basis of estimate: For this estimate, CBO assumes that S. 
1326 will be enacted near the end of fiscal year 2015 and that 
the amounts authorized by the bill will be appropriated for 
each year. Estimated outlays are based on historical spending 
patterns for authorized activities.
    S. 1326 would authorize the appropriation of $379 million 
for ongoing MARAD activities for each of fiscal years 2016 and 
2017. In 2015 MARAD received an appropriation of about $341 
million. For 2016 and 2017 the authorized programs include:
           The Maritime Security Program ($186 
        million),
           The Merchant Marine Academy ($96 million),
           MARAD operations and programs ($54 million),
           State maritime academies ($32 million),
           Disposal of vessels in the National Defense 
        Reserve Fleet ($8 million), and
           Administration of the Maritime Guaranteed 
        Loan Program ($3 million).
    Pay-As-You-Go considerations: None.
    Estimated impact on state, local, and tribal governments: 
S. 1326 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on state, 
local, or tribal governments.
    Estimate prepared by: Federal Costs: Martin von Gnechten; 
Impact on State, Local, and Tribal Governments: Melissa 
Merrell; Impact on the Private Sector: Amy Petz.
    Estimate approved by: H. Samuel Papenfuss; Deputy Assistant 
Director for Budget Analysis.

                           Regulatory Impact

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

                       number of persons covered

    S. 1326 would affect students and graduates of the Nation's 
maritime academies by increasing the service requirement for 
USMMA graduates and State maritime academy graduates of the SIP 
Program. For those affected, the new rules would apply to 
approximately 220-250 USMMA midshipmen and approximately 75 
State cadets each year.

                            economic impact

    The bill would authorize appropriations of $379,272,000 for 
MARAD for each of FYs 2016 and 2017. This represents an 
increase over currently appropriated funding levels.

                                privacy

    The bill would not impact the personal privacy of 
individuals.

                               paperwork

    The reported bill would not increase paperwork requirements 
for the private sector. The bill would require a number of 
reports from the Federal Government. Not later than 180 days 
after the date of enactment, the Administrator of MARAD 
(Administrator) would be required to submit to Congress a 
report on authorities that are needed for the National Security 
Multi-Mission Design Program. No later than one year after 
enactment, the Administrator would be required to submit a 
report to Congress on the implementation of this Act. Not less 
frequently than once every two years, the Administrator would 
be required to submit to Congress a report on the performance 
of the National Security Multi-Mission Design Program.
    In addition, the Administrator in coordination with the 
DOD, and the heads of other Federal agencies considered 
appropriate, would be required to submit a report to Congress, 
as deemed necessary, on national efforts to strengthen the 
U.S.-flagged commercial fleet such that it remains economically 
competitive in foreign markets, and is ready to serve as a 
naval auxiliary for national defense sealift requirements or 
other national emergencies.

                   Congressionally Directed Spending

    In compliance with paragraph 4(b) of rule XLIV of the 
Standing Rules of the Senate, the Committee provides that no 
provisions contained in the bill, as reported, meet the 
definition of congressionally directed spending items under the 
rule.

                      Section-by-Section Analysis

Section 1. Short title.

    This section would designate the short title of this bill 
as the ``Maritime Administration Enhancement Act of 2015.''

Section 2. Cadet commitment requirements.

    This section would strengthen requirements for proper 
performance of reserve service obligations for USMMA graduates 
by providing clarity that graduates are required to apply for a 
position in the reserves of the armed forces, maintain a TWIC, 
and USCG approved medical certificates. This section also would 
change the reserve service obligations of USMMA graduates from 
six to eight years to conform to current DOD reserve 
requirements.

Section 3. Student incentive payment agreements.

    This section would clarify the requirements for a graduate 
of the SIP Program to perform service obligations and would 
facilitate enforcement of the reserve duty component of the 
graduate's service obligation. It would assist in the Federal 
Government's recoupment of funds if SIP graduates fail to fully 
perform their reserve duty service obligations. This section 
also would align current USCG and DOD terminology to update 
references to licensing and the Strategic Sealift Officer 
Program, as well as bring MARAD's reserve service obligation 
requirement in line with the DOD requirements for eight years 
of reserve duty.

Section 4. Federal Unemployment Tax Act.

    This section would provide technical updates to the 
reference from the Secretary of Commerce to the Secretary of 
Transportation regarding service performed by officers and 
members of the crew on or in connection with U.S. vessels.

Section 5. Short sea transportation defined.

    This section would promote the necessary development of 
short sea shipping by making break-bulk and project cargoes 
eligible for the Marine Highway Program, and allow commercial 
ferries to be used for freight transportation. The intent of 
the section is to encourage the establishment of new services 
to reduce landside congestion and to encourage the designation 
of new marine highway projects with ferry elements.

Section 6. Authorization of appropriations.

    This section would authorize MARAD appropriations for FYs 
2016 and 2017 at $379,272,000 each year, including $2.5 million 
per year for the design of national security multi-mission 
vessels.

                        Changes in Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
material is printed in italic, existing law in which no change 
is proposed is shown in roman):

                           TITLE 46. SHIPPING

                      SUBTITLE V. MERCHANT MARINE

                    PART B. MERCHANT MARINE SERVICE

           CHAPTER 513. UNITED STATES MERCHANT MARINE ACADEMY

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] shall sign, as a condition of the appointment, 
an agreement to--
          (1) complete the course of instruction at the 
        Academy;
          [(2) fulfill the requirements for a license as an 
        officer in the merchant marine of the United States 
        before graduation from the Academy;]
          (2) obtain a merchant mariner license, unlimited as 
        to horsepower or tonnage, issued by the United States 
        Coast Guard as an officer in the merchant marine of the 
        United States, accompanied by the appropriate national 
        and international endorsements and certifications 
        required by the Coast Guard for service aboard vessels 
        on domestic and international voyages, without 
        limitation, before graduation from the Academy;
          [(3) maintain a valid license as an officer in the 
        merchant marine of the United States for at least 6 
        years after graduation from the Academy, accompanied by 
        the appropriate national and international endorsements 
        and certification required by the Coast Guard for 
        service aboard vessels on domestic and international 
        voyages;]
          (3) for at least 6 years after graduation from the 
        Academy, maintain--
                  (A) a valid merchant mariner license, 
                unlimited as to horsepower or tonnage, issued 
                by the United States Coast Guard as an officer 
                in the merchant marine of the United States, 
                accompanied by the appropriate national and 
                international endorsements and certifications 
                required by the Coast Guard for service aboard 
                vessels on domestic and international voyages, 
                without limitation;
                  (B) a valid transportation worker 
                identification credential; and
                  (C) a United States Coast Guard medical 
                certificate;
          [(4) apply for, and accept if tendered, an 
        appointment as a commissioned officer in the Navy 
        Reserve (including the Merchant Marine Reserve, 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;]
          (4) apply for, and accept if tendered, an appointment 
        as a commissioned officer in the Navy Reserve 
        (including the Strategic Sealift Officer Program, Navy 
        Reserve), the Coast Guard Reserve, or any other reserve 
        component of an armed force of the United States, and, 
        if tendered the appointment, to serve, meet the 
        participation requirements, and maintain active status 
        in good standing, as determined by the program manager 
        of the appropriate military service, for at least 8 
        years after the date of commissioning;
          (5) serve the foreign and domestic commerce and the 
        national defense of the United States for at least 5 
        years after graduation from the Academy--
                  (A) as a merchant marine officer on a 
                documented vessel or a vessel owned and 
                operated by the United States Government or by 
                a State;
                  (B) as an employee in a United States 
                maritime-related industry, profession, or 
                marine science (as determined by the Secretary 
                of Transportation), if the Secretary determines 
                that service under subparagraph (A) is not 
                available to the individual;
                  (C) as a commissioned officer on active duty 
                in an armed force of the United States, as a 
                commissioned officer in the National Oceanic 
                and Atmospheric Administration, or in other 
                maritime-related Federal employment which 
                serves the national security interests of the 
                United States, as determined by the Secretary; 
                or
                  (D) by a combination of the service 
                alternatives referred to in subparagraphs (A)-
                (C); and
          (6) report to the Secretary on compliance with this 
        subsection.

          CHAPTER 515. STATE MARITIME ACADEMY SUPPORT PROGRAM

Sec. 51509. Student incentive payment agreements

  (a) General Authority.--If a State maritime academy has an 
agreement with the Secretary of Transportation under section 
51505 of this title, the Secretary may make an agreement with a 
student at the academy who is a citizen of the United States to 
make student incentive payments to the individual. An agreement 
with a student may not be effective for more than 4 academic 
years. The Secretary shall allocate payments under this section 
among the various State maritime academies in an equitable 
manner.
  (b) Payments.--[Payments]
          (1)  In general._ Except as provided in paragraph 
        (2), payments under an agreement under this section 
        shall be equal to $8,000 each academic year and be paid 
        in such installments as the Secretary shall determine 
        while the individual is attending the academy, as 
        prescribed by the Secretary.
          (2) Exception.--The Secretary may modify the payments 
        made to an individual under paragraph (1), but the 
        total amount of payments to that individual may not 
        exceed $32,000.
          (3)  Authorized uses._ The payments shall be used for 
        uniforms, tuition, books, and subsistence.
  (c) Enlisted Reserve Status.--An agreement under this section 
shall require the student to accept enlisted reserve status in 
the Navy Reserve (including the [Merchant Marine Reserve] 
Strategic Sealift Officer Program, 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--
          (1) complete the course of instruction at the academy 
        the individual is attending;
          [(2) take the examination for a license as an officer 
        in the merchant marine of the United States before 
        graduation from the academy and fulfill the 
        requirements for such a license within 3 months after 
        graduation from the academy;]
          (2) obtain a merchant mariner license, without 
        limitation as to tonnage or horsepower, from the United 
        States Coast Guard as an officer in the merchant marine 
        of the United States, accompanied by the appropriate 
        national and international endorsements and 
        certification required by the Coast Guard for service 
        aboard vessels on domestic and international voyages, 
        without limitation, within three months of completion 
        of the course of instruction at the academy the 
        individual is attending;
          [(3) maintain a valid license as an officer in the 
        merchant marine of the United States for at least 6 
        years after graduation from the academy, accompanied by 
        the appropriate national and international endorsements 
        and certification required by the Coast Guard for 
        service aboard vessels on domestic and international 
        voyages;]
          (3) for at least 6 years after graduation from the 
        academy, maintain--
                  (A) a valid merchant mariner license, 
                unlimited as to horsepower or tonnage, issued 
                by the United States Coast Guard as an officer 
                in the merchant marine of the United States, 
                accompanied by the appropriate national and 
                international endorsements and certifications 
                required by the Coast Guard for service aboard 
                vessels on domestic and international voyages, 
                without limitation;
                  (B) a valid transportation worker 
                identification credential; and
                  (C) a United States Coast Guard medical 
                certificate;
          [(4) accept, if tendered, an appointment as a 
        commissioned officer in the Navy Reserve (including the 
        Merchant Marine Reserve, 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;]
          (4) apply for, and accept, if tendered, an 
        appointment as a commissioned officer in the Navy 
        Reserve (including the Strategic Sealift Officer 
        Program, Navy Reserve), the Coast Guard Reserve, or any 
        other reserve component of an armed force of the United 
        States, and, if tendered the appointment, to serve and 
        meet the participation requirements and to maintain 
        active status in good standing, as determined by the 
        program manager of the appropriate military service, 
        for at least 8 years after the date of commissioning;
          (5) serve the foreign and domestic commerce and the 
        national defense of the United States for at least 3 
        years after graduation from the academy--
                  (A) as a merchant marine officer on a 
                documented vessel or a vessel owned and 
                operated by the United States Government or by 
                a State;
                  (B) as an employee in a United States 
                maritime-related industry, profession, or 
                marine science (as determined by the 
                Secretary), if the Secretary determines that 
                service under subparagraph (A) is not available 
                to the individual;
                  (C) as a commissioned officer on active duty 
                in an armed force of the United States, as a 
                commissioned officer in the National Oceanic 
                and Atmospheric Administration, or in other 
                maritime-related Federal employment which 
                serves the national security interests of the 
                United States, as determined by the Secretary; 
                or
                  (D) by a combination of the service 
                alternatives referred to in subparagraphs (A)-
                (C); and
          (6) report to the Secretary on compliance with this 
        subsection.
  (e) Failure to Complete Course of Instruction.--
          [(1) Active duty.--If the Secretary of Transportation 
        determines that an individual who has accepted the 
        payments described in subsection (b) for a minimum of 2 
        academic years has failed to fulfill the part of the 
        agreement described in subsection (d)(1), the 
        individual may be ordered by the Secretary of Defense 
        to serve on active duty in the armed forces of the 
        United States for a period of not more than 2 years. In 
        cases of hardship as determined by the Secretary of 
        Transportation, the Secretary of Transportation may 
        waive this paragraph in whole or in part.]
          (1) Active duty.--
                  (A) In general.--The Secretary of Defense may 
                order an individual to serve on active duty in 
                the armed forces of the United States for a 
                period of not more than 2 years if--
                          (i) the individual has attended an 
                        academy under this section for more 
                        than 2 academic years, but less than 3 
                        academic years;
                          (ii) the individual has accepted the 
                        payments described in subsection (b) in 
                        an amount totaling at least $8,000; and
                          (iii) the Secretary of Transportation 
                        has determined that the individual has 
                        failed to fulfill the part of the 
                        agreement described in subsection 
                        (d)(1).
                  (B) 3 or more years.--The Secretary of 
                Defense may order an individual to serve on 
                active duty in the armed forces of the United 
                States for a period of not more than 3 years 
                if--
                          (i) the individual has attended an 
                        academy under this section for 3 or 
                        more academic years;
                          (ii) the individual has accepted the 
                        payments described in subsection (b) in 
                        an amount totaling at least $16,000; 
                        and
                          (iii) the Secretary of Transportation 
                        has determined that the individual has 
                        failed to fulfill the part of the 
                        agreement described in subsection 
                        (d)(1).
                  (C) Hardship waiver.--In cases of hardship as 
                determined by the Secretary of Transportation, 
                the Secretary of Transportation may waive this 
                paragraph in whole or in part.
          (2) Recovery of cost.--If the Secretary of Defense is 
        unable or unwilling to order an individual to serve on 
        active duty under paragraph (1), or if the Secretary of 
        Transportation determines that reimbursement of the 
        cost of education provided would better serve the 
        interests of the United States, the Secretary of 
        Transportation may recover from the individual the 
        amount of student incentive payments, plus interest and 
        attorney fees. The Secretary may reduce the amount to 
        be recovered to reflect partial performance of service 
        obligations and other factors the Secretary determines 
        merit a reduction.
  (f) Failure to Carry Out Other Requirements.--
          (1) Active duty.--If the Secretary of Transportation 
        determines that an individual has failed to fulfill any 
        part of the agreement described in subsection (d)(2)-
        (6), the individual may be ordered to serve on active 
        duty for a period of at least 2 years but not more than 
        the unexpired period (as determined by the Secretary) 
        of the service required by subsection (d)(5). The 
        Secretary of Transportation, in consultation with the 
        Secretary of Defense, shall determine in which service 
        the individual shall serve. In cases of hardship as 
        determined by the Secretary of Transportation, the 
        Secretary of Transportation may waive this paragraph in 
        whole or in part.
          (2) Recovery of cost.--If the Secretary of Defense is 
        unable or unwilling to order an individual to serve on 
        active duty under paragraph (1), or if the Secretary of 
        Transportation determines that reimbursement of the 
        cost of education provided would better serve the 
        interests of the United States, the Secretary of 
        Transportation may recover from the individual the 
        amount of student incentive payments, plus interest and 
        attorney fees. The Secretary may reduce the amount to 
        be recovered to reflect partial performance of service 
        obligations and other factors the Secretary determines 
        merit a reduction.
  (g) Actions to Recover Cost.--To aid in the recovery of the 
cost of education provided by the Government under a commitment 
agreement under this section, the Secretary of Transportation 
may--
          (1) request the Attorney General to bring a civil 
        action against the individual; and
          (2) make use of the Federal debt collection 
        procedures in chapter 176 of title 28 or other 
        applicable administrative remedies.
  (h) Alternative Service.--
          (1) Service as commissioned officer.--An individual 
        who, for the 5-year period following graduation from an 
        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 paragraphs 
        (3) through (5) of subsection (d).
          (2) Modification or waiver.--The Secretary may modify 
        or waive any of the terms and conditions set forth in 
        subsection (d) through the imposition of alternative 
        service requirements.

                      PART D. PROMOTIONAL PROGRAMS

                 CHAPTER 556. SHORT SEA TRANSPORTATION

Sec. 55605. Short sea transportation defined

  In this chapter, the term ``short sea transportation'' means 
the carriage by a documented vessel of cargo--
          (1) that is--
                  (A) contained in intermodal cargo containers 
                and loaded by crane on the vessel; [or]
                  (B) loaded on the vessel by means of wheeled 
                technology; [and]
                  (C) shipped in discrete units or packages 
                that are handled individually, palletized, or 
                unitized for purposes of transportation; or
                  (D) freight vehicles carried aboard commuter 
                ferry boats; and
          (2) that is--
                  (A) loaded at a port in the United States and 
                unloaded either at another port in the United 
                States or at a port in Canada located in the 
                Great Lakes Saint Lawrence Seaway System; or
                  (B) loaded at a port in Canada located in the 
                Great Lakes Saint Lawrence Seaway System and 
                unloaded at a port in the United States.

                     INTERNAL REVENUE CODE OF 1986

SEC. 3305. APPLICABILITY OF STATE LAW.

[26 U.S.C. 3305]

           *       *       *       *       *       *       *

  (g) Vessels Operated by General Agents of United States.--The 
permission granted by subsection (f) shall apply in the same 
manner and under the same conditions (including the obligation 
to comply with all requirements of State unemployment 
compensation laws) to general agents of the [Secretary of 
Commerce] Secretary of Transportation with respect to service 
performed by officers and members of the crew on or in 
connection with American vessels--
          (1) owned by or bareboat chartered to the United 
        States, and
          (2) whose business is conducted by such general 
        agents.
          As to any such vessel, the State permitted to require 
        contributions on account of such service shall be the 
        State to which the general agent would make 
        contributions if the vessel were operated for his own 
        account. Such general agents are designated, for this 
        purpose, instrumentalities of the United States neither 
        wholly nor partially owned by it and shall not be 
        exempt from the tax imposed by section 3301. The 
        permission granted by this subsection is subject to the 
        same conditions and limitations as are imposed in 
        subsection (f), except that clause (B) of the second 
        sentence of subsection (b) shall apply.
  (h) Requirement by State of Contributions.--Any State may, as 
to service performed on account of which contributions are made 
pursuant to subsection (g)--
          (1) require contributions from persons performing 
        such service under its unemployment compensation law or 
        temporary disability insurance law administered in 
        connection therewith, and
          (2) require general agents of the [Secretary of 
        Commerce] Secretary of Transportation to make 
        contributions under such temporary disability insurance 
        law and to make such deductions from wages or 
        remuneration as are required by such unemployment 
        compensation or temporary disability insurance law.
  (i) General Agent as Legal Entity.--Each general agent of the 
[Secretary of Commerce] Secretary of Transportation making 
contributions pursuant to subsection (g) or (h) shall, for 
purposes of such subsections, be considered a legal entity in 
his capacity as an instrumentality of the United States, 
separate and distinct from his identity as a person employing 
individuals on his own account.

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                                  [all]
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