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[Senate Report 109-183]
[From the U.S. Government Publishing Office]

109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-183
_______________________________________________________________________

                                     

                                                       Calendar No. 295
 
            MARITIME ADMINISTRATION ENHANCEMENT ACT OF 2005

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                S. 2029

                                     

               November 17, 2005.--Ordered to be printed
       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
                       one hundred ninth congress
                             first session

                     TED STEVENS, Alaska, Chairman
                 DANIEL K. INOUYE, Hawaii, Co-Chairman
JOHN McCAIN, Arizona                 JOHN D. ROCKEFELLER IV, West 
CONRAD BURNS, Montana                    Virginia
TRENT LOTT, Mississippi              JOHN F. KERRY, Massachusetts
KAY BAILEY HUTCHISON, Texas          BYRON L. DORGAN, North Dakota
OLYMPIA J. SNOWE, Maine              BARBARA BOXER, California
GORDON H. SMITH, Oregon              BILL NELSON, Florida
JOHN ENSIGN, Nevada                  MARIA CANTWELL, Washington
GEORGE ALLEN, Virginia               FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire        E. BENJAMIN NELSON, Nebraska
JIM DeMINT, South Carolina           MARK PRYOR, Arkansas
DAVID VITTER, Louisiana
                    Lisa Sutherland, Staff Director
             Christine Drager Kurth, Deputy Staff Director
                      David Russell, Chief Counsel
     Margaret Cummisky, Democratic Staff Director and Chief Counsel
 Samuel Whitehorn, Democratic Deputy Staff Director and General Counsel

                                                       Calendar No. 295
109th Congress                                                   Report
                                 SENATE
 1st Session                                                    109-183

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

            MARITIME ADMINISTRATION ENHANCEMENT ACT OF 2005

                                _______
                                

               November 17, 2005.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                         [To accompany S. 2029]

    The Committee on Commerce, Science, and Transportation 
reports favorably an original bill (S. 2029) to amend and 
enhance certain maritime programs of the Department of 
Transportation, and for other purposes, and recommends that the 
bill do pass.

                          Purpose of the Bill

  The Maritime Administration Enhancement Act would streamline 
the process of covering the costs of vessel maintenance, 
repairs, and replacements; enhance the requirements for cadets 
entering the Merchant Marine Academy; authorize the Secretary 
of Transportation to permit training upon certain vessels; and 
grant the Maritime Administration (MARAD) greater flexibility 
in disposing of obsolete vessels from the National Defense 
Reserve Fleet (NDRF).
  In addition, the bill would grant MARAD the authority to 
retain certain deepwater port license application fees as well 
as funds collected through its Coastwise administrative waiver 
process. It would permit greater promotion of the merchant 
marine through the utilization of the U.S. Maritime Service at 
maritime-related functions beyond that of training and 
education, and authorize the Secretary to award, free of 
charge, medals for commendable achievements in the U.S. 
Merchant Marine. Furthermore, the bill would authorize duty-
free treatment of emergency war materials imported for use by 
MARAD.
  The bill includes provisions designed to clarify 
Congressional reforms to the MARAD Title XI maritime loan 
guarantee program. The bill also designates MARAD as the lead 
Federal agency to administer Federal funds for port and 
intermodal improvements in the State of Hawaii. Finally, the 
legislation would authorize a maritime training and shipyard 
capital grant program administered by MARAD.

                          Background and Needs

  The mission of MARAD is to promote the development and 
maintenance of an adequate, well-balanced United States 
merchant marine, sufficient to carry the Nation's domestic 
waterborne commerce and a substantial portion of its waterborne 
foreign commerce, and capable of serving as a naval and 
military auxiliary in time of war or national emergency. MARAD 
also seeks to ensure that the United States enjoys adequate 
shipbuilding and repair service, efficient ports, effective 
intermodal water and land transportation systems, and reserve 
shipping capacity in times of national emergency.
  To meet its mission, MARAD administers various U.S. merchant 
marine support programs within the Department of Transportation 
(DOT). These programs include the Maritime Security Program 
(MSP), Title XI maritime loan guarantee program, various cargo 
preference programs, maintenance of the Ready Reserve Force 
(RRF), often used in domestic disaster relief efforts, and the 
National Defense Reserve Force (NDRF), and operation of the 
U.S. Merchant Marine Academy (USMMA) at Kings Point, NY. MARAD 
has approximately 825 employees, including RRF and USMMA staff.
  The MSP funds operating agreements to the privately owned, 
United States-flag, and United States-crewed liner fleet in 
international trade. This fleet also is available to support 
the Department of Defense (DOD) sustainment in a contingency. 
Currently, MSP is authorized through fiscal year 2015 and 
subject to a separate annual appropriation.
  The purpose of the Title XI ship loan guarantee program is to 
promote the growth and modernization of the U.S. merchant 
marine and U.S. shipyards. The program enables owners of 
eligible vessels and eligible shipyards to obtain long-term 
financing with attractive terms backed by the full faith and 
credit of the United States government to guarantee commercial 
loans.
  In November of 2003, Congress enacted reforms to the program 
under P.L.108-136, the National Defense Authorization Act of 
2003, which authorized the Secretary to require an independent 
analysis to be conducted by third party experts if the 
Secretary determines that risk factors associated with markets, 
technology, financial structures, or other factors need such 
analysis prior to making a determination on a loan guarantee 
application. The Secretary's authority to conduct an 
independent risk analysis of projects was not intended to be 
used in routine cases nor where MARAD already has sufficient 
expertise to fully assess the risk of approving a loan 
guarantee application. The Committee is concerned the 
department is not administering the program consistent with 
P.L. 108-136 and is instead subjecting routine financial 
transactions to duplicative bureaucratic reviews by both MARAD 
and the newly established DOT Credit Council. In addition, the 
Committee is concerned with the proposed regulations issued 
June 8, 2005, Docket No. 2005-21380, as they appear to be 
contradictory to the sustainability of the program.
  The Committee is concerned the financial analysis and market 
assessment functions, key MARAD roles, are being taken away by 
DOT, thereby eroding MARAD's fundamental expertise in the 
intricacies of shipbuilding and shipyard modernization. The 
Committee expects that the Title XI program remain exclusively 
within MARAD to streamline the application process and avoid 
the needless duplication of assessing, evaluating and 
determining the financial solvency and potential market 
performance of project applications.
  MARAD's operations and training account funds the 
administration and staffing of MARAD programs (other than the 
Title XI guaranteed loan program and RRF costs), the USMMA, 
State maritime school costs associated with Federal training 
ships, training courses for merchant mariners, various 
operating programs, and research and development. The USMMA 
educates young men and women to become officers in the American 
merchant marine.
  The Global Maritime and Transportation School (GMATS) is a 
private, tuition-funded graduate school housed at the USMMA, 
which offers advanced mariner training and logistics and supply 
chain management courses. The primary mission of the USMMA 
GMATS is to offer leading edge education and training programs 
that will benefit maritime and transportation professionals 
from government agencies, the military, and private industry. 
Funds to operate GMATS are generated through tuition, meal, and 
lodging fees. It is not an appropriated instrumentality of the 
DOT. The current process through which some applicants are 
accepted is cumbersome and this legislation reduces that burden 
and clarifies GMATS's role.

                         Summary of Provisions

  The bill would allow MARAD to use a portion of the hire paid 
for the operation of the National Defense Reserve Fleet (NDRF) 
and proceeds recovered from vessel accident litigation and 
arbitration to be placed in a reserve fund to cover the costs 
of vessel maintenance, repairs, and replacements. The bill 
would authorize MARAD to retain fees from administrative 
waivers and deepwater port license applications up to a 
specific amount to pay for administrative costs.
  The legislation would require students entering the Merchant 
Marine Academy to meet the physical and mental standards 
required by the Department of Defense (DOD). MARAD has reported 
that some students fail to meet current standards set by MARAD, 
thereby avoiding certain commitments upon graduation, including 
entering Reserve units of the Armed Forces. In addition, the 
bill would allow the Armed Services to certify annually 
graduates' mandatory military service commitment and permits 
Academy cadets to train on foreign flag vessels when in the 
interest of national security. Subject to appropriations, the 
bill increases the authorized payments for cadets enrolled in 
State Regional Maritime Academies to $500,000 dollars by fiscal 
year 2008 and increases the amount State Maritime Academies may 
receive for reimbursement of ship fuel costs.
  This bill would grant MARAD the ability to purchase emergency 
war materials for RRF repairs without being subject to ad 
valorem duties while under operational authority DOD. MARAD is 
granted the flexibility to decide on the timing of ship and 
title transfers to U.S. territories and States. Finally, the 
bill would establish a grant program to assist small shipyard 
capital improvements and establish technical training programs 
for small communities largely served by the maritime industry. 
Payments for State and Regional Maritime Academies
  The measure also would clarify the roles of the Maritime 
Administrator and DOD in the loan guarantee process overseen by 
MARAD, and streamlines the cumbersome application review 
process. The bill would require an independent analysis of each 
loan guarantee be conducted by private sector maritime finance 
or operations experts. In addition, it requires adequate 
staffing and expertise to properly manage the program.

                          Legislative History

  The original committee bill was ordered reported to the 
Senate by voice vote on July 21, 2005 in the presence of a 
quorum.

                            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:

                                                 November 15, 2005.
Hon. Ted Stevens,
Chairman, Committee on Commerce, Science, and Transportation,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for the Maritime 
Administration Enhancement Act of 2005.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

Maritime Administration Enhancement Act of 2005

    Summary: The Maritime Administration Enhancement Act would 
amend various laws governing the activities of the Maritime 
Administration (MARAD), authorize appropriations for a new 
program to assist small shipyards and maritime communities, and 
increase support for state maritime academies. Assuming 
appropriation of the authorized or necessary amounts, 
implementing the bill would result in discretionary spending 
totaling $104 million over the 2006-2010 period, CBO estimates.
    In addition, several provisions of the bill would allow 
MARAD to spend, without further appropriation action, certain 
collections from regulatory fees and legal damages. CBO 
estimates that enacting these provisions would increase direct 
spending by about $5 million over the 2006-2010 period and by 
$10 million over the 2006-2015 period.
    Finally, the bill would exempt MARAD from paying ad valorem 
taxes on certain materials and repairs for vessels operated as 
part of the National Defense Reserve Fleet (NDRF) under wartime 
conditions, thereby reducing federal revenues by an estimated 
$1 million over the 2006-2010 period and by $2 million over the 
2006-2015 period. (The costs of NDRF operations would be 
reduced by similar amounts, assuming a corresponding reduction 
in future appropriations.)
    The legislation contains no intergovernmental or private-
sector mandates as defined in the Unfunded Mandates Reform Act 
(UMRA); any costs to state and local governments would be 
incurred voluntarily.
    Estimated cost to the Federal Government: The estimated 
budgetary effects of the legislation are summarized in the 
following table. The costs of this legislation fall within 
budget function 400 (transportation).

----------------------------------------------------------------------------------------------------------------
                                                                       By fiscal year, in millions of dollars--
                                                                    --------------------------------------------
                                                                       2006     2007     2008     2009     2010
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION
 
Additional MARAD Spending for State Maritime Academies:
    Estimated Authorization Level..................................        1        2        4        4        4
    Estimated Outlays..............................................        1        2        4        4        4
Small Shipyard and Maritime Community Grants:
    Authorization Level............................................       30       30       30       30       30
    Estimated Outlays..............................................        3       12       20       25       30
Reduced Spending for Ad Valorem Duties on Foreign Materials and
 Repairs:
    Estimated Authorization Level..................................        *        *        *        *        *
    Estimated Outlays..............................................        *        *        *        *        *
Total Additional MARAD Spending:
    Estimated Authorization Level..................................       31       32       34       34       34
    Estimated Outlays..............................................        4       14       24       29       34
 
                                           CHANGES IN DIRECT SPENDING
 
Estimated Budget Authority.........................................        1        1        1        1        1
Estimated Outlays..................................................        1        1        1        1        1
 
                                             CHANGES IN REVENUES \1\
 
Estimated Revenues from Ad Valorem Duties..........................        *        *        *        *        *
----------------------------------------------------------------------------------------------------------------
\1\ Enacting the bill would also change the classification of about $1 million a year in revenues by directing
  that those collections be recorded in the budget as an offset to spending. Following scorekeeping rule 13,
  such reclassifications in legislation are not counted for purposes of Congressional scorekeeping.
Note.--* = between -$500,000 and $500,000.

Basis of estimate

            Spending subject to appropriation
    For this estimate, CBO assumes that the amounts authorized 
or estimated to be necessary will be appropriated for each 
year. Estimated outlays are based on historical spending 
patterns for existing or similar programs.
    Section 112 would expand financial assistance to state 
maritime academies, subject to the availability of 
appropriations. Specifically, this section would increase 
annual direct payments to the six academies from the existing 
statutory level of $200,000 each to $300,000 in 2006, $400,000 
in 2007, and $500,000 for each year thereafter. This section 
also would direct MARAD to pay up to $100,000 in 2006, $200,000 
in 2007, and $300,000 a year thereafter for the costs of fuel 
to operate state training vessels. CBO estimates that providing 
the higher annual payments to state academies and reimbursing 
them for fuel costs would require additional appropriations 
that would grow to $4 million annually by 2008. (MARAD received 
$1.2 million for direct payments to state maritime academies in 
fiscal year 2005. No amounts were appropriated for that year 
for fuel reimbursements. MARAD's full-year appropriation for 
2006 has not yet been enacted.)
    Section 114 would authorize the appropriation of $30 
million for each of fiscal years 2006-2010 for a new program to 
support small shipyards and maritime communities. Under this 
program, MARAD would pay state and local governments to make 
grants, loans, and loan guarantees to small shipyards for 
capital improvements and to establish maritime training 
programs in communities whose economies are linked to the 
maritime industry. Assuming appropriation of the authorized 
amounts, CBO estimates that implementing this program would 
cost MARAD about $3 million in 2006 and $90 million over the 
2006-2010 period. We estimate that the remaining $60 million 
authorized by the bill would be spent after 2010.
    Other provisions of the bill would have no significant 
effect on the federal budget.
            Direct spending
    The legislation would provide about $1 million of new 
budget authority for MARAD each year by allowing the agency to 
spend without further appropriation certain amounts that are 
currently deposited in the U.S. Treasury as revenues. Section 
109 would allow MARAD to spend payments for damages received 
for accidents that involve vessels that it owns or manages. 
Based on recent judgments and settlements for damages collected 
as a result of such incidents, CBO estimates that this new 
authority would increase direct spending by an average of 
$500,000 a year. Also, sections 107 and 108 would authorize the 
agency to spend up to a total of $500,000 a year from certain 
administrative and regulatory fees, thereby increasing annual 
direct spending by a like amount.
    The bill also would change the budgetary classification of 
those administrative and regulatory fees. Such collections are 
currently considered revenues but under the legislation would 
become offsetting receipts (an offset to direct spending). The 
resulting decrease in revenues and corresponding decrease in 
outlays are not counted for purposes of Congressional 
consideration, however, pursuant to scorekeeping rule 13, which 
states that reclassifications are not counted for purposes of 
enforcing the budget resolution (see House Report 105-217, the 
conference report on the Balanced Budget Act of 1997, page 
1011).
            Revenues
    Section 106 would exempt MARAD from paying ad valorem 
duties on certain materials imported from foreign countries and 
on repairs made in foreign ports for vessels operated as part 
of the NDRF during wartime. CBO estimates that this provision 
would reduce revenues by less than $500,000 in 2006, by $1 
million over the 2006-2010 period, and by $2 million through 
2015. This provision also would result in like reductions in 
discretionary spending, assuming that MARAD's annual 
appropriations would be adjusted to reflect the savings in NDRF 
operating costs.
    By changing the budgetary classification of certain 
administrative and regulatory fees from revenues to offsetting 
receipts, enacting the bill would reduce revenues by about 
$500,000 a year over the 2006-2015 period. But, as noted above, 
such reclassifications are not counted for Congressional 
scorekeeping purposes.
    Intergovernmental and private-sector impact: The 
legislation contains no intergovernmental or private-sector 
mandates as defined in UMRA. The bill would increase the 
authorization of appropriations for maritime academies in six 
states and establish a new grant program to assist state and 
local governments in supporting small shipyards and maritime 
communities within their states. Any costs to state and local 
governments for participating in those programs would be 
incurred voluntarily.
    Estimate prepared by: Federal Spending: Deborah Reis. 
Federal Revenue: Emily Schlect. Impact on State, Local, and 
Tribal Governments: Sarah Puro. Impact on the Private Sector: 
Craig Cammarata.
    Estimate approved by: Robert A. Sunshine, Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

  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

  This program would not affect the number of people subject to 
regulation.

                            ECONOMIC IMPACT

  The bill would authorize the establishment of a $25 million 
grant program designed to assist small shipyards with capital 
improvement needs, and a $5 million grant program to provide 
maritime training. The grants in the program are designed to 
have a positive economic impact on United States maritime 
industry by subsidizing the needed capital improvements in 
communities largely served by that industry and by provided 
much needed training.

                                PRIVACY

  This program would not impact privacy issues.

                               PAPERWORK

  This program would not create new mandatory paperwork or 
reporting requirements.

                      Section-by-Section Analysis

Section 1. Short title

  Section 1 states the short title of the legislation, the 
``Maritime Administration Enhancement Act of 2005''.

Section 101. United States Maritime Service

  This section would permit the Commandant of the United States 
Maritime Service (USMS) or the Maritime Administrator to 
utilize the USMS for maritime related functions beyond that of 
training and education that are determined to be necessary for 
the promotion of the U.S. merchant marine. For instance, the 
amendment would permit the use of members of the USMS to 
further the visibility and understanding of the U.S. merchant 
marine, and allow members of the USMS to serve as liaisons 
within the DOT and to the public.

Section 102. War risk insurance

  This is a technical correction to section 3502(b) of P.L. 
108-375, the National Defense Authorization Act for Fiscal Year 
2005.

Section 103. Maritime education and training

  This section would require students entering the Merchant 
Marine Academy to meet the same physical and mental standards 
required by the DOD. Any cadet not meeting such standards could 
be expelled. This change is necessary to ensure that students 
admitted to the Academy are capable of fulfilling the 
requirements of their commitment agreements upon graduation. If 
students do not meet these DOD standards, they are not eligible 
to obtain a Merchant Marine license or to accept an appointment 
in a reserve unit of the armed forces of the United States, two 
key commitment agreement service requirements.
  Current law requires Academy graduates to become commissioned 
officers on active duty in an armed force of the United States 
or to become commissioned officers in the reserves of the armed 
forces for at least 6 years following graduation. The Privacy 
Act currently prevents MARAD from readily verifying with the 
DOD that graduates are serving their commitment to the armed 
forces. This section would require the DOD, the U.S. Coast 
Guard, and the National Oceanic and Atmospheric Administration 
(NOAA) to certify annually to MARAD that Academy graduates have 
remained on active duty or in ready reserve status, thus 
confirming the fulfillment of a graduates service commitment 
agreement. This provision would provide a mechanism for MARAD 
to recover tuition from graduates who fail to perform their 
duties and that are found in noncompliance with their 
commitment agreement and enable MARAD
  In addition, this section would authorize Academy cadets to 
train on foreign flag vessels if it is in the interest of 
national security. For example, cadets would be permitted to 
train on vessels involved in unique trades that involve 
sensitive security interests of the United States such as 
Liquefied Natural Gas (LNG) vessels that are not documented in 
the United States. This is not intended to authorize the 
training of cadets on foreign flag vessels that do not pose a 
significant security interest to the nation.
  Further, this section would clarify the role of the Global 
Maritime and Transportation School (GMATS) located on the 
campus of Kings Point as a non-appropriated fund 
instrumentality (NAFI) operating under the jurisdiction of the 
Department of Transportation.

Section 104. Authority to dispose of obsolete government vessels

  Public Law 108-136 authorized the Secretary to convey to U.S. 
territories and foreign governments obsolete vessels for use as 
artificial reefs; however, it did not provide MARAD with the 
discretion to decide when to transfer the ship and title(s) 
fleetside at the NDRF. This section would provide MARAD the 
flexibility to make vessel and title transfer decisions that 
not only encourage States to request the ships for use as 
reefs, but also that are in the best interests of the 
government.

Section 105. Awards and medals

  This section would provide the Administrator the discretion 
to award medals at no cost to the recipient. Currently, MARAD 
may only provide such medals and decorations at cost, or 
authorize for the manufacture and sale at reasonable prices by 
private persons.

Section 106. Elimination of tariffs on certain national defense 
        activities

  This measure would grant MARAD the ability to purchase 
emergency war materials for RRF repairs without being subject 
to ad valorem duties while under operational authority of the 
Department of Defense in a war zone. MARAD provides support for 
the deployment of military forces worldwide using the NDRF and 
RRF, which is part of the NDRF, and is a key element of the 
Navy's Strategic Sealift Program. Currently, there are 59 RRF 
vessels in a high state of readiness, and the availability of 
these ships is essential to the deployment of DOD forces and 
equipment, as part of the Navy's Military Sealift Command 
(MSC). The RRF fleet has been activated to support the current 
efforts in Afghanistan and the Persian Gulf.
  Currently, 24 of the vessels are foreign constructed and 
another 35, while not foreign built, are equipped with foreign-
made items. To maintain the vessels in a constant state of 
readiness, MARAD must regularly import foreign-made spare 
parts, repair parts, equipment and supplies. The imports 
necessary to maintain the fleet incur customs duties. Since 
MARAD vessels are maintained for the operational control of 
MSC, and are required for rapid deployment during national 
emergencies, the supplies and equipment needed to maintain the 
vessels should be accorded the same type of duty-free exemption 
for emergency war materials that is extended to DOD.
  These vessels are U.S.-documented, thus any repairs or repair 
parts received abroad are subject to an ad valorem tax of 50 
percent of the cost of the repairs received abroad. Although 
the ad valorem tax is intended to serve as an incentive for 
vessel operators to repair their vessels in United States 
shipyards, unintended consequences arise when applied to 
government owned vessels that are deployed overseas for 
extended periods of time and are engaged in national security 
functions. Therefore, streamlining this process in this 
instance is appropriate and necessary, providing DOD maximum 
flexibility for vessels under its control operating in a war 
zone to obtain ship repairs.

Section 107. Availability of funds from application fees for deepwater 
        ports

  This section would allow MARAD to retain fees assessed 
pursuant to applications for licenses for ownership, 
construction, and operation of deepwater ports, up to $450,000 
per fiscal year.

Section 108. Availability of funds from administrative waivers of 
        coastwise trade laws for eligible vessels

  This section would authorize MARAD to retain funds routinely 
collected through the agency's program for the Administrative 
Waiver of Coastwise Trade Laws for Eligible Vessels, up to 
$50,000 per fiscal year.

Section 109. Amendments to the Vessel Operations Revolving Fund (VORF)

  The VORF was created in 1951 to carry out vessel operating 
functions under the jurisdiction of Secretary of 
Transportation, including the charter, operation, maintenance, 
repair, reconditioning and betterment of merchant vessels. At 
present, such functions come at the expense of the operating 
repairs and maintenance budgeted for other NDRF vessels. In 
addition, all recoveries from litigation are deposited into the 
Treasury after payment to the Department of Justice for the 
costs of litigation. This section would allow MARAD to use a 
portion of the hire paid for the operation of the NDRF vessels 
and proceeds recovered from vessel accident litigation and 
arbitration. Funds would be placed in a reserve fund to cover 
the costs of vessel maintenance, repairs, and replacements.

Section 110. Right to use Maritime Administration decoration

  This section would authorize the Secretary to sanction the 
use, manufacture, sale, possession, or display of a decoration 
or medal, such as the merchant marine seal. Currently no such 
authority exists, thus the use of the merchant seal is severely 
limited. This provision would permit the Secretary, through the 
Maritime Administrator, to authorize the use of maritime 
emblems for purposes and events he deems meritorious, such as 
commemorative ceremonies or events.

Section 111. Hawaii port infrastructure expansion program

  This section would designate MARAD as the lead Federal agency 
to administer Federal funds for port and intermodal 
improvements in Hawaii.

Section 112. Payments for State and regional maritime academies

  This section would increase the amount of assistance provided 
to the 6 State maritime academies which are located in Maine, 
Massachusetts, New York, Michigan, Texas, and California. These 
6 schools currently receive limited Federal support, yet a 
substantial number of their graduates hold Federal licenses and 
support our increasing mariner requirements in both the 
commercial and military sectors. Current law provides for a 
payment from MARAD of $200,000 dollars annually for cadet 
training and facilities support. That amount has not been 
raised since 1989. This section would increase the 
authorization level of Federal support to $300,000 dollars for 
fiscal year 2006, $400,000 dollars in fiscal year 2007, and 
$500,000 in fiscal year 2008, and for each fiscal year 
thereafter, subject to the availability of appropriations. This 
section would also require MARAD to provide modest payments to 
the aforementioned State maritime academies for the increasing 
cost of fuel used for the operation of the academies' training 
ships.

Section 113. Reduction of report burden

  This section would eliminate a report required every 6 months 
pertaining to the progress of ship scrapping.

Section 114. Assistance for small shipyards and maritime communities

  This provision would establish a grant program to assist 
small shipyards to make capital improvements and improve 
maritime training programs for small communities largely served 
by the maritime industry.

Section 201. Redesignation of duplicate numbered sections

  This is a technical correction designed to correct 
duplicative section numbers.

Section 202. Transfer of authority to MARAD

  This section would clarify the roles of the Maritime 
Administrator and the Department of Defense in the loan 
guarantee process overseen by MARAD and streamline the 
cumbersome application process. It would require independent 
analyses of the loan guarantees be conducted by private sector 
maritime finance or operations experts based on the 
determination of the Maritime Administrator that a particular 
set of circumstances relating to risk exists. Further, the 
provision would require MARAD to maintain adequate staffing and 
expertise in the agency to properly manage the program.

                        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):

 FLOYD D. SPENCE NATIONAL DEFENSE AUTHORIZATION ACT OF FISCAL YEAR 2001

SEC. 3502. SCRAPPING OF NATIONAL DEFENSE RESERVE FLEET VESSELS.

              [Pub. L. 106-398 App.; 114 Stat. 1654A-492]

  (a) Extension of Scrapping Authority Under National Maritime 
Heritage Act of 1994.--Section 6(c)(1) of the National Maritime 
Heritage Act of 1994 (16 U.S.C. 5405(c)(1)) is amended--
          (1) in subparagraph (A) by striking ``2001'' and 
        inserting ``2006''; and
          (2) by striking subparagraph (B) and inserting the 
        following:
                  ``(B) in the manner that provides the best 
                value to the Government, except in any case in 
                which obtaining the best value would require 
                towing a vessel and such towing poses a serious 
                threat to the environment; and''.
  (b) Selection of Scrapping Facilities.--The Secretary of 
Transportation may scrap obsolete vessels pursuant to section 
6(c)(1) of the National Maritime Heritage Act of 1994 (16 
U.S.C. 5405(c)(1)) through qualified scrapping facilities, 
using the most expeditious scrapping methodology and location 
practicable. Scrapping facilities shall be selected under that 
section on a best value basis consistent with the Federal 
Acquisition Regulation, as in effect on the date of the 
enactment of this Act, without any predisposition toward 
foreign or domestic facilities taking into consideration, among 
other things, the ability of facilities to scrap vessels--
          (1) at least cost to the Government;
          (2) in a timely manner;
          (3) giving consideration to worker safety and the 
        environment; and
          (4) in a manner that minimizes the geographic 
        distance that a vessel must be towed when towing a 
        vessel poses a serious threat to the environment.
  [(c) Limitation on Scrapping Before Program.--
          [(1) In general.--Until the report required by 
        subsection (d)(1) is transmitted to the congressional 
        committees referred to in that subsection, the 
        Secretary may not proceed with the scrapping of any 
        vessel in the National Defense Reserve Fleet except the 
        following:
                  [(A) DONNER.
                  [(B) EXPORT COMMERCE.
                  [(C) BUILDER.
                  [(D) ALBERT E. WATTS.
                  [(E) WAYNE VICTORY.
                  [(F) MORMACDAWN.
                  [(G) MORMACMOON.
                  [(H) SANTA ELENA.
                  [(I) SANTA ISABEL.
                  [(J) SANTA CRUZ.
                  [(K) PROTECTOR.
                  [(L) LAUDERDALE.
                  [(N) PVT. FRED C. MURPHY.
                  [(M) BEAUJOLAIS.
                  [(O) MEACHAM.
                  [(P) NEACO.
                  [(Q) WABASH.
                  [(R) NEMASKET.
                  [(S) MIRFAK.
                  [(T) GEN. ALEX M. PATCH.
                  [(U) ARTHUR M. HUDDELL.
                  [(V) WASHINGTON.
                  [(W) SUFFOLK COUNTY.
                  [(X) CRANDALL.
                  [(Y) CRILLEY.
                  [(Z) RIGEL.
                  [(AA) VEGA.
                  [(BB) COMPASS ISLAND.
                  [(CC) EXPORT CHALLENGER.
                  [(DD) PRESERVER.
                  [(EE) MARINE FIDDLER.
                  [(FF) WOOD COUNTY.
                  [(GG) CATAWBA VICTORY.
                  [(HH) GEN. NELSON M. WALKER.
                  [(II) LORAIN COUNTY.
                  [(JJ) LYNCH.
                  [(KK) MISSION SANTA YNEZ.
                  [(LL) CALOOSAHATCHEE.
                  [(MM) CANISTEO.
          [(2) Prioritization.--The Secretary shall exercise 
        discretion to prioritize for scrapping those vessels 
        identified in paragraph (1) that pose the most 
        immediate threat to the environment.
  [(d)] (c) Scrapping Program for Obsolete National Defense 
Reserve Fleet Vessels.--
          (1) Development of program; report.--The Secretary of 
        Transportation, in consultation with the Secretary of 
        the Navy and the Administrator of the Environmental 
        Protection Agency, shall within 6 months after the date 
        of the enactment of this Act--
                  (A) develop a program for the scrapping of 
                obsolete National Defense Reserve Fleet 
                vessels; and
                  (B) submit a report on the program to the 
                Committee on Transportation and Infrastructure 
                and the Committee on Resources of the House of 
                Representatives, the Committee on Commerce, 
                Science, and Transportation of the Senate, and 
                the Committees on Armed Services of the House 
                of Representatives and the Senate.
          (2) Contents of report.--The report shall include 
        information concerning the initial determination of 
        scrapping capacity, both domestically and abroad, 
        appropriate proposed regulations to implement the 
        program, funding and staffing requirements, milestone 
        dates for the disposal of each obsolete vessel, and 
        longterm cost estimates for the program.
          (3) Alternatives.--In developing the program, the 
        Secretary of Transportation, in consultation with the 
        Secretary of the Navy and the Administrator of the 
        Environmental Protection Agency, shall consider all 
        alternatives and available information, including--
                  (A) alternative scrapping sites;
                  (B) vessel donations;
                  (C) sinking of vessels in deep water;
                  (D) sinking vessels for development of 
                artificial reefs;
                  (E) sales of vessels before they become 
                obsolete;
                  (F) results from the Navy Ship Disposal 
                Program under section 8124 of the Department of 
                Defense Appropriations Act, 1999; and
                  (G) the Report of the Department of Defense's 
                Interagency Panel on Ship Scrapping issued in 
                April 1998.
  [(e) Report.--Not later than 1 year after the date of the 
enactment of this Act, and every 6 months thereafter, the 
Secretary of Transportation, in coordination with the Secretary 
of the Navy, shall report to the Committee on Transportation 
and Infrastructure and the Committee on Resources of the House 
of Representatives, the Committee on Commerce, Science, and 
Transportation of the Senate, and the Committees on Armed 
Services of the House of Representatives and the Senate on the 
progress of the vessel scrapping program developed under 
subsection (d)(1) and on the progress of any other scrapping of 
obsolete Government-owned vessels.]
  [(f)] (d) Presidential Recommendation.--The President shall 
transmit with the report required by [subsection (d)(1)] 
subsection (c)(1) a recommendation on--
          (1) whether it is necessary to amend the Toxic 
        Substances Control Act (15 U.S.C. 2601 et seq.) or any 
        other environmental statute or regulatory requirements 
        relevant to the disposal of vessels described in 
        section 6(c)(2) of the National Maritime Heritage Act 
        of 1994 (16 U.S.C. 5405(c)(2)) by September 30, 2006; 
        and
          (2) any proposed changes to those requirements to 
        carry out such disposals.

                           PUBLIC LAW 92-402

SEC. 4. TRANSFER OF TITLE; TERMS AND CONDITIONS.

                           [16 U.S.C. 1220a]

  If, after consideration of such comments and views as are 
received pursuant to section 3(c), the Secretary finds that the 
use of obsolete ships proposed by a State will not violate any 
Federal law, contribute to degradation of the marine 
environment, create undue interference with commercial fishing 
or navigation, and is not frivolous, he may transfer without 
consideration to the State all right, title, and interest of 
the United States in and to any obsolete ships which are 
available for transfer under this Act if--
          (1) the State gives to the Secretary such assurances 
        as he deems necessary that such ships will be utilized 
        and maintained only for the purposes stated in the 
        application and, when sunk, will be charted and marked 
        as a hazard to navigation;
          (2) the State agrees to secure any licenses or 
        permits which may be required under the provisions of 
        any other applicable Federal law;
          (3) the State agrees to such other terms and 
        conditions as the Secretary shall require in order to 
        protect the marine environment and other interests of 
        the United States; and
          [(4) the transfer would be at no cost to the 
        Government (except for any financial assistance 
        provided under section 7) with the State taking 
        delivery of such obsolete ships at fleetside of the 
        National Defense Reserve Fleet in an ``as is--where 
        is'' condition.]
          (4) the transfer would be at no cost to the 
        government (except for any financial assistance 
        provided under section 1220(c)(1) of this title) with 
        the State taking delivery of such obsolete ships and 
        titles in an ``as-is--where-is'' condition at such 
        place and time designated as may be determined by the 
        Secretary of Transportation.

                           TARIFF ACT OF 1930

SEC. 466. EQUIPMENT AND REPAIRS OF VESSELS.

                            [19 U.S.C. 1466]

  (a) Vessels Subject to Duty; Penalties.--The equipments, or 
any part thereof, including boats, purchased for, or the repair 
parts or materials to be used, or the expenses of repairs made 
in a foreign country upon a vessel documented under the laws of 
the United States to engage in the foreign or coasting trade, 
or a vessel intended to be employed in such trade, shall, on 
the first arrival of such vessel in any port of the United 
States, be liable to entry and the payment of an ad valorem 
duty of 50 per centum on the cost thereof in such foreign 
country. If the owner or master willfully or knowingly neglects 
or fails to report, make entry, and pay duties as herein 
required, or if he makes any false statement in respect of such 
purchases or repairs without reasonable cause to believe the 
truth of such statements, or aids or procures the making of any 
false statement as to any matter material thereto without 
reasonable cause to believe the truth of such statement, such 
vessel, or a monetary amount up to the value thereof as 
determined by the Secretary, to be recovered from the owner, 
shall be subject to seizure and forfeiture[.] For the purposes 
of this section, compensation paid to members of the regular 
crew of such vessel in connection with the installation of any 
such equipments or any part thereof, or the making of repairs, 
in a foreign country, shall not be included in the cost of such 
equipment or part thereof, or of such repairs.
  (b) Notice.--If the appropriate customs officer has 
reasonable cause to believe a violation has occurred and 
determines that further proceedings are warranted, he shall 
issue to the person concerned a written notice of his intention 
to issue a penalty claim. Such notice shall--
          (1) describe the circumstances of the alleged 
        violation;
          (2) specify all laws and regulations allegedly 
        violated;
          (3) disclose all the material facts which establish 
        the alleged violation;
          (4) state the estimated loss of lawful duties, if 
        any, and taking into account all of the circumstances, 
        the amount of the proposed penalty; and
          (5) inform such person that he shall have a 
        reasonable opportunity to make representations, both 
        oral and written, as to why such penalty claim should 
        not be issued.
  (c) Violation.--After considering representations, if any, 
made by the person concerned pursuant to the notice issued 
under subsection (b), the appropriate customs officer shall 
determine whether any violation of subsection (a), as alleged 
in the notice, has occurred. If such officer determines that 
there was no violation, he shall promptly notify, in writing, 
the person to whom the notice was sent. If such officer 
determines that there was a violation, he shall issue a written 
penalty claim to such person. The written penalty claim shall 
specify all changes in the information provided under 
paragraphs (1) through (4) of subsection (b).
  (d) Remission for Necessary Repairs.--If the owner or master 
of such vessel furnishes good and sufficient evidence that--
          (1) such vessel, while in the regular course of her 
        voyage, was compelled, by stress of weather or other 
        casualty, to put into such foreign port and purchase 
        such equipments, or make such repairs, to secure the 
        safety and seaworthiness of the vessel to enable her to 
        reach her port of destination;
          (2) such equipments or parts thereof or repair parts 
        or materials, were manufactured or produced in the 
        United States, and the labor necessary to install such 
        equipments or to make such repairs was performed by 
        residents of the United States, or by members of the 
        regular crew of such vessel; or
          (3) such equipments, or parts thereof, or materials, 
        or labor, were used as dunnage for cargo, or for the 
        packing or shoring thereof, or in the erection of 
        temporary bulkheads or other similar devices for the 
        control of bulk cargo, or in the preparation (without 
        permanent repair or alteration) of tanks for the 
        carriage of liquid cargo; then the Secretary of the 
        Treasury is authorized to remit or refund such duties, 
        and such vessel shall not be liable to forfeiture, and 
        no license or enrollment and license, or renewal of 
        either, shall hereafter be issued to any such vessel 
        until the collector to whom application is made for the 
        same shall be satisfied, from the oath of the owner or 
        master, that all such equipments or parts thereof or 
        materials and repairs made within the year immediately 
        preceding such application have been duly accounted for 
        under the provisions of this section, and the duties 
        accruing thereon duly paid; and if such owner or master 
        shall refuse to take such oath, or take it falsely, the 
        vessel shall be seized and forfeited.
  (e) Vessels used Primarily for Purposes Other Than 
Transporting Passengers or Property.--
          (1) In the case of any vessel referred to in 
        subsection (a) that arrives in a port of the United 
        States two years or more after its last departure from 
        a port in the United States, the duties imposed by this 
        section shall apply only with respect to--
                  (A) fish nets and netting, and
                  (B) other equipments and parts thereof, 
                repair parts and materials purchased, or 
                repairs made, during the first six months after 
                the last departure of such vessel from a port 
                of the United States.
          (2) If such vessel is designed and used primarily for 
        transporting passengers or property, paragraph (1) 
        shall not apply if the vessel departed from the United 
        States for the sole purpose of obtaining such 
        equipments, parts, materials, or repairs.
  (f) Civil Aircraft Exception.--The duty imposed under 
subsection (a) shall not apply to the cost of equipments, or 
any part thereof, purchased, of repair parts or materials used, 
or of repairs made in a foreign country with respect to a 
United States civil aircraft, within the meaning of general 
note 3(c)(iv) of the Harmonized Tariff Schedule of the United 
States.
  (g) National Defense Reserve Fleet Exception.--
          (1) In general.--The duty imposed under subsection 
        (a) shall not apply to the cost of equipment, or any 
        part thereof purchased, of repair parts or materials 
        used, or expenses of repairs made in a foreign country 
        for any vessel operated as part of the National Defense 
        Reserve Fleet when the vessel is under the 
        jurisdictional control of the Department of Defense if 
        equivalent equipment, parts, repair parts, or materials 
        made in the United States, or repairs made in the 
        United States were determined by the Secretary of 
        Transportation not to be reasonably available.
          (2) Report on determinations.--The Secretary of 
        Transportation shall transmit a report to the Senate 
        Committee on Commerce, Science, and Transportation and 
        the House of Representatives Committee on Armed 
        Services setting forth the circumstances under which 
        any such determination was made by the Secretary.
  [(g)] (h) Fish Net and Netting Purchases and Repairs.--The 
duty imposed by subsection (a) shall not apply to entries on 
and after October 1, 1979, and before January 1, 1982, of--
          (1) tuna purse seine nets and netting which are 
        equipments or parts thereof,
          (2) repair parts for such nets and netting, or 
        materials used in repairing such nets and netting, or
          (3) the expenses of repairs of such nets and netting, 
        for any United States documented tuna purse seine 
        vessel of greater than 500 tons carrying capacity or 
        any United States tuna purse seine vessel required to 
        carry a certificate of inclusion under the general 
        permit issued to the American Tunaboat Association 
        pursuant to section 104 of the Marine Mammal Protection 
        Act of 1972.
  [(h)] (i) Foreign Repair of Vessels.--The duty imposed by 
subsection (a) of this section shall not apply to--
          (1) the cost of any equipment, or any part of 
        equipment, purchased for, or the repair parts or 
        materials to be used, or the expense of repairs made in 
        a foreign country with respect to, LASH (Lighter Aboard 
        Ship) barges documented under the laws of the United 
        States and utilized as cargo containers;
          (2) the cost of spare repair parts or materials 
        (other than nets or nettings) which the owner or master 
        of the vessel certifies are intended for use aboard a 
        cargo vessel, documented under the laws of the United 
        States and engaged in the foreign or coasting trade, 
        for installation or use on such vessel, as needed, in 
        the United States, at sea, or in a foreign country, but 
        only if duty is paid under appropriate commodity 
        classifications of the Harmonized Tariff Schedule of 
        the United States upon first entry into the United 
        States of each such spare part purchased in, or 
        imported from, a foreign country;
          (3) the cost of spare parts necessarily installed 
        before the first entry into the United States, but only 
        if duty is paid under appropriate commodity 
        classifications of the Harmonized Tariff Schedule of 
        the United States upon first entry into the United 
        States of each such spare part purchased in, or 
        imported from, a foreign country; or
          (4) the cost of equipment, repair parts, and 
        materials that are installed on a vessel documented 
        under the laws of the United States and engaged in the 
        foreign or coasting trade, if the installation is done 
        by members of the regular crew of such vessel while the 
        vessel is on the high seas. Declaration and entry shall 
        not be required with respect to the installation, 
        equipment, parts, and materials described in paragraph 
        (4).

           *       *       *       *       *       *       *

                   [Insert A, attached as page ----A]

                       MERCHANT MARINE ACT, 1936

           Title XI--Federal Ship Financing Guarantee Program

SEC. 1101. DEFINITIONS.

                         [46 U.S.C. App. 1271]

  As used in this title--
  (a) The term ``mortgage'' includes--
          (1) a preferred mortgage as defined in section 31301 
        of title 46, United States Code; and
          (2) a mortgage on a vessel that will become a 
        preferred mortgage when filed or recorded under chapter 
        313 of title 46, United States Code.
  (b) The term ``vessel'' includes all types, whether in 
existence or under construction, of passenger cargo and 
combination passenger cargo carrying vessels, tankers, tugs, 
towboats, barges, dredges and ocean thermal energy conversion 
facilities or plantships which are or will be documented under 
the laws of the United States, fishing vessels whose ownership 
will meet the citizenship requirements for documenting vessels 
in the coastwise trade within the meaning of section 2 of the 
Shipping Act, 1916, as amended, floating drydocks which have a 
capacity of thirty-five thousand or more lifting tons and a 
beam of one hundred and twenty-five feet or more between the 
wing walls and oceanographic research or instruction or 
pollution treatment, abatement or control vessels;
  (c) The term ``obligation'' shall mean any note, bond, 
debenture, or other evidence of indebtedness (exclusive of 
notes or other obligations issued by the [Secretary] Secretary 
or Administrator pursuant to subsection (d) of section 1105 of 
this title and obligations eligible for investment of funds 
under section 1102 and subsection (d) of section 1108 of this 
title), issued for one of the purposes specified in subsection 
(a) of section 1104 of this title;
  (d) The term ``obligor'' shall mean any party primarily 
liable for payment of the principal of or interest on any 
obligation;
  (e) The term ``obligee'' shall mean the holder of an 
obligation;
  (f) Actual Cost Defined.--The term ``actual cost'' means the 
sum of--
          (1) all amounts paid by or for the account of the 
        obligor as of the date on which a determination is made 
        under section 1108(g)(1); and
          (2) all amounts that the [Secretary] Secretary or 
        Administrator reasonably estimates that 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 1104A(e) 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.
  (g) The term ``depreciated actual cost'' of a vessel means 
the actual cost of the vessel depreciated on a straightline 
basis over the useful life of the vessel as determined by the 
[Secretary] Secretary or Administrator, not to exceed twenty-
five years from the date the vessel was delivered by the 
shipbuilder, or, if the vessel has been reconstructed or 
reconditioned, the actual cost of the vessel depreciated on a 
straightline basis from the date the vessel was delivered by 
the shipbuilder to the date of such reconstruction or 
reconditioning on the basis of the original useful life of the 
vessel and from the date of such reconstruction or 
reconditioning on a straightline basis and on the basis of a 
useful life of the vessel determined by the [Secretary] 
Secretary or Administrator, plus all amounts paid or obligated 
to be paid for the reconstruction or reconditioning depreciated 
on a straightline basis on the basis of a useful life of the 
vessel determined by the [Secretary] Secretary or 
Administrator;
  (h) The terms ``construction'', ``reconstruction'', or 
``reconditioning'' shall include, but shall not be limited to, 
designing, inspecting, outfitting, and equipping;
  (i) The term ``ocean thermal energy conversion facility or 
plantship'' means any at-sea facility or vessel, whether 
mobile, floating unmoored, moored, or standing on the seabed, 
which uses temperature differences in ocean water to produce 
electricity or another form of energy capable of being used 
directly to perform work, and includes any equipment installed 
on such facility or vessel to use such electricity or other 
form of energy to produce, process, refine, or manufacture a 
product, and any cable or pipeline used to deliver such 
electricity, freshwater, or product to shore, and all other 
associated equipment and appurtenances of such facility or 
vessel, to the extent they are located seaward of the highwater 
mark;
  (j) The term ``citizen of the Northern Mariana Islands'' 
means--
          (1) an individual who qualifies as such under section 
        8 of the Schedule on Transitional Matters attached to 
        the Constitution of the Northern Mariana Islands; or
          (2) a corporation, partnership, association, or other 
        entity formed under the laws of the Northern Mariana 
        Islands, not less than 75 percent of the interest in 
        which is owned by individuals referred to in paragraph 
        (1) or citizens or nationals of the United States, in 
        cases in which ``owned'' is used in the same sense as 
        in section 2 of the Shipping Act, 1916 (46 U.S.C. 802);
  (k) The term ``fishery facility'' means--
          (1) for operations on land--
                  (A) any 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 one or more fisheries,
                  (B) the land necessary for any such structure 
                or appurtenance described in subparagraph (A), 
                and
                  (C) equipment which is for use in connection 
                with any such structure or appurtenance and 
                which is necessary for the performance of any 
                function referred to in subparagraph (A);
          (2) for operations other than on land, any vessel 
        built in the United States used for, equipped to be 
        used for, or of a type which is normally used for, the 
        processing of fish; or
          (3) for aquaculture, including operations on land or 
        elsewhere--
                  (A) any structure or appurtenance thereto 
                designed for aquaculture;
                  (B) the land necessary for any such structure 
                or appurtenance described in subparagraph (A);
                  (C) equipment which is for use in connection 
                with any such structure or appurtenance and 
                which is necessary for the performance of any 
                function referred to in subparagraph (A); and
                  (D) any vessel built in the United States 
                used for, equipped to be used for, or of a type 
                which is normally used for aquaculture; but 
                only if such structure, appurtenance, land, 
                equipment, or vessel is owned by an individual 
                who is a citizen or national of the United 
                States or a citizen of the Northern Mariana 
                Islands or by a corporation, partnership, 
                association, or other entity that is a citizen 
                of the United States within the meaning of 
                section 2 of the Shipping Act, 1916 (46 U.S.C. 
                802), and for purposes of applying such section 
                2 with respect to this section--
                          (i) the term ``State'' as used 
                        therein includes any State, the 
                        District of Columbia, the Commonwealth 
                        of Puerto Rico, American Samoa, the 
                        Virgin Islands of the United States, 
                        Guam, the Northern Mariana Islands, or 
                        any other Commonwealth, territory, or 
                        possession of the United States; and
                          (ii) citizens of the United States 
                        must own not less than 75 percent of 
                        the interest in the entity and 
                        nationals of the United States or 
                        citizens of the Northern Mariana 
                        Islands shall be treated as citizens of 
                        the United States in meeting such 
                        ownership requirement;
  (l) The term ``fishing vessel'' has the meaning given such 
term by section 3(11) of the Magnuson-Stevens Fishery 
Conservation and Management Act of 1976 (16 U.S.C. 1802(11)); 
and any reference in this title to a vessel designed 
principally for commercial use in the fishing trade or industry 
shall be treated as a reference to a fishing vessel;
  (m) The term ``United States'' when used in a geographical 
context with respect to fishing vessels or fishery facilities 
includes all States referred to in subsection (k)(i).
  (n) The term ``Secretary'' means the Secretary of Commerce 
with respect to fishing vessels and fishing facilities as 
provided by this [title, and the Secretary of Transportation 
with respect to all other vessels and general shipyard 
facilities (as defined in section 1112(d)(3)).] title.
  (o) The term ``eligible export vessel'' means a vessel 
constructed, reconstructed, or reconditioned in the United 
States for use in world-wide trade which will, upon delivery or 
redelivery, be placed under or continued to be documented under 
the laws of a country other than the United States.
    (p) The term ``Administrator'' means the Administrator of 
the Maritime Administration.

SEC. 1102. FEDERAL SHIP FINANCING FUND.

                         [46 U.S.C. App. 1272]

  There is hereby created a Federal Ship Financing Fund 
(hereinafter referred to as the Fund) which shall be used by 
the [Secretary] Secretary or Administrator as a revolving fund 
for the purpose of carrying out the provisions of this title, 
and there shall be allocated to such Fund the sum of $1,000,000 
out of funds made available to the [Secretary] Secretary or 
Administrator under the appropriation authorized by Section 
1107 (46 U.S.C.). Moneys in the Fund shall be deposited in the 
Treasury of the United States to the credit of the Fund or 
invested in bonds or other obligations of, or guaranteed as to 
principal and interest by, the United States.

SEC. 1103. AUTHORIZATION OF SECRETARY TO GUARANTEE OBLIGATIONS.

                         [46 U.S.C. App. 1273].

  (a) Principal and Interest.--The [Secretary] Secretary or 
Administrator is authorized to guarantee, and to enter into 
commitments to guarantee, the payment of the interest on, and 
the unpaid balance of the principal of, any obligation which is 
eligible to be guaranteed under this title. A guarantee, or 
commitment to guarantee, made by the [Secretary] Secretary or 
Administrator under this title shall cover 100 percent of the 
amount of the principal and interest of the obligation.
  (b) Security Interest.--No obligation shall be guaranteed 
under this title unless the obligor conveys or agrees to convey 
to the [Secretary] Secretary or Administrator such security 
interest, which may include a mortgage or mortgages on a vessel 
or vessels, as the [Secretary] Secretary or Administrator may 
reasonably require to protect the interests of the United 
States.
  (c) Amount of Guarantee; Percentage Limitation; Determination 
of Actual Cost of Vessel.--The [Secretary] Secretary or 
Administrator shall not guarantee the principal of obligations 
in an amount in excess of 75 per centum, or 87 \1/2\ per 
centum, whichever is applicable under section 1104 of this 
title, of the amount, as determined by the [Secretary] 
Secretary or Administrator which determination shall be 
conclusive, paid by or for the account of the obligor for the 
construction, reconstruction, or reconditioning of a vessel or 
vessels with respect to which a security interest has been 
conveyed to the [Secretary] Secretary or Administrator, unless 
the obligor creates an escrow fund as authorized by section 
1108 of this title, in which case the [Secretary] Secretary or 
Administrator may guarantee 75 per centum or 87\1/2\ per 
centum, whichever is applicable under section 1104 of this 
title, of the actual cost of such vessel or vessels.
  (d) Pledge of United States.--The full faith and credit of 
the United States is pledged to the payment of all guarantees 
made under this title with respect to 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 payment in full of the guarantee.
  (e) Proof of Obligations.--Any guarantee, or commitment to 
guarantee, made by the [Secretary] Secretary or Administrator 
under this title shall be conclusive evidence of the 
eligibility of the obligations for such guarantee, and the 
validity of any guarantee, or commitment to guarantee, so made 
shall be incontestable. Notwithstanding an assumption of an 
obligation by the [Secretary] Secretary or Administrator under 
section 1105(a) or (b) of this Act, the validity of the 
guarantee of an obligation made by the [Secretary] Secretary or 
Administrator under this title is unaffected and the guarantee 
remains in full force and effect.
  (f) Limitation on Outstanding Amount.--The aggregate unpaid 
principal amount of the obligations guaranteed under this 
section and outstanding at any one time shall not exceed 
$12,000,000,000, of which (1) $850,000,000 shall be limited to 
obligations pertaining to guarantees of obligations for fishing 
vessels and fishery facilities made under this title, and (2) 
$3,000,000,000 shall be limited to obligations pertaining to 
guarantees of obligations for eligible export vessels. No 
additional limitations may be imposed on new commitments to 
guarantee loans for any fiscal year, except in such amounts as 
established in advance in annual authorization Acts. No vessel 
eligible for guarantees under this title shall be denied 
eligibility because of its type.
  (g) Loan Guarantees for Export Vessels; Finding Required; 
Termination of Authority.--
          (1) The [Secretary] Secretary or Administrator may 
        not issue a commitment to guarantee obligations for an 
        eligible export vessel unless, after considering--
                  (A) the status of pending applications for 
                commitments to guarantee obligations for 
                vessels documented under the laws of the United 
                States and operating or to be operated in the 
                domestic or foreign commerce of the United 
                States,
                  (B) the economic soundness of the 
                applications referred to in subparagraph (A), 
                and
                  (C) the amount of guarantee authority 
                available, the [Secretary] Secretary or 
                Administrator determines, in the sole 
                discretion of the [Secretary] Secretary or 
                Administrator, that the issuance of a 
                commitment to guarantee obligations for an 
                eligible export vessel will not result in the 
                denial of an economically sound application to 
                issue a commitment to guarantee obligations for 
                vessels documented under the laws of the United 
                States operating in the domestic or foreign 
                commerce of the United States.
          (2) The [Secretary] Secretary or Administrator may 
        not issue commitments to guarantee obligations for 
        eligible export vessels under this section after the 
        later of--
                  (A) the 5th anniversary of the date on which 
                the [Secretary] Secretary or Administrator 
                publishes final regulations setting forth the 
                application procedures for the issuance of 
                commitments to guarantee obligations for 
                eligible export vessels,
                  (B) the last day of any 5-year period in 
                which funding and guarantee authority for 
                obligations for eligible export vessels have 
                been continuously available, or
                  (C) the last date on which those commitments 
                may be issued under any treaty or convention 
                entered into after the date of the enactment of 
                the National Shipbuilding and Shipyard 
                Conversion Act of 1993 that prohibits guarantee 
                of those obligations.
  (h)(1) The [Secretary] Secretary or Administrator shall--
          (A) establish in accordance with this subsection, and 
        update annually, a system of risk categories for 
        obligations guaranteed under this title, that 
        categorizes the relative risk of guarantees made under 
        this title with respect to the risk factors set forth 
        in paragraph (3);
          (B) annually determine for each of the risk 
        categories a subsidy rate equivalent to the cost of 
        obligations in the category, expressed as a percentage 
        of the amount guaranteed under this title 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 expected to be associated with the 
        loans in the category.
  (2)(A) Before making a guarantee under this section for an 
obligation, and annually for projects subject to a guarantee, 
the [Secretary] Secretary or Administrator shall apply the risk 
factors set forth in paragraph (3) to place the obligation in a 
risk category established under paragraph (1)(A).
  (B) The [Secretary] Secretary or Administrator shall consider 
the aggregate amount available to the [Secretary] Secretary or 
Administrator for making guarantees under this title to be 
reduced by the amount determined by multiplying--
          (i) the amount guaranteed under this title for an 
        obligation, by
          (ii) the subsidy rate for the category in which the 
        obligation is placed under subparagraph (A) of this 
        paragraph.
  (C) The estimated cost to the Government of a guarantee made 
by the [Secretary] Secretary or Administrator under this title 
for an obligation is deemed to be the amount determined under 
subparagraph (B) for the obligation.
  (D) The [Secretary] Secretary or Administrator may not 
guarantee obligations under this title after the aggregate 
amount available to the [Secretary] Secretary or Administrator 
under appropriations Acts for the cost of loan guarantees is 
required by subparagraph (B) to be considered reduced to zero.
  (3) The risk factors referred to in paragraphs (1) and (2) 
are the following:
          (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, which is 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, any guarantee related to the 
        project, other than the guarantee under this title for 
        which the risk factor is applied.
          (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 title is or will 
        be in effect during the construction period of the 
        project.
          (K) A risk factor for concentration risk reflecting 
        the risk presented by an unduly large percentage of 
        loans outstanding by any 1 borrower or group of 
        affiliated borrowers.
  (4) 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).
  (i) Priority for National Defense Tank Vessels.--In 
guaranteeing and entering commitments to guarantee under this 
section, the [Secretary] Administrator shall give priority to 
guarantees and commitments for vessels that are otherwise 
eligible for a guarantee under this section and that are 
constructed with assistance under subtitle D of the Maritime 
Security Act of 2003.
  (j) Priority for Other Vessels Suitable for Service as a 
Naval Auxiliary.--[In guaranteeing and entering commitments to 
guarantee under this section,] If the Secretary or 
Administrator seeks a priority for a commitment to guarantee 
under this section, the [Secretary] Administrator shall, after 
applying subsection (i), give priority to a guarantee or 
commitment for a vessel that is otherwise eligible for a 
guarantee under this section and that the Secretary of Defense 
determines--
          (1) is suitable for service as a naval auxiliary in 
        time of war or national emergency; and
          (2) meets a shortfall in sealift capacity or 
        capability.

SEC. 1104A. ELIGIBILITY FOR GUARANTEE.

                         [46 U.S.C. App. 1274]

  (a) Purpose of Obligations.--Pursuant to the authority 
granted under section 1103(a), the [Secretary] Secretary or 
Administrator upon such terms as he shall prescribe, may 
guarantee or make a commitment to guarantee, payment of the 
principal of and interest on an obligation which aids in--
          (1) financing, including reimbursement of an obligor 
        for expenditures previously made for, construction, 
        reconstruction, or reconditioning of a vessel 
        (including an eligible export vessel), which is 
        designed principally for research, or for commercial 
        use (A) in the coastwise or intercoastal trade; (B) on 
        the Great Lakes, or on bays, sounds, rivers, harbors, 
        or inland lakes of the United States; (C) in foreign 
        trade as defined in section 905 of this Act for 
        purposes of title V of this Act; or (D) as an ocean 
        thermal energy conversion facility or plantship; (E) 
        with respect to floating drydocks in the construction, 
        reconstruction, reconditioning, or repair of vessels; 
        or (F) with respect to an eligible export vessel, in 
        world-wide trade; Provided, however, That no guarantee 
        shall be entered into pursuant to this paragraph (a)(1) 
        later than one year after delivery, or redelivery in 
        the case of reconstruction or reconditioning of any 
        such vessel unless the proceeds of the obligation are 
        used to finance the construction, reconstruction, or 
        reconditioning of a vessel or vessels, or facilities or 
        equipment pertaining to marine operations;
          (2) financing, including reimbursement of an obligor 
        for expenditures previously made for, construction, 
        reconstruction, reconditioning, or purchase of a vessel 
        or vessels owned by citizens or nationals of the United 
        States or citizens of the Northern Mariana Islands 
        which are designed principally for research, or for 
        commercial use in the fishing trade or industry;
          (3) financing the purchase, reconstruction, or 
        reconditioning of vessels or fishery facilities for 
        which obligations were guaranteed under this title 
        that, under the provisions of section 1105:
                  (A) are vessels or fishery facilities for 
                which obligations were accelerated and paid;
                  (B) were acquired by the Fund; or
                  (C) were sold at foreclosure instituted by 
                the [Secretary] Secretary or Administrator;
          (4) financing, in whole or in part, the repayment to 
        the United States of any amount of construction-
        differential subsidy paid with respect to a vessel 
        pursuant to title V of this Act, as amended;
          (5) refinancing existing obligations issued for one 
        of the purposes specified in (1), (2), (3), or (4) 
        whether or not guaranteed under this title, including, 
        but not limited to, short-term obligations incurred for 
        the purpose of obtaining temporary funds with the view 
        to refinancing from time to time;
          (6) financing or refinancing, including, but not 
        limited to, the reimbursement of obligors for 
        expenditures previously made for, the construction, 
        reconstruction, reconditioning, or purchase of fishery 
        facilities; or
          (7) financing or refinancing, including, but not 
        limited to, the reimbursement of obligors for 
        expenditures previously made, for the purchase of 
        individual fishing quotas in accordance with section 
        303(d)(4) of the Magnuson-Stevens Fishery Conservation 
        and Management Act (16 U.S.C. 1853(d)(4)).
Any obligation guaranteed under paragraphs (6) and (7) shall be 
treated, for purposes of this title, in the same manner and to 
the same extent as an obligation guaranteed under this title 
which aids in the construction, reconstruction, reconditioning, 
or purchase of a vessel; except with respect to provisions of 
this title that by their nature can only be applied to vessels.
  (b) Contents of Obligations.--Obligations guaranteed under 
this title--
          (1) shall have an obligor approved by the [Secretary] 
        Secretary or Administrator as responsible and 
        possessing the ability, experience, financial 
        resources, and other qualifications necessary to the 
        adequate operation and maintenance of the vessel or 
        vessels which serve as security for the guarantee of 
        the [Secretary] Secretary or Administrator;
          (2) subject to the provisions of subsection (c)(1) 
        and subsection (i), shall be in an aggregate principal 
        amount which does not exceed 75 per centum of the 
        actual cost or depreciated actual cost, as determined 
        by the [Secretary] Secretary or Administrator, of the 
        vessel which is used as security for the guarantee of 
        the [Secretary] Secretary or Administrator: Provided, 
        however, That in the case of a vessel, the size and 
        speed of which are approved by the [Secretary] 
        Secretary or Administrator, and which is or would have 
        been eligible for mortgage aid for construction under 
        section 509 of this Act (or would have been eligible 
        for mortgage aid under section 509 of this Act except 
        that the vessel was built with the aid of construction-
        differential subsidy and said subsidy has been repaid) 
        and in respect of which the minimum downpayment by the 
        mortgagor required by that section would be or would 
        have been 12\1/2\ per centum of the cost of such 
        vessel, such obligations may be in an amount which does 
        not exceed 87\1/2\ per centum of such actual cost or 
        depreciated actual cost: Provided, further, That the 
        obligations which relate to a barge which is 
        constructed without the aid of construction-
        differential subsidy, or, if so subsidized, on which 
        said subsidy has been repaid, may be in an aggregate 
        principal amount which does not exceed 87\1/2\ per 
        centum of the actual cost or depreciated actual cost 
        thereof: Provided further, That in the case of a 
        fishing vessel or fishery facility, the obligation 
        shall be in an aggregate principal amount not to exceed 
        80 percent of the actual cost or depreciated actual 
        cost of the fishing vessel or fishery facility, except 
        that no debt may be placed under this proviso through 
        the Federal Financing Bank: Provided further, That in 
        the case of an ocean thermal energy conversion facility 
        or plantship which is constructed without the aid of 
        construction-differential subsidy, such obligations may 
        be in an aggregate principal amount which does not 
        exceed 87\1/2\ percent of the actual cost or 
        depreciated actual cost of the facility or plantship: 
        Provided further, That in the case of an eligible 
        export vessel, such obligations may be in an aggregate 
        principal amount which does not exceed 87\1/2\ of the 
        actual cost or depreciated actual cost of the eligible 
        export vessel;
          (3) shall have maturity dates satisfactory to the 
        [Secretary] Secretary or Administrator but, subject to 
        the provisions of paragraph (2) of subsection (c) of 
        this section, not to exceed twenty-five years from the 
        date of the delivery of the vessel which serves as 
        security for the guarantee of the [Secretary] Secretary 
        or Administrator or, if the vessel has been 
        reconstructed or reconditioned, not to exceed the later 
        of (i) twenty-five years from the date of delivery of 
        the vessel and (ii) the remaining years of the useful 
        life of the vessel as determined by the [Secretary] 
        Secretary or Administrator;
          (4) shall provide for payments by the obligor 
        satisfactory to the [Secretary] Secretary or 
        Administrator;
          (5) shall bear interest (exclusive of charges for the 
        guarantee and service charges, if any) at rates not to 
        exceed such per centum per annum on the unpaid 
        principal as the [Secretary] Secretary or Administrator 
        determines to be reasonable, taking into account the 
        range of interest rates prevailing in the private 
        market for similar loans and the risks assumed by the 
        [Secretary] Secretary or Administrator;
          (6) shall provide, or a related agreement shall 
        provide, that if the vessel used as security for the 
        guarantee of the [Secretary] Secretary or Administrator 
        is a delivered vessel, the vessel shall be in class A-
        1, American Bureau of Shipping, or shall meet such 
        other standards as may be acceptable to the [Secretary] 
        Secretary or Administrator, with all required 
        certificates, including but not limited to, marine 
        inspection certificates of the United States Coast 
        Guard or, in the case of an eligible export vessel, of 
        the appropriate national flag authorities under a 
        treaty, convention, or other international agreement to 
        which the United States is a party, with all 
        outstanding requirements and recommendations necessary 
        for retention of class accomplished, unless the 
        [Secretary] Secretary or Administrator permits a 
        deferment of such repairs, and shall be tight, stanch, 
        strong, and well and sufficiently tackled, appareled, 
        furnished, and equipped, and in every respect seaworthy 
        and in good running condition and repair, and in all 
        respects fit for service; and
          (7) may provide, or a related agreement may provide, 
        if the vessel used as security for the guarantee of the 
        [Secretary] Administrator is a passenger vessel having 
        the tonnage, speed, passenger accommodations and other 
        characteristics set forth in title V of this Act, as 
        amended, and if the Secretary approves, that the sole 
        recourse against the obligor by the United States for 
        any payments under the guarantee shall be limited to 
        repossession of the vessel and the assignment of 
        insurance claims and that the liability of the obligor 
        for any payments of principal and interest under the 
        guarantee shall be satisfied and discharged by the 
        surrender of the vessel and all right, title, and 
        interest therein to the United States: Provided, That 
        the vessel upon surrender shall be (i) free and clear 
        of all liens and encumbrances whatsoever except the 
        security interest conveyed to the [Secretary] 
        Administrator under this title, (ii) in class, and 
        (iii) in as good order and condition, ordinary wear and 
        tear excepted, as when acquired by the obligor, except 
        that any deficiencies with respect to freedom from 
        encumbrances, condition and class may, to the extent 
        covered by valid policies of insurance, be satisfied by 
        the assignment to the [Secretary] Administrator of 
        claims of the obligor under such policies.
  The Secretary may not establish, as a condition of 
eligibility for guarantee under this title, a minimum principal 
amount for an obligation covering the reconstruction or 
reconditioning of a fishing vessel or fishery facility. For 
purposes of this title, 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.
  (c) Security.--(1) The security for the guarantee of an 
obligation by the [Secretary] Secretary or Administrator under 
this title may relate to more than one vessel and may consist 
of any combination of types of security. The aggregate 
principal amount of obligations which have more than one vessel 
as security for the guarantee of the [Secretary] Secretary or 
Administrator under this title may equal, but not exceed, the 
sum of the principal amount of obligations permissible with 
respect to each vessel.
  (2) If the security for the guarantee of an obligation by the 
[Secretary] Secretary or Administrator under this title relates 
to more than one vessel, such obligation may have the latest 
maturity date permissible under subsection (b) of this section 
with respect to any of such vessels: Provided, That the 
[Secretary] Secretary or Administrator may require such 
payments of principal, prior to maturity, with respect to all 
related obligations as he deems necessary in order to maintain 
adequate security for his guarantee.
  (d) Restrictions.--(1)(A) No commitment to guarantee, or 
guarantee of, an obligation shall be made by the [Secretary of 
Transportation] Administrator unless the [Secretary] 
Administrator finds that the property or project with respect 
to which the obligation will be executed will be economically 
sound. In making that determination, the [Secretary] 
Administrator shall consider--
          (i) 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 title is in effect;
          (ii) the market potential for the employment of the 
        vessel over the life of the guarantee;
          (iii) projected revenues and expenses associated with 
        employment of the vessel;
          (iv) any charters, contracts of affreightment, 
        transportation agreements, or similar agreements or 
        undertakings relevant to the employment of the vessel;
          (v) other relevant criteria; and
          (vi) for inland waterways, the need for technical 
        improvements, including but not limited to increased 
        fuel efficiency, or improved safety.
  (B) No commitment to guarantee, or guarantee of, and 
obligation shall be made by the Secretary of Commerce unless 
the Secretary finds, at or prior to the time such commitment is 
made or guarantee becomes effective, that the property or 
project with respect to which the obligation will be executed 
will be, in the Secretary's opinion, economically sound and in 
the case of fishing vessels, that the purpose of the financing 
or refinancing is consistent with the wise use of the fisheries 
resources and with the development, advancement, management, 
conservation, and protection of the fisheries resources, or 
with the need for technical improvements including but not 
limited to increased fuel efficiency or improved safety.
  (2) No commitment to guarantee, or guarantee of an obligation 
may be made by the Secretary under this title for the purchase 
of a used fishing vessel or used fishery facility unless--
          (A) the vessel or facility will be reconstructed or 
        reconditioned in the United States and will contribute 
        to the development of the United States fishing 
        industry; or
          (B) the vessel or facility will be used in the 
        harvesting of fish from, or for a purpose described in 
        section 1101(k) with respect to, an underutilized 
        fishery.
  (3) No commitment to guarantee, or guarantee of an obligation 
may be made by the [Secretary] Administrator under this title 
for the construction, reconstruction, or reconditioning of an 
eligible export vessel unless--
          (A) the [Secretary] Administrator finds that the 
        construction, reconstruction, or reconditioning of that 
        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, and
          (B) the owner of the vessel agrees with the 
        [Secretary of Transportation] Administrator that the 
        vessel shall not be transferred to any country 
        designated by the Secretary of Defense as a country 
        whose interests are hostile to the interests of the 
        United States.
  (4) The Secretary shall promulgate 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--
          (A) the economic soundness requirements set forth in 
        paragraph (1)(A) of this subsection are met after the 
        waiver of the financial condition requirement; and
          (B) [the waiver] if deemed necessary by the Secretary 
        or Administrator, 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.
  (e) Guarantee Fees.--(1) Except as otherwise provided in this 
subsection, the [Secretary] Secretary or Administrator shall 
prescribe regulations to assess in accordance with this 
subsection a fee for the guarantee of an obligation under this 
title.
  (2)(A) The amount of a fee under this subsection for a 
guarantee is equal to the sum determined by adding the amounts 
determined under subparagraph (B) for the years in which the 
guarantee is in effect.
  (B) The amount referred to in subparagraph (A) for a year is 
the present value (determined by applying the discount rate 
determined under subparagraph (F)) of the amount determined by 
multiplying--
          (i) the estimated average unpaid principal amount of 
        the obligation that will be outstanding during the year 
        (determined in accordance with subparagraph (E)), by
          (ii) the fee rate established under subparagraph (C) 
        for the obligation for each year.
  (C) The fee rate referred to in subparagraph (B)(ii) for an 
obligation shall be--
          (i) in the case of an obligation for a delivered 
        vessel or equipment, not less than one-half of 1 
        percent and not more than 1 percent, determined by the 
        [Secretary] Secretary or Administrator for the 
        obligation under the formula established under 
        subparagraph (D); or
          (ii) in the case of an obligation for a vessel to be 
        constructed, reconstructed, or reconditioned, or of 
        equipment to be delivered, not less than one-quarter of 
        1 percent and not more than one-half of 1 percent, 
        determined by the [Secretary] Secretary or 
        Administrator for the obligation under the formula 
        established under subparagraph (D).
  (D) The [Secretary] Secretary or Administrator shall 
establish a formula for determining the fee rate for an 
obligation for purposes of subparagraph (C), that--
          (i) is a sliding scale based on the creditworthiness 
        of the obligor;
          (ii) takes into account the security provided for a 
        guarantee under this title for the obligation; and
          (iii) uses--
                  (I) in the case of the most creditworthy 
                obligors, the lowest rate authorized under 
                subparagraph (C)(i) or (ii), as applicable; and
                  (II) in the case of the least creditworthy 
                obligors, the highest rate authorized under 
                subparagraph (C)(i) or (ii), as applicable.
  (E) For purposes of subparagraph (B)(i), the estimated 
average unpaid principal amount does not include the average 
amount (except interest) on deposit in a year in the escrow 
fund under section 1108.
  (F) For purposes of determining present value under 
subparagraph (B) for an obligation, the [Secretary] Secretary 
or Administrator shall apply a discount rate determined by the 
Secretary of the Treasury taking into consideration current 
market yields on outstanding obligations of the United States 
having periods to maturity comparable to the period to maturity 
for the obligation with respect to which the determination of 
present value is made.
  (3) A fee under this subsection shall be assessed and 
collected not later than the date on which amounts are first 
paid under an obligation with respect to which the fee is 
assessed.
  (4) A fee paid under this subsection is not refundable. 
However, an obligor shall receive credit for the amount paid 
for the remaining term of the guaranteed obligation if the 
obligation is refinanced and guaranteed under this title after 
such refinancing.
  (5) A fee paid under subsection (e) shall be included in the 
amount of the actual cost of the obligation guaranteed under 
this title and is eligible to be financed under this title.
  (f) Investigation of Applications.--(1) The [Secretary] 
Secretary or Administrator shall charge and collect from the 
obligor such amounts as he may deem reasonable for the 
investigation of applications for a guarantee, for the 
appraisal of properties offered as security for a guarantee, 
for the issuance of commitments, for services in connection 
with the escrow fund authorized by section 1108 and for the 
inspection of such properties during construction, 
reconstruction, or reconditioning: Provided, That such charges 
shall not aggregate more than one-half of 1 per centum of the 
original principal amount of the obligations to be guaranteed.
  (2) The [Secretary] Secretary or Administrator may make a 
determination that aspects of an application under this title 
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] or financial structures. Any 
independent analysis conducted pursuant to this provision shall 
be performed by a party chosen by the [Secretary] Secretary or 
Administrator. The Secretary or Administrator shall not 
establish by rule, regulation, or procedure any requirement for 
independent analysis that is, or is intended to be, applied 
uniformly to loan guarantee applications without regard to such 
risk factors.
  (3) Notwithstanding any other provision of this title, the 
[Secretary] 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.
  (4) The [Secretary] Secretary or Administrator may charge and 
collect fees to cover the costs of independent analysis under 
paragraph (2). Notwithstanding section 3302 of title 31, United 
States Code, any fee collected under this paragraph shall--
          (A) be credit as an offsetting collection to the 
        account that finances the administration of the loan 
        guarantee program;
          (B) shall be available for expenditure only to pay 
        the costs of activities and services for which the fee 
        is imposed; and
          (C) shall remain available until expended.
  (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. No Federal funds shall be expended to conduct 
any review of any application under this title, or any 
modification of an existing loan guarantee, by any party that 
is not an expert in maritime finance or operations.
  (g) Disposition of Moneys.--All moneys received by the 
[Secretary] Secretary or Administrator under the provisions of 
sections 1101-1107 of this title shall be deposited in the 
Fund.
  (h) Additional Requirements.--Obligations guaranteed under 
this title and agreements relating thereto shall contain such 
other provisions with respect to the protection of the security 
interests of the United States (including acceleration, 
assumptions, and subrogation provisions and the issuance of 
notes by the obligor to the [Secretary] Secretary or 
Administrator), liens and releases of liens, payments of taxes, 
and such other matters as the [Secretary] Secretary or 
Administrator may, in his discretion, prescribe.
  (i) Limitation on Establishment of Percentage.--The 
[Secretary] Secretary or Administrator may not, with respect 
to--
          (1) the general 75 percent or less limitation in 
        subsection (b)(2);
          (2) the 87\1/2\ percent or less limitation in the 
        1st, 2nd, 4th, or 5th proviso to subsection (b)(2) or 
        section 1112(b); or
          (3) the 80 percent or less limitation in the 3rd 
        proviso to such subsection; establish by rule, 
        regulation, or procedure any percentage within any such 
        limitation that is, or is intended to be, applied 
        uniformly to all guarantees or commitments to guarantee 
        made under this section that are subject to the 
        limitation.
  (j) Procedure Upon Receiving Loan Guarantee Application.--(1) 
Upon receiving an application for a loan guarantee for an 
eligible export vessel, the [Secretary] Administrator shall 
promptly provide to the Secretary of Defense notice of the 
receipt of the application. During the 30-day period beginning 
on the date on which the Secretary of Defense receives such 
notice, the Secretary of Defense may disapprove the loan 
guarantee based on the assessment of the [Secretary] 
Administrator of the potential use of the vessel in a manner 
that may cause harm to United States national security 
interests. The Secretary of Defense may not disapprove a loan 
guarantee under this section solely on the basis of the type of 
vessel to be constructed with the loan guarantee. The authority 
of the [Secretary] Administrator to disapprove a loan guarantee 
under this section may not be delegated to any official other 
than a civilian officer of the Department of Defense appointed 
by the President, by and with the advice and consent of the 
Senate.
  (2) [The Secretary of Transportation] The Administrator may 
not make a loan guarantee disapproved by the Secretary of 
Defense under paragraph (1).
  (k) Monitoring.--The [Secretary] Secretary or Administrator 
shall monitor the financial conditions and operations of the 
obligor on a regular basis during the term of the guarantee. 
The [Secretary] Secretary or Administrator shall document the 
results of the monitoring on an annual or quarterly basis 
depending upon the condition of the obligor. If the [Secretary] 
Secretary or Administrator determines that the financial 
condition of the obligor warrants additional protections to the 
[Secretary] Secretary or Administrator, then the [Secretary] 
Secretary or Administrator shall take appropriate action under 
subsection (m) of this section. If the [Secretary] 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 
obligations by the [Secretary] Secretary or Administrator, the 
[Secretary] Secretary or Administrator shall make an immediate 
determination whether default should take place and whether 
further measures described in subsection (m) should be taken to 
protect the interests of the [Secretary] Secretary or 
Administrator while insuring that program objectives are met.
  (l) Review of Applications.--No commitment to guarantee, or 
guarantee of, an obligation shall be made by the [Secretary] 
Secretary or Administrator unless the [Secretary] Secretary or 
Administrator certifies that a full and fair consideration of 
all the regulatory requirements, including economic soundness 
and financial requirements applicable to obligors and related 
parties, and a thorough assessment of the technical, economic, 
and financial aspects of the loan application has been made. 
The Administrator shall retain in the Maritime Administration 
adequate resources with sufficient expertise to perform the 
functions prescribed by this title so that no assistance from 
the Department of Transportation or any other Federal agency is 
required to carry out this title.
  (m) Agreement With Obligor.--The [Secretary] Secretary or 
Administrator shall include provisions in loan agreements with 
obligors that provide additional authority to the [Secretary] 
Secretary or Administrator to take action to limit potential 
losses in connection with defaulted loans or loans that are in 
jeopardy due to the deteriorating financial condition of 
obligors. [Provisions that the Secretary shall include in loan 
agreements include requirements for additional collateral or 
greater equity contributions that are effective upon the 
occurrence of verifiable conditions relating to the obligors 
financial condition or the status of the vessel or shipyard 
project.] 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.
  (n) Decision Period.--(1) In general.--[The Secretary of 
Transportation] The Administrator shall approve or deny an 
application for a loan guarantee under this title within 270 
days after the date on which the signed application is received 
by the [Secretary] Administrator.
  (2) Extension.--Upon request by an applicant, the Secretary 
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 for the loan guarantee was received by the 
Secretary.

SEC. 1104B. FINANCING CONTRACT FOR CONSTRUCTION OR RECONSTRUCTION OF 
                    COMMERCIAL VESSEL; VESSEL REPLACEMENT GUARANTEE 
                    FUND.

                         [46 U.S.C. App. 1274a]

  (a) Notwithstanding the provisions of this title, except as 
provided in subsection (d) of this section, the [Secretary] 
Secretary or Administrator, upon the terms the [Secretary] 
Secretary or Administrator may prescribe, may guarantee or make 
a commitment to guarantee, payment of the principal of and 
interest on an obligation which aids in financing and 
refinancing, including reimbursement to an obligor for 
expenditures previously made, of a contract for construction or 
reconstruction of a vessel or vessels which are designed and to 
be employed for commercial use in the coastwise or intercoastal 
trade or in foreign trade as defined in section 905 of this Act 
if--
          (1) the construction or reconstruction by an 
        applicant is made necessary to replace vessels the 
        continued operation of which is denied by virtue of the 
        imposition of a statutorily mandated change in 
        standards for the operation of vessels, and where, as a 
        matter of law, the applicant would otherwise be denied 
        the right to continue operating vessels in the trades 
        in which the applicant operated prior to the taking 
        effect of the statutory or regulatory change;
          (2) 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 changes in operating 
        standards imposed by statute;
          (3) the capacity of the vessels to be constructed or 
        reconstructed under this title will not increase the 
        cargo carrying capacity of the vessels being replaced;
          (4) the [Secretary] Secretary or Administrator has 
        not made a determination that the market demand for the 
        vessel over its useful life will diminish so as to make 
        the granting of the guarantee fiduciarily imprudent; 
        and
          (5) the [Secretary] Secretary or Administrator has 
        considered the provisions of section 
        1104A(d)(1)(A)(iii), (iv), and (v) of this title.
  (b) For the purposes of this section--
          (1) the maximum term for obligations guaranteed under 
        this program may not exceed 25 years;
          (2) obligations guaranteed may not exceed 87\1/2\ 
        percent of the actual cost or depreciated actual cost 
        to the applicant for the construction or reconstruction 
        of the vessel; and
          (3) reconstruction cost obligations may not be 
        guaranteed unless the vessel after reconstruction will 
        have a useful life of at least 15 years. The 
        [Secretary] Secretary or Administrator may not by rule, 
        regulation, or procedure establish any percentage 
        within the 87\1/2\ percent or less limitation in 
        paragraph (2) that is, or is intended to be, applied 
        uniformly to all guarantees or commitments to guarantee 
        made under this section.
  (c)(1) The [Secretary] Secretary or Administrator shall by 
rule require that the applicant provide adequate security 
against default. The [Secretary] Secretary or Administrator 
may, in addition to any fees assessed under section 1104A(e), 
establish a Vessel Replacement Guarantee Fund into which shall 
be paid by obligors under this section--
          (A) annual fees which may be an additional amount on 
        the loan guarantee fee in section 1104A(e) not to 
        exceed an additional 1 percent; or
          (B) fees 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.
  (2) The Vessel Replacement Guarantee Fund shall be a 
subaccount in the Federal Ship Financing Fund, and shall--
          (A) be the depository for all moneys received by the 
        [Secretary] Secretary or Administrator under sections 
        1101 through 1107 of this title with respect to 
        guarantee or commitments to guarantee made under this 
        section;
          (B) not include investigation fees payable under 
        section 1104A(f) which shall be paid to the Federal 
        Ship Financing Fund; and
          (C) be the depository, whenever there shall be 
        outstanding any notes or obligations issued by the 
        [Secretary] Secretary or Administrator under section 
        1105(d) with respect to the Vessel Replacement 
        Guarantee Fund, for all moneys received by the 
        [Secretary] Secretary or Administrator under sections 
        1101 through 1107 from applicants under this section.
  (d) The program created by this section shall, in addition to 
the requirements of this section, be subject to the provisions 
of sections 1101 through 1103; 1104A(b)(1), (4), (5), (6); 
1104A(e); 1104A(f); 1104A(h); and 1105 through 1107; except 
that the Federal Ship Financing Fund is not liable for any 
guarantees or commitments to guarantee issued under this 
section.

SEC. 1105. DEFAULTS.

                         [46 U.S.C. App. 1275]

  (a) Rights of Obligee.--In the event of a default, which has 
continued for thirty days, in any payment by the obligor of 
principal or interest due under an obligation guaranteed under 
this title, the obligee or his agent shall have the right to 
demand (unless the [Secretary] Secretary or Administrator 
shall, upon such terms as may be provided in the obligation or 
related agreements, prior to that demand, have assumed the 
obligor's rights and duties under the obligation and agreements 
and shall have made any payments in default) at or before the 
expiration of such period as may be specified in the guarantee 
or related agreements, but not later than ninety days from the 
date of such default, payment by the [Secretary] Secretary or 
Administrator of the unpaid principal amount of said obligation 
and of the unpaid interest thereon to the date of payment. 
Within such period as may be specified in the guarantee or 
related agreements, but not later than thirty days from the 
date of such demand, the [Secretary] Secretary or Administrator 
shall promptly pay to the obligee or his agent the unpaid 
principal amount of said obligation and unpaid interest thereon 
to the date of payment: Provided, That the [Secretary] 
Secretary or Administrator shall not be required to make such 
payment if prior to the expiration of said period he shall find 
that there was no default by the obligor in the payment of 
principal or interest or that such default has been remedied 
prior to any such demand.
  (b) Notice of Default.--In the event of a default under a 
mortgage, loan agreement, or other security agreement between 
the obligor and the [Secretary] Secretary or Administrator, the 
[Secretary] Secretary or Administrator may upon such terms as 
may be provided in the obligation or related agreement, either:
          (1) assume the obligor's rights and duties under the 
        agreement, make any payment in default, and notify the 
        obligee or the obligee's agent of the default and the 
        assumption by the [Secretary] Secretary or 
        Administrator; or
          (2) notify the obligee or the obligee's agent of the 
        default, and the obligee or the obligee's agent shall 
        have the right to demand at or before the expiration of 
        such period as may be specified in the guarantee or 
        related agreements, but not later than 60 days from the 
        date of such notice, payment by the [Secretary] 
        Secretary or Administrator of the unpaid principal 
        amount of said obligation and of the unpaid interest 
        thereon. Within such period as may be specified in the 
        guarantee or related agreements, but not later than 30 
        days from the date of such demand, the [Secretary] 
        Secretary or Administrator shall promptly pay to the 
        obligee or the obligee's agent the unpaid principal 
        amount of said obligation and unpaid interest thereon 
        to the date of payment.
  (c) [Secretary] Secretary or Administrator To Complete, Sell 
or Operate Property.--In the event of any payment or assumption 
by the [Secretary] Secretary or Administrator under subsection 
(a) or (b) of this section, the [Secretary] Secretary or 
Administrator shall have all rights in any security held by him 
relating to his guarantee of such obligations as are conferred 
upon him under any security agreement with the obligor. 
Notwithstanding any other provision of law relating to the 
acquisition, handling, or disposal of property by the United 
States, the [Secretary] Secretary or Administrator shall have 
the right, in his discretion, to complete, recondition, 
reconstruct, renovate, repair, maintain, operate, charter, or 
sell any property acquired by him pursuant to a security 
agreement with the obligor or may place a vessel in the 
national defense reserve. The terms of the sale shall be as 
approved by the [Secretary] Secretary or Administrator.
  (d) Cash Payments; Issuance of Notes of Obligations.--Any 
amount required to be paid by the [Secretary] Secretary or 
Administrator pursuant to subsection (a) or (b) of this 
section, shall be paid in cash. If at any time the moneys in 
the Fund authorized by section 1102 of this Act are not 
sufficient to pay any amount the [Secretary] Secretary or 
Administrator is required to pay by subsection (a) or (b) of 
this section, the [Secretary] Secretary or Administrator is 
authorized to issue to the Secretary of the Treasury notes or 
other obligations in such forms and denominations, bearing such 
maturities, and subject to such terms and conditions as may be 
prescribed by the [Secretary] Secretary or Administrator, with 
the approval of the Secretary of the Treasury. Such notes or 
other obligations shall bear interest at a rate determined by 
the Secretary of the Treasury, taking into consideration the 
current average market yield on outstanding marketable 
obligations of the United States of comparable maturities 
during the month preceding the issuance of such notes or other 
obligations. The Secretary of the Treasury is authorized and 
directed to purchase any notes and other obligations to be 
issued hereunder and for such purpose he is authorized to use 
as a public debt transaction the proceeds from the sale of any 
securities issued under the Second Liberty Bond Act, as 
amended, and the purposes for which securities may be issued 
under such Act, as amended, are extended to include any 
purchases of such notes and obligations. The Secretary of the 
Treasury may at any time sell any of the notes or other 
obligations acquired by him under this section. All 
redemptions, purchases, and sales by the Secretary of the 
Treasury of such notes or other obligations shall be treated as 
public debt transactions of the United States. Funds borrowed 
under this section shall be deposited in the Fund and 
redemptions of such notes and obligations shall be made by the 
[Secretary] Secretary or Administrator from such Fund.
  (e) Actions Against Obligor.--In the event of a default under 
any guaranteed obligation or any related agreement, the 
[Secretary] Secretary or Administrator shall take such action 
against the obligor or any other parties liable thereunder 
that, in his discretion, may be required to protect the 
interests of the United States. Any suit may be brought in the 
name of the United States or in the name of the obligee and the 
obligee shall make available to the United States all records 
and evidence necessary to prosecute any such suit. The 
[Secretary] Secretary or Administrator shall have the right, in 
his discretion, to accept a conveyance of title to and 
possession of property from the obligor or other parties liable 
to the [Secretary] Secretary or Administrator, and may purchase 
the property for an amount not greater than the unpaid 
principal amount of such obligation and interest thereon. In 
the event that the [Secretary] Secretary or Administrator shall 
receive through the sale of property an amount of cash in 
excess of the unpaid principal amount of the obligation and 
unpaid interest on the obligation and the expenses of 
collection of those amounts, the [Secretary] Secretary or 
Administrator shall pay the excess to the obligor.
  (f) Default Response.--In the event of default on an 
obligation, the Secretary shall conduct operations under this 
title in a manner which--
          (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. 1108. ESCROW FUND.

                         [46 U.S.C. App. 1279a]

  (a) Creation.--If the proceeds of an obligation guaranteed 
under this title are to be used to finance the construction, 
reconstruction, or reconditioning of a vessel or vessels which 
will serve as security for the guarantee of the, the 
[Secretary] Secretary or Administrator is authorized to accept 
and hold, in escrow under an escrow agreement with the obligor, 
a portion of the proceeds of all obligations guaranteed under 
this title whose proceeds are to be so used which is equal to:
          (i) the excess of the principal amount of all 
        obligations whose proceeds are to be so used over 75 
        per centum, or 87\1/2\ per centum, whichever is 
        applicable under section 1104 of this title, paid by or 
        for the account of the obligor for the construction, 
        reconstruction, or reconditioning of the vessel or 
        vessels;
          (ii) with such interest thereon, if any, as the 
        [Secretary] Secretary or Administrator may require: 
        Provided, That in the event the security for the 
        guarantee of an obligation by the [Secretary] Secretary 
        or Administrator relates both to a vessel or vessels to 
        be constructed, reconstructed or reconditioned and to a 
        delivered vessel or vessels, the principal amount of 
        such obligation shall be prorated for purposes of this 
        subsection (a) under regulations prescribed by the 
        [Secretary] Secretary or Administrator.
  (b) Disbursement Prior to Termination of Escrow Agreement.--
The [Secretary] Secretary or Administrator shall, as specified 
in the escrow agreement, disburse the escrow fund to pay 
amounts the obligor is obligated to pay as interest on such 
obligations or for the construction, reconstruction, or 
reconditioning of the vessel or vessels used as security for 
the guarantee of the [Secretary] Secretary or Administrator 
under this title, to redeem such obligations in connection with 
a refinancing under paragraph (4) of subsection (a) of section 
1104 or to pay to the obligor at such times as may be provided 
for in the escrow agreement any excess interest deposits, 
except that if payments become due under the guarantee prior to 
the termination of the escrow agreement, all amounts in the 
escrow fund at the time such payments become due (including 
realized income which has not yet been paid to the obligor) 
shall be paid into the Fund and (i) be credited against any 
amounts due or to become due to the [Secretary] Secretary or 
Administrator from the obligor with respect to the guaranteed 
obligations and (ii) to the extent not so required, be paid to 
the obligor.
  (c) Disbursement Upon Termination of Escrow Agreement.--If 
payments under the guarantee have not become due prior to the 
termination of the escrow agreement, any balance of the escrow 
fund at the time of such termination shall be disbursed to 
prepay the excess of the principal of all obligations whose 
proceeds are to be used to finance the construction, 
reconstruction, or reconditioning of the vessel or vessels 
which serve or will serve as security for such guarantee over 
75 per centum or 87\1/2\ per centum, whichever is applicable 
under section 1104 of this title, of the actual cost of such 
vessel or vessels to the extent paid, and to pay interest on 
such prepaid amount of principal, and the remainder of such 
balance of the escrow fund shall be paid to the obligor.
  (d) Investment of Fund.--The [Secretary] Secretary or 
Administrator may invest and reinvest all or any part of the 
escrow fund in obligations of the United States with such 
maturities that the escrow fund will be available as required 
for purposes of the escrow agreement.
  (e) Payment of Income.--Any income realized on the escrow 
fund shall, upon receipt, be paid to the obligor.
  (f) Terms of Escrow Agreement.--The escrow agreement shall 
contain such other terms as the [Secretary] Secretary or 
Administrator may consider necessary to protect fully the 
interests of the United States.
  (g) Payments Required Before Disbursement.--(1) In General.--
No disbursement shall be made under subsection (b) 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\1/2\ percent, whichever is 
applicable under section 1104A, of the aggregate actual cost of 
the vessel, as previously approved by the [Secretary] Secretary 
or Administrator. If the aggregate actual cost of the vessel 
has increased since the [Secretary's] 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 (b) 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\1/2\ percent, as applicable, of the 
increase, as determined by the [Secretary] Secretary or 
Administrator, in the aggregate actual cost of the vessel. 
Nothing in this paragraph shall require the [Secretary] 
Secretary or Administrator to consent to finance any increase 
in actual cost unless the [Secretary] Secretary or 
Administrator determines that such an increase in the 
obligation meets all the terms and conditions of this title or 
other applicable law.
  (2) Documented Proof of Progress Requirement.--The 
[Secretary] 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] 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.

SEC. 1109. DEPOSIT FUND.

                        [46 U.S.C. App. 1279b.]

  (a) Establishment of Deposit Fund.--There is established in 
the Treasury a deposit fund for purposes of this section. The 
[Secretary] Secretary or Administrator may, in accordance with 
an agreement under subsection (b), deposit into and hold in the 
deposit fund cash belonging to an obligor to serve as 
collateral for a guarantee under this title made with respect 
to the obligor.
  (b) Agreement.--(1) In General.--The [Secretary] Secretary or 
Administrator and an obligor shall enter into 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 deposit fund established by subsection (a).
  (2) Terms.--The agreement shall contain such terms and 
conditions as are required under this section and such 
additional terms as are considered by the [Secretary] Secretary 
or Administrator to be necessary to protect fully the interests 
of the United States.
  (3) Security Interest of United States.--The agreement shall 
include terms that grant to the United States a security 
interest in all amounts deposited into the deposit fund.
  (c) Investment.--The may invest and reinvest any part of the 
amounts in the deposit fund established by subsection (a) in 
obligations of the United States with such maturities as ensure 
that amounts in the deposit fund will be available as required 
for purposes of agreements under subsection (b). Cash balances 
of the deposit 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.--The cash deposited into 
the deposit fund established by subsection (a) may not be 
withdrawn without the consent of the [Secretary] Secretary or 
Administrator.
  (2) Use of Income.--Subject to paragraph (3), the [Secretary] 
Secretary or Administrator may pay any income earned on cash of 
an obligor deposited into the deposit fund in accordance with 
the terms of the agreement with the obligor under subsection 
(b).
  (3) Retention Against Default.--The [Secretary] Secretary or 
Administrator may retain and offset any or all of the cash of 
an obligor in the deposit fund, and any income realized 
thereon, as part of the [Secretary's] Secretary's or 
Administrator's recovery against the obligor in case of a 
default by the obligor on an obligation.

SEC. 1110. OCEAN THERMAL ENERGY CONVERSION DEMONSTRATION FACILITIES AND 
                    PLANTSHIPS.

                         [46 U.S.C. App. 1279c]

  (a) Financing of Construction, Reconstruction, or 
Reconditioning.--Pursuant to the authority granted under 
section 1103(a) of this title, the [Secretary] Administrator, 
upon such terms as he shall prescribe, may guarantee or make a 
commitment to guarantee, payment of the principal of and 
interest on an obligation which aids in financing, including 
reimbursement of an obligor for expenditures previously made 
for, construction, reconstruction, or reconditioning of a 
commercial demonstration ocean thermal energy conversion 
facility or plantship. Guarantees or commitments to guarantee 
under this subsection shall be subject to all the provisos, 
requirements, regulations, and procedures which apply to 
guarantees or commitments to guarantee made pursuant to section 
1104(a)(1) of this title, except that--
          (1) no guarantees or commitments to guarantee may be 
        made by the [Secretary] Administrator under this 
        subsection before October 1, 1981;
          (2) the provisions of subsection (d) of section 1104 
        of this title shall apply to guarantees or commitments 
        to guarantee for that portion of a commercial 
        demonstration ocean thermal energy conversion facility 
        or plantship not to be supported with appropriated 
        Federal funds;
          (3) guarantees or commitments to guarantee made 
        pursuant to this section may be in an aggregate 
        principal amount which does not exceed 87\1/2\ percent 
        of the actual cost or depreciated actual cost of the 
        commercial demonstration ocean thermal energy 
        conversion facility or plantship: Provided, That, if 
        the commercial demonstration ocean thermal energy 
        conversion facility or plantship is supported with 
        appropriated Federal funds, such guarantees or 
        commitments to guarantee may not exceed 87\1/2\ percent 
        of the aggregate principal amount of that portion of 
        the actual cost or depreciated actual cost for which 
        the obligor has an obligation to secure financing in 
        accordance with the terms of the agreement between the 
        obligor and the Department of Energy or other Federal 
        agency; and
          (4) the provisions of this section may be used to 
        guarantee obligations for a total of not more than 5 
        separate commercial demonstration ocean thermal energy 
        conversion facilities and plantships or a demonstrated 
        400 megawatt capacity, whichever comes first.
  (b) Certification of Reasonableness of Risk.--A guarantee or 
commitment to guarantee shall 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 ocean thermal energy conversion 
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 Federal 
Government to a level which is reasonable. The Secretary of 
Energy must base his considerations on the following:
          (1) the successful demonstration of the technology to 
        be used in such 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 such facility or plantship.
  (c) OTEC Demonstration Fund.--A special subaccount in the 
Federal Ship Financing Fund, to be known as the OTEC 
Demonstration Fund, shall be established on October 1, 1981. 
The OTEC Demonstration Fund shall be used for obligation 
guarantees authorized under this section which do not qualify 
under other sections of this title. Except as specified 
otherwise in this section, the operation of the OTEC 
Demonstration Fund shall be identical with that of the parent 
Federal Ship Financing Fund: except that, notwithstanding the 
provisions of section 1104(g), (1) all moneys received by the 
[Secretary] Administrator pursuant to sections 1101 through 
1107 of this title with respect to guarantees or commitments to 
guarantee made pursuant to this section shall be deposited only 
in the OTEC Demonstration Fund, and (2) whenever there shall be 
outstanding any notes or other obligations issued by the 
[Secretary] Administrator pursuant to section 1105(d) of this 
title with respect to the OTEC Demonstration Fund, all moneys 
received by the [Secretary] Administrator pursuant to sections 
1101 through 1107 of this title with respect to ocean thermal 
energy conversional facilities or plantships shall be deposited 
in the OTEC Demonstration Fund. Assets in the OTEC 
Demonstration Fund may at any time be transferred to the parent 
fund whenever and to the extent that the balance thereof 
exceeds the total guarantees or commitments to guarantee made 
pursuant to this section then outstanding, plus any notes or 
other obligations issued by the [Secretary] Administrator 
pursuant to section 1105(d) of this title with respect to the 
OTEC Demonstration Fund. The Federal Ship Financing Fund shall 
not be liable for any guarantees or commitments to guarantee 
issued pursuant to this section. The aggregate unpaid principal 
amount of the obligations guaranteed with the backing of the 
OTEC Demonstration Fund and outstanding at any one time shall 
not exceed $1,650,000,000.
  (d) Notes and Obligations.--The provisions of section 1105(d) 
of this title shall apply specifically to the OTEC 
Demonstration Fund as well as to the Fund: Provided, however, 
That any notes or obligations issued by the [Secretary] 
Administrator pursuant to section 1105(d) of this title with 
respect to the OTEC Demonstration Fund shall be payable solely 
from proceeds realized by the OTEC Demonstration Fund.
  (e) Taxability of Interest.--The interest on any obligation 
guaranteed under this section shall be included in gross income 
for purposes of chapter 1 of the Internal Revenue Code of 1954.

SEC. 1111. AUTHORITY FOR [SECRETARY OF TRANSPORTATION] ADMINISTRATOR  
                    TO MAKE LOAN GUARANTEES.

                         [46 U.S.C. App. 1279d]

  (a) Authority To Guarantee Obligations for Eligible Export 
Vessels.--The [Secretary] Administrator may guarantee 
obligations for eligible export vessels--
          (1) in accordance with the terms and conditions of 
        this title applicable to loan guarantees in the case of 
        vessels documented under the laws of the United States; 
        or
          (2) in accordance with such other terms as the 
        [Secretary] Administrator determines to be more 
        favorable than the terms otherwise provided in this 
        title and to be compatible with export credit terms 
        offered by foreign governments for the sale of vessels 
        built in foreign shipyards.
  (b) Interagency Council.--(1) Establishment; Composition.--
There is hereby established an interagency council for the 
purposes of this section. The council shall be composed of the 
[Secretary of Transportation] Administrator, who shall be 
chairman of the Council, the Secretary of the Treasury, the 
Secretary of State, the Assistant to the President for Economic 
Policy, the United States Trade Representative, and the 
President and Chairman of the United States Export-Import Bank, 
or their designees.
  (2) Purpose of the Council.--The council shall--
          (A) obtain information on shipbuilding loan 
        guarantees, on direct and indirect subsidies, and on 
        other favorable treatment of shipyards provided by 
        foreign governments to shipyards in competition with 
        United States shipyards; and
          (B) provide guidance to the [Secretary] Administrator 
        in establishing terms for loan guarantees for eligible 
        export vessels under subsection (a)(2).
  (3) Consultation with U.S. Shipbuilders.--The council shall 
consult regularly with United States shipbuilders to obtain the 
essential information concerning international shipbuilding 
competition on which to set terms and conditions for loan 
guarantees under subsection (a)(2).
  (4) Annual Report.--Not later than January 31 of each year 
(beginning in 1995), the [Secretary of Transportation] 
Administrator shall submit to Congress a report on the 
activities of the [Secretary] Administrator under this section 
during the preceding year. Each report shall include 
documentation of sources of information on assistance provided 
by the governments of other nations to shipyards in those 
nations and a summary of recommendations made to the 
[Secretary] Administrator during the preceding year regarding 
applications submitted to the [Secretary] Administrator during 
that year for loan guarantees under this title for construction 
of eligible export vessels.

SEC. 1112. LOAN GUARANTEES FOR SHIPYARD MODERNIZATION AND IMPROVEMENT.

                         [46 U.S.C. App. 1279e]

  (a) The Secretary, under section 1103(a) and subject to the 
terms the Secretary shall prescribe, may guarantee or make a 
commitment to guarantee the payment of the principal of, and 
the interest on, an obligation for advanced shipbuilding 
technology and modern shipbuilding technology of a general 
shipyard facility located in the United States.
  (b) Guarantees or commitments to guarantee under this section 
are subject to the extent applicable to all the laws, 
requirements, regulations, and procedures that apply to 
guarantees or commitments to guarantee made under this title, 
except that guarantees or commitments to guarantee made under 
this section may be in the aggregate principal amount that does 
not exceed 87\1/2\ percent of the actual cost of the advanced 
shipbuilding technology or modern shipbuilding technology.
  (c) The Secretary may accept the transfer of funds from any 
other department, agency, or instrumentality of the United 
States Government and may use those funds to cover the cost (as 
defined in section 502 of the Federal Credit Reform Act of 
1990) of making guarantees or commitments to guarantee loans 
entered into under this section.
  (d) For purposes of this section:
          (1) 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 which 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) The term ``modern shipbuilding technology'' means 
        the best available proven technology, techniques, and 
        processes appropriate to enhancing the productivity of 
        shipyards.
          (3) The term ``general shipyard facility'' means--
                  (A) for operations on land--
                          (i) any structure or appurtenance 
                        thereto designed for the construction, 
                        repair, rehabilitation, refurbishment 
                        or rebuilding of any vessel (as defined 
                        in title 1, United States Code) and 
                        including graving docks, building ways, 
                        ship lifts, wharves, and pier cranes;
                          (ii) the land necessary for any 
                        structure or appurtenance described in 
                        clause (i); and
                          (iii) equipment that is for the use 
                        in connection with any structure or 
                        appurtenance and that is necessary for 
                        the performance of any function 
                        referred to in subparagraph (A);
                  (B) for operations other than on land, any 
                vessel, floating drydock or barge built in the 
                United States and used for, equipped to be used 
                for, or of a type that is normally used for 
                activities referred to in subparagraph (A)(i) 
                of this paragraph.

SEC. [1111.] 1113. DEBT OBLIGATIONS GUARANTEED BY SECRETARY; FISHING 
                    CAPACITY REDUCTION FUND.

                           [46 U.S.C. 1279f]

  (a) The [Secretary] Secretary or Administrator is authorized 
to 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] Secretary or Administrator and has agreed with the 
[Secretary] Secretary or Administrator to such conditions as 
the [Secretary] Secretary or Administrator deems necessary for 
this section to achieve the objective of the program and to 
protect the interest of the United States.
  (b) Any 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 
        title, except with respect to provisions of this title 
        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] Secretary or Administrator determines 
        necessary for the program to which they relate;
          (5) have as the exclusive source of repayment 
        (subject to the proviso in subsection (c)(2)) and as 
        the exclusive payment security, the fishing fees 
        established under the program; and
          (6) at the discretion of the [Secretary] Secretary or 
        Administrator be issued in the public market or sold to 
        the Federal Financing Bank.
  (c)(1) There is established in the Treasury of the United 
States a separate account which shall be known as the fishing 
capacity reduction fund (referred to in this section as the 
``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) Amounts in the fund shall be available, without 
appropriation or fiscal year limitation, to the [Secretary] 
Secretary or Administrator to pay the cost of the program, 
including payments to financial institutions to pay debt 
obligations incurred by entities under this section: Provided, 
That funds available for this purpose from other amounts 
available for the program may also be used to pay such debt 
obligations.
    (3) Sums 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.
  (d) The [Secretary] Secretary or Administrator is authorized 
and directed to issue such regulations as the [Secretary] 
Secretary or Administrator deems necessary to carry out this 
section.
  (e) For the purposes of this section, the term ``program'' 
means a fishing capacity reduction program established under 
section 312 of the Magnuson-Stevens Fishery Conservation and 
Management Act.

SEC. [1112.] 1114. DIRECT LOAN OBLIGATIONS; ANNUAL RATE OF INTEREST.

                           [46 U.S.C. 1279g]

  (a) Notwithstanding any other provision of this title, all 
obligations involving any fishing vessel, fishery facility, 
aquaculture facility, individual fishing quota, or fishing 
capacity reduction program issued under this title after the 
date of enactment of the Sustainable Fisheries Act shall be 
direct loan obligations, for which the Secretary shall be the 
obligee, rather than obligations issued to obligees other than 
the Secretary and guaranteed by the Secretary. All direct loan 
obligations under this section shall be treated in the same 
manner and to the same extent as obligations guaranteed under 
this title except with respect to provisions of this title 
which by their nature can only be applied to obligations 
guaranteed under this title.
  (b) Notwithstanding any other provisions of this title, the 
annual rate of interest which obligors shall pay on direct loan 
obligations under this section shall be fixed at two percent of 
the principal amount of such obligations outstanding plus such 
additional percent as the Secretary shall be obligated to pay 
as the interest cost of borrowing from the United States 
Treasury the funds with which to make such direct loans.

                       MERCHANT MARINE ACT, 1936

Title XII--War Risk Insurance

           *       *       *       *       *       *       *

SEC. 1208. INSURANCE FUND; INVESTMENTS; APPROPRIATIONS.

                            [46 U.S.C. 1288]

  (a) The Secretary shall create an insurance fund in the 
Treasury to enable him to carry out the provisions of this 
title. Moneys appropriated by Congress to carry out the 
provisions of this title and all moneys received from premiums, 
salvage, or other recoveries and all receipts in connection 
with this title shall be deposited in the Treasury to the 
credit of such fund. The Secretary of Transportation may 
request the Secretary of the Treasury to invest such portion of 
the Fund as is not, in the judgment of the Secretary of 
Transportation, required to meet the current needs of the fund. 
Such investments shall be made by the Secretary of the Treasury 
in public debt securities of the United States, with maturities 
suitable to the needs of the fund, and bearing interest rates 
determined by the Secretary of the Treasury, taking into 
consideration current market yields on outstanding marketable 
obligations of the United States of comparable maturity. [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.] 
The Secretary of Transportation may request the Secretary of 
the Treasury to invest such portion of the fund as is not, in 
the judgment of the Secretary of Transportation, required to 
meet the current needs of the fund. Such investments shall be 
made by the Secretary of the Treasury in public debt securities 
of the United States, with maturities suitable to the need of 
the fund, and bearing interest rates determined by the 
Secretary of the Treasury, taking into consideration current 
market yields on outstanding marketable obligations of the 
United States of comparable maturity. The interest and benefits 
accruing from such securities shall be deposited to the credit 
of the fund.
  (b) Such sums as shall be necessary to carry out the 
provisions of this title are authorized to be appropriated to 
such fund.

           *       *       *       *       *       *       *

SEC. 1295. CONGRESSIONAL DECLARATION OF POLICY.

                         [46 U.S.C. App. 1295]

  It is the policy of the United States that merchant marine 
vessels of the United States should be operated by highly 
trained and efficient citizens of the United States and that 
the United States Navy and the merchant marine of the United 
States should work closely together to promote the maximum 
integration of the total seapower forces of the United States. 
In furtherance of this policy--
          (1) the Secretary of Transportation is authorized to 
        take the steps necessary to provide for the education 
        and training of citizens of the United States who are 
        capable of providing for the safe and efficient 
        operation of the merchant marine of the United States 
        at all times and as a naval and military auxiliary in 
        time of war or national emergency; and
          (2) the Secretary of Navy, in cooperation with the 
        Maritime Administrator and the head of each State 
        maritime academy, shall assure that the training of 
        future merchant marine officers at the United States 
        Merchant Marine Academy and at the State maritime 
        academies includes programs for naval science training 
        in the operation of merchant marine vessels as a naval 
        and military auxiliary and that naval officer training 
        programs for the training of future officers, insofar 
        as possible, be maintained at designated maritime 
        academies consistent with United States Navy standards 
        and needs.

                       MERCHANT MARINE ACT, 1936

SEC. 1303. MAINTENANCE OF ACADEMY.

                         [46 U.S.C. App. 1295b]

  (a) Duty of Secretary.--The Secretary shall maintain the 
Academy for providing instruction to individuals to prepare 
them for service in the merchant marine of the United States.
  (b) Nomination and Appointment of Cadets; Designation and 
Licensing of Individuals From the Trust Territory of the 
Pacific Islands, Western Hemisphere Nations and Nations Other 
Than the United States.--
          (1) Each Senator and Member of the House of 
        Representatives, the Panama Canal Commission, the 
        Governor of the Northern Mariana Islands, and the 
        Delegate from American Samoa. may nominate for 
        appointment as a cadet at the Academy any individual 
        who is--
                  (A) a citizen of the United States or a 
                national of the United States; and
                  (B) a resident of the State represented by 
                such Senator if the individual is nominated by 
                a Senator, a resident of the State in which the 
                congressional district represented by such 
                Member of the House of Representatives is 
                located if the individual is nominated by a 
                Member of the House of Representatives (or a 
                resident of Guam, the Virgin Islands, the 
                District of Columbia, the Commonwealth of 
                Puerto Rico, or American Samoa if the 
                individual is nominated by a Member of the 
                House of Representatives representing such 
                area), a resident of the area or installation 
                described in paragraph (3)(A)(ii), or a son or 
                daughter of the personnel described in such 
                paragraph, if the individual is nominated by 
                the Panama Canal Commission, or a resident of 
                the Northern Mariana Islands if the individual 
                is nominated by the Governor of the Northern 
                Mariana Islands.
          (2)(A) The Secretary shall establish minimum 
        requirements for the individuals nominated pursuant to 
        paragraph (1) and shall establish a system of 
        competition for the selection of individuals qualified 
        for appointment as cadets at the Academy.
          (B) Such system of competition shall determine the 
        relative merit of appointing each such individual to 
        the Academy through the use of competitive 
        examinations, an assessment of the academic background 
        of the individual, and such other factors as are 
        considered effective indicators of motivation and the 
        probability of successful completion of training at the 
        Academy.
          (C) Notwithstanding any other provision of law, an 
        individual appointed as a cadet may not be admitted to 
        the Academy as a student, unless at the time of the 
        taking of the official oath upon entry into the 
        Merchant Marine Academy, that individual satisfies the 
        physical and mental requirements of the Department of 
        Defense to be appointed or enlisted as a Midshipman, 
        United States Naval Reserve. Following admission to the 
        Academy, notwithstanding any other provision of law, 
        such individual may continue as a student only if that 
        individual continues to satisfy the physical and mental 
        standards set forth in this subparagraph unless the 
        Secretary of Transportation waives the standards.
          (3)(A) Qualified individuals nominated pursuant to 
        paragraph (1) shall be selected each year for 
        appointment as cadets at the Academy to fill positions 
        allocated as follows:
                  (i) Positions shall be allocated each year 
                for individuals who are residents of each State 
                and are nominated by the Members of the 
                Congress from such State in proportion to the 
                representation in Congress from that State.
                  (ii) Two positions shall be allocated each 
                year for individuals nominated by the Panama 
                Canal Commission who are sons or daughters of 
                residents of any area or installation located 
                in the Republic of Panama which is made 
                available to the United States pursuant to the 
                Panama Canal Treaty of 1977, the agreements 
                relating to and implementing that Treaty, 
                signed September 7, 1977, and the Agreement 
                Between the United States of America and the 
                Republic of Panama Concerning Air Traffic 
                Control and Related Services, concluded January 
                8, 1979, and sons or daughters of personnel of 
                the United States Government and the Panama 
                Canal Commission residing in the Republic of 
                Panama, nominated by the Panama Canal 
                Commission.
                  (iii) One position shall be allocated each 
                year for an individual who is a resident of 
                Guam and is nominated by the Delegate to the 
                House of Representatives from Guam.
                  (iv) One position shall be allocated each 
                year for an individual who is a resident of the 
                Virgin Islands and is nominated by the Delegate 
                to the House of Representatives from the Virgin 
                Islands.
                  (v) One position shall be allocated each year 
                for an individual who is a resident of the 
                Northern Mariana Islands and is nominated by 
                the Governor of the Northern Mariana Islands.
                  (vi) One position shall be allocated each 
                year for an individual who is a resident of 
                American Samoa and is nominated by the Delegate 
                to the House of Representatives from American 
                Samoa.
                  (vii) Four positions shall be allocated each 
                year for individuals who are residents of the 
                District of Columbia and are nominated by the 
                Delegate to the House of Representatives from 
                the District of Columbia.
                  (viii) One position shall be allocated each 
                year for an individual who is a resident of the 
                Commonwealth of Puerto Rico and is nominated by 
                the Resident Commissioner to the United States 
                from Puerto Rico.
          (B) The Secretary shall make appointments of 
        qualified individuals to fill the positions allocated 
        pursuant to subparagraph (A) (from among the 
        individuals nominated pursuant to paragraph (1)) in the 
        order of merit determined pursuant to paragraph (2)(B) 
        among residents of each State, Guam, the Virgin 
        Islands, the Northern Mariana Islands, American Samoa, 
        the District of Columbia, and the Commonwealth of 
        Puerto Rico and among individuals nominated by the 
        Panama Canal Commission.
          (C) If positions are not filled after the 
        appointments are made pursuant to subparagraph (B), the 
        Secretary shall make appointments of qualified 
        individuals to fill such positions from among all 
        individuals nominated pursuant to paragraph (1) in the 
        order of merit determined pursuant to paragraph (2)(B) 
        among all such individuals.
          (D) In addition, the Secretary may each year appoint 
        without competition as cadets at the Academy not more 
        than 40 qualified individuals possessing qualities 
        deemed to be of special value to the Academy. In making 
        such appointments the Secretary shall attempt to 
        achieve a national demographic balance at the Academy.
          (E) No preference shall be granted in selecting 
        individuals for appointment as cadets at the Academy 
        because one or more members of the immediate family of 
        any such individual are alumni of the Academy.
          (F) Any citizen of the United States selected for 
        appointment pursuant to this paragraph must agree to 
        apply for midshipman status in the United States Naval 
        Reserve (including the Merchant Marine Reserve, United 
        States Naval Reserve) before being appointed as a cadet 
        at the Academy.
          (G) For purposes of this paragraph, the term 
        ``State'' means the several States.
          (4)(A) In addition to paragraph (3), the Secretary 
        may permit, upon designation by the Secretary of the 
        Interior, individuals from the Trust Territory of the 
        Pacific Islands to receive instruction at the Academy.
          (B) Not more than 4 individuals may receive 
        instruction under this paragraph at any one time.
          (C) Any individual receiving instruction under the 
        authority of this paragraph shall receive the same 
        allowances and shall be subject to the same rules and 
        regulations governing admission, attendance, 
        discipline, resignation, discharge, dismissal, and 
        graduation as cadets at the Academy appointed from the 
        United States, subject to such exceptions as shall be 
        jointly agreed upon by the Secretary and the Secretary 
        of the Interior.
          (5)(A) In addition to paragraphs (3) and (4), the 
        President may designate individuals from nations 
        located in the Western Hemisphere other than the United 
        States to receive instruction at the Academy.
          (B) Not more than 12 individuals may receive 
        instruction under this paragraph at any one time, and 
        not more than 2 individuals receiving instruction under 
        this paragraph at any one time may be from the same 
        nation.
          (C) Any individual receiving instruction under this 
        subparagraph is entitled to the same allowances and 
        shall be subject to the same rules and regulations 
        governing admission, attendance, discipline, 
        resignation, discharge, dismissal, and graduation as 
        cadets at the Academy appointed from the United States.
          (6)(A) In addition to paragraphs (3), (4), and (5), 
        the Secretary may permit, upon approval of the 
        Secretary of State, individuals from nations other than 
        the United States to receive instruction at the 
        Academy.
          (B) Not more than 30 individuals may receive 
        instruction under this paragraph at any one time.
          (C) The Secretary shall insure that each nation from 
        which an individual comes to receive instruction under 
        this paragraph shall reimburse the Secretary for the 
        cost of such instruction (including the same allowances 
        as received by cadets at the Academy appointed from the 
        United States) as determined by the Secretary.
          (D) Any individual receiving instruction at the 
        Academy under this paragraph shall be subject to the 
        same rules and regulations governing admission, 
        attendance, discipline, resignation, discharge, 
        dismissal, and graduation as cadets at the Academy 
        appointed from the United States.
          (7)(A) The Secretary may permit, upon approval of the 
        Secretary of State, additional individuals from the 
        Republic of Panama to receive instruction at the 
        Academy, in addition to those individuals appointed 
        under paragraphs (3), (4), (5), and (6) of this 
        subsection.
          (B) The Secretary shall be reimbursed for the cost of 
        that instruction (including the same allowances as 
        received by cadets at the Academy appointed from the 
        United States) as determined by the Secretary.
          (C) An individual receiving instructions at the 
        Academy under this paragraph shall be subject to the 
        same rules and regulations governing admission, 
        attendance, discipline, resignation, discharge, 
        dismissal, and graduation as cadets at the Academy 
        appointed from the United States.
          (8) An individual appointed as a cadet under 
        paragraph (3), or receiving instruction under paragraph 
        (4), (5), (6), or (7) of this subsection is not 
        entitled to hold a license authorizing service on a 
        merchant marine vessel of the United States solely by 
        reason of graduation from the Academy.
  (c) Appointment of Cadet as Midshipman in the United States 
Naval Reserve.--
          (1) Any citizen of the United States who is appointed 
        as a cadet at the Academy shall be appointed by the 
        Secretary of the Navy as a midshipman in the United 
        States Naval Reserve (including the Merchant Marine 
        Reserve, United States Naval Reserve).
          (2) The Secretary of the Navy shall provide for 
        cadets of the Academy who are midshipmen in the United 
        States Naval Reserve to be issued an identification 
        card (referred to as a ``military ID card'') and to be 
        entitled to all rights and privileges in accordance 
        with the same eligibility criteria as apply to other 
        members of the Ready Reserve of the reserve components 
        of the Armed Forces.
          (3) The Secretary of the Navy shall carry out 
        paragraphs (1) and (2) in coordination with the 
        Secretary.
  (d) Uniforms, Textbooks, and Transportation Allowances.--The 
Secretary shall provide to any cadet at the Academy all 
required uniforms and textbooks and allowances for 
transportation (including reimbursement of traveling expenses) 
while traveling under orders as a cadet of the Academy.
  (e) Commitment Agreements.--
          (1) Each individual appointed as a cadet at the 
        Academy after the date occurring 6 months after the 
        effective date of the Maritime Education and Training 
        Act of 1980, who is a citizen of the United States, 
        shall as a condition of appointment to the Academy sign 
        an agreement committing such individual--
                  (A) to complete the course of instruction at 
                the Academy;
                  (B) to fulfill the requirements for a license 
                as an officer in the merchant marine of the 
                United States on or before the date of 
                graduation from the Academy of such individual;
                  (C) to maintain a valid license as an officer 
                in the merchant marine of the United States for 
                at least 6 years following the date of 
                graduation from the Academy of such individual, 
                accompanied by the appropriate national and 
                international endorsements and certification as 
                required by the United States Coast Guard for 
                service aboard vessels on domestic and 
                international voyages;
                  [(D) to apply for an appointment as, to 
                accept if tendered an appointment as, and to 
                serve as a commissioned officer in the United 
                States Naval Reserve (including the Merchant 
                Marine Reserve, United States Naval Reserve), 
                the United States Coast Guard Reserve, or any 
                other Reserve unit of an armed force of the 
                United States, for at least 6 years following 
                the date of graduation from the Academy of such 
                individual;]
                  (D) to apply for an appointment as, to accept 
                if tendered an appointment as, and to serve and 
                perform all required duties and comply with all 
                requirements as, a commissioned officer in 
                Ready Reserve status in the United States Naval 
                Reserve (including the Merchant Marine Reserve 
                and the United States Naval Reserve), any other 
                Reserve component of an armed force of the 
                United States, or any other equivalent, as 
                determined by the Secretary;
                  (E) to serve the foreign and domestic 
                commerce and the national defense of the United 
                States for at least 5 years following the date 
                of graduation from the Academy--
                          (i) as a merchant marine officer 
                        serving on vessels documented under the 
                        laws of the United States or on vessels 
                        owned and operated by the United States 
                        or by any State or territory of the 
                        United States;
                          (ii) 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 
                        clause (i) is not available to such 
                        individual;
                          (iii) 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 other 
                        maritime-related employment with the 
                        Federal Government which serves the 
                        national security interests of the 
                        United States, as determined by the 
                        Secretary; or
                          (iv) by combining the services 
                        specified in clauses (i), (ii), and 
                        (iii); and (F) to report to the 
                        Secretary on the compliance by the 
                        individual to this paragraph.
          (2)(A) If the Secretary determines that any 
        individual who has attended the Academy for not less 
        than 2 years has failed to fulfill the part of the 
        agreement required by paragraph (1)(A), such individual 
        may be ordered by the Secretary of Defense to active 
        duty in one of the armed forces of the United States to 
        serve for a period of time not to exceed 2 years. In 
        cases of hardship as determined by the Secretary, the 
        Secretary may waive this provision in whole or in part.
          (B) If the Secretary of Defense is unable or 
        unwilling to order an individual to active duty under 
        subparagraph (A), 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 may recover from the individual 
        the cost of education provided by the Federal 
        Government.
          (3)(A) If the Secretary determines that an individual 
        has failed to fulfill any part of the agreement 
        required by paragraph (1), as described in paragraph 
        (1)(B), (C), (D), (E), or (F), such individual may be 
        ordered to active duty to serve a period of time not 
        less than 3 years and not more than the unexpired 
        portion, as determined by the Secretary, of the service 
        required by paragraph (1)(E). The Secretary, in 
        consultation with the Secretary of Defense, shall 
        determine in which service the individual shall be 
        ordered to active duty to serve such period of time. In 
        cases of hardship, as determined by the Secretary, the 
        Secretary may waive this provision in whole or in part.
          (B) If the Secretary of Defense is unable or 
        unwilling to order an individual to active duty under 
        subparagraph (A), 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 may recover from the individual 
        the cost of education provided and may reduce the 
        amount to be recovered from such individual to reflect 
        partial performance of service obligations and such 
        other factors as the Secretary determines merit such a 
        reduction.
          (4) To aid in the recovery of the cost of education 
        provided by the Federal Government pursuant to a 
        commitment agreement under this section, the Secretary 
        may request the Attorney General to begin court 
        proceedings, and the Secretary may make use of the 
        Federal debt collection procedures in chapter 176 of 
        title 28, United States Code, or other applicable 
        administrative remedies.
          (5) The Secretary may defer the service commitment of 
        any individual pursuant to subparagraph (E) of 
        paragraph (1) (as specified in the agreement required 
        by such paragraph) for a period of not more than 2 
        years if such individual is engaged in a graduate 
        course of study approved by the Secretary, except that 
        any deferment of service as a commissioned officer 
        pursuant to paragraph (1)(E) must be approved by the 
        Secretary of the military department (including the 
        Secretary of Commerce with respect to the National 
        Oceanic and Atmospheric Administration) which has 
        jurisdiction over such service.
  (6)(A) In order to meet the requirements of paragraph (1)(D), 
a graduate of the Academy shall perform all directed training 
and obey all orders and directions required by the relevant 
Reserve Component and remain qualified in Ready Reserve 
classification for a period of not less than 6 years, as 
required by the regulations of the applicable armed service 
unless such compliance is waived by the Secretary of Defense or 
the Secretary of the Department in which the United States 
Coast Guard is operating.
  (B) Notwithstanding section 552a of title 5, United States 
Code, the Secretary of Defense or the Secretary of the 
Department in which the Coast Guard is operating, and the 
Administrator of the National Oceanic and Atmospheric 
Administration--
          (i) shall report the status of obligated service of 
        an individual graduate upon request of the Maritime 
        Administration; and
          (ii) may, in their discretion, notify the Maritime 
        Administration of the default in performance of an 
        graduate in the performance of 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.
  (C) A report or notice under subparagraph (B) shall identify 
the graduate determined to have been defaulted and provide all 
required information as to why such graduate has been 
defaulted. 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 Maritime Administration, and be 
subject to all remedies the Maritime Administration may have 
with respect to such a default.
  (6) An individual who serves as a commissioned officer on 
active duty in an armed force of the United States or in the 
National Oceanic and Atmospheric Administration for the 5 years 
immediately following graduation from the Academy shall be 
excused from the requirements of subparagraphs (1)(C), (1)(D), 
and (1)(E).
  (7) The Secretary may modify or waive any of the terms and 
conditions set forth in paragraph (1) through the imposition of 
alternative service requirements.
  (f) Places of Training.--The Secretary may provide for the 
training of cadets at the Academy--
          (1) on vessels owned or subsidized by the United 
        States;
          (2) on other vessels documented under the laws of the 
        United States if the owner of any such vessel 
        cooperates in such use; [and]
          (3) in shipyards or plants and with any industrial or 
        educational [organizations.] organizations; and
          (4) on such other vessels as the Secretary determines 
        to be valuable for the education of cadets at the 
        Academy or in the interest of national security.
  (g) Degrees Awarded.--
          (1) Bachelor's degree.--The Superintendent of the 
        Academy may confer the degree of bachelor of science 
        upon any individual who has met the conditions 
        prescribed by the Secretary and who, if a citizen of 
        the United States, has passed the examination for a 
        merchant marine officer's license. No individual may be 
        denied a degree under this subsection because the 
        individual is not permitted to take such examination 
        solely because of physical disqualification.
          (2) Master's degree.--The Superintendent of the 
        Academy may confer a master's degree upon any 
        individual who has met the conditions prescribed by the 
        Secretary. Any master's degree program may be funded 
        through non-appropriated funds. In order to maintain 
        the appropriate academic standards, the program shall 
        be accredited by the appropriate accreditation body. 
        The Secretary may make regulations necessary to 
        administer such a program.
  (h) Board of Visitors.--
          (1) A Board of Visitors to the Academy shall be 
        established, for a term of two years commencing at the 
        beginning of each Congress, to visit the Academy 
        annually on a date determined by the Secretary and to 
        make recommendations on the operation of the Academy.
          (2) The Board shall be composed of--
                  (A) 2 Senators appointed by the chairman of 
                the Commerce, Science, and Transportation 
                Committee of the Senate;
                  (B) 3 Members of the House of Representatives 
                appointed by the chairman of the Merchant 
                Marine and Fisheries Committee of the House of 
                Representatives;
                  (C) 1 Senator appointed by the Vice 
                President;
                  (D) 2 Members of the House of Representatives 
                appointed by the Speaker of the House of 
                Representatives; and
                  (E) the chairman of the Commerce, Science, 
                and Transportation Committee of the Senate and 
                the chairman of the Merchant Marine and 
                Fisheries Committee of the House of 
                Representatives, as ex officio members.
          (3) Whenever a member of the Board is unable to 
        attend the annual meeting provided in paragraph (1), 
        another individual may be appointed in the manner 
        provided by paragraph (2) as a substitute for such 
        member.
          (4) The chairmen of the Commerce, Science, and 
        Transportation Committee of the Senate and the Merchant 
        Marine and Fisheries Committee of the House of 
        Representatives may designate staff members of such 
        committees to serve without reimbursement as staff for 
        the Board.
          (5) While away from their homes or regular places of 
        business in the performance of services for the Board, 
        members of the Board and any staff members designated 
        under paragraph (4) shall be allowed travel expenses, 
        including per diem in lieu of subsistence, in the same 
        manner as persons employed intermittently in the 
        Government service are allowed expenses under section 
        5703 of title 5, United States Code.
  (i) Advisory Board.--
          (1) An Advisory Board to the Academy shall be 
        established to visit the Academy at least once during 
        each academic year, for the purpose of examining the 
        course of instruction and management of the Academy and 
        advising the Maritime Administrator and the 
        Superintendent of the Academy.
          (2) The Advisory Board shall be composed of not more 
        than 7 persons of distinction in education and other 
        fields relating to the Academy who shall be appointed 
        by the Secretary for terms not to exceed 3 years and 
        may be reappointed.
          (3) The Secretary shall appoint a chairman from among 
        the members of the Advisory Board.
          (4) While away from their homes or regular places of 
        business in the performance of service for the Advisory 
        Board, members of the Advisory Board shall be allowed 
        travel expenses, including per diem in lieu of 
        subsistence, in the same manner as persons employed 
        intermittently in the Government service are allowed 
        expenses under section 5703 of title 5, United States 
        Code.
          (5) The Federal Advisory Committee Act (5 U.S.C. App. 
        1 et seq.) shall not apply to the Advisory Board 
        established pursuant to this subsection.
  (j) Limitation on Charges and Fees for Attendance.--
          (1) Except as provided in paragraph (2), no charge or 
        fee for tuition, room, or board for attendance at the 
        Academy may be imposed unless the charge or fee is 
        specifically authorized by a law enacted after October 
        5, 1994.
          (2) The prohibition specified in paragraph (1) does 
        not apply with respect to any item or service provided 
        to cadets for which a charge or fee is imposed as of 
        October 5, 1994. The Secretary of Transportation shall 
        notify Congress of any change made by the Academy in 
        the amount of a charge or fee authorized under this 
        paragraph.

Title XIII--Maritime Education and Training

           *       *       *       *       *       *       *

SEC. 1304. STATE MARITIME ACADEMIES.

                         [46 U.S.C. App. 1295c]

  (a) Cooperation and Assistance.--The Secretary shall 
cooperate with and assist any State maritime academy in 
providing instruction to individuals to prepare them for 
service in the merchant marine of the United States.
  (b) Regional Maritime Academies.--The Governors of all States 
or territories of the United States, or both, cooperating to 
sponsor a regional maritime academy shall designate in writing 
one State or territory of the United States, from among the 
sponsoring States or territories, or both, to conduct the 
affairs of such regional maritime academy. Any regional 
maritime academy shall be eligible for assistance from the 
Federal Government on the same basis as any State maritime 
academy sponsored by a single State or territory of the United 
States.
  (c) Training Vessels.--
          (1)(A) The Secretary may furnish for training 
        purposes any suitable vessel under the control of the 
        Secretary or provided under subparagraph (B), or 
        construct and furnish a suitable vessel if such a 
        vessel is not available, to any State maritime academy 
        meeting the requirements of subsection (f)(1). Any such 
        vessel--
                  (i) shall be repaired, reconditioned, and 
                equipped (including supplying all apparel, 
                charts, books, and instruments of navigation) 
                as necessary for use as a training ship;
                  (ii) shall be furnished to such State 
                maritime academy only after application for 
                such vessel is made in writing by the Governor 
                of the State or territory sponsoring such State 
                maritime academy or, with respect to a regional 
                maritime academy the Governor of the State or 
                territory designated pursuant to subsection 
                (b);
                  (iii) shall be furnished to such State 
                maritime academy only if a suitable port for 
                the safe mooring of such vessel is available 
                while it is being used by such academy;
                  (iv) shall be maintained in good repair by 
                the Secretary; and
                  (v) shall remain the property of the United 
                States.
          (B) Any department or agency of the United States may 
        provide to the Secretary to be furnished to any State 
        maritime academy any vessel (including equipment) which 
        is suitable for the purposes of this paragraph and 
        which can be provided without detriment to the service 
        to which such vessel is assigned.
          (2) [The Secretary may pay to any State maritime 
        academy] (A) The Secretary shall, subject to the 
        availability of appropriations, pay to each State 
        maritime academy the amount of the costs of all fuel 
        consumed by any vessel furnished under paragraph (1) 
        while such vessel is being used for training purposes 
        by such academy.
          (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.
          (3)(A) The Secretary may provide for the training of 
        individuals attending a State maritime academy--
                  (i) on vessels owned or subsidized by the 
                United States;
                  (ii) on other vessels documented under the 
                laws of the United States if the owner of any 
                such vessel cooperates in such use; and
                  (iii) in shipyards or plants and with any 
                industrial or educational organizations.
          (B) While traveling under orders for purposes of 
        receiving training under this paragraph, any individual 
        who is attending a State maritime academy shall receive 
        from the Secretary allowances for transportation 
        (including reimbursement of traveling expenses) in 
        accordance with any regulations promulgated by the 
        Secretary.
  (d) Annual Payments.--
          (1)(A) The Secretary may enter into an agreement, 
        which shall be effective for not more than 4 years, 
        with one State maritime academy (not including regional 
        maritime academies) located in each State or territory 
        of the United States which meets the requirements of 
        subsection (f)(1), and with each regional maritime 
        academy which meets the requirements of subsection 
        (f)(1), to make annual payments to each such academy 
        for the maintenance and support of such academy.
          (B) Subject to subparagraph (C), the annual payment 
        to such State maritime academy shall be at least equal 
        to the amount given to the academy for its maintenance 
        and support by the State in which it is located, and to 
        such regional maritime academy shall be at least equal 
        to the amount given the academy by all States and 
        territories cooperating to sponsor the academy.
          (C) The amount under subparagraph (B) may not be more 
        than $25,000, except that the amount shall be--
                  (i) $100,000 to such State maritime academy 
                if the academy meets the condition set forth in 
                subsection (f)(2); or
                  (ii) [$200,000] subject to the availability 
                of appropriations, $300,000 for fiscal year 
                2006, $400,000 for fiscal year 2007, and 
                $500,000 for fiscal year 2008 and each fiscal 
                year thereafter to such regional maritime 
                academy if the academy meets the condition set 
                forth in subsection (f)(2).
          (2) The Secretary shall provide to each State 
        maritime academy guidance and assistance in developing 
        courses on the operation and maintenance of new 
        vessels, on equipment, and on innovations being 
        introduced to the merchant marine of the United States.
  (e) Detailing of Personnel.--Upon the request of the Governor 
of any State or territory, the President may detail, without 
reimbursement, any of the personnel of the United States Navy, 
the United States Coast Guard, or the United States Maritime 
Service to any State maritime academy to serve as 
superintendents, professors, lecturers, or instructors at such 
academy.
  (f) Conditions To Receiving Payments or Use of Vessels.--
          (1) As a condition to receiving any payment or the 
        use of any vessel under this section, any State 
        maritime academy shall--
                  (A) provide courses of instruction on 
                navigation, marine engineering (including steam 
                and diesel propulsion), the operation and 
                maintenance of new vessels and equipment, and 
                innovations being introduced to the merchant 
                marine of the United States;
                  (B) agree in writing to conform to such 
                standards for courses, training facilities, 
                admissions, and instruction as are established 
                by the Secretary after consultation with the 
                superintendents of the State maritime 
                academies; and
                  (C) agree in writing to require, as a 
                condition for graduation, that each individual 
                who is a citizen of the United States and who 
                is attending the academy in a merchant marine 
                officer preparation program shall pass the 
                examination administered by the Coast Guard 
                required for issuance of a license under 
                section 7101 of title 46, United States Code.
          (2) As a condition to receiving an annual payment of 
        any amount in excess of $25,000 under subsection (d), a 
        State maritime academy shall agree to admit to such 
        academy each year a number of individuals who meet the 
        admission requirements of such academy and who are 
        citizens of the United States residing in States and 
        territories of the United States other than the States 
        or territories, or both, supporting such academy. The 
        Secretary shall determine the number of individuals 
        under this paragraph for each State maritime academy so 
        that such number does not exceed one-third of the total 
        number of individuals attending such academy at any 
        time.
  (g) Student Incentive Payment Agreements.--
          (1) The Secretary may enter into an agreement, which 
        shall be effective for not more than 4 academic years, 
        with any individual, who is a citizen of the United 
        States and is attending a State maritime academy which 
        entered into an agreement with the Secretary under 
        subsection (d)(1), to make student incentive payments 
        to such individual, which payments shall be in amounts 
        equaling $4,000 for each academic year and which 
        payments shall be--
                  (A) allocated among the various State 
                maritime academies in a fair and equitable 
                manner;
                  (B) used to assist the individual in paying 
                the cost of uniforms, books, and subsistence; 
                and
                  (C) paid by the Secretary as the Secretary 
                shall prescribe while the individual is 
                attending the academy.
          (2) Each agreement entered into under paragraph (1) 
        shall require the individual to accept midshipman and 
        enlisted reserve status in the United States Naval 
        Reserve (including the Merchant Marine Reserve, United 
        States Naval Reserve) before receiving any student 
        incentive payments under this subsection.
          (3) Each agreement entered into under paragraph (1) 
        shall obligate the individual receiving student 
        incentive payments under the agreement--
                  (A) to complete the course of instruction at 
                the State maritime academy which the individual 
                is attending;
                  (B) to take the examination for a license as 
                an officer in the merchant marine of the United 
                States on or before the date of graduation from 
                such State maritime academy of such individual 
                and to fulfill the requirements for such 
                license not later than 3 months after such 
                graduation date;
                  (C) to maintain a valid license as an officer 
                in the merchant marine of the United States for 
                at least 6 years following the date of 
                graduation from such State maritime academy of 
                such individual, accompanied by the appropriate 
                national and international endorsements and 
                certification as required by the United States 
                Coast Guard for service aboard vessels on 
                domestic and international voyages;
                  (D) to accept if tendered an appointment as, 
                and to serve as a commissioned officer in the 
                United States Naval Reserve (including the 
                Merchant Marine Reserve, United States Naval 
                Reserve), the United States Coast Guard 
                Reserve, or any other reserve unit of an armed 
                force of the United States, for at least 6 
                years following the date of graduation from 
                such State maritime academy of such individual;
                  (E) to serve the foreign and domestic 
                commerce and the national defense of the United 
                States for at least 3 years following the date 
                of graduation from the Academy--
                          (i) as a merchant marine officer 
                        serving on vessels documented under the 
                        laws of the United States or on vessels 
                        owned and operated by the United States 
                        or by any State or territory of the 
                        United States;
                          (ii) 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 
                        clause (i) is not available to such 
                        individual;
                          (iii) 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 employment with the 
                        Federal Government which serves the 
                        national security interests of the 
                        United States, as determined by the 
                        Secretary; or
                          (iv) by combining the services 
                        specified in clauses (i), (ii), and 
                        (iii); and
                  (F) to report to the Secretary on the 
                compliance by the individual to this paragraph.
          (4)(A) If the Secretary determines that an individual 
        who has accepted the payment described in paragraph (1) 
        for a minimum of 2 academic years has failed to fulfill 
        the part of the agreement required by paragraph (1) and 
        described in paragraph (3)(A), such individual may be 
        ordered by the Secretary of Defense to active duty in 
        the Armed Forces of the United States to serve for a 
        period of time not to exceed 2 years. In cases of 
        hardship, as determined by the Secretary, the Secretary 
        may waive this provision in whole or in part.
          (B) If the Secretary of Defense is unable or 
        unwilling to order an individual to active duty under 
        subparagraph (A), 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--
                  (i) subject to clause (ii), may recover from 
                the individual the amount of student incentive 
                payments, plus interest and attorneys fees; and
                          (ii) may reduce the amount to be 
                        recovered from such individual to 
                        reflect partial performance of service 
                        obligations and such other factors as 
                        the Secretary determines merit such 
                        reduction.
          (5)(A) If the Secretary determines that an individual 
        has failed to fulfill any part of the agreement 
        required by paragraph (1), as described in paragraph 
        (3)(B), (C), (D), (E), or (F), such individual may be 
        ordered to active duty to serve a period of time not 
        less than 2 years and not more than the unexpired 
        portion, as determined by the Secretary, of the service 
        required by paragraph (3)(E). The Secretary, in 
        consultation with the Secretary of Defense, shall 
        determine in which service the individual shall be 
        ordered to active duty to serve such period of time. In 
        cases of hardship, as determined by the Secretary, the 
        Secretary may waive this provision in whole or in part.
          (B) If the Secretary of Defense is unable or 
        unwilling to order an individual to active duty under 
        subparagraph (A), 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--
                  (i) subject to clause (ii), may recover from 
                the individual the amount of student incentive 
                payments, plus interest and attorneys fees; and
                          (ii) may reduce the amount to be 
                        recovered from such individual to 
                        reflect partial performance of service 
                        obligations and such other factors as 
                        the Secretary determines merit such 
                        reduction.
          (6) To aid in the recovery of student incentive 
        payments plus interest and attorneys fees the Secretary 
        may request the Attorney General to begin court 
        proceedings, and the Secretary may make use of the 
        Federal debt collection procedures in chapter 176 of 
        title 28, United States Code, and other applicable 
        administrative remedies.
          (7) The Secretary may defer the service commitment of 
        any individual pursuant to subparagraph (E) of 
        paragraph (3) (as specified in the agreement required 
        by such paragraph) for a period of not more than 2 
        years if such individual is engaged in a graduate 
        course of study approved by the Secretary, except that 
        any deferment of service as a commissioned officer 
        pursuant to subparagraph (E) of such paragraph must be 
        approved by the Secretary of the military department 
        (including the Secretary of Commerce with respect to 
        the National Oceanic and Atmospheric Administration) 
        which has jurisdiction over such service.
          (8) This subsection shall apply only to individuals 
        first entering a State maritime academy after the date 
        occurring 6 months after the effective date of the 
        Maritime Education and Training Act of 1980.
  (h) Appointment of Cadet as Midshipman in United States Naval 
Reserve.--Any citizen of the United States attending a State 
maritime academy may be appointed by the Secretary of the Navy 
as a midshipman in the United States Naval Reserve (including 
the Merchant Marine Reserve, United States Naval Reserve).

                 PUBLIC LAW 97-31; ACT OF JUNE 2, 1951

[SEC. 801. VESSEL OPERATIONS REVOLVING FUND; ESTABLISHMENT; USES; 
                    LIMITATIONS.

                         [46 U.S.C. App. 1241a]

  [For working capital for the ``Vessel Operations Revolving 
Fund'', which is hereby created for the purpose of carrying out 
vessel operating functions of the Secretary of Transportation, 
including charter, operation, maintenance, repair, 
reconditioning, and betterment of merchant vessels under the 
jurisdiction of the Secretary of Transportation, $20,000,000, 
to remain available until expended.
  [Notwithstanding any other provision of law, rates for 
shipping services rendered under said Fund shall be prescribed 
by the Secretary of Transportation and the Fund shall be 
credited with all receipts from vessel operating activities 
conducted thereunder: Provided, That the provisions of sections 
1(a), 1(c), 3(c) and 4 of Public Law 17, Seventy-eighth 
Congress (57 Stat. 45), as amended, shall be applicable in 
connection with such operations and to seamen employed through 
general agents as employees of the United States, who may be 
employed in accordance with customary commercial practices in 
the maritime industry, notwithstanding the provisions of any 
law applicable in terms to the employment of persons by the 
United States: Provided further, That such sums as may be 
determined to be necessary by the Secretary of Transportation, 
with the approval of the Bureau of the Budget, but not 
exceeding 2 per centum of vessel operating expenses, may be 
advanced from this Fund to the appropriation ``Salaries and 
expenses'' for the purposes of that appropriation in connection 
with vessel operating functions, but without regard to the 
limitations on amounts as stated therein: Provided further, 
That notwithstanding any other provisions of law, the 
unexpended balances of any working funds or of allocation 
accounts established, subsequent to January 1, 1951, for the 
activities provided for under this appropriation, together with 
receipts heretofore and hereafter received from such 
activities, may be transferred to and consolidated with this 
Fund, which shall be available for the purposes of such working 
funds or allocation accounts.
  [No money made available to the Department of Transportation, 
for Maritime Activities, by this or any other Act shall be used 
in payment for a vessel the title to which is acquired by the 
Government either by requisition or purchase, or the use of 
which is taken either by requisition or agreement, or which is 
insured by the Government and lost while so insured, unless the 
price or hire to be paid therefor, (except in cases where 
section 802 of the Merchant Marine Act, 1936, as amended, is 
applicable) is computed in accordance with subsection 902(a) of 
said Act, as that subsection is interpreted by the General 
Accounting Office.]

SEC. 801. VESSEL OPERATIONS REVOLVING FUND.

  (a) In General.--There is established in the Treasury, for 
the purposes set forth in subsection (b), a Vessel Operations 
Revolving Fund which shall be available without appropriation 
to the Secretary of Transportation. All amounts in the Fund 
shall be available for the purposes of the Fund, 
notwithstanding any other provision of law, and shall remain 
available until expended.
  (b) Uses.--Amounts in the Fund shall be available for--
          (1) all expenses and charges relating to the 
        maintenance, repair, and operation of vessels under the 
        jurisdiction of the Secretary;
          (2) all expenses and charges relating to the 
        maintenance, repair, and operation of the facilities 
        necessary to preserve and maintain such vessels;
          (3) payment of all costs of, and indirect costs that 
        are reasonably related to, contracting, procurement, 
        inspection, storage, management, distribution, and 
        accountability of vessels under the jurisdiction of the 
        Secretary and such property, facilities, and 
        nonpersonal services as the Secretary deems necessary 
        for the operation and maintenance of such vessels;
          (4) expenses incurred in activating, repairing, and 
        deactivating vessels under the jurisdiction of the 
        Secretary;
          (5) the acquisition of such vessels for the National 
        Defense Reserve Fleet as both the Secretary and the 
        Secretary of Navy deem necessary;
          (6) necessary expenses incurred in the protection, 
        preservation, maintenance, acquisition, or use of 
        vessels of the National Defense Reserve Fleet involved 
        in mortgage foreclosure or forfeiture proceedings 
        instituted by the United States Government, including 
        payment of prior claims and liens, expenses of sale, 
        and other related charges; and
          (7) costs and expenses incurred to repair damages to 
        Government property under the jurisdiction or control 
        of the Secretary that is used in connection with the 
        National Defense Reserve Fleet.
  (c) Credits to the Fund.--
          (1) In general.--Notwithstanding any other provision 
        of law, there shall be credited to and retained by the 
        Fund--
                  (A) all amounts received in connection with 
                vessel operations for vessels under the 
                jurisdiction of the Secretary; except that 
                there shall be no surcharge on charter hire or 
                similar collection in connection with vessel 
                operations for the purpose of the reserve 
                described in subsection (c)(2); and
                  (B) any reimbursements, advances, setoffs, 
                refunds, or recoveries arising out of or 
                relating to the operation and maintenance of 
                vessels of the National Defense Reserve Fleet 
                under the jurisdiction of the Secretary, 
                including any recoveries from litigation, 
                arbitration, or otherwise.
          (2) Reserve.--There shall be established and retained 
        in the Fund from litigation and arbitration recoveries 
        a reserve, not to exceed $30,000,000 at any one time, 
        for use as a reserve for unscheduled repairs and other 
        necessary expenses in connection with casualties to 
        vessels in the National Reserve Fleet.
  (d) Laws Relating to Seamen.--Subject to the provisions of 
sections 1(a) and (c), 3(c), and 4 of the Act of March 24, 1943 
(50 U.S.C. App. 1291(a) and (c), 1293(c), 1294), seamen 
employed on vessels in the custody of the Secretary and 
operated through the Secretary's ship managers or general 
agents may be so employed by such ship managers or agents in 
accordance with customary commercial practices in the maritime 
industry without regard to any of the laws on employment of 
persons by the United States.
  (e) Advancements.--With the approval of the Director of the 
Office of Management and Budget, the Secretary may advance 
amounts the Secretary considers necessary from the Fund to the 
Maritime Administration Operations and Training appropriation 
account for purposes of carrying out duties and powers related 
to the maintenance, repair, and operation of vessels under the 
jurisdiction of the Secretary, without regard to the 
limitations on amounts stated in the Operations and Training 
appropriation.
  (f) Limitations.--
          (1) In general.--Amounts made available to the 
        Secretary for purposes of this section or any other law 
        may not be used to pay for a vessel described in 
        paragraph (2) unless the compensation to be paid is 
        computed under section 56303 of title 46, United States 
        Code, as that section is interpreted by the Comptroller 
        General.
          (2) Applicable vessels.--Paragraph (1) applies to a 
        vessel--
                  (A) the title to which is acquired by the 
                Government by requisition or purchase;
                  (B) the use of which is taken by requisition 
                or agreement; or
                  (C) that is lost while insured by the 
                Government.
          (3) Nonapplicable vessels.--Paragraph (1) does not 
        apply to a vessel under a construction-differential 
        subsidy contract.

                     MARITIME SECURITY ACT OF 2003

[SEC. 3528. REVIEW OF PROGRAM.

                       [46 U.S.C. App. 1271 note]

  [(a) In General.--The Secretary of Transportation shall 
conduct a comprehensive assessment of the human capital and 
other resource needs in connection with the Title XI loan 
guarantee program under the Merchant Marine Act, 1936 (46 
U.S.C. App. 1271 et seq.). In connection with this assessment, 
the Secretary shall develop an organizational framework for the 
program offices that insures that a clear separation of duties 
is established among the loan application, project monitoring, 
and default management functions.]
  [(b) Program Enhancements.--]

 [AMENDMENTS EXECUTED UPON ENACTMENT OF MARITIME SECURITY ACT OF 2003]

  [(c) Report.The Secretary shall report to the Committee on 
Armed Services and the Committee on Commerce, Science, and 
Transportation of the Senate and the Committee on Armed 
Services of the House of Representatives on the results of the 
development of an organizational framework under subsection (a) 
by January 2, 2004.]

                   OCEAN SHIPPING REFORM ACT OF 1998

SEC. 401. CERTAIN LOAN GUARANTEES AND COMMITMENTS.

                         [46 U.S.C. App. 1273a]

  (a) The [Secretary of Transportation] Administrator of the 
Maritime Administration may not issue a guarantee or commitment 
to guarantee a loan for the construction, reconstruction, or 
reconditioning of a liner vessel under the authority of title 
XI of the Merchant Marine Act, 1936 (46 U.S.C. App. 1271 et 
seq.) after the date of enactment of this Act unless the 
Chairman of the Federal Maritime Commission certifies that the 
operator of such vessel--
          (1) has not been found by the Commission to have 
        violated section 19 of the Merchant Marine Act, 1920 
        (46 U.S.C. App. 876), or the Foreign Shipping Practices 
        Act of 1988 (46 U.S.C. App. 1701a), within the previous 
        5 years; and
          (2) has not been found by the Commission to have 
        committed a violation of the Shipping Act of 1984 (46 
        U.S.C. App. 1701 et seq.), which 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 within the 
        previous 5 years.
  (b) The Secretary of Commerce may not issue a guarantee or a 
commitment to guarantee a loan for the construction, 
reconstruction, or reconditioning of a fishing vessel under the 
authority of Title XI of the Merchant Marine Act, 1936 (46 
U.S.C. App. 1271 et seq.) if the fishing vessel operator has 
been--
          (1) held liable or liable in rem for a civil penalty 
        pursuant to section 308 of the Magnuson-Stevens Fishery 
        Conservation and Management Act (16 U.S.C. 1858) and 
        not paid the penalty;
          (2) found guilty of an offense pursuant to 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 
        pursuant to 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 pursuant to title 33 or 46, United States Code, 
        and not paid the assessed fine.

                           PUBLIC LAW 85-469

SEC. 101. ADVANCES TO FUND.

                         [46 U.S.C. App. 1280]

  The Secretary or the Administrator of the Maritime 
Administration is authorized to advance to this account from 
the ``Vessel operations revolving fund'' (46 U. S. C. 1241a), 
such amounts as may be required for the payment, pursuant to 
section 1105 of the Merchant Marine Act, 1936, as amended (46 
U. S. C. 1275), of unpaid principal amounts of defaulted 
mortgages and loans and of unpaid interest thereon: Provided, 
That such advances shall be repaid to the ``Vessel operations 
revolving fund'' as soon as practicable consistent with the 
status of this account: Provided further, That the total 
advances outstanding at any one time shall not exceed 
$10,000,000.

                     MARITIME SECURITY ACT OF 2003

SEC. 3527. ANNUAL REPORT ON PROGRAM.

                         [46 U.S.C. App. 1280b]

  The [Secretary of Transportation] Administrator of the 
Maritime Administration shall report to Congress annually on 
the loan guarantee program under title XI of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1271 et seq.). The reports 
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.

              MARITIME EDUCATION AND TRAINING ACT OF 1980

SEC. 1306. UNITED STATES MARITIME SERVICE.

                         [46 U.S.C. App. 1295e]

  (a) Establishment and Maintenance.--The Secretary may 
establish and maintain a voluntary organization for the 
training of citizens of the United States to serve on merchant 
marine vessels of the United States and to perform functions to 
assist the United States merchant marine, as determined 
necessary by the Secretary, to be known as the United States 
Maritime Service.
  (b) Enrollment; Compensation; Course of Study and Periods of 
Training; Uniforms.--The Secretary may determine the number of 
individuals to be enrolled for training and reserve purposes in 
such service, to fix the rates of pay and allowances of such 
individuals without regard to the provisions of chapter 51 and 
subchapter III of chapter 53 of title 5, United States Code 
(relating to classification and General Schedule pay rates), to 
prescribe the course of study and the periods of training in 
such service, and to prescribe the uniform of such service and 
the rules governing the wearing and furnishing of such uniform.
  (c) Ranks, Grades, and Ratings Same as for United States 
Coast Guard.--The ranks, grades, and ratings for personnel of 
the United States Maritime Service shall be the same as are 
then prescribed for the personnel of the United States Coast 
Guard.
  (d) Awards and Medals.--The Secretary may establish and 
maintain a medals and awards program to recognize distinguished 
service, superior achievement, professional performance, and 
other commendable achievement by personnel of the United States 
Maritime Service.

           *       *       *       *       *       *       *

SEC. 1309. OPERATION OF THE GLOBAL MARITIME AND TRANSPORTATION SCHOOL.

  (a) Operation as Nonappropriated Fund Instrumentality.--After 
the date of enactment of the Maritime Administration 
Enhancement Act of 2005, the Global Maritime and Transportation 
School shall continue to operate as a nonappropriated fund 
instrumentality of the United States under the jurisdiction of 
the Department of Transportation, Maritime Administration.
  (b) Activities.--
          (1) In general.--Under the general supervision of the 
        Department of Transportation, Maritime Administration, 
        GMATS shall develop, administer, and provide 
        educational, training, and professional development 
        activities, including educational activities, for 
        Federal agencies, Federal employees, nonprofit 
        organizations, other entities, and members of the 
        general public, as well as carry out such other 
        projects and activities that may be authorized by the 
        Superintendent.
          (2) Training services.--The training services and 
        educational activities provided by GMATS shall be 
        available to the Armed Forces of the United States and 
        Commissioned Officers of the National Oceanic and 
        Atmospheric Administration, Federal and State agencies, 
        Federal and State employees, nonprofit organizations, 
        private companies or organizations, and private 
        individuals of the United States or foreign countries 
        friendly to the United States.
          (3) Federal requests for services.--Requests for 
        training or other services from the Armed Forces of the 
        United States or other agencies of the United States 
        may be made pursuant to the provisions of section 1535 
        of title 31, United States Code.
  (c) Fees and Donations.--
          (1) Collection of fees.--GMATS may charge and retain 
        fair and reasonable fees for the activities provided.
          (2) Acceptance and making of donations.--
                  (A) GMATS may accept, use, hold, dispose, and 
                administer gifts, bequests, and devises of 
                money, securities, and other real or personal 
                property made for the benefit of, or in 
                connection with GMATS.
                  (B) GMATS shall not accept a donation from a 
                person that is actively engaged in a 
                procurement activity with GMATS or has an 
                interest that may be substantially affected by 
                the performance or nonperformance of an 
                official duty of a member of the Board or an 
                employee of GMATS.
                  (C) GMATS is authorized to make gifts to the 
                Department of Transportation and the Secretary 
                is authorized to accept gifts from GMATS for 
                any purpose.
          (3) Not federal funds.--Fees collected under 
        paragraph (1) and amounts received under paragraph (2) 
        shall not be considered to be Federal funds and shall 
        not be required to be deposited in the Treasury of the 
        United States. GMATS shall not be funded by 
        appropriated funds.
  (d) Use of USMMA Faculty and Staff.--
          (1) Payment.--GMATS may provide payment to United 
        States Merchant Marine Academy faculty and staff for 
        teaching and other services for GMATS, but only to the 
        extent that the provision of such teaching or services 
        does not interfere or conflict with the official duties 
        of the faculty and staff and are approved by the 
        Superintendent.
          (2) Contracting authority.--The Academy may enter 
        into contracts with GMATS to provide faculty and staff 
        of the Academy for teaching and other services and, to 
        the extent of the actual costs incurred by the Academy 
        under said contracts, credit such funds received under 
        such contracts to the Academy's appropriations, 
        notwithstanding those provisions of law relating to the 
        deposit of miscellaneous receipts into the Treasury.
  (e) General Administration.--
          (1) Authority of superintendent.--The Superintendent 
        is responsible for the overall supervision and 
        administration of GMATS and the determination of its 
        policies. In implementing this responsibility, the 
        Superintendent shall appoint members to the Board and 
        shall designate one member as the Senior Managing 
        Director and may designate other Managing Directors as 
        necessary.
          (2) Authority of the board.--The Superintendent may 
        delegate to the Board the Superintendent's 
        responsibility to advise and oversee the supervision 
        and administration of GMATS. The Board may consist of 
        both United States Merchant Marine Academy employees 
        and non-Academy employees, as determined by the 
        Superintendent. The Board shall be subject to 
        regulation by the Secretary and shall report to the 
        Superintendent.
          (3) Authority of the senior managing director.--The 
        Superintendent may delegate to the Senior Managing 
        Director of GMATS the authority to manage, administer, 
        and operate GMATS.
          (4) Duties of the managing directors.--The Senior 
        Managing Director shall be responsible, subject to the 
        supervision and direction of the Board and the 
        Superintendent, for carrying out the functions of 
        GMATS. All other Managing Directors shall be 
        responsible, subject to the supervision and direction 
        of the Senior Managing Director, for carrying out the 
        functions of GMATS.
          (5) Borrowing and investment authority.--The Board, 
        with the approval of the Superintendent, may authorize 
        the Senior Managing Director--
                  (A) to borrow money on the credit of GMATS; 
                and
                  (B) to invest funds held in excess of the 
                current operating requirements of GMATS for 
                purposes of maintaining a reasonable reserve.
          (6) Liability.--The Managing Directors and the other 
        members of the Board shall not be held personally 
        liable for any loss or damage that may accrue to GMATS 
        as the result of any act performed within the scope of 
        their duties under this section.
  (f) Employees.--Employees of GMATS are employees of a 
nonappropriated fund instrumentality of the United States.
  (g) Not a Federal Agency.--The GMATS shall not be considered 
a Federal agency for purposes of--
          (1) the Federal Advisory Committee Act (5 U.S.C.  ); 
        or
          (2) sections 552 and 552a of title 5, United States 
        Code.
  (h) Acquisition and Disposal of Property.--In order to carry 
out the activities of GMATS, GMATS may--
          (1) acquire goods, services, and real property by 
        lease, purchase. or otherwise;
          (2) maintain, enlarge, or remodel any such property;
          (3) have sole control of any such personal or real 
        property; and
          (4) dispose of real and personal property without 
        regard to the Federal Property and Administrative 
        Services Act of 1949 (40 U.S.C. 101 et seq.).
  (i) Contract Authority.--GMATS may enter into contracts and 
leases without regard to the Federal Property and 
Administrative Services Act of 1949 (40 U.S.C. 101 et seq.) or 
any other law that prescribes procedures for the procurement of 
property or service by an executive agency.
  (j) Use of Department Facilities and Resources.--GMATS may 
use the facilities and resources of the Department of 
Transportation, with the approval of the Superintendent, but 
only if any costs incurred by the Department that are 
attributable solely to GMATS operations and all costs incurred 
by GMATS arising out of such operations are paid using funds of 
GMATS or the Department of Transportation receives other 
consideration for paying for such costs. Any reimbursement may 
be retained by the United States Merchant Marine Academy and 
credited to the charged appropriations account.
  (k) Audits of Records.--The financial records of GMATS shall 
be made available to the Department of Transportation Inspector 
General, upon request, for purposes of conducting an audit.
  (l) Definitions.--In this section:
          (1) GMATS.--The term ``GMATS'' means the Global 
        Maritime and Transportation School at the United States 
        Merchant Marine Academy, a nonappropriated fund 
        instrumentality of the Maritime Administration of the 
        United States Department of Transportation.
          (2) Board.--The term ``Board'' means the GMATS Board 
        of Directors.
          (3) Director.--The term ``Director'' means a member 
        of the GMATS Board.
          (4) Managing director.--The term ``Managing 
        Director'' means a member of the Board who is an 
        employee of GMATS with operational responsibility for 
        the organization, but not a Federal employee.
          (5) Senior managing director.--The term ``Senior 
        Managing Director'' means the Managing Director 
        designated the ``Senior Managing Director'' by the 
        Superintendent, as set forth in subsection (e) of this 
        section.
          (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Transportation.
          (7) Superintendent.--The term ``Superintendent'' 
        means the Superintendent of the United States Merchant 
        Marine Academy at Kings Point, New York, operated by 
        the Maritime Administration, United States Department 
        of Transportation or, in the absence of the 
        Superintendent, the Superintendent's authorized 
        designee or such other person as the Secretary may 
        designate.

               MERCHANT MARINE DECORATIONS AND MEDALS ACT

SEC. 5. INDIVIDUAL NOT TO RECEIVE MORE THAN ONE OF ANY TYPE OF 
                    DECORATION; ACCEPTANCE BY PERSONAL REPRESENTATIVE; 
                    REPLACEMENTS.

                         [46 U.S.C. App. 2004]

  (a) The Secretary of Transportation may not award more than 
one of any type of decoration or medal to an individual. For 
each succeeding act or service justifying the same decoration 
or medal, a suitable device may be awarded to be worn with the 
decoration or medal.
  (b) When an individual scheduled to receive a decoration or 
medal under this Act is unable to accept it, the Secretary may 
make the award to an appropriate personal representative.
  (c) The Secretary may [provide at cost, or authorize for the 
manufacture and sale at reasonable prices by private persons--] 
provide--
          (1) the decorations and medals authorized under 
        section 2 of this Act and replacements for those 
        decorations and medals; and
          (2) replacements for decorations and medals issued 
        under a prior law.
  (d) Decorations and medals authorized under section 2 of this 
Act may be of similar design as are authorized for members of 
the Armed Forces of the United States for similar acts or 
service.

           *       *       *       *       *       *       *

SEC. 8. EXCLUSIVENESS OF RIGHT TO DECORATION OR MEDAL; CIVIL PENALTY 
                    FOR VIOLATION.

                         [46 U.S.C. App. 2007]

  Except as authorized by this Act or by the Secretary of 
Transportation, a person may not manufacture, sell, possess, or 
display a decoration or medal provided for in this Act. A 
person violating this section is liable to the United States 
Government for a civil penalty of $2,000.

                                  
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