I

103D CONGRESS

2D SESSION H. R. 3769

To promote the construction in the United States of modern, efficient documented vessels suitable for commercial and national defense purposes,

to strengthen the defense industrial base, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 2, 1994

Ms. SCHENK (for herself, Mr. ANDREWS of Maine, Mr. DELLUMS, Mr.

FILNER, Mr. HOCHBRUECKNER, Mr. HUNTER, Mr. LIPINSKI, Mr.

STUDDS, Mr. TAYLOR of Mississippi, and Mr. TRAFICANT) introduced the

following bill; which was referred to the Committee on Merchant Marine

and Fisheries

A BILL

To promote the construction in the United States of modern,

efficient documented vessels suitable for commercial and

national defense purposes, to strengthen the defense industrial base, and for other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Merchant Marine Revi5 talization Act of 1994’’.

6 SEC. 2. FINDINGS, PURPOSES, AND POLICY.

7 (a) FINDINGS.—Congress finds the following:
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1 (1) The United States-flag merchant fleet,

2 which is the primary means of transporting vital

3 military and critical raw material cargo in the event

4 of national emergencies, the United States shipyard

5 industry, which designs and constructs all Navy ves6 sels and is a mobilization base in the event of na7 tional emergency, and domestic producers of marine

8 equipment, which are essential to the construction of

9 commercial and naval vessels, serve essential na10 tional security functions.

11 (2) The United States shipbuilding industry is

12 encumbered in the international ship construction

13 market by significant subsidies and anticompetitive

14 practices that impede the ability of United States

15 firms to compete on a fair and equitable basis.

16 (3) The United States shipbuilding industry en17 counters costs of production due to regulatory meas18 ures required by the United States that exceed the

19 standards imposed internationally.

20 (4) The United States-flag merchant fleet has

21 dwindled in size to the point that United States-flag

22 vessels now carry less than 4 percent of the ocean

23 borne trade of the United States.

24 (5) The United States shipyard industry cur25 rently has no orders for new construction of large
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1 commercial vessels, several major shipyards are ex2 periencing severe financial conditions, and the indus3 try is laying-off thousands of employees.

4 (6) Skilled labor to crew the United States mer5 chant marine and to construct new vessels is at a

6 precariously low level.

7 (7) The United States-flag merchant fleet, the

8 United States shipyard industry, and the domestic

9 marine equipment suppliers, have decreased in size

10 to the point that the bulk sealift capability and ves11 sel construction and repair mobilization capacity of

12 the United States are dangerously inadequate.

13 (8) The United States shipbuilding industry, by

14 effectively transitioning from defense production to

15 global competitiveness, has the potential to become

16 an exporter of ships, thereby providing jobs, paying

17 taxes, and earning foreign exchange.

18 (9) The most equitable and cost-effective means

19 of promoting the United States-flag merchant fleet

20 and the United States shipyard industry is to re21 serve a certain portion of cargo imports for United

22 States-flag merchant vessels designed and built in

23 the United States.

24 (b) PURPOSE AND POLICY.—It is the purpose and

25 policy of the Congress in this Act—
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1 (1) to take immediate and positive steps to pro2 mote the orderly and rapid re-growth of the United

3 States-flag merchant fleet to transport at least 30

4 percent of certain imports of the United States on

5 United States-flag vessels by January 1, 2000, to

6 ensure viable merchant marine and shipbuilding in7 dustries;

8 (2) to assist and cooperate with the importers

9 of designated commodities so that they will be able

10 to ship their imported goods in United States-flag

11 vessels in a commercially practicable manner;

12 (3) to encourage the design and construction by

13 the United States shipyard industry of new, efficient

14 merchant vessels;

15 (4) to require the maintenance and repair of

16 United States-flag vessels in United States shipyards

17 unless there is an emergency on a voyage;

18 (5) to eliminate foreign subsidies and anti19 competitive practices and make the United States

20 merchant marine and shipbuilding industries inter21 nationally competitive by the turn of the century;

22 (6) to preserve existing and create additional

23 essential skilled employment in the merchant marine

24 and shipbuilding industries and their supplier indus25 tries;
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1 (7) to complement and support existing efforts

2 to preserve viable and healthy merchant marine and

3 shipbuilding industries for the benefit of the econ4 omy of the United States, the balance of payments

5 of the United States, and the national defense; and

6 (8) to preclude the monopolization of the ship7 ping industry by foreign-flag vessels.

8 SEC. 3. UNITED STATES-FLAG TRANSPORT OF CERTAIN IM9 PORTED CARGOES REQUIRED.

10 Section 901 of the Merchant Marine Act, 1936 (46

11 App. U.S.C. 1241) is amended by adding at the end the

12 following new subsection:

13 ‘‘(d) UNITED STATES-FLAG TRANSPORT OF CERTAIN

14 IMPORTED CARGOES REQUIRED.—

15 ‘‘(1) UNITED STATES-FLAG TRANSPORT RE16 QUIRED.—The Secretary shall issue regulations

17 that—

18 ‘‘(A) ensure that of the total amount of oil

19 in bulk that is imported each year and that is

20 transported on seagoing vessels in the course of

21 that importation, and of the total amount of

22 motor vehicles that is imported each year that

23 is so transported, not less than the percentage

24 applicable under paragraph (2) is so trans25 ported only on vessels that are documented
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1 under the laws of the United States and other2 wise are eligible vessels; and

3 ‘‘(B) require that of the total amount of

4 each type of covered cargo that a person im5 ports in a year, not less than the percentage ap6 plicable for that year under paragraph (2) shall

7 be complying covered cargoes.

8 ‘‘(2) MINIMUM PERCENTAGE APPLICABLE.—

9 ‘‘(A) OIL IN BULK.—Except as otherwise

10 provided in this subsection, the percentage ap11 plicable under this paragraph to importation of

12 oil in bulk is as follows:

13 ‘‘(i) In the case of oil in bulk trans14 ported in the course of that importation on

15 seagoing vessels of 200,000 deadweight

16 tons or greater—

17 ‘‘(I) before 1997, 4 percent;

18 ‘‘(II) in 1997, 8 percent;

19 ‘‘(III) in 1998, 12 percent;

20 ‘‘(IV) in 1999, 16 percent;

21 ‘‘(V) in 2000, 20 percent;

22 ‘‘(VI) in 2001, 25 percent; and

23 ‘‘(VII) in each year after 2001,

24 30 percent.
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1 ‘‘(ii) In the case of oil in bulk trans2 ported in the course of that importation on

3 seagoing vessels of less than 200,000 dead4 weight tons—

5 ‘‘(I) before 1998, 10 percent;

6 ‘‘(II) in 1998, 15 percent;

7 ‘‘(III) in 1999, 20 percent;

8 ‘‘(IV) in 2000, 25 percent; and

9 ‘‘(V) in each year after 2000, 30

10 percent.

11 ‘‘(B) MOTOR VEHICLES.—Except as other12 wise provided in this paragraph or paragraph

13 (6), the percentage applicable under this para14 graph to importation of motor vehicles is—

15 ‘‘(i) before 1995, 4 percent;

16 ‘‘(ii) in 1995, 5 percent;

17 ‘‘(iii) in 1996, 10 percent;

18 ‘‘(iv) in 1997, 20 percent;

19 ‘‘(v) in 1998, 30 percent;

20 ‘‘(vi) in 1999, 40 percent; and

21 ‘‘(vii) in each year after 1999, 50 per22 cent.

23 ‘‘(C) REDUCTION OF PERCENTAGE FOR

24 LACK OF AVAILABLE ELIGIBLE VESSELS.—
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1 ‘‘(i) IN GENERAL.—The Secretary

2 may reduce a percentage otherwise applica3 ble in a year for a covered cargo under

4 subparagraph (A) or (B), if—

5 ‘‘(I) the Secretary determines

6 that the number of eligible vessels (in7 cluding eligible vessels on order and

8 scheduled to be ready for commercial

9 service) that are available at fair and

10 reasonable rates to transport the

11 amount of the covered cargo expected

12 to be imported in that year is not ade13 quate to enable importers of the cov14 ered cargo to comply with the percent15 age otherwise applicable; and

16 ‘‘(II) the percentage, as reduced,

17 will ensure, in the manner most equi18 table and commercially practicable for

19 all importers, the use of all eligible

20 vessels that the Secretary determines

21 are available to provide that trans22 port.

23 ‘‘(ii) TERMINATION OF REDUCTION.—

24 Any reduction of a percentage under this

25 subparagraph shall not apply after the
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1 number of eligible vessels that are available

2 at fair and reasonable rates to transport a

3 covered cargo is adequate to enable import4 ers of the covered cargo to comply with the

5 percentage otherwise applicable under sub6 paragraph (A) or (B).

7 ‘‘(iii) DETERMINATION OF AVAILABLE

8 VESSELS REQUIRED.—Each year the Sec9 retary shall determine the number of eligi10 ble vessels that are available at fair and

11 reasonable rates to transport each type of

12 covered cargo.

13 ‘‘(D) REDUCTION OF PERCENTAGE FOR

14 NATIONAL EMERGENCY.—The President may

15 reduce a percentage otherwise applicable in a

16 year under subparagraph (A) or (B), if the

17 President—

18 ‘‘(i) determines that an emergency ex19 ists justifying the reduction to protect the

20 national interests of the United States;

21 and

22 ‘‘(ii) issues a statement in writing of

23 the reasons for that determination.

24 ‘‘(3) EXEMPTIONS.—The requirements under

25 this subsection shall not apply to—
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1 ‘‘(A) importation of oil in bulk by a person

2 in any year in which the total amount of oil in

3 bulk imported by the person—

4 ‘‘(i) does not exceed an average daily

5 amount of 30,000 barrels per day, and

6 ‘‘(ii) does not exceed the number of

7 barrels used by the person in that year; or

8 ‘‘(B) importation of motor vehicles by a

9 person in any year in which the total number

10 of motor vehicles imported by the person does

11 not exceed a de minimis number of motor vehi12 cles determined by the Secretary that would not

13 have an impact on the implementation of this

14 subsection.

15 ‘‘(4) TREATMENT OF RELATED PERSONS.—In

16 determining for purposes of paragraph (1) the

17 amount of a covered cargo imported by a person, the

18 Secretary shall include covered cargo that is im19 ported by any other person who controls, is con20 trolled by, or is under common control with, the per21 son with respect to whom the determination is made.

22 ‘‘(5) ISSUANCE OF CREDITS AND USE IN LIEU

23 OF COMPLIANCE.—
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1 ‘‘(A) ESTABLISHMENT OF SYSTEM.—The

2 Secretary shall establish in regulations under

3 paragraph (1) a system under which—

4 ‘‘(i) the Secretary shall issue credits

5 to a person for amounts of a complying

6 covered cargo that are imported by the

7 person in a year in excess of the applicable

8 percentage for the complying covered cargo

9 for the year under paragraph (2) and of

10 any amount the person is required to re11 port under paragraph 9(C);

12 ‘‘(ii) those credits may be transferred

13 to another person; and

14 ‘‘(iii) a person may redeem any of

15 those credits held by the person in lieu of

16 complying in that year with paragraphs

17 (1)(B) and (9)(C).

18 ‘‘(B) IMPORTER CERTIFICATION.—Each

19 person that imports a covered cargo in any year

20 after 1993 shall submit to the Secretary, before

21 the end of January of the following year, a

22 sworn statement certifying—

23 ‘‘(i) the amount of each type of cov24 ered cargo that was imported by the per-
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1 son in the year covered by the certification;

2 and

3 ‘‘(ii) the percentage of each of those

4 amounts that was a complying covered

5 cargo.

6 ‘‘(6) PHASE OUT OF REQUIREMENTS.—

7 ‘‘(A) IN GENERAL.—The Secretary shall

8 phase out the requirements of this subsection,

9 in accordance with subparagraphs (B) and (C),

10 if—

11 ‘‘(i) there is in force for the United

12 States and implemented by the Congress

13 an international agreement that eliminates

14 shipbuilding subsidies among the 10 coun15 tries with the largest production of com16 mercial vessels; and

17 ‘‘(ii) the Secretary, after due inves18 tigation, determines and reports to the

19 Congress that all shipbuilding subsidies

20 among those countries have in fact been

21 eliminated.

22 ‘‘(B) REDUCTION OF APPLICABLE PER23 CENTAGE.—The Secretary shall phase out the

24 requirements of this subsection pursuant to

25 subparagraph (A) by reducing each year the
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1 percentages otherwise applicable in the year

2 under paragraph (2).

3 ‘‘(C) ASSURING PARTICIPATION OF EXIST4 ING ELIGIBLE VESSELS.—The Secretary shall

5 reduce applicable percentages pursuant to sub6 paragraph (B) in a manner that will reasonably

7 ensure that each eligible vessel constructed

8 under a contract entered into after the date of

9 the enactment of the Maritime Revitalization

10 Act of 1994 and before the date of the deter11 mination under subparagraph (A)(ii) pursuant

12 to which the reduction is made, will have the

13 opportunity to participate in the transportation

14 of covered cargoes for the lesser of the eco15 nomic life of the vessel or the 20-year period

16 beginning on the date of the completion of con17 struction of the vessel.

18 ‘‘(D) REINSTATEMENT OF REQUIRE19 MENTS.—Notwithstanding any determination

20 by the Secretary under subparagraph (A)(ii)

21 that subsidies have been eliminated, if the Sec22 retary, in consultation with the United States

23 Trade Representative and the heads of other

24 Federal agencies, finds at any time that any of

25 the subsidies have been resumed, then—
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1 ‘‘(i) the Secretary shall reinstate the

2 requirements of this subsection; and

3 ‘‘(ii) any reductions in percentages

4 otherwise applicable under paragraph (2)

5 that were made pursuant to the determina6 tion under subparagraph (A)(ii) of this

7 paragraph shall not apply.

8 ‘‘(7) VESSEL FINANCING.—If the Secretary de9 termines that inadequate commercial financing ex10 ists to construct new vessels of a design appropriate

11 to meet the requirements of this subsection, the Sec12 retary may guarantee that financing under title XI.

13 ‘‘(8) IMPLEMENTATION, GENERALLY.—

14 ‘‘(A) ENSURING FAIR PARTICIPATION.—In

15 implementing this subsection, the Secretary

16 shall ensure fair and reasonable participation

17 by appropriate types and sizes of eligible ves18 sels, in the transportation of complying covered

19 cargoes from all geographic areas in which the

20 cargoes originate.

21 ‘‘(B) ACTIONS BY OTHER AGENCIES.—The

22 head of each agency and each instrumentality

23 of the United States Government, and the offi24 cers and employees of those agencies and in25 strumentalities, shall take all appropriate ac-
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1 tions to comply with, implement, and enforce

2 the requirements of this subsection.

3 ‘‘(9) PENALTIES.—

4 ‘‘(A) IMPOSITION OF CIVIL PENALTY.—

5 Any person who is determined by the Secretary,

6 on the record after an opportunity for a hearing

7 in accordance with section 554 of title 5,

8 United States Code, to have violated this sub9 section or any regulation issued under this sub10 section, shall be liable to the United States for

11 a civil penalty assessed by the Secretary by

12 written notice, in an amount determined under

13 subparagraph (B).

14 ‘‘(B) AMOUNT OF CIVIL PENALTY.—The

15 amount of a civil penalty under subparagraph

16 (A) shall be the equal to—

17 ‘‘(i) the amount of the economic bene18 fit the Secretary determines the person de19 rived from the activity constituting the vio20 lation; plus

21 ‘‘(ii) 10 percent of that amount.

22 ‘‘(C) INCREASE IN REQUIRED IMPORTS OF

23 COMPLYING COVERED CARGO.—If the Secretary

24 determines under this paragraph that the

25 amount of a type of complying covered cargo
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1 that a person imported in a year was less than

2 the amount of that type of complying covered

3 cargo the person was required to import that

4 year under this subsection, the Secretary shall

5 require the person to—

6 ‘‘(i) import in the year following the

7 year in which the determination is made

8 an amount of that type of complying cov9 ered cargo that is equal to the shortfall, in

10 addition to any amount of that type of

11 complying covered cargo the person is re12 quired to import to comply with this sub13 section; or

14 ‘‘(ii) redeem credits equivalent to that

15 amount under the system established

16 under paragraph (5)(A).

17 ‘‘(10) EFFICIENCY REPORT.—The Secretary

18 shall report to the Congress in 1997 on—

19 ‘‘(A) the progress made by the United

20 States shipbuilding and merchant marine indus21 tries in increasing the efficiency of the con22 struction and operation of documented vessels

23 and thereby achieving international competitive24 ness by 2001, through improvements in the cost

25 of—
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1 ‘‘(i) construction, including design;

2 ‘‘(ii) equipment and materials; and

3 ‘‘(iii) operations, including labor;

4 ‘‘(B) the subsidies and anticompetitive

5 measures of foreign countries in their shipbuild6 ing and merchant marine industries; and

7 ‘‘(C) the costs imposed on the shipbuilding

8 and merchant marine industries of the United

9 States due to regulatory measures of the

10 United States.

11 ‘‘(11) ANNUAL REPORT.—the Secretary shall

12 review, evaluate, and report annually to the Con13 gress and the President on the implementation of

14 this subsection, together with recommendations con15 cerning the requirements of this subsection.

16 ‘‘(12) REGULATIONS.—

17 ‘‘(A) ISSUANCE.—The Secretary of Trans18 portation shall issue regulations implementing

19 this subsection by not later than 6 months after

20 the date of the enactment of the Merchant Ma21 rine Revitalization Act of 1994.

22 ‘‘(B) VESSEL AVAILABILITY AND RATES.—

23 Regulations issued under this paragraph shall

24 include regulations that establish a methodology

25 for determining the availability of United
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1 States-flag vessels and that establish fair and

2 reasonable rates for those vessels. In promul3 gating those regulations, the Secretary shall

4 seek to develop a methodology which accounts

5 for variations in charter and vessel types, voy6 age lengths, and other characteristics which

7 may require special consideration (including

8 cost variations over time) and which affords

9 vessel operators a reasonable profit calculated

10 to promote continued acquisition of new vessels

11 from United States shipyards. The Secretary

12 shall publish on a regular and frequent basis

13 the rates developed under this section.

14 ‘‘(13) DEFINITIONS.—In this subsection:

15 ‘‘(A) COMPLYING COVERED CARGO.—The

16 term ‘complying covered cargo’ means a covered

17 cargo that is transported by seagoing vessel in

18 the course of importation (including transpor19 tation directly to the United States from the

20 original point of production, or indirectly from

21 that point through any intermediate point) only

22 on an eligible vessel.

23 ‘‘(B) COVERED CARGO.—The term ‘cov24 ered cargo’ means oil in bulk or a motor vehicle

25 that is—
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1 ‘‘(i) imported after the date of the en2 actment of the Maritime Revitalization Act

3 of 1994; and

4 ‘‘(ii) transported in the course of that

5 importation (including transportation di6 rectly to the United States from the origi7 nal point of production, or indirectly from

8 that point through any intermediate point)

9 on a seagoing vessel;

10 ‘‘(C) ELIGIBLE VESSEL.—The term ‘eligi11 ble vessel’ means a vessel—

12 ‘‘(i) that is a documented vessel (as

13 that term is defined in section 2101 of title

14 46, United States Code);

15 ‘‘(ii) that is a seagoing vessel designed

16 to transport oil in bulk or motor vehicles;

17 ‘‘(iii) that is built in the United

18 States;

19 ‘‘(iv) that is constructed from compo20 nents (including the hull, superstructure,

21 equipment, and materials) from domestic

22 sources, except that this clause does not

23 apply—

24 ‘‘(I) with respect to any compo25 nent that is not available from 2 or
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1 more domestic sources in an amount

2 of time that reasonably allows compli3 ance with the requirements of this

4 subsection; or

5 ‘‘(II) to a vessel that was built

6 before the date of the enactment of

7 the Merchant Marine Revitalization

8 Act of 1994;

9 ‘‘(v) that is less than 20 years old;

10 ‘‘(vi) that complies with all applicable

11 Federal laws, including all applicable Fed12 eral environmental requirements and safety

13 requirements; and

14 ‘‘(vii) for which all work performed in

15 overhauling, repairing, and maintaining

16 the vessel after the date of the enactment

17 of the Merchant Marine Revitalization Act

18 of 1994 is performed in shipyards in the

19 United States, except for emergency voy20 age repairs.

21 ‘‘(D) IMPORT.—The term ‘import’ means

22 to—

23 ‘‘(i) bring covered cargo into the cus24 toms territory of the United States; and
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1 ‘‘(ii) be primarily liable for payment

2 of any duties for that covered cargo.

3 ‘‘(E) MOTOR VEHICLE.—The term ‘motor

4 vehicle’ means complete passenger automobiles,

5 trucks, commercial cars and buses, motorcycles,

6 and special purpose motor vehicles which are

7 primarily for highway use.

8 ‘‘(F) OIL.—The term ‘oil’ means—

9 ‘‘(i) crude oil; or

10 ‘‘(ii) any of the following products re11 fined or derived from crude oil: unfinished

12 fuels, gasoline, kerosene, aviation fuels,

13 naphtha, cracking stocks, distillate heating

14 oil, diesel oil, and residual oils.

15 ‘‘(G) SECRETARY.—The term ‘Secretary’

16 means the Secretary of Transportation.’’.

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