I

103D CONGRESS

2D SESSION H. R. 4003

To authorize appropriations for fiscal year 1995 for certain maritime programs of the Department of Transportation, to amend the Merchant

Marine Act, 1936, as amended, to revitalize the United States-flag

merchant marine, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MARCH 10, 1994

Mr. STUDDS (for himself, Mr. FIELDS of Texas, Mr. LIPINSKI, and Mr. MANTON) (all by request) introduced the following bill; which was referred to

the Committee on Merchant Marine and Fisheries

A BILL

To authorize appropriations for fiscal year 1995 for certain

maritime programs of the Department of Transportation,

to amend the Merchant Marine Act, 1936, as amended,

to revitalize the United States-flag merchant marine, 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 TITLE I—MARITIME ADMINISTRATION

4 AUTHORIZATION OF APPROPRIATIONS

5 SEC. 101. SHORT TITLE.

6 This title may be cited as the ‘‘Maritime Administra7 tion Authorization Act for Fiscal Year 1995’’.
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1 SEC. 102. AUTHORIZATION OF APPROPRIATIONS FOR FIS2 CAL YEAR 1995.

3 Funds are authorized to be appropriated without fis4 cal year limitation, as Appropriations Acts may provide

5 for the use of the Department of Transportation, for the

6 fiscal year ending September 30, 1995, as follows:

7 (1) For payment of obligations incurred for op8 erating-differential subsidy, not to exceed

9 $214,356,000.

10 (2) For expenses necessary for operations and

11 training activities, not to exceed $77,000,000, in12 cluding reception and representation expenses asso13 ciated with graduation functions at the Merchant

14 Marine Academy at Kings Point, New York.

15 (3) For expenses necessary to acquire and

16 maintain the Ready Reserve Force surge shipping

17 and resupply capability in an advanced state of read18 iness, and for related programs, not to exceed

19 $250,000,000.

20 (4) For the costs, as defined in section 502 of

21 the Federal Credit Reform Act of 1990, of guaran22 teed loans authorized by title XI of the Merchant

23 Marine Act, 1936, as amended (46 App. U.S.C.

24 1271, et seq.), $50,000,000. In addition, for admin25 istrative expenses related to loan guarantee commit26 ments under title XI of the Merchant Marine Act,
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1 1936, as amended (46 App. U.S.C. 1271, et seq.),

2 $4,000,000.

3 SEC. 103. MERCHANT SHIP SALES ACT OF 1946 AMEND4 MENT.

5 Section 11 of the Act of March 8, 1946 (50 App.

6 U.S.C. 1744, is amended as follows:

7 (1) By striking ‘‘Secretary of the Navy,’’ in

8 subsection (b)(2) and inserting ‘‘Secretary of

9 Defense,’’.

10 (2) By striking subsection (c) and redesignating

11 subsection (d) as subsection (c).

12 SEC. 104. SUBMISSION OF REPORT ON CONDITION OF PUB13 LIC PORTS.

14 Section 308(c) of title 49, United States Code, is

15 amended by inserting ‘‘even-numbered’’ between ‘‘each’’

16 and ‘‘year’’.

17 TITLE II—AMENDMENTS TO THE

18 MERCHANT MARINE ACT, 1936

19 SEC. 201. SHORT TITLE.

20 This title may be cited as the ‘‘Maritime Security and

21 Trade Act of 1994’’.

22 SEC. 202. MARITIME SECURITY PROGRAM.

23 (a) Title VI of the Merchant Marine Act, 1936, as

24 amended (46 App. U.S.C. 1171 et seq.), is amended by

25 deleting the heading of title VI, ‘‘Operating-Differential
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1 Subsidy’’ and inserting a new heading and subheading as

2 follows:

3 ‘‘TITLE VI—OPERATING-DIFFERENTIAL

4 SUBSIDY AND MARITIME SECURITY

5 PROGRAM.

6 ‘‘Subpart A—Operating-Differential Subsidy’’.

7 (b) Section 605(b) (46 App, U.S.C. 1175(b)) is

8 amended to read as follows:

9 ‘‘(b) No operating-differential subsidy shall be paid

10 for the operation of a vessel that is more than twenty11 five years of age, unless the Secretary of Transportation

12 has determined, before the enactment of the Maritime Se13 curity and Trade Act of 1994, that it is in the public inter14 est to grant such financial aid for the operation of such

15 vessel.’’.

16 (c) Title VI of the Merchant Marine Act, 1936, as

17 amended (46 App. U.S.C. 1171 et seq.) is amended by

18 adding a new section 616 following section 615, to read

19 as follows:

20 ‘‘SEC. 616. (a)(1) The Secretary of Transportation

21 may authorize a contractor operating a liner vessel and

22 receiving an operating-differential subsidy under subpart

23 A of this title to construct, reconstruct, or acquire a liner

24 vessel of over five thousand deadweight tons worldwide to

25 replace a vessel that would reach the end of its
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1 subsidizable life prior to the expiration of the contractor’s

2 operating-differential subsidy contract. The replacement

3 vessel shall be documented under chapter 121 of subtitle

4 II of title 46, United States Code.

5 ‘‘(2) A replacement liner vessel shall not be eligible

6 for operating-differential subsidy pursuant to subpart A

7 of this title, and shall be limited to payments in the

8 amounts set forth in subpart B of the title until the exist9 ing contract pursuant to subpart A terminates according

10 to its terms.

11 ‘‘(b)(1) The Secretary of Transportation may author12 ize a contractor operating a bulk cargo vessel and receiv13 ing operating-differential subsidy under subpart A of this

14 title to construct, reconstruct, or acquire a bulk cargo ves15 sel of over five thousand deadweight tons worldwide to re16 place a vessel that would reach the end of its subsidizable

17 life prior to the expiration of the contractor’s operating18 differential subsidy contract. The replacement vessel shall

19 be documented under chapter 121 of subtitle II of title

20 46, United States Code.

21 ‘‘(2) A replacement bulk cargo vessel shall continue

22 to receive an operating-differential subsidy under an exist23 ing contract pursuant to subpart A of this title until the

24 existing contract terminates according to its terms.
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1 ‘‘(c) Liner vessels and bulk cargo vessels constructed

2 pursuant to subsections (a) and (b) of this section shall

3 be deemed to have been built in a domestic shipyard for

4 the purposes of section 610 of this Act: Provided, That

5 the provisions of section 607 of this Act shall not apply

6 to vessels constructed, reconstructed, or acquired pursuant

7 to subsections (a) and (b) of this section.

8 ‘‘(d) Any existing foreign-built liner vessel that is ac9 quired pursuant to subsection (a) of this section and docu10 mented under chapter 121 of subtitle II of title 46, United

11 States Code, shall be less than five years of age at the

12 time of such documentation.

13 ‘‘(e) Any existing foreign-built bulk cargo vessel that

14 is acquired pursuant to subsection (b) of this section and

15 documented under chapter 121 of subtitle of title 46,

16 United States Code, shall be less than five years of age

17 at the time of such documentation.

18 ‘‘(f) No authority granted by the Secretary of Trans19 portation to construct, reconstruct, or acquire vessels pur20 suant to subsections (a) and (b) of this section may be

21 sold, assigned, conveyed, leased or otherwise transferred

22 to any other party, without the written consent of the Sec23 retary of Transportation pursuant to section 608 of this

24 title.
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1 ‘‘(g) any repair or alteration necessary to bring a ves2 sel, which is constructed, reconstructed, or acquired pur3 suant to subsections (a) and (b) of this section, into com4 pliance with parts B and C of subtitle II of title 46, United

5 States Code, or any regulations prescribed under those

6 Parts, shall be performed in a privately owned shipyard

7 in the United States.’’.

8 (d) Title VI of the Merchant Marine Act, 1936, as

9 amended (46 App. U.S.C. 1171 et seq.) is amended by

10 adding a new section 617 following the new section 616,

11 to read as follows:

12 ‘‘SEC. 617. (a) After the date of enactment of the

13 Maritime Security and Trade Act of 1994, the Secretary

14 of Transportation shall not enter into any new contract

15 for an operating-differential subsidy under subpart A of

16 this title.

17 ‘‘(b) Notwithstanding any other provision of this Act,

18 any operating-differential subsidy contract in effect under

19 title VI on the day before the date of enactment of the

20 Maritime Security and Trade Act of 1994—

21 ‘‘(1) shall continue in effect and terminate as

22 set forth in the contract, unless voluntarily termi23 nated at an earlier date by the persons (other than

24 the United States Government) that are parties to

25 the contract; and
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1 ‘‘(2) may not be renewed or extended.

2 ‘‘(c) After the date of enactment of the Maritime Se3 curity and Trade Act of 1994, an owner or operator of

4 a vessel covered by an operating-differential subsidy con5 tract under subpart A of this title may operate such vessel

6 in the foreign commerce of the United States without re7 striction, notwithstanding any other provision of this Act.

8 ‘‘(d) With respect to a liner vessel—

9 ‘‘(1) whose operator receives operating-differen10 tial subsidy pursuant to a contract under this title,

11 which is in force on October 1, 1993, and if the Sec12 retary approves the replacement of such vessel with

13 a comparable vessel, or

14 ‘‘(2) covered by an operating agreement under

15 subpart B of this title, and if the Secretary approves

16 the replacement of such vessel with a comparable

17 vessel for inclusion in the fleet established under

18 subpart B of title VI,

19 such vessel may be transferred and registered under the

20 flag of an effective United States-controlled foreign flag,

21 notwithstanding any other provision of law: Provided,

22 That the vessel is available to be requisitioned by the Sec23 retary of Transportation pursuant to section 902 of this

24 Act (46 App. U.S.C. 1242).’’.
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1 (e) Title VI of the Merchant Marine Act, 1936, as

2 amended (46 App. U.S.C. 1171 et seq.) is amended by

3 adding a new subpart B to read as follows:

4 ‘‘Subpart B—Maritime Security Program

5 ‘‘SEC 650. ESTABLISHMENT OF FLEET.

6 ‘‘(a) The Secretary of Transportation shall encourage

7 the establishment of a fleet of active, militarily useful, pri8 vately-owned liner vessels to maintain an American pres9 ence in international commercial shipping and meet na10 tional defense and other security requirements. The fleet

11 shall consist of privately-owned, United States-flag liner

12 vessels for which there are in effect operating agreements

13 under this subpart.

14 ‘‘(b) A liner vessel may not be included in the fleet

15 unless—

16 ‘‘(1) it is operated by an ‘ocean common car17 rier’ as defined in section 3 of the Shipping Act of

18 1984 (46 App. U.S.C. 1702);

19 ‘‘(2) it is a vessel that is fifteen years of age

20 or less on the date an operating agreement is en21 tered into under section 651, unless the Secretary of

22 Transportation, in consultation with the Secretary of

23 Defense, determines that it is in the national inter24 est to waive this requirement;
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1 ‘‘(3) it is a vessel that is less than five years

2 of age at the time it is documented under chapter

3 121 of subtitle II of title 46, United States Code, if

4 it is foreign-built;

5 ‘‘(4) the Secretary of Transportation, after con6 sultation with the Secretary of Defense, determines

7 that the vessel is necessary to maintain a United

8 States presence in international commercial shipping

9 or determines that the vessel is militarily useful for

10 meeting the sealift needs of the United States with

11 respect to national emergencies; and

12 ‘‘(5) the owner or operator of the vessel is a cit13 izen of the United States as set forth in section 651.

14 ‘‘SEC. 651. OPERATING AGREEMENTS.

15 ‘‘(a) The Secretary of Transportation shall require,

16 as a condition of including any vessel in the fleet, that

17 the owner or operator of the vessel enter into an operating

18 agreement with the Secretary of Transportation pursuant

19 to this section.

20 ‘‘(b) An operating agreement pursuant to this section

21 shall require that, during the period of the agreement—

22 ‘‘(1) each vessel covered by the operating agree23 ment—

24 ‘‘(A) shall be operated exclusively in the

25 foreign trade, and
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1 ‘‘(B) shall not be operated in the coastwise

2 trade of the United States or in mixed domestic

3 and foreign trade; and

4 ‘‘(2) the owner or operator of a vessel covered

5 by the operating agreement shall have the vessel

6 documented under chapter 121 of subtitle II of title

7 46, United States Code, and shall maintain that

8 documentation.

9 ‘‘(c) An owner or operator of a vessel covered by an

10 operating agreement under this subpart may operate this

11 vessel in the foreign commerce of the United States with12 out restriction.

13 ‘‘(d)(1) The Secretary of Transportation is author14 ized to enter into operating agreements, provided that the

15 total does not exceed $1,000,000,000 for the fiscal years

16 1995 through 2004.

17 ‘‘(2) An operating agreement pursuant to this section

18 shall provide that the Secretary of Transportation pay to

19 the owner or operator of each liner vessel that is included

20 in the operating agreement, an amount per vessel per year

21 that does not exceed $2,500,000, for fiscal years 1995

22 through 1997, and does not exceed $2,000,000, for fiscal

23 years 1998 through 2004. The amount per year paid to

24 the owner or operator of a liner vessel under an operating
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1 agreement pursuant to this section shall be paid at the

2 end of each month in equal installments.

3 ‘‘(3) An amount of $1,000,000,000 is appropriated

4 to carry out this section.

5 ‘‘(e) In order to qualify for the annual payments

6 under this section, the owner or operator shall certify an7 nually, pursuant to regulations issued by the Secretary,

8 that each vessel covered by an operating agreement was

9 operated in a trade required by section 651(b)(1) for at

10 least three hundred twenty days in a fiscal year, including

11 days during which the liner vessel is drydocked, surveyed,

12 inspected, or repaired.

13 ‘‘(f) Without regard to an operating agreement in ef14 fect with an owner or operator of a liner vessel under this

15 section, the Secretary of Transportation shall not make

16 any payment under this section for a vessel with respect

17 to any period in which the vessel is—

18 ‘‘(1) subject to an operating-differential subsidy

19 contract under subpart A of title VI of this Act;

20 ‘‘(2) not operated or maintained in accordance

21 with an operating agreement under this subpart; or

22 ‘‘(3) more than twenty-five years of age.

23 ‘‘(g) With respect to payments under this section for

24 a vessel covered by an operating agreement, the Secretary

25 of Transportation—
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1 ‘‘(1) shall not reduce any payment for the oper2 ation of a vessel to carry military or other preference

3 cargoes under—

4 ‘‘(A) section 2631 of title 10, United

5 States Code; or

6 ‘‘(B) section 1241–1 of title 46, Appendix,

7 United States Code;

8 ‘‘(2) shall not make any payment for each day

9 that a vessel is engaged in transporting more than

10 five thousand tons of civilian bulk preference cargoes

11 pursuant to sections 901(a), 901(b), or 901b of this

12 Act; and

13 ‘‘(3) shall reduce any payment for each day

14 that a vessel is engaged in transporting less than

15 five thousand tons of civilian bulk preference cargoes

16 pursuant to sections 901(a), 901(b), or 901b of this

17 Act, by an amount which bears the same ratio to the

18 amount otherwise payable as revenue for the car19 riage of preference cargo bears to the gross revenue

20 derived from the entire voyage.

21 ‘‘(h) The Secretary of Transportation shall enter into

22 operating agreements in the following order of priority:

23 ‘‘(1) Liner vessel or vessels owned or operated

24 by a person that is a citizen of the United States

25 under section 2 of the Shipping Act, 1916; and then
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1 ‘‘(2) Liner vessel or vessels owned or operated

2 by a person that is eligible to document a vessel

3 under chapter 121 of subtitle II of title 46, United

4 States Code.

5 ‘‘(i) No authority granted by the Secretary of Trans6 portation to an owner or operator of a vessel covered by

7 an operating agreement under this subpart may be sold,

8 assigned, conveyed, leased or otherwise transferred to any

9 other party, without the written consent of the Secretary

10 of Transportation pursuant to the provisions of section

11 608 of this title.

12 ‘‘(j) Any authority granted by the Secretary of Trans13 portation to an owner or operator of a vessel covered by

14 an operating agreement under this subpart shall be used

15 by the holder of the operating agreement within one year

16 from the date such authority is granted for existing vessels

17 and within two years from the date such authority is

18 granted for newly constructed vessels, or the authority

19 shall revert to the Secretary of Transportation for such

20 disposition as determined appropriate.

21 ‘‘(k) An operating agreement entered into by the Sec22 retary of Transportation under this subpart shall be effec23 tive for a period of not more than ten years, and, under

24 any condition, terminate not later than September 30,

25 2004.
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1 ‘‘(l) An operating agreement entered into by the Sec2 retary of Transportation under this subpart shall require

3 the owner or operator of a vessel covered by an operating

4 agreement under this subpart to enroll in an Emergency

5 Preparedness Program, pursuant to the requirements of

6 section 652, under such terms and conditions as the Sec7 retary may prescribe.

8 ‘‘SEC. 652. NATIONAL SECURITY REQUIREMENTS.

9 ‘‘(a) On a request of the President, acting through

10 the Secretary of Transportation in consultation with the

11 Secretary of Defense, during time of war or national emer12 gency or when decided by the President to be necessary

13 in the national interest, acting through the Secretary of

14 Transportation in consultation with the Secretary of De15 fense, an owner or operator of a vessel covered by an oper16 ating agreement under this subpart shall make available

17 commercial transportation resources pursuant to an

18 Emergency Preparedness Program established by the Sec19 retary of Transportation in consultation with the Sec20 retary of Defense.

21 ‘‘(b) The commercial transportation resources to be

22 made available shall include ships, capacity, intermodal

23 systems or equipment, terminal facilities, and intermodal

24 and management services, or any portion of these re25 sources, as the Secretary may determine to be necessary.
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1 ‘‘(c) The Secretary of Transportation shall not reduce

2 the amount of equal monthly installment payments under

3 section 651 to an owner or operator who makes commer4 cial transportation resources available pursuant to an

5 Emergency Preparedness Program under this section.

6 ‘‘(d) An owner or operator who makes a vessel avail7 able pursuant to this section shall be permitted to employ

8 a foreign-flag vessel in the foreign commerce of the United

9 States, without receiving additional compensation, as a re10 placement for a vessel covered by an operating agreement,

11 until a vessel used is redelivered.

12 ‘‘SEC. 653. DOMESTIC NONCONTIGUOUS TRADE RESTRIC13 TIONS.

14 ‘‘(a) PROHIBITION.—

15 ‘‘(1) IN GENERAL.—Except as provided in this

16 section, an owner or operator may not receive any

17 payment under this subpart—

18 ‘‘(A) if the owner or operator or a related

19 party with respect to the owner or operator, di20 rectly or indirectly owns, charters, or operates

21 a vessel engaged in the transportation of cargo

22 in a noncontiguous trade other than in accord23 ance with a waiver under subsection (b), (c), or

24 (d); or
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1 ‘‘(B) if the owner or operator is authorized

2 to operate a vessel in noncontiguous trade

3 under such a waiver, and there is a—

4 ‘‘(i) material change in the domestic

5 ports served by the owner or operator from

6 the ports permitted to be served under the

7 waiver;

8 ‘‘(ii) material increase in the annual

9 number or the frequency of sailings by the

10 owner or operator from the number or fre11 quency permitted under the waiver; or

12 ‘‘(iii) material increase in the annual

13 volume of cargo carried or annual capacity

14 utilized by the owner or operator from the

15 annual volume of cargo or annual capacity

16 permitted under the waiver.

17 ‘‘(2) LIMITATIONS ON PROHIBITION.—Para18 graph (1) applies to an owner or operator only in

19 the years specified for payments under the operating

20 agreement entered into by the owner or operator.

21 ‘‘(b) GENERAL WAIVER AUTHORITY.—

22 ‘‘(1) IN GENERAL.—Except as provided in sub23 section (c), the Secretary may waive, in writing, the

24 application of subsection (a) to an owner or operator

25 pursuant to an application submitted in accordance
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1 with this subsection, unless the Secretary finds

2 that—

3 ‘‘(A) the waiver would result in unfair

4 competition to any person that operates vessels

5 as a carrier of cargo in a service exclusively in

6 the noncontiguous trade for which the waiver is

7 applied;

8 ‘‘(B) subject to paragraph (6), existing

9 service in that noncontiguous trade is adequate;

10 or

11 ‘‘(C) the waiver will result in prejudice to

12 the objects or policy of this title or Act.

13 ‘‘(2) TERMS OF WAIVER.—Any waiver granted

14 by the Secretary under this subsection shall state—

15 ‘‘(A) the domestic ports permitted to be

16 served,

17 ‘‘(B) the annual number or frequency of

18 sailings that may be provided, and

19 ‘‘(C)(i) the annual volume of cargo per20 mitted,

21 ‘‘(ii) for containerized or trailer service, the

22 annual forty-foot equivalent unit shipboard con23 tainer and trailer or vehicle or general cargo ca24 pacity permitted, or
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1 ‘‘(iii) for tug and barge service, the annual

2 barge house cubic foot capacity and the annual

3 barge deck general cargo capacity, or forty-foot

4 equivalent units container, trailer, or vehicle ca5 pacity, permitted.

6 ‘‘(3) APPLICATIONS FOR WAIVERS.—An appli7 cation for a waiver under this subsection may be

8 submitted by an owner or operator and shall de9 scribe, as applicable, the nature and scope of—

10 ‘‘(A) the service proposed to be conducted

11 in a noncontiguous trade under the waiver; or

12 ‘‘(B) any proposed material change or in13 crease in a service in a noncontiguous trade

14 permitted under a previous waiver.

15 ‘‘(4) ACTION ON APPLICATION AND HEARING.—

16 ‘‘(A) NOTICE AND PROCEEDING.—Within

17 thirty days after receipt of an application for a

18 waiver under this subsection, the Secretary

19 shall—

20 ‘‘(i) publish a notice of the applica21 tion;

22 ‘‘(ii) begin a proceeding on the appli23 cation section 554 of title 5, United States

24 Code, to receive—
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1 ‘‘(I) evidence of the nature,

2 quantity, and quality of the existing

3 service in the noncontiguous trade for

4 which the waiver is applied;

5 ‘‘(II) a description of the pro6 posed service or proposed material

7 change or increase in a previously per8 mitted service;

9 ‘‘(III) the projected effect of the

10 proposed service or proposed material

11 change or increase in existing service;

12 and

13 ‘‘(IV) recommendations on condi14 tions that should be contained in any

15 waiver for the proposed service or ma16 terial change or increase.

17 ‘‘(B) INTERVENTION.—An applicant for a

18 waiver under this subsection, and any person

19 that operates cargo vessels in the noncontiguous

20 trade for which a wavier is applied and that has

21 any interest in the application, may intervene in

22 the proceedings on the application.

23 ‘‘(C) HEARING.—Before deciding whether

24 to grant a waiver under this subsection, the

25 Secretary shall hold a public hearing in an ex-
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1 peditious manner, reasonable notice of which

2 shall be published.

3 ‘‘(5) DECISION.—The Secretary shall complete

4 all proceedings and hearings on an application under

5 this subsection and issue a decision on the record

6 within ninety days after receipt of the final briefs

7 submitted for the record.

8 ‘‘(6) LIMITATION ON CONSIDERATION OF CER9 TAIN EXISTING SERVICE.—

10 ‘‘(A) LIMITATION.—In determining wheth11 er to grant a waiver under this subsection for

12 noncontiguous trade with Hawaii, the Secretary

13 shall not consider the criterion set forth in

14 paragraph (1)(B) if a qualified operator—

15 ‘‘(i) is a party to an operating agree16 ment under this subpart, and

17 ‘‘(ii) operates four or more vessels in

18 foreign commerce in competition with an19 other operator who is a party to an operat20 ing agreement under this subpart.

21 ‘‘(B) QUALIFIED OPERATOR.—In this

22 paragraph, the term ‘qualified operator’ means

23 a person that on July 1, 1992, offered service

24 as an operator of containerized vessels, trailer

25 vessels, or combination container and trailer
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1 vessels in domestic trade with Hawaii and the

2 Johnston Islands (including a related party

3 with respect to the person).

4 ‘‘(c) WAIVERS FOR EXISTING NONCONTIGUOUS

5 TRADE OPERATORS.—

6 ‘‘(1) IN GENERAL.—The Secretary shall waive

7 the application of subsection (a) to an owner or op8 erator, who is a party to an operating agreement

9 under this subpart, pursuant to an application sub10 mitted in accordance with this subsection if the Sec11 retary finds that the owner or operator, or a related

12 party or predecessor in interest with respect to the

13 owner or operator—

14 ‘‘(A) engaged in bona fide operation of a

15 vessel as a carrier of cargo by water—

16 ‘‘(i) in a noncontiguous trade on July

17 1, 1992; or

18 ‘‘(ii) in furnishing seasonal service in

19 a season ordinarily covered by its oper20 ation, during the twelve calendar months

21 preceding July 1, 1992; and

22 ‘‘(B) has operated in that service since

23 that time, except for interruptions of service re24 sulting from military contingency or over which
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1 the owner or operator (or related party or pred2 ecessor in interest) had no control.

3 ‘‘(2) TERMS OF WAIVER.—

4 ‘‘(A) IN GENERAL.—Except as otherwise

5 provided in this paragraph, the level of service

6 permitted under a waiver under this subsection

7 shall be the level of service provided by the ap8 plicant (or related party or predecessor in inter9 est) in the relevant noncontiguous trade during,

10 for year-round service, the six calendar months

11 preceding July 1, 1992, or for seasonal service,

12 the twelve calendar months preceding July 1,

13 1992, determined by—

14 ‘‘(i) the domestic ports called;

15 ‘‘(ii) the number of sailings actually

16 made, except as to interruptions in the

17 service in the noncontiguous trade result18 ing from military contingency or over

19 which the applicant (or related party or

20 predecessor in interest) had no control;

21 and

22 ‘‘(iii) the volume of cargo carried or,

23 for containerized or trailer service, the

24 forty-foot equivalent unit shipboard con25 tainer, trailer, or vehicle or general cargo
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1 capacity employed, or, for tug and barge

2 service, the barge house cubic foot capacity

3 and barge deck general cargo capacity or

4 forty-foot equivalent unit container, trailer,

5 or vehicle capacity, employed.

6 ‘‘(B) CERTAIN CONTAINERIZED VES7 SELS.—If an applicant under this subsection

8 was offering service as an operator of container9 ized vessels in noncontiguous trades with Ha10 waii, Puerto Rico, and Alaska on July 1, 1992,

11 a waiver under this subsection for the applicant

12 shall permit a level of service consisting of—

13 ‘‘(i) One hundred and four sailings

14 each year from the West Coast of the

15 United States to Hawaii with an annual

16 capacity allocated to the service of 75 per

17 centum of the total capacity of the vessels

18 employed in the service on July 1, 1992;

19 ‘‘(ii) One hundred fifty-six sailings

20 each year in each direction between the

21 East Coast or Gulf Coast of the United

22 States and Puerto Rico with an annual ca23 pacity allocated to the service of 75 per

24 centum of the total capacity of its vessels

25 employed in the service on the date of the
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1 enactment of the Maritime Security and

2 Trade Act of 1994; and

3 ‘‘(iii) One hundred and three sailings

4 each year in each direction between Wash5 ington and Alaska with an annual capacity

6 allocated to the service in each direction of

7 100 per centum of the total capacity of its

8 vessels employed in the service on July 1,

9 1992.

10 ‘‘(C) CERTAIN TUGS AND BARGES.—If an

11 applicant under this subsection was offering

12 service as an operator of tugs and barges in

13 noncontiguous trades with Hawaii, Puerto Rico,

14 and Alaska on July 1, 1992, a waiver under

15 this subsection for the applicant shall permit a

16 level of service consisting of—

17 ‘‘(i) Seventeen sailings each year in

18 each direction between ports in Washing19 ton, Oregon, and Northern California and

20 ports in Hawaii with an annual barge

21 house cubic foot capacity and annual barge

22 deck forty-foot equivalent unit container

23 capacity in each direction of 100 per cen24 tum of the total of the capacity of its ves25 sels employed in the service during the six
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1 calendar months preceding July 1, 1992,

2 annualized;

3 ‘‘(ii) Two hundred fifty-three sailings

4 each year in each direction between the

5 East Coast or Gulf Coast of the United

6 States and Puerto Rico with an annual

7 forty-foot equivalent unit container or

8 trailer capacity equal to 100 per centum of

9 the capacity of its barges employed in the

10 service on the date of the enactment of the

11 Maritime Security and Trade Act of 1994;

12 ‘‘(iii) Thirty-seven regularly scheduled

13 tandem tow rail barge sailings and ten ad14 ditional single tow rail barge sailings each

15 year in each direction between Washington

16 and the Alaskan port range between and

17 including Anchorage and Whittier with an

18 annual capacity allocated to the service in

19 each direction of 100 per centum of the

20 total rail car capacity of its vessels em21 ployed in the service on July 1, 1992;

22 ‘‘(iv) Eight regularly scheduled single

23 tow sailings each year in each direction be24 tween Washington and points in Alaska

25 (not including the port range between and
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1 including Anchorage and Whittier, except

2 occasional deviations to discharge inciden3 tal quantities of cargo) with an annual ca4 pacity allocated to the service in each di5 rection of 100 per centum of the total ca6 pacity of its vessels employed in the service

7 on July 1, 1992; and

8 ‘‘(v) unscheduled, contract carrier tug

9 and barge service between points in Alaska

10 south of the Arctic Circle not served by the

11 common carrier service permitted under

12 clause (iii) and points in the contiguous

13 forty-eight States, with an annual capacity

14 allocated to that service not exceeding 100

15 per centum of the total capacity of the

16 equipment that was dedicated to service

17 south of the Arctic Circle on July 1, 1992,

18 and actually utilized in that service in the

19 two-year period preceding that date.

20 ‘‘(D) ANNUALIZATION.—Capacity other21 wise required by this paragraph to be permitted

22 under a waiver under this subsection shall be

23 annualized if not a seasonal service.

24 ‘‘(E) ADJUSTMENTS.—
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1 ‘‘(i) Each written waiver granted by

2 the Secretary under this subsection shall

3 contain a statement that the annual capac4 ity permitted under this waiver in any di5 rection shall increase for a calendar year

6 by the percentage of increase during the

7 preceding calendar year in the real gross

8 product of the State or territory to which

9 goods are transported in the noncontiguous

10 trade covered by the waiver, or its equiva11 lent economic measure as determined by

12 the Secretary if the real gross product is

13 not available, and that the increase shall

14 not be considered to be a material change

15 or increase for purposes of subsection

16 (a)(1)(B).

17 ‘‘(ii) The increase in permitted capac18 ity under clause (i) in the noncontiguous

19 trade with Alaska shall be allowed only to

20 the extent the operator actually uses that

21 increased capacity to carry cargo in the

22 permitted service in the calendar year im23 mediately following the preceding increase

24 in gross product. However, if an operator

25 operating exclusively containerized vessels
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1 in trade on July 1, 1992, carries an aver2 age load factor of at least 90 per centum

3 of permitted capacity (including the capac4 ity, if any, both authorized and used under

5 the previous sentence) during nine months

6 of any one calendar year, than in the next

7 following calendar year and thereafter, the

8 requirement that additional capacity must

9 be used in the immediately following year

10 does not apply.

11 ‘‘(F) SERVICE LEVELS NOT INCREASED BY

12 TERMINATION OF AGREEMENT.—The termi13 nation of an operating agreement under subpart

14 B of this title shall not be considered to in15 crease a level of service specified in subpara16 graph (A), (B), or (C) if the contractor under

17 the agreement enters into another operating

18 agreement after that termination.

19 ‘‘(3) APPLICATIONS FOR WAIVERS.—For a

20 waiver under this subsection a contractor shall sub21 mit to the Secretary an application certifying the

22 facts required to be found under paragraph (1) (A)

23 or (B), as applicable.

24 ‘‘(4) ACTION ON APPLICATION.—
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1 ‘‘(A) NOTICE.—The Secretary shall pub2 lish a notice of receipt of an application for a

3 waiver under this subsection within thirty days

4 after receiving the application.

5 ‘‘(B) HEARING PROHIBITED.—The Sec6 retary may not conduct a hearing on an appli7 cation for a waiver under this subsection.

8 ‘‘(C) SUBMISSION OF COMMENTS.—The

9 Secretary shall give every person operating a

10 cargo vessel in a noncontiguous domestic trade

11 for which a waiver is applied for under this sub12 section and who has any interest in the applica13 tion a reasonable opportunity to submit com14 ments on the application and on the description

15 of the service that would be permitted by any

16 waiver that is granted by the Secretary under

17 the application.

18 ‘‘(5) DECISION ON APPLICATION.—Subject to

19 the time required for publication of notice and for

20 receipt and evaluation of comments by the Sec21 retary, an application for a waiver under this sub22 section submitted at the same time the applicant ap23 plies for inclusion of a vessel in the fleet established

24 under this subpart shall be granted in accordance

25 with the level of service determined by the Secretary
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1 under this subsection by not later than the date on

2 which the Secretary offers to the applicant an oper3 ating agreement with respect to that vessel.

4 ‘‘(6) CHANGE OR INCREASE IN SERVICE.—Any

5 material change or increase in a service that is sub6 ject to a waiver under this subsection is not author7 ized except to the extent the change or increase is

8 permitted by a waiver under subsection (b).

9 ‘‘(d) EMERGENCY WAIVER.—Notwithstanding any

10 other provision of this section, the Secretary may, without

11 hearing, temporarily waive the application of subsection

12 (a)(1)(B) if the Secretary finds that a material change or

13 increase is essential in order to respond adequately to (1)

14 an environmental or natural disaster or emergency, or (2)

15 another emergency declared by the President. Any waiver

16 shall be for a period of not to exceed forty-five days, except

17 that a waiver may be renewed for thirty-day periods if the

18 Secretary finds that adequate capacity continues to be

19 otherwise unavailable.

20 ‘‘(e) ANNUAL REPORT ON WAIVERS.—Each waiver

21 under this section shall require the person who is granted

22 the waiver to submit to the Secretary each year an annual

23 report setting forth for the service authorized by the waiv24 er—

25 ‘‘(1) the ports served during the year;
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1 ‘‘(2) the number of frequency of sailings per2 formed during the year; and

3 ‘‘(3) the volume of cargo carried or, for contain4 erized or trailer service, the annual forty-foot equiva5 lent unit shipboard container, trailer, or vehicle ca6 pacity utilized during the year, or for tug and barge

7 service, the annual barge house and barge deck ca8 pacity utilized during the year.

9 ‘‘(f) DEFINITIONS.—In this section—

10 ‘‘(1) the term ‘noncontiguous trade’ means

11 trade between—

12 ‘‘(A) a point in the contiguous forty-eight

13 States; and

14 ‘‘(B) a point in Alaska, Hawaii, or Puerto

15 Rico, other than a point in Alaska north of the

16 Arctic Circle; and

17 ‘‘(2) the term ‘related party’ means—

18 ‘‘(A) a holding company, subsidiary, affili19 ate, or associate of a owner or operator who is

20 a party to an operating agreement under this

21 subpart; and

22 ‘‘(B) an officer, director, agency, or other

23 executive of a contractor or of a person referred

24 to in subparagraph (A).
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1 ‘‘SEC. 654. DEFINITIONS.

2 ‘‘For the purposes of subpart B of this title:

3 ‘‘(1) The term ‘citizen of the United States’

4 means a person that is a citizen of the United States

5 under section 651 of this subpart.

6 ‘‘(2) The term ‘operating agreement’ means an

7 operating agreement that takes effect under section

8 651 of this subpart and covers one or more ves9 sels.’’.

10 (f) EFFECTIVE DATE.—The amendments made by

11 subsections (a) through (e) of this section shall be effective

12 beginning on the date which is one hundred twenty days

13 after the date of enactment of the Maritime Security and

14 Trade Act of 1994.

15 SEC. 203. TONNAGE FEES.

16 (a) INCREASE OF DUTIES.—Section 36 of the Act of

17 August 5, 1909 (46 App. U.S.C. 121) is amended in the

18 second paragraph by—

19 (1) inserting after ‘‘1998,’’ the first place it ap20 pears ‘‘and a supplemental duty of 15 cents per ton,

21 not to exceed in the aggregate 75 cents per ton in

22 any one year, for fiscal years 1995 through 2004,’’;

23 and

24 (2) inserting after ‘‘1998,’’ the second place it

25 appears, ‘‘and a supplemental duty of 44 cents per
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1 ton, not to exceed $2.20 per ton in any one year, for

2 fiscal years 1995 through 2004.’’.

3 (b) OFFSETTING RECEIPTS.—The increased tonnage

4 fees collected as a result of the amendments made by sub5 section (a) shall be deposited in the general fund of the

6 Treasury as offsetting receipts of the department in which

7 the Coast Guard is operating and ascribed to Coast Guard

8 activities.

9 SEC. 204. USE OF FOREIGN-FLAG VESSELS.

10 Section 804 of Title VIII of the Merchant Marine

11 Act, 1936, as amended (46 App. U.S.C. 1222), is

12 amended by adding a new subsection (f) as follows:

13 ‘‘(f) The provisions of subsection (a) of this section

14 shall not preclude an owner or operator receiving operat15 ing assistance under subpart A or subpart B of title VI,

16 or any holding company, subsidiary, affiliate or associate

17 of such owner or operator, or any officer, director, agency,

18 or executive thereof from—

19 ‘‘(1) owning, chartering, or operating any for20 eign-flag vessel that is operated as a feeder vessel

21 for a United States-flag service under an operating

22 agreement pursuant to subpart B of title VI;

23 ‘‘(2) owning, chartering, or operating any for24 eign-flag vessel in line haul service between the

25 United States and foreign ports: Provided, That the
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1 foreign-flag vessel was operated by that owner or op2 erator on the date of enactment of this Act; or that

3 the owner or operator, with respect to each addi4 tional foreign-flag vessel, has first applied to have

5 that vessel added to the existing operating agree6 ment, and the Secretary denies the application: And

7 provided further, That any foreign-flag vessel in line

8 haul service between the United States and foreign

9 ports is (a) registered under the flag of an effective

10 United States-controlled foreign flag, and (b) avail11 able to be requisitioned by the Secretary of Trans12 portation pursuant to section 902 of this Act;

13 ‘‘(3) owning, chartering, or operating foreign14 flag liner vessels that are operated exclusively in for15 eign-to-foreign service and not in the foreign com16 merce of the United States;

17 ‘‘(4) owning, chartering, or operating foreign18 flag bulk cargo vessels that are operated in both for19 eign-to-foreign service and the foreign commerce of

20 the United States;

21 ‘‘(5) chartering or operating foreign-flag vessels

22 that are operated solely as replacement vessels for

23 United States-flag vessels that are made available to

24 the Secretary of Defense pursuant to section 652 of

25 subpart B of title VI; or
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1 ‘‘(6) entering into space charter agreements

2 with foreign-flag carriers or acting as agent or

3 broker for a foreign-flag vessel or vessels.’’.

4 SEC. 205. DEFINITION OF PRIVATELY OWNED UNITED

5 STATES-FLAG COMMERCIAL VESSELS.

6 The third sentence of section 901(b)(1) of title IX

7 of the Merchant Marine Act, 1936, as amended (46 App.

8 U.S.C. 1241(b)(1)) is deleted in its entirety and the fol9 lowing is inserted in lieu thereof: ‘‘For purposes of this

10 section, the term ‘privately owned United States-flag com11 mercial vessels’ shall be deemed to include (1) any pri12 vately owned United States flag commercial vessel con13 structed in the United States, (2) any privately owned

14 liner vessel constructed, reconstructed, or acquired outside

15 the United States that is documented pursuant to chapter

16 121 of title 46, United States Code and is less than five

17 years of age on the date of such documentation, and (3)

18 any bulk cargo vessel constructed in or delivered by a ship19 yard outside the United States after January 1, 1993. The

20 term ‘privately owned United States-flag commercial ves21 sels’ shall also be deemed to include any liner or bulk

22 cargo vessel that so qualified pursuant to section 615 of

23 title VI or section 901(b)(1) of title IX of this Act, prior

24 to enactment of the Maritime Security and Trade Act of

25 1994. The term ‘privately owned United States-flag com-
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1 mercial vessels’ shall not be deemed to include any liquid

2 bulk cargo vessel that does not meet the requirements of

3 section 3703a of title 46, United States Code.’’.

4 SEC. 206. USE OF FOREIGN-FLAG FEEDER VESSELS IN

5 CARRIAGE OF PREFERENCE CARGOES.

6 The provisions of law set forth in 46 App. U.S.C.

7 1241(b)(1), 1241–1, and 1241f, requiring use of United

8 States-flag vessels shall, with respect to liner vessels, be

9 deemed fulfilled, as to the total of any shipment other than

10 that of the Department of Defense covered by 10 U.S.C.

11 2631, if the actual ocean transportation of each shipment

12 for which the United States-flag carrier has issued its own

13 through bill-of-lading between the original port of lading

14 and the port of final discharge, consists of transportation

15 of the cargo by a combination of United States-and for16 eign-flag vessels: Provided, That, measured by distance,

17 the United States-flag line haul portion of each voyage is

18 greater than the foreign-flag feeder portion of each voyage

19 pursuant to regulations issued by the Secretary of Trans20 portation.

21 SEC. 207. LIMITATION ON RESTRICTIONS.

22 Notwithstanding any other provision of law or con23 tract, all restrictions and requirements set forth in 46

24 App. U.S.C. 1153, 1156, and 1212, applicable to a vessel

25 constructed, reconstructed or reconditioned with the aid
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1 of construction-differential subsidy shall terminate: (1) for

2 a liner or dry bulk cargo vessel, upon the expiration of

3 the twenty-five-year period beginning on the date of origi4 nal delivery of the vessel from the shipyard, and (2) for

5 a liquid bulk cargo vessel, upon the expiration of the twen6 ty-year period beginning on the date of original delivery

7 of the vessel from the shipyard.

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