II

103D CONGRESS

2D SESSION S. 1945

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 SENATE OF THE UNITED STATES

MARCH 17 (legislative day, FEBRUARY 22), 1994

Mr. HOLLINGS (by request) introduced the following bill; which was read twice

and referred to the Committee on Commerce, Science, and Transportation

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’’.
2

S 1945 IS

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 (a) For payment of obligations incurred for

8 operating-differential subsidy, not to exceed

9 $214,356,000.

10 (b) 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 (c) 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 (d) 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,
3

S 1945 IS

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—

7 (a) by striking ‘‘Secretary of the Navy,’’ in sub8 section (b)(2) and inserting ‘‘Secretary of Defense,’’;

9 and

10 (b) 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-DIF-
4

S 1945 IS

1 FERENTIAL SUBSIDY’’ and inserting a new heading

2 and subheading as follows:

3 ‘‘TITLE VI—OPERATING-DIFFERENTIAL

4 SUBSIDY AND MARITIME SECURITY PROGRAM

5 ‘‘SUBPART A—OPERATING-DIFFERENTIAL SUBSIDY’’.

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

7 amended to read as follows:

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

9 for the operation of a vessel that is more than twenty10 five years of age, unless the Secretary of Transportation

11 has determined, before the enactment of the Maritime Se12 curity and Trade Act of 1994, that it is in the public inter13 est to grant such financial aid for the operation of such

14 vessel.’’.

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

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

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

18 as follows:

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

20 may authorize a contractor operating a liner vessel and

21 receiving an operating-differential subsidy under subpart

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

23 vessel of over five thousand deadweight tons worldwide to

24 replace a vessel that would reach the end of its

25 subsidizable life prior to the expiration of the contractor’s
5

S 1945 IS

1 operating-differential subsidy contract. The replacement

2 vessel shall be documented under chapter 121 of subtitle

3 II of title 46, United States Code.

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

5 for operating-differential subsidy pursuant to subpart A

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

7 amounts set forth in subpart B of this title until the exist8 ing contract pursuant to subpart A terminates according

9 to its terms.

10 ‘‘(b)(1) The Secretary of Transportation may author11 ize a contractor operating a bulk cargo vessel and receiv12 ing operating-differential subsidy under subpart A of this

13 title to construct, reconstruct, or acquire a bulk cargo ves14 sel of over five thousand deadweight tons worldwide to re15 place a vessel that would reach the end of its subsidizable

16 life prior to the expiration of the contractor’s operating17 differential subsidy contract. The replacement vessel shall

18 be documented under chapter 121 of subtitle II of title

19 46, United States Code.

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

21 to receive an operating-differential subsidy under an exist22 ing contract pursuant to subpart A of this title until the

23 existing contract terminates according to its terms.

24 ‘‘(c) Liner vessels and bulk cargo vessels constructed

25 pursuant to subsections (a) and (b) of this section shall
6

S 1945 IS

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

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

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

4 to vessels constructed, reconstructed, or acquired pursuant

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

6 ‘‘(d) Any existing foreign-built liner vessel that is ac7 quired pursuant to subsection (a) of this section and docu8 mented under chapter 121 of subtitle II of title 46, United

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

10 time of such documentation.

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

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

13 documented under chapter 121 of subtitle II of title 46,

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

15 at the time of such documentation.

16 ‘‘(f) No authority granted by the Secretary of Trans17 portation to construct, reconstruct, or acquire vessels pur18 suant to subsections (a) and (b) of this section may be

19 sold, assigned, conveyed, leased or otherwise transferred

20 to any other party, without the written consent of the Sec21 retary of Transportation pursuant to section 608 of this

22 title.

23 ‘‘(g) Any repair or alteration necessary to bring a ves24 sel, which is constructed, reconstructed, or acquired pur25 suant to subsections (a) and (b) of this section, into com-
7

S 1945 IS

1 pliance with parts B and C of subtitle II of title 46, United

2 States Code, or any regulations prescribed under those

3 parts, shall be performed in a privately owned shipyard

4 in the United States.’’.

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

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

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

8 to read as follows:

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

10 Maritime Security and Trade Act of 1994, the Secretary

11 of Transportation shall not enter into any new contract

12 for an operating-differential subsidy under subpart A of

13 this title.

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

15 any operating-differential subsidy contract in effect under

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

17 Maritime Security and Trade Act of 1994—

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

19 set forth in the contract, unless voluntarily termi20 nated at an earlier date by the persons (other than

21 the United States Government) that are parties to

22 the contract; and

23 ‘‘(2) may not be renewed or extended.

24 ‘‘(c) After the date of enactment of the Maritime Se25 curity and Trade of 1994, an owner or operator of a vessel
8

S 1945 IS

1 covered by an operating-differential subsidy contract

2 under subpart A of this title may operate such vessel in

3 the foreign commerce of the United States without restric4 tion, notwithstanding any other provision of this Act.

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

6 ‘‘(1) whose operator receives operating-differen7 tial subsidy pursuant to a contract under this title,

8 which is in force on October 1, 1993, and if the Sec9 retary approves the replacement of such vessel with

10 a comparable vessel, or

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

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

13 the replacement of such vessel with a comparable

14 vessel for inclusion in the fleet established under

15 subpart B of title VI,

16 such vessel may be transferred and registered under the

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

18 notwithstanding any other provision of law: Provided,

19 That the vessel is available to be requisitioned by the Sec20 retary of Transportation pursuant to section 902 of this

21 Act (46 App. U.S.C. 1242).’’.

22 (e) Title VI of the Merchant Marine Act, 1936, as

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

24 adding a new subpart B to read as follows:
9

S 1945 IS

1 ‘‘SUBPART B—MARITIME SECURITY PROGRAM

2 ‘‘ESTABLISHMENT OF FLEET

3 ‘‘SEC. 650. (a) The Secretary of Transportation shall

4 encourage the establishment of a fleet of active, militarily

5 useful, privately owned liner vessels to maintain an Amer6 ican presence in international commercial shipping and

7 meet national defense and other security requirements.

8 The fleet shall consist of privately owned, United States9 flag liner vessels for which there are in effect operating

10 agreements under this subpart.

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

12 unless—

13 ‘‘(1) it is operated by an ‘‘ocean common car14 rier’’ as defined in section 3 of the Shipping Act of

15 1984 (46 App. U.S.C. 1702);

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

17 or less on the date an operating agreement is en18 tered into under section 651, unless the Secretary of

19 Transportation, in consultation with the Secretary of

20 Defense, determines that it is in the national inter21 est to waive this requirement;

22 ‘‘(3) it is a vessel that is less than five years

23 of age at the time it is documented under chapter

24 121 of subtitle II of title 46, United States Code, if

25 it is foreign-built;
10

S 1945 IS

1 ‘‘(4) the Secretary of Transportation, after con2 sultation with the Secretary of Defense, determines

3 that the vessel is necessary to maintain a United

4 States presence in international commercial shipping

5 or determines that the vessel is militarily useful for

6 meeting the sealift needs of the United States with

7 respect to national emergencies; and

8 ‘‘(5) the owner or operator of the vessel is a cit9 izen of the United States as set forth in section 651.

10 ‘‘OPERATING AGREEMENTS

11 ‘‘SEC. 651. (a) The Secretary of Transportation shall

12 require, as a condition of including any vessel in the fleet,

13 that the owner or operator of the vessel enter into an oper14 ating agreement with the Secretary of Transportation pur15 suant to this section.

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

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

18 ‘‘(1) each vessel covered by the operating agree19 ment—

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

21 foreign trade, and

22 ‘‘(B) shall not be operated in the coastwise

23 trade of the United States or in mixed domestic

24 and foreign trade; and

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

26 by the operating agreement shall have the vessel
11

S 1945 IS

1 documented under chapter 121 of subtitle II of title

2 46, United States Code, and shall maintain that

3 documentation.

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

5 operating agreement under this subpart may operate this

6 vessel in the foreign commerce of the United States with7 out restriction.

8 ‘‘(d) (1) The Secretary of Transportation is author9 ized to enter into operating agreements: Provided, That

10 the total does not exceed $1,000,000,000 for the fiscal

11 years 1995 through 2004.

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

13 shall provide that the Secretary of Transportation pay to

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

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

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

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

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

19 the owner or operator of a liner vessel under an operating

20 agreement pursuant to this section shall be paid at the

21 end of each month in equal installments.

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

23 to carry out this section.

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

25 under this section, the owner or operator shall certify an-
12

S 1945 IS

1 nually, pursuant to regulations issued by the Secretary,

2 that each vessel covered by an operating agreement was

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

4 least three hundred and twenty days in a fiscal year, in5 cluding days during which the liner vessel is drydocked,

6 surveyed, inspected, or repaired.

7 ‘‘(f) Without regard to an operating agreement in ef8 fect with an owner or operator of a liner vessel under this

9 section, the Secretary of Transportation shall not make

10 any payment under this section for a vessel with respect

11 to any period in which the vessel is—

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

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

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

15 with an operating agreement under this subpart; or

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

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

18 a vessel covered by an operating agreement, the Secretary

19 of Transportation—

20 ‘‘(1) shall not reduce any payment for the oper21 ation of a vessel to carry military or other preference

22 cargoes under—

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

24 States Code; or
13

S 1945 IS

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

2 United States Code;

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

4 that a vessel is engaged in transporting more than

5 five thousand tons of civilian bulk preference cargoes

6 pursuant to section 901(a), 901(b), or 901b of this

7 Act; and

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

9 that a vessel is engaged in transporting less than

10 five thousand tons of civilian bulk preference cargoes

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

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

13 amount otherwise payable as revenue for the car14 riage of preference cargo bears to the gross revenue

15 derived from the entire voyage.

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

17 operating agreements in the following order of priority:

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

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

20 under section 2 of the Shipping Act, 1916; and then

21 ‘‘(2) Liner vessel or vessels owned or operated

22 by a person that is eligible to document a vessel

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

24 States Code.
14

S 1945 IS

1 ‘‘(i) No authority granted by the Secretary of Trans2 portation to an owner or operator of a vessel covered by

3 an operating agreement under this subpart may be sold,

4 assigned, conveyed, leased or otherwise transferred to any

5 other party, without the written consent of the Secretary

6 of Transportation pursuant to the provisions of section

7 608 of this title.

8 ‘‘(j) Any authority granted by the Secretary of Trans9 portation to an owner or operator of a vessel covered by

10 an operating agreement under this subpart shall be used

11 by the holder of the operating agreement within one year

12 from the date such authority is granted for existing vessels

13 and within two years from the date such authority is

14 granted for newly constructed vessels, or the authority

15 shall revert to the Secretary of Transportation for such

16 disposition as determined appropriate.

17 ‘‘(k) An operating agreement entered into by the Sec18 retary of Transportation under this subpart shall be effec19 tive for a period of not more than ten years, and, under

20 any condition, terminate not later than September 30,

21 2004.

22 ‘‘(l) An operating agreement entered into by the Sec23 retary of Transportation under this subpart shall require

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

25 agreement under this subpart to enroll in an Emergency
15

S 1945 IS

1 Preparedness Program, pursuant to the requirements of

2 section 652, under such terms and conditions as the Sec3 retary may prescribe.

4 ‘‘NATIONAL SECURITY REQUIREMENTS

5 ‘‘SEC. 652. (a) On a request of the President, acting

6 through the Secretary of Transportation in consultation

7 with the Secretary of Defense, during time of war or na8 tional emergency or when decided by the President to be

9 necessary in the national interest, acting through the Sec10 retary of Transportation in consultation with the Sec11 retary of Defense, an owner or operator of a vessel covered

12 by an operating agreement under this subpart shall make

13 available commercial transportation resources pursuant to

14 an Emergency Preparedness Program established by the

15 Secretary of Transportation in consultation with the Sec16 retary of Defense.

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

18 made available shall include ships, capacity, intermodal

19 systems or equipment, terminal facilities, and intermodal

20 and management services, or any portion of these re21 sources, as the Secretary may determine to be necessary.

22 ‘‘(c) The Secretary of Transportation shall not reduce

23 the amount of equal monthly installment payments under

24 section 651 to an owner or operator who makes commer25 cial transportation resources available pursuant to an

26 Emergency Preparedness Program under this section.
16

S 1945 IS

1 ‘‘(d) An owner or operator who makes a vessel avail2 able pursuant to this section shall be permitted to employ

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

4 States, without receiving additional compensation, as a re5 placement for a vessel covered by an operating agreement,

6 until a vessel used is redelivered.

7 ‘‘DOMESTIC NONCONTIGUOUS TRADE RESTRICTIONS

8 ‘‘SEC. 653. (a) PROHIBITION.—

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

10 section, an owner or operator may not receive any

11 payment under this subpart—

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

13 party with respect to the owner or operator, di14 rectly or indirectly owns, charters, or operates

15 a vessel engaged in the transportation of cargo

16 in a noncontiguous trade other than in accord17 ance with a waiver under subsection (b), (c), or

18 (d); or

19 ‘‘(B) if the owner or operator is authorized

20 to operate a vessel in noncontiguous trade

21 under such a waiver, and there is a—

22 ‘‘(i) material change in the domestic

23 ports served by the owner or operator from

24 the ports permitted to be served under the

25 waiver;
17

S 1945 IS

1 ‘‘(ii) material increase in the annual

2 number or the frequency of sailings by the

3 owner or operator from the number or fre4 quency permitted under the waiver; or

5 ‘‘(iii) material increase in the annual

6 volume of cargo carried or annual capacity

7 utilized by the owner or operator from the

8 annual volume of cargo or annual capacity

9 permitted under the waiver.

10 ‘‘(2) LIMITATIONS ON PROHIBITION.—Para11 graph (1) applies to an owner or operator only in

12 the years specified for payments under the operating

13 agreement entered into by the owner or operator.

14 ‘‘(b) GENERAL WAIVER AUTHORITY.—

15 ‘‘(1) IN GENERAL.—Except as provided in sub16 section (c), the Secretary may waive, in writing, the

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

18 pursuant to an application submitted in accordance

19 with this subsection, unless the Secretary finds

20 that—

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

22 competition to any person that operates vessels

23 as a carrier of cargo in a service exclusively in

24 the noncontiguous trade for which the waiver is

25 applied;
18

S 1945 IS

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

2 service in that noncontiguous trade is adequate;

3 or

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

5 the objects or policy of this title or Act.

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

7 by the Secretary under this subsection shall state—

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

9 served,

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

11 sailings that may be provided; and

12 ‘‘(C)(i) the annual volume of cargo per13 mitted,

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

15 annual forty foot equivalent unit shipboard con16 tainer and trailer or vehicle or general cargo ca17 pacity permitted, or

18 ‘‘(iii) for tug and barge service, the annual

19 barge house cubic foot capacity and the annual

20 barge deck general cargo capacity, or forty foot

21 equivalent unit container, trailer, or vehicle ca22 pacity, permitted.

23 ‘‘(3) APPLICATIONS FOR WAIVERS.—An appli24 cation for a waiver under this subsection may be
19

S 1945 IS

1 submitted by an owner or operator and shall de2 scribe, as applicable, the nature and scope of—

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

4 in a noncontiguous trade under the waiver; or

5 ‘‘(B) any proposed material change or in6 crease in a service in a noncontiguous trade

7 permitted under a previous wavier.

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

9 ‘‘(A) NOTICE AND PROCEEDING.—Within

10 thirty days after receipt of an application for a

11 waiver under this subsection, the Secretary

12 shall—

13 ‘‘(i) publish a notice of the applica14 tion;

15 ‘‘(ii) begin a proceeding on the appli16 cation section 554 of title 5, United States

17 Code, to receive—

18 ‘‘(I) evidence of the nature,

19 quantity, and quality of the existing

20 service in the noncontiguous trade for

21 which the waiver is applied;

22 ‘‘(II) a description of the pro23 posed service or proposed material

24 change or increase in a previously per25 mitted service;
20

S 1945 IS

1 ‘‘(III) the projected effect of the

2 proposed service or proposed material

3 change or increase in existing service;

4 and

5 ‘‘(IV) recommendations on condi6 tions that should be contained in any

7 waiver for the proposed service or ma8 terial change or increase.

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

10 waiver under this subsection, and any person

11 that operates cargo vessels in the noncontiguous

12 trade for which a waiver is applied and that has

13 any interest in the application, may intervene in

14 the proceedings on the application.

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

16 to grant a waiver under this subsection, the

17 Secretary shall hold a public hearing in an ex18 peditious manner, reasonable notice of which

19 shall be published.

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

21 all proceedings and hearings on an application under

22 this subsection and issue a decision on the record

23 within ninety days after receipt of the final briefs

24 submitted for the record.
21

S 1945 IS

1 ‘‘(6) LIMITATION ON CONSIDERATION OF CER2 TAIN EXISTING SERVICE.—

3 ‘‘(A) LIMITATION.—In determining wheth4 er to grant a waiver under this subsection for

5 noncontiguous trade with Hawaii, the Secretary

6 shall not consider the criterion set forth in

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

8 ‘‘(i) is a party to an operating agree9 ment under this subpart, and

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

11 foreign commerce in competition with an12 other operator who is a party to an operat13 ing agreement under this subpart.

14 ‘‘(B) QUALIFIED OPERATOR.—In this

15 paragraph, the term ‘qualified operator’ means

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

17 as an operator of containerized vessels, trailer

18 vessels, or combination container and trailer

19 vessels in domestic trade with Hawaii and the

20 Johnston Islands (including a related party

21 with respect to the person).

22 ‘‘(c) WAIVERS FOR EXISTING NONCONTIGUOUS

23 TRADE OPERATORS.—

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

25 the application of subsection (a) to an owner or op-
22

S 1945 IS

1 erator who is a party to an operating agreement

2 under this subpart, pursuant to an application sub3 mitted in accordance with this subsection if the Sec4 retary finds that the owner or operator, or a related

5 party or predecessor in interest with respect to the

6 owner or operator—

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

8 vessel as a carrier of cargo by water—

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

10 1, 1992; or

11 ‘‘(ii) in furnishing seasonal service in

12 a season ordinarily covered by its oper13 ation, during the twelve calendar months

14 preceding July 1, 1992; and

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

16 that time, except for interruptions of service re17 sulting from military contingency or over which

18 the owner or operator (or related party or pred19 ecessor in interest) had no control.

20 ‘‘(2) TERMS OF WAIVER.—

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

22 provided in this paragraph, the level of service

23 permitted under a waiver under this subsection

24 shall be the level of service provided by the ap25 plicant (or related party or predecessor in inter-
23

S 1945 IS

1 est) in the relevant noncontiguous trade during,

2 for year-round service, the six calendar months

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

4 the twelve calendar months preceding July 1,

5 1992, determined by—

6 ‘‘(i) the domestic ports called;

7 ‘‘(ii) the number of sailings actually

8 made, except as to interruptions in the

9 service in the noncontiguous trade result10 ing from military contingency or over

11 which the applicant (or related party or

12 predecessor in interest) had no control;

13 and

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

15 for containerized or trailer service, the

16 forty-foot equivalent unit shipboard con17 tainer, trailer, or vehicle or general cargo

18 capacity employed, or, for tug and barge

19 service, the barge house cubic foot capacity

20 and barge deck general cargo capacity or

21 forty-foot equivalent unit container, trailer,

22 or vehicle capacity, employed.

23 ‘‘(B) CERTAIN CONTAINERIZED VES24 SELS.—If an applicant under this subsection

25 was offering service as an operator of container-
24

S 1945 IS

1 ized vessels in noncontiguous trades with Ha2 waii, Puerto Rico, and Alaska on July 1, 1992,

3 a waiver under this subsection for the applicant

4 shall permit a level of service consisting of—

5 ‘‘(i) one hundred and four sailings

6 each year from the West Coast of the

7 United States to Hawaii with an annual

8 capacity allocated to the service of 75 per

9 centum of the total capacity of the vessels

10 employed in the service on July 1, 1992;

11 ‘‘(ii) one hundred and fifty-six sailings

12 each year in each direction between the

13 east coast or gulf coast of the United

14 States and Puerto Rico with an annual ca15 pacity allocated to the service of 75 per

16 centum of the total capacity of its vessels

17 employed in the service on the date of the

18 enactment of the Maritime Security and

19 Trade Act of 1994; and

20 ‘‘(iii) one hundred and three sailings

21 each year in each direction between Wash22 ington and Alaska with an annual capacity

23 allocated to the service in each direction of

24 100 per centum of the total capacity of its
25

S 1945 IS

1 vessels employed in the service on July 1,

2 1992.

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

4 applicant under this subsection was offering

5 service as an operator of tugs and barges in

6 noncontiguous trades with Hawaii, Puerto Rico,

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

8 this subsection for the applicant shall permit a

9 level of service consisting of—

10 ‘‘(i) seventeen sailings each year in

11 each direction between ports in Washing12 ton, Oregon, and northern California and

13 ports in Hawaii with an annual barge

14 house cubic foot capacity and annual barge

15 deck forty-foot equivalent unit container

16 capacity in each direction of 100 per cen17 tum of the total of the capacity of its ves18 sels employed in the service during the six

19 calendar months preceding July 1, 1992,

20 annualized;

21 ‘‘(ii) two hundred and fifty-three

22 sailings each year in each direction be23 tween the east coast or gulf coast of the

24 United States and Puerto Rico with an an25 nual forty-foot equivalent unit container or
26

S 1945 IS

1 trailer capacity equal to 100 per centum of

2 the capacity of its barges employed in the

3 service on the date of the enactment of the

4 Maritime Security and Trade Act of 1994;

5 ‘‘(iii) thirty-seven regularly scheduled

6 tandem tow rail barge sailings and ten ad7 ditional single tow rail barge sailings each

8 year in each direction between Washington

9 and the Alaskan port range between and

10 including Anchorage and Whittier with an

11 annual capacity allocated to the service in

12 each direction of 100 per centum of the

13 total rail car capacity of its vessels em14 ployed in the service on July 1, 1992;

15 ‘‘(iv) eight regularly scheduled single

16 tow sailings each year in each direction be17 tween Washington and points in Alaska

18 (not including the port range between and

19 including Anchorage and Whittier, except

20 occasional deviations to discharge

21 incidential quantities of cargo) with an an22 nual capacity allocated to the service in

23 each direction of 100 per centum of the

24 total capacity of its vessels employed in the

25 service on July 1, 1992; and
27

S 1945 IS

1 ‘‘(v) unscheduled, contract carrier tug

2 and barge service between points in Alaska

3 south of the Arctic Circle not served by the

4 common carrier service permitted under

5 clause (iii) and points in the contiguous

6 forty-eight States, with an annual capacity

7 allocated to that service not exceeding 100

8 per centum of the total capacity of the

9 equipment that was dedicated to service

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

11 and actually utilized in that service in the

12 two-year period preceding that date.

13 ‘‘(D) ANNUALIZATION.—Capacity other14 wise required by this paragraph to be permitted

15 under a waiver under this subsection shall be

16 annualized if not a seasonal service.

17 ‘‘(E) ADJUSTMENTS.—

18 ‘‘(i) Each written waiver granted by

19 the Secretary under this subsection shall

20 contain a statement that the annual capac21 ity permitted under this waiver in any di22 rection shall increase for a calendar year

23 by the percentage of increase during the

24 preceding calendar year in the real gross

25 product of the State or territory to which
28

S 1945 IS

1 goods are transported in the noncontiguous

2 trade covered by the waiver, or its equiva3 lent economic measure as determined by

4 the Secretary if the real gross product is

5 not available, and that the increase shall

6 not be considered to be a material change

7 or increase for purposes of subsection

8 (a)(1)(B).

9 ‘‘(ii) The increase in permitted capac10 ity under clause (i) in the noncontiguous

11 trade with Alaska shall be allowed only to

12 the extent the operator actually uses that

13 increased capacity to carry cargo in the

14 permitted service in the calendar year im15 mediately following the preceding increase

16 in gross product. However, if an operator

17 operating exclusively containerized vessels

18 in trade on July 1, 1992, carries an aver19 age load factor of at least 90 per centum

20 of permitted capacity (including the capac21 ity, if any, both authorized and used under

22 the previous sentence) during nine months

23 of any one calendar year, than in the next

24 following calendar year and thereafter, the

25 requirement that additional capacity must
29

S 1945 IS

1 be used in the immediately following year

2 does not apply.

3 ‘‘(F) SERVICE LEVELS NOT INCREASED BY

4 TERMINATION OF AGREEMENT.—The termi5 nation of an operating agreement under Sub6 part B of this title shall not be considered to

7 increase a level of service specified in subpara8 graph (A), (B), or (C) if the contractor under

9 the agreement enters into another operating

10 agreement after that termination.

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

12 waiver under this subsection a contractor shall sub13 mit to the Secretary an application certifying the

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

15 or (B), as applicable.

16 ‘‘(4) ACTION ON APPLICATION.—

17 ‘‘(A) NOTICE.—The Secretary shall pub18 lish a notice of receipt of an application for a

19 waiver under this subsection within thirty days

20 after receiving the application.

21 ‘‘(B) HEARING PROHIBITED.—The Sec22 retary may not conduct a hearing on an appli23 cation for a waiver under this subsection.

24 ‘‘(C) SUBMISSION OF COMMENTS.—The

25 Secretary shall give every person operating a
30

S 1945 IS

1 cargo vessel in a noncontiguous domestic trade

2 for which a waiver is applied for under this sub3 section and who has any interest in the applica4 tion a reasonable opportunity to submit com5 ments on the application and on the description

6 of the service that would be permitted by any

7 waiver that is granted by the Secretary under

8 the application.

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

10 the time required for publication of notice and for

11 receipt and evaluation of comments by the Sec12 retary, an application for a waiver under this sub13 section submitted at the same time the applicant ap14 plies for inclusion of a vessel in the fleet established

15 under this subpart shall be granted in accordance

16 with the level of service determined by the Secretary

17 under this subsection by not later than the date on

18 which the Secretary offers to the applicant an oper19 ating agreement with respect to that vessel.

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

21 material change or increase in a service that is sub22 ject to a waiver under this subsection is not author23 ized except to the extent the change or increase is

24 permitted by a waiver under subsection (b).
31

S 1945 IS

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

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

3 hearing, temporarily waive the application of subsection

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

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

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

7 another emergency declared by the President. Any waiver

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

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

10 Secretary finds that adequate capacity continues to be

11 otherwise unavailable.

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

13 under this section shall require the person who is granted

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

15 report setting forth for the service authorized by the waiv16 er—

17 ‘‘(1) the ports served during the year;

18 ‘‘(2) the number or frequency of sailings per19 formed during the year; and

20 ‘‘(3) the volume of cargo carried or, for contain21 erized or trailer service, the annual forty-foot equiva22 lent unit shipboard container, trailer, or vehicle ca23 pacity utilized during the year, or for tug and barge

24 service, the annual barge house and barge deck ca25 pacity utilized during the year.
32

S 1945 IS

1 ‘‘(f) DEFINITIONS.—In this section—

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

3 trade between—

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

5 States; and

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

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

8 Arctic Circle; and

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

10 ‘‘(A) a holding company, subsidiary, affili11 ate, or associate of a owner or operator who is

12 a party to an operating agreement under this

13 subpart; and

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

15 executive of a contractor or of a person referred

16 to in subparagraph (A).

17 ‘‘DEFINITIONS

18 ‘‘SEC. 654. For the purposes of subpart B of this

19 title:

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

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

22 under section 651 of this subpart.

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

24 operating agreement that takes effect under section

25 651 of this subpart and covers one or more ves26 sels.’’.
33

S 1945 IS

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

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

3 beginning on the date which is one hundred and twenty

4 days after the date of enactment of the Maritime Security

5 and Trade Act of 1994.

6 SEC. 203. TONNAGE FEES.

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

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

9 second paragraph by—

10 (1) inserting after ‘‘1998,’’ the first place it ap11 pears ‘‘and a supplemental duty of 15 cents per ton,

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

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

14 and

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

16 appears, ‘‘and a supplemental duty of 44 cents per

17 ton, not to exceed $2.20 per ton in any one year, for

18 fiscal years 1995 through 2004,’’.

19 (b) OFFSETTING RECEIPTS.—The increased tonnage

20 fees collected as a result of the amendments made by sub21 section (a) shall be deposited in the general fund of the

22 Treasury as offsetting receipts of the department in which

23 the Coast Guard is operating and ascribed to Coast Guard

24 activities.
34

S 1945 IS

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

2 Section 804 of title VIII of the Merchant Marine Act,

3 1936, as amended (46 App. U.S.C. 1222), is amended by

4 adding a new subsection (f) as follows:

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

6 shall not preclude an owner or operator receiving operat7 ing assistance under subpart A or subpart B of title VI,

8 or any holding company, subsidiary, affiliate or associate

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

10 or executive thereof from—

11 ‘‘(1) owning, chartering, or operating any for12 eign-flag vessel that is operated as a feeder vessel

13 for a United States-flag service under an operating

14 agreement pursuant to subpart B of title VI;

15 ‘‘(2) owning, chartering, or operating any for16 eign-flag vessel in line haul service between the Unit17 ed States and foreign ports: Provided, That the for18 eign-flag vessel was operated by that owner or oper19 ator on the date of enactment of this Act; or that

20 the owner or operator, with respect to each addi21 tional foreign-flag vessel, has first applied to have

22 that vessel added to the existing operating agree23 ment, and the Secretary denies the application: And

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

25 haul service between the United States and foreign

26 ports is (a) registered under the flag of an effective
35

S 1945 IS

1 United States-controlled foreign flag, and (b) avail2 able to be requisitioned by the Secretary of Trans3 portation pursuant to section 902 of this Act;

4 ‘‘(3) owning, chartering, or operating foreign5 flag liner vessels that are operated exclusively in for6 eign-to-foreign service and not in the foreign com7 merce of the United States;

8 ‘‘(4) owning, chartering, or operating foreign9 flag bulk cargo vessels that are operated in both for10 eign-to-foreign service and the foreign commerce of

11 the United States;

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

13 that are operated solely as replacement vessels for

14 United States-flag vessels that are made available to

15 the Secretary of Defense pursuant to section 652 of

16 subpart B of title VI; or

17 ‘‘(6) entering into space charter agreements

18 with foreign-flag carriers or acting as agent or

19 broker for a foreign-flag vessel or vessels.

20 SEC. 205. DEFINITION OF PRIVATELY OWNED UNITED

21 STATES-FLAG COMMERCIAL VESSELS.

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

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

24 U.S.C. 1241(b)(1)), is deleted in its entirety and the fol25 lowing is inserted in lieu thereof: ‘‘For purposes of this
36

S 1945 IS

1 section, the term ‘privately owned United States-flag com2 mercial vessels’ shall be deemed to include (1) any pri3 vately owned United States-flag commercial vessel con4 structed in the United States, (2) any privately owned

5 liner vessel constructed, reconstructed, or acquired outside

6 the United States that is documented pursuant to chapter

7 121 of title 46, United States Code, and is less than five

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

9 any bulk cargo vessel constructed in or delivered by a ship10 yard outside the United States after January 1, 1993. The

11 term ‘privately owned United States-flag commercial ves12 sels’ shall also be deemed to include any liner or bulk

13 cargo vessel that so qualified pursuant to section 615 of

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

15 to enactment of the Maritime Security and Trade Act of

16 1994. The term ‘privately owned United States-flag com17 mercial vessels’ shall not be deemed to include any liquid

18 bulk cargo vessel that does not meet the requirements of

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

20 SEC. 206. USE OF FOREIGN-FLAG FEEDER VESSELS IN CAR21 RIAGE OF PREFERENCE CARGOES.

22 The provisions of law set forth in sections

23 1241(b)(1), 1241–1 and 1241f of title 46, United States

24 Code Appendix, requiring use of United States-flag vessels

25 shall, with respect to liner vessels, be deemed fulfilled, as
37

S 1945 IS

1 to the total of any shipment other than that of the Depart2 ment of Defense covered by section 2631 of title 10,

3 United States Code, if the actual ocean transportation of

4 each shipment for which the United States-flag carrier has

5 issued its own through bill-of-lading between the original

6 port of lading and the port of final discharge, consists of

7 transportation of the cargo by a combination of United

8 States- and foreign-flag vessels: Provided, That, measured

9 by distance, the United States-flag line haul portion of

10 each voyage is greater than the foreign-flag feeder portion

11 of each voyage pursuant to regulations issued by the Sec12 retary of Transportation.

13 SEC. 207. LIMITATION ON RESTRICTIONS.

14 Notwithstanding any other provision of law or con15 tract, all restrictions and requirements set forth in sec16 tions 1153, 1156, and 1212 of title 46, United States

17 Code Appendix, applicable to a vessel constructed, recon18 structed, or reconditioned with the aid of construction-dif19 ferential subsidy shall terminate: (1) for a liner or dry

20 bulk cargo vessel, upon the expiration of the twenty-five21 year period beginning on the date of original delivery of

22 the vessel from the shipyard, and (2) for a liquid bulk

23 cargo vessel, upon the expiration of the twenty-year period

24 beginning on the date of original delivery of the vessel

25 from the shipyard.
38

S 1945 IS

Æ

S 1945 IS——2

S 1945 IS——3