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[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1138 Introduced in Senate (IS)]

105th CONGRESS
  1st Session
                                S. 1138

To reform the coastwise, intercoastal, and noncontiguous trade shipping 
                     laws, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             July 31, 1997

 Mr. Helms (for himself, Mr. Brownback, Mr. Burns, Mr. Hagel, and Mr. 
   Roberts) introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

_______________________________________________________________________

                                 A BILL

 
To reform the coastwise, intercoastal, and noncontiguous trade shipping 
                     laws, and for other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Freedom to Ship Act of 1997''.

SEC. 2. MISCELLANEOUS AMENDMENTS TO DEFINITIONS IN TITLE 46, UNITED 
              STATES CODE.

    Section 2101 of title 46, United States Code, is amended--
            (1) in each of paragraphs (1) through (45), by striking the 
        period at the end and inserting a semicolon;
            (2) in paragraph (46), by striking the period at the end 
        and inserting ``; and'';
            (3) by striking paragraph (3a) and inserting the following:
            ``(3a) `citizen of the United States' means--
                    ``(A)(i) a national of the United States, as 
                defined in section 101(a)(22) of the Immigration and 
                Nationality Act (8 U.S.C. 1101(a)(22));
                    ``(ii) a corporation established under the laws of 
                the United States or under the laws of a State, 
                territory, district, or possession of the United 
                States, that has--
                            ``(I) a president or other chief executive 
                        officer and chairman of the board of directors 
                        of that corporation who are citizens of the 
                        United States; and
                            ``(II) a board of directors, on which two-
                        thirds of the number of directors necessary to 
                        constitute a quorum are citizens of the United 
                        States;
                    ``(iii) a partnership existing under the laws of a 
                State, territory, district, or possession of the United 
                States that has at least two-thirds of the general 
                partners who are citizens of the United States;
                    ``(iv) a trust that has at least two-thirds of the 
                trustees who are citizens of the United States; or
                    ``(v) an association, joint venture, limited 
                liability company or partnership, or other entity that 
                has at least two-thirds of the members who are citizens 
                of the United States; but
                    ``(B) such term does not include--
                            ``(i) with respect to a person or entity 
                        under clause (ii), (iii), or (v) of 
                        subparagraph (A), any parent corporation, 
                        partnership, or other person (other than an 
                        individual) or entity that is a second-tier 
                        owner (as that term is defined by the 
                        Secretary) of the person or entity involved; or
                            ``(ii) with respect to a trust under clause 
                        (iv), any beneficiary of the trust.'';
            (4) by inserting after paragraph (4) the following new 
        paragraph:
            ``(4a) `coastwise trade'--
                    ``(A) subject to subparagraph (B), means the 
                transportation by water of merchandise or passengers, 
                the towing of a vessel by a towing vessel, or dredging 
                operations embraced within the coastwise laws of the 
                United States--
                            ``(i) between points in the United States 
                        (including any district, territory, or 
                        possession of the United States);
                            ``(ii) on the Great Lakes (including any 
                        tributary or connecting waters of the Great 
                        Lakes and the Saint Lawrence Seaway);
                            ``(iii) on the subjacent waters of the 
                        Outer Continental Shelf subject to the Outer 
                        Continental Shelf Lands Act (43 U.S.C. 1331 et 
                        seq.); and
                            ``(iv) in the noncontiguous trade; and
                    ``(B) does not include the activities specified in 
                subparagraph (A) on the navigable waters included in 
                the inland waterways trade except for activities 
                specified in subparagraph (A) that occur on mixed 
                waters.'';
            (5) by inserting after paragraph (11c) the following new 
        paragraph:
            ``(11d) `foreign qualified vessel' means a vessel--
                    ``(A) registered in a foreign country; and
                    ``(B) the owner, operator, or charterer of which is 
                a citizen of the United States or--
                            ``(i) has qualified to engage in business 
                        in a State and has an agent in that State upon 
                        whom service of process may be made;
                            ``(ii) is subject to the laws of the United 
                        States in the same manner as any foreign person 
                        doing business in the United States; and
                            ``(iii) either--
                                    ``(I) employs vessels in the 
                                coastwise trade regularly or from time 
                                to time as part of a regularly 
                                scheduled freight service in the 
                                foreign ocean (including the Great 
                                Lakes) trades of the United States; or
                                    ``(II) offers passage or cruises on 
                                passenger vessels the owner, operator, 
                                or charterer employs in the coastwise 
                                trade or in the coastwise trade as part 
                                of those cruises offered in the foreign 
                                ocean (including the Great Lakes) 
                                trades of the United States.'';
            (6) by redesignating paragraph (14a) as paragraph (14b);
            (7) by inserting after paragraph (14) the following new 
        paragraph:
            ``(14a) `inland waterways trade'--
                    ``(A) means--
                            ``(i) the transportation of merchandise or 
                        passengers on the navigable rivers, canals, 
                        lakes other than the Great Lakes, or other 
                        waterways inside the Boundary Line;
                            ``(ii) the towing of barges by towing 
                        vessels in the waters specified in clause (i); 
                        or
                            ``(iii) engaging in dredging operations in 
                        the waters specified in clause (i); and
                    ``(B) includes any activity specified in 
                subparagraph (A) that is conducted in mixed waters.'';
            (8) by redesignating paragraph (15a) as paragraph (15b);
            (9) by inserting after paragraph (15) the following:
            ``(15a) `mixed waters' means--
                    ``(A) the harbors and ports on the coasts and Great 
                Lakes of the United States; and
                    ``(B) the rivers, canals, and other waterways 
                tributary to the Great Lakes or to the coastal harbors 
                and coasts of the United States inside the Boundary 
                Line,
        that the Secretary of Transportation determines to be navigable 
        by oceangoing vessels.'';
            (10) by redesignating paragraph (17a) as paragraph (17b);
            (11) by inserting after paragraph (17) the following:
            ``(17a) `noncontiguous trade' means transportation by water 
        of merchandise or passengers, or towing by towing vessels--
                    ``(A) between--
                            ``(i) a point in the 48 continental States 
                        and the District of Columbia; and
                            ``(ii) a point in Hawaii, Alaska, Puerto 
                        Rico, Guam, the Virgin Islands, American Samoa, 
                        the Northern Mariana Islands, or any other 
                        noncontiguous territory or possession of the 
                        United States, as embraced within the coastwise 
                        laws of the United States; or
                    ``(B) between 2 points described in subparagraph 
                (A)(ii).'';
            (12) in paragraph (21)(A)--
                    (A) in clause (ii), by striking ``or'' after the 
                semicolon;
                    (B) in clause (iii), by inserting ``or'' after the 
                semicolon; and
                    (C) by adding at the end the following new clause:
                            ``(iv) an individual who--
                                    ``(I) is a member of the family or 
                                a guest of the owner or charterer; and
                                    ``(II) is not a passenger for 
                                hire;'';
            (13) by striking paragraph (40) and inserting the 
        following:
            ``(40) `towing vessel' means any commercial vessel engaged 
        in, or that a person intends to use to engage in, the service 
        of--
                    ``(A) towing, pulling, pushing, or hauling 
                alongside (or any combination thereof); or
                    ``(B) assisting in towing, pulling, pushing, or 
                hauling alongside;''; and
            (14) by inserting after paragraph (40) the following new 
        paragraphs:
            ``(40a) `towing of a vessel by a towing vessel between 
        points' means attaching a towing vessel to a towed vessel 
        (including any barge) at 1 point and releasing the towed vessel 
        from the towing vessel at another point, regardless of the 
        origin or ultimate destination of either the towed vessel or 
        the towing vessel; and
            ``(40b) `transportation of merchandise or passengers by 
        water between points' means, without regard to the origin or 
        ultimate destination of the merchandise or passengers 
        involved--
                    ``(A) in the case of merchandise, loading 
                merchandise at 1 point and permanently unloading the 
                merchandise at another point; or
                    ``(B) in the case of passengers, embarking 
                passengers at 1 point and permanently disembarking the 
                passengers at another point.''.

SEC. 3. DOCUMENTATION.

    (a) Definitions.--Section 12101(b)(2) of title 46, United States 
Code, is amended--
            (1) by striking paragraph (2) and inserting the following:
            ``(2) `license', `enrollment and license', `license for the 
        coastwise (or coasting) trade', `enrollment and license for the 
        coastwise (or coasting) trade', and `enrollment and license to 
        engage in the foreign and coastwise (or coasting) trade on the 
        northern, northeastern, and northwestern frontiers, otherwise 
        than by sea' mean a coastwise endorsement provided in section 
        12106.'';
            (2) by striking paragraph (3); and
            (3) by redesignating paragraph (4) as paragraph (3).
    (b) Vessels Eligible for Documentation.--Section 12102(a) of title 
46, United States Code, is amended--
            (1) by striking all that precedes paragraph (5) and 
        inserting the following:
    ``(a) A vessel of at least 5 net tons that is not registered under 
the laws of a foreign country or that is not titled in a State is 
eligible for documentation if--
            ``(1)(A) the vessel is owned by an individual who is a 
        citizen of the United States, or a corporation, association, 
        trust, joint venture, partnership, limited liability company, 
        or other entity that is a citizen of the United States; and
            ``(B) the owner of the vessel is capable of holding title 
        to a vessel under the laws of the United States or under the 
        laws of a State;''; and
            (2) by redesignating paragraphs (5) and (6) as paragraphs 
        (2) and (3), respectively.
    (c) Coastwise Endorsements.--Section 12106 of title 46, United 
States Code, is amended to read as follows:
``Sec. 12106. Coastwise endorsements and certificates
    ``(a) In General.--A certificate of documentation may be endorsed 
with a coastwise endorsement for a vessel that is eligible for 
documentation.
    ``(b) Eligibility.--
            ``(1) In general.--Any of the following vessels may be 
        issued a certificate to engage in the coastwise trade if the 
        Secretary of Transportation makes a finding, pursuant to 
        information obtained and furnished by the Secretary of State, 
        that the government of the nation of registry of such vessel 
        extends reciprocal privileges to vessels of the United States 
        to engage in the transportation of merchandise or passengers 
        (or both) in its coastwise trade:
                    ``(A) A foreign qualified vessel (as defined in 
                section 2101(11d)).
                    ``(B) A vessel of foreign registry--
                            ``(i) if the vessel is subject to a demise 
                        or bareboat charter, for the duration of that 
                        charter, to a person or entity that would be 
                        eligible to document that vessel if that person 
                        or entity were the owner of the vessel; or
                            ``(ii) that engages irregularly in the 
                        coastwise trade of the United States.
            ``(2) Vessel engaging irregularly in the coastwise trade.--
        For purposes of this subsection, a vessel engages irregularly 
        in the coastwise trade of the United States if that vessel--
                    ``(A) during any 60-day period does not make, in 
                the aggregate, more than 4 calls to United States 
                ports; and
                    ``(B) during any calendar year does not make, in 
                the aggregate, more than 6 calls to United States 
                ports.
    ``(c) Employment in the Coastwise Trade.--Subject to the applicable 
laws of the United States regulating the coastwise trade and trade with 
Canada, only a vessel with a certificate of documentation endorsed with 
a coastwise endorsement or with a certificate issued under subsection 
(b) may be employed in the coastwise trade.''.
    (d) Inland Waterways Endorsements.--Section 12107 of title 46, 
United States Code, is amended to read as follows:
``Sec. 12107. Inland waterways endorsements
    ``A certificate of documentation may be endorsed with an inland 
waterways endorsement for a vessel that--
            ``(1) is eligible for documentation; and
            ``(2)(A) was built in the United States; or
            ``(B) was not built in the United States; but was--
                    ``(i) captured in war by citizens of the United 
                States and lawfully condemned as prize;
                    ``(ii) adjudged to be forfeited for a breach of the 
                laws of the United States; or
                    ``(iii) is qualified for documentation under 
                section 4136 of the Revised Statutes (46 App. U.S.C. 
                14).''.
    (e) Limitations on Operations Authorized by Certificates.--Section 
12110(b) of title 46, United States Code, is amended--
            (1) by striking ``coastwise trade'' and inserting 
        ``coastwise trade or inland waterways trade''; and
            (2) by striking ``that trade'' and inserting ``those 
        trades''.

SEC. 4. TRANSPORTATION OF MERCHANDISE IN THE COASTWISE AND INLAND 
              WATERWAYS TRADES.

    (a) In General.--Section 27 of the Merchant Marine Act, 1920 (46 
U.S.C. App. 883) is amended to read as follows:

``SEC. 27. PROHIBITION.

    ``No merchandise, including merchandise owned by the United States 
Government, a State (as defined in section 2101 of title 46, United 
States Code), or a political subdivision of a State, and including 
material without value, shall be transported by water, on penalty of 
forfeiture of the merchandise (or a monetary amount not to exceed the 
value of the merchandise, as determined by the Secretary of the 
Treasury, or the actual cost of the transportation, whichever is 
greater, to be recovered from any cosigner, seller, owner, importer, 
consignee, agent, or other person that transports or causes the 
merchandise to be transported by water)--
            ``(1) in the coastwise trade, in any vessel other than--
                    ``(A) a vessel documented with a coastwise 
                endorsement under section 12106(a) of title 46, United 
                States Code; or
                    ``(B) a vessel that has been issued coastwise 
                certification under section 12106(b) of title 46, 
                United States Code, that is in effect for engaging in 
                the transportation of merchandise; or
            ``(2) in the inland waterways trade in any vessel other 
        than a vessel documented with an inland waterways endorsement 
        under section 12107 of title 46, United States Code.''.
    (b) Repeal.--Section 27A of the Merchant Marine Act, 1920 (46 App. 
U.S.C. 883-1) is repealed.

SEC. 5. TRANSPORTATION OF PASSENGERS.

    (a) In General.--Section 8 of the Act of June 19, 1886 (24 Stat. 
81, chapter 421; 46 U.S.C. App. 289) is amended to read as follows:

``SEC. 8. PROHIBITION.

    ``No passengers shall be transported by water, on penalty of $200 
for each passenger so transported or the actual cost of the 
transportation, whichever is greater, to be recovered from the vessel 
so transporting the passenger--
            ``(1) in the coastwise trade, in any vessel other than--
                    ``(A) a vessel documented with a coastwise 
                endorsement under section 12106 of title 46, United 
                States Code; or
                    ``(B) a vessel that has been issued a coastwise 
                certification under section 12106(b) of title 46, 
                United States Code, that is in effect for engaging in 
                the transportation of merchandise; and
            ``(2) in the inland waterways trade, in any vessel other 
        than a vessel documented with an inland waterways endorsement 
        under section 12107 of title 46, United States Code.''.
    (b) Repeals.--The following provisions are repealed:
            (1) The Act of April 26, 1938 (52 Stat. 223, chapter 174; 
        46 U.S.C. App. 289a).
            (2) Section 12(22) of the Maritime Act of 1981 (46 U.S.C. 
        App. 289b).
            (3) Public Law 98-563 (46 U.S.C. App. 289c).

SEC. 6. TOWING AND SALVAGING OPERATIONS.

    Section 4370(a) of the Revised Statutes (46 U.S.C. App. 316(a)) is 
amended to read as follows:
    ``(a)(1) No vessel (including any barge), other than a vessel in 
distress, may be towed--
            ``(A) in the coastwise trade by any vessel other than--
                    ``(i) a vessel documented with a coastwise 
                endorsement under section 12106(a) of title 46, United 
                States Code; or
                    ``(ii) a vessel registered in a foreign country, if 
                the Secretary of the Treasury finds, pursuant to 
                information furnished by the Secretary of State, that 
                the government of that foreign country and the 
                government of the country of which each ultimate owner 
                of the towing vessel is a citizen extend reciprocal 
                privileges to vessels of the United States to tow 
                vessels (including barges) in the coastal waters of 
                that country; or
            ``(B) in the inland waterways trade by any vessel other 
        than a vessel documented with an inland waterways endorsement 
        under section 12107 of title 46, United States Code.
    ``(2)(A) The owner and master of any vessel that tows another 
vessel (including a barge) in violation of this section shall each be 
liable to the United States Government for a civil penalty in an amount 
not less than $250 and not greater than $1,000. The penalty shall be 
enforceable through the district court of the United States for any 
district in which the offending vessel is found.
    ``(B) A penalty specified in subparagraph (A) shall constitute a 
lien upon the offending vessel, and that vessel shall not be granted 
clearance until that penalty is paid.
    ``(C) In addition to the penalty specified in subparagraph (A), the 
offending vessel shall be liable to the United States Government for a 
civil penalty in an amount equal to $50 per ton of the measurement of 
the vessel towed in violation of this section, which shall be 
recoverable in a libel or other enforcement action conducted through 
the district court for the United States for the district in which the 
offending vessel is found.''.

SEC. 7. CITIZENSHIP AND TRANSFER PROVISIONS.

    (a) Citizenship of Corporations, Partnerships, and Associations.--
Section 2 of the Shipping Act, 1916 (46 U.S.C. App. 802) is amended--
            (1) in subsection (a)--
                    (A) by inserting a period after ``possession 
                thereof''; and
                    (B) by striking all that follows the period 
                inserted in subparagraph (A) through the end of the 
                subsection; and
            (2) by striking subsection (c).
    (b) Approval of Transfer of Registry or Operation Under Authority 
of a Foreign Country or for Scrapping in a Foreign Country; 
Penalties.--Section 9 of the Shipping Act, 1916 (46 U.S.C. App. 808) is 
amended--
            (1) by striking subsection (c) and inserting the following:
    ``(c) Except as provided in section 611 of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1181) and section 31322(a)(1)(D) of title 46, 
United States Code, a person may not, without the approval of the 
Secretary of Transportation--
            ``(1) place under foreign registry--
                    ``(A) a documented vessel; or
                    ``(B) a vessel with respect to which the last 
                documentation was made under the laws of the United 
                States;
            ``(2) operate a vessel referred to in paragraph (1) under 
        the authority of a foreign government; or
            ``(3) scrap or transfer for scrapping a vessel referred to 
        in paragraph (1) in a foreign country.''; and
            (2) by striking subsection (d) and inserting the following:
    ``(d)(1) A person that places a documented vessel under foreign 
registry, operates that vessel under the authority of a foreign 
country, or scraps or transfers for scrapping that vessel in a foreign 
country--
            ``(A) in violation of this section and knowing that that 
        placement, operation, scrapping, or transfer for scrapping is a 
        violation of this section shall, upon conviction, be fined 
        under title 18, United States Code, imprisoned for not more 
        than 5 years, or both; or
            ``(B) otherwise in violation of this section shall be 
        liable to the United States Government for a civil penalty of 
        not more than $10,000 for each violation.
    ``(2) A documented vessel may be seized by, and forfeited to, the 
United States Government if that vessel is placed under foreign 
registry, operated under the authority of a foreign country, or 
scrapped or transferred for scrapping in a foreign country in violation 
of this section.''.

SEC. 8. LABOR PROVISIONS.

    (a) Liability for Injury or Death of Master or Crew Member.--
Section 20(a) of the Act of March 4, 1915 (38 Stat. 1185, chapter 153; 
46 U.S.C. App. 688(a)), is amended--
            (1) by inserting ``(1)'' after ``(a)'';
            (2) by adding at the end of paragraph (1) (as designated 
        under paragraph (1) of this subsection) the following new 
        sentence: ``In an action brought under this subsection against 
        a defendant employer that does not reside or maintain an office 
        in the United States (including any territory or possession of 
        the United States) and that engages in any enterprise that 
        makes use of 1 or more ports in the United States (as defined 
        in section 2101 of title 46, United States Code), jurisdiction 
        shall be under the district court most proximate to the place 
of the occurrence of the personal injury or death that is the subject 
of the action.''; and
            (3) by adding at the end the following new paragraph:
    ``(2)(A) The employer of a master or member of the crew of a 
vessel--
            ``(i) may, at the election of the employer, participate in 
        an authorized compensation plan under the Longshore and Harbor 
        Workers' Compensation Act (33 U.S.C. 901 et seq.); and
            ``(ii) if the employer makes an election under clause (i), 
        notwithstanding section 2(3)(G) of the Longshore and Harbor 
        Workers' Compensation Act (33 U.S.C. 902(3)(G)), shall be 
        subject to that Act.
    ``(B) If an employer makes an election, in accordance with 
subparagraph (A), to participate in an authorized compensation plan 
under the Longshore and Harbor Workers' Compensation Act--
            ``(i) a master or crew member employed by that employer 
        shall be considered to be an employee for the purposes of that 
        Act; and
            ``(ii) the liability of that employer under that Act to the 
        master or crew member, or to any person otherwise entitled to 
        recover damages from the employer based on the injury, 
        disability, or death of the master or crew member, shall be 
        exclusive and in lieu of all other liability.''.
    (b) Minimum Requirements.--All vessels, whether documented in the 
United States or not, operating in the coastwise trade of the United 
States shall be subject to minimum international labor standards for 
seafarers under international agreements in force for the United 
States, as determined by the Secretary of Transportation on the advice 
of the Secretaries of Labor and Defense.

SEC. 9. REGULATIONS REGARDING VESSELS.

    (a) Applicable Minimum Requirements.--Except as provided in 
paragraph (2), the minimum requirements for vessels engaging in the 
transportation of cargo or merchandise in the United States coastwise 
trade shall be the recognized international standards in force for the 
United States (as determined by the Secretary of the department in 
which the Coast Guard is operating, in consultation with any other 
official of the Federal Government that the Secretary determines to be 
appropriate).
    (b) Consistency in Application of Standards.--In any case in which 
any minimum requirement for vessels referred to in paragraph (1) is 
inconsistent with a minimum that is applicable to vessels that are 
documented in a foreign country and that are admitted to engage in the 
transportation of cargo and merchandise in the United States coastwise 
trade, the standard applicable to United States documented vessels 
shall be deemed to be the standard applicable to vessels that are 
documented in a foreign country.
    (c) Minimum Requirements for Vessels.--As used in this subsection, 
the term ``minimum requirements for vessels'' means, with respect to 
vessels (including United States documented vessels and foreign 
documented vessels), all safety, manning, inspection, construction, and 
equipment requirements applicable to those vessels in United States 
coastwise passenger trade, to the extent that those requirements are 
consistent with applicable international law and treaties to which the 
United States is a signatory.

SEC. 10. ENVIRONMENT.

    All vessels, whether documented under the laws of the United States 
or not, regularly engaging in the United States coastwise trade shall 
comply with all applicable State and Federal environmental statutes.

SEC. 11. GENERAL REQUIREMENTS.

    Each person or entity that is not a citizen of the United States, 
as defined in section 2101(3a) of title 46, United States Code, that 
owns or operates vessels that regularly engage in the United States 
domestic coastwise trade shall--
            (1) establish a corporation or other corporate entity and 
        qualify under the laws of that State where the corporation or 
        corporate entity is established to do business in the United 
        States;
            (2) name an officer of the corporation or corporate entity 
        upon whom process may be served;
            (3) abide by all applicable laws of the United States and 
        the State where the corporation or corporate entity is 
        established; and
            (4) post evidence of--
                    (A) financial responsibility in amounts as 
                considered necessary by the Secretary of Transportation 
                for the business activities of the corporation or 
                corporate entity; and
                    (B) compliance with all applicable United States 
                laws.
                                 <all>
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