II

106TH CONGRESS

2D SESSION S. 2564

To provide tax incentives for the construction of seagoing cruise ships in

United States shipyards, and to facilitate the development of a United

States-flag, United States-built cruise industry, and for other purposes.

IN THE SENATE OF THE UNITED STATES

MAY 16, 2000

Ms. SNOWE introduced the following bill; which was read twice and referred

to the Committee on Finance

A BILL

To provide tax incentives for the construction of seagoing

cruise ships in United States shipyards, and to facilitate

the development of a United States-flag, United Statesbuilt cruise industry, and for other purposes.

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

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘All American Cruise

5 Act of 2000’’.
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1 TITLE I—TAX INCENTIVES FOR

2 CRUISE SHIP CONSTRUCTION

3 AND OPERATION

4 SEC. 101. TAX TREATMENT OF UNITED STATES-BUILT

5 CRUISE SHIPS DURING CONSTRUCTION PE6 RIOD.

7 (a) AMENDMENT.—Section 460(e) of the Internal

8 Revenue Code of 1986 (relating to special rules for long9 term contracts) is amended by adding at the end the fol10 lowing new paragraph:

11 ‘‘(7) SPECIAL RULE FOR CRUISE SHIP CON12 STRUCTION CONTRACTS.—In the case of any con13 tract for the construction or overhaul of an ocean14 going cruise ship of at least 20,000 gross tons, a

15 contractor may, at the contractor’s election, use the

16 completed contract method of accounting for each

17 ship that is constructed or overhauled, provided

18 that—

19 ‘‘(A) the construction or overhaul of the

20 ship will take more than 12 months to complete

21 from the contract commencement date to the

22 date that the ship is delivered or returned to

23 the owner,

24 ‘‘(B) the reporting of revenue and costs for

25 each ship may not be deferred beyond the date
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1 of delivery or return of the ship to the owner,

2 and

3 ‘‘(C) when a contract provides for the con4 struction or overhaul of more than 1 ship, each

5 ship covered by the contract will be treated as

6 an individual ship contract for the purpose of

7 applying the completed contract method of ac8 counting, and the reporting of revenue and

9 costs for each ship may not be deferred beyond

10 the date on which the ship is delivered or re11 turned to the owner.’’.

12 (b) EFFECTIVE DATE.—The amendment made by

13 this section shall apply to taxable years beginning after

14 December 31, 2000.

15 SEC. 102. GROSS INCOME EXCLUSION FOR CRUISE SHIP OP16 ERATIONS.

17 (a) AMENDMENTS.—Part III of subchapter B of

18 chapter 1 of the Internal Revenue Code of 1986 (relating

19 to amounts specifically excluded from gross income) is

20 amended by redesignating section 139 as section 140 and

21 by inserting after section 138 the following new section:

22 ‘‘SEC. 139. AMOUNTS DERIVED FROM CRUISE SHIP OPER23 ATIONS.

24 ‘‘(a) GENERAL RULE.—Gross income of a corpora25 tion organized in the United States shall not include
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1 amounts derived by the corporation from the operation of

2 a cruise ship which was built in the United States and

3 has a certificate of documentation issued under chapter

4 121 of title 46, United States Code.

5 ‘‘(b) DEFINITION.—For purposes of subsection (a),

6 the term ‘cruise ship’ means a seagoing passenger vessel

7 of at least 20,000 gross tons that provides a full range

8 of overnight accommodations, entertainment, dining, and

9 other services for its passengers.’’.

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

11 this section shall apply to taxable years beginning after

12 December 31, 2000.

13 SEC. 103. CREDIT FOR INCOME FROM CRUISE SHIP CON14 STRUCTION CONTRACTS.

15 (a) AMENDMENT.—Subpart D of part IV of sub16 chapter A of chapter 1 of the Internal Revenue Code of

17 1986 (relating to credits against tax) is amended by add18 ing at the end the following new section:

19 ‘‘SEC. 45D. CRUISE SHIP CONSTRUCTION CREDIT.

20 ‘‘(a) GENERAL RULE.—In the case of a taxpayer de21 scribed in subsection (b), there shall be allowed a credit

22 against the taxes imposed by this chapter for the taxable

23 year an amount equal to the amount of any income taxes

24 that would be paid or accrued during the taxable year (but

25 for this section) to the United States on the income real-
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1 ized from any construction contract described in sub2 section (c).

3 ‘‘(b) TAXPAYER DESCRIBED.—The taxpayer referred

4 to in subsection (a) is a resident of the United States,

5 or a corporation organized in the United States, whose

6 average annual gross receipts for the 3 taxable years pre7 ceding the taxable year in which such construction con8 tract is entered into are not less than $30,000,000.

9 ‘‘(c) CONSTRUCTION CONTRACT.—The construction

10 contract referred to in subsection (a) is any contract for

11 the construction of a cruise ship entered into by the tax12 payer, in a case where the taxpayer estimates (at the time

13 such contract is entered into) that the ship construction

14 under the contract will be completed within the 2-year pe15 riod beginning on the contract commencement date.

16 ‘‘(d) DEFINITION.—The term ‘cruise ship’ means a

17 seagoing passenger vessel of at least 20,000 gross tons

18 that provides a full range of overnight accommodations,

19 entertainment, dining, and other services for its pas20 sengers.’’.

21 (b) EFFECTIVE DATE.—The amendment made by

22 this section shall apply to taxable years beginning after

23 December 31, 2000.
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1 SEC. 104. ACCELERATED DEPRECIATION.

2 (a) AMENDMENTS.—Section 168(e)(3)(C) of the In3 ternal Revenue Code of 1986 (relating to accelerated cost

4 recovery) is amended—

5 (1) by striking ‘‘and’’ at the end of clause (i),

6 (2) by redesignating clause (ii) as clause (iii),

7 and

8 (3) by inserting after clause (i) the following

9 new clause:

10 ‘‘(ii) a seagoing passenger vessel of at

11 least 20,000 gross tons that provides a full

12 range of overnight accommodations, enter13 tainment, dining, and other services for its

14 passengers, and’’.

15 (b) EFFECTIVE DATE.—The amendments made by

16 this section shall apply to taxable years beginning after

17 December 31, 2000.

18 SEC. 105. DEDUCTION FOR CERTAIN BUSINESS EXPENSES

19 ON CRUISE SHIPS.

20 (a) IN GENERAL.—Section 274 of the Internal Rev21 enue Code of 1986 (relating to certain entertainment ex22 penses) is amended—

23 (1) in subsection (h)—

24 (A) in paragraph (2)—

25 (i) by striking ‘‘meets the require26 ments of paragraph (5) and’’, and
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1 (ii) by striking all after ‘‘trade or

2 business’’ and inserting ‘‘and that the

3 cruise ship is a United States-built vessel

4 registered in the United States, or a for5 eign-built vessel registered in the United

6 States under section 8109 of Public Law

7 105–56 or title III of the All American

8 Cruise Act of 2000.’’, and

9 (B) by striking paragraph (5) and by re10 designating paragraphs (6) and (7) as para11 graphs (5) and (6), respectively, and

12 (2) by striking paragraph (1) of subsection (m)

13 and by redesignating paragraphs (2) and (3) as

14 paragraphs (1) and (2), respectively.

15 (b) CONFORMING AMENDMENTS.—

16 (1) Section 927(e)(3)(A) of the Internal Rev17 enue Code of 1986 is amended by striking ‘‘section

18 274(h)(6)(C)’’ and inserting ‘‘section 274(h)(5)(C)’’.

19 (2) Section 936(d)(4)(B) of such Code is

20 amended by striking ‘‘section 274(h)(6)(A)’’ and in21 serting ‘‘section 274(h)(5)(A)’’.

22 (c) EFFECTIVE DATE.—The amendments made by

23 this section shall apply to taxable years beginning after

24 December 31, 2000.
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1 SEC. 106. CREDIT FOR USE OF CLEAN-BURNING GAS EN2 GINES.

3 (a) AMENDMENT.—Subpart B of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to foreign tax credit, etc.) is amended by

6 adding at the end the following new section:

7 ‘‘SEC. 30B. CREDIT FOR USE OF CLEAN-BURNING ENGINES.

8 ‘‘(a) ALLOWANCE OF CREDIT.—There shall be al9 lowed as a credit against the tax imposed by this chapter

10 for the taxable year an amount equal to 20 percent of the

11 annual cost of fuel consumed by clean-burning engines on

12 a cruise ship that was built in the United States and is

13 documented under the laws of the United States.

14 ‘‘(b) ADJUSTMENTS.—The credit allowed by sub15 section (a) of this section for any taxable year shall not

16 exceed the excess (if any) of—

17 ‘‘(1) the regular tax for the taxable year re18 duced by the sum of the credits allowable under sub19 part A and section 27, over

20 ‘‘(2) the tentative minimum tax for the taxable

21 year.

22 ‘‘(c) DEFINITIONS.—For purposes of this section:

23 ‘‘(1) CLEAN-BURNING ENGINE.—The term

24 ‘clean-burning engine’ means a gas turbine engine,

25 manufactured in the United States or a possession
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1 of the United States, that burns 100 percent dis2 tillate fuel with less than 1.5 percent sulfur.

3 ‘‘(2) CRUISE SHIP.—The term ‘cruise ship’

4 means a seagoing passenger vessel of at least 20,000

5 gross tons that provides a full range of overnight ac6 commodations, entertainment, dining, and other

7 services for its passengers.’’.

8 (b) CLERICAL AMENDMENT.—The table of sections

9 for subpart B of part IV of subchapter A of chapter 1

10 of such Code is amended by adding at the end the fol11 lowing new item:

‘‘Sec. 30B. Credit for use of clean-burning engines.’’.

12 (c) EFFECTIVE DATE.—The amendments made by

13 this section shall apply to taxable years beginning after

14 December 31, 2000.

15 TITLE II—CAPITAL CONSTRUC16 TION FUNDS FOR PASSENGER

17 VESSEL CONSTRUCTION

18 SEC. 201. AMENDMENTS TO MERCHANT MARINE ACT, 1936.

19 (a) CHANGES IN VESSELS TO WHICH CAPITAL CON20 STRUCTION FUNDS APPLY.—

21 (1) The second sentence of subsection (a) of

22 section 607 of the Merchant Marine Act, 1936 (46

23 U.S.C. App. 1177) is amended by striking ‘‘for oper24 ation in the United States foreign, Great Lakes, or

25 noncontiguous domestic trade or in the fisheries of
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1 the United States’’ and inserting ‘‘for operation in

2 the fisheries of the United States, or in the United

3 States foreign, Great Lakes, or noncontiguous do4 mestic trade, or for operation as a passenger vessel

5 in the oceangoing domestic trade,’’.

6 (2) Paragraph (1) of section 607(k) of such Act

7 (defining eligible vessel) is amended to read as fol8 lows:

9 ‘‘(1) The term ‘eligible vessel’ means any

10 vessel—

11 ‘‘(A) constructed in the United States, and

12 if reconstructed, reconstructed in the United

13 States;

14 ‘‘(B) documented under the laws of the

15 United States; and

16 ‘‘(C) operated in the foreign or domestic

17 commerce of the United Sates or in the fish18 eries of the United States.

19 A foreign-built passenger vessel temporarily docu20 mented with a coastwise trade endorsement under

21 section 8109 of Public Law 105–56 or title III of

22 the All American Cruise Act of 2000 shall be treated

23 as satisfying the requirements of subparagraph (A)

24 of this paragraph.’’.
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1 (3) Paragraph (2)(C) of section 607(k) of such

2 Act is amended to read as follows:

3 ‘‘(C) which the person maintaining the

4 fund agrees with the Secretary will be operated

5 in the fisheries of the United States, in the

6 United States foreign, Great Lakes, or non7 contiguous domestic trade, or (only in the case

8 of a passenger vessel) in the oceangoing domes9 tic trade.’’.

10 (4) Subsection (f) of section 607 of such Act is

11 amended by adding at the end thereof the following

12 new paragraph:

13 ‘‘(3) In the case of amounts in any fund as of

14 the date of the enactment of this paragraph, and

15 any earnings thereon, for purposes of this sub16 section, the term ‘qualified withdrawal’ has the

17 meaning given such term by applying subsection

18 (k)(2) as of the date of enactment of the All Amer19 ican Cruise Act of 2000.’’.

20 (5) Subsection (k) of section 607 of such Act

21 is amended by adding at the end thereof the fol22 lowing new paragraphs:

23 ‘‘(10) The terms ‘foreign commerce’ and ‘for24 eign trade’ have the meanings given such terms in

25 section 905 of this Act, except that in the case of
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1 passenger vessels, these terms shall include com2 merce or trade between foreign ports.

3 ‘‘(11) The term ‘passenger vessel’ means a sea4 going passenger vessel of at least 20,000 gross tons

5 that provides a full range of overnight accommoda6 tions, entertainment, dining, and other services for

7 its passengers.

8 ‘‘(12) The term ‘oceangoing domestic trade’

9 means—

10 ‘‘(A) the operation of a passenger vessel on

11 a coastwise voyage between points in the United

12 States; or

13 ‘‘(B) the operation of a passenger vessel on

14 a voyage to transport passengers to the high

15 seas beginning at a point in the United States

16 and returning to the same point without stop17 ping at any other point.’’.

18 (b) TREATMENT OF CERTAIN LEASE PAYMENTS.—

19 (1) Paragraph (1) of section 607(f) of such Act

20 is amended by striking ‘‘or’’ at the end of subpara21 graph (B), by striking the period at the end of sub22 paragraph (C) and inserting ‘‘, or’’, and by inserting

23 after subparagraph (C) the following new subpara24 graph:
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1 ‘‘(D) the payment of amounts which re2 duce the principal amount (as determined under

3 regulations promulgated by the Secretary) of a

4 qualified lease of a qualified vessel or container

5 which is part of the complement of an eligible

6 vessel.’’.

7 (2) Paragraph (4) of section 607(g) of such Act

8 is amended by inserting ‘‘or to reduce the principal

9 amount of any qualified lease’’ after ‘‘indebtedness’’.

10 (3) Subsection (k) of section 607 of such Act

11 is further amended by adding at the end thereof the

12 following new paragraph:

13 ‘‘(13) the term ‘qualified lease’ means any lease

14 with a term of at least 5 years.’’.

15 (c) AUTHORITY TO MAKE DEPOSITS FOR PRIOR

16 YEARS BASED ON AUDIT ADJUSTMENTS.—Subsection (b)

17 of section 607 of such Act is amended by adding at the

18 end the following new paragraph:

19 ‘‘(4) To the extent permitted by joint regula20 tions, deposits may be made in excess of the limita21 tion described in paragraph (1) (and any limitation

22 specified in the agreement) for the taxable year if,

23 by reason of a change in taxable income for a prior

24 taxable year that has become final pursuant to a

25 closing agreement or other similar agreement en-
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1 tered into during the taxable year, the amount of the

2 deposit could have been made for such prior taxable

3 year.’’.

4 (d) TREATMENT OF CAPITAL GAINS AND LOSSES.—

5 (1) Paragraph (3) of section 607(e) of such Act

6 is amended to read as follows:

7 ‘‘(3) The capital gain account shall consist of—

8 ‘‘(A) amounts representing long-term cap9 ital gains (as defined in section 1222 of such

10 Code) on assets referred to in subsection

11 (b)(1)(C), reduced by

12 ‘‘(B) amounts representing long-term cap13 ital losses (as defined in such section) on assets

14 held in the fund.’’.

15 (2) Subparagraph (B) of section 607(e)(4) of

16 such Act is amended to read as follows:

17 ‘‘(B)(i) amounts representing short-term capital

18 gains (as defined in section 1222 of such Code) on

19 assets referred to in subsection (b)(1)(C), reduced

20 by

21 ‘‘(ii) amounts representing short-term capital

22 losses (as defined in such section) on assets held in

23 the fund,’’.

24 (3) Subparagraph (B) of section 607(h)(3) of

25 such Act is amended by striking ‘‘gain’’ and all that
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1 follows and inserting ‘‘long-term capital gain (as de2 fined in section 1222 of such Code), and’’.

3 (4) The last sentence of subparagraph (A) of

4 section 607(h)(6) of such Act is amended by striking

5 ‘‘20 percent (34 percent in the case of a corpora6 tion)’’ and inserting ‘‘the rate applicable to net cap7 ital gain under section 1(h) or 1201(a) of such

8 Code, as the case may be’’.

9 (e) COMPUTATION OF INTEREST WITH RESPECT TO

10 NONQUALIFIED WITHDRAWALS.—

11 (1) Subparagraph (C) of section 607(h)(3) of

12 such Act is amended—

13 (A) by striking clause (i) and inserting the

14 following new clause:

15 ‘‘(i) no addition to the tax shall be

16 payable under section 6651 of such

17 Code,’’, and

18 (B) by striking ‘‘paid at the applicable rate

19 (as defined in paragraph (4))’’ in clause (ii) and

20 inserting ‘‘paid in accordance with section 6601

21 of such Code’’.

22 (2) Subsection (h) of section 607 of such Act

23 is amended by striking paragraph (4) and by redes24 ignating paragraphs (5) and (6) as paragraphs (4)

25 and (5), respectively.
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1 (3) Subparagraph (A) of section 607(h)(5) of

2 such Act, as redesignated by paragraph (2) of this

3 subsection, is amended by striking ‘‘paragraph (5)’’

4 and inserting ‘‘paragraph (4)’’.

5 (f) OTHER CHANGES.—

6 (1) Section 607 of such Act is amended by

7 striking ‘‘the Internal Revenue Code of 1954’’ each

8 place it appears and inserting ‘‘the Internal Revenue

9 Code of 1986’’.

10 (2) Subsection (c) of section 607 of such Act is

11 amended by striking ‘‘interest-bearing securities ap12 proved by the Secretary’’ and inserting ‘‘interest13 bearing securities and other income-producing assets

14 (including accounts receivable) approved by the Sec15 retary’’.

16 SEC. 202. AMENDMENTS OF INTERNAL REVENUE CODE OF

17 1986.

18 (a) TREATMENT OF CERTAIN LEASE PAYMENTS.—

19 (1) Paragraph (1) of section 7518(e) of the In20 ternal Revenue Code of 1986 (relating to purposes

21 of qualified withdrawals) is amended by striking

22 ‘‘or’’ at the end of subparagraph (B), by striking the

23 period at the end of subparagraph (C) and inserting

24 ‘‘, or’’, and by inserting after subparagraph (C) the

25 following new subparagraph:
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1 ‘‘(D) the payments of amounts which re2 duce the principal amount (as determined under

3 regulations) of a qualified lease of a qualified

4 vessel.’’.

5 (2) Paragraph (4) of section 7518(f) of such

6 Code is amended by inserting ‘‘or to reduce the prin7 cipal amount of any qualified lease’’ after ‘‘indebted8 ness’’.

9 (b) AUTHORITY TO MAKE DEPOSITS FOR PRIOR

10 YEARS BASED ON AUDIT ADJUSTMENTS.—Subsection (a)

11 of section 7518 of such Code is amended by adding at

12 the end the following new paragraph:

13 ‘‘(4) AUTHORITY TO MAKE DEPOSITS FOR

14 PRIOR YEARS BASED ON AUDIT ADJUSTMENTS.—To

15 the extent permitted by joint regulations, deposits

16 may be made in excess of the limitations described

17 in paragraph (1) (and any limitation specified in the

18 agreement) for the taxable year if, by reason of a

19 change in taxable income for a prior taxable year

20 that has become final pursuant to a closing agree21 ment or other similar agreement entered into during

22 the taxable year, the amount of the deposit could

23 have been made for such prior taxable year.’’.

24 (c) TREATMENT OF CAPITAL GAINS AND LOSSES.—
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1 (1) Paragraph (3) of section 7518(d) of such

2 Code is amended to read as follows:

3 ‘‘(3) CAPITAL GAIN ACCOUNT.—The capital

4 gain account shall consist of—

5 ‘‘(A) amount representing long-term cap6 ital gains (as defined in section 1222) on assets

7 referred to in subsection (a)(1)(C), reduced by

8 ‘‘(B) amounts representing long-term cap9 ital losses (as defined in such section) on assets

10 held in the fund.’’.

11 (2) Subparagraph (B) of section 7518(d)(4) of

12 such Code is amended to read as follows:

13 ‘‘(B)(i) amounts representing short-term

14 capital gains (as defined in section 1222) on as15 sets referred to in subsection (a)(1)(C), reduced

16 by

17 ‘‘(ii) amounts representing short-term cap18 ital losses (as defined in such section) on assets

19 held in the fund,’’.

20 (3) Subparagraph (B) of section 7518(g)(3) of

21 such Code is amended by striking ‘‘gain’’ and all

22 that follows and inserting ‘‘long-term capital gain

23 (as defined in section 1222), and’’.

24 (4) The last sentence of subparagraph (A) of

25 section 7518(g)(6) of such Code is amended by
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1 striking ‘‘20 percent (34 percent in the case of a

2 corporation)’’ and inserting ‘‘the rate applicable to

3 net capital gain under such section 1(h) or 1201(a),

4 as the case may be’’.

5 (d) COMPUTATION OF INTEREST WITH RESPECT TO

6 NONQUALIFIED WITHDRAWALS.—

7 (1) Subparagraph (C) of section 7518(g)(3) of

8 such Code is amended—

9 (A) by striking clause (i) and inserting the

10 following new clause:

11 ‘‘(i) no addition to the tax shall be

12 payable under section 6651,’’, and

13 (B) by striking ‘‘paid as the applicable rate

14 (as defined in paragraph (4))’’ in clause (ii) and

15 inserting ‘‘paid in accordance with section

16 6601’’.

17 (2) Subsection (g) of section 7518 of such Code

18 is amended by striking paragraph (4) and by redes19 ignating paragraphs (5) and (6) as paragraphs (4)

20 and (5), respectively.

21 (3) Subparagraph (A) of section 7518(g)(5) of

22 such Code, as redesignated by paragraph (2) of this

23 subsection, is amended by striking ‘‘paragraph (5)’’

24 and inserting ‘‘paragraph (4)’’.

25 (e) OTHER CHANGES.—
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1 (1) Paragraph (2) of section 7518(b) of such

2 Code is amended by striking ‘‘interest-bearing secu3 rities approved by the Secretary’’ and inserting ‘‘in4 terest-bearing securities and other income-producing

5 assets (including amounts receivable) approved by

6 the Secretary’’.

7 (2) Paragraph (1) of section 7518(e) of such

8 Code is amended by striking the last sentence.

9 (3) Subsection (i) of section 7518 of such Code

10 is amended by striking ‘‘enactment of this section’’

11 and inserting ‘‘enactment of the All American Cruise

12 Act of 2000’’.

13 (4) Subparagraph (B) of section 543(a)(1) of

14 such Code is amended to read as follows:

15 ‘‘(B) interest on amounts set aside in a

16 capital construction fund under section 607 of

17 the Merchant Marine Act, 1936 (46 App.

18 U.S.C. 1177), or in a construction reserve fund

19 under section 511 of such Act (46 App. U.S.C.

20 1161).’’

21 (5) Subsection (c) of section 56 is amended by

22 striking paragraph (2) and by redesignating para23 graph (3) as paragraph (2).
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1 SEC. 203. EFFECTIVE DATE.

2 (a) IN GENERAL.—Except as otherwise provided in

3 this section, the amendments made by this title shall apply

4 to taxable years beginning after the date of the enactment

5 of this Act.

6 (b) CHANGES IN COMPUTATION OF INTEREST.—The

7 amendments made by sections 201(e) and 202(d) shall

8 apply to withdrawals made after December 31, 2000, in9 cluding for purposes of computing interest on such a with10 drawal for periods on or before such date.

11 (c) QUALIFIED LEASES.—The amendments made by

12 sections 201(b) and 202(a) shall apply to leases in effect

13 on, or entered into after, December 31, 2000.

14 TITLE III—DOMESTIC CRUISE

15 INDUSTRY PHASE-IN

16 SEC. 301. DEFINITIONS.

17 In this title:

18 (1) CRUISE SHIP.—The term ‘‘cruise ship’’

19 means a passenger vessel as defined in section 2101

20 of title 46, United States Code, that is at least

21 20,000 gross tons and provides a full range of over22 night accommodations, entertainment, dining, and

23 other services for its passengers.

24 (2) OWNER OR OPERATOR.—The term ‘‘owner

25 or operator’’ means, in the case of a vessel, a person
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1 owning or operating the vessel, or chartering the

2 vessel by demise.

3 (3) PERSON.—The term ‘‘person’’ means a cor4 poration, partnership, association, or individual.

5 (4) RELATED PERSON.—The term ‘‘related per6 son’’ means a person that is—

7 (A) a holding company, subsidiary, affil8 iate, or association of another person; or

9 (B) an officer, director, or agent of an10 other person.

11 (5) SECRETARY.—The term ‘‘Secretary’’ means

12 the Secretary of Transportation.

13 SEC. 302. TEMPORARY DOCUMENTATION FOR FOREIGN14 BUILT CRUISE SHIP.

15 (a) IN GENERAL.—Notwithstanding the provisions of

16 section 8 of the Act of June 19, 1886 (46 U.S.C. App.

17 289), and chapter 121 of title 46, United States Code,

18 the Secretary may issue a certificate of documentation,

19 with a conditional coastwise trade endorsement, to a for20 eign-built cruise ship that is otherwise in compliance with

21 section 27 of the Merchant Marine Act, 1920 (46 U.S.C.

22 App. 883), and section 12106 of title 46, United States

23 Code, only if the Secretary, based on information provided

24 by the owner or operator of the cruise ship, determines

25 that—
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1 (1) the owner or operator, or a related person,

2 is obligated under a binding contract to construct in

3 the United States 2 or more cruise ships of a size

4 equal to or greater than the cruise ship being con5 sidered for documentation;

6 (2) the contract provides that the first cruise

7 ship to be constructed be delivered no later than 4

8 years after the contract is entered into, and that the

9 second cruise ship be delivered no later than 5 years

10 after the contract is entered into;

11 (3) each cruise ship to be constructed under the

12 contract is different from any cruise ship to be con13 structed under a contract that serves as the basis

14 for the issuance under this section of a certificate of

15 documentation for another foreign-built cruise ship;

16 and

17 (4) in the case of a contract for more than 2

18 ships in a series, the average period between the de19 livery dates of the ships under the contract does not

20 exceed 24 months.

21 (b) EXPIRATION.—A certificate of documentation

22 issued under subsection (a) shall expire and cease to be

23 valid on the date that is 12 months after the projected

24 delivery date for the last cruise ship to be built under the

25 construction contract furnished by the owner or operator
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1 upon applying for documentation. The Secretary shall

2 specify the expiration date on the face of the certificate

3 of documentation.

4 (c) TRANSFER OF REGISTRY.—Notwithstanding sec5 tion 9(c) of the Shipping Act, 1916 (46 U.S.C. App.

6 808(c)), a person may—

7 (1) sell, lease, charter, deliver, or in any man8 ner transfer, or agree to sell, lease, charter, deliver,

9 or in any manner transfer, to a person that is not

10 a citizen of the United States, any interest in or

11 control of a foreign-built cruise ship documented

12 under subsection (a) of this section; or

13 (2) place that cruise ship under foreign registry

14 or operate that ship under the authority of a foreign

15 country.

16 SEC. 303. PERMIT REQUIRED FOR FOREIGN-BUILT CRUISE

17 SHIPS.

18 (a) IN GENERAL.—A foreign-built cruise ship docu19 mented under section 302 shall not operate in coastwise

20 trade unless the owner or operator holds a permit issued

21 by the Secretary that authorizes the ship to transport pas22 sengers on itineraries between ports of the United States

23 or between a port of the United States and a foreign port.

24 (b) EXCLUSIONS.—A permit issued under this section

25 shall prohibit the cruise ship from—
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1 (1) operating as a ferry;

2 (2) regularly carrying for hire vehicles or other

3 cargo; or

4 (3) operating between or among islands or

5 other points in the State of Hawaii.

6 (c) EXPIRATION.—The permit shall expire on the ex7 piration date specified on the certificate of documentation

8 issued for the cruise ship involved, and the expiration date

9 shall be printed on the face of the permit.

10 (d) PENALTY.—A person who fails to comply with the

11 terms and conditions of a permit issued under this section,

12 or operates a foreign-built cruise ship in the coastwise

13 trade without such a permit, is liable to the United States

14 Government for a civil penalty of not more than $10,000.

15 Each day of a continuing violation is a separate violation.

16 SEC. 304. REVOCATION OF COASTWISE TRADE ENDORSE17 MENT AND PERMIT.

18 The Secretary shall revoke both the coastwise trade

19 endorsement issued under section 302, and the permit

20 issued under section 303, if the Secretary determines that

21 the owner or operator of the cruise ship involved is not

22 in substantial compliance with the terms and conditions

23 of—
26

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1 (1) the ship construction contract that was the

2 basis for issuance of documentation under section

3 302; or

4 (2) the permit issued under section 303.

5 SEC. 305. APPLICATION TO OTHER PROVISIONS OF LAW.

6 Nothing in this title affects or otherwise modifies the

7 authority contained in and granted to a person by section

8 8109 of the Department of Defense Appropriations Act,

9 1998 (Public Law 105–56; 111 Stat. 1244).

Æ