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[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 2564 Introduced in Senate (IS)]

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 States-built cruise industry, 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 ``All American Cruise Act of 2000''.

   TITLE I--TAX INCENTIVES FOR CRUISE SHIP CONSTRUCTION AND OPERATION

SEC. 101. TAX TREATMENT OF UNITED STATES-BUILT CRUISE SHIPS DURING 
              CONSTRUCTION PERIOD.

    (a) Amendment.--Section 460(e) of the Internal Revenue Code of 1986 
(relating to special rules for long-term contracts) is amended by 
adding at the end the following new paragraph:
            ``(7) Special rule for cruise ship construction 
        contracts.--In the case of any contract for the construction or 
        overhaul of an oceangoing cruise ship of at least 20,000 gross 
        tons, a contractor may, at the contractor's election, use the 
        completed contract method of accounting for each ship that is 
        constructed or overhauled, provided that--
                    ``(A) the construction or overhaul of the ship will 
                take more than 12 months to complete from the contract 
                commencement date to the date that the ship is 
                delivered or returned to the owner,
                    ``(B) the reporting of revenue and costs for each 
                ship may not be deferred beyond the date of delivery or 
                return of the ship to the owner, and
                    ``(C) when a contract provides for the construction 
                or overhaul of more than 1 ship, each ship covered by 
                the contract will be treated as an individual ship 
                contract for the purpose of applying the completed 
                contract method of accounting, and the reporting of 
                revenue and costs for each ship may not be deferred 
                beyond the date on which the ship is delivered or 
                returned to the owner.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 102. GROSS INCOME EXCLUSION FOR CRUISE SHIP OPERATIONS.

    (a) Amendments.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to amounts specifically 
excluded from gross income) is amended by redesignating section 139 as 
section 140 and by inserting after section 138 the following new 
section:

``SEC. 139. AMOUNTS DERIVED FROM CRUISE SHIP OPERATIONS.

    ``(a) General Rule.--Gross income of a corporation organized in the 
United States shall not include amounts derived by the corporation from 
the operation of a cruise ship which was built in the United States and 
has a certificate of documentation issued under chapter 121 of title 
46, United States Code.
    ``(b) Definition.--For purposes of subsection (a), the term `cruise 
ship' means a seagoing passenger vessel of at least 20,000 gross tons 
that provides a full range of overnight accommodations, entertainment, 
dining, and other services for its passengers.''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 103. CREDIT FOR INCOME FROM CRUISE SHIP CONSTRUCTION CONTRACTS.

    (a) Amendment.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to credits against tax) 
is amended by adding at the end the following new section:

``SEC. 45D. CRUISE SHIP CONSTRUCTION CREDIT.

    ``(a) General Rule.--In the case of a taxpayer described in 
subsection (b), there shall be allowed a credit against the taxes 
imposed by this chapter for the taxable year an amount equal to the 
amount of any income taxes that would be paid or accrued during the 
taxable year (but for this section) to the United States on the income 
realized from any construction contract described in subsection (c).
    ``(b) Taxpayer Described.--The taxpayer referred to in subsection 
(a) is a resident of the United States, or a corporation organized in 
the United States, whose average annual gross receipts for the 3 
taxable years preceding the taxable year in which such construction 
contract is entered into are not less than $30,000,000.
    ``(c) Construction Contract.--The construction contract referred to 
in subsection (a) is any contract for the construction of a cruise ship 
entered into by the taxpayer, in a case where the taxpayer estimates 
(at the time such contract is entered into) that the ship construction 
under the contract will be completed within the 2-year period beginning 
on the contract commencement date.
    ``(d) Definition.--The term `cruise ship' means a seagoing 
passenger vessel of at least 20,000 gross tons that provides a full 
range of overnight accommodations, entertainment, dining, and other 
services for its passengers.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2000.

SEC. 104. ACCELERATED DEPRECIATION.

    (a) Amendments.--Section 168(e)(3)(C) of the Internal Revenue Code 
of 1986 (relating to accelerated cost recovery) is amended--
            (1) by striking ``and'' at the end of clause (i),
            (2) by redesignating clause (ii) as clause (iii), and
            (3) by inserting after clause (i) the following new clause:
                            ``(ii) a seagoing passenger vessel of at 
                        least 20,000 gross tons that provides a full 
                        range of overnight accommodations, 
                        entertainment, dining, and other services for 
                        its passengers, and''.
    (b) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 105. DEDUCTION FOR CERTAIN BUSINESS EXPENSES ON CRUISE SHIPS.

    (a) In General.--Section 274 of the Internal Revenue Code of 1986 
(relating to certain entertainment expenses) is amended--
            (1) in subsection (h)--
                    (A) in paragraph (2)--
                            (i) by striking ``meets the requirements of 
                        paragraph (5) and'', and
                            (ii) by striking all after ``trade or 
                        business'' and inserting ``and that the cruise 
                        ship is a United States-built vessel registered 
                        in the United States, or a foreign-built vessel 
                        registered in the United States under section 
                        8109 of Public Law 105-56 or title III of the 
                        All American Cruise Act of 2000.'', and
                    (B) by striking paragraph (5) and by redesignating 
                paragraphs (6) and (7) as paragraphs (5) and (6), 
                respectively, and
            (2) by striking paragraph (1) of subsection (m) and by 
        redesignating paragraphs (2) and (3) as paragraphs (1) and (2), 
        respectively.
    (b) Conforming Amendments.--
            (1) Section 927(e)(3)(A) of the Internal Revenue Code of 
        1986 is amended by striking ``section 274(h)(6)(C)'' and 
        inserting ``section 274(h)(5)(C)''.
            (2) Section 936(d)(4)(B) of such Code is amended by 
        striking ``section 274(h)(6)(A)'' and inserting ``section 
        274(h)(5)(A)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

SEC. 106. CREDIT FOR USE OF CLEAN-BURNING GAS ENGINES.

    (a) Amendment.--Subpart B of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to foreign tax credit, 
etc.) is amended by adding at the end the following new section:

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

    ``(a) Allowance of Credit.--There shall be allowed as a credit 
against the tax imposed by this chapter for the taxable year an amount 
equal to 20 percent of the annual cost of fuel consumed by clean-
burning engines on a cruise ship that was built in the United States 
and is documented under the laws of the United States.
    ``(b) Adjustments.--The credit allowed by subsection (a) of this 
section for any taxable year shall not exceed the excess (if any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and section 27, 
        over
            ``(2) the tentative minimum tax for the taxable year.
    ``(c) Definitions.--For purposes of this section:
            ``(1) Clean-burning engine.--The term `clean-burning 
        engine' means a gas turbine engine, manufactured in the United 
        States or a possession of the United States, that burns 100 
        percent distillate fuel with less than 1.5 percent sulfur.
            ``(2) Cruise ship.--The term `cruise ship' means a seagoing 
        passenger vessel of at least 20,000 gross tons that provides a 
        full range of overnight accommodations, entertainment, dining, 
        and other services for its passengers.''.
    (b) Clerical Amendment.--The table of sections for subpart B of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

                              ``Sec. 30B. Credit for use of clean-
                                        burning engines.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2000.

 TITLE II--CAPITAL CONSTRUCTION FUNDS FOR PASSENGER VESSEL CONSTRUCTION

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

    (a) Changes in Vessels to Which Capital Construction Funds Apply.--
            (1) The second sentence of subsection (a) of section 607 of 
        the Merchant Marine Act, 1936 (46 U.S.C. App. 1177) is amended 
        by striking ``for operation in the United States foreign, Great 
        Lakes, or noncontiguous domestic trade or in the fisheries of 
        the United States'' and inserting ``for operation in the 
        fisheries of the United States, or in the United States 
        foreign, Great Lakes, or noncontiguous domestic trade, or for 
        operation as a passenger vessel in the oceangoing domestic 
        trade,''.
            (2) Paragraph (1) of section 607(k) of such Act (defining 
        eligible vessel) is amended to read as follows:
            ``(1) The term `eligible vessel' means any vessel--
                    ``(A) constructed in the United States, and if 
                reconstructed, reconstructed in the United States;
                    ``(B) documented under the laws of the United 
                States; and
                    ``(C) operated in the foreign or domestic commerce 
                of the United Sates or in the fisheries of the United 
                States.
        A foreign-built passenger vessel temporarily documented with a 
        coastwise trade endorsement under section 8109 of Public Law 
        105-56 or title III of the All American Cruise Act of 2000 
        shall be treated as satisfying the requirements of subparagraph 
        (A) of this paragraph.''.
            (3) Paragraph (2)(C) of section 607(k) of such Act is 
        amended to read as follows:
                    ``(C) which the person maintaining the fund agrees 
                with the Secretary will be operated in the fisheries of 
                the United States, in the United States foreign, Great 
                Lakes, or noncontiguous domestic trade, or (only in the 
                case of a passenger vessel) in the oceangoing domestic 
                trade.''.
            (4) Subsection (f) of section 607 of such Act is amended by 
        adding at the end thereof the following new paragraph:
            ``(3) In the case of amounts in any fund as of the date of 
        the enactment of this paragraph, and any earnings thereon, for 
        purposes of this subsection, the term `qualified withdrawal' 
        has the meaning given such term by applying subsection (k)(2) 
        as of the date of enactment of the All American Cruise Act of 
        2000.''.
            (5) Subsection (k) of section 607 of such Act is amended by 
        adding at the end thereof the following new paragraphs:
            ``(10) The terms `foreign commerce' and `foreign trade' 
        have the meanings given such terms in section 905 of this Act, 
        except that in the case of passenger vessels, these terms shall 
        include commerce or trade between foreign ports.
            ``(11) The term `passenger vessel' means a seagoing 
        passenger vessel of at least 20,000 gross tons that provides a 
        full range of overnight accommodations, entertainment, dining, 
        and other services for its passengers.
            ``(12) The term `oceangoing domestic trade' means--
                    ``(A) the operation of a passenger vessel on a 
                coastwise voyage between points in the United States; 
                or
                    ``(B) the operation of a passenger vessel on a 
                voyage to transport passengers to the high seas 
                beginning at a point in the United States and returning 
                to the same point without stopping at any other 
                point.''.
    (b) Treatment of Certain Lease Payments.--
            (1) Paragraph (1) of section 607(f) of such Act is amended 
        by striking ``or'' at the end of subparagraph (B), by striking 
        the period at the end of subparagraph (C) and inserting ``, 
        or'', and by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) the payment of amounts which reduce the 
                principal amount (as determined under regulations 
                promulgated by the Secretary) of a qualified lease of a 
                qualified vessel or container which is part of the 
                complement of an eligible vessel.''.
            (2) Paragraph (4) of section 607(g) of such Act is amended 
        by inserting ``or to reduce the principal amount of any 
        qualified lease'' after ``indebtedness''.
            (3) Subsection (k) of section 607 of such Act is further 
        amended by adding at the end thereof the following new 
        paragraph:
            ``(13) the term `qualified lease' means any lease with a 
        term of at least 5 years.''.
    (c) Authority To Make Deposits for Prior Years Based on Audit 
Adjustments.--Subsection (b) of section 607 of such Act is amended by 
adding at the end the following new paragraph:
            ``(4) To the extent permitted by joint regulations, 
        deposits may be made in excess of the limitation described in 
        paragraph (1) (and any limitation specified in the agreement) 
        for the taxable year if, by reason of a change in taxable 
        income for a prior taxable year that has become final pursuant 
        to a closing agreement or other similar agreement entered into 
        during the taxable year, the amount of the deposit could have 
        been made for such prior taxable year.''.
    (d) Treatment of Capital Gains and Losses.--
            (1) Paragraph (3) of section 607(e) of such Act is amended 
        to read as follows:
            ``(3) The capital gain account shall consist of--
                    ``(A) amounts representing long-term capital gains 
                (as defined in section 1222 of such Code) on assets 
                referred to in subsection (b)(1)(C), reduced by
                    ``(B) amounts representing long-term capital losses 
                (as defined in such section) on assets held in the 
                fund.''.
            (2) Subparagraph (B) of section 607(e)(4) of such Act is 
        amended to read as follows:
            ``(B)(i) amounts representing short-term capital gains (as 
        defined in section 1222 of such Code) on assets referred to in 
        subsection (b)(1)(C), reduced by
            ``(ii) amounts representing short-term capital losses (as 
        defined in such section) on assets held in the fund,''.
            (3) Subparagraph (B) of section 607(h)(3) of such Act is 
        amended by striking ``gain'' and all that follows and inserting 
        ``long-term capital gain (as defined in section 1222 of such 
        Code), and''.
            (4) The last sentence of subparagraph (A) of section 
        607(h)(6) of such Act is amended by striking ``20 percent (34 
        percent in the case of a corporation)'' and inserting ``the 
        rate applicable to net capital gain under section 1(h) or 
        1201(a) of such Code, as the case may be''.
    (e) Computation of Interest With Respect to Nonqualified 
Withdrawals.--
            (1) Subparagraph (C) of section 607(h)(3) of such Act is 
        amended--
                    (A) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651 of such Code,'', and
                    (B) by striking ``paid at the applicable rate (as 
                defined in paragraph (4))'' in clause (ii) and 
                inserting ``paid in accordance with section 6601 of 
                such Code''.
            (2) Subsection (h) of section 607 of such Act is amended by 
        striking paragraph (4) and by redesignating paragraphs (5) and 
        (6) as paragraphs (4) and (5), respectively.
            (3) Subparagraph (A) of section 607(h)(5) of such Act, as 
        redesignated by paragraph (2) of this subsection, is amended by 
        striking ``paragraph (5)'' and inserting ``paragraph (4)''.
    (f) Other Changes.--
            (1) Section 607 of such Act is amended by striking ``the 
        Internal Revenue Code of 1954'' each place it appears and 
        inserting ``the Internal Revenue Code of 1986''.
            (2) Subsection (c) of section 607 of such Act is amended by 
        striking ``interest-bearing securities approved by the 
        Secretary'' and inserting ``interest-bearing securities and 
        other income-producing assets (including accounts receivable) 
        approved by the Secretary''.

SEC. 202. AMENDMENTS OF INTERNAL REVENUE CODE OF 1986.

    (a) Treatment of Certain Lease Payments.--
            (1) Paragraph (1) of section 7518(e) of the Internal 
        Revenue Code of 1986 (relating to purposes of qualified 
        withdrawals) is amended by striking ``or'' at the end of 
        subparagraph (B), by striking the period at the end of 
        subparagraph (C) and inserting ``, or'', and by inserting after 
        subparagraph (C) the following new subparagraph:
                    ``(D) the payments of amounts which reduce the 
                principal amount (as determined under regulations) of a 
                qualified lease of a qualified vessel.''.
            (2) Paragraph (4) of section 7518(f) of such Code is 
        amended by inserting ``or to reduce the principal amount of any 
        qualified lease'' after ``indebtedness''.
    (b) Authority To Make Deposits for Prior Years Based on Audit 
Adjustments.--Subsection (a) of section 7518 of such Code is amended by 
adding at the end the following new paragraph:
            ``(4) Authority to make deposits for prior years based on 
        audit adjustments.--To the extent permitted by joint 
        regulations, deposits may be made in excess of the limitations 
        described in paragraph (1) (and any limitation specified in the 
        agreement) for the taxable year if, by reason of a change in 
        taxable income for a prior taxable year that has become final 
        pursuant to a closing agreement or other similar agreement 
        entered into during the taxable year, the amount of the deposit 
        could have been made for such prior taxable year.''.
    (c) Treatment of Capital Gains and Losses.--
            (1) Paragraph (3) of section 7518(d) of such Code is 
        amended to read as follows:
            ``(3) Capital gain account.--The capital gain account shall 
        consist of--
                    ``(A) amount representing long-term capital gains 
                (as defined in section 1222) on assets referred to in 
                subsection (a)(1)(C), reduced by
                    ``(B) amounts representing long-term capital losses 
                (as defined in such section) on assets held in the 
                fund.''.
            (2) Subparagraph (B) of section 7518(d)(4) of such Code is 
        amended to read as follows:
                    ``(B)(i) amounts representing short-term capital 
                gains (as defined in section 1222) on assets referred 
                to in subsection (a)(1)(C), reduced by
                    ``(ii) amounts representing short-term capital 
                losses (as defined in such section) on assets held in 
                the fund,''.
            (3) Subparagraph (B) of section 7518(g)(3) of such Code is 
        amended by striking ``gain'' and all that follows and inserting 
        ``long-term capital gain (as defined in section 1222), and''.
            (4) The last sentence of subparagraph (A) of section 
        7518(g)(6) of such Code is amended by striking ``20 percent (34 
        percent in the case of a corporation)'' and inserting ``the 
        rate applicable to net capital gain under such section 1(h) or 
        1201(a), as the case may be''.
    (d) Computation of Interest With Respect to Nonqualified 
Withdrawals.--
            (1) Subparagraph (C) of section 7518(g)(3) of such Code is 
        amended--
                    (A) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651,'', and
                    (B) by striking ``paid as the applicable rate (as 
                defined in paragraph (4))'' in clause (ii) and 
                inserting ``paid in accordance with section 6601''.
            (2) Subsection (g) of section 7518 of such Code is amended 
        by striking paragraph (4) and by redesignating paragraphs (5) 
        and (6) as paragraphs (4) and (5), respectively.
            (3) Subparagraph (A) of section 7518(g)(5) of such Code, as 
        redesignated by paragraph (2) of this subsection, is amended by 
        striking ``paragraph (5)'' and inserting ``paragraph (4)''.
    (e) Other Changes.--
            (1) Paragraph (2) of section 7518(b) of such Code is 
        amended by striking ``interest-bearing securities approved by 
        the Secretary'' and inserting ``interest-bearing securities and 
        other income-producing assets (including amounts receivable) 
        approved by the Secretary''.
            (2) Paragraph (1) of section 7518(e) of such Code is 
        amended by striking the last sentence.
            (3) Subsection (i) of section 7518 of such Code is amended 
        by striking ``enactment of this section'' and inserting 
        ``enactment of the All American Cruise Act of 2000''.
            (4) Subparagraph (B) of section 543(a)(1) of such Code is 
        amended to read as follows:
                    ``(B) interest on amounts set aside in a capital 
                construction fund under section 607 of the Merchant 
                Marine Act, 1936 (46 App. U.S.C. 1177), or in a 
                construction reserve fund under section 511 of such Act 
                (46 App. U.S.C. 1161).''
            (5) Subsection (c) of section 56 is amended by striking 
        paragraph (2) and by redesignating paragraph (3) as paragraph 
        (2).

SEC. 203. EFFECTIVE DATE.

    (a) In General.--Except as otherwise provided in this section, the 
amendments made by this title shall apply to taxable years beginning 
after the date of the enactment of this Act.
    (b) Changes in Computation of Interest.--The amendments made by 
sections 201(e) and 202(d) shall apply to withdrawals made after 
December 31, 2000, including for purposes of computing interest on such 
a withdrawal for periods on or before such date.
    (c) Qualified Leases.--The amendments made by sections 201(b) and 
202(a) shall apply to leases in effect on, or entered into after, 
December 31, 2000.

              TITLE III--DOMESTIC CRUISE INDUSTRY PHASE-IN

SEC. 301. DEFINITIONS.

    In this title:
            (1) Cruise ship.--The term ``cruise ship'' means a 
        passenger vessel as defined in section 2101 of title 46, United 
        States Code, that is at least 20,000 gross tons and provides a 
        full range of overnight accommodations, entertainment, dining, 
        and other services for its passengers.
            (2) Owner or operator.--The term ``owner or operator'' 
        means, in the case of a vessel, a person owning or operating 
        the vessel, or chartering the vessel by demise.
            (3) Person.--The term ``person'' means a corporation, 
        partnership, association, or individual.
            (4) Related person.--The term ``related person'' means a 
        person that is--
                    (A) a holding company, subsidiary, affiliate, or 
                association of another person; or
                    (B) an officer, director, or agent of another 
                person.
            (5) Secretary.--The term ``Secretary'' means the Secretary 
        of Transportation.

SEC. 302. TEMPORARY DOCUMENTATION FOR FOREIGN-BUILT CRUISE SHIP.

    (a) In General.--Notwithstanding the provisions of section 8 of the 
Act of June 19, 1886 (46 U.S.C. App. 289), and chapter 121 of title 46, 
United States Code, the Secretary may issue a certificate of 
documentation, with a conditional coastwise trade endorsement, to a 
foreign-built cruise ship that is otherwise in compliance with section 
27 of the Merchant Marine Act, 1920 (46 U.S.C. App. 883), and section 
12106 of title 46, United States Code, only if the Secretary, based on 
information provided by the owner or operator of the cruise ship, 
determines that--
            (1) the owner or operator, or a related person, is 
        obligated under a binding contract to construct in the United 
        States 2 or more cruise ships of a size equal to or greater 
        than the cruise ship being considered for documentation;
            (2) the contract provides that the first cruise ship to be 
        constructed be delivered no later than 4 years after the 
        contract is entered into, and that the second cruise ship be 
        delivered no later than 5 years after the contract is entered 
        into;
            (3) each cruise ship to be constructed under the contract 
        is different from any cruise ship to be constructed under a 
        contract that serves as the basis for the issuance under this 
        section of a certificate of documentation for another foreign-
        built cruise ship; and
            (4) in the case of a contract for more than 2 ships in a 
        series, the average period between the delivery dates of the 
        ships under the contract does not exceed 24 months.
    (b) Expiration.--A certificate of documentation issued under 
subsection (a) shall expire and cease to be valid on the date that is 
12 months after the projected delivery date for the last cruise ship to 
be built under the construction contract furnished by the owner or 
operator upon applying for documentation. The Secretary shall specify 
the expiration date on the face of the certificate of documentation.
    (c) Transfer of Registry.--Notwithstanding section 9(c) of the 
Shipping Act, 1916 (46 U.S.C. App. 808(c)), a person may--
            (1) sell, lease, charter, deliver, or in any manner 
        transfer, or agree to sell, lease, charter, deliver, or in any 
        manner transfer, to a person that is not a citizen of the 
        United States, any interest in or control of a foreign-built 
        cruise ship documented under subsection (a) of this section; or
            (2) place that cruise ship under foreign registry or 
        operate that ship under the authority of a foreign country.

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

    (a) In General.--A foreign-built cruise ship documented under 
section 302 shall not operate in coastwise trade unless the owner or 
operator holds a permit issued by the Secretary that authorizes the 
ship to transport passengers on itineraries between ports of the United 
States or between a port of the United States and a foreign port.
    (b) Exclusions.--A permit issued under this section shall prohibit 
the cruise ship from--
            (1) operating as a ferry;
            (2) regularly carrying for hire vehicles or other cargo; or
            (3) operating between or among islands or other points in 
        the State of Hawaii.
    (c) Expiration.--The permit shall expire on the expiration date 
specified on the certificate of documentation issued for the cruise 
ship involved, and the expiration date shall be printed on the face of 
the permit.
    (d) Penalty.--A person who fails to comply with the terms and 
conditions of a permit issued under this section, or operates a 
foreign-built cruise ship in the coastwise trade without such a permit, 
is liable to the United States Government for a civil penalty of not 
more than $10,000. Each day of a continuing violation is a separate 
violation.

SEC. 304. REVOCATION OF COASTWISE TRADE ENDORSEMENT AND PERMIT.

    The Secretary shall revoke both the coastwise trade endorsement 
issued under section 302, and the permit issued under section 303, if 
the Secretary determines that the owner or operator of the cruise ship 
involved is not in substantial compliance with the terms and conditions 
of--
            (1) the ship construction contract that was the basis for 
        issuance of documentation under section 302; or
            (2) the permit issued under section 303.

SEC. 305. APPLICATION TO OTHER PROVISIONS OF LAW.

    Nothing in this title affects or otherwise modifies the authority 
contained in and granted to a person by section 8109 of the Department 
of Defense Appropriations Act, 1998 (Public Law 105-56; 111 Stat. 
1244).
                                 <all>
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