II

103D CONGRESS

1ST SESSION H. R. 2151

IN THE SENATE OF THE UNITED STATES

NOVEMBER 8 (legislative day, NOVEMBER 2), 1993

Received; read twice and referred to the Committee on Commerce, Science,

and Transportation

AN ACT

To amend the Merchant Marine Act, 1936, to establish the

Maritime Security Fleet program, 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 ‘‘Maritime Security and

5 Competitiveness Act of 1993’’.

6 SEC. 2. PURPOSE OF THE MERCHANT MARINE ACT, 1936.

7 Section 101 of the Merchant Marine Act, 1936 (46

8 App. U.S.C. 1101) is amended to read as follows:
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1 ‘‘SEC. 101. FOSTERING DEVELOPMENT AND MAINTENANCE

2 OF MERCHANT MARINE.

3 ‘‘The Secretary of Transportation shall carry out this

4 Act in a manner that ensures the existence of an operating

5 fleet of United States documented vessels that is—

6 ‘‘(1) sufficient to carry the domestic water7 borne commerce of the United States and a substan8 tial portion of the water-borne export and import

9 foreign commerce of the United States and to pro10 vide shipping service essential for maintaining the

11 flow of such domestic and foreign water-borne com12 merce at all times;

13 ‘‘(2) adequate to serve as a naval auxiliary in

14 time of war or national emergency;

15 ‘‘(3) owned and operated by citizens of the

16 United States, to the extent practicable;

17 ‘‘(4) composed of the best-equipped, safest, and

18 most modern vessels;

19 ‘‘(5) manned with the best trained and efficient

20 personnel who are citizens of the United States; and

21 ‘‘(6) supplemented by modern and efficient

22 United States facilities for shipbuilding and ship re23 pair.’’.
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1 SEC. 3. MARITIME SECURITY FLEET PROGRAM.

2 (a) The Merchant Marine Act, 1936 (46 App. U.S.C.

3 1101 et seq.) is amended by inserting after title III the

4 following new title:

5 ‘‘TITLE IV—MARITIME SECURITY

6 FLEET PROGRAM

7 ‘‘SEC. 401. ESTABLISHMENT OF MARITIME SECURITY

8 FLEET.

9 ‘‘The Secretary of Transportation shall establish a

10 fleet of active commercial vessels to enhance sealift capa11 bilities and maintain a presence in international commer12 cial shipping of United States documented vessels. The

13 fleet shall be known as the ‘Maritime Security Fleet’.

14 ‘‘SEC. 402. COMPOSITION OF FLEET.

15 ‘‘The Fleet shall consist of privately owned United

16 States documented vessels for which there are in effect

17 operating agreements.

18 ‘‘SEC. 403. VESSELS ELIGIBLE FOR ENROLLMENT IN FLEET.

19 ‘‘(a) IN GENERAL.—A vessel is eligible to be enrolled

20 in the Fleet if the Secretary decides, in accordance with

21 this section, that it is eligible. The Secretary may decide

22 whether a vessel is eligible to be enrolled in the Fleet only

23 pursuant to an eligibility decision application submitted to

24 the Secretary by the owner or operator of the vessel. The

25 Secretary shall make such a decision by not later than

26 90 days after the date of submittal of an eligibility deci-
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1 sion application for the vessel by the owner or operator

2 of the vessel.

3 ‘‘(b) VESSEL ELIGIBILITY, GENERALLY.—Except as

4 provided in subsection (c), the Secretary shall decide that

5 a vessel is eligible to be enrolled in the Fleet if—

6 ‘‘(1) the person that will be the contractor with

7 respect to an operating agreement for the vessel

8 agrees to enter into an operating agreement with the

9 Secretary for the vessel under section 404;

10 ‘‘(2) the person that will be a contractor with

11 respect to an operating agreement for the vessel is

12 a citizen of the United States;

13 ‘‘(3)(A) the vessel is a United States docu14 mented vessel on May 19, 1993;

15 ‘‘(B) the vessel is—

16 ‘‘(i) in existence on May 19, 1993;

17 ‘‘(ii) a United States documented vessel

18 after May 19, 1993; and

19 ‘‘(iii) not more than 10 years of age on the

20 date of that documentation;

21 ‘‘(C) the vessel is built and, if rebuilt, rebuilt in

22 a United States shipyard;

23 ‘‘(D) the vessel is built in a shipyard that is not

24 a foreign subsidized shipyard under a contract en25 tered into before May 19, 1993;
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1 ‘‘(E)(i) the vessel is built in a foreign shipyard

2 under a contract entered into on or before May 19,

3 1993; and

4 ‘‘(ii) the owner has contracted to build another

5 vessel for enrollment in the Fleet in a United States

6 shipyard that will be delivered within 30 months

7 after the effective date of an operating agreement

8 for the vessel referred to in clause (i), or the Sec9 retary finds and certifies in writing that a United

10 States shipyard cannot sell a vessel to the owner at

11 the world price due to the unavailability of series

12 transition payments under title XIV to build that

13 vessel; or

14 ‘‘(F)(i) the vessel is built under a contract en15 tered into after May 19, 1993;

16 ‘‘(ii) the proposed owner of the vessel solicited

17 nationwide bids for at least 6 months to build the

18 vessel in a United States shipyard;

19 ‘‘(iii) the Secretary finds and certifies in writing

20 that a United States shipyard cannot sell a vessel to

21 the proposed owner at the world price due to the un22 availability of series transition payments under title

23 XIV to build that vessel;
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1 ‘‘(iv) the vessel is delivered from the foreign

2 shipyard within 30 months after the Secretary’s cer3 tification under clause (iii); and

4 ‘‘(v) the vessel is substantially the same type

5 and design as the vessel described in the solicitation

6 made under clause (ii); and

7 ‘‘(4) the vessel is self-propelled and is—

8 ‘‘(A) a container vessel with a capacity of

9 at least 750 Twenty-foot Equivalent Units;

10 ‘‘(B) a roll-on/roll-off vessel with a carry11 ing capacity of at least 80,000 square feet or

12 500 Twenty-foot Equivalent Units;

13 ‘‘(C) a LASH vessel with a barge capacity

14 of at least 75 barges;

15 ‘‘(D) a vessel subject to a contract under

16 title VI on May 19, 1993; or

17 ‘‘(E) any other type of vessel that is deter18 mined by the Secretary to be suitable for use by

19 the United States for national defense or mili20 tary purposes in time of war or national emer21 gency.

22 ‘‘(c) DETERMINATIONS OF ELIGIBILITY.—

23 ‘‘(1) DETERMINATIONS REQUIRED.—The Sec24 retary shall make determinations under subsection
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1 (b) for each vessel for which an eligibility decision

2 application is submitted under this section.

3 ‘‘(2) DETERMINATION REGARDING CERTIFI4 CATION.—The Secretary shall—

5 ‘‘(A) make the finding and certification

6 under paragraph (3)(E)(ii) for a vessel, or de7 termine not to, by not later than 60 days after

8 the date of receipt of an eligibility decision ap9 plication for the vessel; and

10 ‘‘(B) make the finding and certification

11 under paragraph (3)(F)(iii) for a vessel, or de12 termine not to, by not later than 60 days after

13 the closing date of the solicitation pursuant to

14 paragraph (3)(F)(ii) for the vessel.

15 ‘‘(3) WRITTEN EXPLANATION.—The Secretary

16 shall provide to the person that submits an eligibility

17 application for a vessel a written explanation of any

18 decision that the vessel is not eligible for enrollment

19 in the Fleet.

20 ‘‘(d) LIST OF ELIGIBLE VESSELS.—

21 ‘‘(1) IN GENERAL.—The Secretary shall main22 tain a list of vessels that the Secretary decides in ac23 cordance with this section are eligible to be enrolled

24 in the Fleet.
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1 ‘‘(2) REMOVAL OF VESSELS FROM LIST.—The

2 Secretary shall remove a vessel from the list main3 tained under this subsection, and the vessel shall not

4 be an eligible vessel for purposes of this title—

5 ‘‘(A) at any time that the conditions for

6 eligibility under subsection (b) are not fulfilled

7 for the vessel;

8 ‘‘(B) if the status of the person who sub9 mitted an eligibility decision application for the

10 vessel, as owner or operator of the vessel,

11 changes and after that change—

12 ‘‘(i) the owner or operator of the ves13 sel fails to submit a new eligibility decision

14 application for the vessel; or

15 ‘‘(ii) such an application is not ap16 proved by the Secretary; or

17 ‘‘(C) if the vessel carries as cargo any item

18 that—

19 ‘‘(i) is sold or shipped to the United

20 States;

21 ‘‘(ii) is not made in the United States;

22 and

23 ‘‘(iii) the owner or operator of the ves24 sel knows has had fruadulently affixed to

25 it a label bearing a ‘Made in America’ in-
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1 scription, or any inscription with the same

2 meaning.

3 ‘‘SEC. 404. OPERATING AGREEMENTS, GENERALLY.

4 ‘‘(a) REQUIREMENT FOR ENROLLMENT OF VES5 SELS.—A vessel may be enrolled in the Fleet only if it

6 is an eligible vessel for which the owner or operator of

7 the vessel applies for and enters into an operating agree8 ment with the Secretary under this section.

9 ‘‘(b) PRIORITY FOR AWARDING AGREEMENTS.—Sub10 ject to the availability of appropriations, the Secretary

11 shall enter into operating agreements according to the fol12 lowing priority:

13 ‘‘(1) VESSELS OWNED BY CITIZENS.—

14 ‘‘(A) PRIORITY.—First, for any vessel that

15 is—

16 ‘‘(i) owned and operated by persons

17 who are citizens of the United States

18 under section 2 of the Shipping Act, 1916;

19 or

20 ‘‘(ii) less than 5 years of age and

21 owned and operated by a corporation that

22 is—

23 ‘‘(I) eligible to document a vessel

24 under chapter 121 of title 46, United

25 States Code; and
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1 ‘‘(II) affiliated with a corporation

2 operating or managing other United

3 States documented vessels for the Sec4 retary of Defense or chartering other

5 vessels to the Secretary of Defense.

6 ‘‘(B) LIMITATION ON NUMBER OF OPERAT7 ING AGREEMENTS.—The total number of oper8 ating agreements that may be entered into by

9 a person under the priority in subparagraph

10 (A)—

11 ‘‘(i) for vessels described in subpara12 graph (A)(i), may not exceed the sum of—

13 ‘‘(I) the number of United States

14 documented vessels the person oper15 ated in the foreign commerce of the

16 United States (except mixed coastwise

17 and foreign commerce) on January 1,

18 1993; and

19 ‘‘(II) the number of United

20 States documented vessels the person

21 chartered to the Secretary of Defense

22 on that date; and

23 ‘‘(ii) for vessels described in subpara24 graph (A)(ii), may not exceed 4 vessels.
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1 ‘‘(C) TREATMENT OF RELATED PAR2 TIES.—For purposes of subparagraph (B), a re3 lated party with respect to a person shall be

4 treated as the person.

5 ‘‘(2) OTHER VESSELS OWNED BY CITIZENS AND

6 GOVERNMENT CONTRACTORS.—To the extent that

7 amounts are available after applying paragraph (1),

8 any vessel that is—

9 ‘‘(A) owned and operated by—

10 ‘‘(i) citizens of the United States

11 under section 2 of the Shipping Act, 1916,

12 that have not been awarded an operating

13 agreement under the priority established

14 under paragraph (1); or

15 ‘‘(ii)(I) eligible to document a vessel

16 under chapter 121 of title 46, United

17 States Code; and

18 ‘‘(II) affiliated with a corporation op19 erating or managing other United States

20 documented vessels for the Secretary of

21 Defense or chartering other vessels to the

22 Secretary of Defense; and

23 ‘‘(B) on the list maintained under section

24 403(d).
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1 ‘‘(3) OTHER VESSELS.—To the extent that

2 amounts are available after applying paragraphs (1)

3 and (2), any vessel that is—

4 ‘‘(A) owned and operated by a person that

5 is eligible to document a vessel under chapter

6 121 of title 46, United States Code; and

7 ‘‘(B) on the list maintained under section

8 403(d).

9 ‘‘(c) AWARD OF AGREEMENTS.—

10 ‘‘(1) IN GENERAL.—The Secretary shall award

11 operating agreements within each priority under

12 subsection (b) (1), (2), and (3) under regulations

13 prescribed by the Secretary.

14 ‘‘(2) NUMBER OF AGREEMENTS AWARDED.—

15 Regulations under paragraph (1) shall provide that

16 if appropriated amounts are not sufficient for oper17 ating agreements for all vessels within a priority

18 under subsection (b) (1), (2), or (3), the Secretary

19 shall award to each person submitting a request a

20 number of operating agreements that bears approxi21 mately the same ratio to the total number of vessels

22 in the priority, as the amount of appropriations

23 available for operating agreements for vessels in the

24 priority bears to the amount of appropriations nec-
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1 essary for operating agreements for all vessels in the

2 priority.

3 ‘‘(3) TREATMENT OF RELATED PARTIES.—For

4 purposes of paragraph (2), a related party with re5 spect to a person shall be treated as the person.

6 ‘‘(d) TIME LIMIT FOR DECISION ON ENTERING OP7 ERATING AGREEMENT.—The Secretary shall enter an op8 erating agreement for a vessel within 90 days after mak9 ing the decision that the vessel is eligible to be enrolled

10 in the Fleet under section 403(a).

11 ‘‘(e) EFFECTIVE DATE OF OPERATING AGREE12 MENT.—The effective date of an operating agreement may

13 not be later than the later of—

14 ‘‘(1) the date the vessel covered by the agree15 ment enters into the trade required under section

16 405(a)(1)(A);

17 ‘‘(2) the date the vessel covered by the agree18 ment is withdrawn from an operating differential

19 subsidy contract under title VI;

20 ‘‘(3) the date of termination of an operating

21 differential subsidy contract under title VI that ap22 plies to the vessel; or

23 ‘‘(4) the date of the expiration or termination

24 of a charter of the vessel to the United States Gov25 ernment that was entered into before the date of the
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1 enactment of the Maritime Security and Competi2 tiveness Act of 1993.

3 ‘‘(f) EXPIRATION OF OFFERS FOR AGREEMENTS.—

4 Unless extended by the Secretary, an offer by the Sec5 retary to enter into an operating agreement under this

6 section expires 120 days after the date the offer is made.

7 ‘‘(g) LENGTH OF AGREEMENTS.—An operating

8 agreement is effective for 10 years from the effective date

9 of the agreement.

10 ‘‘(h) REPAYMENT REQUIREMENTS.—

11 ‘‘(1) NONCOMPLIANCE.—A contractor that fails

12 to comply with the terms of an operating agreement

13 shall be liable to the United States Government for

14 all amounts received by the contractor as payments

15 for the vessel under this title with respect to the pe16 riod of that noncompliance, and for interest on those

17 amounts determined under paragraph (3).

18 ‘‘(2) FAILURE TO OPERATE REPLACEMENT VES19 SEL.—A contractor under an operating agreement

20 that covers a vessel that is 25 or more years of age

21 and that fails to replace the vessel as provided in

22 section 405(a)(3) (A) or (B) shall be liable to the

23 United States Government for all amounts received

24 by the contractor as payments for the vessel under

25 this title with respect to periods after the date the
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1 vessel becomes 25 years of age, and for interest on

2 those amounts determined under paragraph (3).

3 ‘‘(3) DETERMINATION OF INTEREST.—Interest

4 under paragraphs (1) and (2) shall be at an annual

5 rate equal to 125 percent of the coupon issue yield

6 equivalent (as determined by the Secretary of the

7 Treasury) of the average accepted auction price for

8 auctions of 3 month United States Treasury bills

9 settled during the quarter preceding the date of the

10 failure to comply or the failure to replace, respec11 tively.

12 ‘‘(i) PROHIBITION ON AGREEMENTS FOR CERTAIN

13 VESSELS.—The Secretary may not enter into an operating

14 agreement for a vessel that is owned or operated by a per15 son that was a contractor for the vessel under an operat16 ing agreement terminated under section 405(a)(10), be17 fore the end of the term of the agreement that was termi18 nated.

19 ‘‘(j) BINDING OBLIGATION OF GOVERNMENT.—An

20 operating agreement constitutes a contractual obligation

21 of the United States Government to pay the amounts pro22 vided for under that agreement.
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1 ‘‘SEC. 405. TERMS OF OPERATING AGREEMENTS.

2 ‘‘(a) OPERATING AGREEMENT REQUIREMENTS.—An

3 operating agreement shall, during the effective period of

4 the agreement, provide the following:

5 ‘‘(1) OPERATION AND DOCUMENTATION.—The

6 vessel covered by the operating agreement—

7 ‘‘(A) shall be operated in the foreign trade

8 or domestic trade allowed under a registry en9 dorsement for the vessel issued under section

10 12105 of title 46, United States Code;

11 ‘‘(B) may not be operated in the coastwise

12 trade of the United States or in mixed coast13 wise and foreign trade, except for coastwise

14 trade allowed under a registry endorsement is15 sued for the vessel under section 12105 of title

16 46, United States Code; and

17 ‘‘(C) shall be documented under chapter

18 121 of title 46, United States Code.

19 ‘‘(2) ANNUAL PAYMENTS.—

20 ‘‘(A) IN GENERAL.—The Secretary shall

21 pay the contractor, in accordance with this sub22 section, the following amounts for each fiscal

23 year in which the vessel is operated in accord24 ance with the agreement:

25 ‘‘(i) For fiscal year 1994, $2,300,000.
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1 ‘‘(ii) For each fiscal year thereafter,

2 $2,100,000.

3 ‘‘(B) LIMITATION.—The Secretary shall

4 not pay any amount pursuant to this paragraph

5 for any day in which the vessel is—

6 ‘‘(i) under a charter to the United

7 States Government that was entered into

8 before the date of the enactment of the

9 Maritime Security and Competitiveness Act

10 of 1993; or

11 ‘‘(ii) covered by an operating differen12 tial subsidy contract under title VI.

13 ‘‘(3) TERMINATION BASED ON AGE OF VES14 SEL.—

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

16 subparagraph (B), the operating agreement

17 shall terminate on the later of—

18 ‘‘(i) the date the vessel covered by the

19 agreement is 25 years of age, or

20 ‘‘(ii) the date the vessel covered by the

21 agreement is 30 years of age, in the case

22 of an agreement that covers a vessel that

23 is repowered in a United States shipyard

24 after the effective date of the operating
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1 agreement and before the vessel is 25

2 years of age.

3 ‘‘(B) EXCEPTION.—The operating agree4 ment shall not terminate under subparagraph

5 (A) if the contractor agrees to acquire a re6 placement for the vessel from among vessels on

7 the list maintained under section 403(d), and—

8 ‘‘(i) in the case of a vessel to be re9 placed with a new vessel, the contractor

10 enters into a binding contract with a ship11 yard that requires the shipyard to deliver

12 the replacement vessel by not later than 30

13 months after the later of the date the oper14 ating agreement is entered into or the date

15 the operating agreement would otherwise

16 terminate under subparagraph (A); or

17 ‘‘(ii) in the case of a vessel to be re18 placed with an existing vessel, the contrac19 tor acquires the replacement vessel from

20 among vessels on the list maintained under

21 section 403(d), by not later than 12

22 months after the later of the date the oper23 ating agreement is entered into or the date

24 the operating agreement would otherwise

25 expire under subparagraph (A).
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1 ‘‘(4) AVAILABILITY OF VESSEL.—

2 ‘‘(A) IN GENERAL.—On a request of the

3 President during time of war or national emer4 gency or when considered by the President, act5 ing through the Secretary in consultation with

6 the Secretary of Defense, to be necessary in the

7 interest of national security, and subject to sub8 paragraph (B), the contractor as soon as prac9 ticable shall, as specified by the Secretary—

10 ‘‘(i) make the vessel covered by the

11 agreement available to the Secretary under

12 a time charter; or

13 ‘‘(ii) provide space on the vessel cov14 ered by the agreement to the Secretary on

15 a guaranteed basis.

16 ‘‘(B) CONDITION FOR CHARTER.—The

17 Secretary shall allow a contractor to comply

18 with this paragraph by providing space on a

19 vessel under subparagraph (A)(ii) unless the

20 Secretary determines that it is necessary in the

21 interest of national security that the contractor

22 make the vessel available under a time charter.

23 ‘‘(5) DELIVERY OF VESSEL.—The contractor

24 shall deliver a vessel to the Secretary pursuant to a
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1 time charter under paragraph (4)(A)(i), as specified

2 in the request for the vessel—

3 ‘‘(A) at the first port in the United States

4 the vessel is scheduled to call after the date of

5 receipt of the request;

6 ‘‘(B) at the port in the United States to

7 which the vessel is nearest on the date of re8 ceipt of the request; or

9 ‘‘(C) in any other reasonable manner au10 thorized by the agreement and specified in the

11 request.

12 ‘‘(6) DELIVERY COSTS.—In addition to

13 amounts paid under paragraph (2), the Secretary

14 shall reimburse the contractor for costs incurred by

15 the contractor in delivering the vessel covered by the

16 agreement to the Secretary in accordance with the

17 agreement.

18 ‘‘(7) COMPENSATION.—In addition to amounts

19 paid under paragraph (2), the Secretary shall pay

20 the contractor, as provided in the operating agree21 ment, reasonable compensation at reasonable com22 mercial rates for the period of time the vessel is

23 chartered or the contractor provides space on the

24 vessel under paragraph (4).

25 ‘‘(8) REQUIRED OPERATION.—
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1 ‘‘(A) IN GENERAL.—A vessel covered by

2 the operating agreement shall be operated in

3 the trade required under paragraph (1), and

4 under conditions eligible for payment under this

5 title, for at least 320 days in a fiscal year, in6 cluding days during which the vessel is dry7 docked, surveyed, inspected, or repaired.

8 ‘‘(B) REDUCTION IN PAYMENTS.—If a ves9 sel operates in the trade required under para10 graph (1), and under conditions eligible for pay11 ment under this title, for less than the time re12 quired under subparagraph (A), the payments

13 required under paragraph (2) shall be reduced

14 on a pro-rata basis to reflect the lesser time in

15 that operation.

16 ‘‘(9) SUBSTITUTION OF VESSELS AUTHOR17 IZED.—The contractor may substitute for the vessel

18 covered by the agreement another vessel on the list

19 maintained under section 403(d).

20 ‘‘(10) OTHER TERMINATION.—The operating

21 agreement shall terminate if—

22 ‘‘(A) in the case of a vessel that transports

23 less than 12,000 tons of bulk cargo under the

24 agreement—
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1 ‘‘(i) the vessel covered by the agree2 ment is not operated under an operating

3 agreement for one year; and

4 ‘‘(ii) a substitute for that vessel is not

5 operated under the agreement during that

6 year; or

7 ‘‘(B) the contractor notifies the Secretary

8 that the contractor intends to terminate the

9 agreement, by not later than 60 days before the

10 effective date of the termination.

11 ‘‘(b) PAYMENTS.—

12 ‘‘(1) IN GENERAL.—The amount required to be

13 paid by the Secretary each year to a contractor

14 under an operating agreement pursuant to sub15 section (a)(2)—

16 ‘‘(A) shall be paid at a pro rated amount

17 at the beginning of each month in equal install18 ments; and

19 ‘‘(B) except as provided in paragraph (2),

20 may not be reduced by reason of operation of

21 the vessel covered by the agreement to carry ci22 vilian or military preference cargoes under—

23 ‘‘(i) section 901(a), 901(b), or 901b;

24 ‘‘(ii) section 2631 of title 10, United

25 States Code; or
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1 ‘‘(iii) the Act of March 26, 1934 (48

2 Stat. 500).

3 ‘‘(2) REDUCTION FOR PREFERENCE CARGO.—A

4 contractor with respect to a vessel may not receive

5 any payment under this title for any day in which

6 the vessel is engaged in transporting more than

7 12,000 tons of preference cargo described in para8 graph (1)(B) that is bulk cargo (as defined in sec9 tion 3 of the Shipping Act of 1984).

10 ‘‘(c) REDELIVERY OF VESSELS.—The Secretary

11 shall, upon the termination of the need for which a vessel

12 is delivered under subsection (a)(4), return the vessel to

13 the contractor—

14 ‘‘(1) at a place that is mutually agreed upon by

15 the Secretary of Defense and the contractor; and

16 ‘‘(2) in the condition in which it was delivered

17 to the Secretary, excluding normal wear and tear.

18 ‘‘(d) TRANSFER OF OPERATING AGREEMENTS.—A

19 contractor under an operating agreement may transfer the

20 agreement (including all rights and obligations under the

21 agreement) to any other person that is a citizen of the

22 United States, after notification of the Secretary in ac23 cordance with regulations prescribed by the Secretary, un24 less the transfer is disapproved by the Secretary within

25 90 days after the date of that notification. A transfer shall
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1 not be effective before the end of that 90-day period. A

2 person to whom an agreement is transferred may receive

3 payments from the Secretary under the agreement only

4 if the vessel to be covered by the agreement after the

5 transfer is on the list maintained under section 403(d).

6 ‘‘SEC. 406. NONCONTIGUOUS TRADE RESTRICTIONS.

7 ‘‘(a) PROHIBITION.—

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

9 section, a contractor may not receive any payment

10 under this title—

11 ‘‘(A) if the contractor or a related party

12 with respect to the contractor, directly or indi13 rectly owns, charters, or operates a vessel en14 gaged in the transportation of cargo in non15 contiguous trade other than in accordance with

16 a waiver under subsection (b), (c), or (d); or

17 ‘‘(B) if the contractor is authorized to op18 erate a vessel in noncontiguous trade under

19 such a waiver, and there is a—

20 ‘‘(i) material change in the domestic

21 ports served by the contractor from the

22 ports permitted to be served under the

23 waiver;

24 ‘‘(ii) material increase in the annual

25 number or the frequency of sailings by the
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1 contractor from the number or frequency

2 permitted under the waiver; or

3 ‘‘(iii) material increase in the annual

4 volume of cargo carried or annual capacity

5 utilized by the contractor from the annual

6 volume of cargo or annual capacity per7 mitted under the waiver.

8 ‘‘(2) LIMITATIONS ON PROHIBITION.—Para9 graph (1) applies to a contractor only in the years

10 specified for payments under the operating agree11 ment entered into by the contractor.

12 ‘‘(b) GENERAL WAIVER AUTHORITY.—

13 ‘‘(1) IN GENERAL.—Except as provided in sub14 section (c), the Secretary may waive, in writing, the

15 application of subsection (a) to a contractor pursu16 ant to an application submitted in accordance with

17 this subsection, unless the Secretary finds that—

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

19 competition to any person that operates vessels

20 as a carrier of cargo in a service exclusively in

21 the noncontiguous trade for which the waiver is

22 applied;

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

24 service in that noncontiguous trade is adequate;

25 or
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1 ‘‘(C) the waiver will result in prejudice to

2 the objects or policy of this title or Act.

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

4 by the Secretary under this subsection shall state—

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

6 served;

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

8 sailings that may be provided; and

9 ‘‘(C)(i) the annual volume of cargo per10 mitted,

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

12 annual 40-foot equivalent unit shipboard con13 tainer and trailer or vehicle or general cargo ca14 pacity permitted, or

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

16 barge house cubic foot capacity and the annual

17 barge deck general cargo capacity, or 40-foot

18 equivalent unit container, trailer, or vehicle ca19 pacity, permitted.

20 ‘‘(3) APPLICATIONS FOR WAIVERS.—An appli21 cation for a waiver under this subsection may be

22 submitted by a contractor and shall describe, as ap23 plicable, the nature and scope of—

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

25 in a noncontiguous trade under the waiver; or
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1 ‘‘(B) any proposed material change or in2 crease in a service in a noncontiguous trade

3 permitted under a previous waiver.

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

5 ‘‘(A) NOTICE AND PROCEEDING.—Within

6 30 days after receipt of an application for a

7 waiver under this subsection, the Secretary

8 shall—

9 ‘‘(i) publish a notice of the applica10 tion; and

11 ‘‘(ii) begin a proceeding on the appli12 cation under section 554 of title 5, United

13 States Code, to receive—

14 ‘‘(I) evidence of the nature,

15 quantity, and quality of the existing

16 service in the noncontiguous trade for

17 which the waiver is applied;

18 ‘‘(II) a description of the pro19 posed service or proposed material

20 change or increase in a previously per21 mitted service;

22 ‘‘(III) the projected effect of the

23 proposed service or proposed material

24 change or increase in existing service;

25 and
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1 ‘‘(IV) recommendations on condi2 tions that should be contained in any

3 waiver for the proposed service or ma4 terial change or increase.

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

6 waiver under this subsection, and any person

7 that operates cargo vessels in the noncontiguous

8 trade for which a waiver is applied and that has

9 any interest in the application, may intervene in

10 the proceedings on the application.

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

12 to grant a waiver under this subsection, the

13 Secretary shall hold a public hearing in an ex14 peditious manner, reasonable notice of which

15 shall be published.

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

17 all proceedings and hearings on an application under

18 this subsection and issue a decision on the record

19 within 90 days after receipt of the final briefs sub20 mitted for the record.

21 ‘‘(6) LIMITATION ON CONSIDERATION OF CER22 TAIN EXISTING SERVICE.—

23 ‘‘(A) LIMITATION.—In determining wheth24 er to grant a waiver under this subsection for

25 noncontiguous trade with Hawaii, the Secretary
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1 shall not consider the criterion set forth in

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

3 ‘‘(i) is a contractor, and

4 ‘‘(ii) operates 4 or more vessels in for5 eign commerce in competition with another

6 contractor.

7 ‘‘(B) QUALIFIED OPERATOR.—In this

8 paragraph, the term ‘qualified operator’ means

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

10 as an operator of containerized vessels, trailer

11 vessels, or combination container and trailer

12 vessels in noncontiguous trade with Hawaii and

13 the Johnston Islands (including a related party

14 with respect to the person).

15 ‘‘(c) WAIVERS FOR EXISTING NONCONTIGUOUS

16 TRADE OPERATORS.—

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

18 the application of subsection (a) to a contractor pur19 suant to an application submitted in accordance with

20 this subsection if the Secretary finds that the con21 tractor, or a related party or predecessor in interest

22 with respect to the contractor—

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

24 vessel as a carrier of cargo by water—
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1 ‘‘(i) in a noncontiguous trade on July

2 1, 1992; or

3 ‘‘(ii) in furnishing seasonal service in

4 a season ordinarily covered by its oper5 ation, during the 12 calendar months pre6 ceding July 1, 1992; and

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

8 that time, except for interruptions of service re9 sulting from military contingency or over which

10 the contractor (or related party or predecessor

11 in interest) had no control.

12 ‘‘(2) TERMS OF WAIVER.—

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

14 provided in this paragraph, the level of service

15 permitted under a waiver under this subsection

16 shall be the level of service provided by the ap17 plicant (or related party or predecessor in inter18 est) in the relevant noncontiguous trade during,

19 for year-round service, the 6 calendar months

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

21 the 12 calendar months preceding July 1, 1992,

22 determined by—

23 ‘‘(i) the domestic ports called;

24 ‘‘(ii) the number of sailings actually

25 made, except as to interruptions in the
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1 service in the noncontiguous trade result2 ing from military contingency or over

3 which the applicant (or related party or

4 predecessor in interest) had no control;

5 and

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

7 for containerized or trailer service, the 40-

8 foot equivalent unit shipboard container,

9 trailer, or vehicle or general cargo capacity

10 employed, or, for tug and barge service,

11 the barge house cubic foot capacity and

12 barge deck general cargo capacity or 40-

13 foot equivalent unit container, trailer, or

14 vehicle capacity, employed.

15 ‘‘(B) CERTAIN CONTAINERIZED VES16 SELS.—If an applicant under this subsection

17 was offering service as an operator of container18 ized vessels in noncontiguous trades with Ha19 waii, Puerto Rico, and Alaska on July 1, 1992,

20 a waiver under this subsection for the applicant

21 shall permit a level of service consisting of—

22 ‘‘(i) 104 sailings each year from the

23 West Coast of the United States to Hawaii

24 with an annual capacity allocated to the

25 service of 75 percent of the total capacity
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1 of the vessels employed in the service on

2 July 1, 1992;

3 ‘‘(ii) 156 sailings each year in each di4 rection between the East Coast or Gulf

5 Coast of the United States and Puerto

6 Rico with an annual capacity allocated to

7 the service of 75 percent of the total ca8 pacity of its vessels employed in the service

9 on the date of the enactment of the Mari10 time Security and Competitiveness Act of

11 1993; and

12 ‘‘(iii) 103 sailings each year in each

13 direction between Washington and Alaska

14 with an annual capacity allocated to the

15 service in each direction of 100 percent of

16 the total capacity of its vessels employed in

17 the service on July 1, 1992.

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

19 applicant under this subsection was offering

20 service as an operator of tugs and barges in

21 noncontiguous trades with Hawaii, Puerto Rico,

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

23 this subsection for the applicant shall permit a

24 level of service consisting of—
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1 ‘‘(i) 17 sailings each year in each di2 rection between ports in Washington, Or3 egon, and Northern California and ports in

4 Hawaii with an annual barge house cubic

5 foot capacity and annual barge deck 40-

6 foot equivalent unit container capacity in

7 each direction of 100 percent of the total

8 of the capacity of its vessels employed in

9 the service during the 6 calendar months

10 preceding July 1, 1992, annualized;

11 ‘‘(ii) 253 sailings each year in each di12 rection between the East Coast or Gulf

13 Coast of the United States and Puerto

14 Rico with an annual 40-foot equivalent

15 unit container or trailer capacity equal to

16 100 percent of the capacity of its barges

17 employed in the service on the date of the

18 enactment of the Maritime Security and

19 Competitiveness Act of 1993;

20 ‘‘(iii) 37 regularly scheduled tandem

21 tow rail barge sailings and 10 additional

22 single tow rail barge sailings each year in

23 each direction between Washington and the

24 Alaskan port range between and including

25 Anchorage and Whittier with an annual
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1 capacity allocated to the service in each di2 rection of 100 percent of the total rail car

3 capacity of its vessels employed in the serv4 ice on July 1, 1992;

5 ‘‘(iv) 8 regularly scheduled single tow

6 sailings each year in each direction be7 tween Washington and points in Alaska

8 (not including the port range between and

9 including Anchorage and Whittier, except

10 occasional deviations to discharge inciden11 tal quantities of cargo) with an annual ca12 pacity allocated to the service in each di13 rection of 100 percent of the total capacity

14 of its vessels employed in the service on

15 July 1, 1992; and

16 ‘‘(v) unscheduled, contract carrier tug

17 and barge service between points in Alaska

18 south of the Arctic Circle not served by the

19 common carrier service permitted under

20 clause (iii) and points in the contiguous 48

21 States, with an annual capacity allocated

22 to that service not exceeding 100 percent

23 of the total capacity of the equipment that

24 was dedicated to service south of the Arctic

25 Circle on July 1, 1992, and actually uti-
35

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1 lized in that service in the 2-year period

2 preceding that date.

3 ‘‘(D) ANNUALIZATION.—Capacity other4 wise required by this paragraph to be permitted

5 under a waiver under this subsection shall be

6 annualized if not a seasonal service.

7 ‘‘(E) ADJUSTMENTS.—

8 ‘‘(i) Each written waiver granted by

9 the Secretary under this subsection shall

10 contain a statement that the annual capac11 ity permitted under this waiver in any di12 rection shall increase for a calendar year

13 by the percentage of increase during the

14 preceding calendar year in the real gross

15 product of the State or territory to which

16 goods are transported in the noncontiguous

17 trade covered by the waiver, or its equiva18 lent economic measure as determined by

19 the Secretary if the real gross product is

20 not available, and that the increase shall

21 not be considered to be a material change

22 or increase for purposes of subsection

23 (a)(1)(B).

24 ‘‘(ii) The increase in permitted capac25 ity under clause (i) in the noncontiguous
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1 trade with Alaska shall be allowed only to

2 the extent the operator actually uses that

3 increased capacity to carry cargo in the

4 permitted service in the calendar year im5 mediately following the preceding increase

6 in gross product. However, if an operator

7 operating exclusively containerized vessels

8 in that trade on July 1, 1992, carries an

9 average loan factor of at least 90 percent

10 of permitted capacity (including the capac11 ity, if any, both authorized and used under

12 the previous sentence) during 9 months of

13 any one calendar year, than in the next fol14 lowing calendar year and thereafter, the

15 requirement that additional capacity must

16 be used in the immediately following year

17 does not apply.

18 ‘‘(F) SERVICE LEVELS NOT INCREASED BY

19 TERMINATION OF AGREEMENT.—The termi20 nation of an operating agreement under section

21 405(a)(10) shall not be considered to increase

22 a level of service specified in subparagraph (A),

23 (B), or (C) if the contractor under the agree24 ment enters into another operating agreement

25 after that termination.
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1 ‘‘(3) APPLICATIONS FOR WAIVERS.—For a

2 waiver under this subsection a contractor shall sub3 mit to the Secretary an application certifying the

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

5 or (B), as applicable.

6 ‘‘(4) ACTION ON APPLICATION.—

7 ‘‘(A) NOTICE.—The Secretary shall pub8 lish a notice of receipt of an application for a

9 waiver under this subsection within 30 days

10 after receiving the application.

11 ‘‘(B) HEARING PROHIBITED.—The Sec12 retary may not conduct a hearing on an appli13 cation for a waiver under this subsection.

14 ‘‘(C) SUBMISSION OF COMMENTS.—The

15 Secretary shall give every person operating a

16 cargo vessel in a noncontiguous trade for which

17 a waiver is applied for under this subsection

18 and who has any interest in the application a

19 reasonable opportunity to submit comments on

20 the application and on the description of the

21 service that would be permitted by any waiver

22 that is granted by the Secretary under the ap23 plication.

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

25 the time required for publication of notice and for
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1 receipt and evaluation of comments by the Sec2 retary, an application for a waiver under this sub3 section submitted at the same time the applicant ap4 plies for inclusion of a vessel in the Fleet shall be

5 granted in accordance with the level of service deter6 mined by the Secretary under this subsection by not

7 later than the date on which the Secretary offers to

8 the applicant an operating agreement with respect to

9 that vessel.

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

11 material change or increase in a service that is sub12 ject to a waiver under this subsection is not author13 ized except to the extent the change or increase is

14 permitted by a waiver under subsection (b).

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

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

17 hearing, temporarily waive the application of subsection

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

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

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

21 another emergency declared by the President. Any waiver

22 shall be for a period of not to exceed 45 days, except that

23 a waiver may be renewed for 30-day periods if the Sec24 retary finds that adequate capacity continues to be other25 wise unavailable.
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1 ‘‘(e) ANNUAL REPORT ON WAIVERS.—Each waiver

2 under this section shall require the person who is granted

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

4 report setting forth for the service authorized by the waiv5 er—

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

7 ‘‘(2) the number or frequency of sailings per8 formed during the year; and

9 ‘‘(3) the volume of cargo carried or, for contain10 erized or trailer service, the annual 40-foot equiva11 lent unit shipboard container, trailer, or vehicle ca12 pacity utilized during the year, or for tug and barge

13 service, the annual barge house and barge deck ca14 pacity utilized during the year.

15 ‘‘(f) DEFINITIONS.—In this section—

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

17 trade between—

18 ‘‘(A) a point in the contiguous 48 States;

19 and

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

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

22 Arctic Circle; and

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

24 ‘‘(A) a holding company, subsidiary, affili25 ate, or associate of a contractor; and
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1 ‘‘(B) an officer, director, agency, or other

2 executive of a contractor or of a person referred

3 to in subparagraph (A).

4 ‘‘SEC. 407. OPERATING COMPETING FOREIGN VESSELS.

5 ‘‘(a) IN GENERAL.—Except as provided in this sec6 tion, a contractor (including a related party with respect

7 to a contractor) may not own, charter, or operate a foreign

8 vessel in competition with a United States documented

9 vessel.

10 ‘‘(b) EXCEPTION.—Subsection (a) does not apply to

11 a foreign vessel if—

12 ‘‘(1)(A) the contractor has applied for an oper13 ating agreement for a vessel to be operated in the

14 same service as the foreign vessel; and

15 ‘‘(B) the Secretary, due to the unavailability of

16 funds, does not award an operating agreement to

17 that contractor for a United States documented ves18 sel for that service within 60 days after that applica19 tion is submitted;

20 ‘‘(2) the Secretary, after notice and an oppor21 tunity for a hearing, under special circumstances,

22 and for good cause shown, waives subsection (a) for

23 the contractor for a specified period of time; or

24 ‘‘(3) the foreign vessel was operated by that

25 contractor on August 5, 1993.
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1 ‘‘SEC. 408. FUNDING FOR OPERATING AGREEMENTS.

2 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—For en3 tering into operating agreements under this title there are

4 authorized to be appropriated to the Secretary

5 $1,200,000,000 for fiscal year 1995. Amounts appro6 priated under this subsection shall remain available until

7 expended.

8 ‘‘(b) TRANSFER OF BALANCES FROM OPERATING

9 DIFFERENTIAL SUBSIDY PROGRAM.—Any amounts other10 wise available for operating differential subsidy contracts

11 under title VI that are no longer required for those con12 tracts are available, until expended, for operating agree13 ments.

14 ‘‘SEC. 409. DEFINITIONS.

15 ‘‘In this title:

16 ‘‘(1) CONTRACTOR.—The term ‘contractor’

17 means an owner or operator of a vessel that enters

18 into an operating agreement for the vessel with the

19 Secretary.

20 ‘‘(2) ELIGIBILITY DECISION APPLICATION.—

21 The term ‘eligibility decision application’ means an

22 application for a decision by the Secretary under

23 section 403 that a vessel is eligible to be enrolled in

24 the Fleet.
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1 ‘‘(3) ELIGIBLE VESSEL.—The term ‘eligible ves2 sel’ means a vessel that the Secretary decides under

3 section 403 is eligible to be enrolled in the Fleet.

4 ‘‘(4) FLEET.—The term ‘Fleet’ means the Mar5 itime Security Fleet established under section 402.

6 ‘‘(5) OPERATING AGREEMENT.—The term ‘op7 erating agreement’ means an operating agreement

8 entered into by the Secretary under section 404.

9 ‘‘(6) RELATED PARTY.—The term ‘related

10 party’ means, with respect to a contractor or other

11 person—

12 ‘‘(A) a holding company, subsidiary, affili13 ate, or association of the person; and

14 ‘‘(B) an officer, director, other executive,

15 or agent of the person or of an entity referred

16 to in paragraph (1).

17 ‘‘(7) SECRETARY.—The term ‘Secretary’ means

18 the Secretary of Transportation.

19 ‘‘(8) UNITED STATES DOCUMENTED VESSEL.—

20 The term ‘United States documented vessel’ means

21 a vessel that is documented under chapter 121 of

22 title 46, United States Code.’’.

23 SEC. 4. OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS.

24 (a) TERMINATION OF EXISTING CONTRACTS.—Not25 withstanding any other provision of this Act, any contract
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1 in effect under title VI of the Merchant Marine Act, 1936

2 (46 App. U.S.C. 1171 et seq.), on the day before the date

3 of enactment of this Act shall continue in effect under its

4 terms and terminate as set forth in the contract, unless

5 voluntarily terminated on an earlier date by the persons

6 (other than the United States Government) that are par7 ties to the contract.

8 (b) AGE ACCELERATION OF BULK CARGO ODS VES9 SELS.—Section 506 of the Merchant Marine Act, 1936

10 (46 App. U.S.C. 1156) is amended—

11 (1) by inserting ‘‘(a)’’ after ‘‘SEC. 506.’’; and

12 (2) by adding at the end the following new sub13 section:

14 ‘‘(b) For purposes of this section, any liquid or dry

15 bulk cargo vessel for which operating-differential subsidy

16 is required to be paid under a contract under title VI that

17 is in force on May 19, 1993, shall, effective upon the ter18 mination date of the contract (as set forth in the contract

19 as in effect on May 19, 1993, be deemed to have reached

20 the age of 20 years.’’.

21 (c) RESTRICTIONS ON OPERATIONS OF ODS VES22 SELS.—Title VI of the Merchant Marine Act, 1936 (46

23 App. U.S.C. 1171 et seq.), as amended by this Act, is fur24 ther amended by adding at the end the following:
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1 ‘‘SEC. 616. LIMITATION ON APPLICATION OF RESTRICTIONS

2 ON OPERATIONS.

3 ‘‘(a) Sections 605(c) and 804, this section, and the

4 essential service requirements in section 601(a) and

5 603(a), do not apply to a contractor if—

6 ‘‘(1) the contractor submits an eligibility deci7 sion application to the Secretary under title IV for

8 all of the vessels operated by the contractor under

9 an operating-differential subsidy contract; and

10 ‘‘(2) all of those vessels for which operating

11 agreements are offered by the Secretary under title

12 IV are enrolled in the Maritime Security Fleet.

13 ‘‘(b)(1) With respect to the operations of a contractor

14 receiving operating-differential subsidy for liner vessels on

15 a particular trade route, as defined in that contractor’s

16 contract in effect on January 1, 1993, that operator shall

17 not be subject to the restrictions of either section 605(c)

18 or section 804 with respect to operations on that trade

19 route, commencing at such time as—

20 ‘‘(A) that operator transfers 50 percent or more

21 of its vessels that were operating on that trade route

22 as of January 1, 1993, from the operating-differen23 tial subsidy program to the Maritime Security Fleet

24 program under title IV; or

25 ‘‘(B) that operator is the only contractor receiv26 ing operating-differential subsidy with respect to
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1 that trade route, and all other United States-flag

2 liner operators operating a vessel on that trade route

3 are operating on that trade route only vessels for

4 which there are in effect operating agreements under

5 title IV.

6 ‘‘(2) With respect to any contractor receiving operat7 ing-differential subsidy for liner vessels on Maritime Ad8 ministration Essential Trade Route 1, 2, or 8, that opera9 tor shall not be subject to the restrictions of either section

10 605(c) or section 804 with respect to operations on any

11 of those trade routes, commencing at such time as pay12 ments begin to accrue on behalf of another United States13 flag operator that is a party to an operating agreement

14 under title IV which provides liner service on Maritime

15 Administration Essential Trade Route 2.’’.

16 (d) ELIMINATION OF TRADE ROUTE RESTRIC17 TIONS.—Section 809(a) of the Merchant Marine Act,

18 1936 (46 U.S.C. 1213(a)) is amended by adding at the

19 end the following: ‘‘This subsection shall not apply to con20 tracts under title IV or funds for such contracts.’’.

21 SEC. 5. ELIMINATION OF CONSTRUCTION DIFFERENTIAL

22 SUBSIDY RESTRICTIONS.

23 Title V of the Merchant Marine Act, 1936 (46 App.

24 U.S.C. 1151 et seq.), is amended by adding at the end

25 the following:
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1 ‘‘SEC. 512. LIMITATION ON RESTRICTIONS.

2 ‘‘Notwithstanding any other provision of law or con3 tract, all restrictions and requirements under sections

4 503, 506, and 802 applicable to a liner vessel constructed,

5 reconstructed, or reconditioned with the aid of construc6 tion-differential subsidy shall terminate upon the expira7 tion of the 25-year period beginning on the date of the

8 original delivery of the vessel from the shipyard.’’.

9 SEC. 6. DEFINITIONS APPLICABLE TO MERCHANT MARINE

10 ACT, 1936.

11 Section 905 of the Merchant Marine Act, 1936 (46

12 App. U.S.C. 1244), is amended—

13 (1) by striking subsection (a) and inserting the

14 following:

15 ‘‘(a) Each of the terms ‘foreign commerce’ and ‘for16 eign trade’ mean—

17 ‘‘(1) trade between the United States and a for18 eign country; or

19 ‘‘(2) trade between foreign ports.’’;

20 (2) by striking subsection (c) and inserting the

21 following:

22 ‘‘(c) The term ‘citizen of the United States’ means

23 a person eligible to own a documented vessel under chap24 ter 121 of title 46, United States Code.’’, and

25 (3) by adding at the end the following:
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1 ‘‘(h) The term ‘foreign subsidized shipyard’ means a

2 shipyard that—

3 ‘‘(1) receives or benefits from, directly or indi4 rectly, a shipyard subsidy for the construction of

5 vessels; and

6 ‘‘(2) is located in a foreign country that has not

7 signed a trade agreement with the United States

8 that provides for the elimination of subsidies for

9 that shipyard.

10 ‘‘(i) The term ‘subsidy’ includes any of the following:

11 ‘‘(1) Officially supported export credits and de12 velopment assistance.

13 ‘‘(2) Direct official operating support to the

14 commercial shipbuilding and repair industry, or to a

15 related entity that favors the operation of shipbuild16 ing and repair, including—

17 ‘‘(A) grants;

18 ‘‘(B) loans and loan guarantees other than

19 those available on the commercial market;

20 ‘‘(C) forgiveness of debt;

21 ‘‘(D) equity infusions on terms inconsistent

22 with commercially reasonable investment prac23 tices;

24 ‘‘(E) preferential provision of goods and

25 services; and
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1 ‘‘(F) public sector ownership of commercial

2 shipyards on terms inconsistent with commer3 cially reasonable investment practices.

4 ‘‘(3) Direct official support for investment in

5 the commercial shipbuilding and repair industry, or

6 to a related entity that favors the operation of ship7 building and repair, including the kinds of support

8 listed in clauses (i) through (v) of subparagraph (B),

9 and any restructuring support, except public support

10 for social purposes directly and effectively linked to

11 shipyard closures.

12 ‘‘(4) Assistance in the form of grants, pref13 erential loans, preferential tax treatment, or other14 wise, that benefits or is directly related to shipbuild15 ing and repair for purposes of research and develop16 ment that is not equally open to domestic and for17 eign enterprises.

18 ‘‘(5) Tax policies and practices that favor the

19 shipbuilding and repair industry, directly or indi20 rectly, such as tax credits, deductions, exemptions

21 and preferences, including accelerated depreciation,

22 if the benefits are not generally available to persons

23 or firms not engaged in shipbuilding or repair.

24 ‘‘(6) Any official regulation or practice that au25 thorizes or encourages persons or firms engaged in
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1 shipbuilding or repair to enter into anticompetitive

2 arrangements.

3 ‘‘(7) Any indirect support directly related, in

4 law or in fact, to shipbuilding and repair at national

5 yards, including any public assistance favoring ship6 owners with an indirect effect on shipbuilding or re7 pair activities, and any assistance provided to suppli8 ers of significant inputs to shipbuilding, which re9 sults in benefits to domestic shipbuilders.

10 ‘‘(8) Any export subsidy identified in the Illus11 trative List of Export Subsidies in the Annex to the

12 Agreement on Interpretation and Application of Ar13 ticles VI, XVI, and XXIII of the General Agreement

14 on Tariffs and Trade or any other export subsidy

15 that may be prohibited as a result of the Uruguay

16 Round of trade negotiations.’’.

17 SEC. 7. GOVERNMENT-IMPELLED CARGOES.

18 (a) VESSELS ELIGIBLE FOR CARGOES.—Section

19 901(b) of the Merchant Marine Act, 1936 (46 App. U.S.C.

20 1241(b)) is amended—

21 (1) in paragraph (1), by striking ‘‘For purposes

22 of this section, the term ‘privately owned United

23 States-flag commercial vessels’ ’’ and all that follows

24 through the end of the paragraph; and
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1 (2) by adding at the end the following new

2 paragraphs:

3 ‘‘(3) In this section and section 901b, the term ‘pri4 vately owned United States-flag commercial vessel’ means

5 a privately owned vessel that is documented under chapter

6 121 of title 46, United States Code, that—

7 ‘‘(A) was built in the United States;

8 ‘‘(B) was documented under chapter 121 of

9 title 46, United States Code, before May 19, 1993;

10 ‘‘(C) does not transport under section 901b or

11 this section on any voyage more than 12,000 tons of

12 bulk cargo (as defined in section 3 of the Shipping

13 Act of 1984), and—

14 ‘‘(i) was built in a foreign shipyard under

15 a contract entered into on or before May 19,

16 1993;

17 ‘‘(ii) is built under a contract entered into

18 after that date, in a foreign shipyard that on

19 the date the contract is entered is not a foreign

20 subsidized shipyard; or

21 ‘‘(iii) is subject to an operating agreement

22 under title IV;

23 ‘‘(D)(i) is built under a contract entered into

24 after May 19, 1993, in a foreign shipyard that on
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1 the date the contract was entered is not a foreign

2 subsidized shipyard; and

3 ‘‘(ii) has not been documented in a foreign

4 country before it is documented under chapter 121

5 of title 46, United States Code; or

6 ‘‘(E) has been documented under chapter 121

7 of title 46, United States Code, for at least 3 con8 secutive years, did not transport any equipment, ma9 terials, or commodities during that period under this

10 section or section 901b, and—

11 ‘‘(i) was built in a foreign shipyard under

12 a contract entered into before May 19, 1993; or

13 ‘‘(ii) is built under a contract entered into

14 after that date, in a foreign shipyard that on

15 the date the contract was entered is not a for16 eign subsidized shipyard.

17 ‘‘(4) In paragraph (3), the term ‘built’ includes re18 built.’’.

19 (b) CLERICAL AMENDMENT.—Section 901b of the

20 Merchant Marine Act, 1936 (46 App. U.S.C. 1241f) is

21 amended by adding at the end the following:

22 ‘‘(f) For the definition of the term ‘privately owned

23 United States-flag commercial vessel’, see section

24 901(b)(3).’’.
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1 SEC. 8. VESSEL FINANCING.

2 (a) ELIMINATION OF MORTGAGEE RESTRICTIONS.—

3 Section 31322(a) of title 46, United States Code, is

4 amended to read as follows:

5 ‘‘(a) A preferred mortgage is a mortgage, whenever

6 made, that—

7 ‘‘(1) includes the whole of the vessel;

8 ‘‘(2) is filed in substantial compliance with sec9 tion 31321 of this title; and

10 ‘‘(3)(A) covers a documented vessel; or

11 ‘‘(B) covers a vessel for which an application

12 for documentation is filed that is in substantial com13 pliance with the requirements of chapter 121 of this

14 title and the regulations prescribed under that chap15 ter.’’.

16 (b) ELIMINATION OF TRUSTEE RESTRICTIONS.—

17 (1) REPEAL.—Section 31328 of title 46, United

18 States Code, is repealed.

19 (2) CONFORMING AMENDMENT.—Section

20 31330(b) of title 46, United States Code, is amend21 ed in paragraphs (1), (2), and (3) by striking

22 ‘‘31328 or’’ each place it appears.

23 (c) REMOVAL OF MORTGAGE RESTRICTIONS.—Sec24 tion 9 of the Shipping Act, 1916 (46 App. U.S.C. 808),

25 as amended by this Act, is further amended—

26 (1) in subsection (c)—
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1 (A) by striking ‘‘31328’’ and inserting

2 ‘‘12106(e)’’; and

3 (B) in paragraph (1) by striking ‘‘mort4 gage,’’ each place it appears; and

5 (2) in subsection (d)—

6 (A) in paragraph (1) by striking ‘‘transfer,

7 or mortgage’’ and inserting ‘‘or transfer’’;

8 (B) in paragraph (2) by striking ‘‘trans9 fers, or mortgages’’ and inserting ‘‘or trans10 fers’’;

11 (C) in paragraph (3)(B) by striking

12 ‘‘transfers, or mortgages’’ and inserting ‘‘or

13 transfers’’; and

14 (D) in paragraph (4) by striking ‘‘trans15 fers, or mortgages’’ and inserting ‘‘or trans16 fers’’.

17 (d) LEASE FINANCING.—Section 12106 of title 46,

18 United States Code, is amended by adding at the end the

19 following new subsections:

20 ‘‘(e)(1) A certificate of documentation for a vessel

21 may be endorsed with a coastwise endorsement if—

22 ‘‘(A) the vessel is eligible for documentation

23 under section 12102;

24 ‘‘(B) the vessel is otherwise qualified under this

25 section to be employed in the coastwise trade;
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1 ‘‘(C) the person that owns the vessel, or any

2 other person that owns or controls the person that

3 owns the vessel, is primarily engaged in leasing or

4 other financing transactions;

5 ‘‘(D) the vessel is under a demise charter to a

6 person qualifying as a citizen of the United States

7 for engaging in the coastwise trade under section 2

8 of the Shipping Act, 1916; and

9 ‘‘(E) the demise charter is for—

10 ‘‘(i) a period of at least 3 years; or

11 ‘‘(ii) such shorter period as may be pre12 scribed by the Secretary.

13 ‘‘(2) On termination of a demise charter required

14 under paragraph (1)(D), the coastwise endorsement may

15 be continued for a period not to exceed 6 months on any

16 terms and conditions that the Secretary of Transportation

17 may prescribe.

18 ‘‘(f) For purposes of the first proviso of section 27

19 of the Merchant Marine Act, 1920, section 2 of the Ship20 ping Act, 1916, and section 12102(a), a vessel meeting

21 the criteria of subsection (d) or (e) is deemed to be owned

22 exclusively by citizens of the United States.’’.
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1 SEC. 9. PLACEMENT OF VESSELS UNDER FOREIGN REG2 ISTRY.

3 (a) IN GENERAL.—Section 9 of the Shipping Act,

4 1916 (46 App. U.S.C. 808), as amended by this Act, is

5 further amended by adding at the end the following:

6 ‘‘(e) Notwithstanding subsection (c)(2), the Merchant

7 Marine Act, 1936, or any contract entered into with the

8 Secretary under that Act, a vessel may be placed under

9 a foreign registry, without approval of the Secretary, if—

10 ‘‘(1)(A) the Secretary determines that at least

11 one replacement vessel of a capacity that is equiva12 lent or greater, as measured by deadweight tons,

13 gross tons, or container equivalent units, as appro14 priate, is documented under chapter 121 of title 46,

15 United States Code, by the owner of the vessel

16 placed under the foreign registry; and

17 ‘‘(B) the replacement vessel is not more than

18 10 years of age on the date of that documentation;

19 ‘‘(2)(A) the owner of the vessel has applied for

20 an operating agreement under title IV of the Mer21 chant Marine Act, 1936; and

22 ‘‘(B) the Secretary, due to the unavailability of

23 funds, has not awarded that owner an operating

24 agreement within 60 days after the date of that ap25 plication; or
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1 ‘‘(3)(A) before the expiration of an operating

2 agreement entered into under title IV of the Mer3 chant Marine Act, 1936, the owner has applied for

4 a new operating agreement; and

5 ‘‘(B) the Secretary, due to the unavailability of

6 funds, has not awarded the owner an operating

7 agreement before the later of—

8 ‘‘(i) 60 days after the application for a new

9 operating agreement; or

10 ‘‘(ii) the date of expiration of the operating

11 agreement.

12 ‘‘(f) The Secretary shall give notice and an oppor13 tunity for a hearing for all approvals applied for under

14 subsection (c)(2) for oceangoing merchant vessels that are

15 of at least 3,000 gross tons.’’.

16 (b) APPLICATION.—The amendment made by sub17 section (a) applies to vessels that are placed under foreign

18 registry after the date of enactment of this Act and re19 placement vessels documented in the United States after

20 that date.

21 (c) COURT SALES OF VESSELS.—Section 31329 of

22 title 46, United States Code, is amended to read as fol23 lows:
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1 ‘‘§ 31329. Court sales of documented vessels

2 ‘‘When a documented vessel is sold by order of a dis3 trict court to a mortgagee not eligible to own a docu4 mented vessel—

5 ‘‘(1) that sale is not a sale foreign within the

6 terms of the first proviso of section 27 of the Mer7 chant Marine Act, 1920 (46 App. U.S.C. 883); and

8 ‘‘(2) unless the vessel is transferred to a foreign

9 registry, the vessel may be operated only with the

10 approval of the Secretary of Transportation.’’.

11 SEC. 10. SERIES CONSTRUCTION ASSISTANCE.

12 The Merchant Marine Act, 1936 (46 App. U.S.C.

13 1101 et seq.) is amended by adding at the end the follow14 ing:

15 ‘‘TITLE XIV—SERIES

16 CONSTRUCTION ASSISTANCE

17 ‘‘SEC. 1401. PAYMENT OF ASSISTANCE AUTHORIZED.

18 ‘‘(a) IN GENERAL.—The Secretary of Transportation

19 (hereinafter in this title referred to as the ‘Secretary’)

20 may, subject to the availability of appropriations, pay as21 sistance in accordance with this title to the owner of a

22 shipyard that is located in the United States for the con23 struction (including outfitting and equipping) of any com24 mercial vessel that is one of a series of vessels for which

25 payment of assistance under this section to the owner is

26 approved by the Secretary under section 1402.
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1 ‘‘(b) AMOUNT OF ASSISTANCE.—The total amount of

2 assistance paid under this section with respect to a vessel

3 shall be equal to the series transition payment determined

4 for the vessel under section 1403(a).

5 ‘‘SEC. 1402. APPROVAL OF ASSISTANCE FOR CONSTRUC6 TION OF SERIES OF VESSELS.

7 ‘‘(a) APPROVAL OF ASSISTANCE.—

8 ‘‘(1) IN GENERAL.—The Secretary may approve

9 payment of assistance under section 1401 for con10 struction of a series of vessels in a shipyard if—

11 ‘‘(A) the owner of the shipyard submits an

12 application for that assistance in accordance

13 with section 1405;

14 ‘‘(B) the Secretary makes the determina15 tions described in subsection (b); and

16 ‘‘(C) the Secretary determines that pay17 ment of the assistance will contribute to main18 taining national vessel construction capabilities

19 that are essential in time of war or national

20 emergency.

21 ‘‘(2) LIMITATION.—The Secretary may not ap22 prove assistance under this section for a series of

23 vessels if the series transition payment determined

24 under section 1403(a) for any vessel in the series is

25 greater than 50 percent of the estimate of the cost
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1 of constructing the vessel determined by the Sec2 retary under section 1403(b)(2).

3 ‘‘(b) DETERMINATIONS BY SECRETARY.—The Sec4 retary may not approve assistance for construction of a

5 series of vessels in a shipyard unless the Secretary has

6 determined the following:

7 ‘‘(1) VESSEL REQUIREMENTS.—The vessels

8 are—

9 ‘‘(A) commercial vessels of at least 10,000

10 gross tons; and

11 ‘‘(B) commercially marketable on the inter12 national market.

13 ‘‘(2) SHIPYARD REQUIREMENTS.—The shipyard

14 in which the vessels will be constructed—

15 ‘‘(A) is located in the United States; and

16 ‘‘(B) upon completion of construction of

17 the vessels, will be capable of constructing addi18 tional vessels of the same type as those in the

19 series for a price that is competitive in the

20 international market.

21 ‘‘(3) APPLICANT REQUIREMENTS.—The appli22 cant for the assistance—

23 ‘‘(A) has the ability, financial resources,

24 and other qualifications necessary for construc25 tion of the vessels;
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1 ‘‘(B) has entered into a contract for the

2 construction of each of the first 2 vessels to be

3 constructed in the series, which may include a

4 contract for a vessel that will be constructed

5 without assistance under this title; and

6 ‘‘(C) is the owner of the shipyard in which

7 the vessels will be constructed.

8 ‘‘(4) CONTRACT REQUIREMENTS.—Each of the

9 contracts required under paragraph (3)(B) are bind10 ing obligations on the applicant and all other parties

11 to the contracts, except that such a contract may be

12 contingent on—

13 ‘‘(A) the approval of assistance under this

14 title for construction of a vessel under the con15 tract; and

16 ‘‘(B) the making of a guarantee or com17 mitment to guarantee obligations under title XI

18 for construction under the contract.

19 ‘‘(5) PURCHASER REQUIREMENTS.—Each per20 son that is a purchaser of a vessel under a contract

21 required under paragraph (3)(B)—

22 ‘‘(A) has the ability, financial resources,

23 and other qualifications necessary to own and

24 operate the vessel in commercial service; and

25 ‘‘(B) is a party to the contract.
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1 ‘‘(6) SERIES TRANSITION PAYMENT.—The se2 ries transition payment under section 1403 for each

3 vessel in the series.

4 ‘‘(c) PRIORITY FOR CERTAIN SERIES OF VESSELS.—

5 In approving assistance under this title, the Secretary may

6 give priority to a series of vessels—

7 ‘‘(1) if a smaller number of vessels in the series

8 are required to be constructed with assistance before

9 construction of that type of vessel becomes cost ef10 fective;

11 ‘‘(2) for which the total of the series transition

12 payments determined under section 1403 for all ves13 sels in the series is less than that total for other se14 ries of vessels for which applications are submitted

15 for assistance under this title;

16 ‘‘(3) that will be constructed in a shipyard with

17 respect to which assistance under this title has not

18 been provided; or

19 ‘‘(4) that would contribute to the preservation

20 of a shipyard that would be essential in a time of

21 war or national emergency.

22 ‘‘SEC. 1403. DETERMINATION OF SERIES TRANSITION PAY23 MENTS.

24 ‘‘(a) IN GENERAL.—The Secretary shall determine

25 the series transition payment for each vessel in a series
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1 of vessels for which an application for assistance under

2 this title is received by the Secretary.

3 ‘‘(b) AMOUNT OF SERIES TRANSITION PAYMENT.—

4 The series transition payment for a vessel under sub5 section (a) is equal to the difference of—

6 ‘‘(1) the estimated cost of completing construc7 tion of the vessel, as included in the application for

8 assistance submitted under section 1405; minus

9 ‘‘(2) a reasonable estimate of the cost of con10 structing the vessel under similar plans and speci11 fications in a foreign shipyard that is considered by

12 the Secretary to be a fair and representative exam13 ple for purposes of determining the payment.

14 ‘‘SEC. 1404. SERIES CONSTRUCTION AGREEMENT.

15 ‘‘(a) IN GENERAL.—

16 ‘‘(1) IN GENERAL.—The Secretary shall, for

17 each series of vessels for which assistance is ap18 proved under section 1402, enter into a series con19 struction agreement with the owner of the shipyard

20 in which the series of vessels will be constructed,

21 under which the Secretary is required to pay the

22 owner assistance in accordance with a schedule es23 tablished under paragraph (2).

24 ‘‘(2) SCHEDULE FOR PAYMENTS.—An agree25 ment under this subsection shall establish a schedule
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1 for the payment of assistance under the agreement,

2 that is based on the construction schedule for vessels

3 for which the assistance is paid.

4 ‘‘(3) TERMINATION OF AGREEMENT.—An

5 agreement under this subsection shall authorize the

6 Secretary to terminate the agreement if—

7 ‘‘(A) a contract required under section

8 1402(b)(3)(B) is terminated by the purchaser

9 of the vessel under the contract, and the owner

10 of the shipyard does not enter into a new con11 tract for construction of the vessel within a pe12 riod which shall be specified in the agreement;

13 or

14 ‘‘(B) the owner of the shipyard fails to

15 enter into contracts for construction of all ves16 sels in the series of vessels to which the agree17 ment applies, within a period which shall be

18 specified in the agreement.

19 ‘‘(4) CONTINUING EFFECT OF AGREEMENT

20 WITH RESPECT TO VESSELS COVERED BY CON21 TRACTS.—The termination of a series construction

22 agreement under paragraph (3) shall not affect the

23 effectiveness of the agreement with respect to vessels

24 for which a construction contract is in effect on the

25 date of termination.
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1 ‘‘(b) BINDING OBLIGATION OF THE UNITED

2 STATES.—

3 ‘‘(1) IN GENERAL.—Except as provided in para4 graph (2), a requirement that the Secretary make

5 payments under a series construction agreement

6 under subsection (a) shall constitute a binding obli7 gation of the United States.

8 ‘‘(2) TERMINATION OF OBLIGATION.—If the

9 Secretary terminates a series construction agreement

10 pursuant to subsection (a)(3), the obligation of the

11 United States under paragraph (1) to make pay12 ments under the agreement shall terminate with re13 spect to vessels for which no construction contract is

14 in effect on the date of termination of the agree15 ment.

16 ‘‘(3) CONTINUING AVAILABILITY OF

17 AMOUNTS.—Amounts to be used to liquidate an obli18 gation under paragraph (1) that terminates under

19 paragraph (2) shall remain available to the Sec20 retary for the payment of assistance under this title.

21 ‘‘SEC. 1405. APPLICATIONS FOR ASSISTANCE.

22 ‘‘(a) SUBMITTAL.—A person desiring assistance

23 under this title shall, in accordance with this section, sub24 mit an application to the Secretary.
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1 ‘‘(b) CONTENTS OF APPLICATION.—An application

2 for assistance under this title with respect to a series of

3 vessels shall include the following:

4 ‘‘(1) A detailed description of the type of ves5 sels included in the series, including plans and speci6 fications for the vessels.

7 ‘‘(2) Detailed estimates of the cost of complet8 ing construction of each of the vessels in the series,

9 including such estimates from subcontractors for the

10 construction as may be required by the Secretary.

11 ‘‘(3) Copies of the contracts required under sec12 tion 1402(b)(3)(B).

13 ‘‘(4) Other information required by the Sec14 retary to fulfill the requirements of this title.

15 ‘‘(c) REGULATIONS.—The Secretary shall issue regu16 lations setting forth the procedures for submitting an ap17 plication for assistance under this title.

18 ‘‘SEC. 1406. RESTRICTION ON VESSEL OPERATIONS.

19 ‘‘A vessel for which assistance is paid under this

20 title—

21 ‘‘(1) may be operated only in foreign trade or

22 domestic trade authorized under a registry endorse23 ment for the vessel issued under section 12105 of

24 title 46, United States Code; and
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1 ‘‘(2) may not be operated in the coastwise trade

2 of the United States (including mixed coastwise and

3 foreign trade), except coastwise trade authorized

4 under a registry endorsement for the vessel issued

5 under section 12105 of title 46, United States Code.

6 ‘‘SEC. 1407. VESSEL DESIGN AWARDS.

7 ‘‘The Secretary, subject to the availability of appro8 priations, may make an award to a United States shipyard

9 on an equal matching basis for the cost of vessel designs

10 and document and bid preparation for vessels described

11 in section 403(b)(4).’’.

12 SEC. 11. EFFECTIVE DATE.

13 The amendments made by this Act are effective on

14 the date which is 120 days after the date of enactment

15 of this Act.

16 SEC. 12. REGULATIONS.

17 (a) IN GENERAL.—The Secretary of Transportation

18 shall prescribe regulations as necessary to carry out this

19 Act.

20 (b) INTERIM REGULATIONS.—The Secretary of

21 Transportation may prescribe interim regulations nec22 essary to carry out this Act and for accepting eligibility

23 decision applications under section 403 of the Merchant

24 Marine Act, 1936, as amended by this Act. For this pur25 pose, the Secretary of Transportation is excepted from
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1 compliance with the notice and comment requirements of

2 section 553 of title 5, United States Code. All regulations

3 prescribed under the authority of this subsection that are

4 not earlier superseded by final rules shall expire 270 days

5 after the date of enactment of this Act.

6 SEC. 13. EXPANSION OF STANDING FOR MARITIME UNIONS.

7 Section 301 of the Merchant Marine Act, 1936 (46

8 App. U.S.C. 1131) is amended by adding at the end the

9 following:

10 ‘‘(c) STANDING FOR MARITIME UNION REPRESENTA11 TIVES.—The duly-elected representative of any organiza12 tion that is certified by the Secretary of Labor as the prop13 er collective bargaining agency for officers or crew em14 ployed on any type of United States documented vessel

15 is an interested party in, and has standing to challenge,

16 any proposed or final order, action, or rule of the Sec17 retary of Transportation under this Act or section 9(c)(2)

18 of the Shipping Act, 1916.’’.

19 SEC. 14. STUDY.

20 (a) IN GENERAL.—After providing public notice and

21 opportunity for comment, the Secretary of Transportation

22 shall conduct a study of—

23 (1) the impact of this Act on the international

24 competitiveness of United States documented vessels

25 and whether this Act has had a favorable or unfa-
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1 vorable impact on the ability of United States docu2 mented vessels to compete successfully with foreign3 flag vessels;

4 (2) whether continuation of the Maritime Secu5 rity Fleet program established by this Act would as6 sist the international competitiveness of United

7 States documented vessels;

8 (3) whether the Maritime Security Fleet pro9 gram should be continued, modified, or discontinued;

10 (4) alternatives that are or should be available

11 to operators of United States documented vessels if

12 the Maritime Security Fleet program is discon13 tinued; and

14 (5) any other issues related to promoting the

15 international competitiveness of United States docu16 mented vessels that the Secretary considers appro17 priate.

18 (b) REPORT.—The Secretary of Transportation shall

19 submit to the Congress a report on the findings and con20 clusions of the study required by subsection (a) by not

21 later than 4 years after the date of enactment of this Act,

22 which shall include such recommendations as the Sec23 retary considers appropriate.
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1 SEC. 15. CARGO PREFERENCE ADMINISTRATIVE REFORM.

2 (a) FINDINGS.—The Congress finds and declares

3 that—

4 (1) the Congress continues to support the cargo

5 preference program as an important element of sup6 port for the United States-flag merchant marine be7 cause the United States merchant marine is critical

8 to the economic and national security of the United

9 States;

10 (2) reserving a small portion of Government

11 cargo for United States-flag vessels encourages com12 petition among United States-flag vessels; and

13 (3) administering the cargo preference program

14 in a centralized, commercially based manner reduces

15 costs of the program.

16 (b) ADMINISTRATIVE REFORM.—Section 901 of the

17 Merchant Marine Act, 1936 (46 App. U.S.C. 1241) is

18 amended by adding at the end the following new sub19 sections:

20 ‘‘(d) A privately owned United States-flag commercial

21 vessel transporting any equipment, materials, or commod22 ities under this section or section 901b shall be engaged

23 under terms no less favorable than the most favorable

24 terms offered to any foreign-flag vessel transporting

25 equipment, materials, or commodities under this section

26 or section 901b.
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1 ‘‘(e) A contract for the ocean transportation of any

2 equipment, materials, or commodities under this section

3 or section 901b, to the extent the Secretary of Transpor4 tation, in consultation with the heads of other appropriate

5 agencies, determines necessary to further the purposes of

6 this section and section 901b, shall be based on contracts

7 used for commercial shipments.

8 ‘‘(f) The Secretary of Transportation shall partici9 pate in negotiations relating to agreements with recipient

10 countries for equipment, materials, or commodities subject

11 to this section or section 901b to the extent the Secretary,

12 in consultation with the heads of other appropriate agen13 cies, considers to be necessary to ensure agreement provi14 sions relating to or affecting the transportation of such

15 equipment, materials, or commodities permit fair and rea16 sonable transportation services to be provided.

17 ‘‘(g) No later than 180 days after the date of the

18 enactment of the Maritime Security and Competitiveness

19 Act of 1993, the heads of appropriate Federal agencies,

20 or their representatives, shall transmit to the Secretary

21 of Transportation recommendations relating to the meth22 odology used by the Secretary of Transportation to deter23 mine whether rates for United States-flag vessels are fair

24 and reasonable in compliance with section 901(b) and will

25 achieve the policy objectives of this Act.’’.
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1 (c) Within 90 days after the date of enactment of

2 this Act, the Secretary of Transportation shall take ac3 tions to ensure and maintain a significant increase of gov4 ernment-impelled cargo through Great Lakes ports,

5 through administrative waivers and action and through an

6 exemption of cargo preference requirements.

7 SEC. 16. WAGES FOR WHICH PREFERRED MARITIME LIEN

8 MAY BE ESTABLISHED.

9 (a) IN GENERAL.—Section 31301(5)(D) of title 46,

10 United States Code, is amended by inserting before the

11 semicolon the following: ‘‘(including any payment de12 scribed in paragraph (5), (6), (7), (8), or (9) of section

13 302(c) of the Labor Management Relations Act, 1947 for

14 any individual as a member of the crew of the vessel, that

15 is due from and unpaid by an owner or managing operator

16 of the vessel)’’.

17 (b) INCURRING OBLIGATIONS BEFORE EXECUTING

18 PREFERRED MORTGAGES.—Section 31323(b)(2) of title

19 46, United States Code, is amended by inserting before

20 the semicolon the following: ‘‘(including any payment de21 scribed in paragraph (5), (6), (7), (8), or (9) of section

22 302(c) of the Labor Management Relations Act, 1947 for

23 any member of the crew of the vessel)’’.

24 (c) MASTER’S LIEN FOR WAGES.—Section 11112 of

25 title 46, United States Code, is amended by inserting after
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1 ‘‘wages’’ the following: ‘‘(including any payment described

2 in paragraph (5), (6), (7), (8), or (9) of section 302(c)

3 of the Labor Management Relations Act, 1947 for an indi4 vidual as master of the vessel, that is due from and unpaid

5 by an owner or managing operator of the vessel)’’.

6 (d) APPLICATION.—The amendments made by sub7 sections (a), (b), and (c) shall apply with respect to pay8 ments that first become due on or after the date of the

9 enactment of this Act.

10 SEC. 17. COMPLIANCE WITH BUY AMERICAN ACT.

11 No funds appropriated pursuant to this Act may be

12 expended by an entity unless the entity agrees that in ex13 pending the assistance the entity will comply with sections

14 2 through 4 of the Act of March 3, 1933 (41 U.S.C. 10a–

15 10c, popularly known as the ‘‘Buy American Act’’).

16 SEC. 18. SENSE OF CONGRESS; REQUIREMENT REGARDING

17 NOTICE.

18 (a) PURCHASE OF AMERICAN-MADE EQUIPMENT

19 AND PRODUCTS.—In the case of any equipment or prod20 ucts that may be authorized to be purchased with financial

21 assistance provided under this Act, it is the sense of the

22 Congress that entities receiving such assistance should, in

23 expending the assistance, purchase only American-made

24 equipment and products.
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1 (b) NOTICE TO RECIPIENTS OF ASSISTANCE.—In

2 providing financial assistance under this Act, the head of

3 each Federal agency shall provide to each recipient of the

4 assistance a notice describing the statement made in sub5 section (a) by the Congress.

Passed the House of Representatives November 4,

1993.

Attest: DONNALD K. ANDERSON,

Clerk.

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