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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2151 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2151

   To amend the Merchant Marine Act, 1936, to establish the Maritime 
            Security Fleet program, and for other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 19, 1993

    Mr. Studds (for himself, Mr. Lipinski, Mr. Fields of Texas, Mr. 
 Bateman, Mr. Young of Alaska, Mr. Hughes, Mr. Hutto, Mr. Tauzin, Mr. 
Ortiz, Mr. Manton, Mr. Pickett, Mrs. Unsoeld, Mr. Reed, Mr. Lancaster, 
 Mr. Andrews of Maine, Ms. Furse, Ms. Schenk, Mr. Gene Green of Texas, 
 Mr. Hastings, Mr. Barlow, Mr. Thompson of Mississippi, Mr. Ackerman, 
 Mr. King, and Mrs. Bentley) introduced the following bill; which was 
       referred to the Committee on Merchant Marine and Fisheries

_______________________________________________________________________

                                 A BILL

 
   To amend the Merchant Marine Act, 1936, to establish the Maritime 
            Security Fleet program, 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 ``Maritime Security and 
Competitiveness Act of 1993''.

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

    Section 101 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101) 
is amended to read as follows:

``SEC. 101. FOSTERING DEVELOPMENT AND MAINTENANCE OF MERCHANT MARINE.

    ``The Secretary of Transportation shall carry out this Act in a 
manner that ensures the existence of an operating fleet of United 
States documented vessels that is--
            ``(1) sufficient to carry the domestic water-borne commerce 
        of the United States and a substantial portion of the water-
        borne export and import foreign commerce of the United States 
        and to provide shipping service essential for maintaining the 
        flow of such domestic and foreign water-borne commerce at all 
        times;
            ``(2) adequate to serve as a naval auxiliary in time of war 
        or national emergency;
            ``(3) owned and operated by citizens of the United States, 
        to the extent practicable;
            ``(4) composed of the best-equipped, safest, and most 
        modern vessels;
            ``(5) manned with the best trained and efficient personnel 
        who are citizens of the United States; and
            ``(6) supplemented by modern and efficient United States 
        facilities for shipbuilding and ship repair.''.

SEC. 3. MARITIME SECURITY FLEET PROGRAM.

    (a) Establishment of Program.--The Merchant Marine Act, 1936 (46 
App. U.S.C. 1101 et seq.) is amended by inserting after title III the 
following new title:

              ``TITLE IV--MARITIME SECURITY FLEET PROGRAM

``SEC. 401. ESTABLISHMENT OF MARITIME SECURITY FLEET.

    ``The Secretary of Transportation shall establish a fleet of active 
commercial vessels to enhance sealift capabilities and maintain a 
presence in international commercial shipping of United States 
documented vessels. The fleet shall be known as the `Maritime Security 
Fleet'.

``SEC. 402. COMPOSITION OF FLEET.

    ``The Fleet shall consist of privately owned United States 
documented vessels for which there are in effect operating agreements.

``SEC. 403. VESSELS ELIGIBLE FOR ENROLLMENT IN FLEET.

    ``(a) In General.--A vessel is eligible to be enrolled in the Fleet 
if the Secretary decides, in accordance with this section, that it is 
eligible. The Secretary may decide whether a vessel is eligible to be 
enrolled in the Fleet only pursuant to an eligibility decision 
application submitted to the Secretary by the owner or operator of the 
vessel. The Secretary shall make such a decision by not later than 90 
days after the date of submittal of an eligibility decision application 
for the vessel by the owner or operator of the vessel.
    ``(b) Vessel Eligibility and Listing.--The Secretary shall decide 
that a vessel is eligible to be enrolled in the Fleet if--
            ``(1) the person that will be the contractor with respect 
        to an operating agreement for the vessel agrees to enter into 
        an operating agreement with the Secretary for the vessel under 
        section 404;
            ``(2) the vessel is not built in a foreign subsidized 
        shipyard under a contract entered into on or after May 19, 
        1993;
            ``(3) the person that will be a contractor with respect to 
        an operating agreement for the vessel is a citizen of the 
        United States;
            ``(4)(A) the vessel is a United States documented vessel on 
        May 19, 1993;
            ``(B) the vessel is--
                    ``(i) a United States documented vessel after May 
                19, 1993; and
                    ``(ii) not more than 10 years of age on the date of 
                that documentation; or
            ``(C) if the vessel is not in existence on that date--
                    ``(i) the person that will be the contractor with 
                respect to an operating agreement for the vessel has 
                entered into a binding contract with a shipyard for the 
                delivery of a vessel that the Secretary decides will 
                otherwise be eligible under this subsection; and
                    ``(ii) an operating agreement for the vessel is 
                entered into by not later than 30 months after the date 
                of submittal of the application; and
            ``(5) the vessel is self-propelled and is--
                    ``(A) a container vessel with a capacity of at 
                least 750 Twenty-foot Equivalent Units;
                    ``(B) a roll-on/roll-off vessel with a carrying 
                capacity of at least 10,000 square feet or 500 Twenty-
                foot Equivalent Units;
                    ``(C) a LASH vessel with a barge capacity of at 
                least 75 barges;
                    ``(D) a vessel subject to a contract under title VI 
                on May 19, 1993; or
                    ``(E) any other type of vessel that is suitable for 
                use by the United States for national defense or 
                military purposes in time of war or national emergency.
    ``(c) Notice of Noneligibility Decision.--
            ``(1) Determination.--The Secretary shall make 
        determinations under subsection (b) for each vessel for which 
        an eligibility decision application is submitted under this 
        section.
            ``(2) Written explanation.--The Secretary shall provide to 
        the person that submits an eligibility application for a vessel 
        a written explanation of any decision that the vessel is not 
        eligible for enrollment in the Fleet.
    ``(d) List of Eligible Vessels.--
            ``(1) In general.--The Secretary shall maintain a list of 
        vessels that the Secretary decides in accordance with this 
        section are eligible to be enrolled in the Fleet.
            ``(2) Removal of vessels from list.--The Secretary shall 
        remove a vessel from the list maintained under this subsection, 
        and the vessel shall not be an eligible vessel for purposes of 
        this title--
                    ``(A) at any time that the conditions for 
                eligibility under subsection (b) are not fulfilled for 
                the vessel; or
                    ``(B) if the status of the person who submitted an 
                eligibility decision application for the vessel, as 
                owner or operator of the vessel, changes and after that 
                change--
                            ``(i) the owner or operator of the vessel 
                        fails to submit a new eligibility decision 
                        application for the vessel; or
                            ``(ii) such an application is not approved 
                        by the Secretary.

``SEC. 404. OPERATING AGREEMENTS, GENERALLY.

    ``(a) Requirement for Enrollment of Vessels.--A vessel may be 
enrolled in the Fleet only if it is an eligible vessel for which the 
owner or operator of the vessel applies for and enters into an 
operating agreement with the Secretary under this section.
    ``(b) Priority for Awarding Agreements.--The Secretary shall enter 
into operating agreements according to the following priority:
            ``(1) Vessels under ods contracts.--For operating 
        agreements that are effective before September 30, 2000, any 
        vessel that is or will be owned or operated by a person that--
                    ``(A) is a party to an operating-differential 
                subsidy contract entered into under title VI; and
                    ``(B) is or will be operating that vessel under 
                that contract;
        if the authority to operate the vessel under the contract is 
        terminated under an agreement with the Secretary.
            ``(2) Other vessels owned by citizens.--To the extent that 
        amounts are available after applying paragraph (1), any vessel 
        that is--
                    ``(A) owned and operated by a person that is a 
                citizen of the United States under section 2 of the 
                Shipping Act, 1916; and
                    ``(B) on the list maintained under section 403(d).
            ``(3) Other vessels.--To the extent that amounts are 
        available after applying paragraphs (1) and (2), any vessel 
        that is--
                    ``(A) owned and operated by a person that is 
                eligible to document a vessel under chapter 121 of 
                title 46, United States Code; and
                    ``(B) on the list maintained under section 403(d).
    ``(c) Prohibition on Entering Agreements.--The Secretary may not 
enter into an operating agreement for a fiscal year only to the extent 
that annual appropriations laws place a limit on the total amount of 
operating agreements that the Secretary may enter into and obligate 
during that fiscal year.
    ``(d) Prohibition on Vessel Coverage.--A vessel may not be covered 
by an operating agreement if the vessel is covered by an operation-
differential subsidy contract under title VI.
    ``(e) Time Limit for Decision on Entering Operating Agreement.--To 
the extent that the Secretary is not restricted from entering into 
contracts under subsection (c), the Secretary shall enter an operating 
agreement for a vessel within 90 days after making the decision that 
the vessel is eligible to be enrolled in the Fleet under section 
403(a).
    ``(f) Effective Date of Operating Agreement.--Except as provided in 
section 3(b) of the Maritime Security and Competitiveness Act of 1993, 
the effective date of an operating agreement may not be later than the 
later of--
            ``(1) 30 days after the date the agreement is entered; or
            ``(2) the date the vessel covered by the agreement enters 
        into the trade required under section 405(a)(1)(A).
    ``(g) Expiration of Offers for Agreements.--Unless extended by the 
Secretary, an offer by the Secretary to enter into an operating 
agreement under this section expires 120 days after the date of the 
offer.
    ``(h) Length of Agreements.--An operating agreement is effective 
for 10 years from the effective date of the agreement.
    ``(i) Termination of Agreement for Failure To Place Vessel.--An 
operating agreement entered into by the Secretary pursuant to 
subsection (b)(1), and the rights under that agreement, are terminated 
at the end of the 90-day period beginning on the date the agreement is 
entered into unless a vessel from the list maintained under section 
403(d) is covered by the agreement before the end of that period.
    ``(j) Repayment Requirements.--
            ``(1) Noncompliance.--A contractor that fails to comply 
        with the terms of an operating agreement shall be liable to the 
        United States Government for all amounts received by the 
        contractor as payments for the vessel under this title with 
        respect to the period of that noncompliance.
            ``(2) Failure to operate replacement vessel.--A contractor 
        under an operating agreement that covers a vessel that is 25 or 
        more years of age and that fails to replace the vessel as 
        provided in section 405(a)(3) (A) or (B) shall be liable to the 
        United States Government for all amounts received by the 
        contractor as payments for the vessel under this title with 
        respect to periods after the date the vessel becomes 25 years 
        of age.
    ``(k) Binding Obligation of Government.--An operating agreement 
constitutes a contractual obligation of the United States Government to 
pay the amounts provided for under that agreement.

``SEC. 405. TERMS OF OPERATING AGREEMENTS.

    ``(a) Operating Agreement Requirements.--An operating agreement 
shall, during the effective period of the agreement, provide the 
following:
            ``(1) Operation and documentation.--The vessel covered by 
        the operating agreement--
                    ``(A) shall be operated in the foreign trade or 
                domestic trade allowed under a registry endorsement for 
                the vessel issued under section 12105 of title 46, 
                United States Code;
                    ``(B) may not be operated in the coastwise trade of 
                the United States or in mixed coastwise and foreign 
                trade, except for coastwise trade allowed under a 
                registry endorsement issued for the vessel under 
                section 12105 of title 46, United States Code; and
                    ``(C) shall be documented under chapter 121 of 
                title 46, United States Code.
            ``(2) Annual payments.--The Secretary shall pay the 
        contractor, in accordance with this subsection, the following 
        amounts for each fiscal year in which the vessel is operated in 
        accordance with the agreement:
                    ``(A) For fiscal year 1996, $2,300,000.
                    ``(B) For each fiscal year after fiscal year 1996, 
                $2,100,000.
            ``(3) Termination based on age of vessel.--The operating 
        agreement shall terminate on the date the vessel covered by the 
        agreement is 25 years of age, unless--
                    ``(A) the contractor agrees to acquire a 
                replacement for the vessel from among vessels on the 
                list maintained under section 403(d); and
                    ``(B)(i) in the case of a vessel to be replaced 
                with a new vessel, the contractor enters into a binding 
                contract with a shipyard for the delivery, by not later 
                than 30 months after the later of the date the 
                operating agreement is entered into or the date the 
                vessel subject to the operating agreement is 25 years 
                of age, of the replacement vessel; or
                    ``(ii) in the case of a vessel to be replaced with 
                an existing vessel, the contractor acquires the 
                replacement vessel from among vessels on the list 
                maintained under section 403(d), by not later than 12 
                months after the later of the date the operating 
                agreement is entered into or the date the vessel 
                subject to the operating agreement is 25 years of age.
            ``(4) Availability of vessel.--
                    ``(A) In general.--On a request of the President 
                during time of war or national emergency or when 
                considered by the President, acting through the 
                Secretary in consultation with the Secretary of 
                Defense, to be necessary in the interest of national 
                security, and subject to subparagraph (B), the 
                contractor as soon as practicable shall, as specified 
                by the Secretary--
                            ``(i) make the vessel covered by the 
                        agreement available to the Secretary under a 
                        time charter; or
                            ``(ii) provide space on the vessel covered 
                        by the agreement to the Secretary on a 
                        guaranteed basis.
                    ``(B) Condition for charter.--The Secretary shall 
                allow a contractor to comply with this paragraph by 
                providing space on a vessel under subparagraph (A)(ii) 
                unless the Secretary determines that it is necessary in 
                the interest of national security that the contractor 
                make the vessel available under a time charter.
            ``(5) Delivery of vessel.--The contractor shall deliver a 
        vessel to the Secretary pursuant to a time charter under 
        paragraph (4)(A)(i), as specified in the request for the 
        vessel--
                    ``(A) at the first port in the United States the 
                vessel is scheduled to call after the date of receipt 
                of the request;
                    ``(B) at the port in the United States to which the 
                vessel is nearest on the date of receipt of the 
                request; or
                    ``(C) in any other reasonable manner authorized by 
                the agreement and specified in the request.
            ``(6) Delivery costs.--The Secretary shall reimburse the 
        contractor for costs incurred by the contractor in delivering 
        the vessel covered by the agreement to the Secretary in 
        accordance with the agreement.
            ``(7) Compensation.--The Secretary shall pay the 
        contractor, as provided in the operating agreement, reasonable 
        compensation at reasonable commercial rates for the period of 
        time the vessel is chartered or the contractor provides space 
        on the vessel under paragraph (4).
            ``(8) Required operation.--
                    ``(A) In general.--A vessel covered by the 
                operating agreement shall be operated in the trade 
                required under paragraph (1) for at least 320 days in a 
                fiscal year, including days during which the vessel is 
                dry-docked, surveyed, inspected, or repaired.
                    ``(B) Reduction in payments.--If a vessel operates 
                in the trade required under paragraph (1) for less than 
                the time required under subparagraph (A), the payments 
                required under paragraph (2) shall be reduced on a pro-
                rata basis to reflect the lesser time in that 
                operation.
            ``(9) Substitution of vessels authorized.--The contractor 
        may substitute for the vessel covered by the agreement another 
        vessel on the list maintained under section 403(d).
            ``(10) Termination for failure to operate or substitute.--
        The operating agreement is terminated if--
                    ``(A) the vessel covered by the agreement is not 
                operated under an operating agreement for one year; and
                    ``(B) a substitute for that vessel is not operated 
                under the agreement during that year.
    ``(b) Payments.--
            ``(1) In general.--The amount required to be paid by the 
        Secretary each year to a contractor under an operating 
        agreement pursuant to subsection (a)(2)--
                    ``(A) shall be paid at a pro rated amount at the 
                beginning of each month in equal installments; and
                    ``(B) except as provided in paragraph (2), may not 
                be reduced by reason of operation of the vessel covered 
                by the agreement to carry civilian or military 
                preference cargoes under--
                            ``(i) section 901(a), 901(b), or 901b;
                            ``(ii) section 2631 of title 10, United 
                        States Code; or
                            ``(iii) the Act of March 26, 1934 (48 Stat. 
                        500).
            ``(2) Reduction for preference cargo.--A contractor with 
        respect to a vessel may not receive any payment under this 
        title for any day in which the vessel is engaged in 
        transporting more than 5,000 tons of preference cargo described 
        in paragraph (1)(B) that is bulk cargo (as defined in section 3 
        of the Shipping Act of 1984).
    ``(c) Redelivery of Vessels.--The Secretary shall, upon the 
termination of the need for which a vessel is delivered under an 
operating agreement, return the vessel to the contractor--
            ``(1) at a place that is mutually agreed upon by the 
        Secretary of Defense and the contractor; and
            ``(2) in the condition in which it was delivered to the 
        Secretary, excluding normal wear and tear.
    ``(d) Transfer of Operating Agreements.--A contractor under an 
operating agreement may transfer the agreement (including all rights 
under the agreement) to any other person that is a citizen of the 
United States, after notification of the Secretary in accordance with 
regulations prescribed by the Secretary. A person to whom an agreement 
is transferred may receive payments from the Secretary under the 
agreement only if the vessel to be covered by the agreement after the 
transfer is on the list maintained under section 403(d).

``SEC. 406. NONCONTIGUOUS TRADE RESTRICTIONS.

    ``(a) Prohibition.--
            ``(1) In general.--Except as provided in this section, a 
        contractor may not receive any payment under this title if--
                    ``(A) the contractor or a related party with 
                respect to the contractor, directly or indirectly owns, 
                charters, or operates a vessel engaged in the 
                transportation of cargo in noncontiguous trade, other 
                than in accordance with a waiver under subsection (b) 
                or (c); or
                    ``(B) for noncontiguous trade for which there is a 
                waiver under subsection (b) or (c), there is a--
                            ``(i) material change in the domestic ports 
                        served from the ports permitted to be served 
                        under the waiver;
                            ``(ii) material increase in the annual 
                        number or the frequency of sailings from the 
                        number or frequency permitted under the waiver; 
                        or
                            ``(iii) material increase in the annual 
                        volume of cargo carried or annual capacity 
                        utilized from the annual volume of cargo or 
                        annual capacity permitted under the waiver.
            ``(2) Limitations on prohibition.--Paragraph (1) applies to 
        a contractor only in the years specified for payments under the 
        operating agreement entered into by the contractor.
    ``(b) General Waiver Authority.--
            ``(1) In general.--Except as provided in subsection (c), 
        the Secretary shall waive, in writing, the application of 
        subsection (a) to a contractor pursuant to an application 
        submitted in accordance with this subsection, unless the 
        Secretary finds that--
                    ``(A) the waiver would result in unfair competition 
                to any person that operates vessels as a carrier of 
                cargo in a service exclusively in the noncontiguous 
                trade for which the waiver is applied;
                    ``(B) existing service in that noncontiguous trade 
                is adequate; or
                    ``(C) the waiver will result in prejudice to the 
                objects or policy of this title or Act.
            ``(2) Terms of waiver.--Any waiver granted by the Secretary 
        under this subsection shall state--
                    ``(A) the domestic ports permitted to be served;
                    ``(B) the annual number or frequency of sailings 
                that may be provided; and
                    ``(C)(i) the annual volume of cargo permitted,
                    ``(ii) for containerized or trailer service, the 
                annual 40-foot equivalent unit shipboard container and 
                trailer or vehicle or general cargo capacity permitted, 
                or
                    ``(iii) for tug and barge service, the annual barge 
                house cubic foot capacity and the annual barge deck 
                general cargo capacity, or 40-foot equivalent unit 
                container, trailer, or vehicle capacity, permitted.
            ``(3) Applications for waivers.--An application for a 
        waiver under this subsection may be submitted by a contractor 
        and shall describe, as applicable, the nature and scope of--
                    ``(A) the service proposed to be conducted in a 
                noncontiguous trade under the waiver; or
                    ``(B) any proposed material change or increase in a 
                service in a noncontiguous trade permitted under an 
                existing waiver.
            ``(4) Action on application and hearing.--
                    ``(A) Notice and proceeding.--Within 30 days after 
                receipt of an application for a waiver under this 
                subsection, the Secretary shall--
                            ``(i) publish a notice of the application; 
                        and
                            ``(ii) begin a proceeding on the 
                        application under section 554 of title 5, 
                        United States Code, to receive--
                                    ``(I) evidence of the nature, 
                                quantity, and quality of the existing 
                                service in the noncontiguous trade for 
                                which the waiver is applied;
                                    ``(II) a description of the 
                                proposed service or proposed material 
                                change or increase in a previously 
                                permitted service;
                                    ``(III) the projected effect of the 
                                proposed service or proposed material 
                                change or increase in existing service; 
                                and
                                    ``(IV) recommendations on 
                                conditions that should be contained in 
                                any waiver for the proposed service or 
                                material change or increase.
                    ``(B) Intervention.--An applicant for a waiver 
                under this subsection, and any person that operates 
                cargo vessels in the noncontiguous trade for which a 
                waiver is applied and that has any interest in the 
                application, may intervene in the proceedings on the 
                application.
                    ``(C) Hearing.--Before deciding whether to grant a 
                waiver under this subsection, the Secretary shall hold 
                a public hearing in an expeditious manner, reasonable 
                notice of which shall be published.
            ``(5) Decision.--The Secretary shall complete all 
        proceedings and hearings on an application under this 
        subsection and issue a decision on the record within 90 days 
        after receipt of the final briefs submitted for the record.
    ``(c) Existing Noncontiguous Trade Operators.--
            ``(1) In general.--The Secretary shall waive the 
        application of subsection (a) to a contractor pursuant to an 
        application submitted in accordance with this subsection if the 
        Secretary finds that the contractor, or a related party or 
        predecessor in interest with respect to the contractor--
                    ``(A) engaged in bona fide operation of a vessel as 
                a carrier of cargo by water--
                            ``(i) in a noncontiguous trade on July 1, 
                        1992; or
                            ``(ii) in furnishing seasonal service in a 
                        season ordinarily covered by its operation, 
                        during the 12 calendar months preceding July 1, 
                        1992; and
                    ``(B) has operated in that service since that time, 
                except for interruptions of service resulting from 
                Operation Desert Storm or over which the contractor (or 
                related party or predecessor in interest) had no 
                control.
            ``(2) Terms of waiver.--
                    ``(A) In general.--Except as otherwise provided in 
                this paragraph, the level of service permitted under a 
                waiver under this subsection shall be the level of 
                service provided by the applicant (or related party or 
                predecessor in interest) in the relevant noncontiguous 
                trade during, for year-round service, the 6 calendar 
                months preceding July 1, 1992, or for seasonal service, 
                the 12 calendar months preceding July 1, 1992, 
                determined by--
                            ``(i) the domestic ports called;
                            ``(ii) the number of sailings actually 
                        made, except as to interruptions in the service 
                        in the noncontiguous trade resulting from 
                        Operation Desert Storm or over which the 
                        applicant (or related party or predecessor in 
                        interest) had no control; and
                            ``(iii) the volume of cargo carried or, for 
                        containerized or trailer service, the 40-foot 
                        equivalent unit shipboard container, trailer, 
                        or vehicle or general cargo capacity employed, 
                        or, for tug and barge service, the barge house 
                        cubic foot capacity and barge deck general 
                        cargo capacity or 40-foot equivalent unit 
                        container, trailer, or vehicle capacity, 
                        employed.
                    ``(B) Certain containerized vessels.--If an 
                applicant under this subsection was offering service as 
                an operator of containerized vessels in noncontiguous 
                trades with Hawaii, Puerto Rico, and Alaska on July 1, 
                1992, a waiver under this subsection shall permit the 
                applicant to conduct--
                            ``(i) 104 sailings each year from the West 
                        Coast of the United States to Hawaii with an 
                        annual capacity allocated to the service of 75 
                        percent of the total capacity of the vessels 
                        employed in the service on July 1, 1992;
                            ``(ii) 156 sailings each year in each 
                        direction between the East Coast or Gulf Coast 
                        of the United States and Puerto Rico with an 
                        annual capacity allocated to the service of 75 
                        percent of the total capacity of its vessels 
                        employed in the service on July 1, 1992; and
                            ``(iii) 103 sailings each year in each 
                        direction between Washington and Alaska with an 
                        annual capacity allocated to the service in 
                        each direction of 100 percent of the total 
                        capacity of its vessels employed in the service 
                        on July 1, 1992.
                    ``(C) Certain tugs and barges.--If an applicant 
                under this subsection was offering service as an 
                operator of tugs and barges in noncontiguous trades 
                with Hawaii, Puerto Rico, and Alaska on July 1, 1992, a 
                waiver under this subsection shall permit the applicant 
                to conduct--
                            ``(i) 17 sailings each year in each 
                        direction between ports in Washington, Oregon, 
                        and Northern California and ports in Hawaii 
                        with an annual barge house cubic foot capacity 
                        and annual barge deck 40-foot equivalent unit 
                        container capacity in each direction of 100 
                        percent of the total of the capacity of its 
                        vessels employed in the service during the 6 
                        calendar months preceding July 1, 1992, 
                        annualized;
                            ``(ii) 253 sailings each year in each 
                        direction between the East Coast or Gulf Coast 
                        of the United States and Puerto Rico with an 
                        annual 40-foot equivalent unit container or 
                        trailer capacity equal to 100 percent of the 
                        capacity of its barges employed in the service 
                        on July 1, 1992;
                            ``(iii) 37 regularly scheduled tandem tow 
                        rail barge sailings and 10 additional single 
                        tow sailings each year in each direction 
                        between Washington and the Alaskan port range 
                        between and including Anchorage and Whittier 
                        with an annual capacity allocated to the 
                        service in each direction of 100 percent of the 
                        total rail car capacity of its vessels employed 
                        in the service on July 1, 1992;
                            ``(iv) 8 regularly scheduled single tow 
                        sailings each year in each direction between 
                        Washington and points in Alaska (not including 
                        the port range between and including Anchorage 
                        and Whittier, except occasional deviations to 
                        discharge incidental quantities of cargo) with 
                        an annual capacity allocated to the service in 
                        each direction of 100 percent of the total 
                        capacity of its vessels employed in the service 
                        on July 1, 1992; and
                            ``(v) unscheduled, contract carrier tug and 
                        barge service between points in Alaska not 
                        served by the common carrier service permitted 
                        under clause (iii) or (iv) and points in 
                        Washington, with an annual capacity allocated 
                        to that service not exceeding 100 percent of 
                        the highest total capacity of the equipment 
                        that was employed in that service in any year 
                        after 1979.
                    ``(D) Annualization.--Capacity otherwise required 
                by this paragraph to be permitted under a waiver under 
                this subsection shall be annualized if not a seasonal 
                service.
                    ``(E) Adjustments.--
                            ``(i) In general.--The annual capacity 
                        permitted under a waiver under this subsection 
                        shall be adjusted for each calendar year to 
                        reflect changes in the total volume of trade on 
                        the noncontiguous trade route for which the 
                        waiver is issued. Such an adjustment may not be 
                        considered to be a material change or increase 
                        in service under the waiver for purposes 
                        subsection (b)(3)(B).
                            ``(ii) Limitation.--An increase in capacity 
                        under this subparagraph shall apply only to the 
                        extent the contractor actually uses the 
                        increased capacity to carry cargo in the 
                        permitted service in the calendar year 
                        immediately following the preceding increase in 
                        gross product. However, if a contractor 
                        operating exclusively containerized vessels in 
                        that trade on July 1, 1992, carries an average 
                        load factor of at least 90 percent of permitted 
                        capacity (including the capacity, if any, both 
                        authorized and used under the previous 
                        sentence) during 9 months of any one calendar 
                        year, then in the next following calendar year 
                        and thereafter, the requirement that additional 
                        capacity shall be used in the immediately 
                        following year does not apply.
            ``(3) Applications for waivers.--For a waiver under this 
        subsection a contractor shall submit to the Secretary an 
        application certifying the facts required to be found under 
        paragraph (1) (A) or (B), as applicable.
            ``(4) Action on application.--
                    ``(A) Notice.--The Secretary shall publish a notice 
                of receipt of an application for a waiver under this 
                subsection within 30 days after receiving the 
                application.
                    ``(B) Hearing prohibited.--The Secretary may not 
                conduct a hearing on an application for a waiver under 
                this subsection.
                    ``(C) Submission of comments.--The Secretary shall 
                give every person operating a cargo vessel in a 
                noncontiguous trade for which a waiver is applied for 
                under this subsection and who has any interest in the 
                application a reasonable opportunity to submit comments 
                on the application and on the description of the 
                service that would be permitted by any waiver that is 
                granted by the Secretary under the application.
            ``(5) Decision on application.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Secretary shall complete all 
                proceedings on an application under this subsection and 
                issue a decision on the record within 180 days after 
                receipt of the application.
                    ``(B) Expedited consideration.--Subject to the time 
                required for publication of notice and for receipt and 
                evaluation of comments by the Secretary, an application 
                for a waiver under this subsection submitted at the 
                same time the applicant applies for inclusion of a 
                vessel in the Fleet shall be granted in accordance with 
                the level of service determined by the Secretary under 
                this subsection by not later than the date on which the 
                Secretary offers to the applicant an operating 
                agreement with respect to that vessel.
            ``(6) Change or increase in service.--Any material change 
        or increase in a service that is subject to a waiver under this 
        subsection is not authorize except to the extent the change or 
        increase is permitted by a waiver under subsection (b).
    ``(d) Annual Report on Waivers.--Each waiver under this section 
shall require the person who is granted the waiver to submit to the 
Secretary each year an annual report setting forth for the service 
authorized by the waiver--
            ``(1) the ports served during the year;
            ``(2) the number or frequency of sailings performed during 
        the year; and
            ``(3) the volume of cargo carried or, for containerized or 
        trailer service, the annual 40-foot equivalent unit shipboard 
        container, trailer, or vehicle capacity utilized during the 
        year, or for tug and barge service, the annual barge house and 
        barge deck capacity utilized during the year.
    ``(e) Definitions.--In this section--
            ``(1) the term `noncontiguous trade' means trade between--
                    ``(A) the contiguous 48 States; and
                    ``(B) Alaska, Hawaii, or Puerto Rico; and
            ``(2) the term `related party' means--
                    ``(A) a holding company, subsidiary, affiliate, or 
                associate of a contractor; and
                    ``(B) an officer, director, agency, or other 
                executive of a contractor or of a person referred to in 
                subparagraph (A).

``SEC. 407. FUNDING FOR CONTINGENCY RETAINER FLEET OPERATING 
              AGREEMENTS.

    ``(a) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary any amounts necessary to liquidate 
obligations under operating agreements.
    ``(b) Transfer of Balances From Operating-Differential Subsidy 
Program.--Any amounts otherwise available for operating differential 
subsidy contracts under title VI that are no longer required for those 
contracts are available, until expended, for operating agreements.

``SEC. 408. DEFINITIONS.

    ``In this title:
            ``(1) Contractor.--The term `contractor' means an owner or 
        operator of a vessel that enters into an operating agreement 
        for the vessel with the Secretary.
            ``(2) Eligibility decision application.--The term 
        `eligibility decision application' means an application for a 
        decision by the Secretary under section 403 that a vessel is 
        eligible to be enrolled in the Fleet.
            ``(3) Eligible vessel.--The term `eligible vessel' means a 
        vessel that the Secretary decides under section 403 is eligible 
        to be enrolled in the Fleet.
            ``(4) Fleet.--The term `Fleet' means the Contingency 
        Retainer Fleet established under section 402.
            ``(5) Fleet operator.--The term `Fleet Operator' means a 
        person that is a party to an operating agreement with the 
        Secretary in effect under this title.
            ``(6) Operating agreement.--The term `operating agreement' 
        means an operating agreement entered into by the Secretary 
        under section 404.
            ``(7) Secretary.--The term `Secretary' means the Secretary 
        of Transportation.
            ``(8) United states documented vessel.--The term `United 
        States documented vessel' means a vessel that is documented 
        under chapter 121 of title 46, United States Code.''.
    (b) Limitation on Entering and Effectiveness of Agreements.--The 
Secretary of Transportation may not enter into an operating agreement 
under title IV of the Merchant Marine Act, 1936, as amended by this 
Act, before October 1, 1994. Any operating agreement entered into under 
that title between October 1, 1994, and September 30, 1995, may not be 
effective until October 1, 1995.
    (c) Limitation on Payments.--Notwithstanding section 405(a)(2) of 
the Merchant Marine Act, 1936, as amended by this Act, or the terms of 
any operating agreement (as that term is used in that section), the 
United States Government is not obligated to pay, and the Secretary of 
Transportation may not pay, any amount pursuant to that section for any 
day in which a vessel that is covered by an operating agreement is 
under a charter to the United States Government that was entered into 
before the date of the enactment of this Act.
    (d) Limitation on Operating Agreements for Vessels Constructed 
Under Existing Foreign Construction Contracts.--
            (1) Limitation.--The Secretary of Transportation may decide 
        that a vessel described in paragraph (2) is eligible for an 
        operating agreement under title IV of the Merchant Marine Act, 
        1936, as amended by this Act, only if--
                    (A) the contract under which the vessel is 
                constructed is, on and after May 19, 1993, binding on 
                the person that submits an eligibility application 
                under that title for the vessel;
                    (B) construction of the vessel is begun before 
                January 1, 1994; and
                    (C) the vessel is a United States documented vessel 
                (as that term is defined in that title) before November 
                19, 1995.
            (2) Vessel described.--A vessel referred to in paragraph 
        (1) is a vessel--
                    (A) that is constructed in a foreign country under 
                a contract that is entered into before May 19, 1993; 
                and
                    (B) the construction of which is not completed 
                before that date.

SEC. 4. OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS.

    (a) Prohibition on New Contracts.--Section 601 of the Merchant 
Marine Act, 1936 (46 App. U.S.C. 1171) is amended by adding at the end 
the following:
    ``(c) After the effective date of this subsection, the Secretary of 
Transportation may not enter into any new contract under this title.''.
    (b) Termination of Existing Contracts.--Notwithstanding any other 
provision of this Act, any contract in effect under title VI of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1171 et seq.), on the day 
before the date of enactment of this Act shall continue in effect under 
its terms and terminate as set forth in the contract, unless 
voluntarily terminated on an earlier date by the persons (other than 
the United States Government) that are parties to the contract.
    (c) Exemption of Bulk Cargo ODS Vessels From Operating 
Restrictions.--Section 506 of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1156) is amended--
            (1) by inserting ``(a)'' after ``Sec. 506.''; and
            (2) by adding at the end the following new subsection:
    ``(b) This section does not apply to any liquid or dry bulk cargo 
vessel for which operating-differential subsidy is required to be paid 
under a contract under title VI that is in force on the effective date 
of this subsection, effective upon the termination date of the contract 
(as set forth in the contract as in effect on the effective date of 
this subsection).''.
    (d) Restrictions on Operations of ODS Vessels.--Title VI of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1171 et seq.), as amended by 
this Act, is further amended by adding at the end the following:

``SEC. 616. LIMITATION ON APPLICATION OF RESTRICTIONS ON OPERATIONS.

    ``Sections 605(c), 804, and 805, this section, and the essential 
service requirements in section 601(a) and 603(a), do not apply to a 
contractor if--
            ``(1) the contractor submits an eligibility decision 
        application to the Secretary under title IV for all of the 
        vessels operated by the contractor under an operating-
        differential subsidy contract; and
            ``(2) all of those vessels for which operating agreements 
        are offered by the Secretary under title IV are enrolled in the 
        Maritime Security Fleet.''.
    (e) Termination of Operating Differential Subsidy For Older 
Vessels.--Section 605(b) of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1175(b)), is amended by adding the following new sentence at the 
end of the subsection: ``After May 19, 1993, the Secretary of 
Transportation may not enter any new formal order under this 
subsection.''.

SEC. 5. DEFINITIONS APPLICABLE TO MERCHANT MARINE ACT, 1936.

    Section 905 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1244), 
is amended--
            (1) by striking subsection (a) and inserting the following:
    ``(a) Each of the terms `foreign commerce' and `foreign trade' 
mean--
            ``(1) trade between the United States and a foreign 
        country; or
            ``(2) trade between foreign ports.'';
            (2) by striking subsection (c) and inserting the following:
    ``(c) The term `citizen of the United States' means a person 
eligible to own a documented vessel under chapter 121 of title 46, 
United States Code.'', and
            (3) by adding at the end the following:
    ``(h) The term `foreign subsidized shipyard' means a shipyard 
that--
            ``(1) receives or benefits from, directly or indirectly, a 
        shipyard subsidy for the construction of vessels; and
            ``(2) is located in a foreign country that has not signed a 
        trade agreement with the United States that provides for the 
        elimination of subsidies for that shipyard.
    ``(i) The term `subsidy' includes any of the following:
            ``(A) Officially supported export credits and development 
        assistance.
            ``(B) Direct official operating support to the commercial 
        shipbuilding and repair industry, or to a related entity that 
        favors the operation of shipbuilding and repair, including--
                    ``(i) grants;
                    ``(ii) loans and loan guarantees other than those 
                available on the commercial market;
                    ``(iii) forgiveness of debt;
                    ``(iv) equity infusions on terms inconsistent with 
                commercially reasonable investment practices;
                    ``(v) preferential provision of goods and services; 
                and
                    ``(vi) public sector ownership of commercial 
                shipyards on terms inconsistent with commercially 
                reasonable investment practices.
            ``(C) Direct official support for investment in the 
        commercial shipbuilding and repair industry, or to a related 
        entity that favors the operation of shipbuilding and repair, 
        including the kinds of support listed in clauses (i) through 
        (v) of subparagraph (B), and any restructuring support, except 
        public support for social purposes directly and effectively 
        linked to shipyard closures.
            ``(D) Assistance in the form of grants, preferential loans, 
        preferential tax treatment, or otherwise, that benefits or is 
        directly related to shipbuilding and repair for purposes of 
        research and development that is not equally open to domestic 
        and foreign enterprises.
            ``(E) Tax policies and practices that favor the 
        shipbuilding and repair industry, directly or indirectly, such 
        as tax credits, deductions, exemptions and preferences, 
        including accelerated depreciation, if the benefits are not 
        generally available to persons or firms not engaged in 
        shipbuilding or repair.
            ``(F) Any official regulation or practice that authorizes 
        or encourages persons or firms engaged in shipbuilding or 
        repair to enter into anticompetitive arrangements.
            ``(G) Any indirect support directly related, in law or in 
        fact, to shipbuilding and repair at national yards, including 
        any public assistance favoring shipowners with an indirect 
        effect on shipbuilding or repair activities, and any assistance 
        provided to suppliers of significant inputs to shipbuilding, 
        which results in benefits to domestic shipbuilders.
            ``(H) Any export subsidy identified in the Illustrative 
        List of Export Subsidies in the Annex to the Agreement on 
        Interpretation and Application of Articles VI, XVI, and XXIII 
        of the General Agreement on Tariffs and Trade or any other 
        export subsidy that may be prohibited as a result of the 
        Uruguay Round of trade negotiations.''.

SEC. 6. GOVERNMENT-IMPELLED CARGOES.

    (a) Vessels Eligible for Cargoes.--Section 901(b) of the Merchant 
Marine Act, 1936 (46 App. U.S.C. 1241(b)) is amended--
            (1) in paragraph (1), by striking ``For purposes of this 
        section, the term `privately owned United States-flag 
        commercial vessels''' and all that follows through the end of 
        the paragraph and inserting a period; and
            (2) by adding at the end the following new paragraph:
    ``(3) In this section and section 901b, the term `privately owned 
United States-flag commercial vessel' means a privately owned vessel 
that is documented under chapter 121 of title 46, United States Code, 
that--
            ``(A) was built in the United States;
            ``(B) was documented under chapter 121 of title 46, United 
        States Code, before May 19, 1993;
            ``(C) does not transport under section 901b or this section 
        on any voyage more than 5,000 tons of bulk cargo (as defined in 
        section 3 of the Shipping Act of 1984), and--
                    ``(i) was built in a foreign shipyard under a 
                contract entered into before May 19, 1993; or
                    ``(ii) is built under a contract entered into after 
                that date, in a foreign shipyard that on the date the 
                contract is entered is not a foreign subsidized 
                shipyard;
            ``(D)(i) is built under a contract entered into after May 
        19, 1993, in a foreign shipyard that on the date the contract 
        was entered is not a foreign subsidized shipyard; and
            ``(ii) has not been documented in a foreign country before 
        it is documented under chapter 121 of title 46, United States 
        Code; or
            ``(E) has been documented under chapter 121 of title 46, 
        United States Code, for at least 3 consecutive years, and--
                    ``(i) was built in a foreign shipyard under a 
                contract entered into before May 19, 1993; or
                    ``(ii) is built under a contract entered into after 
                that date, in a foreign shipyard that on the date the 
                contract was entered is not a foreign subsidized 
                shipyard.''.
    (b) Clerical Amendment.--Section 901b of the Merchant Marine Act, 
1936 (46 App. U.S.C. 1241f) is amended by adding at the end the 
following:
    ``(f) For the definition of the term `privately owned United 
States-flag commercial vessel', see section 901(b)(3).''.

SEC. 7. VESSEL FINANCING.

    (a) Elimination of Mortgagee Restrictions.--Section 31322(a) of 
title 46, United States Code, is amended to read as follows:
    ``(a) A preferred mortgage is a mortgage, whenever made, that--
            ``(1) includes the whole of the vessel;
            ``(2) is filed in substantial compliance with section 31321 
        of this title; and
            ``(3)(A) covers a documented vessel; or
            ``(B) covers a vessel for which an application for 
        documentation is filed that is in substantial compliance with 
        the requirements of chapter 121 of this title and the 
        regulations prescribed under that chapter.''.
    (b) Elimination of Trustee Restrictions.--
            (1) Repeal.--Section 31328 of title 46, United States Code, 
        is repealed.
            (2) Conforming amendment.--Section 31330(b) of title 46, 
        United States Code, is amended in paragraphs (1), (2), and (3) 
        by striking ``31328 or'' each place it appears.
    (c) Removal of Mortgage Restrictions.--Section 9 of the Shipping 
Act, 1916 (46 App. U.S.C. 808), as amended by this Act, is further 
amended--
            (1) in subsection (c)--
                    (A) by striking ``and sections 31322(a)(1)(D) and 
                31328 of title 46, United States Code,''; and
                    (B) in paragraph (1) by striking ``mortgage,'' each 
                place it appears; and
            (2) in subsection (d)--
                    (A) in paragraph (1) by striking ``transfer, or 
                mortgage'' and inserting ``or transfer'';
                    (B) in paragraph (2) by striking ``transfers, or 
                mortgages'' and inserting ``or transfers'';
                    (C) in paragraph (3)(B) by striking ``transfers, or 
                mortgages'' and inserting ``or transfers''; and
                    (D) in paragraph (4) by striking ``transfers, or 
                mortgages'' and inserting ``or transfers'';

SEC. 8. PLACEMENT OF VESSELS UNDER FOREIGN REGISTRY.

    (a) In General.--Section 9 of the Shipping Act, 1916 (46 App. 
U.S.C. 808), as amended by this Act, is further amended by adding at 
the end the following:
    ``(e) Notwithstanding subsection (c)(2), the Merchant Marine Act, 
1936, or any contract entered into with the Secretary under that Act, 
the Secretary of Transportation shall allow a documented vessel to be 
placed under a foreign registry if at least one replacement vessel of a 
capacity that is equivalent or greater, as measured by deadweight tons, 
gross tons, or container equivalent units, as appropriate, is 
documented under chapter 121 of title 46, United States Code, by the 
owner of the vessel placed under foreign registry.''.
    (b) Application.--The amendment made by subsection (a) applies to 
vessels that are placed under foreign registry after the date of 
enactment of this Act and replacement vessels documented in the United 
States after that date.

SEC. 9. EFFECTIVE DATE.

    The amendments made by this Act are effective on the date which is 
120 days after the date of enactment of this Act.

SEC. 10. REGULATIONS.

    (a) In General.--The Secretary of Transportation shall prescribe 
regulations as necessary to carry out this Act.
    (b) Interim Regulations.--The Secretary of Transportation may 
prescribe interim regulations necessary to carry out this Act and for 
accepting eligibility decision applications under section 403 of the 
Merchant Marine Act, 1936, as amended by this Act. For this purpose, 
the Secretary of Transportation is excepted from compliance with the 
notice and comment requirements of section 553 of title 5, United 
States Code. All regulations prescribed under the authority of this 
subsection that are not earlier superseded by final rules shall expire 
270 days after the date of enactment of this Act.

SEC. 11. EXPANSION OF STANDING FOR MARITIME UNIONS.

    Section 301 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1131) 
is amended by adding at the end the following:
    ``(c) Standing for Maritime Union Representatives.--The duly-
elected representative of any organization that is certified by the 
Secretary of Labor as the proper collective bargaining agency for 
officers or crew employed on any type of United States documented 
vessel is an interested party in, and has standing to challenge, any 
proposed or final order, action, or rule of the Secretary of 
Transportation under this Act.''.

SEC. 12. STUDY.

    (a) In General.--After providing public notice and opportunity for 
comment, the Secretary of Transportation shall conduct a study of--
            (1) the impact of this Act on the international 
        competitiveness of United States documented vessels and whether 
        this Act has had a favorable or unfavorable impact on the 
        ability of United States documented vessels to compete 
        successfully with foreign-flag vessels;
            (2) whether continuation of the Maritime Security Fleet 
        program established by this Act would assist the international 
        competitiveness of United States documented vessels;
            (3) whether the Maritime Security Fleet program should be 
        continued, modified, or discontinued;
            (4) alternatives that are or should be available to 
        operators of United States documented vessels if the Maritime 
        Security Fleet program is discontinued; and
            (5) any other issues related to promoting the international 
        competitiveness of United States documented vessels that the 
        Secretary considers appropriate.
    (b) Report.--The Secretary of Transportation shall submit to the 
Congress a report on the findings and conclusions of the study required 
by subsection (a) by not later than 4 years after the date of enactment 
of this Act, which shall include such recommendations as the Secretary 
considers appropriate.

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