Union Calendar No. 141

103D CONGRESS

1ST SESSION H. R. 2151

[Report No. 103–251]

A BILL

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

SEPTEMBER 22, 1993

Reported with an amendment, committed to the Commitordered to be printed tee of the Whole House on the State of the Union, and
IB

Union Calendar No. 141

103D CONGRESS

1ST SESSION H. R. 2151

[Report No. 103–251]

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

SEPTEMBER 22, 1993

Additional sponsors: Mr. DIAZ-BALART, Mrs. FOWLER, Mr. INHOFE, Mr.

FOGLIETTA, Mr. HOCHBRUECKNER, Mr. PALLONE, Mr. STUPAK, Mr.

WELDON, Mr. RAVENEL, Mr. FRANK of Massachusetts, Mr. SMITH of

New Jersey, Mr. BACCHUS of Florida, Mr. PETERSON of Minnesota, Mr.

TORKILDSEN, Mr. JOHNSTON of Florida, Mr. MACHTLEY, Mrs.

MALONEY, Mr. WILSON, Mr. ABERCROMBIE, Mr. OWENS, Mr. PRICE of

North Carolina, Mr. ENGEL, Mr. WHEAT, Mr. PASTOR, Ms. MOLINARI,

Mr. GUTIERREZ, Mr. DELLUMS, Mr. HINCHEY, Mr. EVANS, Mr. HAMBURG, Mr. BORSKI, Mr. SOLOMON, Mr. ANDREWS of New Jersey, Mr.

MCCLOSKEY, Mr. HOYER, Mr. CALLAHAN, Mr. GILCHREST, Ms. PELOSI,

Mr. NEAL of Massachusetts, Mr. VISCLOSKY, Mr. GOSS, and Mr. GEJDENSON

SEPTEMBER 22, 1993

Reported with an amendment, committed to the Committee of the Whole

House on the State of the Union, and ordered to be printed
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[Strike out all after the enacting clause and insert the part printed in italic]

[For text of introduced bill, see copy of bill as introduced on May 19, 1993]

A BILL

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:

9 ‘‘SEC. 101. FOSTERING DEVELOPMENT AND MAINTENANCE

10 OF MERCHANT MARINE.

11 ‘‘The Secretary of Transportation shall carry out this

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

13 fleet of United States documented vessels that is—

14 ‘‘(1) sufficient to carry the domestic water-borne

15 commerce of the United States and a substantial por16 tion of the water-borne export and import foreign

17 commerce of the United States and to provide ship18 ping service essential for maintaining the flow of such
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1 domestic and foreign water-borne commerce at all

2 times;

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

4 time of war or national emergency;

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

6 United States, to the extent practicable;

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

8 most modern vessels;

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

10 personnel who are citizens of the United States; and

11 ‘‘(6) supplemented by modern and efficient

12 United States facilities for shipbuilding and ship re13 pair.’’.

14 SEC. 3. MARITIME SECURITY FLEET PROGRAM.

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

16 1101 et seq.) is amended by inserting after title III the fol17 lowing new title:

18 ‘‘TITLE IV—MARITIME SECURITY

19 FLEET PROGRAM

20 ‘‘SEC. 401. ESTABLISHMENT OF MARITIME SECURITY FLEET.

21 ‘‘The Secretary of Transportation shall establish a fleet

22 of active commercial vessels to enhance sealift capabilities

23 and maintain a presence in international commercial ship24 ping of United States documented vessels. The fleet shall

25 be known as the ‘Maritime Security Fleet’.
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1 ‘‘SEC. 402. COMPOSITION OF FLEET.

2 ‘‘The Fleet shall consist of privately owned United

3 States documented vessels for which there are in effect oper4 ating agreements.

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

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

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

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

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

10 pursuant to an eligibility decision application submitted

11 to the Secretary by the owner or operator of the vessel. The

12 Secretary shall make such a decision by not later than 90

13 days after the date of submittal of an eligibility decision

14 application for the vessel by the owner or operator of the

15 vessel.

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

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

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

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

20 respect to an operating agreement for the vessel agrees

21 to enter into an operating agreement with the Sec22 retary for the vessel under section 404;

23 ‘‘(2) the person that will be a contractor with re24 spect to an operating agreement for the vessel is a cit25 izen of the United States;
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1 ‘‘(3)(A) the vessel is a United States documented

2 vessel on May 19, 1993;

3 ‘‘(B) the vessel is—

4 ‘‘(i) in existence on May 19, 1993;

5 ‘‘(ii) a United States documented vessel

6 after May 19, 1993; and

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

8 date of that documentation;

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

10 a United States shipyard;

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

12 a foreign subsidized shipyard under a contract en13 tered into before May 19, 1993;

14 ‘‘(E)(i) the vessel is built in a foreign shipyard

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

16 1993; and

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

18 vessel for enrollment in the Fleet in a United States

19 shipyard that will be delivered within 30 months

20 after the effective date of an operating agreement for

21 the vessel referred to in clause (i), or the Secretary

22 finds and certifies in writing that a United States

23 shipyard cannot sell a vessel to the owner at the world

24 price due to the unavailability of series transition

25 payments under title XIV to build that vessel; or
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1 ‘‘(F)(i) the vessel is built under a contract en2 tered into after May 19, 1993;

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

4 nationwide bids for at least 6 months to build the ves5 sel in a United States shipyard;

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

7 that a United States shipyard cannot sell a vessel to

8 the proposed owner at the world price due to the un9 availability of series transition payments under title

10 XIV to build that vessel;

11 ‘‘(iv) the vessel is delivered from the foreign ship12 yard within 30 months after the Secretary’s certifi13 cation under clause (iii); and

14 ‘‘(v) the vessel is substantially the same type and

15 design as the vessel described in the solicitation made

16 under clause (ii); and

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

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

19 at least 750 Twenty-foot Equivalent Units;

20 ‘‘(B) a roll-on/roll-off vessel with a carrying

21 capacity of at least 80,000 square feet or 500

22 Twenty-foot Equivalent Units;

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

24 of at least 75 barges;
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1 ‘‘(D) a vessel subject to a contract under

2 title VI on May 19, 1993; or

3 ‘‘(E) any other type of vessel that is deter4 mined by the Secretary to be suitable for use by

5 the United States for national defense or mili6 tary purposes in time of war or national emer7 gency.

8 ‘‘(c) DETERMINATIONS OF ELIGIBILITY.—

9 ‘‘(1) DETERMINATIONS REQUIRED.—The Sec10 retary shall make determinations under subsection (b)

11 for each vessel for which an eligibility decision appli12 cation is submitted under this section.

13 ‘‘(2) DETERMINATION REGARDING CERTIFI14 CATION.—The Secretary shall—

15 ‘‘(A) make the finding and certification

16 under paragraph (3)(E)(ii) for a vessel, or deter17 mine not to, by not later than 60 days after the

18 date of receipt of an eligibility decision applica19 tion for the vessel; and

20 ‘‘(B) make the finding and certification

21 under paragraph (3)(F)(iii) for a vessel, or de22 termine not to, by not later than 60 days after

23 the closing date of the solicitation pursuant to

24 paragraph (3)(F)(ii) for the vessel.
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1 ‘‘(3) WRITTEN EXPLANATION.—The Secretary

2 shall provide to the person that submits an eligibility

3 application for a vessel a written explanation of any

4 decision that the vessel is not eligible for enrollment

5 in the Fleet.

6 ‘‘(d) LIST OF ELIGIBLE VESSELS.—

7 ‘‘(1) IN GENERAL.—The Secretary shall main8 tain a list of vessels that the Secretary decides in ac9 cordance with this section are eligible to be enrolled

10 in the Fleet.

11 ‘‘(2) REMOVAL OF VESSELS FROM LIST.—The

12 Secretary shall remove a vessel from the list main13 tained under this subsection, and the vessel shall not

14 be an eligible vessel for purposes of this title—

15 ‘‘(A) at any time that the conditions for eli16 gibility under subsection (b) are not fulfilled for

17 the vessel; or

18 ‘‘(B) if the status of the person who submit19 ted an eligibility decision application for the ves20 sel, as owner or operator of the vessel, changes

21 and after that change—

22 ‘‘(i) the owner or operator of the vessel

23 fails to submit a new eligibility decision ap24 plication for the vessel; or
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1 ‘‘(ii) such an application is not ap2 proved by the Secretary.

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

4 ‘‘(a) REQUIREMENT FOR ENROLLMENT OF VESSELS.—

5 A vessel may be enrolled in the Fleet only if it is an eligible

6 vessel for which the owner or operator of the vessel applies

7 for and enters into an operating agreement with the Sec8 retary under this section.

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

11 enter into operating agreements according to the following

12 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 under

18 section 2 of the Shipping Act, 1916; or

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

20 owned and operated by a corporation that

21 is—

22 ‘‘(I) eligible to document a vessel

23 under chapter 121 of title 46, United

24 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 operat8 ing agreements that may be entered into by a

9 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 operated

15 in the foreign commerce of the United

16 States (except mixed coastwise and for17 eign commerce) on January 1, 1993;

18 and

19 ‘‘(II) the number of United States

20 documented vessels the person chartered

21 to the Secretary of Defense on that

22 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 PARTIES.—

2 For purposes of subparagraph (B), a related

3 party with respect to a person shall be treated as

4 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 under

11 section 2 of the Shipping Act, 1916, that

12 have not been awarded an operating agree13 ment under the priority established under

14 paragraph (1); or

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

16 under chapter 121 of title 46, United States

17 Code; and

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

20 documented vessels for the Secretary of De21 fense or chartering other vessels to the Sec22 retary 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 sub12 section (b) (1), (2), and (3) under regulations pre13 scribed by the Secretary.

14 ‘‘(2) NUMBER OF AGREEMENTS AWARDED.—Reg15 ulations under paragraph (1) shall provide that if

16 appropriated amounts are not sufficient for operating

17 agreements for all vessels within a priority under sub18 section (b) (1), (2), or (3), the Secretary shall award

19 to each person submitting a request a number of oper20 ating agreements that bears approximately the same

21 ratio to the total number of vessels in the priority, as

22 the amount of appropriations available for operating

23 agreements for vessels in the priority bears to the

24 amount of appropriations necessary for operating

25 agreements for all vessels in the priority.
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1 ‘‘(3) TREATMENT OF RELATED PARTIES.—For

2 purposes of paragraph (2), a related party with re3 spect to a person shall be treated as the person.

4 ‘‘(d) TIME LIMIT FOR DECISION ON ENTERING OPER5 ATING AGREEMENT.—The Secretary shall enter an operat6 ing agreement for a vessel within 90 days after making the

7 decision that the vessel is eligible to be enrolled in the Fleet

8 under section 403(a).

9 ‘‘(e) EFFECTIVE DATE OF OPERATING AGREEMENT.—

10 The effective date of an operating agreement may not be

11 later than the later of—

12 ‘‘(1) the date the vessel covered by the agreement

13 enters into the trade required under section

14 405(a)(1)(A);

15 ‘‘(2) the date the vessel covered by the agreement

16 is withdrawn from an operating differential subsidy

17 contract under title VI;

18 ‘‘(3) the date of termination of an operating dif19 ferential subsidy contract under title VI that applies

20 to the vessel; or

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

22 a charter of the vessel to the United States Govern23 ment that was entered into before the date of the en24 actment of the Maritime Security and Competitive25 ness Act of 1993.
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1 ‘‘(f) EXPIRATION OF OFFERS FOR AGREEMENTS.—Un2 less extended by the Secretary, an offer by the Secretary

3 to enter into an operating agreement under this section ex4 pires 120 days after the date the offer is made.

5 ‘‘(g) LENGTH OF AGREEMENTS.—An operating agree6 ment is effective for 10 years from the effective date of the

7 agreement.

8 ‘‘(h) REPAYMENT REQUIREMENTS.—

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

10 to comply with the terms of an operating agreement

11 shall be liable to the United States Government for all

12 amounts received by the contractor as payments for

13 the vessel under this title with respect to the period

14 of that noncompliance, and for interest on those

15 amounts determined under paragraph (3).

16 ‘‘(2) FAILURE TO OPERATE REPLACEMENT VES17 SEL.—A contractor under an operating agreement

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

19 and that fails to replace the vessel as provided in sec20 tion 405(a)(3) (A) or (B) shall be liable to the United

21 States Government for all amounts received by the

22 contractor as payments for the vessel under this title

23 with respect to periods after the date the vessel be24 comes 25 years of age, and for interest on those

25 amounts determined under paragraph (3).
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1 ‘‘(3) DETERMINATION OF INTEREST.—Interest

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

3 rate equal to 125 percent of the coupon issue yield

4 equivalent (as determined by the Secretary of the

5 Treasury) of the average accepted auction price for

6 auctions of 3 month United States Treasury bills set7 tled during the quarter preceding the date of the fail8 ure to comply or the failure to replace, respectively.

9 ‘‘(i) PROHIBITION ON AGREEMENTS FOR CERTAIN

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

11 agreement for a vessel that is owned or operated by a person

12 that was a contractor for the vessel under an operating

13 agreement terminated under section 405(a)(10), before the

14 end of the term of the agreement that was terminated.

15 ‘‘(j) BINDING OBLIGATION OF GOVERNMENT.—An op16 erating agreement constitutes a contractual obligation of the

17 United States Government to pay the amounts provided for

18 under that agreement.

19 ‘‘SEC. 405. TERMS OF OPERATING AGREEMENTS.

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

21 operating agreement shall, during the effective period of the

22 agreement, provide the following:

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

24 vessel covered by the operating agreement—
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1 ‘‘(A) shall be operated in the foreign trade

2 or domestic trade allowed under a registry en3 dorsement for the vessel issued under section

4 12105 of title 46, United States Code;

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

6 trade of the United States or in mixed coastwise

7 and foreign trade, except for coastwise trade al8 lowed under a registry endorsement issued for

9 the vessel under section 12105 of title 46, United

10 States Code; and

11 ‘‘(C) shall be documented under chapter 121

12 of title 46, United States Code.

13 ‘‘(2) ANNUAL PAYMENTS.—

14 ‘‘(A) IN GENERAL.—The Secretary shall pay

15 the contractor, in accordance with this sub16 section, the following amounts for each fiscal

17 year in which the vessel is operated in accord18 ance with the agreement:

19 ‘‘(i) For fiscal year 1994, $2,300,000.

20 ‘‘(ii) For each fiscal year thereafter,

21 $2,100,000.

22 ‘‘(B) LIMITATION.—The Secretary shall not

23 pay any amount pursuant to this paragraph for

24 any day in which the vessel is—
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1 ‘‘(i) under a charter to the United

2 States Government that was entered into be3 fore the date of the enactment of the Mari4 time Security and Competitiveness Act of

5 1993; or

6 ‘‘(ii) covered by an operating differen7 tial subsidy contract under title VI.

8 ‘‘(3) TERMINATION BASED ON AGE OF VESSEL.—

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

10 subparagraph (B), the operating agreement shall

11 terminate on the later of—

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

13 agreement is 25 years of age, or

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

15 agreement is 30 years of age, in the case of

16 an agreement that covers a vessel that is

17 repowered in a United States shipyard after

18 the effective date of the operating agreement

19 and before the vessel is 25 years of age.

20 ‘‘(B) EXCEPTION.—The operating agree21 ment shall not terminate under subparagraph

22 (A) if the contractor agrees to acquire a replace23 ment for the vessel from among vessels on the list

24 maintained under section 403(d), and—
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1 ‘‘(i) in the case of a vessel to be re2 placed with a new vessel, the contractor en3 ters into a binding contract with a ship4 yard that requires the shipyard to deliver

5 the replacement vessel by not later than 30

6 months after the later of the date the operat7 ing agreement is entered into or the date the

8 operating agreement would otherwise termi9 nate under subparagraph (A); or

10 ‘‘(ii) in the case of a vessel to be re11 placed with an existing vessel, the contrac12 tor acquires the replacement vessel from

13 among vessels on the list maintained under

14 section 403(d), by not later than 12 months

15 after the later of the date the operating

16 agreement is entered into or the date the op17 erating agreement would otherwise expire

18 under subparagraph (A).

19 ‘‘(4) AVAILABILITY OF VESSEL.—

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

21 President during time of war or national emer22 gency or when considered by the President, act23 ing through the Secretary in consultation with

24 the Secretary of Defense, to be necessary in the

25 interest of national security, and subject to sub-
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1 paragraph (B), the contractor as soon as prac2 ticable shall, as specified by the Secretary—

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

4 agreement available to the Secretary under

5 a time charter; or

6 ‘‘(ii) provide space on the vessel cov7 ered by the agreement to the Secretary on a

8 guaranteed basis.

9 ‘‘(B) CONDITION FOR CHARTER.—The Sec10 retary shall allow a contractor to comply with

11 this paragraph by providing space on a vessel

12 under subparagraph (A)(ii) unless the Secretary

13 determines that it is necessary in the interest of

14 national security that the contractor make the

15 vessel available under a time charter.

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

17 shall deliver a vessel to the Secretary pursuant to a

18 time charter under paragraph (4)(A)(i), as specified

19 in the request for the vessel—

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

21 the vessel is scheduled to call after the date of re22 ceipt of the request;

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

24 which the vessel is nearest on the date of receipt

25 of the request; or
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1 ‘‘(C) in any other reasonable manner au2 thorized by the agreement and specified in the

3 request.

4 ‘‘(6) DELIVERY COSTS.—In addition to amounts

5 paid under paragraph (2), the Secretary shall reim6 burse the contractor for costs incurred by the contrac7 tor in delivering the vessel covered by the agreement

8 to the Secretary in accordance with the agreement.

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

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

11 contractor, as provided in the operating agreement,

12 reasonable compensation at reasonable commercial

13 rates for the period of time the vessel is chartered or

14 the contractor provides space on the vessel under

15 paragraph (4).

16 ‘‘(8) REQUIRED OPERATION.—

17 ‘‘(A) IN GENERAL.—A vessel covered by the

18 operating agreement shall be operated in the

19 trade required under paragraph (1), and under

20 conditions eligible for payment under this title,

21 for at least 320 days in a fiscal year, including

22 days during which the vessel is dry-docked, sur23 veyed, inspected, or repaired.

24 ‘‘(B) REDUCTION IN PAYMENTS.—If a vessel

25 operates in the trade required under paragraph
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1 (1), and under conditions eligible for payment

2 under this title, for less than the time required

3 under subparagraph (A), the payments required

4 under paragraph (2) shall be reduced on a pro5 rata basis to reflect the lesser time in that oper6 ation.

7 ‘‘(9) SUBSTITUTION OF VESSELS AUTHORIZED.—

8 The contractor may substitute for the vessel covered

9 by the agreement another vessel on the list main10 tained under section 403(d).

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

12 agreement shall terminate if—

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

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

15 agreement—

16 ‘‘(i) the vessel covered by the agreement

17 is not operated under an operating agree18 ment for one year; and

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

20 operated under the agreement during that

21 year; or

22 ‘‘(B) the contractor notifies the Secretary

23 that the contractor intends to terminate the

24 agreement, by not later than 60 days before the

25 effective date of the termination.
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1 ‘‘(b) PAYMENTS.—

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

3 paid by the Secretary each year to a contractor under

4 an operating agreement pursuant to subsection

5 (a)(2)—

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

7 at the beginning of each month in equal install8 ments; and

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

10 may not be reduced by reason of operation of the

11 vessel covered by the agreement to carry civilian

12 or military preference cargoes under—

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

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

15 States Code; or

16 ‘‘(iii) the Act of March 26, 1934 (48

17 Stat. 500).

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

19 contractor with respect to a vessel may not receive

20 any payment under this title for any day in which

21 the vessel is engaged in transporting more than

22 12,000 tons of preference cargo described in para23 graph (1)(B) that is bulk cargo (as defined in section

24 3 of the Shipping Act of 1984).
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1 ‘‘(c) REDELIVERY OF VESSELS.—The Secretary shall,

2 upon the termination of the need for which a vessel is deliv3 ered under subsection (a)(4), return the vessel to the con4 tractor—

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

6 the Secretary of Defense and the contractor; and

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

8 to the Secretary, excluding normal wear and tear.

9 ‘‘(d) TRANSFER OF OPERATING AGREEMENTS.—A con10 tractor under an operating agreement may transfer the

11 agreement (including all rights and obligations under the

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

13 United States, after notification of the Secretary in accord14 ance with regulations prescribed by the Secretary, unless

15 the transfer is disapproved by the Secretary within 90 days

16 after the date of that notification. A transfer shall not be

17 effective before the end of that 90-day period. A person to

18 whom an agreement is transferred may receive payments

19 from the Secretary under the agreement only if the vessel

20 to be covered by the agreement after the transfer is on the

21 list maintained under section 403(d).

22 ‘‘SEC. 406. NONCONTIGUOUS TRADE RESTRICTIONS.

23 ‘‘(a) PROHIBITION.—
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1 ‘‘(1) IN GENERAL.—Except as provided in this

2 section, a contractor may not receive any payment

3 under this title—

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

5 with respect to the contractor, directly or indi6 rectly owns, charters, or operates a vessel en7 gaged in the transportation of cargo in non8 contiguous trade other than in accordance with

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

10 ‘‘(B) if the contractor is authorized to oper11 ate a vessel in noncontiguous trade under such

12 a waiver, and there is a—

13 ‘‘(i) material change in the domestic

14 ports served by the contractor from the ports

15 permitted to be served under the waiver;

16 ‘‘(ii) material increase in the annual

17 number or the frequency of sailings by the

18 contractor from the number or frequency

19 permitted under the waiver; or

20 ‘‘(iii) material increase in the annual

21 volume of cargo carried or annual capacity

22 utilized by the contractor from the annual

23 volume of cargo or annual capacity per24 mitted under the waiver.
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1 ‘‘(2) LIMITATIONS ON PROHIBITION.—Paragraph

2 (1) applies to a contractor only in the years specified

3 for payments under the operating agreement entered

4 into by the contractor.

5 ‘‘(b) GENERAL WAIVER AUTHORITY.—

6 ‘‘(1) IN GENERAL.—Except as provided in sub7 section (c), the Secretary may waive, in writing, the

8 application of subsection (a) to a contractor pursuant

9 to an application submitted in accordance with this

10 subsection, unless the Secretary finds that—

11 ‘‘(A) the waiver would result in unfair com12 petition to any person that operates vessels as a

13 carrier of cargo in a service exclusively in the

14 noncontiguous trade for which the waiver is ap15 plied;

16 ‘‘(B) subject to paragraph (6), existing serv17 ice in that noncontiguous trade is adequate; or

18 ‘‘(C) the waiver will result in prejudice to

19 the objects or policy of this title or Act.

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

21 by the Secretary under this subsection shall state—

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

23 served;

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

25 sailings that may be provided; and
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1 ‘‘(C)(i) the annual volume of cargo per2 mitted,

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

4 annual 40-foot equivalent unit shipboard con5 tainer and trailer or vehicle or general cargo ca6 pacity permitted, or

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

8 barge house cubic foot capacity and the annual

9 barge deck general cargo capacity, or 40-foot

10 equivalent unit container, trailer, or vehicle ca11 pacity, permitted.

12 ‘‘(3) APPLICATIONS FOR WAIVERS.—An applica13 tion for a waiver under this subsection may be sub14 mitted by a contractor and shall describe, as applica15 ble, the nature and scope of—

16 ‘‘(A) the service proposed to be conducted in

17 a noncontiguous trade under the waiver; or

18 ‘‘(B) any proposed material change or in19 crease in a service in a noncontiguous trade per20 mitted under a previous waiver.

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

22 ‘‘(A) NOTICE AND PROCEEDING.—Within 30

23 days after receipt of an application for a waiver

24 under this subsection, the Secretary shall—
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1 ‘‘(i) publish a notice of the application;

2 and

3 ‘‘(ii) begin a proceeding on the appli4 cation under section 554 of title 5, United

5 States Code, to receive—

6 ‘‘(I) evidence of the nature, quan7 tity, and quality of the existing service

8 in the noncontiguous trade for which

9 the waiver is applied;

10 ‘‘(II) a description of the proposed

11 service or proposed material change or

12 increase in a previously permitted

13 service;

14 ‘‘(III) the projected effect of the

15 proposed service or proposed material

16 change or increase in existing service;

17 and

18 ‘‘(IV) recommendations on condi19 tions that should be contained in any

20 waiver for the proposed service or ma21 terial change or increase.

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

23 waiver under this subsection, and any person

24 that operates cargo vessels in the noncontiguous

25 trade for which a waiver is applied and that has
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1 any interest in the application, may intervene in

2 the proceedings on the application.

3 ‘‘(C) HEARING.—Before deciding whether to

4 grant a waiver under this subsection, the Sec5 retary shall hold a public hearing in an expedi6 tious manner, reasonable notice of which shall be

7 published.

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

9 all proceedings and hearings on an application under

10 this subsection and issue a decision on the record

11 within 90 days after receipt of the final briefs submit12 ted for the record.

13 ‘‘(6) LIMITATION ON CONSIDERATION OF CERTAIN

14 EXISTING SERVICE.—

15 ‘‘(A) LIMITATION.—In determining whether

16 to grant a waiver under this subsection for non17 contiguous trade with Hawaii, the Secretary

18 shall not consider the criterion set forth in para19 graph (1)(B) if a qualified operator—

20 ‘‘(i) is a contractor, and

21 ‘‘(ii) operates 4 or more vessels in for22 eign commerce in competition with another

23 contractor.

24 ‘‘(B) QUALIFIED OPERATOR.—In this para25 graph, the term ‘qualified operator’ means a per-
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1 son that on July 1, 1992, offered service as an

2 operator of containerized vessels, trailer vessels,

3 or combination container and trailer vessels in

4 noncontiguous trade with Hawaii and the John5 ston Islands (including a related party with re6 spect to the person).

7 ‘‘(c) WAIVERS FOR EXISTING NONCONTIGUOUS TRADE

8 OPERATORS.—

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

10 the application of subsection (a) to a contractor pur11 suant to an application submitted in accordance with

12 this subsection if the Secretary finds that the contrac13 tor, or a related party or predecessor in interest with

14 respect to the contractor—

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

16 vessel as a carrier of cargo by water—

17 ‘‘(i) in a noncontiguous trade on July

18 1, 1992; or

19 ‘‘(ii) in furnishing seasonal service in

20 a season ordinarily covered by its oper21 ation, during the 12 calendar months pre22 ceding July 1, 1992; and

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

24 time, except for interruptions of service resulting

25 from military contingency or over which the con-
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1 tractor (or related party or predecessor in inter2 est) had no control.

3 ‘‘(2) TERMS OF WAIVER.—

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

5 provided in this paragraph, the level of service

6 permitted under a waiver under this subsection

7 shall be the level of service provided by the appli8 cant (or related party or predecessor in interest)

9 in the relevant noncontiguous trade during, for

10 year-round service, the 6 calendar months pre11 ceding July 1, 1992, or for seasonal service, the

12 12 calendar months preceding July 1, 1992, de13 termined by—

14 ‘‘(i) the domestic ports called;

15 ‘‘(ii) the number of sailings actually

16 made, except as to interruptions in the serv17 ice in the noncontiguous trade resulting

18 from military contingency or over which the

19 applicant (or related party or predecessor

20 in interest) had no control; and

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

22 for containerized or trailer service, the 40-

23 foot equivalent unit shipboard container,

24 trailer, or vehicle or general cargo capacity

25 employed, or, for tug and barge service, the
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1 barge house cubic foot capacity and barge

2 deck general cargo capacity or 40-foot

3 equivalent unit container, trailer, or vehicle

4 capacity, employed.

5 ‘‘(B) CERTAIN CONTAINERIZED VESSELS.—

6 If an applicant under this subsection was offer7 ing service as an operator of containerized ves8 sels in noncontiguous trades with Hawaii, Puer9 to Rico, and Alaska on July 1, 1992, a waiver

10 under this subsection for the applicant shall per11 mit a level of service consisting of—

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

13 West Coast of the United States to Hawaii

14 with an annual capacity allocated to the

15 service of 75 percent of the total capacity of

16 the vessels employed in the service on July

17 1, 1992;

18 ‘‘(ii) 156 sailings each year in each di19 rection between the East Coast or Gulf

20 Coast of the United States and Puerto Rico

21 with an annual capacity allocated to the

22 service of 75 percent of the total capacity of

23 its vessels employed in the service on the

24 date of the enactment of the Maritime Secu25 rity and Competitiveness Act of 1993; and
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1 ‘‘(iii) 103 sailings each year in each

2 direction between Washington and Alaska

3 with an annual capacity allocated to the

4 service in each direction of 100 percent of

5 the total capacity of its vessels employed in

6 the service on July 1, 1992.

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

8 applicant under this subsection was offering

9 service as an operator of tugs and barges in non10 contiguous trades with Hawaii, Puerto Rico,

11 and Alaska on July 1, 1992, a waiver under this

12 subsection for the applicant shall permit a level

13 of service consisting of—

14 ‘‘(i) 17 sailings each year in each di15 rection between ports in Washington, Or16 egon, and Northern California and ports in

17 Hawaii with an annual barge house cubic

18 foot capacity and annual barge deck 40-foot

19 equivalent unit container capacity in each

20 direction of 100 percent of the total of the

21 capacity of its vessels employed in the serv22 ice during the 6 calendar months preceding

23 July 1, 1992, annualized;

24 ‘‘(ii) 253 sailings each year in each di25 rection between the East Coast or Gulf
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1 Coast of the United States and Puerto Rico

2 with an annual 40-foot equivalent unit con3 tainer or trailer capacity equal to 100 per4 cent of the capacity of its barges employed

5 in the service on the date of the enactment

6 of the Maritime Security and Competitive7 ness Act of 1993;

8 ‘‘(iii) 37 regularly scheduled tandem

9 tow rail barge sailings and 10 additional

10 single tow rail barge sailings each year in

11 each direction between Washington and the

12 Alaskan port range between and including

13 Anchorage and Whittier with an annual ca14 pacity allocated to the service in each direc15 tion of 100 percent of the total rail car ca16 pacity of its vessels employed in the service

17 on July 1, 1992;

18 ‘‘(iv) 8 regularly scheduled single tow

19 sailings each year in each direction between

20 Washington and points in Alaska (not in21 cluding the port range between and includ22 ing Anchorage and Whittier, except occa23 sional deviations to discharge incidental

24 quantities of cargo) with an annual capac25 ity allocated to the service in each direction
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1 of 100 percent of the total capacity of its

2 vessels employed in the service on July 1,

3 1992; and

4 ‘‘(v) unscheduled, contract carrier tug

5 and barge service between points in Alaska

6 south of the Arctic Circle not served by the

7 common carrier service permitted under

8 clause (iii) and points in the contiguous 48

9 States, with an annual capacity allocated

10 to that service not exceeding 100 percent of

11 the total capacity of the equipment that was

12 dedicated to service south of the Arctic Cir13 cle on July 1, 1992, and actually utilized in

14 that service in the 2-year period preceding

15 that date.

16 ‘‘(D) ANNUALIZATION.—Capacity otherwise

17 required by this paragraph to be permitted

18 under a waiver under this subsection shall be

19 annualized if not a seasonal service.

20 ‘‘(E) ADJUSTMENTS.—

21 ‘‘(i) Each written waiver granted by

22 the Secretary under this subsection shall

23 contain a statement that the annual capac24 ity permitted under this waiver in any di25 rection shall increase for a calendar year by
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1 the percentage of increase during the preced2 ing calendar year in the real gross product

3 of the State or territory to which goods are

4 transported in the noncontiguous trade cov5 ered by the waiver, or its equivalent eco6 nomic measure as determined by the Sec7 retary if the real gross product is not avail8 able, and that the increase shall not be con9 sidered to be a material change or increase

10 for purposes of subsection (a)(1)(B).

11 ‘‘(ii) The increase in permitted capac12 ity under clause (i) in the noncontiguous

13 trade with Alaska shall be allowed only to

14 the extent the operator actually uses that in15 creased capacity to carry cargo in the per16 mitted service in the calendar year imme17 diately following the preceding increase in

18 gross product. However, if an operator oper19 ating exclusively containerized vessels in

20 that trade on July 1, 1992, carries an aver21 age loan factor of at least 90 percent of per22 mitted capacity (including the capacity, if

23 any, both authorized and used under the

24 previous sentence) during 9 months of any

25 one calendar year, than in the next follow-
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1 ing calendar year and thereafter, the re2 quirement that additional capacity must be

3 used in the immediately following year does

4 not apply.

5 ‘‘(F) SERVICE LEVELS NOT INCREASED BY

6 TERMINATION OF AGREEMENT.—The termination

7 of an operating agreement under section

8 405(a)(10) shall not be considered to increase a

9 level of service specified in subparagraph (A),

10 (B), or (C) if the contractor under the agreement

11 enters into another operating agreement after

12 that termination.

13 ‘‘(3) APPLICATIONS FOR WAIVERS.—For a waiv14 er under this subsection a contractor shall submit to

15 the Secretary an application certifying the facts re16 quired to be found under paragraph (1) (A) or (B),

17 as applicable.

18 ‘‘(4) ACTION ON APPLICATION.—

19 ‘‘(A) NOTICE.—The Secretary shall publish

20 a notice of receipt of an application for a waiver

21 under this subsection within 30 days after re22 ceiving the application.

23 ‘‘(B) HEARING PROHIBITED.—The Sec24 retary may not conduct a hearing on an appli25 cation for a waiver under this subsection.
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1 ‘‘(C) SUBMISSION OF COMMENTS.—The Sec2 retary shall give every person operating a cargo

3 vessel in a noncontiguous trade for which a

4 waiver is applied for under this subsection and

5 who has any interest in the application a rea6 sonable opportunity to submit comments on the

7 application and on the description of the service

8 that would be permitted by any waiver that is

9 granted by the Secretary under the application.

10 ‘‘(5) DECISION ON APPLICATION.—Subject to the

11 time required for publication of notice and for receipt

12 and evaluation of comments by the Secretary, an ap13 plication for a waiver under this subsection submitted

14 at the same time the applicant applies for inclusion

15 of a vessel in the Fleet shall be granted in accordance

16 with the level of service determined by the Secretary

17 under this subsection by not later than the date on

18 which the Secretary offers to the applicant an operat19 ing agreement with respect to that vessel.

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

21 material change or increase in a service that is sub22 ject to a waiver under this subsection is not author23 ized except to the extent the change or increase is per24 mitted by a waiver under subsection (b).
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1 ‘‘(d) EMERGENCY WAIVER.—Notwithstanding any

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

3 hearing, temporarily waive the application of subsection

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

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

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

7 another emergency declared by the President. Any waiver

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

9 a waiver may be renewed for 30-day periods if the Sec10 retary finds that adequate capacity continues to be other11 wise unavailable.

12 ‘‘(e) ANNUAL REPORT ON WAIVERS.—Each waiver

13 under this section shall require the person who is granted

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

15 report setting forth for the service authorized by the waiv16 er—

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

18 ‘‘(2) the number or frequency of sailings per19 formed during the year; and

20 ‘‘(3) the volume of cargo carried or, for contain21 erized or trailer service, the annual 40-foot equivalent

22 unit shipboard container, trailer, or vehicle capacity

23 utilized during the year, or for tug and barge service,

24 the annual barge house and barge deck capacity uti25 lized during the year.
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1 ‘‘(f) DEFINITIONS.—In this section—

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

3 between—

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

5 and

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

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

8 Arctic Circle; and

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

10 ‘‘(A) a holding company, subsidiary, affili11 ate, or associate of a contractor; and

12 ‘‘(B) an officer, director, agency, or other

13 executive of a contractor or of a person referred

14 to in subparagraph (A).

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

16 ‘‘(a) IN GENERAL.—Except as provided in this section,

17 a contractor (including a related party with respect to a

18 contractor) may not own, charter, or operate a foreign ves19 sel in competition with a United States documented vessel.

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

21 foreign vessel if—

22 ‘‘(1)(A) the contractor has applied for an operat23 ing agreement for a vessel to be operated in the same

24 service as the foreign vessel; and
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1 ‘‘(B) the Secretary, due to the unavailability of

2 funds, does not award an operating agreement to that

3 contractor for a United States documented vessel for

4 that service within 60 days after that application is

5 submitted;

6 ‘‘(2) the Secretary, after notice and an oppor7 tunity for a hearing, under special circumstances,

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

9 the contractor for a specified period of time; or

10 ‘‘(3) the foreign vessel was operated by that con11 tractor on August 5, 1993.

12 ‘‘SEC. 408. FUNDING FOR OPERATING AGREEMENTS.

13 ‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There

14 are authorized to be appropriated to the Secretary any

15 amounts necessary to liquidate obligations under operating

16 agreements.

17 ‘‘(b) TRANSFER OF BALANCES FROM OPERATING DIF18 FERENTIAL SUBSIDY PROGRAM.—Any amounts otherwise

19 available for operating differential subsidy contracts under

20 title VI that are no longer required for those contracts are

21 available, until expended, for operating agreements.

22 ‘‘SEC. 409. DEFINITIONS.

23 ‘‘In this title:
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1 ‘‘(1) CONTRACTOR.—The term ‘contractor’ means

2 an owner or operator of a vessel that enters into an

3 operating agreement for the vessel with the Secretary.

4 ‘‘(2) ELIGIBILITY DECISION APPLICATION.—The

5 term ‘eligibility decision application’ means an ap6 plication for a decision by the Secretary under section

7 403 that a vessel is eligible to be enrolled in the Fleet.

8 ‘‘(3) ELIGIBLE VESSEL.—The term ‘eligible ves9 sel’ means a vessel that the Secretary decides under

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

11 ‘‘(4) FLEET.—The term ‘Fleet’ means the Mari12 time Security Fleet established under section 402.

13 ‘‘(5) OPERATING AGREEMENT.—The term ‘oper14 ating agreement’ means an operating agreement en15 tered into by the Secretary under section 404.

16 ‘‘(6) RELATED PARTY.—The term ‘related party’

17 means, with respect to a contractor or other person—

18 ‘‘(A) a holding company, subsidiary, affili19 ate, or association of the person; and

20 ‘‘(B) an officer, director, other executive, or

21 agent of the person or of an entity referred to in

22 paragraph (1).

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

24 the Secretary of Transportation.
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1 ‘‘(8) UNITED STATES DOCUMENTED VESSEL.—

2 The term ‘United States documented vessel’ means a

3 vessel that is documented under chapter 121 of title

4 46, United States Code.’’.

5 SEC. 4. OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS.

6 (a) TERMINATION OF EXISTING CONTRACTS.—Not7 withstanding any other provision of this Act, any contract

8 in effect under title VI of the Merchant Marine Act, 1936

9 (46 App. U.S.C. 1171 et seq.), on the day before the date

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

11 terms and terminate as set forth in the contract, unless vol12 untarily terminated on an earlier date by the persons (other

13 than the United States Government) that are parties to the

14 contract.

15 (b) AGE ACCELERATION OF BULK CARGO ODS VES16 SELS.—Section 506 of the Merchant Marine Act, 1936 (46

17 App. U.S.C. 1156) is amended—

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

19 (2) by adding at the end the following new sub20 section:

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

22 bulk cargo vessel for which operating-differential subsidy is

23 required to be paid under a contract under title VI that

24 is in force on May 19, 1993, shall, effective upon the termi25 nation date of the contract (as set forth in the contract as
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1 in effect on May 19, 1993, be deemed to have reached the

2 age of 20 years.’’.

3 (c) RESTRICTIONS ON OPERATIONS OF ODS VES4 SELS.—Title VI of the Merchant Marine Act, 1936 (46 App.

5 U.S.C. 1171 et seq.), as amended by this Act, is further

6 amended by adding at the end the following:

7 ‘‘SEC. 616. LIMITATION ON APPLICATION OF RESTRICTIONS

8 ON OPERATIONS.

9 ‘‘(a) Sections 605(c) and 804, this section, and the es10 sential service requirements in section 601(a) and 603(a),

11 do not apply to a contractor if—

12 ‘‘(1) the contractor submits an eligibility deci13 sion application to the Secretary under title IV for all

14 of the vessels operated by the contractor under an op15 erating-differential subsidy contract; and

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

17 agreements are offered by the Secretary under title IV

18 are enrolled in the Maritime Security Fleet.

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

20 receiving operating-differential subsidy for liner vessels on

21 a particular trade route, as defined in that contractor’s con22 tract in effect on January 1, 1993, that operator shall not

23 be subject to the restrictions of either section 605(c) or sec24 tion 804 with respect to operations on that trade route, com25 mencing at such time as—
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1 ‘‘(A) that operator transfers 50 percent or more

2 of its vessels that were operating on that trade route

3 as of January 1, 1993, from the operating-differential

4 subsidy program to the Maritime Security Fleet pro5 gram under title IV; or

6 ‘‘(B) that operator is the only contractor receiv7 ing operating-differential subsidy with respect to that

8 trade route, and all other United States-flag liner op9 erators operating a vessel on that trade route are op10 erating on that trade route only vessels for which

11 there are in effect operating agreements under title

12 IV.

13 ‘‘(2) With respect to any contractor receiving operat14 ing-differential subsidy for liner vessels on Maritime Ad15 ministration Essential Trade Route 1, 2, or 8, that operator

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

17 or section 804 with respect to operations on any of those

18 trade routes, commencing at such time as payments begin

19 to accrue on behalf of another United States-flag operator

20 that is a party to an operating agreement under title IV

21 which provides liner service on Maritime Administration

22 Essential Trade Route 2.’’.

23 (d) ELIMINATION OF TRADE ROUTE RESTRICTIONS.—

24 Section 809(a) of the Merchant Marine Act, 1936 (46

25 U.S.C. 1213(a)) is amended by adding at the end the follow-
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1 ing: ‘‘This subsection shall not apply to contracts under

2 title IV or funds for such contracts.’’.

3 SEC. 5. ELIMINATION OF CONSTRUCTION DIFFERENTIAL

4 SUBSIDY RESTRICTIONS.

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

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

7 following:

8 ‘‘SEC. 512. LIMITATION ON RESTRICTIONS.

9 ‘‘Notwithstanding any other provision of law or con10 tract, all restrictions and requirements under sections 503,

11 506, and 802 applicable to a liner vessel constructed, recon12 structed, or reconditioned with the aid of construction-dif13 ferential subsidy shall terminate upon the expiration of the

14 25-year period beginning on the date of the original deliv15 ery of the vessel from the shipyard.’’.

16 SEC. 6. DEFINITIONS APPLICABLE TO MERCHANT MARINE

17 ACT, 1936.

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

19 App. U.S.C. 1244), is amended—

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

21 following:

22 ‘‘(a) Each of the terms ‘foreign commerce’ and ‘foreign

23 trade’ mean—

24 ‘‘(1) trade between the United States and a for25 eign country; or
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1 ‘‘(2) trade between foreign ports.’’;

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

3 following:

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

5 person eligible to own a documented vessel under chapter

6 121 of title 46, United States Code.’’, and

7 (3) by adding at the end the following:

8 ‘‘(h) The term ‘foreign subsidized shipyard’ means a

9 shipyard that—

10 ‘‘(1) receives or benefits from, directly or indi11 rectly, a shipyard subsidy for the construction of ves12 sels; and

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

14 signed a trade agreement with the United States that

15 provides for the elimination of subsidies for that ship16 yard.

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

18 ‘‘(1) Officially supported export credits and de19 velopment assistance.

20 ‘‘(2) Direct official operating support to the com21 mercial shipbuilding and repair industry, or to a re22 lated entity that favors the operation of shipbuilding

23 and repair, including—

24 ‘‘(A) grants;
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1 ‘‘(B) loans and loan guarantees other than

2 those available on the commercial market;

3 ‘‘(C) forgiveness of debt;

4 ‘‘(D) equity infusions on terms inconsistent

5 with commercially reasonable investment prac6 tices;

7 ‘‘(E) preferential provision of goods and

8 services; and

9 ‘‘(F) public sector ownership of commercial

10 shipyards on terms inconsistent with commer11 cially reasonable investment practices.

12 ‘‘(3) Direct official support for investment in the

13 commercial shipbuilding and repair industry, or to a

14 related entity that favors the operation of shipbuild15 ing and repair, including the kinds of support listed

16 in clauses (i) through (v) of subparagraph (B), and

17 any restructuring support, except public support for

18 social purposes directly and effectively linked to ship19 yard closures.

20 ‘‘(4) Assistance in the form of grants, pref21 erential loans, preferential tax treatment, or other22 wise, that benefits or is directly related to shipbuild23 ing and repair for purposes of research and develop24 ment that is not equally open to domestic and foreign

25 enterprises.
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1 ‘‘(5) Tax policies and practices that favor the

2 shipbuilding and repair industry, directly or indi3 rectly, such as tax credits, deductions, exemptions and

4 preferences, including accelerated depreciation, if the

5 benefits are not generally available to persons or

6 firms not engaged in shipbuilding or repair.

7 ‘‘(6) Any official regulation or practice that au8 thorizes or encourages persons or firms engaged in

9 shipbuilding or repair to enter into anticompetitive

10 arrangements.

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

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

13 yards, including any public assistance favoring ship14 owners with an indirect effect on shipbuilding or re15 pair activities, and any assistance provided to sup16 pliers of significant inputs to shipbuilding, which re17 sults in benefits to domestic shipbuilders.

18 ‘‘(8) Any export subsidy identified in the Illus19 trative List of Export Subsidies in the Annex to the

20 Agreement on Interpretation and Application of Arti21 cles VI, XVI, and XXIII of the General Agreement on

22 Tariffs and Trade or any other export subsidy that

23 may be prohibited as a result of the Uruguay Round

24 of trade negotiations.’’.
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1 SEC. 7. GOVERNMENT-IMPELLED CARGOES.

2 (a) VESSELS ELIGIBLE FOR CARGOES.—Section

3 901(b) of the Merchant Marine Act, 1936 (46 App. U.S.C.

4 1241(b)) is amended—

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

6 of this section, the term ‘privately owned United

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

8 through the end of the paragraph; and

9 (2) by adding at the end the following new para10 graphs:

11 ‘‘(3) In this section and section 901b, the term ‘pri12 vately owned United States-flag commercial vessel’ means

13 a privately owned vessel that is documented under chapter

14 121 of title 46, United States Code, that—

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

16 ‘‘(B) was documented under chapter 121 of title

17 46, United States Code, before May 19, 1993;

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

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

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

21 Act of 1984), and—

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

23 a contract entered into on or before May 19,

24 1993;

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

26 after that date, in a foreign shipyard that on the
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1 date the contract is entered is not a foreign sub2 sidized shipyard; or

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

4 under title IV;

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

6 after May 19, 1993, in a foreign shipyard that on the

7 date the contract was entered is not a foreign sub8 sidized shipyard; and

9 ‘‘(ii) has not been documented in a foreign coun10 try before it is documented under chapter 121 of title

11 46, United States Code; or

12 ‘‘(E) has been documented under chapter 121 of

13 title 46, United States Code, for at least 3 consecutive

14 years, did not transport any equipment, materials, or

15 commodities during that period under this section or

16 section 901b, and—

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

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

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

20 after that date, in a foreign shipyard that on the

21 date the contract was entered is not a foreign

22 subsidized shipyard.

23 ‘‘(4) In paragraph (3), the term ‘built’ includes re24 built.’’.
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1 (b) CLERICAL AMENDMENT.—Section 901b of the Mer2 chant Marine Act, 1936 (46 App. U.S.C. 1241f) is amended

3 by adding at the end the following:

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

5 United States-flag commercial vessel’, see section

6 901(b)(3).’’.

7 SEC. 8. VESSEL FINANCING.

8 (a) ELIMINATION OF MORTGAGEE RESTRICTIONS.—

9 Section 31322(a) of title 46, United States Code, is amend10 ed to read as follows:

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

12 made, that—

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

14 ‘‘(2) is filed in substantial compliance with sec15 tion 31321 of this title; and

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

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

18 documentation is filed that is in substantial compli19 ance with the requirements of chapter 121 of this title

20 and the regulations prescribed under that chapter.’’.

21 (b) ELIMINATION OF TRUSTEE RESTRICTIONS.—

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

23 States Code, is repealed.

24 (2) CONFORMING AMENDMENT.—Section

25 31330(b) of title 46, United States Code, is amended
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1 in paragraphs (1), (2), and (3) by striking ‘‘31328

2 or’’ each place it appears.

3 (c) REMOVAL OF MORTGAGE RESTRICTIONS.—Section

4 9 of the Shipping Act, 1916 (46 App. U.S.C. 808), as

5 amended by this Act, is further amended—

6 (1) in subsection (c)—

7 (A) by striking ‘‘31328’’ and inserting

8 ‘‘12106(e)’’; and

9 (B) in paragraph (1) by striking ‘‘mort10 gage,’’ each place it appears; and

11 (2) in subsection (d)—

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

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

14 (B) in paragraph (2) by striking ‘‘transfers,

15 or mortgages’’ and inserting ‘‘or transfers’’;

16 (C) in paragraph (3)(B) by striking ‘‘trans17 fers, or mortgages’’ and inserting ‘‘or transfers’’;

18 and

19 (D) in paragraph (4) by striking ‘‘transfers,

20 or mortgages’’ and inserting ‘‘or transfers’’.

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

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

23 following new subsections:

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

25 be endorsed with a coastwise endorsement if—
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1 ‘‘(A) the vessel is eligible for documentation

2 under section 12102;

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

4 section to be employed in the coastwise trade;

5 ‘‘(C) the person that owns the vessel, or any

6 other person that owns or controls the person that

7 owns the vessel, is primarily engaged in leasing or

8 other financing transactions;

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

10 person qualifying as a citizen of the United States for

11 engaging in the coastwise trade under section 2 of the

12 Shipping Act, 1916; and

13 ‘‘(E) the demise charter is for—

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

15 ‘‘(ii) such shorter period as may be pre16 scribed by the Secretary.

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

18 under paragraph (1)(D), the coastwise endorsement may be

19 continued for a period not to exceed 6 months on any terms

20 and conditions that the Secretary of Transportation may

21 prescribe.

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

23 the Merchant Marine Act, 1920, section 2 of the Shipping

24 Act, 1916, and section 12102(a), a vessel meeting the cri-
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1 teria of subsection (d) or (e) is deemed to be owned exclu2 sively by citizens of the United States.’’.

3 SEC. 9. PLACEMENT OF VESSELS UNDER FOREIGN REG4 ISTRY.

5 (a) IN GENERAL.—Section 9 of the Shipping Act, 1916

6 (46 App. U.S.C. 808), as amended by this Act, is further

7 amended by adding at the end the following:

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

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

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

11 foreign registry, without approval of the Secretary, if—

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

13 one replacement vessel of a capacity that is equivalent

14 or greater, as measured by deadweight tons, gross

15 tons, or container equivalent units, as appropriate, is

16 documented under chapter 121 of title 46, United

17 States Code, by the owner of the vessel placed under

18 the foreign registry; and

19 ‘‘(B) the replacement vessel is not more than 10

20 years of age on the date of that documentation;

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

22 operating agreement under title IV of the Merchant

23 Marine Act, 1936; and

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

25 funds, has not awarded that owner an operating
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1 agreement within 60 days after the date of that appli2 cation; or

3 ‘‘(3)(A) before the expiration of an operating

4 agreement entered into under title IV of the Merchant

5 Marine Act, 1936, the owner has applied for a new

6 operating agreement; and

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

8 funds, has not awarded the owner an operating agree9 ment before the later of—

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

11 operating agreement; or

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

13 agreement.

14 ‘‘(f) The Secretary shall give notice and an oppor15 tunity for a hearing for all approvals applied for under

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

17 of at least 3,000 gross tons.’’.

18 (b) APPLICATION.—The amendment made by sub19 section (a) applies to vessels that are placed under foreign

20 registry after the date of enactment of this Act and replace21 ment vessels documented in the United States after that

22 date.

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

24 46, United States Code, is amended to read as follows:
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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 documented

4 vessel—

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

6 terms of the first proviso of section 27 of the Merchant

7 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 ap10 proval of the Secretary of Transportation.’’.

11 SEC. 10. SERIES CONSTRUCTION ASSISTANCE.

12 The Merchant Marine Act, 1936 (46 App. U.S.C. 1101

13 et seq.) is amended by adding at the end the following:

14 ‘‘TITLE XIV—SERIES

15 CONSTRUCTION ASSISTANCE

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

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

18 (hereinafter in this title referred to as the ‘Secretary’) may,

19 subject to the availability of appropriations, pay assistance

20 in accordance with this title to the owner of a shipyard

21 that is located in the United States for the construction (in22 cluding outfitting and equipping) of any commercial vessel

23 that is one of a series of vessels for which payment of assist24 ance under this section to the owner is approved by the Sec25 retary 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 payment

17 of the assistance will contribute to maintaining

18 national vessel construction capabilities that are

19 essential in time of war or national emergency.

20 ‘‘(2) LIMITATION.—The Secretary may not ap21 prove assistance under this section for a series of ves22 sels if the series transition payment determined under

23 section 1403(a) for any vessel in the series is greater

24 than 50 percent of the estimate of the cost of con-
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1 structing the vessel determined by the Secretary under

2 section 1403(b)(2).

3 ‘‘(b) DETERMINATIONS BY SECRETARY.—The Sec4 retary may not approve assistance for construction of a se5 ries of vessels in a shipyard unless the Secretary has deter6 mined the following:

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

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

9 gross tons; and

10 ‘‘(B) commercially marketable on the inter11 national market.

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

13 in which the vessels will be constructed—

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

15 ‘‘(B) upon completion of construction of the

16 vessels, will be capable of constructing additional

17 vessels of the same type as those in the series for

18 a price that is competitive in the international

19 market.

20 ‘‘(3) APPLICANT REQUIREMENTS.—The applicant

21 for the assistance—

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

23 and other qualifications necessary for construc24 tion of the vessels;
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1 ‘‘(B) has entered into a contract for the con2 struction of each of the first 2 vessels to be con3 structed in the series, which may include a con4 tract for a vessel that will be constructed without

5 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 commit17 ment to guarantee obligations under title XI for

18 construction under the contract.

19 ‘‘(5) PURCHASER REQUIREMENTS.—Each person

20 that is a purchaser of a vessel under a contract re21 quired 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 series

2 transition payment under section 1403 for each vessel

3 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 effec10 tive;

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 series

14 of vessels for which applications are submitted for as15 sistance 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 of

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

21 or national emergency.

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

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

25 series transition payment for each vessel in a series of ves-
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1 sels for which an application for assistance under this title

2 is received by the Secretary.

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

4 series transition payment for a vessel under subsection (a)

5 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 specifica11 tions in a foreign shipyard that is considered by the

12 Secretary to be a fair and representative example for

13 purposes of determining the payment.

14 ‘‘SEC. 1404. SERIES CONSTRUCTION AGREEMENT.

15 ‘‘(a) IN GENERAL.—

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

17 series of vessels for which assistance is approved

18 under section 1402, enter into a series construction

19 agreement with the owner of the shipyard in which

20 the series of vessels will be constructed, under which

21 the Secretary is required to pay the owner assistance

22 in accordance with a schedule established under para23 graph (2).

24 ‘‘(2) SCHEDULE FOR PAYMENTS.—An agreement

25 under this subsection shall establish a schedule for the
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1 payment of assistance under the agreement, that is

2 based on the construction schedule for vessels for

3 which the assistance is paid.

4 ‘‘(3) TERMINATION OF AGREEMENT.—An agree5 ment under this subsection shall authorize the Sec6 retary to terminate the agreement if—

7 ‘‘(A) a contract required under section

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

9 the vessel under the contract, and the owner of

10 the shipyard does not enter into a new contract

11 for construction of the vessel within a period

12 which shall be specified in the agreement; or

13 ‘‘(B) the owner of the shipyard fails to enter

14 into contracts for construction of all vessels in

15 the series of vessels to which the agreement ap16 plies, within a period which shall be specified in

17 the agreement.

18 ‘‘(4) CONTINUING EFFECT OF AGREEMENT WITH

19 RESPECT TO VESSELS COVERED BY CONTRACTS.—The

20 termination of a series construction agreement under

21 paragraph (3) shall not affect the effectiveness of the

22 agreement with respect to vessels for which a construc23 tion contract is in effect on the date of termination.

24 ‘‘(b) BINDING OBLIGATION OF THE UNITED STATES.—
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1 ‘‘(1) IN GENERAL.—Except as provided in para2 graph (2), a requirement that the Secretary make

3 payments under a series construction agreement

4 under subsection (a) shall constitute a binding obliga5 tion of the United States.

6 ‘‘(2) TERMINATION OF OBLIGATION.—If the Sec7 retary terminates a series construction agreement

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

9 United States under paragraph (1) to make payments

10 under the agreement shall terminate with respect to

11 vessels for which no construction contract is in effect

12 on the date of termination of the agreement.

13 ‘‘(3) CONTINUING AVAILABILITY OF AMOUNTS.—

14 Amounts to be used to liquidate an obligation under

15 paragraph (1) that terminates under paragraph (2)

16 shall remain available to the Secretary for the pay17 ment of assistance under this title.

18 ‘‘SEC. 1405. APPLICATIONS FOR ASSISTANCE.

19 ‘‘(a) SUBMITTAL.—A person desiring assistance under

20 this title shall, in accordance with this section, submit an

21 application to the Secretary.

22 ‘‘(b) CONTENTS OF APPLICATION.—An application for

23 assistance under this title with respect to a series of vessels

24 shall include the following:
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1 ‘‘(1) A detailed description of the type of vessels

2 included in the series, including plans and specifica3 tions for the vessels.

4 ‘‘(2) Detailed estimates of the cost of completing

5 construction of each of the vessels in the series, includ6 ing such estimates from subcontractors for the con7 struction as may be required by the Secretary.

8 ‘‘(3) Copies of the contracts required under sec9 tion 1402(b)(3)(B).

10 ‘‘(4) Other information required by the Secretary

11 to fulfill the requirements of this title.

12 ‘‘(c) REGULATIONS.—The Secretary shall issue regula13 tions setting forth the procedures for submitting an applica14 tion for assistance under this title.

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

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

17 title—

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

19 domestic trade authorized under a registry endorse20 ment for the vessel issued under section 12105 of title

21 46, United States Code; and

22 ‘‘(2) may not be operated in the coastwise trade

23 of the United States (including mixed coastwise and

24 foreign trade), except coastwise trade authorized
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1 under a registry endorsement for the vessel issued

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

3 ‘‘SEC. 1407. VESSEL DESIGN AWARDS.

4 ‘‘The Secretary, subject to the availability of appro5 priations, may make an award to a United States shipyard

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

7 and document and bid preparation for vessels described in

8 section 403(b)(4).’’.

9 SEC. 11. EFFECTIVE DATE.

10 The amendments made by this Act are effective on the

11 date which is 120 days after the date of enactment of this

12 Act.

13 SEC. 12. REGULATIONS.

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

15 shall prescribe regulations as necessary to carry out this

16 Act.

17 (b) INTERIM REGULATIONS.—The Secretary of Trans18 portation may prescribe interim regulations necessary to

19 carry out this Act and for accepting eligibility decision ap20 plications under section 403 of the Merchant Marine Act,

21 1936, as amended by this Act. For this purpose, the Sec22 retary of Transportation is excepted from compliance with

23 the notice and comment requirements of section 553 of title

24 5, United States Code. All regulations prescribed under the

25 authority of this subsection that are not earlier superseded
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1 by final rules shall expire 270 days after the date of enact2 ment of this Act.

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

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

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

6 following:

7 ‘‘(c) STANDING FOR MARITIME UNION REPRESENTA8 TIVES.—The duly-elected representative of any organization

9 that is certified by the Secretary of Labor as the proper

10 collective bargaining agency for officers or crew employed

11 on any type of United States documented vessel is an inter12 ested party in, and has standing to challenge, any proposed

13 or final order, action, or rule of the Secretary of Transpor14 tation under this Act or section 9(c)(2) of the Shipping Act,

15 1916.’’.

16 SEC. 14. STUDY.

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

18 opportunity for comment, the Secretary of Transportation

19 shall conduct a study of—

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

21 competitiveness of United States documented vessels

22 and whether this Act has had a favorable or unfavor23 able impact on the ability of United States docu24 mented vessels to compete successfully with foreign25 flag vessels;
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1 (2) whether continuation of the Maritime Secu2 rity Fleet program established by this Act would as3 sist the international competitiveness of United States

4 documented vessels;

5 (3) whether the Maritime Security Fleet program

6 should be continued, modified, or discontinued;

7 (4) alternatives that are or should be available to

8 operators of United States documented vessels if the

9 Maritime Security Fleet program is discontinued;

10 and

11 (5) any other issues related to promoting the

12 international competitiveness of United States docu13 mented vessels that the Secretary considers appro14 priate.

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

16 submit to the Congress a report on the findings and conclu17 sions of the study required by subsection (a) by not later

18 than 4 years after the date of enactment of this Act, which

19 shall include such recommendations as the Secretary con20 siders appropriate.

21 SEC. 15. CARGO PREFERENCE ADMINISTRATIVE REFORM.

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

23 that—

24 (1) the Congress continues to support the cargo

25 preference program as an important element of sup-
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1 port for the United States-flag merchant marine be2 cause the United States merchant marine is critical

3 to the economic and national security of the United

4 States;

5 (2) reserving a small portion of Government

6 cargo for United States-flag vessels encourages com7 petition among United States-flag vessels; and

8 (3) administering the cargo preference program

9 in a centralized, commercially based manner reduces

10 costs of the program.

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

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

13 amended by adding at the end the following new sub14 sections:

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

16 vessel transporting any equipment, materials, or commod17 ities under this section or section 901b shall be engaged

18 under terms no less favorable than the most favorable terms

19 offered to any foreign-flag vessel transporting equipment,

20 materials, or commodities under this section or section

21 901b.

22 ‘‘(e) A contract for the ocean transportation of any

23 equipment, materials, or commodities under this section or

24 section 901b, to the extent the Secretary of Transportation

25 determines necessary to further the purposes of this section
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1 and section 901b, shall be based on contracts used for com2 mercial shipments.

3 ‘‘(f) The Secretary of Transportation shall participate

4 in negotiations relating to agreements with recipient coun5 tries for equipment, materials, or commodities subject to

6 this section or section 901b to the extent the Secretary con7 siders to be necessary to ensure agreement provisions relat8 ing to or affecting the transportation of such equipment,

9 materials, or commodities permit fair and reasonable trans10 portation services to be provided.

11 ‘‘(g) No later than 180 days after the date of the enact12 ment of the Maritime Security and Competitiveness Act of

13 1993, the heads of appropriate Federal agencies, or their

14 representatives, shall transmit to the Secretary of Transpor15 tation recommendations relating to the methodology used

16 by the Secretary of Transportation to determine whether

17 rates for United States-flag vessels are fair and reasonable

18 in compliance with section 901(b) and will achieve the pol19 icy objectives of this Act.’’.

20 SEC. 16. WAGES FOR WHICH PREFERRED MARITIME LIEN

21 MAY BE ESTABLISHED.

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

23 United States Code, is amended by inserting before the

24 semicolon the following: ‘‘(including any payment described

25 in paragraph (5), (6), (7), (8), or (9) of section 302(c) of
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1 the Labor Management Relations Act, 1947 for any indi2 vidual as a member of the crew of the vessel, that is due

3 from and unpaid by an owner or managing operator of

4 the vessel)’’.

5 (b) INCURRING OBLIGATIONS BEFORE EXECUTING

6 PREFERRED MORTGAGES.—Section 31323(b)(2) of title 46,

7 United States Code, is amended by inserting before the

8 semicolon the following: ‘‘(including any payment described

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

10 the Labor Management Relations Act, 1947 for any member

11 of the crew of the vessel)’’.

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

13 title 46, United States Code, is amended by inserting after

14 ‘‘wages’’ the following: ‘‘(including any payment described

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

16 the Labor Management Relations Act, 1947 for an individ17 ual as master of the vessel, that is due from and unpaid

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

19 (d) APPLICATION.—The amendments made by sub20 sections (a), (b), and (c) shall apply with respect to pay21 ments that first become due on or after the date of the enact22 ment of this Act.

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