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[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2151 Referred in Senate (RFS)]

103d CONGRESS
  1st Session
                                H. R. 2151

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

             November 8 (legislative day, November 2), 1993

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

_______________________________________________________________________

                                 AN ACT

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

    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) 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, Generally.--Except as provided in 
subsection (c), 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 person that will be a contractor with respect to 
        an operating agreement for the vessel is a citizen of the 
        United States;
            ``(3)(A) the vessel is a United States documented vessel on 
        May 19, 1993;
            ``(B) the vessel is--
                    ``(i) in existence on May 19, 1993;
                    ``(ii) a United States documented vessel after May 
                19, 1993; and
                    ``(iii) not more than 10 years of age on the date 
                of that documentation;
            ``(C) the vessel is built and, if rebuilt, rebuilt in a 
        United States shipyard;
            ``(D) the vessel is built in a shipyard that is not a 
        foreign subsidized shipyard under a contract entered into 
        before May 19, 1993;
            ``(E)(i) the vessel is built in a foreign shipyard under a 
        contract entered into on or before May 19, 1993; and
            ``(ii) the owner has contracted to build another vessel for 
        enrollment in the Fleet in a United States shipyard that will 
        be delivered within 30 months after the effective date of an 
        operating agreement for the vessel referred to in clause (i), 
        or the Secretary finds and certifies in writing that a United 
        States shipyard cannot sell a vessel to the owner at the world 
        price due to the unavailability of series transition payments 
        under title XIV to build that vessel; or
            ``(F)(i) the vessel is built under a contract entered into 
        after May 19, 1993;
            ``(ii) the proposed owner of the vessel solicited 
        nationwide bids for at least 6 months to build the vessel in a 
        United States shipyard;
            ``(iii) the Secretary finds and certifies in writing that a 
        United States shipyard cannot sell a vessel to the proposed 
        owner at the world price due to the unavailability of series 
        transition payments under title XIV to build that vessel;
            ``(iv) the vessel is delivered from the foreign shipyard 
        within 30 months after the Secretary's certification under 
        clause (iii); and
            ``(v) the vessel is substantially the same type and design 
        as the vessel described in the solicitation made under clause 
        (ii); and
            ``(4) 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 80,000 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 determined 
                by the Secretary to be suitable for use by the United 
                States for national defense or military purposes in 
                time of war or national emergency.
    ``(c) Determinations of Eligibility.--
            ``(1) Determinations required.--The Secretary shall make 
        determinations under subsection (b) for each vessel for which 
        an eligibility decision application is submitted under this 
        section.
            ``(2) Determination regarding certification.--The Secretary 
        shall--
                    ``(A) make the finding and certification under 
                paragraph (3)(E)(ii) for a vessel, or determine not to, 
                by not later than 60 days after the date of receipt of 
                an eligibility decision application for the vessel; and
                    ``(B) make the finding and certification under 
                paragraph (3)(F)(iii) for a vessel, or determine not 
                to, by not later than 60 days after the closing date of 
                the solicitation pursuant to paragraph (3)(F)(ii) for 
                the vessel.
            ``(3) 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;
                    ``(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; or
                    ``(C) if the vessel carries as cargo any item 
                that--
                            ``(i) is sold or shipped to the United 
                        States;
                            ``(ii) is not made in the United States; 
                        and
                            ``(iii) the owner or operator of the vessel 
                        knows has had fruadulently affixed to it a 
                        label bearing a `Made in America' inscription, 
                        or any inscription with the same meaning.

``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.--Subject to the 
availability of appropriations, the Secretary shall enter into 
operating agreements according to the following priority:
            ``(1) Vessels owned by citizens.--
                    ``(A) Priority.--First, for any vessel that is--
                            ``(i) owned and operated by persons who are 
                        citizens of the United States under section 2 
                        of the Shipping Act, 1916; or
                            ``(ii) less than 5 years of age and owned 
                        and operated by a corporation that is--
                                    ``(I) eligible to document a vessel 
                                under chapter 121 of title 46, United 
                                States Code; and
                                    ``(II) affiliated with a 
                                corporation operating or managing other 
                                United States documented vessels for 
                                the Secretary of Defense or chartering 
                                other vessels to the Secretary of 
                                Defense.
                    ``(B) Limitation on number of operating 
                agreements.--The total number of operating agreements 
                that may be entered into by a person under the priority 
                in subparagraph (A)--
                            ``(i) for vessels described in subparagraph 
                        (A)(i), may not exceed the sum of--
                                    ``(I) the number of United States 
                                documented vessels the person operated 
                                in the foreign commerce of the United 
                                States (except mixed coastwise and 
                                foreign commerce) on January 1, 1993; 
                                and
                                    ``(II) the number of United States 
                                documented vessels the person chartered 
                                to the Secretary of Defense on that 
                                date; and
                            ``(ii) for vessels described in 
                        subparagraph (A)(ii), may not exceed 4 vessels.
                    ``(C) Treatment of related parties.--For purposes 
                of subparagraph (B), a related party with respect to a 
                person shall be treated as the person.
            ``(2) Other vessels owned by citizens and government 
        contractors.--To the extent that amounts are available after 
        applying paragraph (1), any vessel that is--
                    ``(A) owned and operated by--
                            ``(i) citizens of the United States under 
                        section 2 of the Shipping Act, 1916, that have 
                        not been awarded an operating agreement under 
                        the priority established under paragraph (1); 
                        or
                            ``(ii)(I) eligible to document a vessel 
                        under chapter 121 of title 46, United States 
                        Code; and
                            ``(II) affiliated with a corporation 
                        operating or managing other United States 
                        documented vessels for the Secretary of Defense 
                        or chartering other vessels to the Secretary of 
                        Defense; 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) Award of Agreements.--
            ``(1) In general.--The Secretary shall award operating 
        agreements within each priority under subsection (b) (1), (2), 
        and (3) under regulations prescribed by the Secretary.
            ``(2) Number of agreements awarded.--Regulations under 
        paragraph (1) shall provide that if appropriated amounts are 
        not sufficient for operating agreements for all vessels within 
        a priority under subsection (b) (1), (2), or (3), the Secretary 
        shall award to each person submitting a request a number of 
        operating agreements that bears approximately the same ratio to 
        the total number of vessels in the priority, as the amount of 
        appropriations available for operating agreements for vessels 
        in the priority bears to the amount of appropriations necessary 
        for operating agreements for all vessels in the priority.
            ``(3) Treatment of related parties.--For purposes of 
        paragraph (2), a related party with respect to a person shall 
        be treated as the person.
    ``(d) Time Limit for Decision on Entering Operating Agreement.--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).
    ``(e) Effective Date of Operating Agreement.--The effective date of 
an operating agreement may not be later than the later of--
            ``(1) the date the vessel covered by the agreement enters 
        into the trade required under section 405(a)(1)(A);
            ``(2) the date the vessel covered by the agreement is 
        withdrawn from an operating differential subsidy contract under 
        title VI;
            ``(3) the date of termination of an operating differential 
        subsidy contract under title VI that applies to the vessel; or
            ``(4) the date of the expiration or termination of a 
        charter of the vessel to the United States Government that was 
        entered into before the date of the enactment of the Maritime 
        Security and Competitiveness Act of 1993.
    ``(f) 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 the offer 
is made.
    ``(g) Length of Agreements.--An operating agreement is effective 
for 10 years from the effective date of the agreement.
    ``(h) 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, and for interest 
        on those amounts determined under paragraph (3).
            ``(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, and for interest on those amounts determined under 
        paragraph (3).
            ``(3) Determination of interest.--Interest under paragraphs 
        (1) and (2) shall be at an annual rate equal to 125 percent of 
        the coupon issue yield equivalent (as determined by the 
        Secretary of the Treasury) of the average accepted auction 
        price for auctions of 3 month United States Treasury bills 
        settled during the quarter preceding the date of the failure to 
        comply or the failure to replace, respectively.
    ``(i) Prohibition on Agreements for Certain Vessels.--The Secretary 
may not enter into an operating agreement for a vessel that is owned or 
operated by a person that was a contractor for the vessel under an 
operating agreement terminated under section 405(a)(10), before the end 
of the term of the agreement that was terminated.
    ``(j) 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.--
                    ``(A) In general.--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:
                            ``(i) For fiscal year 1994, $2,300,000.
                            ``(ii) For each fiscal year thereafter, 
                        $2,100,000.
                    ``(B) Limitation.--The Secretary shall not pay any 
                amount pursuant to this paragraph for any day in which 
                the vessel is--
                            ``(i) under a charter to the United States 
                        Government that was entered into before the 
                        date of the enactment of the Maritime Security 
                        and Competitiveness Act of 1993; or
                            ``(ii) covered by an operating differential 
                        subsidy contract under title VI.
            ``(3) Termination based on age of vessel.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the operating agreement shall 
                terminate on the later of--
                            ``(i) the date the vessel covered by the 
                        agreement is 25 years of age, or
                            ``(ii) the date the vessel covered by the 
                        agreement is 30 years of age, in the case of an 
                        agreement that covers a vessel that is 
                        repowered in a United States shipyard after the 
                        effective date of the operating agreement and 
                        before the vessel is 25 years of age.
                    ``(B) Exception.--The operating agreement shall not 
                terminate under subparagraph (A) if the contractor 
                agrees to acquire a replacement for the vessel from 
                among vessels on the list maintained under section 
                403(d), and--
                            ``(i) in the case of a vessel to be 
                        replaced with a new vessel, the contractor 
                        enters into a binding contract with a shipyard 
                        that requires the shipyard to deliver the 
                        replacement vessel by not later than 30 months 
                        after the later of the date the operating 
                        agreement is entered into or the date the 
                        operating agreement would otherwise terminate 
                        under subparagraph (A); 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 
                        operating agreement would otherwise expire 
                        under subparagraph (A).
            ``(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.--In addition to amounts paid under 
        paragraph (2), 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.--In addition to amounts paid under 
        paragraph (2), 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), and under conditions 
                eligible for payment under this title, 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), and under 
                conditions eligible for payment under this title, 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) Other termination.--The operating agreement shall 
        terminate if--
                    ``(A) in the case of a vessel that transports less 
                than 12,000 tons of bulk cargo under the agreement--
                            ``(i) the vessel covered by the agreement 
                        is not operated under an operating agreement 
                        for one year; and
                            ``(ii) a substitute for that vessel is not 
                        operated under the agreement during that year; 
                        or
                    ``(B) the contractor notifies the Secretary that 
                the contractor intends to terminate the agreement, by 
                not later than 60 days before the effective date of the 
                termination.
    ``(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 12,000 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 
subsection (a)(4), 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 
and obligations 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, unless the 
transfer is disapproved by the Secretary within 90 days after the date 
of that notification. A transfer shall not be effective before the end 
of that 90-day period. 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--
                    ``(A) if 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), 
                (c), or (d); or
                    ``(B) if the contractor is authorized to operate a 
                vessel in noncontiguous trade under such a waiver, and 
                there is a--
                            ``(i) material change in the domestic ports 
                        served by the contractor from the ports 
                        permitted to be served under the waiver;
                            ``(ii) material increase in the annual 
                        number or the frequency of sailings by the 
                        contractor from the number or frequency 
                        permitted under the waiver; or
                            ``(iii) material increase in the annual 
                        volume of cargo carried or annual capacity 
                        utilized by the contractor 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 may 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) subject to paragraph (6), 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 a 
                previous 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.
            ``(6) Limitation on consideration of certain existing 
        service.--
                    ``(A) Limitation.--In determining whether to grant 
                a waiver under this subsection for noncontiguous trade 
                with Hawaii, the Secretary shall not consider the 
                criterion set forth in paragraph (1)(B) if a qualified 
                operator--
                            ``(i) is a contractor, and
                            ``(ii) operates 4 or more vessels in 
                        foreign commerce in competition with another 
                        contractor.
                    ``(B) Qualified operator.--In this paragraph, the 
                term `qualified operator' means a person that on July 
                1, 1992, offered service as an operator of 
                containerized vessels, trailer vessels, or combination 
                container and trailer vessels in noncontiguous trade 
                with Hawaii and the Johnston Islands (including a 
                related party with respect to the person).
    ``(c) Waivers for 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 
                military contingency 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 
                        military contingency 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 for the applicant 
                shall permit a level of service consisting of--
                            ``(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 the date of the 
                        enactment of the Maritime Security and 
                        Competitiveness Act of 1993; 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 for the applicant shall 
                permit a level of service consisting of--
                            ``(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 the date of the enactment of the Maritime 
                        Security and Competitiveness Act of 1993;
                            ``(iii) 37 regularly scheduled tandem tow 
                        rail barge sailings and 10 additional single 
                        tow rail barge 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 south of 
                        the Arctic Circle not served by the common 
                        carrier service permitted under clause (iii) 
                        and points in the contiguous 48 States, with an 
                        annual capacity allocated to that service not 
                        exceeding 100 percent of the total capacity of 
                        the equipment that was dedicated to service 
                        south of the Arctic Circle on July 1, 1992, and 
                        actually utilized in that service in the 2-year 
                        period preceding that date.
                    ``(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) Each written waiver granted by the 
                        Secretary under this subsection shall contain a 
                        statement that the annual capacity permitted 
                        under this waiver in any direction shall 
                        increase for a calendar year by the percentage 
                        of increase during the preceding calendar year 
                        in the real gross product of the State or 
                        territory to which goods are transported in the 
                        noncontiguous trade covered by the waiver, or 
                        its equivalent economic measure as determined 
                        by the Secretary if the real gross product is 
                        not available, and that the increase shall not 
                        be considered to be a material change or 
                        increase for purposes of subsection (a)(1)(B).
                            ``(ii) The increase in permitted capacity 
                        under clause (i) in the noncontiguous trade 
                        with Alaska shall be allowed only to the extent 
                        the operator actually uses that increased 
                        capacity to carry cargo in the permitted 
                        service in the calendar year immediately 
                        following the preceding increase in gross 
                        product. However, if an operator operating 
                        exclusively containerized vessels in that trade 
                        on July 1, 1992, carries an average loan 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, than in the next following calendar year 
                        and thereafter, the requirement that additional 
                        capacity must be used in the immediately 
                        following year does not apply.
                    ``(F) Service levels not increased by termination 
                of agreement.--The termination of an operating 
                agreement under section 405(a)(10) shall not be 
                considered to increase a level of service specified in 
                subparagraph (A), (B), or (C) if the contractor under 
                the agreement enters into another operating agreement 
                after that termination.
            ``(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.--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 authorized except to the extent the change or 
        increase is permitted by a waiver under subsection (b).
    ``(d) Emergency Waiver.--Notwithstanding any other provision of 
this section, the Secretary may, without hearing, temporarily waive the 
application of subsection (a)(1)(B) if the Secretary finds that a 
material change or increase is essential in order to respond adequately 
to (1) an environmental or natural disaster or emergency, or (2) 
another emergency declared by the President. Any waiver shall be for a 
period of not to exceed 45 days, except that a waiver may be renewed 
for 30-day periods if the Secretary finds that adequate capacity 
continues to be otherwise unavailable.
    ``(e) 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.
    ``(f) Definitions.--In this section--
            ``(1) the term `noncontiguous trade' means trade between--
                    ``(A) a point in the contiguous 48 States; and
                    ``(B) a point in Alaska, Hawaii, or Puerto Rico, 
                other than a point in Alaska north of the Arctic 
                Circle; 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. OPERATING COMPETING FOREIGN VESSELS.

    ``(a) In General.--Except as provided in this section, a contractor 
(including a related party with respect to a contractor) may not own, 
charter, or operate a foreign vessel in competition with a United 
States documented vessel.
    ``(b) Exception.--Subsection (a) does not apply to a foreign vessel 
if--
            ``(1)(A) the contractor has applied for an operating 
        agreement for a vessel to be operated in the same service as 
        the foreign vessel; and
            ``(B) the Secretary, due to the unavailability of funds, 
        does not award an operating agreement to that contractor for a 
        United States documented vessel for that service within 60 days 
        after that application is submitted;
            ``(2) the Secretary, after notice and an opportunity for a 
        hearing, under special circumstances, and for good cause shown, 
        waives subsection (a) for the contractor for a specified period 
        of time; or
            ``(3) the foreign vessel was operated by that contractor on 
        August 5, 1993.

``SEC. 408. FUNDING FOR OPERATING AGREEMENTS.

    ``(a) Authorization of Appropriations.--For entering into operating 
agreements under this title there are authorized to be appropriated to 
the Secretary $1,200,000,000 for fiscal year 1995. Amounts appropriated 
under this subsection shall remain available until expended.
    ``(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. 409. 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 Maritime Security 
        Fleet established under section 402.
            ``(5) Operating agreement.--The term `operating agreement' 
        means an operating agreement entered into by the Secretary 
        under section 404.
            ``(6) Related party.--The term `related party' means, with 
        respect to a contractor or other person--
                    ``(A) a holding company, subsidiary, affiliate, or 
                association of the person; and
                    ``(B) an officer, director, other executive, or 
                agent of the person or of an entity referred to in 
                paragraph (1).
            ``(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.''.

SEC. 4. OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS.

    (a) 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.
    (b) Age Acceleration of Bulk Cargo ODS Vessels.--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) For purposes of this section, 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 May 19, 1993, 
shall, effective upon the termination date of the contract (as set 
forth in the contract as in effect on May 19, 1993, be deemed to have 
reached the age of 20 years.''.
    (c) 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.

    ``(a) Sections 605(c) and 804, 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.
    ``(b)(1) With respect to the operations of a contractor receiving 
operating-differential subsidy for liner vessels on a particular trade 
route, as defined in that contractor's contract in effect on January 1, 
1993, that operator shall not be subject to the restrictions of either 
section 605(c) or section 804 with respect to operations on that trade 
route, commencing at such time as--
            ``(A) that operator transfers 50 percent or more of its 
        vessels that were operating on that trade route as of January 
        1, 1993, from the operating-differential subsidy program to the 
        Maritime Security Fleet program under title IV; or
            ``(B) that operator is the only contractor receiving 
        operating-differential subsidy with respect to that trade 
        route, and all other United States-flag liner operators 
        operating a vessel on that trade route are operating on that 
        trade route only vessels for which there are in effect 
        operating agreements under title IV.
    ``(2) With respect to any contractor receiving operating-
differential subsidy for liner vessels on Maritime Administration 
Essential Trade Route 1, 2, or 8, that operator shall not be subject to 
the restrictions of either section 605(c) or section 804 with respect 
to operations on any of those trade routes, commencing at such time as 
payments begin to accrue on behalf of another United States-flag 
operator that is a party to an operating agreement under title IV which 
provides liner service on Maritime Administration Essential Trade Route 
2.''.
    (d) Elimination of Trade Route Restrictions.--Section 809(a) of the 
Merchant Marine Act, 1936 (46 U.S.C. 1213(a)) is amended by adding at 
the end the following: ``This subsection shall not apply to contracts 
under title IV or funds for such contracts.''.

SEC. 5. ELIMINATION OF CONSTRUCTION DIFFERENTIAL SUBSIDY RESTRICTIONS.

    Title V of the Merchant Marine Act, 1936 (46 App. U.S.C. 1151 et 
seq.), is amended by adding at the end the following:

``SEC. 512. LIMITATION ON RESTRICTIONS.

    ``Notwithstanding any other provision of law or contract, all 
restrictions and requirements under sections 503, 506, and 802 
applicable to a liner vessel constructed, reconstructed, or 
reconditioned with the aid of construction-differential subsidy shall 
terminate upon the expiration of the 25-year period beginning on the 
date of the original delivery of the vessel from the shipyard.''.

SEC. 6. 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:
            ``(1) Officially supported export credits and development 
        assistance.
            ``(2) 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--
                    ``(A) grants;
                    ``(B) loans and loan guarantees other than those 
                available on the commercial market;
                    ``(C) forgiveness of debt;
                    ``(D) equity infusions on terms inconsistent with 
                commercially reasonable investment practices;
                    ``(E) preferential provision of goods and services; 
                and
                    ``(F) public sector ownership of commercial 
                shipyards on terms inconsistent with commercially 
                reasonable investment practices.
            ``(3) 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.
            ``(4) 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.
            ``(5) 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.
            ``(6) Any official regulation or practice that authorizes 
        or encourages persons or firms engaged in shipbuilding or 
        repair to enter into anticompetitive arrangements.
            ``(7) 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.
            ``(8) 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. 7. 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
            (2) by adding at the end the following new paragraphs:
    ``(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 12,000 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 on or before May 19, 1993;
                    ``(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; or
                    ``(iii) is subject to an operating agreement under 
                title IV;
            ``(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, did not 
        transport any equipment, materials, or commodities during that 
        period under this section or section 901b, 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.
    ``(4) In paragraph (3), the term `built' includes rebuilt.''.
    (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. 8. 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 ``31328'' and inserting 
                ``12106(e)''; 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''.
    (d) Lease Financing.--Section 12106 of title 46, United States 
Code, is amended by adding at the end the following new subsections:
    ``(e)(1) A certificate of documentation for a vessel may be 
endorsed with a coastwise endorsement if--
            ``(A) the vessel is eligible for documentation under 
        section 12102;
            ``(B) the vessel is otherwise qualified under this section 
        to be employed in the coastwise trade;
            ``(C) the person that owns the vessel, or any other person 
        that owns or controls the person that owns the vessel, is 
        primarily engaged in leasing or other financing transactions;
            ``(D) the vessel is under a demise charter to a person 
        qualifying as a citizen of the United States for engaging in 
        the coastwise trade under section 2 of the Shipping Act, 1916; 
        and
            ``(E) the demise charter is for--
                    ``(i) a period of at least 3 years; or
                    ``(ii) such shorter period as may be prescribed by 
                the Secretary.
    ``(2) On termination of a demise charter required under paragraph 
(1)(D), the coastwise endorsement may be continued for a period not to 
exceed 6 months on any terms and conditions that the Secretary of 
Transportation may prescribe.
    ``(f) For purposes of the first proviso of section 27 of the 
Merchant Marine Act, 1920, section 2 of the Shipping Act, 1916, and 
section 12102(a), a vessel meeting the criteria of subsection (d) or 
(e) is deemed to be owned exclusively by citizens of the United 
States.''.

SEC. 9. 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, a 
vessel may be placed under a foreign registry, without approval of the 
Secretary, if--
            ``(1)(A) the Secretary determines that 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 the foreign registry; and
            ``(B) the replacement vessel is not more than 10 years of 
        age on the date of that documentation;
            ``(2)(A) the owner of the vessel has applied for an 
        operating agreement under title IV of the Merchant Marine Act, 
        1936; and
            ``(B) the Secretary, due to the unavailability of funds, 
        has not awarded that owner an operating agreement within 60 
        days after the date of that application; or
            ``(3)(A) before the expiration of an operating agreement 
        entered into under title IV of the Merchant Marine Act, 1936, 
        the owner has applied for a new operating agreement; and
            ``(B) the Secretary, due to the unavailability of funds, 
        has not awarded the owner an operating agreement before the 
        later of--
                    ``(i) 60 days after the application for a new 
                operating agreement; or
                    ``(ii) the date of expiration of the operating 
                agreement.
    ``(f) The Secretary shall give notice and an opportunity for a 
hearing for all approvals applied for under subsection (c)(2) for 
oceangoing merchant vessels that are of at least 3,000 gross tons.''.
    (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.
    (c) Court Sales of Vessels.--Section 31329 of title 46, United 
States Code, is amended to read as follows:
``Sec. 31329. Court sales of documented vessels
    ``When a documented vessel is sold by order of a district court to 
a mortgagee not eligible to own a documented vessel--
            ``(1) that sale is not a sale foreign within the terms of 
        the first proviso of section 27 of the Merchant Marine Act, 
        1920 (46 App. U.S.C. 883); and
            ``(2) unless the vessel is transferred to a foreign 
        registry, the vessel may be operated only with the approval of 
        the Secretary of Transportation.''.

SEC. 10. SERIES CONSTRUCTION ASSISTANCE.

    The Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et seq.) is 
amended by adding at the end the following:

              ``TITLE XIV--SERIES CONSTRUCTION ASSISTANCE

``SEC. 1401. PAYMENT OF ASSISTANCE AUTHORIZED.

    ``(a) In General.--The Secretary of Transportation (hereinafter in 
this title referred to as the `Secretary') may, subject to the 
availability of appropriations, pay assistance in accordance with this 
title to the owner of a shipyard that is located in the United States 
for the construction (including outfitting and equipping) of any 
commercial vessel that is one of a series of vessels for which payment 
of assistance under this section to the owner is approved by the 
Secretary under section 1402.
    ``(b) Amount of Assistance.--The total amount of assistance paid 
under this section with respect to a vessel shall be equal to the 
series transition payment determined for the vessel under section 
1403(a).

``SEC. 1402. APPROVAL OF ASSISTANCE FOR CONSTRUCTION OF SERIES OF 
              VESSELS.

    ``(a) Approval of Assistance.--
            ``(1) In general.--The Secretary may approve payment of 
        assistance under section 1401 for construction of a series of 
        vessels in a shipyard if--
                    ``(A) the owner of the shipyard submits an 
                application for that assistance in accordance with 
                section 1405;
                    ``(B) the Secretary makes the determinations 
                described in subsection (b); and
                    ``(C) the Secretary determines that payment of the 
                assistance will contribute to maintaining national 
                vessel construction capabilities that are essential in 
                time of war or national emergency.
            ``(2) Limitation.--The Secretary may not approve assistance 
        under this section for a series of vessels if the series 
        transition payment determined under section 1403(a) for any 
        vessel in the series is greater than 50 percent of the estimate 
        of the cost of constructing the vessel determined by the 
        Secretary under section 1403(b)(2).
    ``(b) Determinations by Secretary.--The Secretary may not approve 
assistance for construction of a series of vessels in a shipyard unless 
the Secretary has determined the following:
            ``(1) Vessel requirements.--The vessels are--
                    ``(A) commercial vessels of at least 10,000 gross 
                tons; and
                    ``(B) commercially marketable on the international 
                market.
            ``(2) Shipyard requirements.--The shipyard in which the 
        vessels will be constructed--
                    ``(A) is located in the United States; and
                    ``(B) upon completion of construction of the 
                vessels, will be capable of constructing additional 
                vessels of the same type as those in the series for a 
                price that is competitive in the international market.
            ``(3) Applicant requirements.--The applicant for the 
        assistance--
                    ``(A) has the ability, financial resources, and 
                other qualifications necessary for construction of the 
                vessels;
                    ``(B) has entered into a contract for the 
                construction of each of the first 2 vessels to be 
                constructed in the series, which may include a contract 
                for a vessel that will be constructed without 
                assistance under this title; and
                    ``(C) is the owner of the shipyard in which the 
                vessels will be constructed.
            ``(4) Contract requirements.--Each of the contracts 
        required under paragraph (3)(B) are binding obligations on the 
        applicant and all other parties to the contracts, except that 
        such a contract may be contingent on--
                    ``(A) the approval of assistance under this title 
                for construction of a vessel under the contract; and
                    ``(B) the making of a guarantee or commitment to 
                guarantee obligations under title XI for construction 
                under the contract.
            ``(5) Purchaser requirements.--Each person that is a 
        purchaser of a vessel under a contract required under paragraph 
        (3)(B)--
                    ``(A) has the ability, financial resources, and 
                other qualifications necessary to own and operate the 
                vessel in commercial service; and
                    ``(B) is a party to the contract.
            ``(6) Series transition payment.--The series transition 
        payment under section 1403 for each vessel in the series.
    ``(c) Priority for Certain Series of Vessels.--In approving 
assistance under this title, the Secretary may give priority to a 
series of vessels--
            ``(1) if a smaller number of vessels in the series are 
        required to be constructed with assistance before construction 
        of that type of vessel becomes cost effective;
            ``(2) for which the total of the series transition payments 
        determined under section 1403 for all vessels in the series is 
        less than that total for other series of vessels for which 
        applications are submitted for assistance under this title;
            ``(3) that will be constructed in a shipyard with respect 
        to which assistance under this title has not been provided; or
            ``(4) that would contribute to the preservation of a 
        shipyard that would be essential in a time of war or national 
        emergency.

``SEC. 1403. DETERMINATION OF SERIES TRANSITION PAYMENTS.

    ``(a) In General.--The Secretary shall determine the series 
transition payment for each vessel in a series of vessels for which an 
application for assistance under this title is received by the 
Secretary.
    ``(b) Amount of Series Transition Payment.--The series transition 
payment for a vessel under subsection (a) is equal to the difference 
of--
            ``(1) the estimated cost of completing construction of the 
        vessel, as included in the application for assistance submitted 
        under section 1405; minus
            ``(2) a reasonable estimate of the cost of constructing the 
        vessel under similar plans and specifications in a foreign 
        shipyard that is considered by the Secretary to be a fair and 
        representative example for purposes of determining the payment.

``SEC. 1404. SERIES CONSTRUCTION AGREEMENT.

    ``(a) In General.--
            ``(1) In general.--The Secretary shall, for each series of 
        vessels for which assistance is approved under section 1402, 
        enter into a series construction agreement with the owner of 
        the shipyard in which the series of vessels will be 
        constructed, under which the Secretary is required to pay the 
        owner assistance in accordance with a schedule established 
        under paragraph (2).
            ``(2) Schedule for payments.--An agreement under this 
        subsection shall establish a schedule for the payment of 
        assistance under the agreement, that is based on the 
        construction schedule for vessels for which the assistance is 
        paid.
            ``(3) Termination of agreement.--An agreement under this 
        subsection shall authorize the Secretary to terminate the 
        agreement if--
                    ``(A) a contract required under section 
                1402(b)(3)(B) is terminated by the purchaser of the 
                vessel under the contract, and the owner of the 
                shipyard does not enter into a new contract for 
                construction of the vessel within a period which shall 
                be specified in the agreement; or
                    ``(B) the owner of the shipyard fails to enter into 
                contracts for construction of all vessels in the series 
                of vessels to which the agreement applies, within a 
                period which shall be specified in the agreement.
            ``(4) Continuing effect of agreement with respect to 
        vessels covered by contracts.--The termination of a series 
        construction agreement under paragraph (3) shall not affect the 
        effectiveness of the agreement with respect to vessels for 
        which a construction contract is in effect on the date of 
        termination.
    ``(b) Binding Obligation of the United States.--
            ``(1) In general.--Except as provided in paragraph (2), a 
        requirement that the Secretary make payments under a series 
        construction agreement under subsection (a) shall constitute a 
        binding obligation of the United States.
            ``(2) Termination of obligation.--If the Secretary 
        terminates a series construction agreement pursuant to 
        subsection (a)(3), the obligation of the United States under 
        paragraph (1) to make payments under the agreement shall 
        terminate with respect to vessels for which no construction 
        contract is in effect on the date of termination of the 
        agreement.
            ``(3) Continuing availability of amounts.--Amounts to be 
        used to liquidate an obligation under paragraph (1) that 
        terminates under paragraph (2) shall remain available to the 
        Secretary for the payment of assistance under this title.

``SEC. 1405. APPLICATIONS FOR ASSISTANCE.

    ``(a) Submittal.--A person desiring assistance under this title 
shall, in accordance with this section, submit an application to the 
Secretary.
    ``(b) Contents of Application.--An application for assistance under 
this title with respect to a series of vessels shall include the 
following:
            ``(1) A detailed description of the type of vessels 
        included in the series, including plans and specifications for 
        the vessels.
            ``(2) Detailed estimates of the cost of completing 
        construction of each of the vessels in the series, including 
        such estimates from subcontractors for the construction as may 
        be required by the Secretary.
            ``(3) Copies of the contracts required under section 
        1402(b)(3)(B).
            ``(4) Other information required by the Secretary to 
        fulfill the requirements of this title.
    ``(c) Regulations.--The Secretary shall issue regulations setting 
forth the procedures for submitting an application for assistance under 
this title.

``SEC. 1406. RESTRICTION ON VESSEL OPERATIONS.

    ``A vessel for which assistance is paid under this title--
            ``(1) may be operated only in foreign trade or domestic 
        trade authorized under a registry endorsement for the vessel 
        issued under section 12105 of title 46, United States Code; and
            ``(2) may not be operated in the coastwise trade of the 
        United States (including mixed coastwise and foreign trade), 
        except coastwise trade authorized under a registry endorsement 
        for the vessel issued under section 12105 of title 46, United 
        States Code.

``SEC. 1407. VESSEL DESIGN AWARDS.

    ``The Secretary, subject to the availability of appropriations, may 
make an award to a United States shipyard on an equal matching basis 
for the cost of vessel designs and document and bid preparation for 
vessels described in section 403(b)(4).''.

SEC. 11. 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. 12. 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. 13. 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 or section 9(c)(2) of the Shipping Act, 
1916.''.

SEC. 14. 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.

SEC. 15. CARGO PREFERENCE ADMINISTRATIVE REFORM.

    (a) Findings.--The Congress finds and declares that--
            (1) the Congress continues to support the cargo preference 
        program as an important element of support for the United 
        States-flag merchant marine because the United States merchant 
        marine is critical to the economic and national security of the 
        United States;
            (2) reserving a small portion of Government cargo for 
        United States-flag vessels encourages competition among United 
        States-flag vessels; and
            (3) administering the cargo preference program in a 
        centralized, commercially based manner reduces costs of the 
        program.
    (b) Administrative Reform.--Section 901 of the Merchant Marine Act, 
1936 (46 App. U.S.C. 1241) is amended by adding at the end the 
following new subsections:
    ``(d) A privately owned United States-flag commercial vessel 
transporting any equipment, materials, or commodities under this 
section or section 901b shall be engaged under terms no less favorable 
than the most favorable terms offered to any foreign-flag vessel 
transporting equipment, materials, or commodities under this section or 
section 901b.
    ``(e) A contract for the ocean transportation of any equipment, 
materials, or commodities under this section or section 901b, to the 
extent the Secretary of Transportation, in consultation with the heads 
of other appropriate agencies, determines necessary to further the 
purposes of this section and section 901b, shall be based on contracts 
used for commercial shipments.
    ``(f) The Secretary of Transportation shall participate in 
negotiations relating to agreements with recipient countries for 
equipment, materials, or commodities subject to this section or section 
901b to the extent the Secretary, in consultation with the heads of 
other appropriate agencies, considers to be necessary to ensure 
agreement provisions relating to or affecting the transportation of 
such equipment, materials, or commodities permit fair and reasonable 
transportation services to be provided.
    ``(g) No later than 180 days after the date of the enactment of the 
Maritime Security and Competitiveness Act of 1993, the heads of 
appropriate Federal agencies, or their representatives, shall transmit 
to the Secretary of Transportation recommendations relating to the 
methodology used by the Secretary of Transportation to determine 
whether rates for United States-flag vessels are fair and reasonable in 
compliance with section 901(b) and will achieve the policy objectives 
of this Act.''.
    (c) Within 90 days after the date of enactment of this Act, the 
Secretary of Transportation shall take actions to ensure and maintain a 
significant increase of government-impelled cargo through Great Lakes 
ports, through administrative waivers and action and through an 
exemption of cargo preference requirements.

SEC. 16. WAGES FOR WHICH PREFERRED MARITIME LIEN MAY BE ESTABLISHED.

    (a) In General.--Section 31301(5)(D) of title 46, United States 
Code, is amended by inserting before the semicolon the following: 
``(including any payment described in paragraph (5), (6), (7), (8), or 
(9) of section 302(c) of the Labor Management Relations Act, 1947 for 
any individual as a member of the crew of the vessel, that is due from 
and unpaid by an owner or managing operator of the vessel)''.
    (b) Incurring Obligations Before Executing Preferred Mortgages.--
Section 31323(b)(2) of title 46, United States Code, is amended by 
inserting before the semicolon the following: ``(including any payment 
described in paragraph (5), (6), (7), (8), or (9) of section 302(c) of 
the Labor Management Relations Act, 1947 for any member of the crew of 
the vessel)''.
    (c) Master's Lien for Wages.--Section 11112 of title 46, United 
States Code, is amended by inserting after ``wages'' the following: 
``(including any payment described in paragraph (5), (6), (7), (8), or 
(9) of section 302(c) of the Labor Management Relations Act, 1947 for 
an individual as master of the vessel, that is due from and unpaid by 
an owner or managing operator of the vessel)''.
    (d) Application.--The amendments made by subsections (a), (b), and 
(c) shall apply with respect to payments that first become due on or 
after the date of the enactment of this Act.

SEC. 17. COMPLIANCE WITH BUY AMERICAN ACT.

    No funds appropriated pursuant to this Act may be expended by an 
entity unless the entity agrees that in expending the assistance the 
entity will comply with sections 2 through 4 of the Act of March 3, 
1933 (41 U.S.C. 10a-10c, popularly known as the ``Buy American Act'').

SEC. 18. SENSE OF CONGRESS; REQUIREMENT REGARDING NOTICE.

    (a) Purchase of American-Made Equipment and Products.--In the case 
of any equipment or products that may be authorized to be purchased 
with financial assistance provided under this Act, it is the sense of 
the Congress that entities receiving such assistance should, in 
expending the assistance, purchase only American-made equipment and 
products.
    (b) Notice to Recipients of Assistance.--In providing financial 
assistance under this Act, the head of each Federal agency shall 
provide to each recipient of the assistance a notice describing the 
statement made in subsection (a) by the Congress.

            Passed the House of Representatives November 4, 1993.

            Attest:

                                           DONNALD K. ANDERSON,

                                                                 Clerk.

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