I

103D CONGRESS

1ST SESSION H. R. 2547

To improve the economy of the United States and promote the national

security interests of the United States by establishing a National Shipbuilding Initiative to provide support for the United States shipbuilding

industry in order to assist that industry in regaining a significant share

of the world commercial shipbuilding market, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

JUNE 29, 1993

Mr. STUDDS (for himself, Mr. DELLUMS, Mr. LIPINSKI, Mr. TAYLOR of Mississippi, Mr. FIELDS of Texas, Mr. BATEMAN, Mr. HUGHES, Mr. TAUZIN,

Mr. ORTIZ, Mr. MANTON, Mr. PICKETT, Mr. HOCHBRUECKNER, Mrs.

UNSOELD, Mr. REED, Mr. LANCASTER, Mr. ANDREWS of Maine, Ms.

FURSE, Ms. SCHENK, Mr. HASTINGS, Ms. ESHOO, Mr. BARLOW, Mr.

STUPAK, Mr. THOMPSON of Mississippi, Mr. ACKERMAN, Mr. SCOTT, Mr.

SAXTON, Mr. CUNNINGHAM, Mr. KING, Mr. DIAZ-BALART, Mrs. BENTLEY, and Mr. HAMBURG) introduced the following bill; which was referred

jointly to the Committees on Merchant Marine and Fisheries and Armed

Services

A BILL

To improve the economy of the United States and promote

the national security interests of the United States by

establishing a National Shipbuilding Initiative to provide

support for the United States shipbuilding industry in

order to assist that industry in regaining a significant

share of the world commercial shipbuilding market, and

for other purposes.
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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘National Shipbuilding

5 and Conversion Act of 1993’’.

6 TITLE I—NATIONAL

7 SHIPBUILDING INITIATIVE

8 SEC. 101. NATIONAL SHIPBUILDING INITIATIVE.

9 (a) ESTABLISHMENT OF PROGRAM.—There shall be

10 a National Shipbuilding Initiative program, to be carried

11 out to support the industrial base for national security ob12 jectives by assisting in the reestablishment of the United

13 States shipbuilding industry as a self-sufficient, inter14 nationally competitive industry.

15 (b) ADMINISTERING DEPARTMENTS.—The program

16 shall be carried out—

17 (1) by the Secretary of Defense, with respect to

18 programs under the jurisdiction of the Secretary of

19 Defense; and

20 (2) by the Secretary of Transportation, with re21 spect to programs under the jurisdiction of the Sec22 retary of Transportation.

23 (c) PROGRAM ELEMENTS.—The National Shipbuild24 ing Initiative shall consist of the following program ele25 ments:
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1 (1) FINANCIAL INCENTIVES PROGRAM.—A fi2 nancial incentives program to provide loan guaran3 tees to initiate commercial ship construction for do4 mestic and export sales, encourage shipyard mod5 ernization, and support increased productivity, as

6 provided in title XI of the Merchant Marine Act,

7 1936 (as amended by title II of this Act).

8 (2) TECHNOLOGY DEVELOPMENT PROGRAM.—A

9 technology development program, to be carried out

10 within the Department of Defense by the Advanced

11 Research Projects Agency, to improve the technology

12 base for advanced shipbuilding technologies and re13 lated dual-use technologies through activities includ14 ing a development program for innovative commer15 cial ship design and production processes and tech16 nologies.

17 (3) NAVY’S AFFORDABILITY THROUGH COM18 MONALITY PROGRAM.—Enhanced support by the

19 Secretary of Defense for the shipbuilding program of

20 the Department of the Navy known as the Afford21 ability Through Commonality (ATC) program, to in22 clude enhanced support (A) for the development of

23 common modules for military and commercial ships,

24 and (B) to foster civil-military integration into the

25 next generation of Naval surface combatants.
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1 (4) NAVY’S MANUFACTURING TECHNOLOGY AND

2 TECHNOLOGY BASE PROGRAMS.—Enhanced support

3 by the Secretary of Defense for, and strengthened

4 funding for, that portion of the Manufacturing

5 Technology program of the Navy, and that portion

6 of the Technology Base program of the Navy, that

7 are in the areas of shipbuilding technologies and

8 ship repair technologies.

9 SEC. 102. DEPARTMENT OF DEFENSE PROGRAM MANAGE10 MENT THROUGH ADVANCED RESEARCH

11 PROJECTS AGENCY.

12 The Secretary of Defense shall designate the Ad13 vanced Research Projects Agency of the Department of

14 Defense as the lead agency of the Department of Defense

15 for activities of the Department of Defense which are part

16 of the National Shipbuilding Initiative program. Those ac17 tivities shall be carried out as part of defense conversion

18 activities of the Department of Defense.

19 SEC. 103. ADVANCED RESEARCH PROJECTS AGENCY FUNC20 TIONS.

21 The Secretary of Defense, acting through the Direc22 tor of the Advanced Research Projects Agency, shall carry

23 out the following functions with respect to the National

24 Shipbuilding Initiative program:
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1 (1) Consultation with the Maritime Administra2 tion, the Office of Economic Adjustment, the Na3 tional Economic Council, the National Shipbuilding

4 Research Project, the Coast Guard, appropriate

5 naval commands and activities, and other appro6 priate Federal agencies on—

7 (A) development and transfer to the pri8 vate sector of dual-use shipbuilding tech9 nologies, ship repair technologies, and ship10 building management technologies;

11 (B) assessments of potential markets for

12 maritime product; and

13 (C) recommendation of industrial entities,

14 partnerships, joint ventures, or consortia for

15 short- and long-term manufacturing technology

16 investment strategies.

17 (2) Funding and program management activi18 ties to develop innovative design and production

19 processes and the technologies required to implement

20 those processes.

21 (3) Facilitation of industry and Government

22 technology development and technology transfer ac23 tivities (including education and training, market as24 sessments, simulations, hardware models and proto-
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1 types, and national and regional industrial base

2 studies).

3 (4) Integration of promising technology ad4 vances made in the Technology Reinvestment Pro5 gram of the Advanced Research Projects Agency

6 into the National Shipbuilding Initiative to effect

7 full defense conversion potential.

8 SEC. 104. ELIGIBLE SHIPYARDS.

9 To be eligible to receive any assistance or otherwise

10 to participate in any program carried out under the Na11 tional Shipbuilding Initiative, a shipyard must be a private

12 shipyard located in the United States.

13 TITLE II—GUARANTEES OF OBLI14 GATIONS FOR VESSEL CON15 STRUCTION AND UNITED

16 STATES SHIPYARD MOD17 ERNIZATION

18 SEC. 201. LOAN GUARANTEES FOR EXPORT VESSELS.

19 Title XI of the Merchant Marine Act, 1936 (46 App.

20 U.S.C. 1271 et seq.) is amended as follows:

21 (1) ELIGIBLE EXPORT VESSEL DEFINED.—Sec22 tion 1101 is amended by adding at the end the fol23 lowing new subsection:

24 ‘‘(o) The term ‘eligible export vessel’ means a vessel

25 constructed, reconstructed, or reconditioned in the United
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1 States for use in world-wide trade which will, upon deliv2 ery or redelivery, be placed under or continued to be docu3 mented under the laws of a country other than the United

4 States.’’.

5 (2) LIMITATIONS ON GUARANTEE OBLIGA6 TIONS.—Section 1103 is amended—

7 (A) by amending the first sentence of sub8 section (f) to read as follows: ‘‘The aggregate

9 unpaid principal amount of the obligations

10 guaranteed under this section and outstanding

11 at any one time shall not exceed

12 $12,000,000,000, of which (1) $850,000,000

13 shall be limited to obligations pertaining to

14 guarantees of obligations for fishing vessels and

15 fishery facilities made under this title, and (2)

16 $3,000,000,000 shall be limited to obligations

17 pertaining to guarantees of obligations for eligi18 ble export vessels.’’; and

19 (B) by adding at the end the following new

20 subsection:

21 ‘‘(g)(1) The Secretary may not issue a commitment

22 to guarantee obligations for an eligible export vessel un23 less, after considering—

24 ‘‘(A) the status of pending applications for com25 mitments to guarantee obligations for vessels docu-
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1 mented under the laws of the United States and op2 erating or to be operated in the domestic or foreign

3 commerce of the United States,

4 ‘‘(B) the economic soundness of the applica5 tions referred to in subparagraph (A), and

6 ‘‘(C) the amount of guarantee authority avail7 able,

8 the Secretary determines, in the sole discretion of the Sec9 retary, that the issuance of a commitment to guarantee

10 obligations for an eligible export vessel will not result in

11 the denial of an economically sound application to issue

12 a commitment to guarantee obligations for vessels docu13 mented under the laws of the United States operating in

14 the domestic or foreign commerce of the United States.

15 ‘‘(2) The Secretary may not issue commitments to

16 guarantee obligations for eligible export vessels under this

17 section after the later of—

18 ‘‘(A) the 5th anniversary of the date on which

19 the Secretary publishes final regulations setting

20 forth the application procedures for the issuance of

21 commitments to guarantee obligations for eligible ex22 port vessels,

23 ‘‘(B) the last day of any 5-year period in which

24 funding and guarantee authority for obligations for
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1 eligible export vessels have been continuously avail2 able, or

3 ‘‘(C) the last date on which those commitments

4 may be issued under any treaty, convention, or other

5 international agreement entered into after the date

6 of the enactment of the Shipbuilding Conversion Act

7 of 1993 that prohibits guarantee of those obliga8 tions.’’.

9 (3) AUTHORITY TO GUARANTEE OBLIGATIONS

10 FOR ELIGIBLE EXPORT VESSELS.—Section 1104A is

11 amended—

12 (A) by amending so much of subsection

13 (a)(1) as precedes the proviso to read as fol14 lows:

15 ‘‘(1) financing, including reimbursement of an

16 obligor for expenditures previously made for, con17 struction, reconstruction, or reconditioning of a ves18 sel or vessels owned by citizens of the United States,

19 or in the case of an eligible export vessel, owned by

20 either non-United States or by a citizen of the

21 United States, which are designed principally for re22 search, or for commercial use (A) in the coastwise

23 or intercoastal trade; (B) on the Great Lakes, or on

24 bays, sounds, rivers, harbors, or inland lakes of the

25 United States; (C) in foreign trade as defined in sec-
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1 tion 905 of this Act for purposes of title V of this

2 Act; or (D) as an ocean thermal energy conversion

3 facility or plantship; (E) with respect to floating dry4 docks in the construction, reconstruction, recondi5 tioning, or repair of vessels; or (F) with respect to

6 an eligible export vessel, in world-wide trade;’’;

7 (B) by amending subsection (b)(2)—

8 (i) by striking ‘‘subject to the provi9 sions of paragraph (1) of subsection (c) of

10 this section,’’ and inserting ‘‘subject to the

11 provisions of subsection (c)(1) and sub12 section (i),’’, and

13 (ii) by adding at the end the following

14 additional proviso: ‘‘Provided, further That

15 in the case of an eligible export vessel,

16 such obligations may be in an aggregate

17 principal amount which does not exceed

871 18 ⁄2 percent of the actual cost or depre19 ciated actual cost of the eligible export ves20 sel.’’;

21 (C) by amending subsection (b)(6) by in22 serting after ‘‘United States Coast Guard’’ the

23 following: ‘‘or, in the case of an eligible export

24 vessel, of the appropriate national flag authori25 ties under a treaty, convention, or other inter-
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1 national agreement to which the United States

2 is a party’’;

3 (D) by striking out all after the paragraph

4 (2) in subsection (d) and inserting the following

5 new paragraph:

6 ‘‘(3) No commitment to guarantee, or guaran7 tee of an obligation may be made by the Secretary

8 under this title for the construction, reconstruction

9 or reconditioning of an eligible export vessel un10 less—

11 ‘‘(A) the Secretary finds that the construc12 tion, reconstruction, or reconditioning of such

13 eligible export vessel will aid in the transition of

14 United States shipyards to commercial activities

15 or will preserve shipbuilding assets that would

16 be essential in time of war or national emer17 gency, and

18 ‘‘(B) the owner of the eligible export vessel

19 agrees with the Secretary that the vessel shall

20 not be transferred to any country designated by

21 the Secretary as a country whose interests are

22 hostile to the interests of the United States.’’;

23 and

24 (E) by adding at the end the following new

25 subsection:
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1 ‘‘(i) The Secretary may not, with respect to—

2 ‘‘(1) the general 75 percent or less limitation in

3 subsection (b)(2);

‘‘(2) the 871 4 ⁄2 percent or less limitation in the

5 1st, 2nd, 4th, or 5th proviso to subsection (b)(2) or

6 section 1111(b); or

7 ‘‘(3) the 80 percent or less limitation in the 3rd

8 proviso to such subsection;

9 establish by rule, regulation, or procedure any percentage

10 within any such limitation that is, or is intended to be,

11 applied uniformly to all guarantees or commitments to

12 guarantee made under this section that are subject to the

13 limitation.’’.

14 (4) LIMITATION ON AUTHORITY TO ESTABLISH

15 UNIFORM PERCENTAGE LIMITATION.—Section

16 1104B is amended by adding at the end of sub17 section (b) the following flush sentence:

18 ‘‘The Secretary may not by rule, regulation, or procedure

establish any percentage within the 871 19 ⁄2 percent or less

20 limitation in paragraph (2) that is, or is intended to be,

21 applied uniformly to all guarantees or commitments to

22 guarantee made under this section.’’.

23 (5) CONFORMING AMENDMENT.—Section

24 1103(a) is amended in the first sentence by striking
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1 ‘‘, upon application by a citizen of the United

2 States,’’.

3 SEC. 202. LOAN GUARANTEES FOR SHIPYARD MODERNIZA4 TION AND IMPROVEMENT.

5 (a) IN GENERAL.—Title XI of the Merchant Marine

6 Act, 1936, is further amended by adding at the end the

7 following new section:

8 ‘‘SEC. 1111. (a) The Secretary, under section

9 1103(a) and subject to the terms the Secretary shall pre10 scribe, may guarantee or make a commitment to guaran11 tee the payment of the principal of, and the interest on,

12 an obligation for advanced shipbuilding technology and

13 modern shipbuilding technology of a general shipyard fa14 cility located in the United States.

15 ‘‘(b) Guarantees or commitments to guarantee under

16 this section are subject to the extent applicable to all the

17 laws requirements, regulations, and procedures that apply

18 to guarantees or commitments to guarantee made under

19 this title, except that guarantees or commitments to guar20 antee made under this section may be in the aggregate

principal amount that does not exceed 871 21 ⁄2 percent of the

22 actual cost of the advanced shipbuilding technology or

23 modern shipbuilding technology.

24 ‘‘(c) The Secretary may accept the transfer of funds

25 from any other department, agency, or instrumentality of
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1 the United States Government and may use those funds

2 to make guarantees or commitments to guarantee loans

3 entered into under this section.

4 ‘‘(d) For purposes of this section:

5 ‘‘(1) The term ‘advanced shipbuilding tech6 nology’ includes—

7 ‘‘(A) numerically controlled machine tools,

8 robots, automated process control equipment,

9 computerized flexible manufacturing systems,

10 associated computer software, and other tech11 nology for improving shipbuilding and related

12 industrial production which advance the state13 of-the-art; and

14 ‘‘(B) novel techniques and processes de15 signed to improve shipbuilding quality, produc16 tivity, and practice, and to promote sustainable

17 development, including engineering design,

18 quality assurance, concurrent engineering, con19 tinuous process production technology, energy

20 efficiency, waste minimization, design for

21 recyclability or parts reuse, inventory manage22 ment, upgraded worker skills, and communica23 tions with customers and suppliers.

24 ‘‘(2) The term ‘modern shipbuilding technology’

25 means the best available proven technology, tech-
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1 niques, and processes appropriate to enhancing the

2 productivity of shipyards.

3 ‘‘(3) The term ‘general shipyard facility’

4 means—

5 ‘‘(A) for operations on land—

6 ‘‘(i) any structure or appurtenance

7 thereto designed for the construction, re8 pair, rehabilitation, refurbishment or re9 building of any vessel (as defined in title 1,

10 United States Code) and including graving

11 docks, building ways, ship lifts, wharves,

12 and pier cranes;

13 ‘‘(ii) the land necessary for any struc14 ture or appurtenance described in clause

15 (i); and

16 ‘‘(iii) equipment that is for the use in

17 connection with any structure or appur18 tenance and that is necessary for the per19 formance of any function referred to in

20 subparagraph (A);

21 ‘‘(B) for operations other than on land,

22 any vessel, floating drydock or barge built in

23 the United States and used for, equipped to be

24 used for, or of a type that is normally used for
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1 activities referred to in subparagraph (A)(i) of

2 this paragraph.’’.

3 (b) CONFORMING AMENDMENT.—Section 1101(n) of

4 that Act (46 App. U.S.C. 1271(n)) is amended by striking

5 ‘‘vessels.’’ and inserting ‘‘vessels and general shipyard fa6 cilities (as defined in section 1111(d)(3)).’’.

7 SEC. 203. AUTHORIZATIONS OF APPROPRIATIONS.

8 (a) AUTHORIZATION OF APPROPRIATIONS TO DE9 PARTMENT OF DEFENSE.—There is authorized to be ap10 propriated to the Secretary of Defense for fiscal year 1994

11 the sum of $200,000,000, which shall be available only

12 for transfer to the Secretary of Transportation and of

13 which—

14 (1) $175,000,000 shall be available only for

15 costs (as defined in section 502 of the Federal Cred16 it Reform Act of 1990 (2 U.S.C. 661a)) of new loan

17 guarantee commitments under section 1104A(a)(1)

18 of the Merchant Marine Act, 1936 (46 App. U.S.C.

19 1274(a)(1)), as amended by section 201, for—

20 (A) eligible export vessels; and

21 (B) vessels in any series of vessels for

22 which a series construction agreement is en23 tered into by the Secretary under section 305 of

24 this Act; and
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1 (2) $25,000,000 shall be available only for costs

2 (as defined in section 502 of the Federal Credit Re3 form Act of 1990) of new loan guarantee commit4 ments under section 1111 of the Merchant Marine

5 Act, 1936, as added by section 202.

6 (b) AUTHORIZATIONS FOR DEPARTMENT OF TRANS7 PORTATION.—There is authorized to be appropriated to

8 the Secretary of Transportation for fiscal year 1994 the

9 sum of $10,000,000 to pay administrative costs related

10 to new loan guarantee commitments described in sub11 section (a), of which—

12 (1) $8,000,000 shall be for administrative costs

13 related to new loan guarantee commitments de14 scribed in paragraph (1) of that subsection; and

15 (2) $2,000,000 shall be for administrative costs

16 related to new loan guarantee commitments de17 scribed in paragraph (2) of that subsection.

18 (c) AVAILABLITY OF AMOUNTS.—Amounts appro19 priated under the authority of this section shall remain

20 available until expended.

21 (d) TRANSFER TO SECRETARY OF TRANSPOR22 TATION.—Subject to the provisions of appropriations Acts,

23 amounts appropriated under the authority of subsection

24 (a) shall be transferred to the Secretary of Transportation

25 for use as described in that subsection. Any such transfer
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1 shall be made not later than 90 days after the date of

2 the enactment of an Act appropriating the funds to be

3 transferred.

4 TITLE III—SERIES

5 CONSTRUCTION ASSISTANCE

6 SEC. 301. PAYMENT OF ASSISTANCE AUTHORIZED.

7 (a) IN GENERAL.—The Secretary of Defense may,

8 subject to the availability of appropriations, pay assistance

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

10 that is located in the United States for the construction

11 (including outfitting and equipping) of any commercial

12 vessel that is one of a series of vessels for which payment

13 of assistance under this section to the owner is approved

14 by the Secretary under section 302.

15 (b) AMOUNT OF ASSISTANCE.—The total amount of

16 assistance paid under this section with respect to a vessel

17 shall be equal to the series transition payment determined

18 for the vessel under section 303(a).

19 SEC. 302. APPROVAL OF ASSISTANCE FOR CONSTRUCTION

20 OF SERIES OF VESSELS.

21 (a) APPROVAL OF ASSISTANCE.—

22 (1) IN GENERAL.—The Secretary of Defense

23 may approve payment of assistance under section

24 301 for construction of a series of vessels in a ship25 yard if—
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1 (A) the owner of the shipyard submits an

2 application for that assistance in accordance

3 with section 305;

4 (B) the Secretary of Transportation makes

5 the determinations described in subsection (b);

6 and

7 (C) the Secretary of Defense determines

8 that payment of the assistance will contribute

9 to maintaining national vessel construction ca10 pabilities that are essential in time of war or

11 national emergency.

12 (2) LIMITATION.—The Secretary of Defense

13 may not approve assistance under this section for a

14 series of vessels if the series transition payment de15 termined under section 303(a) for any vessel in the

16 series is greater than 50 percent of the estimate of

17 the cost of constructing the vessel determined by the

18 Secretary of Defense under section 303(b)(2).

19 (b) DETERMINATIONS BY SECRETARY OF TRANSPOR20 TATION.—The Secretary of Defense may not approve as21 sistance for construction of a series of vessels in a ship22 yard unless the Secretary of Transportation has deter23 mined the following:

24 (1) VESSEL REQUIREMENTS.—The vessels

25 are—
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1 (A) commercial vessels of at least 10,000

2 gross tons; and

3 (B) commercially marketable on the inter4 national market.

5 (2) SHIPYARD REQUIREMENTS.—The shipyard

6 in which the vessels will be constructed—

7 (A) is located in the United States; and

8 (B) upon completion of construction of the

9 vessels, will be capable of constructing addi10 tional vessels of the same type as those in the

11 series for a price that is competitive in the

12 international market.

13 (3) APPLICANT REQUIREMENTS.—The appli14 cant for the assistance—

15 (A) has the ability, financial resources, and

16 other qualifications necessary for construction

17 of the vessels;

18 (B) has entered into a contract for the

19 construction of each of the first 2 vessels to be

20 constructed in the series, which may include a

21 contract for a vessel that will be constructed

22 without assistance under this title; and

23 (C) is the owner of the shipyard in which

24 the vessels will be constructed.
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1 (4) CONTRACT REQUIREMENTS.—Each of the

2 contracts required under paragraph (3)(B) are bind3 ing obligations on the applicant and all other parties

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

5 contingent on—

6 (A) the approval of assistance under this

7 title for construction of a vessel under the con8 tract; and

9 (B) the making of a guarantee or commit10 ment to guarantee obligations under title XI of

11 the Merchant Marine Act, 1936 (46 App.

12 U.S.C. 1273), as amended by this Act, for con13 struction under the contract.

14 (5) PURCHASER REQUIREMENTS.—Each person

15 that is a purchaser of a vessel under a contract re16 quired under paragraph (3)(B)—

17 (A) has the ability, financial resources, and

18 other qualifications necessary to own and oper19 ate the vessel in commercial service; and

20 (B) is a party to the contract.

21 (6) SERIES TRANSITION PAYMENT.—The series

22 transition payment under section 303 for each vessel

23 in the series.
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1 (c) PRIORITY FOR CERTAIN SERIES OF VESSELS.—

2 In approving assistance under this title, the Secretary of

3 Defense may give priority to a series of vessels—

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

5 are required to be constructed with assistance before

6 construction of that type of vessel becomes cost ef7 fective;

8 (2) for which the total of the series transition

9 payments determined under section 303 for all ves10 sels in the series is less than that total for other se11 ries of vessels for which applications are submitted

12 for assistance under this title;

13 (3) that will be constructed in a shipyard with

14 respect to which assistance under this title has not

15 been provided; or

16 (4) that would contribute to the preservation of

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

18 or national emergency.

19 SEC. 303. DETERMINATION OF SERIES TRANSITION PAY20 MENTS.

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

22 shall determine the series transition payment for each ves23 sel in a series of vessels for which an application for assist24 ance under this title is received by the Secretary of De25 fense.
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1 (b) AMOUNT OF SERIES TRANSITION PAYMENT.—

2 The series transition payment for a vessel under sub3 section (a) is equal to the difference of—

4 (1) the estimated cost of completing construc5 tion of the vessel, as included in the application for

6 assistance submitted under section 305; minus

7 (2) a reasonable estimate of the cost of con8 structing the vessel under similar plans and speci9 fications in a foreign shipyard that is considered by

10 the Secretary of Transportation to be a fair and rep11 resentative example for purposes of determining the

12 payment.

13 SEC. 304. SERIES CONSTRUCTION AGREEMENT.

14 (a) IN GENERAL.—

15 (1) IN GENERAL.—The Secretary of Defense

16 shall, for each series of vessels for which assistance

17 is approved under section 302, enter into a series

18 construction agreement with the owner of the ship19 yard in which the series of vessels will be con20 structed, under which the Secretary is required to

21 pay the owner assistance in accordance with a sched22 ule established under paragraph (2).

23 (2) SCHEDULE FOR PAYMENTS.—An agreement

24 under this subsection shall establish a schedule for

25 the payment of assistance under the agreement, that
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1 is based on the construction schedule for vessels for

2 which the assistance is paid.

3 (3) TERMINATION OF AGREEMENT.—An agree4 ment under this subsection shall authorize the Sec5 retary of Defense to terminate the agreement if—

6 (A) a contract required under section

7 302(b)(3)(B) is terminated by the purchaser of

8 the vessel under the contract, and the owner of

9 the shipyard does not enter into a new contract

10 for construction of the vessel within a period

11 which shall be specified in the agreement; or

12 (B) the owner of the shipyard fails to enter

13 into contracts for construction of all vessels in

14 the series of vessels to which the agreement ap15 plies, within a period which shall be specified in

16 the agreement.

17 (4) CONTINUING EFFECT OF AGREEMENT WITH

18 RESPECT TO VESSELS COVERED BY CONTRACTS.—

19 The termination of a series construction agreement

20 under paragraph (3) shall not affect the effective21 ness of the agreement with respect to vessels for

22 which a construction contract is in effect on the date

23 of termination.

24 (b) BINDING OBLIGATION OF THE UNITED

25 STATES.—
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1 (1) IN GENERAL.—Except as provided in para2 graph (2), a requirement that the Secretary of De3 fense make payments under a series construction

4 agreement under subsection (a) shall constitute a

5 binding obligation of the United States.

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

8 agreement pursuant to subsection (a)(3), the obliga9 tion of the United States under paragraph (1) to

10 make payments under the agreement shall terminate

11 with respect to vessels for which no construction

12 contract is in effect on the date of termination of the

13 agreement.

14 (3) CONTINUING AVAILABILITY OF AMOUNTS.—

15 Amounts to be used to liquidate an obligation under

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

17 shall remain available to the Secretary of Defense

18 for the payment of assistance under this title.

19 SEC. 305. APPLICATIONS FOR ASSISTANCE.

20 (a) SUBMITTAL.—A person desiring assistance under

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

22 application to the Secretary of Defense.

23 (b) CONTENTS OF APPLICATION.—An application for

24 assistance under this title with respect to a series of ves25 sels shall include the following:
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1 (1) A detailed description of the type of vessels

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

4 (2) Detailed estimates of the cost of completing

5 construction of each of the vessels in the series, in6 cluding such estimates from subcontractors for the

7 construction as may be required by the Secretary of

8 Defense.

9 (3) Copies of the contracts required under sec10 tion 302(b)(3)(B).

11 (4) Other information required by the Secretary

12 to fulfill the requirements of this title.

13 (c) TRANSMITTAL TO SECRETARY OF TRANSPOR14 TATION.—The Secretary of Defense shall transmit a copy

15 of each application submitted under this section to the

16 Secretary of Transportation.

17 (d) REGULATIONS.—The Secretary of Defense shall

18 issue regulations setting forth the procedures for submit19 ting an application for assistance under this title.

20 SEC. 306. RESTRICTION ON VESSEL OPERATIONS.

21 A vessel for which assistance is paid under this title—

22 (1) may be operated only in foreign trade or do23 mestic trade authorized under a registry endorse24 ment for the vessel issued under section 12105 of

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

2 of the United States (including mixed coastwise and

3 foreign trade), except coastwise trade authorized

4 under a registry endorsement for the vessel issued

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

6 SEC. 307. TERMINATION OF AUTHORITY TO PROVIDE NEW

7 ASSISTANCE.

8 The Secretary of Defense may not under section 302

9 approve the payment of assistance under section 301, and

10 may not enter into any series construction agreement

11 under section 305, after—

12 (1) the 5th anniversary of the date on which

13 the Secretary publishes final regulations setting

14 forth the procedures for submitting an application

15 for that assistance,

16 (2) the last day of any 5-year period in which

17 amounts have been continuously available for paying

18 that assistance, or

19 (3) the last date on which that assistance may

20 be paid under any treaty, convention, or other inter21 national agreement entered into after the date of the

22 enactment of this Act that prohibits that payment.
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1 TITLE IV—DOUBLE HULL RE2 QUIREMENT FOR TANKERS

3 CHARTERED BY DEPART4 MENT OF DEFENSE

5 SEC. 401. DOUBLE-HULL TANKER CHARTERS.

6 Section 2401 of title 10, United States Code, is

7 amended by adding at the end the following new sub8 section:

9 ‘‘(g) After December 31, 1994, the Secretary of De10 fense may not enter into, renew, or extend a contract for

11 the charter of a tanker unless the tanker—

12 ‘‘(1) is built in a shipyard located in the United

13 States under a contract entered into after October

14 1, 1993;

15 ‘‘(2) is equipped with a double hull that satis16 fies the requirements applicable under section 3703a

17 of title 46 without regard to subsection (c) of that

18 section; and

19 ‘‘(3) is chartered under the contract for a pe20 riod of at least 10 years.’’.

21 SEC. 402. PROHIBITION ON ENTERING INTO, RENEWING, OR

22 EXTENDING CERTAIN CHARTERS FOR TANK23 ERS.

24 Notwithstanding any other law, between the date of

25 the enactment of this Act, and January 1, 1995, the Sec-
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1 retary of Defense may not enter into, renew, or extend

2 a contract for a charter of a tanker that expires after De3 cember 31, 1994. The Secretary shall cancel any contract

4 or contract provision that was entered into, renewed, or

5 extended during the period beginning on June 30, 1993,

6 and ending on the date of the enactment of this Act for

7 a charter of a tanker that expires after December 31,

8 1994.

9 SEC. 403. TANKER DEFINED.

10 In this title, the term ‘‘tanker’’ has the meaning given

11 that term in section 2101 of title 46, United States Code.

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