(A) by striking ‘‘31328’’ and inserting
‘‘12106(e)’’; and
(B) in paragraph (1) by striking ‘‘mort-
gage,’’ 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 ‘‘trans-
fers, or mortgages’’ and inserting ‘‘or trans-
fers’’;
(C) in paragraph (3)(B) by striking
‘‘transfers, or mortgages’’ and inserting ‘‘or
transfers’’; and
(D) in paragraph (4) by striking ‘‘trans-
fers, or mortgages’’ and inserting ‘‘or trans-
fers’’.
(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 pre-
scribed 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 Ship-
ping 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 REG-
ISTRY.
(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 equiva-
lent or greater, as measured by deadweight tons,
gross tons, or container equivalent units, as appro-
priate, 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 Mer-
chant 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 ap-
plication; or
‘‘(3)(A) before the expiration of an operating
agreement entered into under title IV of the Mer-
chant 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 oppor-
tunity 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 sub-
section (a) applies to vessels that are placed under foreign
registry after the date of enactment of this Act and re-
placement 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 fol-
lows:
‘‘§ 31329. Court sales of documented vessels
‘‘When a documented vessel is sold by order of a dis-
trict court to a mortgagee not eligible to own a docu-
mented vessel—
‘‘(1) that sale is not a sale foreign within the
terms of the first proviso of section 27 of the Mer-
chant 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 follow-
ing:
‘‘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 as-
sistance in accordance with this title to the owner of a
shipyard that is located in the United States for the con-
struction (including outfitting and equipping) of any com-
mercial 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 CONSTRUC-
TION OF SERIES OF VESSELS.
‘‘(a) APPROVAL OF ASSISTANCE.—
‘‘(1) IN GENERAL.—The Secretary may approve
payment of assistance under section 1401 for con-
struction 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 determina-
tions described in subsection (b); and
‘‘(C) the Secretary determines that pay-
ment of the assistance will contribute to main-
taining national vessel construction capabilities
that are essential in time of war or national
emergency.
‘‘(2) LIMITATION.—The Secretary may not ap-
prove 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
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 sup-
port for the United States-flag merchant marine be-
cause 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 com-
petition 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 sub-
sections:
‘‘(d) A privately owned United States-flag commercial
vessel transporting any equipment, materials, or commod-
ities 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.