H. R. 1350—7
entering into a contract for construction of a vessel in a foreign
shipyard, provide notice of the intent of the contractor to enter
into such a contract to each shipyard in the United States that
is capable of constructing the vessel.
‘‘NATIONAL SECURITY REQUIREMENTS
‘‘SEC. 653. (a) EMERGENCY PREPAREDNESS AGREEMENT.—
‘‘(1) REQUIREMENT TO ENTER AGREEMENT.—The Secretary
of Transportation shall establish an Emergency Preparedness
Program under this section that is approved by the Secretary
of Defense. Under the program, the Secretary of Transportation
shall include in each operating agreement under this subtitle
a requirement that the contractor enter into an Emergency
Preparedness Agreement under this section with the Secretary.
The Secretary shall negotiate and enter into an Emergency
Preparedness Agreement with each contractor as promptly as
practicable after the contractor has entered into an operating
agreement under this subtitle.
‘‘(2) TERMS OF AGREEMENT.—An Emergency Preparedness
Agreement under this section shall require that upon a request
by the Secretary of Defense during time of war or national
emergency, or whenever determined by the Secretary of Defense
to be necessary for national security (including any natural
disaster, international peace operation, or contingency oper-
ation (as that term is defined in section 101 of title 10, United
States Code)), a contractor for a vessel covered by an operating
agreement under this subtitle shall make available commercial
transportation resources (including services). The basic terms
of the Emergency Preparedness Agreements shall be estab-
lished pursuant to consultations among the Secretary, the Sec-
retary of Defense, and Maritime Security Program contractors.
In any Emergency Preparedness Agreement, the Secretary and
a contractor may agree to additional or modifying terms appro-
priate to the contractor’s circumstances if those terms have
been approved by the Secretary of Defense.
‘‘(3) PARTICIPATION
AFTER
EXPIRATION
OF
OPERATING
AGREEMENT.—Except as provided by section 652(m), the Sec-
retary may not require, through an Emergency Preparedness
Agreement or operating agreement, that a contractor continue
to participate in an Emergency Preparedness Agreement when
the operating agreement with the contractor has expired accord-
ing to its terms or is otherwise no longer in effect. After expira-
tion of an Emergency Preparedness Agreement, a contractor
may volunteer to continue to participate in such an agreement.
‘‘(b) RESOURCES MADE AVAILABLE.—The commercial transpor-
tation resources to be made available under an Emergency
Preparedness Agreement shall include vessels or capacity in vessels,
intermodal systems and equipment, terminal facilities, intermodal
and management services, and other related services, or any agreed
portion of such nonvessel resources for activation as the Secretary
may determine to be necessary, seeking to minimize disruption
of the contractor’s service to commercial shippers.
‘‘(c) COMPENSATION.—
‘‘(1) IN GENERAL.—The Secretary of Transportation shall
provide in each Emergency Preparedness Agreement for fair
and reasonable compensation for all commercial transportation
resources provided pursuant to this section.
H. R. 1350—8
‘‘(2) SPECIFIC
REQUIREMENTS.—Compensation under this
subsection—
‘‘(A) shall not be less than the contractor’s commercial
market charges for like transportation resources;
‘‘(B) shall include all the contractor’s costs associated
with provision and use of the contractor’s commercial
resources to meet emergency requirements;
‘‘(C) in the case of a charter of an entire vessel, shall
be fair and reasonable;
‘‘(D) shall be in addition to and shall not in any way
reflect amounts payable under section 652; and
‘‘(E) shall be provided from the time that a vessel
or resource is diverted from commercial service until the
time that it reenters commercial service.
‘‘(3) APPROVAL OF AMOUNT BY SECRETARY OF DEFENSE.—
No compensation may be provided for a vessel under this
subsection unless the amount of the compensation is approved
by the Secretary of Defense.
‘‘(d) TEMPORARY REPLACEMENT VESSELS.—Notwithstanding any
other provision of this subtitle or of other law to the contrary—
‘‘(1) a contractor may operate or employ in foreign
commerce a foreign-flag vessel or foreign-flag vessel capacity,
as a temporary replacement for a United States-documented
vessel or United States-documented vessel capacity that is acti-
vated under an Emergency Preparedness Agreement; and
‘‘(2) such replacement vessel or vessel capacity shall be
eligible during the replacement period to transport preference
cargoes subject to section 2631 of title 10, United States Code,
the Act of March 26, 1934 (46 U.S.C. App. 1241–1), and sections
901(a), 901(b), and 901b of this Act to the same extent as
the eligibility of the vessel or vessel capacity replaced.
‘‘(e) REDELIVERY
AND
LIABILITY
OF
UNITED
STATES
FOR
DAMAGES.—
‘‘(1) IN GENERAL.—All commercial transportation resources
activated under an Emergency Preparedness Agreement shall,
upon termination of the period of activation, be redelivered
to the contractor in the same good order and condition as
when received, less ordinary wear and tear, or the Government
shall fully compensate the contractor for any necessary repair
or replacement.
‘‘(2) LIMITATION ON LIABILITY OF UNITED STATES.—Except
as may be expressly agreed to in an Emergency Preparedness
Agreement, or as otherwise provided by law, the Government
shall not be liable for disruption of a contractor’s commercial
business or other consequential damages to a contractor arising
from activation of commercial transportation resources under
an Emergency Preparedness Agreement.
‘‘(3) LIMITATION
ON
APPLICATION
OF
OTHER
REQUIRE-
MENTS.—Sections 902 and 909 of this Act shall not apply to
a vessel while it is covered by an Emergency Preparedness
Agreement under this subtitle. Any Emergency Preparedness
Agreement entered into by a contractor shall supersede any
other agreement between that contractor and the Government
for vessel availability in time of war or national emergency.
H. R. 1350—9
‘‘DEFINITIONS
‘‘SEC. 654. In this subtitle:
‘‘(1) BULK CARGO.—The term ‘bulk cargo’ means cargo that
is loaded and carried in bulk without mark or count.
‘‘(2) CONTRACTOR.—The term ‘contractor’ means an owner
or operator of a vessel that enters into an operating agreement
for the vessel with the Secretary of Transportation under
section 652.
‘‘(3) OCEAN COMMON CARRIER.—The term ‘ocean common
carrier’ means a person holding itself out to the general public
to operate vessels to provide transportation by water of pas-
sengers or cargo between the United States and a foreign
country for compensation, that—
‘‘(A) assumes responsibility for the transportation from
the port or point of receipt to the port or point of destina-
tion, and
‘‘(B) utilizes, for all or part of that transportation,
a vessel operating on the high seas or the Great Lakes
between a port in the United States and a port in a foreign
country, except that the term does not include a common
carrier engaged in ocean transportation by ferry boat, ocean
tramp, or chemical parcel-tanker. As used in this para-
graph, ‘chemical parcel-tanker’ means a vessel whose cargo-
carrying capability consists of individual cargo tanks for
bulk chemicals that are a permanent part of the vessel,
that have segregation capability with piping systems to
permit simultaneous carriage of several bulk chemical car-
goes with minimum risk of cross-contamination, and that
has a valid certificate of fitness under the International
Maritime Organization Code for the Construction and
Equipment of Ships Carrying Dangerous Chemicals in
Bulk.
‘‘(4) FLEET.—The term ‘Fleet’ means the Maritime Security
Fleet established pursuant to section 651(a).
‘‘(5) LASH VESSEL.—The term ‘LASH vessel’ means a
lighter aboard ship vessel.
‘‘(6) 
UNITED
STATES-DOCUMENTED
VESSEL.—The 
term
‘United States-documented vessel’ means a vessel documented
under chapter 121 of title 46, United States Code.
‘‘AUTHORIZATION OF APPROPRIATIONS
‘‘SEC. 655. There are authorized to be appropriated for operating
agreements under this subtitle, to remain available until expended,
$100,000,000 for fiscal year 1996 and such sums as may be nec-
essary, not to exceed $100,000,000, for each fiscal year thereafter
through fiscal year 2005.’’.
SEC. 
3. 
TERMINATION 
OF 
OPERATING-DIFFERENTIAL 
SUBSIDY
PROGRAM.
(a) LIMITATION
ON PAYMENTS
FOR OLDER VESSELS.—Section
605(b) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1175(b)),
is amended to read as follows:
‘‘(b) No operating-differential subsidy shall be paid for the oper-
ation of a vessel after the calendar year the vessel becomes 25
years of age, unless the Secretary of Transportation has determined,
before the date of enactment of the Maritime Security Act of 1996,
H. R. 1350—10
that it is in the public interest to grant such financial aid for
the operation of such vessel.’’.
(b) WIND-UP OF PROGRAM.—Subtitle A of such Act (46 U.S.C.
App. 1171 et seq.), as designated by the amendment made by
section 2(1), is further amended by adding at the end the following
new section:
‘‘SEC. 616. (a) After the date of enactment of the Maritime
Security Act of 1996, the Secretary of Transportation shall not
enter into any new contract for operating-differential subsidy under
this subtitle.
‘‘(b) Notwithstanding any other provision of this Act, any operat-
ing-differential subsidy contract in effect under this title on the
day before the date of enactment of the Maritime Security Act
of 1996 shall continue in effect and terminate as set forth in
the contract, unless voluntarily terminated at an earlier date by
the parties (other than the United States Government) to the con-
tract.
‘‘(c) The essential service requirements of section 601(a) and
603(b), and the provisions of sections 605(c) and 809(a), shall not
apply to the operating-differential subsidy program under this sub-
title effective upon the earlier of—
‘‘(1) the date that a payment is made, under the Maritime
Security Program established by subtitle B to a contractor
under that subtitle who is not party to an operating-differential
subsidy contract under this subtitle, with the Secretary to
cause notice of the date of such payment to be published in
the Federal Register as soon as possible; or
‘‘(2) with respect to a particular contractor under the
operating-differential subsidy program, the date that contractor
enters into a contract with the Secretary under the Maritime
Security Program established by subtitle B.
‘‘(d)(1) Notwithstanding any other provision of law, a vessel
may be transferred and registered under an effective United States-
controlled foreign flag if—
‘‘(A) the operator of the vessel receives an operating-
differential subsidy pursuant to a contract under this subtitle
which is in force on October 1, 1994, and the Secretary approves
the replacement of such vessel with a comparable vessel, or
‘‘(B) the vessel is covered by an operating agreement under
subtitle B, and the Secretary approves the replacement of such
vessel with a comparable vessel for inclusion in the Maritime
Security Fleet established under subtitle B.
‘‘(2) Any such vessel may be requisitioned by the Secretary
of Transportation pursuant to section 902.’’.
SEC. 4. DOMESTIC OPERATIONS.
(a) IN GENERAL.—Subtitle B of title VI of the Merchant Marine
Act, 1936, as amended by section 102 of this title, is further
amended by adding at the end the following new section:
‘‘NONCONTIGUOUS DOMESTIC TRADES
‘‘SEC. 656. (a)(1) Except as otherwise provided in this section,
no contractor or related party shall receive payments pursuant
to this subtitle during a period when it participates in a noncontig-
uous domestic trade, except upon written permission of the
Secretary of Transportation. Such written permission shall also
be required for any material change in the number or frequency