H. R. 1350—11
of sailings, the capacity offered, or the domestic ports called by
a contractor or related party in a noncontiguous domestic trade.
The Secretary may grant such written permission pursuant to writ-
ten application of such contractor or related party unless the Sec-
retary finds that—
‘‘(A) existing service in that trade is adequate; or
‘‘(B) the service sought to be provided by the contractor
or related party—
‘‘(i) would result in unfair competition to any other
person operating vessels in such noncontiguous domestic
trade, or
‘‘(ii) would be contrary to the objects and policy of
this Act.
‘‘(2) For purposes of this subsection, ‘written permission of
the Secretary’ means permission which states the capacity offered,
the number and frequency of sailings, and the domestic ports called,
and which is granted following—
‘‘(A) 
written 
application 
containing 
the 
information
required by paragraph (e)(1) by a person seeking such written
permission, notice of which application shall be published in
the Federal Register within 15 days of filing of such application
with the Secretary;
‘‘(B) holding of a hearing on the application under section
554 of title 5, United States Code, in which every person,
firm or corporation having any interest in the application shall
be permitted to intervene and be heard; and
‘‘(C) final decision on the application by the Secretary
within 120 days following conclusion of such hearing.
‘‘(b) Subsection (a) shall not apply in any way to provision
by a contractor of service within the level of service provided by
that contractor as of the date established by subsection (c) or
to provision of service permitted by subsection (d).
‘‘(c) The date referred to in subsection (b) shall be August
9, 1995: Provided however, That with respect to tug and barge
service to Alaska the date referred to in subsection (b) shall be
July 1, 1992.
‘‘(d) A contractor may provide service in a trade in addition
to the level of service provided as of the applicable date established
by subsection (c) in proportion to the annual increase in real gross
product of the noncontiguous State or Commonwealth served since
the applicable date established by subsection (c).
‘‘(e)(1) A person applying for award of an agreement under
this subtitle shall include with the application a description of
the level of service provided by that person in each noncontiguous
domestic trade served as of the date applicable under subsection
(c). The application also shall include, for each such noncontiguous
domestic trade: a list of vessels operated by that person in such
trade, their container carrying capacity expressed in twenty-foot
equivalent units (TEUs) or other carrying capacity, the itinerary
for each such vessel, and such other information as the Secretary
may require by regulation. Such description and information shall
be made available to the public. Within 15 days of the date of
an application for an agreement by a person seeking to provide
service pursuant to subsections (b) and (c) of this section, the
Secretary shall cause to be published in the Federal Register notice
of such description, along with a request for public comment
thereon. Comments on such description shall be submitted to the
H. R. 1350—12
Secretary within 30 days of publication in the Federal Register.
Within 15 days after receipt of comments, the Secretary shall issue
a determination in writing either accepting, in whole or part, or
rejecting use of the applicant’s description to establish the level
of service provided as of the date applicable under subsection (c):
Provided, That notwithstanding the provisions of this subsection,
processing of the application for an award of an agreement shall
not be suspended or delayed during the time in which comments
may be submitted with respect to the determination or during
the time prior to issuance by the Secretary of the required
determination: Provided further, That if the Secretary does not
make the determination required by this paragraph within the
time provided by this paragraph, the description of the level of
service provided by the applicant shall be deemed to be the level
of service provided as of the applicable date until such time as
the Secretary makes the determination.
‘‘(2) No contractor shall implement the authority granted in
subsection (d) of this section except as follows:
‘‘(A) An application shall be filed with the Secretary which
shall state the increase in capacity sought to be offered, a
description of the means by which such additional capacity
would be provided, the basis for applicant’s position that such
increase in capacity would be in proportion to or less than
the increase in real gross product of the relevant noncontiguous
State or Commonwealth since the applicable date established
by subsection (c), and such information as the Secretary may
require so that the Secretary may accurately determine such
increase in real gross product of the relevant noncontiguous
State or Commonwealth.
‘‘(B) Such increase in capacity sought by applicant and
such information shall be made available to the public.
‘‘(C) Within 15 days of the date of an application pursuant
to this paragraph the Secretary shall cause to be published
in the Federal Register notice of such application, along with
a request for public comment thereon.
‘‘(D) Comments on such application shall be submitted
to the Secretary within 30 days of publication in the Federal
Register.
‘‘(E) Within 15 days after receipt of comments, the
Secretary shall issue a determination in writing either accept-
ing, in whole or part, or rejecting, the increase in capacity
sought by the applicant as being in proportion to or less than
the increase in real gross product of the relevant noncontiguous
State or Commonwealth since the applicable date established
by subsection (c): Provided, That, notwithstanding the provi-
sions of this section, if the Secretary does not make the deter-
mination required by this paragraph within the time provided
by this paragraph, the increase in capacity sought by applicant
shall be permitted as being in proportion to or less than such
increase in real gross product until such time as the Secretary
makes the determination.
‘‘(f) With respect to provision by a contractor of service in
a noncontiguous domestic trade not authorized by this section,
the Secretary shall deny payments under the operating agreement
with respect to the period of provision of such service but shall
deny payments only in part if the extent of provision of such
unauthorized service was de minimis or not material.
H. R. 1350—13
‘‘(g) Notwithstanding any other provision of this subtitle, the
Secretary may issue temporary permission for any United States
citizen, as that term is defined in section 2 of the Shipping Act,
1916, to provide service to a noncontiguous State or Commonwealth
upon the request of the Governor of such noncontiguous State
or Commonwealth, in circumstances where an Act of God, a declara-
tion of war or national emergency, or any other condition occurs
that prevents ocean transportation service to such noncontiguous
State or Commonwealth from being provided by persons currently
providing such service. Such temporary permission shall expire
90 days from date of grant, unless extended by the Secretary
upon written request of the Governor of such State or Common-
wealth.
‘‘(h) As used in this section:
‘‘(1) The term ‘level of service provided by a contractor’
in a trade as of a date means—
‘‘(A) with respect to service other than service described
in (B), the total annual capacity provided by the contractor
in that trade for the 12 calendar months preceding that
date: Provided, That, with respect to unscheduled, contract
carrier tug and barge service between points in Alaska
south of the Arctic Circle and points in the contiguous
48 States, the level of service provided by a contractor
shall include 100 percent of the capacity of the equipment
dedicated to such service on the date specified in subsection
(c) and actually utilized in that service in the two-year
period preceding that date, excluding service to points
between Anchorage, Alaska and Whittier, Alaska, served
by common carrier service unless such unscheduled service
is only for carriage of oil or pursuant to a contract with
the United States military: Provided further, That, with
respect to scheduled barge service between the contiguous
48 States and Puerto Rico, such total annual capacity shall
be deemed as such total annual capacity plus the annual
capacity of two additional barges, each capable of carrying
185 trailers and 100 automobiles; and
‘‘(B) with respect to service provided by container
vessels, the overall capacity equal to the sum of—
‘‘(i) 100 percent of the capacity of vessels operated
by or for the contractor on that date, with the vessels’
configuration and frequency of sailing in effect on that
date, and which participate solely in that noncontig-
uous domestic trade; and
‘‘(ii) 75 percent of the capacity of vessels operated
by or for the contractor on that date, with the vessels’
configuration and frequency of sailing in effect on that
date, and which participate in that noncontiguous
domestic trade and in another trade, provided that
the term does not include any restriction on frequency,
or number of sailings, or on ports called within such
overall capacity.
‘‘(2) The level of service set forth in paragraph (1) shall
be described with the specificity required by subsection (e)(1)
and shall be the level of service in a trade with respect to
the applicable date established by subsection (c) only if the
service is not abandoned thereafter, except for interruptions
H. R. 1350—14
due to military contingency or other events beyond the contrac-
tor’s control.
‘‘(3) The term ‘participates in a noncontiguous domestic
trade’ means directly or indirectly owns, charters, or operates
a vessel engaged in transportation of cargo between a point
in the contiguous 48 states and a point in Alaska, Hawaii,
or Puerto Rico, other than a point in Alaska north of the
Arctic Circle.
‘‘(4) The term ‘related party’ means—
‘‘(A) a holding company, subsidiary, affiliate, or associ-
ate of a contractor who is a party to an operating agreement
under this subtitle; and
‘‘(B) an officer, director, agent, or other executive of
a contractor or of a person referred to in subparagraph
(A).’’.
(b) CONFORMING AMENDMENT.—Section 805 of the Merchant
Marine Act, 1936 (46 U.S.C. App. 1223) is amended—
(1) by striking ‘‘title VI of this Act’’ each place it appears
and inserting ‘‘subtitle A of title VI of this Act’’; and
(2) by striking ‘‘under title VI’’ each place it appears and
inserting ‘‘under subtitle A of title VI’’.
SEC. 5. USE OF FOREIGN-FLAG VESSELS.
(a) IN GENERAL.—Section 804 of the Merchant Marine Act,
1936 (46 U.S.C. App. 1222) is amended by adding at the end
the following new subsection:
‘‘(f) The provisions of subsection (a) shall not preclude a contrac-
tor receiving assistance under subtitle A or B of title VI, or any
holding company, subsidiary, or affiliate of the contractor, or any
officer, director, agent, or executive thereof, from—
‘‘(1) owning, chartering, or operating any foreign-flag vessel
on a voyage or a segment of a voyage that does not call
at a port in the United States;
‘‘(2) owning, chartering, or operating any foreign-flag vessel
in line haul service between the United States and foreign
ports if—
‘‘(A) the foreign-flag vessel was owned, chartered, or
operated by, or is a replacement for a foreign-flag vessel
owned, chartered, or operated by, such owner or operator,
or any holding company, subsidiary, affiliate, or associate
of such owner or operator, on the date of enactment of
the Maritime Security Act of 1996;
‘‘(B) the owner or operator, with respect to each addi-
tional foreign-flag vessel, other than a time chartered ves-
sel, has first applied to have that vessel covered by an
operating agreement under subtitle B of title VI, and the
Secretary has not awarded an operating agreement with
respect to that vessel within 90 days after the filing of
the application; or
‘‘(C) the vessel has been placed under foreign docu-
mentation pursuant to section 9 of the Shipping Act, 1916
(46 U.S.C. App. 808), except that any foreign-flag vessel,
other than a time chartered vessel, a replacement vessel
under section 653(d), or a vessel operated by the owner
or operator on the date of enactment of the Maritime
Security Act of 1996, in line haul service between the
United States and foreign ports is registered under the
H. R. 1350—15
flag of an effective United States-controlled foreign flag,
and available to be requisitioned by the Secretary of
Transportation pursuant to section 902 of this Act;
‘‘(3) owning, chartering, or operating foreign-flag bulk cargo
vessels that are operated in foreign-to-foreign service or the
foreign commerce of the United States;
‘‘(4) chartering or operating foreign-flag vessels that are
operated solely as replacement vessels for United States-flag
vessels or vessel capacity that are made available to the
Secretary of Defense pursuant to section 653 of this Act; or
‘‘(5) entering into time or space charter or other cooperative
agreements with respect to foreign-flag vessels or acting as
agent or broker for a foreign-flag vessel or vessels.’’.
(b) EFFECTIVE DATE.—The amendment made by subsection (a)
shall apply to a contractor under subtitle B of title VI of the
Merchant Marine Act, 1936, as amended by this Act, upon enact-
ment of this Act, and shall apply to a contractor under subtitle
A of title VI of that Act, upon the earlier of—
(1) the date that a payment is made, under the Maritime
Security Program under subtitle B of that title to a contractor
under subtitle B of that title who is not party to an operating-
differential subsidy contract under subtitle A of that title, with
the Secretary of Transportation 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 operat-
ing-differential subsidy program under subtitle A of that title,
the date that contractor enters into a contract with the
Secretary under the Maritime Security Program established
by subtitle B of that title.
SEC. 6. AMENDMENT TO SHIPPING ACT, 1916.
Section 9 of the Shipping Act, 1916 (46 U.S.C. App. 808) is
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 of
Transportation 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 replace-
ment vessel of a capacity that is equivalent or greater, as
measured by deadweight tons, gross tons, or container equiva-
lent 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) an application for an operating agreement under
subtitle B of title VI of the Merchant Marine Act, 1936 has
been filed with respect to a vessel which is eligible to be
included in the Maritime Security Fleet under section 651(b)(1)
of that Act; and
‘‘(B) the Secretary has not awarded an operating agreement
with respect to that vessel within 90 days after the date of
that application;
‘‘(3) a contract covering the vessel under subtitle A of
title VI of the Merchant Marine Act, 1936 has expired, and
H. R. 1350—16
that vessel is more than 15 years of age on the date the
contract expires; or
‘‘(4) an operating agreement covering the vessel under sub-
title B of title VI of the Merchant Marine Act, 1936 has
expired.’’.
SEC. 7. CONSTRUCTION DIFFERENTIAL SUBSIDY RESTRICTIONS.
Title V of the Merchant Marine Act, 1936 (46 U.S.C. App.
1151 et seq.) is amended by adding at the end the following new
section:
‘‘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. 8. REGULATIONS.
(a) IN GENERAL.—The Secretary of Transportation may pre-
scribe rules as necessary to carry out this Act and the amendments
made by this Act.
(b) INTERIM RULES.—The Secretary of Transportation may
prescribe interim rules necessary to carry out this Act and the
amendments made 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 rules prescribed under the authority of this subsection
that are not earlier superseded by final rules shall expire no later
than 270 days after the date of enactment of this Act.
SEC. 9. MERCHANT SHIP SALES ACT OF 1946 AMENDMENT.
Section 11 of the Merchant Ship Sales Act of 1946 (50 U.S.C.
App. 1744) is amended as follows:
(1) In subsection (b)(2) by striking ‘‘Secretary of the Navy,’’
and inserting ‘‘Secretary of Defense,’’.
(2) By striking subsection (c) and redesignating subsection
(d) as subsection (c).
SEC. 10. REEMPLOYMENT RIGHTS FOR CERTAIN MERCHANT SEAMEN.
(a) IN GENERAL.—Title III of the Merchant Marine Act, 1936
(46 U.S.C. App. 1131) is amended by inserting after section 301
the following new section:
‘‘SEC. 302. (a) An individual who is certified by the Secretary
of Transportation under subsection (c) shall be entitled to reemploy-
ment rights and other benefits substantially equivalent to the rights
and benefits provided for by chapter 43 of title 38, United States
Code, for any member of a Reserve component of the Armed Forces
of the United States who is ordered to active duty.
‘‘(b) An individual may submit an application for certification
under subsection (c) to the Secretary of Transportation not later
than 45 days after the date the individual completes a period
of employment described in subsection (c)(1)(A) with respect to
which the application is submitted.
‘‘(c) Not later than 20 days after the date the Secretary of
Transportation receives from an individual an application for certifi-
cation under this subsection, the Secretary shall—
H. R. 1350—17
‘‘(1) determine whether or not the individual—
‘‘(A) was employed in the activation or operation of
a vessel—
‘‘(i) in the National Defense Reserve Fleet main-
tained under section 11 of the Merchant Ship Sales
Act of 1946, in a period in which that vessel was
in use or being activated for use under subsection
(b) of that section;
‘‘(ii) that is requisitioned or purchased under
section 902 of this Act; or
‘‘(iii) that is owned, chartered, or controlled by
the United States and used by the United States for
a war, armed conflict, national emergency, or maritime
mobilization need (including for training purposes or
testing for readiness and suitability for mission
performance); and
‘‘(B) during the period of that employment, possessed
a valid license, certificate of registry, or merchant mariner’s
document issued under chapter 71 or chapter 73 (as
applicable) of title 46, United States Code; and
‘‘(2) if the Secretary makes affirmative determinations
under paragraph (1) (A) and (B), certify that individual under
this subsection.
‘‘(d) For purposes of reemployment rights and benefits provided
by this section, a certification under subsection (c) shall be consid-
ered to be the equivalent of a certificate referred to in paragraph
(1) of section 4301(a) of title 38, United States Code.’’.
(b) APPLICATION.—The amendment made by subsection (a) shall
apply to employment described in section 302(c)(1)(A) of the
Merchant Marine Act, 1936, as amended by subsection (a), occurring
after the date of enactment of this Act.
(c) REGULATION.—Not later than 120 days after the date of
the enactment of this Act, the Secretary of Transportation shall
issue regulations implementing this section.
SEC. 11. TITLE XI LOAN GUARANTEES.
Title XI of the Merchant Marine Act, 1936 (46 U.S.C. App.
1271 et seq.) is amended—
(1) in section 1101(b), by striking ‘‘owned by citizens of
the United States’’;
(2) in section 1104B(a), in the material preceding paragraph
(1), by striking ‘‘owned by citizens of the United States’’; and
(3) in section 1110(a), by striking ‘‘owned by citizens of
the United States’’.
SEC. 12. EXTENSION OF WAR RISK INSURANCE AUTHORITY.
Section 1214 of the Merchant Marine Act, 1936 (46 U.S.C.
App. 1294) is amended by striking ‘‘June 30, 1995’’ and inserting
‘‘June 30, 2000’’.
SEC. 13. VESSEL LOAN GUARANTEE PROGRAM.
(a) RISK
FACTOR
DETERMINATIONS.—Section 1103 of the
Merchant Marine Act, 1936 (46 U.S.C. App. 1273) is amended
by adding at the end the following new subsection:
‘‘(h)(1) The Secretary shall—
‘‘(A) establish in accordance with this subsection a system
of risk categories for obligations guaranteed under this title,
that categorizes the relative risk of guarantees made under
H. R. 1350—18
this title with respect to the risk factors set forth in paragraph
(3); and
‘‘(B) determine for each of the risk categories a subsidy
rate equivalent to the cost of obligations in the category,
expressed as a percentage of the amount guaranteed under
this title for obligations in the category.
‘‘(2)(A) Before making a guarantee under this section for an
obligation, the Secretary shall apply the risk factors set forth in
paragraph (3) to place the obligation in a risk category established
under paragraph (1)(A).
‘‘(B) The Secretary shall consider the aggregate amount avail-
able to the Secretary for making guarantees under this title to
be reduced by the amount determined by multiplying—
‘‘(i) the amount guaranteed under this title for an
obligation, by
‘‘(ii) the subsidy rate for the category in which the
obligation is placed under subparagraph (A) of this paragraph.
‘‘(C) The estimated cost to the Government of a guarantee
made by the Secretary under this title for an obligation is deemed
to be the amount determined under subparagraph (B) for the
obligation.
‘‘(D) The Secretary may not guarantee obligations under this
title after the aggregate amount available to the Secretary under
appropriations Acts for the cost of loan guarantees is required
by subparagraph (B) to be considered reduced to zero.
‘‘(3) The risk factors referred to in paragraphs (1) and (2)
are the following:
‘‘(A) If applicable, the country risk for each eligible export
vessel financed or to be financed by an obligation.
‘‘(B) The period for which an obligation is guaranteed or
to be guaranteed.
‘‘(C) The amount of an obligation, which is guaranteed
or to be guaranteed, in relation to the total cost of the project
financed or to be financed by the obligation.
‘‘(D) The financial condition of an obligor or applicant for
a guarantee.
‘‘(E) If applicable, any guarantee related to the project,
other than the guarantee under this title for which the risk
factor is applied.
‘‘(F) If applicable, the projected employment of each vessel
or equipment to be financed with an obligation.
‘‘(G) If applicable, the projected market that will be served
by each vessel or equipment to be financed with an obligation.
‘‘(H) The collateral provided for a guarantee for an
obligation.
‘‘(I) The management and operating experience of an obligor
or applicant for a guarantee.
‘‘(J) Whether a guarantee under this title is or will be
in effect during the construction period of the project.
‘‘(4) In this subsection, the term ‘cost’ has the meaning given
that term in section 502 of the Federal Credit Reform Act of
1990 (2 U.S.C. 661a).’’.
(b) APPLICATION.—Subsection (h)(2) of section 1103 of the
Merchant Marine Act, 1936 (46 U.S.C. App. 1273), as amended
by subsection (a) of this section, shall apply to guarantees that
the Secretary of Transportation makes or commits to make with
H. R. 1350—19
any amounts that are unobligated on or after the date of enactment
of this Act.
(c) GUARANTEE FEES.—Section 1104A(e) of title XI of the
Merchant Marine Act, 1936 (46 U.S.C. App. 1274(e)) is amended
to read as follows:
‘‘(e)(1) Except as otherwise provided in this subsection, the
Secretary shall prescribe regulations to assess in accordance with
this subsection a fee for the guarantee of an obligation under
this title.
‘‘(2)(A) The amount of a fee under this subsection for a
guarantee is equal to the sum determined by adding the amounts
determined under subparagraph (B) for the years in which the
guarantee is in effect.
‘‘(B) The amount referred to in subparagraph (A) for a year
is the present value (determined by applying the discount rate
determined under subparagraph (F)) of the amount determined
by multiplying—
‘‘(i) the estimated average unpaid principal amount of the
obligation that will be outstanding during the year (determined
in accordance with subparagraph (E)), by
‘‘(ii) the fee rate established under subparagraph (C) for
the obligation for each year.
‘‘(C) The fee rate referred to in subparagraph (B)(ii) for an
obligation shall be—
‘‘(i) in the case of an obligation for a delivered vessel
or equipment, not less than one-half of 1 percent and not
more than 1 percent, determined by the Secretary for the
obligation under the formula established under subparagraph
(D); or
‘‘(ii) in the case of an obligation for a vessel to be con-
structed, reconstructed, or reconditioned, or of equipment to
be delivered, not less than one-quarter of 1 percent and not
more than one-half of 1 percent, determined by the Secretary
for the obligation under the formula established under subpara-
graph (D).
‘‘(D) The Secretary shall establish a formula for determining
the fee rate for an obligation for purposes of subparagraph (C),
that—
‘‘(i) is a sliding scale based on the creditworthiness of
the obligor;
‘‘(ii) takes into account the security provided for a guarantee
under this title for the obligation; and
‘‘(iii) uses—
‘‘(I) in the case of the most creditworthy obligors, the
lowest rate authorized under subparagraph (C) (i) or (ii),
as applicable; and
‘‘(II) in the case of the least creditworthy obligors,
the highest rate authorized under subparagraph (C) (i)
or (ii), as applicable.
‘‘(E) For purposes of subparagraph (B)(i), the estimated average
unpaid principal amount does not include the average amount
(except interest) on deposit in a year in the escrow fund under
section 1108.
‘‘(F) For purposes of determining present value under subpara-
graph (B) for an obligation, the Secretary shall apply a discount
rate determined by the Secretary of the Treasury taking into consid-
eration current market yields on outstanding obligations of the
H. R. 1350—20
United States having periods to maturity comparable to the period
to maturity for the obligation with respect to which the determina-
tion of present value is made.
‘‘(3) A fee under this subsection shall be assessed and collected
not later than the date on which amounts are first paid under
an obligation with respect to which the fee is assessed.
‘‘(4) A fee paid under this subsection is not refundable. However,
an obligor shall receive credit for the amount paid for the remaining
term of the guaranteed obligation if the obligation is refinanced
and guaranteed under this title after such refinancing.
‘‘(5) A fee paid under subsection (e) shall be included in the
amount of the actual cost of the obligation guaranteed under this
title and is eligible to be financed under this title.’’.
SEC. 14. MARITIME POLICY REPORT.
(a) REPORT.—The Secretary of Transportation shall transmit
to the Congress a report setting forth the Department of Transpor-
tation’s policies for the 5-year period beginning October 1, 1995,
with respect to—
(1) fostering and maintaining a United States merchant
marine capable of meeting economic and national security
requirements;
(2) improving the vitality and competitiveness of the United
States merchant marine and the maritime industrial base,
including ship repairers, shipbuilders, ship manning, ship
operators, and ship suppliers;
(3) reversing the precipitous decrease in the number of
ships in the United States-flag fleet and the Nation’s shipyard
and repair capability;
(4) stabilizing and eventually increasing the number of
mariners available to crew United States merchant vessels;
(5) achieving adequate manning of merchant vessels for
national security needs during a mobilization;
(6) ensuring that sufficient civil maritime resources will
be available to meet defense deployment and essential economic
requirements in support of our national security strategy;
(7) ensuring that the United States maintains the capabil-
ity to respond unilaterally to security threats in geographic
areas not covered by alliance commitments and otherwise meets
sealift requirements in the event of crisis or war;
(8) ensuring that international agreements and practices
do not place United States maritime industries at an unfair
competitive disadvantage in world markets;
(9) ensuring that Federal agencies promote, through effi-
cient application of laws and regulations, the readiness of the
United States merchant marine and supporting industries; and
(10) any other relevant maritime policies.
(b) DATE OF TRANSMITTAL.—The report required under sub-
section (a) shall be transmitted along with the President’s budget
submission, under section 1105 of title 31, United States Code,
for fiscal year 1997.
SEC. 15. RELIEF FROM UNITED STATES DOCUMENTATION REQUIRE-
MENT FOR 3 VESSELS.
(a) IN GENERAL.—Notwithstanding any other law or any agree-
ment with the United States Government, a vessel described in
subsection (b) may be sold to a person that is not a citizen of
H. R. 1350—21
the United States and transferred to or placed under a foreign
registry.
(b) VESSELS DESCRIBED.—The vessels referred to in subsection
(a) are the following:
(1) RAINBOW HOPE (United States official number
622178).
(2) IOWA TRADER (United States official number 642934).
(3) KANSAS TRADER (United States official number
634621).
SEC. 16. VESSEL REPAIR AND MAINTENANCE PILOT PROGRAM.
(a) IN GENERAL.—The Secretary of Transportation shall conduct
a pilot program to evaluate the feasibility of using renewable con-
tracts for the maintenance and repair of outported vessels in the
Ready Reserve Force to enhance the readiness of those vessels.
Under the pilot program, the Secretary, subject to the availability
of appropriations and within 6 months after the date of the enact-
ment of this Act, shall award 9 contracts for this purpose.
(b) 
USE
OF
VARIOUS
CONTRACTING
ARRANGEMENTS.—In
conducting a pilot program under this section, the Secretary of
Transportation shall use contracting arrangements similar to those
used by the Department of Defense for procuring maintenance
and repair of its vessels.
(c) CONTRACT REQUIREMENTS.—Each contract with a shipyard
under this section shall—
(1) subject to subsection (d), provide for the procurement
from the shipyard of all repair and maintenance (including
activation, deactivation, and drydocking) for 1 vessel in the
Ready Reserve Force that is outported in the geographical
vicinity of the shipyard;
(2) be effective for 1 fiscal year; and
(3) be renewable, subject to the availability of appropria-
tions, for each subsequent fiscal year through fiscal year 1998.
(d) LIMITATION OF WORK UNDER CONTRACTS.—A contract under
this section may not provide for the procurement of operation or
manning for a vessel that may be procured under another contract
for the vessel to which section 11(d)(2) of the Merchant Ship Sales
Act of 1946 (50 U.S.C. App. 1774(d)(2)) applies.
(e) GEOGRAPHIC DISTRIBUTION.—The Secretary shall seek to
distribute contract awards under this section to shipyards located
throughout the United States.
(f) REPORTS.—The Secretary shall submit to the Congress—
(1) an interim report on the effectiveness of each contract
under this section in providing for economic and efficient repair
and maintenance of the vessel included in the contract, no
later than 20 months after the date of the enactment of this
Act; and
(2) a final report on that effectiveness no later than 6
months after the termination of all contracts awarded pursuant
to this section.
SEC. 17. STREAMLINING OF CARGO ALLOCATION PROCEDURES.
(a) AMENDMENTS.—Section 901b(c)(3) of the Merchant Marine
Act, 1936 (46 U.S.C. App. 1241f(c)(3)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘and consistent with those sections,’’
and inserting ‘‘and, subject to subparagraph (B) of this
paragraph, consistent with those sections,’’; and
H. R. 1350—22
(B) by striking ‘‘50 percent’’ and inserting ‘‘25 percent’’;
and
(2) by striking subparagraph (B) and inserting the following
new subparagraphs:
‘‘(B) In carrying out this paragraph, there shall first be
calculated the allocation of 100 percent of the quantity to be pro-
cured on an overall lowest landed cost basis without regard to
the country of documentation of the vessel and there shall be
allocated to the Great Lakes port range any cargoes for which
it has the lowest landed cost under that calculation. The require-
ments for United States-flag transportation under section 901(b)
and this section shall not apply to commodities allocated under
subparagraph (A) to the Great Lakes port range, and commodities
allocated under subparagraph (A) to that port range may not be
reallocated or diverted to another port range to meet those require-
ments to the extent that the total tonnage of commodities to which
subparagraph (A) applies that is furnished and transported from
the Great Lakes port range is less than 25 percent of the total
annual tonnage of such commodities furnished.
‘‘(C) In awarding any contract for the transportation by vessel
of commodities from the Great Lakes port range pursuant to an
export activity referred to in subsection (b), each agency or
instrumentality—
‘‘(i) shall consider expressions of freight interest for any
vessel from a vessel operator who meets reasonable require-
ments for financial and operational integrity; and
‘‘(ii) may not deny award of the contract to a person based
on the type of vessel on which the transportation would be
provided (including on the basis that the transportation would
not be provided on a liner vessel (as that term is used in
the Shipping Act of 1984, as in effect on November 14, 1995)),
if the person otherwise satisfies reasonable requirements for
financial and operational integrity.’’.
(b) CONFORMING AMENDMENTS.—(1) Paragraph (4) of section
901b(c) of that Act is repealed.
(2) 
Paragraph 
(5) 
of 
that 
section 
is 
redesignated 
as
paragraph (4).
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.