103D CONGRESS
2D SESSION
H. R. 4003
AN ACT
To authorize appropriations for fiscal year 1995 for certain
maritime programs of the Department of Transportation,
to amend the Merchant Marine Act, 1936, as amended,
to revitalize the United States-flag merchant marine, and
for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
TITLE I—MARITIME SECURITY
AND COMPETITIVENESS
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Maritime Security and
Competitiveness Act of 1994’’.
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SEC. 101. 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:
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‘‘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 substan-
tial portion of the water-borne export and import
foreign commerce of the United States and to pro-
vide shipping service essential for maintaining the
flow of such domestic and foreign water-borne com-
merce 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 re-
pair.’’.
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SEC. 102. 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 capa-
bilities and maintain a presence in international commer-
cial 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 deci-
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sion 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 docu-
mented 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 en-
tered into before May 19, 1993;
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‘‘(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 Sec-
retary 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 en-
tered 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 un-
availability of series transition payments under title
XIV to build that vessel;
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‘‘(iv) the vessel is delivered from the foreign
shipyard within 30 months after the Secretary’s cer-
tification 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 carry-
ing 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 deter-
mined by the Secretary to be suitable for use by
the United States for national defense or mili-
tary purposes in time of war or national emer-
gency.
‘‘(c) DETERMINATIONS OF ELIGIBILITY.—
‘‘(1) DETERMINATIONS
REQUIRED.—The Sec-
retary shall make determinations under subsection
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(b) for each vessel for which an eligibility decision
application is submitted under this section.
‘‘(2) DETERMINATION
REGARDING
CERTIFI-
CATION.—The Secretary shall—
‘‘(A) make the finding and certification
under paragraph (3)(E)(ii) for a vessel, or de-
termine not to, by not later than 60 days after
the date of receipt of an eligibility decision ap-
plication for the vessel; and
‘‘(B) make the finding and certification
under paragraph (3)(F)(iii) for a vessel, or de-
termine 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 main-
tain a list of vessels that the Secretary decides in ac-
cordance with this section are eligible to be enrolled
in the Fleet.
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‘‘(2) REMOVAL OF VESSELS FROM LIST.—The
Secretary shall remove a vessel from the list main-
tained 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 sub-
mitted 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 ves-
sel fails to submit a new eligibility decision
application for the vessel; or
‘‘(ii) such an application is not ap-
proved 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 ves-
sel knows has had fruadulently affixed to
it a label bearing a ‘Made in America’ in-
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scription, or any inscription with the same
meaning.
‘‘SEC. 404. OPERATING AGREEMENTS, GENERALLY.
‘‘(a) REQUIREMENT
FOR ENROLLMENT
OF VES-
SELS.—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 agree-
ment with the Secretary under this section.
‘‘(b) PRIORITY FOR AWARDING AGREEMENTS.—Sub-
ject to the availability of appropriations, the Secretary
shall enter into operating agreements according to the fol-
lowing 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
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‘‘(II) affiliated with a corporation
operating or managing other United
States documented vessels for the Sec-
retary of Defense or chartering other
vessels to the Secretary of Defense.
‘‘(B) LIMITATION ON NUMBER OF OPERAT-
ING AGREEMENTS.—The total number of oper-
ating agreements that may be entered into by
a person under the priority in subparagraph
(A)—
‘‘(i) for vessels described in subpara-
graph (A)(i), may not exceed the sum of—
‘‘(I) the number of United States
documented vessels the person oper-
ated 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 subpara-
graph (A)(ii), may not exceed 4 vessels.
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‘‘(C) TREATMENT
OF
RELATED
PAR-
TIES.—For purposes of subparagraph (B), a re-
lated 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 op-
erating 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).
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‘‘(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 oper-
ating 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 approxi-
mately 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 nec-
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essary for operating agreements for all vessels in the
priority.
‘‘(3) TREATMENT OF RELATED PARTIES.—For
purposes of paragraph (2), a related party with re-
spect to a person shall be treated as the person.
‘‘(d) TIME LIMIT FOR DECISION ON ENTERING OP-
ERATING AGREEMENT.—The Secretary shall enter an op-
erating agreement for a vessel within 90 days after mak-
ing the decision that the vessel is eligible to be enrolled
in the Fleet under section 403(a).
‘‘(e) EFFECTIVE
DATE
OF
OPERATING
AGREE-
MENT.—The effective date of an operating agreement may
not be later than the later of—
‘‘(1) the date the vessel covered by the agree-
ment enters into the trade required under section
405(a)(1)(A);
‘‘(2) the date the vessel covered by the agree-
ment 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 ap-
plies to the vessel; or
‘‘(4) the date of the expiration or termination
of a charter of the vessel to the United States Gov-
ernment that was entered into before the date of the
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enactment of the Maritime Security and Competi-
tiveness Act of 1993.
‘‘(f) EXPIRATION OF OFFERS FOR AGREEMENTS.—
Unless extended by the Secretary, an offer by the Sec-
retary 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 pe-
riod of that noncompliance, and for interest on those
amounts determined under paragraph (3).
‘‘(2) FAILURE TO OPERATE REPLACEMENT VES-
SEL.—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
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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, respec-
tively.
‘‘(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 per-
son that was a contractor for the vessel under an operat-
ing agreement terminated under section 405(a)(10), be-
fore the end of the term of the agreement that was termi-
nated.
‘‘(j) BINDING OBLIGATION OF GOVERNMENT.—An
operating agreement constitutes a contractual obligation
of the United States Government to pay the amounts pro-
vided for under that agreement.
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‘‘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 en-
dorsement 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 coast-
wise and foreign trade, except for coastwise
trade allowed under a registry endorsement is-
sued 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 sub-
section, the following amounts for each fiscal
year in which the vessel is operated in accord-
ance with the agreement:
‘‘(i) For fiscal year 1994, $2,300,000.
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‘‘(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 differen-
tial subsidy contract under title VI.
‘‘(3) TERMINATION
BASED
ON
AGE
OF
VES-
SEL.—
‘‘(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
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agreement and before the vessel is 25
years of age.
‘‘(B) EXCEPTION.—The operating agree-
ment shall not terminate under subparagraph
(A) if the contractor agrees to acquire a re-
placement for the vessel from among vessels on
the list maintained under section 403(d), and—
‘‘(i) in the case of a vessel to be re-
placed with a new vessel, the contractor
enters into a binding contract with a ship-
yard that requires the shipyard to deliver
the replacement vessel by not later than 30
months after the later of the date the oper-
ating 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 re-
placed with an existing vessel, the contrac-
tor 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 oper-
ating agreement is entered into or the date
the operating agreement would otherwise
expire under subparagraph (A).
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‘‘(4) AVAILABILITY OF VESSEL.—
‘‘(A) IN GENERAL.—On a request of the
President during time of war or national emer-
gency or when considered by the President, act-
ing through the Secretary in consultation with
the Secretary of Defense, to be necessary in the
interest of national security, and subject to sub-
paragraph (B), the contractor as soon as prac-
ticable 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 cov-
ered 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
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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 re-
ceipt of the request; or
‘‘(C) in any other reasonable manner au-
thorized 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 agree-
ment, reasonable compensation at reasonable com-
mercial rates for the period of time the vessel is
chartered or the contractor provides space on the
vessel under paragraph (4).
‘‘(8) REQUIRED OPERATION.—
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‘‘(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, in-
cluding days during which the vessel is dry-
docked, surveyed, inspected, or repaired.
‘‘(B) REDUCTION IN PAYMENTS.—If a ves-
sel operates in the trade required under para-
graph (1), and under conditions eligible for pay-
ment under this title, for less than the time re-
quired 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
AUTHOR-
IZED.—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—
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‘‘(i) the vessel covered by the agree-
ment 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 sub-
section (a)(2)—
‘‘(A) shall be paid at a pro rated amount
at the beginning of each month in equal install-
ments; 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 ci-
vilian or military preference cargoes under—
‘‘(i) section 901(a), 901(b), or 901b;
‘‘(ii) section 2631 of title 10, United
States Code; or
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‘‘(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 para-
graph (1)(B) that is bulk cargo (as defined in sec-
tion 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 ac-
cordance with regulations prescribed by the Secretary, un-
less the transfer is disapproved by the Secretary within
90 days after the date of that notification. A transfer shall
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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 indi-
rectly owns, charters, or operates a vessel en-
gaged in the transportation of cargo in non-
contiguous trade other than in accordance with
a waiver under subsection (b), (c), or (d); or
‘‘(B) if the contractor is authorized to op-
erate 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
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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 per-
mitted under the waiver.
‘‘(2) LIMITATIONS
ON
PROHIBITION.—Para-
graph (1) applies to a contractor only in the years
specified for payments under the operating agree-
ment entered into by the contractor.
‘‘(b) GENERAL WAIVER AUTHORITY.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (c), the Secretary may waive, in writing, the
application of subsection (a) to a contractor pursu-
ant 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
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‘‘(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 per-
mitted,
‘‘(ii) for containerized or trailer service, the
annual 40-foot equivalent unit shipboard con-
tainer and trailer or vehicle or general cargo ca-
pacity 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 ca-
pacity, permitted.
‘‘(3) APPLICATIONS FOR WAIVERS.—An appli-
cation for a waiver under this subsection may be
submitted by a contractor and shall describe, as ap-
plicable, the nature and scope of—
‘‘(A) the service proposed to be conducted
in a noncontiguous trade under the waiver; or
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‘‘(B) any proposed material change or in-
crease 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 applica-
tion; and
‘‘(ii) begin a proceeding on the appli-
cation 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 pro-
posed service or proposed material
change or increase in a previously per-
mitted service;
‘‘(III) the projected effect of the
proposed service or proposed material
change or increase in existing service;
and
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‘‘(IV) recommendations on condi-
tions that should be contained in any
waiver for the proposed service or ma-
terial 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 ex-
peditious 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 sub-
mitted for the record.
‘‘(6) LIMITATION ON CONSIDERATION OF CER-
TAIN EXISTING SERVICE.—
‘‘(A) LIMITATION.—In determining wheth-
er to grant a waiver under this subsection for
noncontiguous trade with Hawaii, the Secretary
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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 for-
eign 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 pur-
suant to an application submitted in accordance with
this subsection if the Secretary finds that the con-
tractor, 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—
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‘‘(i) in a noncontiguous trade on July
1, 1992; or
‘‘(ii) in furnishing seasonal service in
a season ordinarily covered by its oper-
ation, during the 12 calendar months pre-
ceding July 1, 1992; and
‘‘(B) has operated in that service since
that time, except for interruptions of service re-
sulting 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 ap-
plicant (or related party or predecessor in inter-
est) 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
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service in the noncontiguous trade result-
ing 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
VES-
SELS.—If an applicant under this subsection
was offering service as an operator of container-
ized vessels in noncontiguous trades with Ha-
waii, 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
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of the vessels employed in the service on
July 1, 1992;
‘‘(ii) 156 sailings each year in each di-
rection 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 ca-
pacity of its vessels employed in the service
on the date of the enactment of the Mari-
time 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—
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‘‘(i) 17 sailings each year in each di-
rection between ports in Washington, Or-
egon, 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 di-
rection 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
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lized in that service in the 2-year period
preceding that date.
‘‘(D) ANNUALIZATION.—Capacity other-
wise 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 capac-
ity permitted under this waiver in any di-
rection 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 equiva-
lent 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 capac-
ity under clause (i) in the noncontiguous
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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 im-
mediately 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 capac-
ity, if any, both authorized and used under
the previous sentence) during 9 months of
any one calendar year, than in the next fol-
lowing 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 termi-
nation 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 agree-
ment enters into another operating agreement
after that termination.
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‘‘(3) APPLICATIONS
FOR
WAIVERS.—For a
waiver under this subsection a contractor shall sub-
mit 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 pub-
lish a notice of receipt of an application for a
waiver under this subsection within 30 days
after receiving the application.
‘‘(B) HEARING
PROHIBITED.—The Sec-
retary may not conduct a hearing on an appli-
cation 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 ap-
plication.
‘‘(5) DECISION
ON
APPLICATION.—Subject to
the time required for publication of notice and for
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receipt and evaluation of comments by the Sec-
retary, an application for a waiver under this sub-
section submitted at the same time the applicant ap-
plies for inclusion of a vessel in the Fleet shall be
granted in accordance with the level of service deter-
mined 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 sub-
ject to a waiver under this subsection is not author-
ized 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 Sec-
retary finds that adequate capacity continues to be other-
wise unavailable.
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‘‘(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 waiv-
er—
‘‘(1) the ports served during the year;
‘‘(2) the number or frequency of sailings per-
formed during the year; and
‘‘(3) the volume of cargo carried or, for contain-
erized or trailer service, the annual 40-foot equiva-
lent unit shipboard container, trailer, or vehicle ca-
pacity utilized during the year, or for tug and barge
service, the annual barge house and barge deck ca-
pacity 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, affili-
ate, or associate of a contractor; and
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‘‘(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 sec-
tion, 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 oper-
ating 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 ves-
sel for that service within 60 days after that applica-
tion is submitted;
‘‘(2) the Secretary, after notice and an oppor-
tunity 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.