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
noncontiguous domestic trade; and
‘‘(ii) 75 percent of the capacity of ves-
sels 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 non-
contiguous domestic trade and in another
trade, provided that the term does not in-
clude any restriction on frequency, or num-
ber 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 estab-
lished by subsection (c) only if the service is not
abandoned thereafter, except for interruptions due
to military contingency or other events beyond the
contractor’s control.
‘‘(3) The term ‘participates in a noncontiguous
domestic trade’ means directly or indirectly owns,
charters, or operates a vessel engaged in transpor-
tation 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 Arc-
tic Circle.
‘‘(4) The term ‘related party’ means—
‘‘(A) a holding company, subsidiary, affili-
ate, or associate 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 App. U.S.C. 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 Ma-
rine Act, 1936 (46 App. U.S.C. 1222) is amended by add-
ing at the end the following new subsection:
‘‘(f) The provisions of subsection (a) shall not pre-
clude a contractor 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 for-
eign-flag vessel on a voyage or a segment of a voy-
age that does not call at a port in the United States;
‘‘(2) owning, chartering, or operating any for-
eign-flag vessel in line haul service between the Unit-
ed 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 associ-
ate of such owner or operator, on the date of
enactment of the Maritime Security Act of
1995;
‘‘(B) the owner or operator, with respect to
each additional foreign-flag vessel, other than a
time chartered vessel, 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 for-
eign documentation pursuant to section 9 of the
Shipping Act, 1916 (46 App. U.S.C. 808), ex-
cept 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 1995, in line
haul service between the United States and for-
eign ports is registered under the flag of an ef-
fective United States-controlled foreign flag,
and available to be requisitioned by the Sec-
retary 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 for-
eign-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 amend-
ed by this Act, upon enactment 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 Sec-
retary of Transportation to cause notice of the date
of such payment to be published in the Federal Reg-
ister as soon as possible; or
(2) with respect to a particular contractor
under the operating-differential subsidy program
under subtitle A of that title, the date that contrac-
tor enters into a contract with the Secretary under
the Maritime Security Program established by sub-
title B of that title.
SEC. 6. AMENDMENT TO SHIPPING ACT, 1916.
Section 9 of the Shipping Act, 1916 (46 App. U.S.C.
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 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;
reconstructed, or reconditioned with the aid of construc-
tion-differential subsidy shall terminate upon the expira-
tion 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 prescribe rules as necessary to carry out this Act and
the amendments made by this Act.
(b) INTERIM RULES.—The Secretary of Transpor-
tation 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 pre-
scribed under the authority of this subsection that are not
earlier superseded by final rules shall expire no later than
270 day 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 App. U.S.C. 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 MER-
CHANT SEAMEN.
(a) IN GENERAL.—Title III of the Merchant Marine
Act, 1936 (46 App. U.S.C. 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 reemployment rights and other benefits sub-
stantially 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 cer-
tification under subsection (c) to the Secretary of Trans-
portation not later than 45 days after the date the individ-
ual completes a period of employment described in sub-
section (c)(1)(A) with respect to which the application is
submitted.
‘‘(c) Not later than 20 days after the date the Sec-
retary of Transportation receives from an individual an
application for certification under this subsection, the Sec-
retary shall—
‘‘(1) determine whether or not the individual—
‘‘(A) was employed in the activation or op-
eration of a vessel—
‘‘(i) in the National Defense Reserve
Fleet maintained under section 11 of the
Merchant Ship Sales Act of 1946, in a pe-
riod in which that vessel was in use or
being activated for use under subsection
(b) of that section;
‘‘(ii) that is requisitioned or pur-
chased under section 902 of this Act; or
‘‘(iii) that is owned, chartered, or con-
trolled by the United States and used by
the United States for a war, armed con-
flict, national emergency, or maritime mo-
bilization need (including for training pur-
poses or testing for readiness and suit-
ability for mission performance); and
‘‘(B) during the period of that employ-
ment, possessed a valid license, certificate of
registry, or merchant mariner’s document is-
sued under chapter 71 or chapter 73 (as appli-
cable) of title 46, United States Code; and
‘‘(2) if the Secretary makes affirmative deter-
minations under paragraph (1)(A) and (B), certify
that individual under this subsection.
‘‘(d) For purposes of reemployment rights and bene-
fits provided by this section, a certification under sub-
section (c) shall be considered 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 sub-
section (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 en-
actment of this Act.
(c) REGULATION.—Not later than 120 days after the
date of the enactment of this Act, the Secretary of Trans-
portation shall issue regulations implementing this section.
SEC. 11. TITLE XI LOAN GUARANTEES.
Title XI of the Merchant Marine Act, 1936 (46 App.
U.S.C. 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 preced-
ing 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
App. U.S.C. 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 App. U.S.C. 1273)
is amended by adding at the end the following new sub-
section:
‘‘(h)(1) The Secretary shall—
‘‘(A) establish in accordance with this sub-
section a system of risk categories for obligations
guaranteed under this title, that categorizes the rel-
ative risk of guarantees made under 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 sec-
tion 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 available 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 eli-
gible 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.
‘‘(i) in the case of an obligation for a delivered
vessel or equipment, not less than one-half of 1 per-
cent 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 constructed, 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 per-
cent, determined by the Secretary for the obligation
under the formula established under subparagraph
(D).
‘‘(D) The Secretary shall establish a formula for de-
termining the fee rate for an obligation for purposes of
subparagraph (C), that—
‘‘(i) is a sliding scale based on the creditworthi-
ness 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 sub-
paragraph (C)(i) or (ii), as applicable; and
‘‘(II) in the case of the least creditworthy
obligors, the highest rate authorized under sub-
paragraph (C)(i) or (ii), as applicable.
‘‘(E) For purposes of subparagraph (B)(i), the esti-
mated 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 subparagraph (B) for an obligation, the Secretary
shall apply a discount rate determined by the Secretary
of the Treasury taking into consideration current market
yields on outstanding obligations of the United States hav-
ing periods to maturity comparable to the period to matu-
rity 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 refund-
able. However, an obligor shall receive credit for the
amount paid for the remaining term of the guaranteed ob-
ligation 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 guaran-
teed 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 De-
partment of Transportation’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 mari-
time industrial base, including ship repairers, ship-
builders, 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 mobiliza-
tion;
(6) ensuring that sufficient civil maritime re-
sources 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 capability to respond unilaterally to security
threats in geographic areas not covered by alliance
commitments and otherwise meets sealift require-
ments in the event of crisis or war;
(8) ensuring that international agreements and
practices do not place United States maritime indus-
tries at an unfair competitive disadvantage in world
markets;
(9) ensuring that Federal agencies promote,
through efficient 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 subsection (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 U.S. DOCUMENTATION REQUIRE-
MENT FOR 3 VESSELS.
(a) IN GENERAL.—Notwithstanding any other law or
any agreement with the United States Government, a ves-
sel described in subsection (b) may be sold to a person
that is not a citizen of 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 PRO-
GRAM.
(a) IN GENERAL.—The Secretary of Transportation
shall conduct a pilot program to evaluate the feasibility
of using renewable contracts for the maintenance and re-
pair 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 ap-
propriations and with 6 months after the date of the en-
actment of this Act, shall award 9 contracts for this pur-
pose.
(b) USE
OF
VARIOUS
CONTRACTING
ARRANGE-
MENTS.—In conducting a pilot program under this sec-
tion, the Secretary of Transportation shall use contracting
arrangements similar to those used by the Department of
Defense for procuring maintenance and repair of its ves-
sels.
(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
appropriations, 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 pro-
curement 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 eco-
nomic 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 PROCE-
DURES.
(a) AMENDMENTS.—Section 901b(c)(3) of the Mer-
chant Marine Act, 1936 (46 App. U.S.C. 1241f(c)(3)) is
amended—
(1) in subparagraph (A)—
(A) by striking ‘‘and consistent with those
sections,’’ and inserting ‘‘and, subject to sub-
paragraph (B) of this paragraph, consistent
with those sections,’’; and
(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 procured on an overall lowest landed cost basis with-
out 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 requirements 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 allo-
cated under subparagraph (A) to that port range may not
be reallocated or diverted to another port range to meet
those requirements 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 inter-
est for any vessel from a vessel operator who meets
reasonable requirements for financial and oper-
ational 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 Ship-
ping Act of 1984, as in effect on November 14,
1995)), if the person otherwise satisfies reasonable
requirements for financial and operational integ-
rity.’’.
(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).
Passed the House of Representatives December 6,
1995.
Attest:
Clerk.