the Secretary under the Maritime Security Program
established by subtitle B.
‘‘(d)(1) Notwithstanding any other provision of law,
a vessel may be transferred and registered under an effec-
tive United States-controlled foreign flag if—
‘‘(A) the operator of the vessel receives an oper-
ating-differential subsidy pursuant to a contract
under this subtitle which is in force on October 1,
1994, and the Secretary approves the replacement
of such vessel with a comparable vessel, or
‘‘(B) the vessel is covered by an operating
agreement under subtitle B, and the Secretary ap-
proves the replacement of such vessel with a com-
parable vessel for inclusion in the Maritime Security
Fleet established under subtitle B.
‘‘(2) Any such vessel may be requisitioned by the Sec-
retary of Transportation pursuant to section 902.’’.
SEC. 4. DOMESTIC OPERATIONS.
(a) IN GENERAL.—Subtitle B of title VI of the Mer-
chant Marine Act, 1936, as amended by section 102 of
this title, is further amended by adding at the end the
following new section:
‘‘NONCONTIGUOUS DOMESTIC TRADES
‘‘SEC. 656. (a)(1) Except as otherwise provided in
this section, no contractor or related party shall receive
payments pursuant to this subtitle during a period when
it participates in a noncontiguous domestic trade, except
upon written permission of the Secretary of Transpor-
tation. Such written permission shall also be required for
any material change in the number or frequency of
sailings, the capacity offered, or the domestic ports called
by a contractor or related party in a noncontiguous domes-
tic trade. The Secretary may grant such written permis-
sion pursuant to written application of such contractor or
related party unless the Secretary 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 non-
contiguous domestic trade, or
‘‘(ii) would be contrary to the objects and
policy of this Act.
‘‘(2) For purposes of this subsection, ‘‘written per-
mission 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 follow-
ing—
‘‘(A) written application containing the infor-
mation required by paragraph (e)(1) by a person
seeking such written permission, notice of which ap-
plication 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 in-
tervene 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 pro-
vision 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 sub-
section (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 an-
nual 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 de-
scription 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 con-
tainer carrying capacity expressed in twenty-foot equiva-
lent 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 sub-
sections (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 Secretary within 30 days of publication in the Fed-
eral 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 appli-
cant’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 deter-
mination or during the time prior to issuance by the Sec-
retary of the required determination: Provided further,
That if the Secretary does not make the determination re-
quired 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 Sec-
retary 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 ap-
plicable 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 appli-
cant and such information shall be made available to
the public.
‘‘(C) Within 15 days of the date of an applica-
tion 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 publi-
cation in the Federal Register.
‘‘(E) Within 15 days after receipt of comments,
the Secretary shall issue a determination in writing
either accepting, 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 provisions of this section, if the Secretary does
not make the determination required by this para-
graph 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 serv-
ice 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 provi-
sion 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.
‘‘(g) Notwithstanding any other provision of this sub-
title, the Secretary may issue temporary permission for
any United States citizen, as that term is defined in sec-
tion 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 Common-
wealth, 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 pro-
vided by persons currently providing such service. Such
temporary permission shall expire 90 days from date of
grant, unless extended by the Secretary upon written re-
quest of the Governor of such State or Commonwealth.