I
103D CONGRESS
1ST SESSION
H. R. 2151
To amend the Merchant Marine Act, 1936, to establish the Maritime Security
Fleet program, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 19, 1993
Mr. STUDDS (for himself, Mr. LIPINSKI, Mr. FIELDS of Texas, Mr. BATEMAN,
Mr. YOUNG of Alaska, Mr. HUGHES, Mr. HUTTO, Mr. TAUZIN, Mr.
ORTIZ, Mr. MANTON, Mr. PICKETT, Mrs. UNSOELD, Mr. REED, Mr.
LANCASTER, Mr. ANDREWS of Maine, Ms. FURSE, Ms. SCHENK, Mr.
GENE GREEN of Texas, Mr. HASTINGS, Mr. BARLOW, Mr. THOMPSON of
Mississippi, Mr. ACKERMAN, Mr. KING, and Mrs. BENTLEY) introduced
the following bill; which was referred to the Committee on Merchant Ma-
rine and Fisheries
A BILL
To amend the Merchant Marine Act, 1936, to establish the
Maritime Security Fleet program, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Maritime Security and
Competitiveness Act of 1993’’.
SEC. 2. 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:
‘‘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.’’.
SEC. 3. MARITIME SECURITY FLEET PROGRAM.
(a) ESTABLISHMENT OF PROGRAM.—The Merchant
Marine Act, 1936 (46 App. U.S.C. 1101 et seq.) is amend-
ed 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-
sion application for the vessel by the owner or operator
of the vessel.
‘‘(b) VESSEL ELIGIBILITY AND LISTING.—The Sec-
retary 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 vessel is not built in a foreign sub-
sidized shipyard under a contract entered into on or
after May 19, 1993;
‘‘(3) the person that will be a contractor with
respect to an operating agreement for the vessel is
a citizen of the United States;
‘‘(4)(A) the vessel is a United States docu-
mented vessel on May 19, 1993;
‘‘(B) the vessel is—
‘‘(i) a United States documented vessel
after May 19, 1993; and
‘‘(ii) not more than 10 years of age on the
date of that documentation; or
‘‘(C) if the vessel is not in existence on that
date—
‘‘(i) the person that will be the contractor
with respect to an operating agreement for the
vessel has entered into a binding contract with
a shipyard for the delivery of a vessel that the
Secretary decides will otherwise be eligible
under this subsection; and
‘‘(ii) an operating agreement for the vessel
is entered into by not later than 30 months
after the date of submittal of the application;
and
‘‘(5) 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 10,000 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 suit-
able for use by the United States for national
defense or military purposes in time of war or
national emergency.
‘‘(c) NOTICE OF NONELIGIBILITY DECISION.—
‘‘(1) DETERMINATION.—The Secretary shall
make determinations under subsection (b) for each
vessel for which an eligibility decision application is
submitted under this section.
‘‘(2) 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.
‘‘(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; or
‘‘(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.
‘‘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.—The
Secretary shall enter into operating agreements according
to the following priority:
‘‘(1) VESSELS
UNDER
ODS
CONTRACTS.—For
operating agreements that are effective before Sep-
tember 30, 2000, any vessel that is or will be owned
or operated by a person that—
‘‘(A) is a party to an operating-differential
subsidy contract entered into under title VI;
and
‘‘(B) is or will be operating that vessel
under that contract;
if the authority to operate the vessel under the con-
tract is terminated under an agreement with the
Secretary.
‘‘(2) OTHER VESSELS OWNED BY CITIZENS.—
To the extent that amounts are available after ap-
plying paragraph (1), any vessel that is—
‘‘(A) owned and operated by a person that
is a citizen of the United States under section
2 of the Shipping Act, 1916; and
‘‘(B) on the list maintained under section
403(d).
‘‘(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) PROHIBITION ON ENTERING AGREEMENTS.—
The Secretary may not enter into an operating agreement
for a fiscal year only to the extent that annual appropria-
tions laws place a limit on the total amount of operating
agreements that the Secretary may enter into and obligate
during that fiscal year.
this title with respect to periods after the date the
vessel becomes 25 years of age.
‘‘(k) 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.
‘‘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.—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 accordance with the
agreement:
‘‘(A) For fiscal year 1996, $2,300,000.
‘‘(B) For each fiscal year after fiscal year
1996, $2,100,000.
‘‘(3) TERMINATION
BASED
ON
AGE
OF
VES-
SEL.—The operating agreement shall terminate on
the date the vessel covered by the agreement is 25
years of age, unless—
‘‘(A) the contractor agrees to acquire a re-
placement for the vessel from among vessels on
the list maintained under section 403(d); and
‘‘(B)(i) in the case of a vessel to be re-
placed with a new vessel, the contractor enters
into a binding contract with a shipyard for the
delivery, by not later than 30 months after the
later of the date the operating agreement is en-
tered into or the date the vessel subject to the
operating agreement is 25 years of age, of the
replacement vessel; or
‘‘(ii) in the case of a vessel to be replaced
with an existing vessel, the contractor 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 operating agreement is entered into or the
date the vessel subject to the operating agree-
ment is 25 years of age.
‘‘(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
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.—The Secretary shall re-
imburse the contractor for costs incurred by the con-
tractor in delivering the vessel covered by the agree-
ment to the Secretary in accordance with the agree-
ment.
‘‘(7) COMPENSATION.—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.—
‘‘(A) IN GENERAL.—A vessel covered by
the operating agreement shall be operated in
the trade required under paragraph (1) for at
least 320 days in a fiscal year, including 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) for less than the time required 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) TERMINATION FOR FAILURE TO OPERATE
OR SUBSTITUTE.—The operating agreement is ter-
minated if—
‘‘(A) the vessel covered by the agreement is
not operated under an operating agreement for
one year; and
‘‘(B) a substitute for that vessel is not op-
erated under the agreement during that year.
‘‘(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
‘‘(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
5,000 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 an operating agreement, return the ves-
sel 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 under the agreement) to
any other person that is a citizen of the United States,
after notification of the Secretary in accordance with regu-
lations prescribed by the Secretary. A person to whom an
agreement is transferred may receive payments from the
Secretary under the agreement only if the vessel to be cov-
ered 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 if—
‘‘(A) the contractor or a related party with
respect to the contractor, directly or indirectly
owns, charters, or operates a vessel engaged in
the transportation of cargo in noncontiguous
trade, other than in accordance with a waiver
under subsection (b) or (c); or
‘‘(B) for noncontiguous trade for which
there is a waiver under subsection (b) or (c),
there is a—
‘‘(i) material change in the domestic
ports served from the ports permitted to be
served under the waiver;
‘‘(ii) material increase in the annual
number or the frequency of sailings from
the number or frequency permitted under
the waiver; or
‘‘(iii) material increase in the annual
volume of cargo carried or annual capacity
utilized from the annual volume of cargo
or annual capacity permitted 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 shall 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) existing service in that noncontiguous
trade is adequate; or
‘‘(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
‘‘(B) any proposed material change or in-
crease in a service in a noncontiguous trade
permitted under an existing 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
‘‘(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.
‘‘(c) EXISTING NONCONTIGUOUS TRADE OPERA-
TORS.—
‘‘(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—
‘‘(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 Operation Desert Storm or over
which the contractor (or related party or prede-
cessor 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
service in the noncontiguous trade result-
ing from Operation Desert Storm 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 shall permit the
applicant to conduct—
‘‘(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
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 July 1, 1992; 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 shall permit the applicant to
conduct—
‘‘(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 July 1, 1992;
‘‘(iii) 37 regularly scheduled tandem
tow rail barge sailings and 10 additional
single tow sailings each year in each direc-
tion between Washington and the Alaskan
port range between and including Anchor-
age and Whittier with an annual capacity
allocated to the service in each direction of
100 percent of the total rail car capacity of
its vessels employed in the service on July
1, 1992;
‘‘(iv) 8 regularly scheduled single tow
sailings each year in each direction be-
tween Washington and points in Alaska
(not including the port range between and
including Anchorage and Whittier, except
occasional deviations to discharge inciden-
tal quantities of cargo) with an annual ca-
pacity allocated to the service in each di-
rection of 100 percent of the total capacity
of its vessels employed in the service on
July 1, 1992; and
‘‘(v) unscheduled, contract carrier tug
and barge service between points in Alaska
not served by the common carrier service
permitted under clause (iii) or (iv) and
points in Washington, with an annual ca-
pacity allocated to that service not exceed-
ing 100 percent of the highest total capac-
ity of the equipment that was employed in
that service in any year after 1979.
‘‘(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) IN GENERAL.—The annual capac-
ity permitted under a waiver under this
subsection shall be adjusted for each cal-
endar year to reflect changes in the total
volume of trade on the noncontiguous
trade route for which the waiver is issued.
Such an adjustment may not be considered
to be a material change or increase in serv-
ice under the waiver for purposes sub-
section (b)(3)(B).
‘‘(ii) LIMITATION.—An increase in ca-
pacity under this subparagraph shall apply
only to the extent the contractor actually
uses the increased capacity to carry cargo
in the permitted service in the calendar
year immediately following the preceding
increase in gross product. However, if a
contractor operating exclusively container-
ized vessels in that trade on July 1, 1992,
carries an average load factor of at least
90 percent of permitted capacity (including
the capacity, if any, both authorized and
used under the previous sentence) during 9
months of any one calendar year, then in
the next following calendar year and there-
after, the requirement that additional ca-
pacity shall be used in the immediately fol-
lowing year does not apply.
‘‘(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.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the Secretary shall complete
all proceedings on an application under this
subsection and issue a decision on the record
within 180 days after receipt of the application.
‘‘(B) EXPEDITED
CONSIDERATION.—Sub-
ject to the time required for publication of no-
tice and for receipt and evaluation of comments
by the Secretary, an application for a waiver
under this subsection submitted at the same
time the applicant applies for inclusion of a ves-
sel in the Fleet shall be granted in accordance
with the level of service determined by the Sec-
retary 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-
ize except to the extent the change or increase is
permitted by a waiver under subsection (b).
‘‘(d) 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
‘‘SEC. 407. FUNDING FOR CONTINGENCY RETAINER FLEET
OPERATING AGREEMENTS.
‘‘(a) AUTHORIZATION OF APPROPRIATIONS.—There
are authorized to be appropriated to the Secretary any
amounts necessary to liquidate obligations under operat-
ing agreements.
‘‘(b) TRANSFER OF BALANCES FROM OPERATING-
DIFFERENTIAL SUBSIDY PROGRAM.—Any amounts other-
wise available for operating differential subsidy contracts
under title VI that are no longer required for those con-
tracts are available, until expended, for operating agree-
ments.
‘‘SEC. 408. DEFINITIONS.
‘‘In this title:
‘‘(1) 
CONTRACTOR.—The 
term 
‘contractor’
means an owner or operator of a vessel that enters
into an operating agreement for the vessel with the
Secretary.
‘‘(2) ELIGIBILITY
DECISION
APPLICATION.—
The term ‘eligibility decision application’ means an
application for a decision by the Secretary under
section 403 that a vessel is eligible to be enrolled in
the Fleet.
‘‘(3) ELIGIBLE VESSEL.—The term ‘eligible ves-
sel’ means a vessel that the Secretary decides under
section 403 is eligible to be enrolled in the Fleet.
‘‘(4) FLEET.—The term ‘Fleet’ means the Con-
tingency Retainer Fleet established under section
402.
‘‘(5) FLEET OPERATOR.—The term ‘Fleet Op-
erator’ means a person that is a party to an operat-
ing agreement with the Secretary in effect under
this title.
‘‘(6) OPERATING AGREEMENT.—The term ‘op-
erating agreement’ means an operating agreement
entered into by the Secretary under section 404.
‘‘(7) SECRETARY.—The term ‘Secretary’ means
the Secretary of Transportation.
‘‘(8) UNITED STATES DOCUMENTED VESSEL.—
The term ‘United States documented vessel’ means
a vessel that is documented under chapter 121 of
title 46, United States Code.’’.
(b) LIMITATION ON ENTERING AND EFFECTIVENESS
OF AGREEMENTS.—The Secretary of Transportation may
not enter into an operating agreement under title IV of
the Merchant Marine Act, 1936, as amended by this Act,
before October 1, 1994. Any operating agreement entered
into under that title between October 1, 1994, and Sep-
tember 30, 1995, may not be effective until October 1,
1995.
(c) LIMITATION
ON PAYMENTS.—Notwithstanding
section 405(a)(2) of the Merchant Marine Act, 1936, as
amended by this Act, or the terms of any operating agree-
ment (as that term is used in that section), the United
States Government is not obligated to pay, and the Sec-
retary of Transportation may not pay, any amount pursu-
ant to that section for any day in which a vessel that is
covered by an operating agreement is under a charter to
the United States Government that was entered into be-
fore the date of the enactment of this Act.
(d) LIMITATION ON OPERATING AGREEMENTS FOR
VESSELS
CONSTRUCTED
UNDER
EXISTING
FOREIGN
CONSTRUCTION CONTRACTS.—
(1) LIMITATION.—The Secretary of Transpor-
tation may decide that a vessel described in para-
graph (2) is eligible for an operating agreement
under title IV of the Merchant Marine Act, 1936, as
amended by this Act, only if—
(A) the contract under which the vessel is
constructed is, on and after May 19, 1993,
binding on the person that submits an eligibility
application under that title for the vessel;
(B) construction of the vessel is begun be-
fore January 1, 1994; and
(C) the vessel is a United States docu-
mented vessel (as that term is defined in that
title) before November 19, 1995.
(2) VESSEL DESCRIBED.—A vessel referred to
in paragraph (1) is a vessel—
(A) that is constructed in a foreign country
under a contract that is entered into before
May 19, 1993; and
(B) the construction of which is not com-
pleted before that date.
SEC. 4. OPERATING-DIFFERENTIAL SUBSIDY CONTRACTS.
(a) PROHIBITION
ON NEW CONTRACTS.—Section
601 of the Merchant Marine Act, 1936 (46 App. U.S.C.
1171) is amended by adding at the end the following:
‘‘(c) After the effective date of this subsection, the
Secretary of Transportation may not enter into any new
contract under this title.’’.
(b) TERMINATION OF EXISTING CONTRACTS.—Not-
withstanding any other provision of this Act, any contract
in effect under title VI of the Merchant Marine Act, 1936
(46 App. U.S.C. 1171 et seq.), on the day before the date
of enactment of this Act shall continue in effect under its
terms and terminate as set forth in the contract, unless
voluntarily terminated on an earlier date by the persons
(other than the United States Government) that are par-
ties to the contract.
(c) EXEMPTION
OF BULK CARGO ODS VESSELS
FROM OPERATING RESTRICTIONS.—Section 506 of the
Merchant Marine Act, 1936 (46 App. U.S.C. 1156) is
amended—
(1) by inserting ‘‘(a)’’ after ‘‘SEC. 506.’’; and
(2) by adding at the end the following new sub-
section:
‘‘(b) This section does not apply to any liquid or dry
bulk cargo vessel for which operating-differential subsidy
is required to be paid under a contract under title VI that
is in force on the effective date of this subsection, effective
upon the termination date of the contract (as set forth
in the contract as in effect on the effective date of this
subsection).’’.
(d) RESTRICTIONS ON OPERATIONS OF ODS VES-
SELS.—Title VI of the Merchant Marine Act, 1936 (46
App. U.S.C. 1171 et seq.), as amended by this Act, is fur-
ther amended by adding at the end the following:
‘‘SEC. 616. LIMITATION ON APPLICATION OF RESTRICTIONS
ON OPERATIONS.
‘‘Sections 605(c), 804, and 805, this section, and the
essential service requirements in section 601(a) and
603(a), do not apply to a contractor if—
‘‘(1) the contractor submits an eligibility deci-
sion application to the Secretary under title IV for
all of the vessels operated by the contractor under
an operating-differential subsidy contract; and
‘‘(2) all of those vessels for which operating
agreements are offered by the Secretary under title
IV are enrolled in the Maritime Security Fleet.’’.
(e) TERMINATION
OF OPERATING DIFFERENTIAL
SUBSIDY FOR OLDER VESSELS.—Section 605(b) of the
Merchant Marine Act, 1936 (46 App. U.S.C. 1175(b)), is
amended by adding the following new sentence at the end
of the subsection: ‘‘After May 19, 1993, the Secretary of
Transportation may not enter any new formal order under
this subsection.’’.
SEC. 5. DEFINITIONS APPLICABLE TO MERCHANT MARINE
ACT, 1936.
Section 905 of the Merchant Marine Act, 1936 (46
App. U.S.C. 1244), is amended—
(1) by striking subsection (a) and inserting the
following:
‘‘(a) Each of the terms ‘foreign commerce’ and ‘for-
eign trade’ mean—
‘‘(1) trade between the United States and a for-
eign country; or
‘‘(2) trade between foreign ports.’’;
(2) by striking subsection (c) and inserting the
following:
‘‘(c) The term ‘citizen of the United States’ means
a person eligible to own a documented vessel under chap-
ter 121 of title 46, United States Code.’’, and
(3) by adding at the end the following:
‘‘(h) The term ‘foreign subsidized shipyard’ means a
shipyard that—
‘‘(1) receives or benefits from, directly or indi-
rectly, a shipyard subsidy for the construction of
vessels; and
‘‘(2) is located in a foreign country that has not
signed a trade agreement with the United States
that provides for the elimination of subsidies for
that shipyard.
‘‘(i) The term ‘subsidy’ includes any of the following:
‘‘(A) Officially supported export credits and de-
velopment assistance.
‘‘(B) Direct official operating support to the
commercial shipbuilding and repair industry, or to a
related entity that favors the operation of shipbuild-
ing and repair, including—
‘‘(i) grants;
‘‘(ii) loans and loan guarantees other than
those available on the commercial market;
rectly, such as tax credits, deductions, exemptions
and preferences, including accelerated depreciation,
if the benefits are not generally available to persons
or firms not engaged in shipbuilding or repair.
‘‘(F) Any official regulation or practice that au-
thorizes or encourages persons or firms engaged in
shipbuilding or repair to enter into anticompetitive
arrangements.
‘‘(G) Any indirect support directly related, in
law or in fact, to shipbuilding and repair at national
yards, including any public assistance favoring ship-
owners with an indirect effect on shipbuilding or re-
pair activities, and any assistance provided to suppli-
ers of significant inputs to shipbuilding, which re-
sults in benefits to domestic shipbuilders.
‘‘(H) Any export subsidy identified in the Illus-
trative List of Export Subsidies in the Annex to the
Agreement on Interpretation and Application of Ar-
ticles VI, XVI, and XXIII of the General Agreement
on Tariffs and Trade or any other export subsidy
that may be prohibited as a result of the Uruguay
Round of trade negotiations.’’.
SEC. 6. GOVERNMENT-IMPELLED CARGOES.
(a) VESSELS
ELIGIBLE
FOR
CARGOES.—Section
901(b) of the Merchant Marine Act, 1936 (46 App. U.S.C.
1241(b)) is amended—
(1) in paragraph (1), by striking ‘‘For purposes
of this section, the term ‘privately owned United
States-flag commercial vessels’ ’’ and all that follows
through the end of the paragraph and inserting a
period; and
(2) by adding at the end the following new
paragraph:
‘‘(3) In this section and section 901b, the term ‘pri-
vately owned United States-flag commercial vessel’ means
a privately owned vessel that is documented under chapter
121 of title 46, United States Code, that—
‘‘(A) was built in the United States;
‘‘(B) was documented under chapter 121 of
title 46, United States Code, before May 19, 1993;
‘‘(C) does not transport under section 901b or
this section on any voyage more than 5,000 tons of
bulk cargo (as defined in section 3 of the Shipping
Act of 1984), and—
‘‘(i) was built in a foreign shipyard under
a contract entered into before May 19, 1993; or
‘‘(ii) is built under a contract entered into
after that date, in a foreign shipyard that on
the date the contract is entered is not a foreign
subsidized shipyard;
‘‘(D)(i) is built under a contract entered into
after May 19, 1993, in a foreign shipyard that on
the date the contract was entered is not a foreign
subsidized shipyard; and
‘‘(ii) has not been documented in a foreign
country before it is documented under chapter 121
of title 46, United States Code; or
‘‘(E) has been documented under chapter 121
of title 46, United States Code, for at least 3 con-
secutive years, and—
‘‘(i) was built in a foreign shipyard under
a contract entered into before May 19, 1993; or
‘‘(ii) is built under a contract entered into
after that date, in a foreign shipyard that on
the date the contract was entered is not a for-
eign subsidized shipyard.’’.
(b) CLERICAL AMENDMENT.—Section 901b of the
Merchant Marine Act, 1936 (46 App. U.S.C. 1241f) is
amended by adding at the end the following:
‘‘(f) For the definition of the term ‘privately owned
United States-flag commercial vessel’, see section
901(b)(3).’’.
SEC. 7. VESSEL FINANCING.
(a) ELIMINATION OF MORTGAGEE RESTRICTIONS.—
Section 31322(a) of title 46, United States Code, is
amended to read as follows:
‘‘(a) A preferred mortgage is a mortgage, whenever
made, that—
‘‘(1) includes the whole of the vessel;
‘‘(2) is filed in substantial compliance with sec-
tion 31321 of this title; and
‘‘(3)(A) covers a documented vessel; or
‘‘(B) covers a vessel for which an application
for documentation is filed that is in substantial com-
pliance with the requirements of chapter 121 of this
title and the regulations prescribed under that chap-
ter.’’.
(b) ELIMINATION OF TRUSTEE RESTRICTIONS.—
(1) REPEAL.—Section 31328 of title 46, United
States Code, is repealed.
(2) 
CONFORMING
AMENDMENT.—Section
31330(b) of title 46, United States Code, is amend-
ed in paragraphs (1), (2), and (3) by striking
‘‘31328 or’’ each place it appears.
(c) REMOVAL OF MORTGAGE RESTRICTIONS.—Sec-
tion 9 of the Shipping Act, 1916 (46 App. U.S.C. 808),
as amended by this Act, is further amended—
(1) in subsection (c)—
(A) 
by 
striking 
‘‘and 
sections
31322(a)(1)(D) and 31328 of title 46, United
States Code,’’; and
(B) in paragraph (1) by striking ‘‘mort-
gage,’’ each place it appears; and
(2) in subsection (d)—
(A) in paragraph (1) by striking ‘‘transfer,
or mortgage’’ and inserting ‘‘or transfer’’;
(B) in paragraph (2) by striking ‘‘trans-
fers, or mortgages’’ and inserting ‘‘or trans-
fers’’;
(C) in paragraph (3)(B) by striking
‘‘transfers, or mortgages’’ and inserting ‘‘or
transfers’’; and
(D) in paragraph (4) by striking ‘‘trans-
fers, or mortgages’’ and inserting ‘‘or trans-
fers’’;
SEC. 8. PLACEMENT OF VESSELS UNDER FOREIGN REG-
ISTRY.
(a) IN GENERAL.—Section 9 of the Shipping Act,
1916 (46 App. U.S.C. 808), as amended by this Act, is
further 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 under that Act, the Secretary of Transportation
shall allow a documented vessel to be placed under a for-
eign registry if at least one replacement vessel of a capac-
ity that is equivalent or greater, as measured by dead-
weight tons, gross tons, or container equivalent units, as
appropriate, is documented under chapter 121 of title 46,
United States Code, by the owner of the vessel placed
under foreign registry.’’.
(b) APPLICATION.—The amendment made by sub-
section (a) applies to vessels that are placed under foreign
registry after the date of enactment of this Act and re-
placement vessels documented in the United States after
that date.
SEC. 9. EFFECTIVE DATE.
The amendments made by this Act are effective on
the date which is 120 days after the date of enactment
of this Act.
SEC. 10. REGULATIONS.
(a) IN GENERAL.—The Secretary of Transportation
shall prescribe regulations as necessary to carry out this
Act.
(b) INTERIM
REGULATIONS.—The Secretary of
Transportation may prescribe interim regulations nec-
essary to carry out this Act and for accepting eligibility
decision applications under section 403 of the Merchant
Marine Act, 1936, as amended by this Act. For this pur-
pose, the Secretary of Transportation is excepted from
compliance with the notice and comment requirements of
section 553 of title 5, United States Code. All regulations
prescribed under the authority of this subsection that are
not earlier superseded by final rules shall expire 270 days
after the date of enactment of this Act.
SEC. 11. EXPANSION OF STANDING FOR MARITIME UNIONS.
Section 301 of the Merchant Marine Act, 1936 (46
App. U.S.C. 1131) is amended by adding at the end the
following:
‘‘(c) STANDING FOR MARITIME UNION REPRESENTA-
TIVES.—The duly-elected representative of any organiza-
tion that is certified by the Secretary of Labor as the prop-
er collective bargaining agency for officers or crew em-
ployed on any type of United States documented vessel
is an interested party in, and has standing to challenge,
any proposed or final order, action, or rule of the Sec-
retary of Transportation under this Act.’’.
SEC. 12. STUDY.
(a) IN GENERAL.—After providing public notice and
opportunity for comment, the Secretary of Transportation
shall conduct a study of—
(1) the impact of this Act on the international
competitiveness of United States documented vessels
and whether this Act has had a favorable or unfa-
vorable impact on the ability of United States docu-
mented vessels to compete successfully with foreign-
flag vessels;
(2) whether continuation of the Maritime Secu-
rity Fleet program established by this Act would as-
sist the international competitiveness of United
States documented vessels;
(3) whether the Maritime Security Fleet pro-
gram should be continued, modified, or discontinued;
(4) alternatives that are or should be available
to operators of United States documented vessels if
the Maritime Security Fleet program is discon-
tinued; and
(5) any other issues related to promoting the
international competitiveness of United States docu-
mented vessels that the Secretary considers appro-
priate.
(b) REPORT.—The Secretary of Transportation shall
submit to the Congress a report on the findings and con-
clusions of the study required by subsection (a) by not
later than 4 years after the date of enactment of this Act,
which shall include such recommendations as the Sec-
retary considers appropriate.
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