I
104TH CONGRESS
1ST SESSION
H. R. 1350
To amend the Merchant Marine Act, 1936 to revitalize the United States-
flag merchant marine, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 29, 1995
Mr. SPENCE (for himself, Mr. DELLUMS, and Mr. BATEMAN), (all by request)
introduced the following bill; which was referred to the Committee on Na-
tional Security
A BILL
To amend the Merchant Marine Act, 1936 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,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Maritime Security Act
of 1995.’’
SEC. 2. AMENDMENTS TO THE MERCHANT MARINE ACT,
1936, AS AMENDED.
(a) Title VI of the Merchant Marine Act, 1936, as
amended (46 App. U.S.C. 1171 et seq.), is amended by
deleting the heading of title VI, ‘‘OPERATING-DIF-
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FERENTIAL SUBSIDY’’ and inserting a new heading
and subheading as follows:
‘‘TITLE VI—OPERATING-DIFFERENTIAL
SUBSIDY AND MARITIME SECURITY PROGRAM
‘‘Subpart A—Operating-Differential Subsidy’’.
(b) Section 605(b) (46 App. U.S.C. 1175(b)) is
amended to read as follows:
‘‘(b) No operating-differential subsidy shall be paid
for the operation of a vessel that is more than twenty-
five years of age, unless the Secretary of Transportation
has determined, before the enactment of the Maritime Se-
curity Act of 1995, that it is in the public interest to grant
such financial aid for the operation of such vessel. After
the date of enactment of the Maritime Security Act of
1995, the Secretary of Transportation shall have no au-
thority to grant additional operating-differential subsidy
under this subsection.’’.
(c) Title VI of the Merchant Marine Act, 1936, as
amended (46 App. U.S.C. 1171 et seq.) is amended by
adding a new section 616 following section 615, to read
as follows:
‘‘SEC. 616. (a)(1) The Secretary of Transportation
may authorize a contractor operating a liner vessel and
receiving an operating-differential subsidy under subpart
A of this title to construct, reconstruct, or acquire a liner
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vessel of over five thousand deadweight tons worldwide to
replace a vessel that would reach the end of its
subsidizable life prior to the expiration of the contractor’s
operating-differential subsidy contract. The replacement
vessel shall be documented under chapter 121 of subtitle
II of title 46, United States Code.
‘‘(2) A replacement liner vessel shall not be eligible
for operating-differential subsidy pursuant to subpart A
of this title, and shall be limited to payments in the
amounts set forth in subpart B of this title until the exist-
ing contract pursuant to subpart A terminates according
to its terms.
‘‘(b)(1) The Secretary of Transportation may author-
ize a contractor operating a bulk cargo vessel and receiv-
ing operating-differential subsidy under subpart A of this
title to construct, reconstruct, or acquire a bulk cargo ves-
sel of over five thousand deadweight tons worldwide to re-
place a vessel that would reach the end of its subsidizable
life prior to the expiration of the contractor’s operating-
differential subsidy contract. The replacement vessel shall
be documented under chapter 121 of subtitle II of title
46, United States Code.
‘‘(2) A replacement bulk cargo vessel shall continue
to receive an operating-differential subsidy under an exist-
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ing contract pursuant to subpart A of this title until the
existing contract terminates according to its terms.
‘‘(c) Liner vessels and bulk cargo vessels constructed
pursuant to subsections (a) and (b) of this section shall
be deemed to have been built in a domestic shipyard for
the purposes of section 610 of this Act: Provided, That
the provisions of section 607 of this Act shall not apply
to vessels constructed, reconstructed, or acquired pursuant
to subsections (a) and (b) of this section.
‘‘(d) Any existing foreign-built liner vessel that is ac-
quired pursuant to subsection (a) of this section and docu-
mented under chapter 121 of subtitle II of title 46, United
States Code, shall be less than five years of age at the
time of such documentation.
‘‘(e) Any existing foreign-built bulk cargo vessel that
is acquired pursuant to subsection (b) of this section and
documented under chapter 121 of subtitle II of title 46,
United States Code, shall be less than five years of age
at the time of such documentation.
‘‘(f) No authority granted by the Secretary of Trans-
portation to construct, reconstruct, or acquire vessels pur-
suant to subsections (a) and (b) of this section may be
sold, assigned, conveyed, leased or otherwise transferred
to any other party, without the written consent of the Sec-
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retary of Transportation pursuant to section 608 of this
title.’’.
(d) Title VI of the Merchant Marine Act, 1936, as
amended (46 App. U.S.C. 1171 et seq.) is amended by
adding a new section 617 following the new section 616,
to read as follows:
‘‘SEC. 617. (A) After the date of enactment of the
Maritime Security Act of 1995, the Secretary of Transpor-
tation shall not enter into any new contract for an operat-
ing-differential subsidy under subpart A of this title.
‘‘(b) Notwithstanding any other provision of this Act,
any operating-differential subsidy contract in effect under
title VI on the day before the date of enactment of the
Maritime Security and Trade Act of 1995—
‘‘(1) shall continue in effect and terminate as
set forth in the contract, unless voluntarily termi-
nated at an earlier date by the persons (other than
the United States Government) that are parties to
the contract; and
‘‘(2) may not be renewed or extended.
‘‘(c) After the date of enactment of the Maritime Se-
curity Act of 1995, an owner or operator of a vessel cov-
ered by an operating-differential subsidy contract under
subpart A of this title may operate such vessel in the for-
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eign commerce of the United States without restriction,
notwithstanding any other provision of this Act.
‘‘(d) With respect to a liner vessel—
‘‘(1) whose operator receives operating-differen-
tial subsidy pursuant to a contract under this title,
which is in force on October 1, 1995, and if the Sec-
retary approves the replacement of such vessel with
a comparable vessel, or
‘‘(2) covered by an operating agreement under
subpart B of this title, and if the Secretary approves
the replacement of such vessel with a comparable
vessel for inclusion in the fleet established under
subpart B of title VII—
such vessel may be transferred and registered under the
flag of an effective United States-controlled foreign flag,
notwithstanding any other provision of law: Provided,
That the vessel is available to be requisitioned by the Sec-
retary of Transportation pursuant to section 902 of this
Act (46 App. U.S.C. 1242).’’.
(e) Title VI of the Merchant Marine Act, 1936, as
amended (46 App. U.S.C. 1171 et seq.) is amended by
adding a new subpart B to read as follows:
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‘‘Subpart B—Maritime Security Program
‘‘ESTABLISHMENT OF FLEET
‘‘SEC. 650. (a) The Secretary of Transportation shall
encourage the establishment of a fleet of active, militarily
useful, privately owned vessels to meet national defense
and other security requirements and maintain an Amer-
ican presence in international commercial shipping. The
fleet shall consist of privately owned, United States-flag
liner vessels for which there are in effect operating agree-
ments under this subpart.
‘‘(b) A liner vessel may not be included in the fleet
unless:
‘‘(1) It is operated by an ‘ocean common car-
rier’ as defined in section 3 of the Shipping Act of
1984 (46 App. U.S.C. 1702).
‘‘(2) It is a vessel that is fifteen years of age
or less on the date an operating agreement is en-
tered into under section 651, unless the Secretary of
Transportation, in consultation with the Secretary of
Transportation, in consultation with the Secretary of
Defense, determines that it is in the national inter-
est to waive this requirement.
‘‘(3) It is a vessel that is less than five years
of age at the time it is documented under chapter
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placement for a vessel covered by an operating agreement,
until a vessel used is redelivered.
‘‘DOMESTIC NONCONTIGUOUS TRADE RESTRICTIONS
‘‘SEC. 653. (a) PROHIBITION.—
‘‘(1) IN GENERAL.—Except as provided in this
section, an owner or operator may not receive any
payment under this subpart—
‘‘(A) if the owner or operator or a related
party with respect to the owner or operator, di-
rectly or indirectly owns, charters, or operates
a vessel engaged in the transportation of cargo
in a noncontiguous trade other than in accord-
ance with a waiver under subsection (b), (c), or
(d); or
‘‘(B) if the owner or operator is authorized
to operate a vessel in noncontiguous trade
under such a waiver, and there is a—
‘‘(i) material change in the domestic
ports served by the owner or operator from
the ports permitted to be served under the
waiver;
‘‘(ii) material increase in the annual
number or the frequency of sailings by the
owner or operator from the number or fre-
quency permitted under the waiver; or
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‘‘(iii) material increase in the annual
volume of cargo carried or annual capacity
utilized by the owner or operator from the
annual volume of cargo or annual capacity
permitted under the waiver.
‘‘(2) LIMITATIONS
ON
PROHIBITION.—Para-
graph (1) applies to an owner or operator only in
the years specified for payments under the operating
agreement entered into by the owner or operator.
‘‘(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 an owner or operator
pursuant 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 forty-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 forty-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 an owner or operator and shall de-
scribe, as applicable, 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
thirty days after receipt of an application for a
waiver under this subsection, the Secretary
shall—
‘‘(i) publish a notice of the applica-
tion;
‘‘(ii) begin a proceeding on the appli-
cation 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 ninety days after receipt of the final briefs
submitted 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 party to an operating agree-
ment under this subpart, and
‘‘(ii) operates four or more vessels in
foreign commerce in competition with an-
other operator who is a party to an operat-
ing agreement under this subpart.
‘‘(B) 
QUALFIEID
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 domestic 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 an owner or op-
erator, who is a party to an operating agreement
under this subpart, pursuant to an application sub-
mitted in accordance with this subsection if the Sec-
retary finds that the owner or operator, or a related
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the twelve 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 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
forty-foot equivalent unit shipboard con-
tainer, 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
forty-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,
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a waiver under this subsection for the applicant
shall permit a level of service consisting of—
‘‘(i) one hundred and four sailings
each year from the West Coast of the
United States to Hawaii with an annual
capacity allocated to the service of 75 per
centum of the total capacity of the vessels
employed in the service on July 1, 1992;
‘‘(ii) one hundred and fifty-six sailings
each year in each direction between the
East Coast or Gulf Coast of the United
States and Puerto Rico with an annual ca-
pacity allocated to the service of 75 per
centum of the total capacity of its vessels
employed in the service on the date of the
enactment of the Maritime Security Act of
1995; and
‘‘(iii) one hundred and three sailings
each year in each direction between Wash-
ington and Alaska with an annual capacity
allocated to the service in each direction of
100 per centum of the total capacity of its
vessels employed in the service on July 1,
1992.
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‘‘(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—
‘‘(i) seventeen sailings each year in
each direction between ports in Washing-
ton, Oregon, and Northern California and
ports in Hawaii with an annual barge
house cubic foot capacity and annual barge
deck forty-foot equivalent unit container
capacity in each direction of 100 per cen-
tum of the total of the capacity of its ves-
sels employed in the service during the six
calendar months preceding July 1, 1992,
annualized;
‘‘(ii) two hundred and fifty-three
sailings each year in each direction be-
tween the East Coast or Gulf Coast of the
United States and Puerto Rico with an an-
nual forty-foot equivalent unit container or
trailer capacity equal to 100 per centum of
the capacity of its barges employed in the
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service on the date of the enactment of the
Maritime Security Act of 1995;
‘‘(iii) thirty-seven regularly scheduled
tandem tow rail barge sailings and ten ad-
ditional 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 capacity allocated to the service in
each direction of 100 per centum of the
total rail car capacity of its vessels em-
ployed in the service on July 1, 1992;
‘‘(iv) eight 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 per centum of the total ca-
pacity of its vessels employed in the service
on July 1, 1992; and
‘‘(v) unscheduled, contract carrier tug
and barge service between points in Alaska
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south of the Arctic Circle not served by the
common carrier service permitted under
clause (iii) and points in the contiguous
forty-eight States, with an annual capacity
allocated to that service not exceeding 100
per centum of the total capacity of the
equipment that was dedicated to service
south of the Arctic Circle on July 1, 1992,
and actually utilized in that service in the
two-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-
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lent economic measure as determined by
the Secretary if the real gross produce 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
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 trade on July 1, 1992, carries an aver-
age load factor of at least 90 per centum
of permitted capacity (including the capac-
ity, if any, both authorized and used under
the previous sentence) during nine months
of any one calendar year, then in the next
following calendar year and thereafter, the
requirement that additional capacity must
be used in the immediately following year
does not apply.
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‘‘(F) SERVICE LEVELS NOT INCREASED BY
TERMINATION
OF
AGREEMENT.—The termi-
nation of an operating agreement under subpart
B of this title shall not be considered to in-
crease a level of service specified in subpara-
graph (A), (B), or (C) if the contractor under
the agreement enters into another operating
agreement after that termination.
‘‘(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 thirty 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 domestic trade
for which a waiver is applied for under this sub-
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(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 Presi-
dent.
Any waiver shall be for a period of not to exceed forty-
five days, except that a waiver may be renewed for thirty-
day periods if the Secretary finds that adequate capacity
continues to be otherwise unavailable.
‘‘(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 forty-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—
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‘‘(1) the term ‘noncontiguous trade’ means
trade between—
‘‘(A) a point in the contiguous forty-eight
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 owner or operator who is
a party to an operating agreement under this
subpart; and
‘‘(B) an officer, director, agency, or other
executive of a contractor or of a person referred
to in subparagraph (A).
‘‘DEFINITIONS
‘‘SEC. 654. For the purposes of subpart B of this
title:
‘‘(1) The term ‘citizen of the United States’
means a person that is a citizen of the United States
under section 651 of this subpart.
‘‘(2) The term ‘operating agreement’ means an
operating agreement that takes effect under section
651 of this subpart and covers one or more ves-
sels.’’.
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(f) EFFECTIVE DATE.—The amendments made by
subsections (a) through (e) of this section shall be effective
beginning on the date which is one hundred twenty days
after the date of enactment of the Maritime Security Act
of 1995.
SEC. 3. AUTHORIZATION OF APPROPRIATIONS.
(a) Funds are authorized to be appropriated for oper-
ating agreements that are entered into under the Maritime
Security Program in subpart B of title VI of the Merchant
Marine Act, 1936, as amended, as follows:
‘‘(1) not to exceed $175,000,000, to remain
available until expended, for fiscal year 1996, of
which $75,000,000 shall be held in reserve for con-
tract termination costs, and
‘‘(2) not to exceed $100,000,000, to remain
available until expended, for each of fiscal years
1997 through 2005.’’.
(b) For any fiscal year after fiscal year 1996, con-
tract termination costs are deemed termination costs that
satisfy the total obligation of the Federal Government to
an owner or operator of a vessel covered by an operating
agreement under the Maritime Security Program and the
operating agreement is thereby terminated, if funds are
not authorized and appropriated for payments pursuant
to operating agreements that are entered into under the
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Maritime Security Program, and the $75,000,000 held in
reserve for contract termination costs is paid on a pro rata
basis for vessels covered by operating agreements in the
year of the default. Each vessel covered by an operating
agreement is thereby released from any further obligation
under the operating agreement and the vessel owner or
operator may transfer and register such vessel imme-
diately under an effective United States-controlled foreign
flag, notwithstanding any other provision of law: Provided,
that, if section 902 of the Merchant Marine Act, 1936,
as amended (46 App. U.S.C. 1242) is applicable to such
vessel after registry under the flag of an effective United
States-controlled foreign flag, the vessel is available to be
requisitioned by the Secretary of Transportation pursuant
to section 902 of the Merchant Marine Act, 1936, as
amended.
SEC. 4. USE OF FOREIGN-FLAG VESSELS.
Section 804 of title VIII of the Merchant Marine Act,
1936, as amended (46 App. U.S.C. 1222), is amended by
adding a new subsection (f) as follows:
‘‘(f) The provisions of subsection (a) of this section
shall not preclude an owner or operator receiving operat-
ing assistance under subpart A or subpart B of title VI,
or any holding company, subsidiary, affiliate or associate
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of such owner or operator, or any officer, director, agency,
or executive thereof from—
‘‘(1) owning, chartering, or operating any for-
eign-flag vessel that is operated as a feeder vessel
for a United States-flag service under an operating
agreement pursuant to subpart B of title VI;
‘‘(2) owning, chartering, or operating any for-
eign-flag vessel in line haul service between the Unit-
ed States and foreign ports; Provided, That the for-
eign-flag vessel was operated by that owner or oper-
ator on the date of enactment of this Act; or that
the owner or operator, with respect to each addi-
tional foreign-flag vessel, has first applied to have
that vessel added to the existing operating agree-
ment, and the Secretary has denied the application;
And provided further, That any foreign-flag vessel in
line haul service between the United States and for-
eign ports is—
(A) registered under the flag of an effec-
tive United States-controlled foreign flag, and
(B) available to be requisitioned by the
Secretary of Transportation pursuant to section
902 of this Act;
‘‘(3) owning, chartering, or operating foreign-
flag liner vessels that are operated exclusively in for-
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eign-to-foreign service and not in the foreign com-
merce of the United States;
‘‘(4) owning, chartering, or operating foreign-
flag bulk cargo vessels that are operated in both for-
eign-to-foreign service and the foreign commerce of
the United States;
‘‘(5) chartering or operating foreign-flag vessels
that are operated solely as replacement vessels for
United States-flag vessels that are made available to
the Secretary of Defense pursuant to section 652 of
subpart B of title VI; or
‘‘(6) entering into space charter agreements
with foreign-flag carriers or acting as agent or
broker for a foreign-flag vessel or vessels.’’.
SEC. 
5. 
DEFINITION 
OF 
PRIVATELY 
OWNED 
UNITED
STATES-FLAG COMMERCIAL VESSELS.
The third sentence of section 901(b)(1) of title IX
of the Merchant Marine Act, 1936, as amended (46 App.
U.S.C. 1241(b)(1)) is deleted in its entirety and the fol-
lowing is inserted in lieu thereof: ‘‘For purposes of this
section, the term ‘privately owned United States-flag com-
mercial vessels’ shall be deemed to include—
(A) any privately owned United States flag
commercial vessel constructed in the United
States,