Requires a Reserve rear admiral or rear admiral (lower half) to be removed from an active status on the day that officer completes four years of service after appointment to rear admiral (lower half), unless such officer is retained in or removed from an active status under any other law.

Increases the maximum amount appropriated per annum for necessary expenses for the operation of the Coast Guard that can be made available for investigative expenses of a confidential character.

Extends the authority of certain waterway safety advisory committees.

Amends Federal shipping law to authorize members of the Coast Guard while in the performance of official duties: (1) to carry a firearm; and (2) while at a facility, to make an arrest without a warrant for any offense against the United States committed in their presence, and to seize property as provided by law. Authorizes a State or local government law enforcement officer to make an arrest for violation of a security zone regulation prescribed by a Coast Guard official, if the violation is a felony, and the officer has reasonable grounds to believe that the person to be arrested has committed or is committing such violation.

Subjects any vessel that is used in violation of certain port security regulations to in rem liability for any civil penalty assessed because of such violation. Authorizes the Secretary of the department in which the Coast Guard is operating to refuse or revoke any clearance with respect to a vessel in which the owner or operator of the vessel is liable for a civil penalty assessed because of a violation of such regulations.

Directs the Secretary to notify the owner, charterer, managing operator, agent, master, or individual in charge of a vessel of deficiencies found during any inspection.

Requires the head of an agency in which a civilian of a Federal agency, an officer in the Public Health Services, or an officer in the National Oceanic and Atmospheric Administration (NOAA) who is employed in any capacity on board a vessel operated by the agency and who has received from a Medical Review Officer a report of a positive drug test to release the report to the Commandant of the Coast Guard.

Subjects: (1) certain National Transportation Safety Board final orders regarding maritime matters to judicial review; and (2) towing vessels to Coast Guard inspection.

Authorizes the Secretary to issue a certificate of documentation with appropriate endorsement for employment in the coastwise trade for certain named vessels.

Authorizes the Commandant of the Coast Guard to convey all right, title, and interest of the United States in certain named vessels to certain named recipients, without consideration, provided certain conditions are met.

(Sec. 102) Allows a Reserve rear admiral or rear admiral (lower half) to remain on active status until the day that officer completes four years of service after appointment to rear admiral (lower half), unless such officer is retained in or removed from an active status under any other law. (Currently the four-year term includes combined services in the grades of rear admiral and real admiral (lower half).)

(Sec. 103) Increases from $15,000 to $45,000 the maximum amount appropriated per annum for Coast Guard confidential investigative expenses.

(Sec. 104) Extends through September 30, 2010, the authority of certain waterway safety advisory committees, including: (1) the Commercial Fishing Industry Vessel Safety Advisory Committee; (2) the Houston-Galveston Navigation Safety Advisory Committee; (3) the Lower Mississippi River Waterway Safety Advisory Committee; (4) the Great Lakes Pilotage Advisory Committee; (5) the Navigation Safety Advisory Council; (6) the National Boating Safety Advisory Council; and (7) the Towing Safety Advisory Committee.

(Sec. 105) Prohibits the Coast Guard from procuring a Response Boat-Medium vessel if the engine is not manufactured in the United States, or substantially all of the engine components are not produced or manufactured in the United States, unless: (1) the price of a compliant engine is unreasonable; or (2) emergency circumstances exist.

Title II: Marine Safety and Environmental Protection - (Sec. 201) Amends Federal shipping law to authorize members of the Coast Guard while in the performance of official duties: (1) to carry a firearm; and (2) while at a facility, to make an arrest without a warrant for any offense against the United States committed in their presence, and to seize property as provided by law. Authorizes a State or local government law enforcement officer to make an arrest for violation of a security or safety zone regulation prescribed by a Coast Guard official, if the violation is a felony, and the officer has reasonable grounds to believe that the person to be arrested has committed or is committing such violation.

(Sec. 202) Amends Federal shipping law and the Magnuson Act to subject any vessel that is used in violation of certain port security regulations to in rem liability for any civil penalty assessed because of such violation. Authorizes the Secretary of the department in which the Coast Guard is operating to refuse or revoke any clearance with respect to a vessel in which the owner or operator of the vessel is liable, or reasonable cause exists to believe in the liability, for a civil penalty assessed because of a violation of such regulations. Authorizes the Secretary to require the filing of a bond or other surety as a condition of granting clearance that has been refused or revoked.

(Sec. 203) Authorizes the President to delegate to the Secretary the authority to issue rules and regulations regarding the anchorage and movement of vessels in U.S. waters during national emergency.

(Sec. 204) Directs the Secretary to notify the owner, charterer, managing operator, agent, master, or individual in charge of a vessel of deficiencies found during any inspection (currently, a vessel found not to be in compliance with a prescribed regulation). Repeals the requirement that the notification state how compliance may be achieved.

(Sec. 205) Requires the head of an agency to release to the Commandant of the Coast Guard any report from a Medical Review Officer of a positive drug test concerning a civilian of a Federal agency, an officer in the Public Health Services, or an officer in the National Oceanic and Atmospheric Administration (NOAA) who is employed in any capacity on board a vessel operated by the agency. Authorizes the release of the report of a drug test of the employee without his or her prior written consent.

(Sec. 206) Subjects: (1) certain National Transportation Safety Board final orders affecting maritime safety or security to judicial review; and (2) towing vessels to Coast Guard inspection.

(Sec. 207) Authorizes the Secretary to establish by regulation a safety management system appropriate for the characteristics, methods of operation, and nature of service of towing vessels.

(Sec. 208) Authorizes the Secretary to issue a certificate of documentation with coastwise endorsement for specified Westlake chemical barges.

(Sec. 209) Authorizes the Commandant to convey all right, title, and interest of the United States in the Coast Guard 44-foot Motor Life Boat Vessel #44345 (formally assigned to the Group Grand Haven Command) to the city of Ludington, Michigan, and one decommissioned "Balsam Class" 180-foot Coast Guard vessel (whether decommissioned before or after the date of enactment of this Act) to CAS Foundation, Inc. (a nonprofit corporation under Indiana law), without consideration, provided certain conditions are met.

(Sec. 210) Amends the Oil Pollution Act of 1990 to grant the head of a Federal agency authority to settle a claim under $500,000, including costs paid from the Oil Spill Liability Trust Fund, for recovery of removal costs or damages as a result of an oil spill, provided the claim has nor been referred to the Attorney General. Authorizes the settlement of recovery claims exceeding $500,000 (excluding interest) only with prior written approval of the Attorney General.

(Sec. 211) Amends Federal shipping law to require vessels subject to Coast Guard inspection to have, among other things, an adequate supply of potable water for drinking and washing by passengers and crew.

(Sec. 212) Extends, through FY 2006, or until the date related regulations are promulgated if earlier, the authority of the Secretary to implement and enforce the notice to mariners eentitled "2004 Enforcement Policy for Cargo Residues on the Great Lakes" for purposes of regulating incidental discharges from vessels of residues of dry bulk cargo into the waters of the Great Lakes. Authorizes the Commandant to promulgate regulations governing the discharge of dry bulk cargo residue on the Great Lakes.