[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1350 Introduced in House (IH)]







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 National 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 Representatives 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-DIFFERENTIAL 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 Security 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 authority 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 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 existing contract pursuant to subpart A terminates 
according to its terms.
    ``(b)(1) The Secretary of Transportation may authorize a contractor 
operating a bulk cargo vessel and receiving operating-differential 
subsidy under subpart A of this title to construct, reconstruct, or 
acquire a bulk cargo 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 bulk cargo vessel shall continue to receive an 
operating-differential subsidy under an existing 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 acquired 
pursuant to subsection (a) 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.
    ``(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 Transportation to 
construct, reconstruct, or acquire vessels pursuant 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 Secretary 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 Transportation shall not enter 
into any new contract for an operating-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 terminated 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 Security Act of 
1995, an owner or operator of a vessel covered by an operating-
differential subsidy contract under subpart A of this title may operate 
such vessel in the foreign 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-differential 
        subsidy pursuant to a contract under this title, which is in 
        force on October 1, 1995, and if the Secretary 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 Secretary 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:

                 ``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 American presence in international commercial shipping. The 
fleet shall consist of privately owned, United States-flag liner 
vessels for which there are in effect operating agreements under this 
subpart.
    ``(b) A liner vessel may not be included in the fleet unless:
            ``(1) It is operated by an `ocean common carrier' 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 entered 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 interest 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 121 of subtitle II of 
        title 46, United States Code, if it is foreign-built.
            ``(4) The Secretary of Transportation, after consultation 
        with the Secretary of Defense, determines that the vessel is 
        necessary to maintain a United States presence in international 
        commercial shipping or determines that the vessel is militarily 
        useful for meeting the sealift needs of the United States with 
        respect to national emergencies.
            ``(5) The owner or operator of the vessel is a citizen of 
        the United States as set forth in section 651.

                         ``operating agreements

    ``Sec. 651. (a) The Secretary of Transportation shall require, as a 
condition of including any vessel in the fleet, that the owner or 
operator of the vessel enter into an operating agreement with the 
Secretary of Transportation pursuant to this section.
    ``(b) An operating agreement pursuant to this section shall require 
that, during the period of the agreement--
            ``(1) each vessel covered by the operating agreement--
                    ``(A) shall be operated exclusively in the foreign 
                trade, and
                    ``(B) shall not be operated in the coastwise trade 
                of the United States or in mixed domestic and foreign 
                trade; and
            ``(2) the owner or operator of a vessel covered by the 
        operating agreement shall have the vessel documented under 
        chapter 121 of subtitle II of title 46, United States Code, and 
        shall maintain that documentation.
    ``(c) An owner or operator of a vessel covered by an operating 
agreement under this subpart may operate this vessel in the foreign 
commerce of the United States without restriction.
    ``(d)(1) The Secretary of Transportation is authorized to enter 
into multiyear operating agreements for the period of fiscal year 1996 
through fiscal year 2005, subject to the following conditions:
            ``(A) The total amount of all operating agreements does not 
        exceed $1,000,000,000 for fiscal years 1996 through 2005.
            ``(B) Funds need only be appropriated for the first year of 
        the agreements and for termination costs, pursuant to section 3 
        of the Maritime Security Act of 1995, at the time the operating 
        agreements are executed.
            ``(C) Funds for termination costs shall be held in reserve, 
        pursuant to section 3 of the Maritime Security Act of 1995.
            ``(D) Such operating agreements shall provide that at no 
        time will the Government's total termination liability exceed 
        amounts currently appropriated for the purpose of such 
        agreements plus amounts held in reserve for termination costs.
            ``(E) An operating agreement entered into pursuant to this 
        section shall not be considered a procurement contract for the 
        purposes of Federal procurement laws or regulations.
    ``(2) An operating agreement pursuant to this section shall provide 
that the Secretary of Transportation pay to the owner or operator of 
each liner vessel that is included in the operating agreement, an 
amount per vessel per year that does not exceed $2,500,000, for fiscal 
years 1996 through 1998, and does not exceed $2,000,000, for fiscal 
years 1999 through 2005. The amount per year paid to the owner or 
operator of a liner vessel under an operating agreement pursuant to 
this section shall be paid at the end of each month in equal 
installments.
    ``(e) In order to qualify for the annual payments under this 
section, the owner or operator shall certify annually, pursuant to 
regulations issued by the Secretary, that each vessel covered by an 
operating agreement was operated in a trade required by section 
651(b)(1) for at least three hundred and twenty days in a fiscal year, 
including days during which the liner vessel is drydocked, surveyed, 
inspected, or repaired.
    ``(f) Without regard to an operating agreement in effect with an 
owner or operator of a liner vessel under this section, the Secretary 
of Transportation shall not make any payment under this section for a 
vessel with respect to any period in which the vessel is--
            ``(1) subject to an operating-differential subsidy contract 
        under subpart A of title VI of this Act;
            ``(2) not operated or maintained in accordance with an 
        operating agreement under this subpart; or
            ``(3) more than twenty-five years of age.
    ``(g) With respect to payments under this section for a vessel 
covered by an operating agreement, the Secretary of Transportation--
            ``(1) shall not reduce any payment for the operation of a 
        vessel to carry military or other preference cargoes under--
                    ``(A) section 2631 of title 10, United States Code; 
                or
                    ``(B) section 1241-1 of title 46, Appendix, United 
                States Code;
            ``(2) shall not make any payment for each day that a vessel 
        is engaged in transporting more than five thousand tons of 
        civilian bulk preference cargoes pursuant to section 901(a), 
        901(b), or 901b of this Act; and
            ``(3) shall reduce any payment for each day that a vessel 
        is engaged in transporting less than five thousand tons of 
        civilian bulk preference cargoes pursuant to sections 901(a), 
        901(b), or 901b of this Act, by an amount which bears the same 
        ratio to the amount otherwise payable as revenue for the 
        carriage of preference cargo bears to the gross revenue derived 
        from the entire voyage.
    ``(h) The Secretary of Transportation shall enter into operating 
agreements in the following order of priority--
            ``(1) liner vessel or vessels owned or operated by a person 
        that is a citizen of the United States under section 2 of the 
        Shipping Act, 1916; and then
            ``(2) liner vessel or vessels owned or operated by a person 
        that is eligible to document a vessel under chapter 121 of 
        subtitle II of title 46, United States Code.
    ``(i) No authority granted by the Secretary of Transportation to an 
owner or operator of a vessel covered by an operating agreement under 
this subpart may be sold, assigned, conveyed, leased or otherwise 
transferred to any other party, without the written consent of the 
Secretary of Transportation pursuant to the provisions of section 608 
of this title.
    ``(j) Any authority granted by the Secretary of Transportation to 
an owner or operator of a vessel covered by an operating agreement 
under this subpart shall be used by the holder of the operating 
agreement within one year from the date such authority is granted for 
existing vessels and within two years from the date such authority is 
granted for newly constructed vessels, or the authority shall revert to 
the Secretary of Transportation for such disposition as determined 
appropriate.
    ``(k) An operating agreement entered into by the Secretary of 
Transportation under this subpart shall be effective for a period of 
not more than ten years, and, under any condition, terminate not later 
than September 30, 2005.
    ``(l) An operating agreement entered into by the Secretary of 
Transportation under this subpart shall require the owner or operator 
of a vessel covered by an operating agreement under this subpart to 
enroll in an Emergency Preparedness Program, pursuant to the 
requirements of section 652, under such terms and conditions as the 
Secretary may prescribe.

                    ``national security requirements

    ``Sec. 652. (a) On a request of the President during time of war or 
national emergency or when decided by the President to be necessary in 
the national interest, an owner or operator of a vessel covered by an 
operating agreement under this subpart shall make available commercial 
transportation resources pursuant to an Emergency Preparedness Program 
established by the Secretary of Transportation and approved by the 
Secretary of Defense.
    ``(b) The commercial transportation resources to be made available 
shall include vessels or capacity in vessels, intermodal systems and 
equipment, terminal facilities, and intermodal and management services, 
or any portion of these resources, as the Secretary may determine to be 
necessary.
    ``(c) The Secretary of Transportation shall not reduce the amount 
of equal monthly installment payments under section 651 to an owner or 
operator who makes commercial transportation resources available 
pursuant to an Emergency Preparedness Program under this section.
    ``(d) An owner or operator who makes a vessel available pursuant to 
this section shall be permitted to employ a foreign-flag vessel in the 
foreign commerce of the United States, without receiving additional 
compensation, as a replacement 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, directly or 
                indirectly owns, charters, or operates a vessel engaged 
                in the transportation of cargo in a noncontiguous trade 
                other than in accordance 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 frequency 
                        permitted under the waiver; or
                            ``(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.--Paragraph (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 subsection (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
                    ``(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 permitted,
                    ``(ii) for containerized or trailer service, the 
                annual forty-foot equivalent unit shipboard container 
                and trailer or vehicle or general cargo capacity 
                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 capacity, permitted.
            ``(3) Applications for waivers.--An application for a 
        waiver under this subsection may be submitted by an owner or 
        operator and shall describe, as applicable, 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 increase 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 application;
                            ``(ii) begin a proceeding on the 
                        application 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 
                                proposed service or proposed material 
                                change or increase in a previously 
                                permitted service;
                                    ``(III) the projected effect of the 
                                proposed service or proposed material 
                                change or increase in existing service; 
                                and
                                    ``(IV) recommendations on 
                                conditions that should be contained in 
                                any waiver for the proposed service or 
                                material 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 expeditious 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 certain existing 
        service.--
                    ``(A) Limitation.--In determining whether to grant 
                a waiver under this subsection for noncontiguous trade 
                with Hawaii, the Secretary shall not consider the 
                criterion set forth in paragraph (1)(B) if a qualified 
                operator--
                            ``(i) is a party to an operating agreement 
                        under this subpart, and
                            ``(ii) operates four or more vessels in 
                        foreign commerce in competition with another 
                        operator who is a party to an operating 
                        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 operator, who is a 
        party to an operating agreement under this subpart, pursuant to 
        an application submitted in accordance with this subsection if 
        the Secretary finds that the owner or operator, or a related 
        party or predecessor in interest with respect to the owner or 
        operator--
                    ``(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 operation, 
                        during the 12 calendar months preceding July 1, 
                        1992; and
                    ``(B) has operated in that service since that time, 
                except for interruptions of service resulting from 
                military contingency or over which the owner or 
                operator (or related party or predecessor 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 applicant (or related party or 
                predecessor in interest) in the relevant noncontiguous 
                trade during, for year-round service, the six calendar 
                months preceding July 1, 1992, or for seasonal service, 
                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 resulting 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 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 forty-foot equivalent 
                        unit container, trailer, or vehicle capacity, 
                        employed.
                    ``(B) Certain containerized vessels.--If an 
                applicant under this subsection was offering service as 
                an operator of containerized vessels 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) 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 capacity 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 Washington 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.
                    ``(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 Washington, 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 centum of the total of the capacity of 
                        its vessels 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 between the East 
                        Coast or Gulf Coast of the United States and 
                        Puerto Rico with an annual forty-foot 
                        equivalent unit container or trailer capacity 
                        equal to 100 per centum of the capacity of its 
                        barges employed in the 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 
                        additional 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 employed in the service on July 
                        1, 1992;
                            ``(iv) eight regularly scheduled single tow 
                        sailings each year in each direction between 
                        Washington and points in Alaska (not including 
                        the port range between and including Anchorage 
                        and Whittier, except occasional deviations to 
                        discharge incidental quantities of cargo) 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; and
                            ``(v) unscheduled, contract carrier tug and 
                        barge service between points in Alaska 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 otherwise 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 capacity permitted 
                        under this waiver in any direction 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 equivalent 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 capacity 
                        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 immediately 
                        following the preceding increase in gross 
                        product. However, if an operator operating 
                        exclusively containerized vessels in trade on 
                        July 1, 1992, carries an average load factor of 
                        at least 90 per centum of permitted capacity 
                        (including the capacity, 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.
                    ``(F) Service levels not increased by termination 
                of agreement.--The termination of an operating 
                agreement under subpart B of this title shall not be 
                considered to increase a level of service specified in 
                subparagraph (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 submit 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 publish a notice 
                of receipt of an application for a waiver under this 
                subsection within thirty days after receiving the 
                application.
                    ``(B) Hearing prohibited.--The Secretary may not 
                conduct a hearing on an application 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 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 
                application.
            ``(5) Decision on application.--Subject to the time 
        required for publication of notice 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 vessel in the fleet 
        established under this subpart shall be granted in accordance 
        with the level of service determined by the Secretary 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 of increase in service.--Any material change 
        or increase in a service that is subject to a waiver under this 
        subsection is not authorized except to the extent the change or 
        increase is permitted by a waiver under subsection (b).
    ``(d) Emergency Waiver.--Notwithstanding any other provision of 
this section, the Secretary may, without hearing, temporarily waive the 
application of subsection (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 President.
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 waiver--
            ``(1) the ports served during the year;
            ``(2) the number or frequency of sailings performed during 
        the year; and
            ``(3) the volume of cargo carried or, for containerized or 
        trailer service, the annual forty-foot equivalent unit 
        shipboard container, trailer, or vehicle capacity utilized 
        during the year, or for tug and barge service, the annual barge 
        house and barge deck capacity utilized during the year.
    ``(f) Definitions.--In this section--
            ``(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, affiliate, 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 vessels.''.
    (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 operating 
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 contract 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, contract 
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 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 immediately 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 operating assistance under 
subpart A or subpart B of title VI, or any holding company, subsidiary, 
affiliate or associate of such owner or operator, or any officer, 
director, agency, or executive thereof from--
            ``(1) owning, chartering, or operating any foreign-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 foreign-flag 
        vessel in line haul service between the United States and 
        foreign ports; Provided, That the foreign-flag vessel was 
        operated by that owner or operator on the date of enactment of 
        this Act; or that the owner or operator, with respect to each 
        additional foreign-flag vessel, has first applied to have that 
        vessel added to the existing operating agreement, and the 
        Secretary has denied the application; And provided further, 
        That any foreign-flag vessel in line haul service between the 
        United States and foreign ports is--
                    (A) registered under the flag of an effective 
                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 foreign-to-foreign 
        service and not in the foreign commerce of the United States;
            ``(4) owning, chartering, or operating foreign-flag bulk 
        cargo vessels that are operated in both foreign-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 following is inserted in lieu thereof: ``For 
purposes of this section, the term `privately owned United States-flag 
commercial vessels' shall be deemed to include--
                    (A) any privately owned United States flag 
                commercial vessel constructed in the United States,
                    (B) any privately owned liner vessel constructed, 
                reconstructed, or acquired outside the United States 
                that is documented pursuant to chapter 121 of title 46, 
                United States Code and is less than five years of age 
                on the date of such documentation, and
                    (C) any bulk cargo vessel constructed in or 
                delivered by a shipyard outside the United States after 
                January 1, 1993.
        The term `privately owned United States-flag commercial 
        vessels' shall also be deemed to include any liner or bulk 
        cargo vessel that so qualified pursuant to section 615 of title 
        VI or Section 901(b)(1) of title IX of this Act, prior to 
        enactment of the Maritime Security Act of 1995. The term 
        `privately owned United States-flag commercial vessels' shall 
        not be deemed to include any liquid bulk cargo vessel that does 
        not meet the requirements of section 3703a of title 46, United 
        States Code.''.

SEC. 6. USE OF FOREIGN-FLAG FEEDER VESSELS IN CARRIAGE OF PREFERENCE 
              CARGOES.

    The provisions of law set forth in 46 App. U.S.C. 1241(b)(1), 1241-
1, and 1241f, requiring use of United States-flag vessels shall, with 
respect to liner vessels, be deemed fulfilled, as to the total of any 
shipment other than that of the Department of Defense covered by 10 
U.S.C. 2631, if the actual ocean transportation of each shipment for 
which the United States-flag carrier has issued its own through bill-
of-lading between the original port of lading and the port of final 
discharge, consists of transportation of the cargo by a combination of 
United States- and foreign-flag vessels; Provided, That, measured by 
distance, the United States-flag line haul portion of each voyage is 
greater than the foreign-flag feeder portion of each voyage pursuant to 
regulations issued by the Secretary of Transportation.

SEC. 7. LIMITATION ON RESTRICTIONS.

    Notwithstanding any other provision of law or contract, all 
restrictions and requirements set forth in 46 App. U.S.C. 1153, 1156, 
and 1212, applicable to a vessel constructed, reconstructed or 
reconditioned with the aid of construction-differential subsidy shall 
terminate--
            (1) for a liner or dry bulk cargo vessel, upon the 
        expiration of the twenty-five-year period beginning on the date 
        of original delivery of the vessel from the shipyard, and
            (2) for a liquid bulk cargo vessel, upon the expiration of 
        the twenty-year period beginning on the date of original 
        delivery of the vessel from the shipyard.
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