[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1350 Placed on Calendar Senate (PCS)]
Calendar No. 262
104th CONGRESS
1st Session
H. R. 1350
_______________________________________________________________________
AN ACT
To amend the Merchant Marine Act, 1936 to revitalize the United States-
flag merchant marine, and for other purposes.
_______________________________________________________________________
December 7, 1995
Received; read twice and placed on the calendar
Calendar No. 262
104th CONGRESS
1st Session
H. R. 1350
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 7, 1995
Received; read twice and placed on the calendar
_______________________________________________________________________
AN ACT
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. MARITIME SECURITY PROGRAM.
Title VI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1171 et
seq.) is amended--
(1) by striking the title heading and inserting the
following:
``Title VI--Vessel Operating Assistance Programs
``Subtitle A--Operating-Differential Subsidy Program'';
and
(2) by adding at the end the following new subtitle:
``Subtitle B--Maritime Security Fleet Program
``establishment of fleet
``Sec. 651. (a) In General.--The Secretary of Transportation shall
establish a fleet of active, militarily useful, privately-owned vessels
to meet national defense and other security requirements and maintain a
United States presence in international commercial shipping. The Fleet
shall consist of privately owned, United States-flag vessels for which
there are in effect operating agreements under this subtitle, and shall
be known as the Maritime Security Fleet.
``(b) Vessel Eligibility.--A vessel is eligible to be included in
the Fleet if the vessel is self-propelled and--
``(1)(A) is operated by a person as an ocean common
carrier;
``(B) whether in commercial service, on charter to the
Department of Defense, or in other employment, is either--
``(i) a roll-on/roll-off vessel with a carrying
capacity of at least 80,000 square feet or 500 twenty-
foot equivalent units; or
``(ii) a lighter aboard ship vessel with a barge
capacity of at least 75 barges; or
``(C) any other type of vessel that is determined by the
Secretary to be suitable for use by the United States for
national defense or military purposes in time of war or
national emergency;
``(2)(A)(i) is a United States-documented vessel; and
``(ii) on the date an operating agreement covering the
vessel is entered into under this subtitle, is--
``(I) a LASH vessel that is 25 years of age or
less; or
``(II) any other type of vessel that is 15 years of
age or less;
except that the Secretary of Transportation may waive the
application of clause (ii) if the Secretary, in consultation
with the Secretary of Defense, determines that the waiver is in
the national interest; or
``(B) it is not a United States-documented vessel, but the
owner of the vessel has demonstrated an intent to have the
vessel documented under chapter 121 of title 46, United States
Code, if it is included in the Fleet, and the vessel will be
less than 10 years of age on the date of that documentation;
``(3) the Secretary of Transportation determines that the
vessel is necessary to maintain a United States presence in
international commercial shipping or, after consultation with
the Secretary of Defense, determines that the vessel is
militarily useful for meeting the sealift needs of the United
States with respect to national emergencies; and
``(4) at the time an operating agreement for the vessel is
entered into under this subtitle, the vessel will be eligible
for documentation under chapter 121 of title 46, United States
Code.
``operating agreements
``Sec. 652. (a) In General.--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 under this section. Notwithstanding subsection (g), the
Secretary may enter into an operating agreement for, among other
vessels that are eligible to be included in the Fleet, any vessel which
continues to operate under an operating-differential subsidy contract
under subtitle A or which is under charter to the Department of
Defense.
``(b) Requirements for Operation.--An operating agreement under
this section shall require that, during the period a vessel is
operating under the agreement--
``(1) the vessel--
``(A) shall be operated exclusively in the foreign
trade or in mixed foreign and domestic trade allowed
under a registry endorsement issued under section 12105
of title 46, United States Code, and
``(B) shall not otherwise be operated in the
coastwise trade; and
``(2) the vessel shall be documented under chapter 121 of
title 46, United States Code.
``(c) Regulatory Relief.--A contractor of a vessel included in an
operating agreement under this subtitle may operate the vessel in the
foreign commerce of the United States without restriction, and shall
not be subject to any requirement under section 801, 808, 809, or 810.
Participation in the program established by this subtitle shall not
subject a contractor to section 805 or to any provision of subtitle A.
``(d) Effectiveness and Annual Payment Requirements of Operating
Agreements.--
``(1) Effectiveness.--The Secretary of Transportation may
enter into an operating agreement under this subtitle for
fiscal year 1996. The agreement shall be effective only for 1
fiscal year, but shall be renewable, subject to the
availability of appropriations, for each subsequent fiscal year
through the end of fiscal year 2005.
``(2) Annual payment.--An operating agreement under this
subtitle shall require, subject to the availability of
appropriations and the other provisions of this section, that
the Secretary of Transportation pay each fiscal year to the
contractor, for each vessel that is covered by the operating
agreement, an amount equal to $2,300,000 for fiscal year 1996
and $2,100,000 for each fiscal year thereafter in which the
agreement is in effect. The amount shall be paid in equal
monthly installments at the end of each month. The amount shall
not be reduced except as provided by this section.
``(e) Certification Required for Payment.--As a condition of
receiving payment under this section for a fiscal year for a vessel,
the contractor for the vessel shall certify, in accordance with
regulations issued by the Secretary of Transportation, that the vessel
has been and will be operated in accordance with subsection (b)(1)
for at least 320 days in the fiscal year. Days during which the vessel
is drydocked, surveyed, inspected, or repaired shall be considered days
of operation for purposes of this subsection.
``(f) Operating Agreement is Obligation of United States
Government.--An operating agreement under this subtitle constitutes a
contractual obligation of the United States Government to pay the
amounts provided for in the agreement to the extent of actual
appropriations.
``(g) Limitations.--The Secretary of Transportation shall not make
any payment under this subtitle for a vessel with respect to any days
for which the vessel is--
``(1) subject to an operating-differential subsidy contract
under subtitle A or under a charter to the United States
Government, other than a charter pursuant to section 653;
``(2) not operated or maintained in accordance with an
operating agreement under this subtitle; or
``(3) more than 25 years of age, except that the Secretary
may make such payments for a LASH vessel for any day for which
the vessel is more than 25 years of age if that vessel--
``(A) is modernized after January 1, 1994,
``(B) is modernized before it is 25 years of age,
and
``(C) is not more than 30 years of age.
``(h) Payments.--With respect to payments under this subtitle for a
vessel covered by an operating agreement, the Secretary of
Transportation--
``(1) except as provided in paragraph (2), shall not reduce
any payment for the operation of a vessel to carry military or
other preference cargoes under section 2631 of title 10, United
States Code, the Act of March 26, 1934 (46 App. U.S.C. 1241-1),
section 901(a), 901(b), or 901b of this Act, or any other cargo
preference law of the United States;
``(2) shall not make any payment for any day that a vessel
is engaged in transporting more than 7,500 tons of civilian
bulk preference cargoes pursuant to section 901(a), 901(b), or
901b that is cargo; and
``(3) shall make a pro rata reduction in payment for each
day less than 320 in a fiscal year that a vessel covered by an
operating agreement is not operated in accordance with
subsection (b)(1), with days during which the vessel is
drydocked or undergoing survey, inspection, or repair
considered to be days on which the vessel is operated.
``(i) Priority for Awarding Agreements.--Subject to the
availability of appropriations, the Secretary shall enter into
operating agreements according to the following priority:
``(1) Vessels owned by citizens.--
``(A) Priority.--First, for any vessel that is--
``(i) owned and operated by persons who are
citizens of the United States under section 2
of the Shipping Act, 1916; or
``(ii) less than 10 years of age and owned
and operated by a corporation that is--
``(I) eligible to document a vessel
under chapter 121 of title 46, United
States Code; and
``(II) affiliated with a
corporation operating or managing for
the Secretary of Defense other vessels
documented under that chapter, or
chartering other vessels to the
Secretary of Defense.
``(B) Limitation on number of operating
agreements.--The total number of operating agreements
that may be entered into by a person under the priority
in subparagraph (A)--
``(i) for vessels described in subparagraph
(A)(i), may not exceed the sum of--
``(I) the number of United States-
documented vessels the person operated
in the foreign commerce of the United
States (except mixed coastwise and
foreign commerce) on May 17, 1995; and
``(II) the number of United States-
documented vessels the person chartered
to the Secretary of Defense on that
date; and
``(ii) for vessels described in
subparagraph (A)(ii), may not exceed 5 vessels.
``(C) Treatment of related parties.--For purposes
of subparagraph (B), a related party with respect to a
person shall be treated as the person.
``(2) Other vessels owned by citizens and government
contractors.--To the extent that amounts are available after
applying paragraph (1), any vessel that is owned and operated
by a person who is--
``(A) a citizen of the United States under section
2 of the Shipping Act, 1916, that has not been awarded
an operating agreement under the priority established
under paragraph (1); or
``(B)(i) eligible to document a vessel under
chapter 121 of title 46, United States Code; and
``(ii) affiliated with a corporation operating or
managing other United States-documented vessels for the
Secretary of Defense or chartering other vessels to the
Secretary of Defense.
``(3) Other vessels.--To the extent that amounts are
available after applying paragraphs (1) and (2), any other
eligible vessel.
``(j) Transfer of Operating Agreements.--A contractor under an
operating agreement may transfer the agreement (including all rights
and obligations under the agreement) to any person eligible to enter
into that operating agreement under this subtitle after notification of
the Secretary in accordance with regulations prescribed by the
Secretary, unless the transfer is disapproved by the Secretary within
90 days after the date of that notification. A person to whom an
operating agreement is transferred may receive payments from the
Secretary under the agreement only if each vessel to be covered by the
agreement after the transfer is an eligible vessel under section
651(b).
``(k) Reversion of Unused Authority.--The obligation of the
Secretary to make payments under an operating agreement under this
subtitle shall terminate with respect to a vessel if the contractor
fails to engage in operation of the vessel for which such payment is
required--
``(1) within one year after the effective date of the
operating agreement, in the case of a vessel in existence on
the effective date of the agreement, or
``(2) within 30 months after the effective date of the
operating agreement, in the case of a vessel to be constructed
after that effective date.
``(l) Procedure for Considering Application; Effective Date for
Certain Vessels.--
``(1) Procedures.--No later than 30 days after the date of
the enactment of the Maritime Security Act of 1995, the
Secretary shall accept applications for enrollment of vessels
in the Fleet, and within 90 days after receipt of an
application for enrollment of a vessel in the Fleet, the
Secretary shall enter into an operating agreement with the
applicant or provide in writing the reason for denial of that
application.
``(2) Effective date.--Unless an earlier date is requested
by the applicant, the effective date for an operating agreement
with respect to a vessel which is, on the date of entry into an
operating agreement, either subject to a contract under
subtitle A or on charter to the United States Government, other
than a charter under section 653, shall be the expiration or
termination date of the contract under subtitle A or of the
Government charter covering the vessel, respectively, or any
earlier date the vessel is withdrawn from that contract or
charter.
``(m) Early Termination.--An operating agreement under this
subtitle shall terminate on a date specified by the contractor if the
contractor notifies the Secretary, by not later than 60 days before the
effective date of the termination, that the contractor intends to
terminate the agreement. Vessels covered by an operating agreement
terminated under this subsection shall remain documented under chapter
121 of title 46, United States Code, until the date the operating
agreement would have terminated according to its terms. A contractor
who terminates an operating agreement pursuant to this subsection shall
continue to be bound by the provisions of section 653 until the date
the operating agreement would have terminated according to its terms.
All terms and conditions of an Emergency Preparedness Agreement entered
into under section 653 shall remain in effect until the date the
operating agreement would have terminated according to its terms,
except that the terms of such Emergency Preparedness Agreement may be
modified by the mutual consent of the contractor and the Secretary of
Transportation and the Secretary of Defense.
``(n) Nonrenewal for Lack of Funds.--If, by the first day of a
fiscal year, sufficient funds have not been appropriated under the
authority provided by section 655 for that fiscal year, the Secretary
of Transportation shall notify the Congress that operating agreements
authorized under this subtitle for which sufficient funds are not
available will not be renewed for that fiscal year if sufficient funds
are not appropriated by the 60th day of that fiscal year. If funds are
not appropriated under the authority provided by section 655 for any
fiscal year by the 60th day of that fiscal year, then each vessel
covered by an operating agreement under this subtitle for which funds
are not available is thereby released from any further obligation under
the operating agreement, and the vessel owner or operator may transfer
and register such vessel under a foreign registry deemed acceptable by
the Secretary of Transportation, notwithstanding any other provision of
law. If section 902 is applicable to such vessel after registration of
the vessel under such a registry, the vessel is available to be
requisitioned by the Secretary of Transportation pursuant to section
902.
``(o) Award of Operating Agreements.--
``(1) In general.--The Secretary of Transportation, subject
to paragraph (4), shall award operating agreements within each
priority under subsection (i)(1), (2), and (3) under
regulations prescribed by the Secretary.
``(2) Number of agreements awarded.--Regulations under
paragraph (1) shall provide that if appropriated amounts are
not sufficient for operating agreements for all vessels within
a priority under subsection (i)(1), (2), or (3), the Secretary
shall award to each person submitting a request a number of
operating agreements that bears approximately the same ratio to
the total number of vessels in the priority, as the amount of
appropriations available for operating agreements for vessels
in the priority bears to the amount of appropriations necessary
for operating agreements for all vessels in the priority.
``(3) Treatment of related parties.--For purposes of
paragraph (2), a related party with respect to a person shall
be treated as the person.
``(4) Preference for u.s.-built vessels.--In awarding
operating agreements for vessels within a priority under
subsection (i) (1), (2), or (3), the Secretary shall give
preference to a vessel that was constructed in the United
States, to the extent such preference is consistent with
establishment of a fleet described in the first sentence of
section 651(a) (taking into account the age of the vessel, the
nature of service provided by the vessel, and the commercial
viability of the vessel).
``(p) Notice to U.S. Shipbuilders Required.--The Secretary shall
include in any operating agreement under this subtitle a requirement
that the contractor under the agreement shall, by not later than 30
days after soliciting any bid or offer for the construction of any
vessel in a foreign shipyard and before entering into a contract for
construction of a vessel in a foreign shipyard, provide notice of the
intent of the contractor to enter into such a contract to each shipyard
in the United States that is capable of constructing the vessel.
``national security requirements
``Sec. 653. (a) Emergency Preparedness Agreement.--
``(1) Requirement to enter agreement.--The Secretary of
Transportation shall establish an Emergency Preparedness
Program under this section that is approved by the Secretary of
Defense. Under the program, the Secretary of Transportation
shall include in each operating agreement under this subtitle a
requirement that the contractor enter into an Emergency
Preparedness Agreement under this section with the Secretary.
The Secretary shall negotiate and enter into an Emergency
Preparedness Agreement with each contractor as promptly as
practicable after the contractor has entered into an operating
agreement under this subtitle.
``(2) Terms of agreement.--An Emergency Preparedness
Agreement under this section shall require that upon a request
by the Secretary of Defense during time of war or national
emergency, or whenever determined by the Secretary of Defense
to be necessary for national security (including any natural
disaster, international peace operation, or contingency
operation (as that term is defined in section 101 of title 10,
United States Code)), a contractor for a vessel covered by an
operating agreement under this subtitle shall make available
commercial transportation resources (including services). The
basic terms of the Emergency Preparedness Agreements shall be
established pursuant to consultations among the Secretary, the
Secretary of Defense, and Maritime Security Program
contractors. In any Emergency Preparedness Agreement, the
Secretary and a contractor may agree to additional or modifying
terms appropriate to the contractor's circumstances if those
terms have been approved by the Secretary of Defense.
``(3) Participation after expiration of operating
agreement.--Except as provided by section 652(m), the Secretary
may not require, through an Emergency Preparedness Agreement or
operating agreement, that a contractor continue to participate
in an Emergency Preparedness Agreement when the operating
agreement with the contractor has expired according to its
terms or is otherwise no longer in effect. After expiration of
an Emergency Preparedness Agreement, a contractor may volunteer
to continue to participate in such an agreement.
``(b) Resources Made Available.--The commercial transportation
resources to be made available under an Emergency Preparedness
Agreement shall include vessels or capacity in vessels, intermodal
systems and equipment, terminal facilities, intermodal and management
services, and other related services, or any agreed portion of such
nonvessel resources for activation as the Secretary may determine to be
necessary, seeking to minimize disruption of the contractor's service
to commercial shippers.
``(c) Compensation.--
``(1) In general.--The Secretary of Transportation shall
provide in each Emergency Preparedness Agreement for fair and
reasonable compensation for all commercial transportation
resources provided pursuant to this section.
``(2) Specific requirements.--Compensation under this
subsection--
``(A) shall not be less than the contractor's
commercial market charges for like transportation
resources;
``(B) shall include all the contractor's costs
associated with provision and use of the contractor's
commercial resources to meet emergency requirements;
``(C) in the case of a charter of an entire vessel,
shall be fair and reasonable;
``(D) shall be in addition to and shall not in any
way reflect amounts payable under section 652; and
``(E) shall be provided from the time that a vessel
or resource is diverted from commercial service until
the time that it reenters commercial service.
``(3) Approval of amount by secretary of defense.--No
compensation may be provided for a vessel under this subsection
unless the amount of the compensation is approved by the
Secretary of Defense.
``(d) Temporary Replacement Vessels.--Notwithstanding any other
provision of this subtitle or of other law to the contrary--
``(1) a contractor may operate or employ in foreign
commerce a foreign-flag vessel or foreign-flag vessel capacity,
as a temporary replacement for a United States-documented
vessel or United States-documented vessel capacity that is
activated under an Emergency Preparedness Agreement; and
``(2) such replacement vessel or vessel capacity shall be
eligible during the replacement period to transport preference
cargoes subject to section 2631 of title 10, United States
Code, the Act of March 26, 1934 (46 App. U.S.C. 1241-1), and
sections 901(a), 901(b), and 901b of this Act to the same
extent as the eligibility of the vessel or vessel capacity
replaced.
``(e) Redelivery and Liability of U.S. for Damages.--
``(1) In general.--All commercial transportation resources
activated under an Emergency Preparedness Agreement shall, upon
termination of the period of activation, be redelivered to the
contractor in the same good order and condition as when
received, less ordinary wear and tear, or the Government shall
fully compensate the contractor for any necessary repair or
replacement.
``(2) Limitation on liability of u.s.--Except as may be
expressly agreed to in an Emergency Preparedness Agreement, or
as otherwise provided by law, the Government shall not be
liable for disruption of a contractor's commercial business or
other consequential damages to a contractor arising from
activation of commercial transportation resources under an
Emergency Preparedness Agreement.
``(3) Limitation on application of other requirements.--
Sections 902 and 909 of this Act shall not apply to a vessel
while it is covered by an Emergency Preparedness Agreement
under this subtitle. Any Emergency Preparedness Agreement
entered into by a contractor shall supersede any other
agreement between that contractor and the Government for vessel
availability in time of war or national emergency.
``definitions
``Sec. 654. In this subtitle:
``(1) Bulk cargo.--The term `bulk cargo' means cargo that
is loaded and carried in bulk without mark or count.
``(2) Contractor.--The term `contractor' means an owner or
operator of a vessel that enters into an operating agreement
for the vessel with the Secretary of Transportation under
section 652.
``(3) Ocean common carrier.--The term `ocean common
carrier' means a person holding itself out to the general
public to operate vessels to provide transportation by water of
passengers or cargo between the United States and a foreign
country for compensation, that--
``(A) assumes responsibility for the transportation
from the port or point of receipt to the port or point
of destination, and
``(B) utilizes, for all or part of that
transportation, a vessel operating on the high seas or
the Great Lakes between a port in the United States and
a port in a foreign country, except that the term does
not include a common carrier engaged in ocean
transportation by ferry boat, ocean tramp, or chemical
parcel-tanker. As used in this paragraph, `chemical
parcel-tanker' means a vessel whose cargo-carrying
capability consists of individual cargo tanks for bulk
chemicals that are a permanent part of the vessel, that
have segregation capability with piping systems to
permit simultaneous carriage of several bulk chemical
cargoes with minimum risk of cross-contamination, and
that has a valid certificate of fitness under the
International Maritime Organization Code for the
Construction and Equipment of Ships Carrying Dangerous
Chemicals in Bulk.
``(4) Fleet.--The term `Fleet' means the Maritime Security
Fleet established pursuant to section 651(a).
``(5) LASH vessel.--The term `LASH vessel' means a lighter
aboard ship vessel.
``(6) United states-documented vessel.--The term `United
States-documented vessel' means a vessel documented under
chapter 121 of title 46, United States Code.
``authorization of appropriations
``Sec. 655. There are authorized to be appropriated for operating
agreements under this subtitle, to remain available until expended,
$100,000,000 for fiscal year 1996 and such sums as may be necessary,
not to exceed $100,000,000, for each fiscal year thereafter through
fiscal year 2005.''.
SEC. 3. TERMINATION OF OPERATING-DIFFERENTIAL SUBSIDY PROGRAM.
(a) Limitation on Payments for Older Vessels.--Section 605(b) of
the Merchant Marine Act, 1936 (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 after the calendar year the vessel becomes 25
years of age, unless the Secretary of Transportation has determined,
before the date of 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.''.
(b) Wind-Up of Program.--Subtitle A of such Act (46 App. U.S.C.
1171 et seq.), as designated by the amendment made by section 2(1), is
further amended by adding at the end the following new section:
``Sec. 616. (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 operating-differential subsidy under this
subtitle.
``(b) Notwithstanding any other provision of this Act, any
operating-differential subsidy contract in effect under this title on
the day before the date of enactment of the Maritime Security Act of
1995 shall continue in effect and terminate as set forth in the
contract, unless voluntarily terminated at an earlier date by the
parties (other than the United States Government) to the contract.
``(c) The essential service requirements of section 601(a) and
603(b), and the provisions of sections 605(c) and 809(a), shall not
apply to the operating-differential subsidy program under this subtitle
effective upon the earlier of--
``(1) the date that a payment is made, under the Maritime
Security Program established by subtitle B to a contractor
under that subtitle who is not party to an operating-
differential subsidy contract under this subtitle, with the
Secretary to cause notice of the date of such payment to be
published in the Federal Register as soon as possible; or
``(2) with respect to a particular contractor under the
operating-differential subsidy program, the date that
contractor enters into a contract with the Secretary under the
Maritime Security Program established by subtitle B.
``(d)(1) Notwithstanding any other provision of law, a vessel may
be transferred and registered under an effective United States-
controlled foreign flag if--
``(A) the operator of the vessel receives an operating-
differential subsidy pursuant to a contract under this subtitle
which is in force on October 1, 1994, and the Secretary
approves the replacement of such vessel with a comparable vessel, or
``(B) the vessel is covered by an operating agreement under
subtitle B, and the Secretary approves the replacement of such
vessel with a comparable vessel for inclusion in the Maritime
Security Fleet established under subtitle B.
``(2) Any such vessel may be requisitioned by the Secretary of
Transportation pursuant to section 902.''.
SEC. 4. DOMESTIC OPERATIONS.
(a) In General.--Subtitle B of title VI of the Merchant Marine Act,
1936, as amended by section 102 of this title, is further amended by
adding at the end the following new section:
``noncontiguous domestic trades
``Sec. 656. (a)(1) Except as otherwise provided in this section, no
contractor or related party shall receive payments pursuant to this
subtitle during a period when it participates in a noncontiguous
domestic trade, except upon written permission of the Secretary of
Transportation. Such written permission shall also be required for any
material change in the number or frequency of sailings, the capacity
offered, or the domestic ports called by a contractor or related party
in a noncontiguous domestic trade. The Secretary may grant such written
permission pursuant to written application of such contractor or
related party unless the Secretary finds that--
``(A) existing service in that trade is adequate; or
``(B) the service sought to be provided by the contractor
or related party--
``(i) would result in unfair competition to any
other person operating vessels in such noncontiguous
domestic trade, or
``(ii) would be contrary to the objects and policy
of this Act.
``(2) For purposes of this subsection, ``written permission of the
Secretary'' means permission which states the capacity offered, the
number and frequency of sailings, and the domestic ports called, and
which is granted following--
``(A) written application containing the information
required by paragraph (e)(1) by a person seeking such written
permission, notice of which application shall be published in
the Federal Register within 15 days of filing of such
application with the Secretary;
``(B) holding of a hearing on the application under section
554 of title 5, United States Code, in which every person, firm
or corporation having any interest in the application shall be
permitted to intervene and be heard; and
``(C) final decision on the application by the Secretary
within 120 days following conclusion of such hearing.
``(b) Subsection (a) shall not apply in any way to provision by a
contractor of service within the level of service provided by that
contractor as of the date established by subsection (c) or to provision
of service permitted by subsection (d).
``(c) The date referred to in subsection (b) shall be August 9,
1995: Provided, however, That with respect to tug and barge service to
Alaska the date referred to in subsection (b) shall be July 1, 1992.
``(d) A contractor may provide service in a trade in addition to
the level of service provided as of the applicable date established by
subsection (c) in proportion to the annual increase in real gross
product of the noncontiguous State or Commonwealth served since the
applicable date established by subsection (c).
``(e)(1) A person applying for award of an agreement under this
subtitle shall include with the application a description of the level
of service provided by that person in each noncontiguous domestic trade
served as of the date applicable under subsection (c). The application
also shall include, for each such noncontiguous domestic trade: a list
of vessels operated by that person in such trade, their container
carrying capacity expressed in twenty-foot equivalent units (TEUs) or
other carrying capacity, the itinerary for each such vessel, and such
other information as the Secretary may require by regulation. Such
description and information shall be made available to the public.
Within 15 days of the date of an application for an agreement by a
person seeking to provide service pursuant to subsections (b) and (c)
of this section, the Secretary shall cause to be published in the
Federal Register notice of such description, along with a request for
public comment thereon. Comments on such description shall be submitted
to the Secretary within 30 days of publication in the Federal Register.
Within 15 days after receipt of comments, the Secretary shall issue a
determination in writing either accepting, in whole or part, or
rejecting use of the applicant's description to establish the level of
service provided as of the date applicable under subsection (c):
Provided, That notwithstanding the provisions of this subsection,
processing of the application for an award of an agreement shall not be
suspended or delayed during the time in which comments may be submitted
with respect to the determination or during the time prior to issuance
by the Secretary of the required determination: Provided further, That
if the Secretary does not make the determination required by this
paragraph within the time provided by this paragraph, the description
of the level of service provided by the applicant shall be deemed to be
the level of service provided as of the applicable date until such time
as the Secretary makes the determination.
``(2) No contractor shall implement the authority granted in
subsection (d) of this section except as follows:
``(A) An application shall be filed with the Secretary
which shall state the increase in capacity sought to be
offered, a description of the means by which such additional
capacity would be provided, the basis for applicant's position
that such increase in capacity would be in proportion to or
less than the increase in real gross product of the relevant
noncontiguous State or Commonwealth since the applicable date
established by subsection (c), and such information as the
Secretary may require so that the Secretary may accurately
determine such increase in real gross product of the relevant
noncontiguous State or Commonwealth.
``(B) Such increase in capacity sought by applicant and
such information shall be made available to the public.
``(C) Within 15 days of the date of an application pursuant
to this paragraph the Secretary shall cause to be published in
the Federal Register notice of such application, along with a
request for public comment thereon.
``(D) Comments on such application shall be submitted to
the Secretary within 30 days of publication in the Federal
Register.
``(E) Within 15 days after receipt of comments, the
Secretary shall issue a determination in writing either
accepting, in whole or part, or rejecting, the increase in
capacity sought by the applicant as being in proportion to or
less than the increase in real gross product of the relevant
noncontiguous State or Commonwealth since the applicable date
established by subsection (c): Provided That, notwithstanding
the provisions of this section, if the Secretary does not make
the determination required by this paragraph within the time
provided by this paragraph, the increase in capacity sought by
applicant shall be permitted as being in proportion to or less
than such increase in real gross product until such time as the
Secretary makes the determination.
``(f) With respect to provision by a contractor of service in a
noncontiguous domestic trade not authorized by this section, the
Secretary shall deny payments under the operating agreement with
respect to the period of provision of such service but shall deny
payments only in part if the extent of provision of such unauthorized
service was de minimis or not material.
``(g) Notwithstanding any other provision of this subtitle, the
Secretary may issue temporary permission for any United States citizen,
as that term is defined in section 2 of the Shipping Act, 1916, to
provide service to a noncontiguous State or Commonwealth upon the
request of the Governor of such noncontiguous State or Commonwealth, in
circumstances where an Act of God, a declaration of war or national
emergency, or any other condition occurs that prevents ocean
transportation service to such noncontiguous State or Commonwealth from
being provided by persons currently providing such service. Such
temporary permission shall expire 90 days from date of grant, unless
extended by the Secretary upon written request of the Governor of such
State or Commonwealth.
``(h) As used in this section:
``(1) The term `level of service provided by a contractor'
in a trade as of a date means--
``(A) with respect to service other than service
described in (B), the total annual capacity provided by
the contractor in that trade for the 12 calendar months
preceding that date: Provided, That, with respect to
unscheduled, contract carrier tug and barge service
between points in Alaska south of the Arctic Circle and
points in the contiguous 48 States, the level of
service provided by a contractor shall include 100
percent of the capacity of the equipment dedicated to
such service on the date specified in subsection (c)
and actually utilized in that service in the two-year
period preceding that date, excluding service to points
between Anchorage, Alaska and Whittier, Alaska, served
by common carrier service unless such unscheduled
service is only for carriage of oil or pursuant to a
contract with the United States military: Provided
further, That, with respect to scheduled barge service
between the contiguous 48 States and Puerto Rico, such
total annual capacity shall be deemed as such total
annual capacity plus the annual capacity of two
additional barges, each capable of carrying 185
trailers and 100 automobiles; and
``(B) with respect to service provided by container
vessels, the overall capacity equal to the sum of--
``(i) 100 percent of the capacity of
vessels operated by or for the contractor on
that date, with the vessels' configuration and
frequency of sailing in effect on that date,
and which participate solely in that
noncontiguous domestic trade; and
``(ii) 75 percent of the capacity of
vessels operated by or for the contractor on
that date, with the vessels' configuration and
frequency of sailing in effect on that date,
and which participate in that noncontiguous
domestic trade and in another trade, provided
that the term does not include any restriction
on frequency, or number of sailings, or on
ports called within such overall capacity.
``(2) The level of service set forth in paragraph (1) shall
be described with the specificity required by subsection (e)(1)
and shall be the level of service in a trade with respect to
the applicable date established by subsection (c) only if the
service is not abandoned thereafter, except for interruptions
due to military contingency or other events beyond the
contractor's control.
``(3) The term `participates in a noncontiguous domestic
trade' means directly or indirectly owns, charters, or operates
a vessel engaged in transportation of cargo between a point in
the contiguous 48 states and a point in Alaska, Hawaii, or
Puerto Rico, other than a point in Alaska north of the Arctic
Circle.
``(4) The term `related party' means--
``(A) a holding company, subsidiary, affiliate, or
associate of a contractor who is a party to an
operating agreement under this subtitle; and
``(B) an officer, director, agent, or other
executive of a contractor or of a person referred to in
subparagraph (A).''.
(b) Conforming Amendment.--Section 805 of the Merchant Marine Act,
1936 (46 App. U.S.C. 1223) is amended--
(1) by striking ``title VI of this Act'' each place it
appears and inserting ``subtitle A of title VI of this Act'';
and
(2) by striking ``under title VI'' each place it appears
and inserting ``under subtitle A of title VI''.
SEC. 5. USE OF FOREIGN-FLAG VESSELS.
(a) In General.--Section 804 of the Merchant Marine Act, 1936 (46
App. U.S.C. 1222) is amended by adding at the end the following new
subsection:
``(f) The provisions of subsection (a) shall not preclude a
contractor receiving assistance under subtitle A or B of title VI, or
any holding company, subsidiary, or affiliate of the contractor, or any
officer, director, agent, or executive thereof, from--
``(1) owning, chartering, or operating any foreign-flag
vessel on a voyage or a segment of a voyage that does not call
at a port in the United States;
``(2) owning, chartering, or operating any foreign-flag
vessel in line haul service between the United States and
foreign ports if--
``(A) the foreign-flag vessel was owned, chartered,
or operated by, or is a replacement for a foreign-flag
vessel owned, chartered, or operated by, such owner or
operator, or any holding company, subsidiary,
affiliate, or associate of such owner or operator, on
the date of enactment of the Maritime Security Act of
1995;
``(B) the owner or operator, with respect to each
additional foreign-flag vessel, other than a time
chartered vessel, has first applied to have that vessel
covered by an operating agreement under subtitle B of
title VI, and the Secretary has not awarded an
operating agreement with respect to that vessel within
90 days after the filing of the application; or
``(C) the vessel has been placed under foreign
documentation pursuant to section 9 of the Shipping
Act, 1916 (46 App. U.S.C. 808), except that any
foreign-flag vessel, other than a time chartered
vessel, a replacement vessel under section 653(d), or a
vessel operated by the owner or operator on the date of
enactment of the Maritime Security Act of 1995, in line
haul service between the United States and foreign
ports is registered under the flag of an effective
United States-controlled foreign flag, and available to
be requisitioned by the Secretary of Transportation
pursuant to section 902 of this Act;
``(3) owning, chartering, or operating foreign-flag bulk
cargo vessels that are operated in foreign-to-foreign service
or the foreign commerce of the United States;
``(4) chartering or operating foreign-flag vessels that are
operated solely as replacement vessels for United States-flag
vessels or vessel capacity that are made available to the
Secretary of Defense pursuant to section 653 of this Act; or
``(5) entering into time or space charter or other
cooperative agreements with respect to foreign-flag vessels or
acting as agent or broker for a foreign-flag vessel or
vessels.''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to a contractor under subtitle B of title VI of the Merchant
Marine Act, 1936, as amended by this Act, upon enactment of this Act,
and shall apply to a contractor under subtitle A of title VI of that
Act, upon the earlier of--
(1) the date that a payment is made, under the Maritime
Security Program under subtitle B of that title to a contractor
under subtitle B of that title who is not party to an
operating-differential subsidy contract under subtitle A of
that title, with the Secretary of Transportation to cause
notice of the date of such payment to be published in the
Federal Register as soon as possible; or
(2) with respect to a particular contractor under the
operating-differential subsidy program under subtitle A of that
title, the date that contractor enters into a contract with the
Secretary under the Maritime Security Program established by
subtitle B of that title.
SEC. 6. AMENDMENT TO SHIPPING ACT, 1916.
Section 9 of the Shipping Act, 1916 (46 App. U.S.C. 808) is 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 of Transportation
under that Act, a vessel may be placed under a foreign registry,
without approval of the Secretary, if--
``(1)(A) the Secretary determines that at least one
replacement vessel of a capacity that is equivalent or greater,
as measured by deadweight 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 the foreign registry; and
``(B) the replacement vessel is not more than 10 years of
age on the date of that documentation;
``(2)(A) an application for an operating agreement under
subtitle B of title VI of the Merchant Marine Act, 1936 has
been filed with respect to a vessel which is eligible to be
included in the Maritime Security Fleet under section 651(b)(1)
of that Act; and
``(B) the Secretary has not awarded an operating agreement
with respect to that vessel within 90 days after the date of
that application;
``(3) a contract covering the vessel under subtitle A of
title VI of the Merchant Marine Act, 1936 has expired, and that
vessel is more than 15 years of age on the date the contract
expires; or
``(4) an operating agreement covering the vessel under
subtitle B of title VI of the Merchant Marine Act, 1936 has
expired.''.
SEC. 7. CONSTRUCTION DIFFERENTIAL SUBSIDY RESTRICTIONS.
Title V of the Merchant Marine Act, 1936 (46 App. U.S.C. 1151 et
seq.) is amended by adding at the end the following new section:
``SEC. 512. LIMITATION ON RESTRICTIONS.
``Notwithstanding any other provision of law or contract, all
restrictions and requirements under sections 503, 506, and 802
applicable to a liner vessel constructed, reconstructed, or
reconditioned with the aid of construction-differential subsidy shall
terminate upon the expiration of the 25-year period beginning on the
date of the original delivery of the vessel from the shipyard.''.
SEC. 8. REGULATIONS.
(a) In General.--The Secretary of Transportation may prescribe
rules as necessary to carry out this Act and the amendments made by
this Act.
(b) Interim Rules.--The Secretary of Transportation may prescribe
interim rules necessary to carry out this Act and the amendments made
by this Act. For this purpose, the Secretary of Transportation is
excepted from compliance with the notice and comment requirements of
section 553 of title 5, United States Code. All rules prescribed under
the authority of this subsection that are not earlier superseded by
final rules shall expire no later than 270 day after the date of
enactment of this Act.
SEC. 9. MERCHANT SHIP SALES ACT OF 1946 AMENDMENT.
Section 11 of the Merchant Ship Sales Act of 1946 (50 App. U.S.C.
1744) is amended as follows:
(1) In subsection (b)(2) by striking ``Secretary of the
Navy,'' and inserting ``Secretary of Defense,''.
(2) By striking subsection (c) and redesignating subsection
(d) as subsection (c).
SEC. 10. REEMPLOYMENT RIGHTS FOR CERTAIN MERCHANT SEAMEN.
(a) In General.--Title III of the Merchant Marine Act, 1936 (46
App. U.S.C. 1131) is amended by inserting after section 301 the
following new section:
``Sec. 302. (a) An individual who is certified by the Secretary of
Transportation under subsection (c) shall be entitled to reemployment
rights and other benefits substantially equivalent to the rights and
benefits provided for by chapter 43 of title 38, United States Code,
for any member of a Reserve component of the Armed Forces of the United
States who is ordered to active duty.
``(b) An individual may submit an application for certification
under subsection (c) to the Secretary of Transportation not later than
45 days after the date the individual completes a period of employment
described in subsection (c)(1)(A) with respect to which the application
is submitted.
``(c) Not later than 20 days after the date the Secretary of
Transportation receives from an individual an application for
certification under this subsection, the Secretary shall--
``(1) determine whether or not the individual--
``(A) was employed in the activation or operation
of a vessel--
``(i) in the National Defense Reserve Fleet
maintained under section 11 of the Merchant
Ship Sales Act of 1946, in a period in which
that vessel was in use or being activated for
use under subsection (b) of that section;
``(ii) that is requisitioned or purchased
under section 902 of this Act; or
``(iii) that is owned, chartered, or
controlled by the United States and used by the
United States for a war, armed conflict,
national emergency, or maritime mobilization
need (including for training purposes or
testing for readiness and suitability for
mission performance); and
``(B) during the period of that employment,
possessed a valid license, certificate of registry, or
merchant mariner's document issued under chapter 71 or
chapter 73 (as applicable) of title 46, United States
Code; and
``(2) if the Secretary makes affirmative determinations
under paragraph (1)(A) and (B), certify that individual under
this subsection.
``(d) For purposes of reemployment rights and benefits provided by
this section, a certification under subsection (c) shall be considered
to be the equivalent of a certificate referred to in paragraph (1) of
section 4301(a) of title 38, United States Code.''.
(b) Application.--The amendment made by subsection (a) shall apply
to employment described in section 302(c)(1)(A) of the Merchant Marine
Act, 1936, as amended by subsection (a), occurring after the date of
enactment of this Act.
(c) Regulation.--Not later than 120 days after the date of the
enactment of this Act, the Secretary of Transportation shall issue
regulations implementing this section.
SEC. 11. TITLE XI LOAN GUARANTEES.
Title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1271 et
seq.) is amended--
(1) in section 1101(b), by striking ``owned by citizens of
the United States'';
(2) in section 1104B(a), in the material preceding
paragraph (1), by striking ``owned by citizens of the United
States''; and
(3) in section 1110(a), by striking ``owned by citizens of
the United States''.
SEC. 12. EXTENSION OF WAR RISK INSURANCE AUTHORITY.
Section 1214 of the Merchant Marine Act, 1936 (46 App. U.S.C. 1294)
is amended by striking ``June 30, 1995'' and inserting ``June 30,
2000''.
SEC. 13. VESSEL LOAN GUARANTEE PROGRAM.
(a) Risk Factor Determinations.--Section 1103 of the Merchant
Marine Act, 1936 (46 App. U.S.C. 1273) is amended by adding at the end
the following new subsection:
``(h)(1) The Secretary shall--
``(A) establish in accordance with this subsection a system
of risk categories for obligations guaranteed under this title,
that categorizes the relative risk of guarantees made under
this title with respect to the risk factors set forth in
paragraph (3); and
``(B) determine for each of the risk categories a subsidy
rate equivalent to the cost of obligations in the category,
expressed as a percentage of the amount guaranteed under this
title for obligations in the category.
``(2)(A) Before making a guarantee under this section for an
obligation, the Secretary shall apply the risk factors set forth in
paragraph (3) to place the obligation in a risk category established
under paragraph (1)(A).
``(B) The Secretary shall consider the aggregate amount available
to the Secretary for making guarantees under this title to be reduced
by the amount determined by multiplying--
``(i) the amount guaranteed under this title for an
obligation, by
``(ii) the subsidy rate for the category in which the
obligation is placed under subparagraph (A) of this paragraph.
``(C) The estimated cost to the Government of a guarantee made by
the Secretary under this title for an obligation is deemed to be the
amount determined under subparagraph (B) for the obligation.
``(D) The Secretary may not guarantee obligations under this title
after the aggregate amount available to the Secretary under
appropriations Acts for the cost of loan guarantees is required by
subparagraph (B) to be considered reduced to zero.
``(3) The risk factors referred to in paragraphs (1) and (2) are
the following:
``(A) If applicable, the country risk for each eligible
export vessel financed or to be financed by an obligation.
``(B) The period for which an obligation is guaranteed or
to be guaranteed.
``(C) The amount of an obligation, which is guaranteed or
to be guaranteed, in relation to the total cost of the project
financed or to be financed by the obligation.
``(D) The financial condition of an obligor or applicant
for a guarantee.
``(E) If applicable, any guarantee related to the project,
other than the guarantee under this title for which the risk
factor is applied.
``(F) If applicable, the projected employment of each
vessel or equipment to be financed with an obligation.
``(G) If applicable, the projected market that will be
served by each vessel or equipment to be financed with an
obligation.
``(H) The collateral provided for a guarantee for an
obligation.
``(I) The management and operating experience of an obligor
or applicant for a guarantee.
``(J) Whether a guarantee under this title is or will be in
effect during the construction period of the project.
``(4) In this subsection, the term `cost' has the meaning given
that term in section 502 of the Federal Credit Reform Act of 1990 (2
U.S.C. 661a).''.
(b) Application.--Subsection (h)(2) of section 1103 of the Merchant
Marine Act, 1936 (46 App. U.S.C. 1273), as amended by subsection (a) of
this section, shall apply to guarantees that the Secretary of
Transportation makes or commits to make with any amounts that are
unobligated on or after the date of enactment of this Act.
(c) Guarantee Fees.--Section 1104A(e) of title XI of the Merchant
Marine Act, 1936 (46 App. U.S.C. 1274(e)) is amended to read as
follows:
``(e)(1) Except as otherwise provided in this subsection, the
Secretary shall prescribe regulations to assess in accordance with this
subsection a fee for the guarantee of an obligation under this title.
``(2)(A) The amount of a fee under this subsection for a guarantee
is equal to the sum determined by adding the amounts determined under
subparagraph (B) for the years in which the guarantee is in effect.
``(B) The amount referred to in subparagraph (A) for a year is the
present value (determined by applying the discount rate determined
under subparagraph (F)) of the amount determined by multiplying--
``(i) the estimated average unpaid principal amount of the
obligation that will be outstanding during the year (determined
in accordance with subparagraph (E)), by
``(ii) the fee rate established under subparagraph (C) for
the obligation for each year.
``(C) The fee rate referred to in subparagraph (B)(ii) for an
obligation shall be--
``(i) in the case of an obligation for a delivered vessel
or equipment, not less than one-half of 1 percent and not more
than 1 percent, determined by the Secretary for the obligation
under the formula established under subparagraph (D); or
``(ii) in the case of an obligation for a vessel to be
constructed, reconstructed, or reconditioned, or of equipment
to be delivered, not less than one-quarter of 1 percent and not
more than one-half of 1 percent, determined by the Secretary
for the obligation under the formula established under
subparagraph (D).
``(D) The Secretary shall establish a formula for determining the
fee rate for an obligation for purposes of subparagraph (C), that--
``(i) is a sliding scale based on the creditworthiness of
the obligor;
``(ii) takes into account the security provided for a
guarantee under this title for the obligation; and
``(iii) uses--
``(I) in the case of the most creditworthy
obligors, the lowest rate authorized under subparagraph
(C)(i) or (ii), as applicable; and
``(II) in the case of the least creditworthy
obligors, the highest rate authorized under
subparagraph (C)(i) or (ii), as applicable.
``(E) For purposes of subparagraph (B)(i), the estimated average
unpaid principal amount does not include the average amount (except
interest) on deposit in a year in the escrow fund under section 1108.
``(F) For purposes of determining present value under subparagraph
(B) for an obligation, the Secretary shall apply a discount rate
determined by the Secretary of the Treasury taking into consideration
current market yields on outstanding obligations of the United States
having periods to maturity comparable to the period to maturity for the
obligation with respect to which the determination of present value is
made.
``(3) A fee under this subsection shall be assessed and collected
not later than the date on which amounts are first paid under an
obligation with respect to which the fee is assessed.
``(4) A fee paid under this subsection is not refundable. However,
an obligor shall receive credit for the amount paid for the remaining
term of the guaranteed obligation if the obligation is refinanced and
guaranteed under this title after such refinancing.
``(5) A fee paid under subsection (e) shall be included in the
amount of the actual cost of the obligation guaranteed under this title
and is eligible to be financed under this title.''.
SEC. 14. MARITIME POLICY REPORT.
(a) Report.--The Secretary of Transportation shall transmit to the
Congress a report setting forth the Department of Transportation's
policies for the 5-year period beginning October 1, 1995, with respect
to--
(1) fostering and maintaining a United States merchant
marine capable of meeting economic and national security
requirements;
(2) improving the vitality and competitiveness of the
United States merchant marine and the maritime industrial base,
including ship repairers, shipbuilders, ship manning, ship
operators, and ship suppliers;
(3) reversing the precipitous decrease in the number of
ships in the United States-flag fleet and the Nation's shipyard
and repair capability;
(4) stabilizing and eventually increasing the number of
mariners available to crew United States merchant vessels;
(5) achieving adequate manning of merchant vessels for
national security needs during a mobilization;
(6) ensuring that sufficient civil maritime resources will
be available to meet defense deployment and essential economic
requirements in support of our national security strategy;
(7) ensuring that the United States maintains the
capability to respond unilaterally to security threats in
geographic areas not covered by alliance commitments and
otherwise meets sealift requirements in the event of crisis or
war;
(8) ensuring that international agreements and practices do
not place United States maritime industries at an unfair
competitive disadvantage in world markets;
(9) ensuring that Federal agencies promote, through
efficient application of laws and regulations, the readiness of
the United States merchant marine and supporting industries;
and
(10) any other relevant maritime policies.
(b) Date of Transmittal.--The report required under subsection (a)
shall be transmitted along with the President's budget submission,
under section 1105 of title 31, United States Code, for fiscal year
1997.
SEC. 15. RELIEF FROM U.S. DOCUMENTATION REQUIREMENT FOR 3 VESSELS.
(a) In General.--Notwithstanding any other law or any agreement
with the United States Government, a vessel described in subsection (b)
may be sold to a person that is not a citizen of the United States and
transferred to or placed under a foreign registry.
(b) Vessels Described.--The vessels referred to in subsection (a)
are the following:
(1) RAINBOW HOPE (United States official number 622178).
(2) IOWA TRADER (United States official number 642934).
(3) KANSAS TRADER (United States official number 634621).
SEC. 16. VESSEL REPAIR AND MAINTENANCE PILOT PROGRAM.
(a) In General.--The Secretary of Transportation shall conduct a
pilot program to evaluate the feasibility of using renewable contracts
for the maintenance and repair of outported vessels in the Ready
Reserve Force to enhance the readiness of those vessels. Under the
pilot program, the Secretary, subject to the availability of
appropriations and with 6 months after the date of the enactment of
this Act, shall award 9 contracts for this purpose.
(b) Use of Various Contracting Arrangements.--In conducting a pilot
program under this section, the Secretary of Transportation shall use
contracting arrangements similar to those used by the Department of
Defense for procuring maintenance and repair of its vessels.
(c) Contract Requirements.--Each contract with a shipyard under
this section shall--
(1) subject to subsection (d), provide for the procurement
from the shipyard of all repair and maintenance (including
activation, deactivation, and drydocking) for 1 vessel in the
Ready Reserve Force that is outported in the geographical
vicinity of the shipyard;
(2) be effective for 1 fiscal year; and
(3) be renewable, subject to the availability of
appropriations, for each subsequent fiscal year through fiscal
year 1998.
(d) Limitation of Work Under Contracts.--A contract under this
section may not provide for the procurement of operation or manning for
a vessel that may be procured under another contract for the vessel to
which section 11(d)(2) of the Merchant Ship Sales Act of 1946 (50
U.S.C. App. 1774(d)(2)) applies.
(e) Geographic Distribution.--The Secretary shall seek to
distribute contract awards under this section to shipyards located
throughout the United States.
(f) Reports.--The Secretary shall submit to the Congress--
(1) an interim report on the effectiveness of each contract
under this section in providing for economic and efficient
repair and maintenance of the vessel included in the contract,
no later than 20 months after the date of the enactment of this
Act; and
(2) a final report on that effectiveness no later than 6
months after the termination of all contracts awarded pursuant
to this section.
SEC. 17. STREAMLINING OF CARGO ALLOCATION PROCEDURES.
(a) Amendments.--Section 901b(c)(3) of the Merchant Marine Act,
1936 (46 App. U.S.C. 1241f(c)(3)) is amended--
(1) in subparagraph (A)--
(A) by striking ``and consistent with those
sections,'' and inserting ``and, subject to
subparagraph (B) of this paragraph, consistent with
those sections,''; and
(B) by striking ``50 percent'' and inserting ``25
percent''; and
(2) by striking subparagraph (B) and inserting the
following new subparagraphs:
``(B) In carrying out this paragraph, there shall first be
calculated the allocation of 100 percent of the quantity to be procured
on an overall lowest landed cost basis without regard to the country of
documentation of the vessel and there shall be allocated to the Great
Lakes port range any cargoes for which it has the lowest landed cost
under that calculation. The requirements for United States-flag
transportation under section 901(b) and this section shall not apply to
commodities allocated under subparagraph (A) to the Great Lakes port
range, and commodities allocated under subparagraph (A) to that port
range may not be reallocated or diverted to another port range to meet
those requirements to the extent that the total tonnage of commodities
to which subparagraph (A) applies that is furnished and transported
from the Great Lakes port range is less than 25 percent of the total
annual tonnage of such commodities furnished.
``(C) In awarding any contract for the transportation by vessel of
commodities from the Great Lakes port range pursuant to an export
activity referred to in subsection (b), each agency or
instrumentality--
``(i) shall consider expressions of freight interest for
any vessel from a vessel operator who meets reasonable
requirements for financial and operational integrity; and
``(ii) may not deny award of the contract to a person based
on the type of vessel on which the transportation would be
provided (including on the basis that the transportation would
not be provided on a liner vessel (as that term is used in the
Shipping Act of 1984, as in effect on November 14, 1995)), if
the person otherwise satisfies reasonable requirements for
financial and operational integrity.''.
(b) Conforming Amendments.--(1) Paragraph (4) of section 901b(c) of
that Act is repealed.
(2) Paragraph (5) of that section is redesignated as paragraph (4).
Passed the House of Representatives December 6, 1995.
Attest:
ROBIN H. CARLE,
Clerk.
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