[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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