[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 1262 Reported in Senate (RS)]






                                                       Calendar No. 361
108th CONGRESS
  1st Session
                                S. 1262

                          [Report No. 108-184]

 To authorize appropriations for fiscal years 2004, 2005, and 2006 for 
certain maritime programs of the Department of Transportation, and for 
                            other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             June 13, 2003

  Mr. McCain introduced the following bill; which was read twice and 
   referred to the Committee on Commerce, Science, and Transportation

                            November 3, 2003

 Reported by Mr. McCain, with amendments and an amendment to the title
  [Omit the part struck through and insert the part printed in italic]

_______________________________________________________________________

                                 A BILL


 
 To authorize appropriations for fiscal years 2004, 2005, and 2006 for 
certain maritime programs of the Department of Transportation, 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 Administration 
Authorization Act of 2003''.

                     TITLE I--MARAD REAUTHORIZATION

<DELETED>SEC. 2. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEARS 2004, 
              2005, AND 2006.</DELETED>

SEC. 101. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEARS 2004, 2005, 
              2006, 2007, AND 2008.

    There are authorized to be appropriated to the Secretary of 
Transportation for the Maritime Administration--
            (1) for expenses necessary for operations and training 
        activities, not to exceed $104,400,000 for the fiscal year 
        ending September 30, 2004, $106,000,000 for the fiscal year 
        ending September 2005, and $109,000,000 for the fiscal year 
        ending <DELETED>2006; </DELETED>September 30, 2006, 
        $111,000,000 for the fiscal year ending September 30, 2007, and 
        $113,000,000 for the fiscal year ending September 30, 2008;
        <DELETED>    (2) for administrative expenses related to loan 
        guarantee commitments under title XI of the Merchant Marine 
        Act, 1936 (46 U.S.C. App. 1271 et seq.), $4,498,000 for each of 
        fiscal years 2004, 2005, 2006, 2007, and 2008; and</DELETED>
            (2) for expenses under the loan guarantee program 
        authorized by title XI of the Merchant Marine Act, 1936 (46 
        U.S.C. App. 1271 et. seq.), $56,000,000 for each of fiscal 
        years 2004, 2005, 2006, 2007, and 2008 of which--
                    (A) $50,000,000 shall be for the cost (as defined 
                in section 502(5) of the Federal Credit Reform Act of 
                1990 (2 U.S.C. 661a(5))) of loan guarantees under the 
                program; and
                    (B) $6,000,000 shall be for administrative expenses 
                related to loan guarantee commitments under the 
                program; and
            (3) for ship disposal, $11,422,000 for each of fiscal years 
        2004, 2005, and <DELETED>2006. </DELETED>2006, and $12,000,000 
        for each of fiscal years 2007 and 2008.

<DELETED>SEC. 3. CONVEYANCE OF OBSOLETE VESSELS UNDER TITLE V, MERCHANT 
              MARINE ACT, 1936.</DELETED>

SEC. 102. CONVEYANCE OF OBSOLETE VESSELS UNDER TITLE V, MERCHANT MARINE 
              ACT, 1936.

    Section 508 of the Merchant Marine Act, 1936 (46 U.S.C. App. 1158) 
is amended--
            (1) by inserting ``(a) Authority To Scrap or Sell Obsolete 
        Vessels.--'' before ``If''; and
            (2) by adding at the end the following:
2    ``(b) Authority To Convey Vessels.--
            ``(1) In general.--Notwithstanding section 510(j) of this 
        Act, the Secretary of Transportation may convey the right, 
        title, and interest of the United States Government in any 
        vessel of the National Defense Reserve Fleet that has been 
        identified by the Secretary as an obsolete vessel of 
        insufficient value to warrant its further preservation, if--
                    ``(A) the recipient is a non-profit organization, a 
                State, Commonwealth, or possession of the United States 
                or any municipal corporation or political subdivision 
                thereof, or the District of Columbia;
                    ``(B) the recipient agrees not to use, or allow 
                others to use, the vessel for commercial transportation 
                purposes;
                    ``(C) the recipient agrees to make the vessel 
                available to the Government whenever the Secretary 
                indicates that it is needed by the Government;
                    ``(D) the recipient agrees to hold the Government 
                harmless for any claims arising from exposure to 
                asbestos, polychlorinated biphenyls, lead paint, or 
                other hazardous substances after conveyance of the 
                vessel, except for claims arising from use of the 
                vessel by the Government;
                    ``(E) the recipient has a conveyance plan and a 
                business plan, each of which have been submitted to and 
                approved by the Secretary; and
                    ``(F) the recipient has provided proof, as 
                determined by the Secretary, of resources sufficient to 
                accomplish the transfer, necessary repairs and 
                modifications, and initiation of the intended use of 
                the vessel.
            ``(2) Other equipment.--At the Secretary's discretion, 
        additional equipment from other obsolete vessels of the 
        National Defense Reserve Fleet may be conveyed to assist the 
        recipient with maintenance, repairs, or modifications.
            ``(3) Additional terms.--The Secretary may require any 
        additional terms the Secretary considers appropriate.
            ``(4) Delivery of vessel.--If conveyance is made under this 
        subsection the vessel shall be delivered to the recipient at a 
        time and place to be determined by the Secretary. The vessel 
        shall be conveyed in an `as is' condition.
            ``(5) Limitations.--If at any time prior to delivery of the 
        vessel to the recipient, the Secretary determines that a 
        different disposition of a vessel would better serve the 
interests of the Government, the Secretary shall pursue the more 
favorable disposition of the obsolete vessel and shall not be liable 
for any damages that may result from an intended recipient's reliance 
upon a proposed transfer.''.

<DELETED>SEC. 4. CARGO PREFERENCE UNDER TITLE IX.</DELETED>

<DELETED>    (a) Construction of U.S.-Flag Tank Ships.--Section 
901(b)(1) of the Merchant Marine Act, 1936 (46 U.S.C. App. 1241(b)(1)) 
is amended by striking ``three years:'' and all that follows and 
inserting ``3 years. Notwithstanding the preceding sentence, the term 
`privately owned United States-flag commercial vessel' shall include a 
United States documented self-propelled tank vessel when the owner of 
such a vessel has notified the Maritime Administration in writing of 
the existence of an executed contract between the owner and a United 
States shipyard for the construction of 2 or more self-propelled, 
double hulled tank vessels to be documented under the laws of the 
United States, each to be capable of carrying more than 2 types of 
refined petroleum products. The preceding sentence shall apply to such 
a privately owned United States-flag commercial vessel for a 3-year 
period commencing on the date the contract is executed for construction 
of the vessels and shall continue to apply to the vessel throughout the 
3-year period so long as the vessel remains documented under the laws 
of the United States.''.</DELETED>
<DELETED>    (b) Conforming Cargo Preference Year to Federal Fiscal 
Year.--Section 901b(c)(2) of the Merchant Marine Act, 1936 (46 U.S.C 
App. 1241f(c)(2)) is amended by striking ``1986.'' and inserting 
``1986, the 18-month period beginning April 1, 2002, and the 12-month 
period beginning October 1, 2003, and each year 
thereafter.''.</DELETED>

SEC. 103. CARGO PREFERENCE.

    Section 901b(c)(2) of the Merchant Marine Act, 1936 (46 U.S.C App. 
1241f(c)(2)) is amended by striking ``1986.'' and inserting ``1986, the 
18-month period beginning April 1, 2002, and the 12-month period 
beginning October 1, 2003, and each year thereafter.''.

<DELETED>SEC. 5. EQUITY PAYMENTS BY OBLIGOR FOR DISBURSEMENT PRIOR TO 
              TERMINATION OF ESCROW AGREEMENT UNDER TITLE XI.</DELETED>

SEC. 104. EQUITY PAYMENTS BY OBLIGOR FOR DISBURSEMENT PRIOR TO 
              TERMINATION OF ESCROW AGREEMENT UNDER TITLE XI.

    (a) In General.--Section 1108 of the Merchant Marine Act, 1936 (46 
U.S.C. App. 1279a) is amended by adding at the end the following:
    ``(g) Payments Required Before Disbursement.--
            ``(1) In general.--No disbursement shall be made under 
        subsection (b) to any person until the total amount paid by or 
        for the account of the obligor from sources other than the 
        proceeds of the obligation equals at least 25 per centum or 
        12\1/2\ per centum, whichever is applicable under section 
        1104A, of the actual cost of the vessel. The Secretary shall 
        establish a system of controls, including automated controls, 
        to ensure that no loan funds are disbursed to a shipowner or 
        shipyard owner before the shipowner or shipyard owner meets the 
        requirement of the preceding sentence.
            ``(2) Documented proof of progress requirement.--The 
        Secretary shall, by regulation, establish a transparent, 
        independent, and risk-based process for verifying and 
        documenting the progress of projects under construction before 
        disbursing guaranteed loan funds. At a minimum, the process 
        shall require documented proof of progress in connection with 
        the construction, reconstruction, or reconditioning of a vessel 
        or vessels before disbursements are made from the escrow fund. 
        The <DELETED>regulations shall </DELETED>Secretary may require 
        that the obligor provide a certificate from an independent 
        party certifying that the requisite progress in construction, 
        reconstruction, or reconditioning has taken place.''.
    (b) Definition of Actual Cost.--Section 1101(f) of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1271(f)) is amended to read as 
follows:
    ``(f) Actual Cost Defined.--The term `actual cost' means the sum 
of--
            ``(1) all amounts paid by or for the account of the obligor 
        as of the date on which a determination is made under section 
        1108(g)(1); and
            ``(2) all amounts that the Secretary reasonably estimates 
        that the obligor will become obligated to pay from time to time 
        thereafter, for the construction, reconstruction, or 
        reconditioning of the vessel, including guarantee fees that 
        will become payable under section 1104A(e) in connection with 
        all obligations issued for construction, reconstruction, or 
        reconditioning of the vessel or equipment to be delivered, and 
        all obligations issued for the delivered vessel or 
        equipment.''.

<DELETED>SEC. 6. WAIVERS OF PROGRAM REQUIREMENTS UNDER TITLE 
              XI.</DELETED>

SEC. 105. WAIVERS OF PROGRAM REQUIREMENTS UNDER TITLE XI.

    Section 1104A(d) of the Merchant Marine Act, 1936 (46 U.S.C. App. 
1274(d)) is amended by redesignating paragraph (4) as paragraph (5), 
and inserting after paragraph (3) the following:
            ``(4) The Secretary shall promulgate regulations concerning 
        circumstances under which waivers of or exceptions to otherwise 
        applicable regulatory requirements concerning financial 
        condition can be made. The regulations shall require that--
                <DELETED>    ``(A) a waiver of otherwise applicable 
                regulatory requirements be made only with the 
                documented concurrence of program offices with 
                expertise in economic, technical, and financial aspects 
                of the review process;</DELETED>
                    ``<DELETED>(B) </DELETED>(A) the economic soundness 
                requirements set forth in paragraph (1)(A) of this 
                subsection are met after the waiver of the financial 
                condition requirement; and
                    ``<DELETED>(C) </DELETED>(B) the wavier shall 
                provide for the imposition of other requirements on the 
                obligor designed to compensate for the increased risk 
                associated with the obligor's failure to meet 
                regulatory requirements applicable to financial 
                condition.''.

<DELETED>SEC. 7. PROJECT MONITORING UNDER TITLE XI.</DELETED>

SEC. 106. PROJECT MONITORING UNDER TITLE XI.

    (a) Project Monitoring.--Section 1104A of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1274) is amended by adding at the end the 
following:
    ``(k) Monitoring.-- The Secretary shall monitor the financial 
conditions and operations of the obligor on a regular basis during the 
term of the guarantee. The Secretary shall document the results of the 
monitoring on <DELETED>a quarterly or monthly </DELETED>an annual or 
quarterly basis depending upon the condition of the obligor. If the 
Secretary determines that the financial condition of the obligor 
warrants additional protections to the Secretary, then the Secretary 
shall take appropriate action under subsection (m) of this section. If 
the Secretary determines that the financial condition of the obligor 
jeopardizes its continued ability to perform its responsibilities in 
connection with the guarantee of obligations by the Secretary, the 
Secretary shall make an immediate determination whether default should 
take place and whether further measures described in subsection (m) 
should be taken to protect the interests of the Secretary while 
insuring that program objectives are met.''.
    (b) Separation of Duties and Other Requirements.--Section 1104A of 
the Merchant Marine Act, 1936 (46 U.S.C. App. 1274), as amended by 
subsection (a), is further amended by adding at the end the following:
    ``(l) Review of Applications.--No commitment to guarantee, or 
guarantee of, an obligation shall be made by the Secretary unless the 
Secretary certifies that a full and fair consideration of all the 
regulatory requirements, including economic soundness and financial 
requirements applicable to obligors and related parties, <DELETED>has 
been made through a documented independent assessment conducted by 
offices with expertise in technical, economic, and financial aspects of 
the loan application process. </DELETED>and a thorough assessment of 
the technical, economic, and financial aspects of the loan application 
has been made.
    ``(m) Agreement With Obligor.--The Secretary shall include 
provisions in loan agreements with obligors that provide additional 
authority to the Secretary to take action to limit potential losses in 
connection with defaulted loans or loans that are in jeopardy due to 
the deteriorating financial condition of obligors. Provisions that the 
Secretary shall include in loan agreements include requirements for 
additional collateral or greater equity contributions that are 
effective upon the occurrence of verifiable conditions relating to the 
obligors financial condition or the status of the vessel or shipyard 
project.''.

<DELETED>SEC. 8. DEFAULTS UNDER TITLE XI.</DELETED>

SEC. 107. DEFAULTS UNDER TITLE XI.

    <DELETED>(a) Actions To Be Taken in Event of Default.--
</DELETED>Section 1105 of the Merchant Marine Act, 1936 (46 U.S.C. App. 
1275) is amended by adding at the end the following:
    ``(f) Default Response.--In the event of default on a obligation, 
the Secretary shall conduct operations under this title in a manner 
which--
            ``(1) maximizes the net present value return from the sale 
        or disposition of assets associated with the obligation;
            ``(2) minimizes the amount of any loss realized in the 
        resolution of the guarantee;
            ``(3) ensures adequate competition and fair and consistent 
        treatment of offerors; and
            ``(4) requires appraisal of assets by an independent 
        appraiser.''.
<DELETED>    (b) Restrictions.--</DELETED>
        <DELETED>    (1) Section 1104A(d)(1)(A)(i) of the Merchant 
        Marine Act, 1936 (46 U.S.C. App. 1274 (d)(1)(A)(i)) is amended 
        by striking ``equipment for which a guarantee under this title 
        is in effect;'' and inserting ``equipment;''.</DELETED>
        <DELETED>    (2) Section 1104A(d)(1)(A) of the Merchant Marine 
        Act, 1936 (46 U.S.C. App. 1274 (d)(1)(A)) is amended--
        </DELETED>
                <DELETED>    (A) by striking ``and'' after the 
                semicolon in clause (v);</DELETED>
                <DELETED>    (B) by striking ``safety.'' in clause (vi) 
                and inserting ``safety; and''; and</DELETED>
                <DELETED>    (C) by adding at the end the 
                following:</DELETED>
                        <DELETED>    ``(vii) the past performance of 
                        the shipyard doing the construction on 
                        commercial projects, including cost-over-runs 
                        and on-time performance.''.</DELETED>

<DELETED>SEC. 9. 270-DAY DECISION PERIOD.</DELETED>

<DELETED>    Section 1104A of the Merchant Marine Act, 1936 (46 U.S.C. 
App. 1274), as amended by section 7, is amended by adding at the end 
the following:</DELETED>
<DELETED>    ``(n) 270-Day Decision.--The Secretary of Transportation 
shall approve or deny an application for a loan guarantee under this 
title within 270 days after the date on which the signed application is 
received by the Secretary.''.</DELETED>

SEC. 108. DECISION PERIOD.

    Section 1104A of the Merchant Marine Act, 1936 (46 U.S.C. App. 
1274), as amended by section 106, is amended by adding at the end the 
following:
    ``(n) Decision Period.--
            ``(1) In general.--The Secretary of Transportation shall 
        approve or deny an application for a loan guarantee under this 
        title within 270 days after the date on which the signed 
        application is received by the Secretary.
            ``(2) Extension.--Upon request by an applicant, the 
        Secretary may extend the 270-day period in paragraph (1) to a 
        date not later than 2 years after the date on which the signed 
        application for the loan guarantee was received by the 
        Secretary.''.

<DELETED>SEC. 10. LOAN GUARANTEES UNDER TITLE XI.</DELETED>

SEC. 109. LOAN GUARANTEES UNDER TITLE XI.

    Section 1104A of the Merchant Marine Act, 1936 (46 U.S.C. App. 
1274) is amended--
            (1) by adding at the end of subsection (d)(1) the 
        following:
                    ``(C) The Secretary may make a determination that 
                aspects of an application under this title require 
                independent analysis to be conducted by third party 
                experts due to risk factors associated with markets, 
                technology, financial structures, or other risk factors 
                identified by the Secretary. Any independent analysis 
                conducted pursuant to this provision shall be performed 
                by a party chosen by the Secretary.
                    ``(D) Notwithstanding any other provision of this 
                title, the Secretary may make a determination that an 
                application under this title requires additional equity 
                because of increased risk factors associated with 
                markets, technology, financial structures, or other 
                risk factors identified by the Secretary.
                <DELETED>    ``(E) In determining whether to approve an 
                application under this title, the Secretary may 
                consider a proposed shipyard's past performance on 
                commercial projects including cost increases, quality 
                of work, and ability to meet work and delivery 
                schedules. After consideration of these factors the 
                Secretary may impose additional requirements on a 
                shipyard, require additional security, or disapprove an 
                application.</DELETED>
                    ``<DELETED>(F) </DELETED>(E) The Secretary may 
                charge and collect fees to cover the costs of 
                independent analysis under subparagraph (C). 
                Notwithstanding section 3302 of title 31, United 
States Code, any fee collected under this subparagraph shall--
                            ``(i) be credit as an offesetting 
                        collection to the account that finances the 
                        administration of the loan guarantee program;
                            ``(ii) shall be available for expenditure 
                        only to pay the costs of activities and 
                        services for which the fee is imposed; and
                            ``(iii) shall remain available until 
                        expended.''; and
            (2) by striking ``(including for obtaining independent 
        analysis under subsection (d)(4)),'' in subsection (f).

<DELETED>SEC. 11. ANNUAL REPORT ON TITLE XI PROGRAM.</DELETED>

SEC. 110. ANNUAL REPORT ON TITLE XI PROGRAM.

    The Secretary of Transportation shall report to Congress annually 
on the loan guarantee program under title XI of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1271 et seq.). The reports shall include--
            (1) the size, in dollars, of the portfolio of loans 
        guaranteed;
            (2) the size, in dollars, of projects in the portfolio 
        facing financial difficulties;
            (3) the number and type of projects covered;
            (4) a profile of pending loan applications;
            (5) the amount of appropriations available for new 
        guarantees;
            (6) a profile of each project approved since the last 
        report; and
            (7) a profile of any defaults since the last report.

<DELETED>SEC. 12. REVIEW OF TITLE XI LOAN GUARANTEE PROGRAM.</DELETED>

SEC. 111. REVIEW OF TITLE XI LOAN GUARANTEE PROGRAM.

    (a) In General.--The Secretary of Transportation shall conduct a 
comprehensive assessment of the human capital and other resource needs 
in connection with the title XI loan guarantee program under the 
Merchant Marine Act, 1936 (46 U.S.C. App. 1271 et seq.). In connection 
with this assessment, the Secretary shall develop an organizational 
framework for the program offices that insures that a clear separation 
of duties is established among the loan application, project 
monitoring, and default management functions.
    (b) Program Enhancements.--
            <DELETED>(1) Section 1103(h)(1) of the Merchant Marine Act, 
        1936 (46 U.S.C. App. 1273(h)(1)) is amended--
        </DELETED>    (1) Section 1103(h) of the Merchant Marine Act, 
        1936 (46 U.S.C. App. 1273(h) is amended--
                    (A) by striking ``(h)(1) The Secretary shall--'' 
                and inserting the following:
    ``(h) Risk Factor Determinations.--
            ``(1) The Secretary shall--'';
                    (B) by moving the left margin of each paragraph, 
                subparagraph, and clause to the right by 2 ems;
                    <DELETED>(A) </DELETED>(C) by striking 
                ``subsection'' in subparagraph (A) and inserting 
                ``subsection, and update annually,'';
                    <DELETED>(B) </DELETED>(D) by inserting 
                ``annually'' before ``determine'' in subparagraph (B);
                    <DELETED>(C) </DELETED>(E) by striking ``and'' 
                after the semicolon in subparagraph (A);
                    <DELETED>(D) </DELETED>(F) by striking 
                ``category.'' in subparagraph (B) and inserting 
                ``category; and''; and
                    <DELETED>(E) </DELETED>(G) by adding at the end the 
                following:
                    ``(C) ensure that each risk category is comprised 
                of loans that are relatively homogenous in cost and 
                share characteristics predictive of defaults and other 
                costs, given the facts known at the time of obligation 
                or committment, using a risk category system that is 
                based on historical analysis of program data and 
                statistical evidence concerning the likely costs of 
                defaults or other costs that expected to be associated 
                with the loans in the category.''.
            (2) Section 1103(h)(2)(A) of that Act (46 U.S.C. App. 
        1273(h)(2)(A)) is amended by inserting ``and annually for 
        projects subject to a guarantee,'' after ``obligation,''.
            (3) Section 1103(h)(3) of that Act (46 U.S.C. App. 
        1273(h)(3)) is amended by adding at the end the following:
                    ``(K) A risk factor for concentration risk 
                reflecting the risk presented by an unduly large 
                percentage of loans outstanding by any 1 borrower or 
                group of affiliated borrowers.''.
    (c) Report.--The Secretary shall report to the Senate Committee on 
Commerce, Science, and Transportation and the House of Representatives 
Committee on Armed Services on the results of the development of an 
organizational framework under subsection (a) by January 2, 2004.
<DELETED>    (d) Funding.--It is the sense of the Congress that no 
further appropriations should be made for purposes of extending loan 
guarantees under the title XI loan guarantee program of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1271 et seq.) until the Secretary of 
Transportation has developed sufficient internal controls and resource 
allocation to ensure that the loan guarantee program is efficiently and 
effectively fulfilling the purposes for which it was established and 
has updated default and recovery assumptions used in estimating the 
credit subsidy costs of the program to more accurately reflect the 
actual costs associated with the program.</DELETED>

<DELETED>SEC. 13. WAR RISK INSURANCE.</DELETED>

SEC. 112. WAR RISK INSURANCE.

    (a) International Agreements.--Section 1205 of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1285) is amended by adding at the end the 
following:
    ``(c) Insuring International Operations.--The Secretary of 
Transportation is authorized, upon the request of the Secretary of 
Defense or any other agency, with the approval of the President, to 
make payments on behalf of the United States with regard to an 
international sharing of risk agreement or any lesser obligation on the 
part of the United States for vessels supporting operations of the 
North Atlantic Treaty Organization or similar international 
organization or alliance in which the United States is involved, 
regardless of registration or ownership, and without regard to whether 
the vessels are under contract with a department or agency of the 
United States. In order to segregate moneys received and disbursed in 
connection with an agreement authorized under this subsection, the 
Secretary of Transportation shall establish a subaccount within the 
insurance fund established under section 1208 of this Act.
    ``(d) Receipt of Contributions.--
            ``(1) In general.--Notwithstanding the provisions of 
        section 3302(b) of title 31, United States Code, if the 
        international agreements referenced in subsection (c) of this 
        section provide for the sharing of risks involved in mutual or 
        joint operations, contributions for losses incurred by the fund 
        subaccount or financed pursuant to section 1208 that are 
        received from foreign entities, may be deposited in the fund 
        subaccount.
            ``(2) Indemnity agreement.--Such risk sharing agreements 
        shall not affect the requirement that the Secretary of Defense 
        or a head of a department, agency, or instrumentality 
        designated by the President make an indemnity agreement with 
        the Secretary of Transportation under subsection (b) for a 
        waiver of premium on insurance obtained by a department, agency 
        or instrumentality of the United States Government.
            ``(3) Crediting of contributory payments.--If the Secretary 
        of Defense, or a designated head of a department, agency or 
        instrumentality, has made a payment to the Secretary of 
        Transportation on account of a loss, pursuant to an 
        indemnification agreement under subsection (b), and the 
        Secretary of Transportation subsequently receives from an 
        entity a contributory payment on account of the same loss, 
        pursuant to a risk sharing agreement referred to in paragraph 
        (1), the amount of the contribution shall be deemed to be a 
        credit in favor of the indemnifying department, agency, or 
        instrumentality against any amount that such department, 
        agency, or instrumentality owes or may owe to the Secretary of 
        Transportation under a subsequent indemnification agreement.''.
    (b) Permanent Budgetary Resource.--Section 1208 of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1288) is amended by adding at the end 
the following:
    ``(c) Authorization of Appropriations.--To the extent that the fund 
balance is insufficient to fund current obligations arising under this 
chapter, there are authorized to be appropriated to the Secretary of 
Transportation such sums as may be necessary to pay such 
obligations.''.
    (c) Clerical Amendment.--The section heading for section 1205 of 
the Merchant Marine Act, 1936 (46 U.S.C. App. 1285) is amended to read 
as follows:

``SEC. 1205. INSURANCE ON PROPERTY OF GOVERNMENT DEPARTMENTS, AGENCIES 
              AND INTERNATIONAL ORGANIZATIONS.''.

<DELETED>SEC. 14. MARITIME EDUCATION AND TRAINING.</DELETED>

SEC. 113. MARITIME EDUCATION AND TRAINING.

    (a) Cost of Education Defined.--Section 1302 of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1295a) is amended--
            (1) by striking ``and'' after the semicolon in paragraph 
        (3);
            (2) by striking ``States.'' in paragraph (4)(B) and 
        inserting ``States; and''; and
            (3) by adding at the end the following:
            ``(5) the term `cost of education provided' means the 
        financial costs incurred by the Federal Government for 
        providing training or financial assistance to students at the 
        United States Merchant Marine Academy and the State maritime 
        academies, including direct financial assistance, room, board, 
        classroom academics, and other training activities.''.
    (b) Commitment Agreements.--Section 1303(e) of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1295b(e)) is amended--
            (1) by striking ``Academy, unless the individual is 
        separated <DELETED>from </DELETED>by the'' in paragraph (1)(A);
            (2) by striking paragraph (1)(C) and inserting the 
        following:
            ``(C) to maintain a valid license as an officer in the 
        merchant marine of the United States for at least 6 years 
        following the date of graduation from the Academy of such 
        individual, accompanied by the appropriate national and 
        international endorsements and certification as required by the 
        United States Coast Guard for service aboard vessels on 
        domestic and international voyages;'';
            (3) by striking paragraph (1)(E)(iii) and inserting the 
        following:
                    ``(iii) as a commissioned officer on active duty in 
                an armed force of the United States, as a commissioned 
                officer in the National Oceanic and Atmospheric 
                Administration, or other maritime-related employment 
                with the Federal Government which serves the national 
                security interests of the United States, as determined 
                by the Secretary; or'';
            (4) by striking paragraph (2) and inserting the following:
    ``(2)(A) If the Secretary determines that any individual who has 
attended the Academy for not less than 2 years has failed to fulfill 
the part of the agreement required by paragraph (1)(A), such individual 
may be ordered by the Secretary of Defense to active duty in one of the 
armed forces of the United States to serve for a period of time not to 
exceed 2 years. In cases of hardship as determined by the Secretary, 
the Secretary may waive this provision in whole or in part.
            ``(B) If the Secretary of the Navy is unable or unwilling 
        to order an individual to active duty under subparagraph (A), 
        or if the Secretary of Transportation determines that 
        reimbursement of the cost of education provided would better 
        serve the interests of the United States, the Secretary may 
        recover from the individual the cost of education provided by 
        the Federal Government.'';
            (5) by striking paragraph (3) and inserting the following:
    ``(3)(A) If the Secretary determines that an individual has failed 
to fulfill any part of the agreement required by paragraph (1), as 
described in subparagraphs (1)(B), (C), (D), (E), or (F), such 
individual may be ordered to active duty to serve a period of time not 
less than 3 years and not more than the unexpired portion, as 
determined by the Secretary, of the service required by paragraph 
(1)(E). The Secretary, in consultation with the Secretary of Defense, 
shall determine in which service the individual shall be ordered to 
active duty to serve such period of time. In cases of hardship, as 
determined by the Secretary, the Secretary may waive this provision in 
whole or in part.
    ``(B) If the Secretary of Defense is unable or unwilling to order 
an individual to active duty under subparagraph (A), or if the 
Secretary of Transportation determines that reimbursement of the cost 
of education provided would better serve the interests of the United 
States, the Secretary may recover from the individual the cost of 
education provided in an amount proportionate to the unfulfilled 
portion of the service obligation as determined by the Secretary. In 
cases of hardship the Secretary may waive this provision in whole or in 
part.''; and
            (6) by redesignating paragraph (4) as paragraph (5) and 
        inserting after paragraph (3) the following:
    ``(4) To aid in the recovery of the cost of education provided by 
the Federal Government pursuant to a commitment agreement under this 
section, the Secretary may request the Attorney General to begin court 
proceedings, or the Secretary may make use of the Federal debt 
collection procedures in chapter 176 of title 28, United States Code, 
or other applicable administrative remedies.''.
    (c) Degrees Awarded.--Section 1303(g) of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1295b(g)) is amended to read as follows:
    ``(g) Degrees Awarded.--
            ``(1) Bachelor's degree.--The Superintendent of the Academy 
        may confer the degree of bachelor of science upon any 
        individual who has met the conditions prescribed by the 
        Secretary and who, if a citizen of the United States, has 
        passed the examination for a merchant marine officer's license. 
        No individual may be denied a degree under this subsection 
        because the individual is not permitted to take such 
        examination solely because of physical disqualification.
            ``(2) Master's degree.--The Superintendent of the Academy 
        may confer a master's degree upon any individual who has met 
        the conditions prescribed by the Secretary. Any master's degree 
        program may be funded through non-appropriated funds. In order 
        to maintain the appropriate academic standards, the program 
        shall be accredited by the appropriate accreditation body. The 
        Secretary may make regulations necessary to administer such a 
        program.''.
    (d) Student Incentive Payments.--Section 1304(g) of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1295c(g)) is amended--
            (1) by striking ``$3,000'' in paragraph (1) and inserting 
        ``$4,000'';
            (2) in paragraph (3)(A) by striking ``attending, unless the 
        individual is separated by such academy;'' and inserting 
        ``attending;'';
            (3) by striking paragraph (3)(C) and inserting the 
        following:
            ``(C) to maintain a valid license as an officer in the 
        merchant marine of the United States for at least 6 years 
        following the date of graduation from such State maritime 
        academy of such individual, accompanied by the appropriate 
        national and international endorsements and certification as 
        required by the United States Coast Guard for service aboard 
        vessels on domestic and international voyages;'';
            (4) by striking paragraph (3)(E)(iii) and inserting the 
        following:
                    ``(iii) as a commissioned officer on active duty in 
                an armed force of the United States, as a commissioned 
                officer in the National Oceanic and Atmospheric 
                Administration, or in other maritime-related employment 
                with the Federal Government which serves the national 
                security interests of the United States, as determined 
                by the Secretary; or'';
            (5) by striking paragraph (4) and inserting the following:
    ``(4)(A) If the Secretary determines that an individual who has 
accepted the payment described in paragraph (1) for a minimum of 2 
academic years has failed to fulfill the part of the agreement required 
by paragraph (1) and described in paragraph (3)(A), such individual may 
be ordered by the Secretary of the Navy to active duty in the United 
States Navy to serve for a period of time not to exceed 2 years. In 
cases of hardship, as determined by the Secretary, the Secretary may 
waive this provision in whole or in part.
    ``(B) If the Secretary of the Navy is unable or unwilling to order 
an individual to active duty under subparagraph (A), or if the 
Secretary of Transportation determines that reimbursement of the cost 
of education provided would better serve the interests of the United 
States, the Secretary may recover from the individual the cost of 
education provided by the Federal Government.'';
            (6) by striking paragraph (5) and inserting the following:
    ``(5)(A) If the Secretary determines that an individual has failed 
to fulfill any part of the agreement required by paragraph (1), as 
described in paragraphs (3)(B), (C), (D), (E), or (F), such individual 
may be ordered to active duty to serve a period of time not less than 2 
years and not more than the unexpired portion, as determined by the 
Secretary, of the service required by paragraph (3)(E). The Secretary, 
in consultation with the Secretary of Defense, shall determine in which 
service the individual shall be ordered to active duty to serve such 
period of time. In cases of hardship, as determined by the Secretary, 
the Secretary may waive this provision in whole or in part.
    ``(B) If the Secretary of Defense is unable or unwilling to order 
an individual to active duty under subparagraph (A), or if the 
Secretary of Transportation determines that reimbursement of the cost 
of education provided would better serve the interests of the United 
States, the Secretary may recover from the individual the cost of 
education provided in an amount proportionate to the unfulfilled 
portion of the service obligation as determined by the Secretary. In 
cases of hardship the Secretary may waive this provision in whole or in 
part.''; and
            (7) by redesignating paragraphs (6) and (7) as paragraphs 
        (7) and (8), respectively, and inserting after paragraph (5) 
        the following:
    ``(6) To aid in the recovery of the cost of education provided by 
the Federal Government pursuant to a commitment agreement under this 
section, the Secretary may request the Attorney General to begin court 
proceedings, or the Secretary may make use of the Federal debt 
collection procedures in chapter 176 of title 28, United States Code, 
or other applicable administrative remedies.''.
    (e) Awards and Medals.--Section 1306 of the Merchant Marine Act, 
1936 (46 U.S.C. App. 1295e) is amended by adding at the end the 
following:
    ``(d) Awards and Medals.--The Secretary may establish and maintain 
a medals and awards program to recognize distinguished service, 
superior achievement, professional performance, and other commendable 
achievement by personnel of the United States Maritime Service.''.

<DELETED>SEC. 15. PROHIBITION AGAINST CARRYING GOVERNMENT IMPELLED 
              CARGOES FOR VESSELS WITH SUBSTANDARD SECURITY 
              MEASURES.</DELETED>

SEC. 114. PROHIBITION AGAINST CARRYING GOVERNMENT IMPELLED CARGOES FOR 
              VESSELS WITH SUBSTANDARD SECURITY MEASURES.

    Section 2302(e)(1) of title 46, United States Code, is amended--
            (1) by inserting ``including violations for substandard 
        security measures,'' in subparagraph (A) after ``party,''; and
            (2) by inserting ``including violations for substandard 
        security measures,'' in subparagraph (B) after ``party,''.

<DELETED>SEC. 16. AUTHORITY TO CONVEY OBSOLETE VESSELS TO U.S. 
              TERRITORIES AND FOREIGN COUNTRIES FOR REEFING.</DELETED>

SEC. 115. AUTHORITY TO CONVEY OBSOLETE VESSELS TO U.S. TERRITORIES AND 
              FOREIGN COUNTRIES FOR REEFING.

    (a) Section 3 of the Act entitled ``An Act to authorize 
appropriations for the fiscal year 1973 for certain maritime programs 
of the Department of Commerce, and for related purposes.'' (16 U.S.C. 
1220), Title 16, United States Code, is amended to read as follows:

``SEC. 3. PREPARATION OF VESSELS FOR USE AS ARTIFICIAL REEFS.

    ``(a) Guidance.--
            ``(1) In general.--Not later than September 30, 2003, the 
        Administrator of the Environmental Protection Agency and the 
        Secretary of Transportation, acting through the Maritime 
        Administration, shall jointly develop guidance recommending 
        environmental best management practices to be used in the 
        preparation of vessels for use as artificial reefs. Before 
        issuing the guidance, the Administrator and the Secretary shall 
        consult with interested Federal and State agencies.
            ``(2) Requirements.--The guidance shall--
                    ``(A) recommend environmental best management 
                practices for the preparation of vessels that would 
                ensure that the use of vessels so prepared as 
                artificial reefs would be environmentally beneficial;
                    ``(B) promote the nationally consistent use of such 
                practices; and
                    ``(C) provide a basis for estimating the costs 
                associated with the preparation of vessels for use as 
                artificial reefs.
            ``(3) Use by federal agencies.--The guidance shall serve as 
        national guidance for Federal agencies preparing vessels for 
        use as artificial reefs.
            ``(4) Report.--The Secretary of Transportation shall submit 
        to Congress a report on the environmental best management 
        practices developed under paragraph (1) through the existing 
        ship disposal reporting requirements in section 3502 of the 
        Floyd D. Spence National Defense Authorization Act for Fiscal 
        Year 2001 (16 U.S.C. 5405 note). The report shall describe such 
        practices, and may include such other matters as the Secretary 
        considers appropriate.
    ``(b) Application Required.--
            ``(1) In general.--A State, commonwealth, possession of the 
        United States or foreign government may apply for any vessel of 
        the National Defense Reserve Fleet that has been identified by 
        the Secretary as an obsolete vessel of insufficient value to 
        warrant its further preservation in such a manner and form as 
        the Secretary shall prescribe. At a minimum, the application 
        shall state--
                    ``(A) the location at which the applicant proposes 
                to sink the vessel or vessels;
                    ``(B) the environmental goals to be achieved by the 
                use of the vessel or vessels; and
                    ``(C) that the applicant agrees to hold the 
                Government harmless for any claims arising from 
                exposure to asbestos, polychlorinated biphenyls, lead 
                paint, or other hazardous substances after conveyance 
                of the vessel, except for claims arising from use of 
                the vessel by the Government.
            ``(2) States.--
                    ``(A) Additional documentation required.--A State, 
                commonwealth, or possession of the United States shall 
                also provide to the Secretary and the Administrator in 
                its application documentation that the proposed use of 
                the particular vessel or vessels requested will comply 
                with all applicable water quality standards and will 
                benefit the environment in the vicinity of the proposed 
                reef, taking into account the guidance issued under 
                subsection (a) and other appropriate environmental 
                considerations.
                    ``(B) EPA certification.--Before any vessel may be 
                used as an artificial reef, the State, commonwealth, or 
                possession of the United States shall demonstrate to 
                the Environmental Protection Agency, and that Agency 
                shall determine in writing, that the use of the vessel 
                as an artificial reef at the proposed location will be 
                environmentally beneficial.
            ``(3) Foreign governments.--A foreign government shall also 
        provide to the Secretary and the Administrator in its 
        application--
                    ``(A) documentation of--
                            ``(i) how the proposed use of the vessel or 
                        vessels will benefit the environment; and
                            ``(ii) remediation that the vessel will 
                        undergo prior to use as an artificial reef; and
                    ``(B) certification that such remediation shall 
                take into account the guidance issued under subsection 
                (a).
            ``(4) Determination of environmental benefit.--No obsolete 
        vessel shall be conveyed unless the Maritime Administration and 
        the Environmental Protection Agency jointly determine, in 
        writing, that the proposed remediation measures will ensure 
        that use of the vessel as an artificial reef will be 
        environmentally beneficial. The contract conveying the vessel 
        or vessels from Maritime Administration to the foreign 
        government shall require the use of the remediation measures 
        determined by Maritime Administration and the Environmental 
        Protection Agency to ensure that use of the vessel or vessels 
        as an artificial reef will be environmentally beneficial.
    ``(c) Application With Other Law.--Nothing in this section shall be 
construed as affecting in any manner the application of any other 
provision of law, including laws relating to the conveyance of obsolete 
vessels, their distribution in commerce, or their use as artificial 
reefs.''.

<DELETED>SEC. 17. MAINTENANCE OF CURRENT SAINT LAWRENCE SEAWAY 
              DEVELOPMENT CORPORATION SAFETY 
              RESPONSIBILITIES.</DELETED>

SEC. 116. MAINTENANCE OF CURRENT SAINT LAWRENCE SEAWAY DEVELOPMENT 
              CORPORATION SAFETY RESPONSIBILITIES.

    Section 3(2) of the Ports and Waterways Safety Act (33 U.S.C. 
1222(2)) is amended by striking ``operating.'' and inserting 
``operating, except that `Secretary' means the Secretary of 
Transportation with respect to the applicability of this Act to the 
Saint Lawrence Seaway.''.

<DELETED>SEC. 18. USE OF INSURANCE PROCEEDS FOR REPAIRS AT UNITED 
              STATES MERCHANT MARINE ACADEMY.</DELETED>

SEC. 117. USE OF INSURANCE PROCEEDS FOR REPAIRS AT UNITED STATES 
              MERCHANT MARINE ACADEMY.

    Notwithstanding section 3302 of title 31, United States Code, the 
Maritime Administration may deposit into its operations and training 
account (account number 69X1750) and use, for purposes otherwise 
authorized by law and in addition to amounts otherwise appropriated, 
the amount received by the Maritime Administration as insurance 
proceeds as a result of the fire that occurred on December 16, 1996, at 
the United States Merchant Marine Academy, Fitch Building.

<DELETED>SEC. 19. AVAILABILITY TO THE VESSEL OPERATIONS REVOLVING FUND 
              OF FUNDS FROM LAWSUITS AND SETTLEMENTS.</DELETED>

SEC. 118. AVAILABILITY TO THE VESSEL OPERATIONS REVOLVING FUND OF FUNDS 
              FROM LAWSUITS AND SETTLEMENTS.

    The Vessel Operations Revolving Fund, created by the Third 
Supplemental Appropriations Act, 1951 (65 Stat. 59), shall, after the 
date of enactment of this Act, be credited with amounts received by the 
United States from final judgments and dispute settlements that arise 
from the operation of vessels in the National Defense Reserve Fleet, 
including the Ready Reserve Force. Funds credited to the Fund under 
this section shall be available until expended.

SEC. 119. ELIGIBILITY OF TANK VESSELS FOR THE MARITIME SECURITY 
              PROGRAM.

    Section 652(o) of the Merchant Marine Act, 1936 (46 U.S.C. App 
1187a(o)) is amended by adding at the end the following:
            ``(5) Limitations.--With respect to the eligibility of a 
        tank vessel that was not built in the United States--
                    ``(A) the Secretary may award an operating 
                agreement for such vessel if--
                            ``(i) a binding contract for construction 
                        in the United States of a replacement vessel to 
                        be operated under the operating agreement is 
                        executed prior to the award of such operating 
                        agreement; and
                            ``(ii) the replacement vessel is eligible 
                        to be included in the fleet under this section; 
                        and
                    ``(B) no payment under this subtitle may be made 
                for an existing tank vessel for which an operating 
                agreement is awarded under this paragraph after the 
                earlier of--
                            ``(i) the date that is 4 years after the 
                        award of the operating agreement for such tank 
                        vessel; or
                            ``(ii) the date of delivery of the 
                        replacement tank vessel.''.

SEC. 120. CORRECTION OF 2002 COASTWISE TRADE AUTHORIZATION PROVISION.

    Section 213(b) of the Maritime Policy Improvement Act of 2002 is 
amended by striking ``transport and launch'' and inserting ``transport 
or launch''.

               TITLE II--MARITIME SECURITY FLEET PROGRAM

SEC. 201. SHORT TITLE.

    This title may be cited as the ``Maritime Security Fleet Program 
Reauthorization Act of 2003''.

SEC. 202. AMENDMENT OF MERCHANT MARINE ACT, 1936.

    Except as otherwise expressly provided, whenever in this title an 
amendment or repeal is expressed in terms of an amendment to, or a 
repeal of, a section or other provision, the reference shall be 
considered to be made to a section or other provision of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1101 et seq.).

SEC. 203. CHANGES TO MARITIME SECURITY FLEET ESTABLISHMENT PROVISIONS.

    Section 651 (46 U.S.C. App. 1187) is amended--
            (1) by striking ``Transportation'' in subsection (a) and 
        inserting ``Transportation, in consultation with the Secretary 
        of Defense,'';
            (2) by inserting ``commercially viable,'' after ``active,'' 
        in subsection (a);
            (3) by inserting ``(including a tank vessel)'' after 
        ``vessel'' the first place it appears in the text of subsection 
        (b);
            (4) by striking ``as an ocean common carrier;'' in 
        subsection (b)(1)(A) and inserting ``in oceangoing 
        transportation;'';
            (5) by striking subparagraph (B) of subsection (b)(1) and 
        inserting the following:
                    ``(B) is in commercial service, on charter to the 
                Department of Defense, or in other employment;'';
            (6) by striking ``is determined by the Secretary to be'' in 
        subsection (b)(1)(C) and inserting ``the Secretary, in 
        conjunction with the Secretary of Defense, has determined to be 
        commercially viable and'';
            (7) by striking so much of subsection (b)(2) as precedes 
        subparagraph (B) and inserting the following:
            ``(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 15 years of age 
        or less;
        except that the Secretary of Transportation may waive the 
        application of clause (ii) if the Secretary, in conjunction 
        with the Secretary of Defense, determines that the waiver--
                    ``(I) is in the national interest;
                    ``(II) is appropriate to allow the maintenance of 
                the economic viability of the vessel and any associated 
                operating network;
                    ``(III) is necessary due to the availability of 
                appropriate vessels that meet the operations and 
                commercial requirements; and
                    ``(IV) is consistent with such other factors as the 
                Secretaries consider appropriate; or'';
            (8) by striking ``or, after consultation'' in subsection 
        (b)(3) and inserting ``and, in conjunction'';
            (9) by striking ``and'' after the semicolon in subsection 
        (b)(3);
            (10) by striking ``Code.'' in subsection (b)(4) and 
        inserting ``Code; and'';
            (11) by adding at the end of subsection (b) the following:
            ``(5) meets the requirements of paragraph (1), (2), (3), or 
        (4) of subsection (c).''; and
            (12) by adding at the end the following:
    ``(c) Requirements Regarding Citizenship of Owners and 
Charterers.--
            ``(1) Vessel owned and operated by section 2 citizens.--A 
        vessel meets the requirements of this paragraph if, during the 
        period of an operating agreement under this subtitle that 
        applies to the vessel, the vessel will be owned and operated by 
        a person that is a citizen of the United States under section 2 
        of the Shipping Act, 1916 (46 U.S.C. App. 802).
            ``(2) Vessel owned by documentation citizen and chartered 
        to section 2 citizen.--A vessel meets the requirements of this 
        paragraph if, during the period of an operating agreement under 
        this subtitle that applies to the vessel, the vessel will be--
                    ``(A) owned by a person that is eligible to 
                document a vessel under chapter 121 of title 46, United 
                States Code; and
                    ``(B) demise chartered to a person that is a 
                citizen of the United States under section 2 of the 
                Shipping Act, 1916 (46 U.S.C. App. 802).
            ``(3) Vessel owned and operated by defense contractor.--A 
        vessel meets the requirements of this paragraph if--
                    ``(A) during the period of an operating agreement 
                under this subtitle that applies to the vessel, the 
                vessel will be owned and operated by a person that--
                            ``(i) is eligible to document a vessel 
                        under chapter 121 of title 46, United States 
                        Code;
                            ``(ii) operates or manages other United 
                        States-documented vessels for the Secretary of 
                        Defense, or charters other vessels to the 
                        Secretary of Defense;
                            ``(iii) has entered into a special security 
                        agreement for purposes of this paragraph with 
                        the Secretary of Defense;
                            ``(iv) makes the certification described in 
                        paragraph (4)(A)(ii)(III); and
                            ``(v) in the case of a vessel described in 
                        paragraph (2)(B), enters into an agreement 
                        referred to in that paragraph; and
                    ``(B) the Secretary and the Secretary of Defense 
                certify to the House Armed Services Committee and the 
                Senate Commerce, Science and Transportation Committee 
                that they concur with the certification, and have 
                reviewed and agree that there are no other legal, 
                operational, or other impediments that would prohibit 
                the contractor for the vessel from performing its 
                obligations under an operating agreement under this 
                subtitle.
            ``(4) Vessel owned by section 2 citizen and chartered to 
        documentation citizen.--A vessel meets the requirements of this 
        paragraph if--
                    ``(A) during the period of an operating agreement 
                under this subtitle that applies to the vessel, the 
                vessel will be--
                            ``(i) owned by a person that is a citizen 
                        of the United States under section 2 of the 
                        Shipping Act, 1916 (46 U.S.C. App. 802); and
                            ``(ii) demise chartered to a person--
                                    ``(I) that is eligible to document 
                                the vessel under chapter 121 of title 
                                46, United States Code;
                                    ``(II) the chairman of the board of 
                                directors, chief executive officer, and 
                                a majority of the members of the board 
                                of directors of which are United States 
                                citizens, are appointed and subjected 
                                to removal only upon approval by the 
                                Secretary;
                                    ``(III) that certifies that there 
                                are no treaties, statutes, regulations, 
                                or other laws that would prohibit the 
                                contractor for the vessel from 
                                performing its obligations under an 
                                operating agreement under this 
                                subtitle; and
                                    ``(IV) the Secretary and the 
                                Secretary of Defense certify to the 
                                House Armed Services Committee and the 
                                Senate Commerce, Science, and 
                                Transportation Committee that they 
                                concur with the certification, and have 
                                reviewed and agree that there are no 
                                other legal, operational, or other 
                                impediments that would prohibit the 
                                contractor for the vessel from 
                                performing its obligations under an 
                                operating agreement under this 
                                subtitle; and
                    ``(B) in the case of a vessel that will be 
                chartered to a person that is owned or controlled by 
                another person that is not a citizen of the United 
                States under section 2 of the Shipping Act, 1916 (46 
                U.S.C. App. 802), the other person enters into an 
                agreement with the Secretary not to influence the 
                operation of the vessel in a manner that will adversely 
                affect the interests of the United States.
    ``(d) Deemed Ownership.--Notwithstanding section 12102(d)(4) of 
title 46, United States Code, in the case of a vessel that is owned by 
a trust and that is demise chartered to a person meeting the 
requirements of subsection (c)(4), the vessel is deemed, for purposes 
of the eligibility requirements of this section, to be owned and 
operated by a person that is a citizen of the United States under 
section 2 of the Shipping Act, 1916 (46 U.S.C. App. 802) if the trust 
meets the requirements of paragraph (2) of section 12102(d) of title 
46, United States Code, as qualified by paragraph (4) of that section.
    ``(e) Vessel Standards.--
            ``(1) Certificate of inspection.--A vessel used to provide 
        oceangoing transportation which the Secretary of the department 
        in which the Coast Guard is operating determines meets the 
        criteria of subsection (b) of this section but which, on the 
        date of enactment of the Maritime Security Fleet Program 
        Reauthorization Act of 2003, is not a documented vessel (as 
        that term is defined in section 12101 of title 46, United 
        States Code) shall be eligible for a certificate of inspection 
        if the Secretary determines that--
                    ``(A) the vessel is classed by and designed in 
                accordance with the rules of the American Bureau of 
                Shipping, or another classification society accepted by 
                the Secretary;
                    ``(B) the vessel complies with applicable 
                international agreements and associated guidelines, as 
                determined by the country in which the vessel was 
                documented immediately before becoming a documented 
                vessel (as defined in that section); and
                    ``(C) that country has not been identified by the 
                Secretary as inadequately enforcing international 
                vessel regulations as to that vessel.
            ``(2) Continued eligibility for certificate.--Paragraph (1) 
        does not apply to a vessel after any date on which the vessel 
        fails to comply with the applicable international agreements 
        and associated guidelines referred to in paragraph (1)(B).
            ``(3) Reliance on classification society.--
                    ``(A) In general.--The Secretary may rely on a 
                certification from the American Bureau of Shipping or, 
                subject to subparagraph (B), another classification 
                society accepted by the Secretary to establish that a 
                vessel is in compliance with the requirements of 
                paragraphs (1) and (2).
                    ``(B) Foreign classification society.--The 
                Secretary may accept certification from a foreign 
                classification society under subparagraph (A) only--
                            ``(i) to the extent that the government of 
                        the foreign country in which the society is 
                        headquartered provides access on a reciprocal 
                        basis to the American Bureau of Shipping; and
                            ``(ii) if the foreign classification 
                        society has offices and maintains records in 
                        the United States.''.

SEC. 204. CHANGES TO OPERATING AGREEMENTS REQUIREMENTS.

    (a) In General.--Section 652 (46 U.S.C. App. 1187a) is amended--
            (1) by striking ``which continues to operate under an 
        operating differential subsidy contract under subtitle A or'' 
        in subsection (a);
            (2) by striking ``trade'' the first place it appears in 
        subsection (b)(1)(A) and inserting ``trade, as that term is 
        defined in section 905(a) of this Act (without regard to `in 
        the context of section 607 of this Act concerning capital 
        construction funds and except that in the context of title V of 
        this Act concerning construction-differential subsidy,'),'';
            (3) by resetting the text of subsection (c) following 
        ``Relief.--'' as a new paragraph indented 2 ems from the left 
        margin and inserting ``(1) In general.--'' before ``A 
        contractor'';
            (4) by adding at the end of subsection (c) the following:
            ``(2) Telecommunications equipment.--The telecommunications 
        and other electronic equipment on an existing vessel that is 
        redocumented under the laws of the United States for operation 
        under an operating agreement under this subtitle shall be 
        deemed to satisfy all Federal Communications Commission 
        equipment certification requirements, if--
            ``(A) such equipment complies with all applicable 
        international agreements and associated guidelines as 
        determined by the country in which the vessel was documented 
        immediately before becoming documented under the laws of the 
        United States;
            ``(B) that country has not been identified by the Secretary 
        as inadequately enforcing international regulations as to that 
        vessel; and
            ``(C) at the end of its useful life, such equipment will be 
        replaced with equipment that meets Federal Communications 
        Commission equipment certification standards.'';
            (5) by striking ``2005.'' in subsection (d)(1) and 
        inserting ``2015.'';
            (6) by striking ``1996 and'' in subsection (d)(2) and 
        inserting ``1996,'';
            (7) by inserting ``for each of fiscal years 1997 through 
        2005, and $3,100,000'' in subsection (d)(2) after 
        ``$2,100,000'';
            (8) by striking ``subject to an operating differential 
        subsidy contract under subtitle A or'' in subsection (g)(1);
            (9) by striking paragraph (3) of subsection (g) and 
        inserting the following:
            ``(3) beyond its economic life, as determined by the 
        Secretary.'';
            (10) by striking ``7,500'' in subsection (h)(2) and 
        inserting ``2,500'';
            (11) by inserting ``or bagged'' after ``bulk'' each place 
        it appears in subsection (h)(2);
            (12) by striking ``cargo; and'' in subsection (h)(2) and 
        inserting ``cargo unless the vessel is owned and operated by 
        persons that are citizens of the United States under section 2 
        of the Shipping Act, 1916 (46 U.S.C. App. 802); and'';
            (13) by redesignating subsections (j) through (p) as 
        subsections (l) through (r), respectively, and inserting after 
        subsection (i) the following:
    ``(j) Awarding New Agreements.--Subject to the availability of 
appropriations and without regard to subsection (i), the Secretary of 
Transportation shall enter into operating agreements according to a 
priority determined by the applicant's record of owning and operating 
vessels in accordance with section 2 of the Shipping Act, 1916 (46 
U.S.C. App. 802) under the United States flag and its capability to 
provide a sufficient level of military utility to the United States, as 
determined jointly by the Secretary of Transportation and the Secretary 
of Defense, based on the type and number of vessels, and non-vessel 
assets the applicant offers to the program.
    ``(k) Reissuance of Operating Agreements.--Subject to the 
availability of appropriations the Secretary of Transportation, in 
conjunction with the Secretary of Defense, may reissue operating 
agreements for participating fleet vessels. If the Secretary fails to 
reissue an operating agreement, or if the Secretary does not receive an 
application for reissuance of an operating agreement for a 
participating fleet vessel, the operating agreement will be awarded 
subject to subsection (j).'';
            (14) by striking ``Secretary within'' in subsection (l), as 
        redesignated, and inserting ``Secretary and the Secretary of 
        Defense within'';
            (15) by inserting ``(1)'' in subsection (m), as 
        redesignated, after ``authority.--'' and redesignating 
        paragraphs (1) and (2) as subparagraphs (A) and (B), 
        respectively;
            (16) by adding at the end of subsection (m), as 
        redesignated, the following:
    ``(2) If the Secretary of Transportation makes a determination that 
the requirements set forth in this section are not fulfilled while an 
operating agreement is in effect, the Secretary may terminate the 
agreement and the Secretary shall be free to enter into an operating 
agreement with another party capable of fulfilling the requirements for 
an operating agreement under this subtitle.'';
            (17) by redesignating subsections (n) through (r), as 
        redesignated, as subsections (o) through (s), respectively, and 
        inserting after subsection (m), as redesignated, the following:
    ``(n) Replacement Vessel.--The Secretary shall require the 
replacement of any participating fleet vessel that does not meet the 
requirements of section 651(b), and the Secretary, in conjunction with 
the Secretary of Defense, may approve the replacement of any 
participating vessel if the replacement vessel is eligible under 
section 651(b).''; and
            (18) by adding at the end of subsection (o), as 
        redesignated, the following:
    ``(3) Procedures for new awards.--No later than 60 days after the 
date of issuance of interim final rules (or, if earlier, 60 days after 
the date of issuance of the a final rule under section 657), the 
Secretary shall accept applications for enrollment of 13 additional 
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.
    ``(4) Procedures for reissuance of operating agreements.--Not later 
than 60 days after the date of issuance of interim final rules (or, if 
earlier, 60 days after the date of issuance of the a final rule under 
section 657), the Secretary shall accept applications, from any person 
that is eligible to enter into an operating agreement for a 
participating fleet vessel as of October 1, 2005, for the reissuance of 
an operating agreement for a participating fleet vessel. Within 90 days 
after receipt of an application for such a reissuance, the Secretary 
shall enter into an agreement with the applicant, or provide in writing 
a reason for the denial.
    ``(5) Limitation.--The Secretary may not award operating agreements 
under this subtitle that require payments under this section for more 
than 60 vessels in any fiscal year.''.
    ``(6) Effective date.--The effective date for an operating 
agreement under paragraph (3) or (4) shall be October 1, 2005, except 
for a vessel which is, on the date of entry into an operating 
agreement, on charter to the United States Government, other than a 
charter under section 653, the effective date shall be the expiration 
or termination date of the Government charter covering the vessel, or 
any earlier date the vessel is withdrawn from that contract or charter.
    (b) Conforming Amendments.--Section 653 (46 U.S.C. App. 1187b) is 
amended--
            (1) by striking ``Secretary'' in subsection (b) and 
        inserting ``Secretary, in conjunction with the Secretary of 
        Defense,''; and
            (2) by striking ``Transportation'' in subsection (c)(1) and 
        inserting ``Transportation, in conjunction with the Secretary 
        of Defense,''.

SEC. 205. PARTICIPATING FLEET VESSEL DEFINED.

    Section 654 (46 U.S.C. App. 1187c) is amended by adding at the end 
the following:
            ``(7) Participating fleet vessel.--The term `participating 
        fleet vessel' means--
                    ``(A) any vessel that is owned or demise chartered 
                and that--
                            ``(i) on October 1, 2005--
                                    ``(I) will meet the requirements of 
                                paragraph (1), (2), (3), or (4) of 
                                section 651(c); and
                                    ``(II) will be less than 25 years 
                                of age, or less than 30 years of age in 
                                the case of a LASH vessel; and
                            ``(ii) on April 30, 2005, is covered by an 
                        operating agreement under subtitle B of title 
                        VI of the Merchant Marine Act, 1936 (46 U.S.C. 
                        App. 1187 et seq.); or
                    ``(B) any vessel that--
                            ``(i) is a replacement for a vessel 
                        described in subparagraph (A);
                            ``(ii) is controlled by the person that 
                        controls such replaced vessel;
                            ``(iii) is eligible to be included in the 
                        Fleet under section 651(b); and
                            ``(iv) is approved by the Secretary and the 
                        Secretary of Defense.''.

SEC. 206. AUTHORIZATION OF APPROPRIATIONS.

    Section 655 (46 U.S.C. App. 1187d) is amended--
            (1) by striking ``1996 and'' and inserting ``1996,'';
            (2) by striking ``$100,000,000, for each fiscal year 
        thereafter through fiscal year 2005.'' and inserting 
        ``$100,000,000 for each of fiscal years 1997 through 2005, and 
        such sums as may be necessary, not to exceed $186,000,000, for 
        each fiscal year thereafter through fiscal year 2015.''.

SEC. 207. NONCONTIGUOUS DOMESTIC TRADE.

    Section 656 (46 U.S.C. App. 1187e) is amended to read as follows:

``SEC. 656. NONCONTIGUOUS DOMESTIC TRADES.

    ``(a) In General.--Except as otherwise provided in this section, no 
contractor or related party shall receive payments pursuant to this 
part during a period when it participates in a noncontiguous domestic 
trade, except upon written permission of the Secretary of 
Transportation that is granted after a hearing on the record under 
section 554 of title 5, United States Code, and that states the 
capacity that may be offered in that trade. The Secretary may grant 
such written permission pursuant to written application of such 
contractor or related party unless the Secretary finds that--
            ``(1) existing service in that trade is adequate; or
            ``(2) the service sought to be provided by the contractor 
        or related party--
                    ``(A) would result in unfair competition to any 
                other person operating vessels in such noncontiguous 
                domestic trade, or
                    ``(B) would be contrary to the objects and policy 
                of this Act.
    ``(b) Grandfather.--
            ``(1) Subsection (a) shall not apply to provision by a 
        contractor of service within the level of service provided by 
        that contractor as of the date of enactment of the Maritime 
        Security Fleet Program Reauthorization Act of 2003, adjusted 
        for increases in the real gross product of the State or 
        Commonwealth served since that date.
            ``(2) Subsection (a) shall not apply to operation by a 
        contractor of a self-propelled tank vessel in a noncontiguous 
        domestic trade, or to ownership by a contractor of an interest 
        in a self-propelled tank vessel that operates in a 
        noncontiguous domestic trade.
    ``(c) Definitions.--In this section:
            ``(1) Participates in a noncontiguous domestic trade.--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.
            ``(2) Related party.--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 part; and
                    ``(B) an officer, director, agent, or other 
                executive of a contractor or of a person referred to in 
                subparagraph (A).''.

SEC. 208. REGULATIONS.

    Subtitle B of title VI of the Merchant Marine Act, 1936 (46 U.S.C. 
App. 1187 et seq.) is amended by adding at the end the following:

``SEC. 657. REGULATIONS.

    ``(a) In General.--The Secretary of Transportation, in consultation 
with the Secretary of Defense, may prescribe rules as necessary to 
carry out this subtitle and the amendments made by this subtitle.
    ``(b) Interim Rules.--The Secretary of Transportation, in 
consultation with the Secretary of Defense, may prescribe interim rules 
necessary to carry out this subtitle. For this purpose the Secretary is 
excepted from compliance with the notice and comment requirements of 
section 553 of title 5, United States Code. All interim rules 
prescribed under the authority of this subsection that are not 
superseded by final rules shall expire no later than 270 days after the 
date of enactment of the Maritime Security Fleet Program 
Reauthorization Act of 2003.''.

    TITLE III--NATIONAL DEFENSE TANK VESSEL CONSTRUCTION ASSISTANCE

SEC. 301. NATIONAL DEFENSE.

    (a) In General.--Title V of the Merchant Marine Act, 1936 (46 
U.S.C. App. 1151 et seq.) is amended by inserting at the end the 
following new subtitle:

   ``Subtitle B--National Defense Tank Vessel Construction Assistance

``SEC. 521. NATIONAL DEFENSE TANK VESSEL CONSTRUCTION PROGRAM.

    ``The Secretary of Transportation shall establish a program for the 
provision of financial assistance for the construction in the United 
States of a fleet of up to 5 privately owned product tank vessels--
            ``(1) to be operated in commercial service in foreign 
        commerce; and
            ``(2) to be available for national defense purposes in time 
        of war or national emergency pursuant to an Emergency 
        Preparedness Plan approved by the Secretary of Defense pursuant 
        to section 523(e) of this subtitle.

``SEC. 522. APPLICATION PROCEDURE.

    ``(a) Request for Proposals.--Within 90 days after the date of the 
enactment of this subtitle, and on an as-needed basis thereafter, the 
Secretary of Transportation, in consultation with the Secretary of 
Defense, shall publish in the Federal Register a request for 
competitive proposals for the construction of new product tank vessels 
necessary to meet the commercial and national security needs of the 
United States and to be built with assistance under this subtitle.
    ``(b) Qualification.--Any citizen of the United States or any 
shipyard in the United States may submit a proposal to the Secretary of 
Transportation for purposes of constructing a product tank vessel with 
assistance under this subtitle.
    ``(c) Requirement.--The Secretary of Transportation, with the 
concurrence of the Secretary of Defense, may enter into an agreement 
with the submitter of a proposal for assistance under this subtitle if 
the Secretary of Transportation determines that--
            ``(1) the plans and specifications call for construction of 
        a new product tank vessel of not less than 35,000 deadweight 
        tons and not greater than 60,000 deadweight tons, that--
                    ``(A) will meet the requirements of foreign 
                commerce;
                    ``(B) is capable of carrying militarily useful 
                petroleum products, and will be suitable for national 
                defense or military purposes in time of war, national 
                emergency, or other military contingency; and
                    ``(C) will meet the construction standards 
                necessary to be documented under the laws of the United 
                States;
            ``(2) the shipyard in which the vessel will be constructed 
        has the necessary capacity and expertise to successfully 
        construct the proposed number and type of product tank vessels 
        in a reasonable period of time as determined by the Secretary 
        of Transportation, taking into consideration the recent prior 
        commercial shipbuilding history of the proposed shipyard in 
        delivering a vessel or series of vessels on time and in 
        accordance with the contract price and specifications; and
            ``(3) the person proposed to be the operator of the 
        proposed vessel possesses the ability, experience, financial 
        resources, and any other qualifications determined to be 
        necessary by the Secretary for the operation and maintenance of 
        the vessel.
    ``(d) Priority.--The Secretary of Transportation--
            ``(1) subject to paragraph (2), shall give priority 
        consideration to a proposal submitted by a person that is a 
        citizen of the United States under section 2 of the Shipping 
        Act, 1916 (46 U.S.C. App. 802); and
            ``(2) may give priority to consideration of proposals that 
        provide the best value to the Government, taking into 
        consideration--
                    ``(A) the costs of vessel construction; and
                    ``(B) the commercial and national security needs of 
                the United States.

``SEC. 523. AWARD OF ASSISTANCE.

    ``(a) In General.--If after review of a proposal, the Secretary of 
Transportation determines that the proposal fulfills the requirements 
under this subtitle, the Secretary may enter into a contract with the 
proposed purchaser and the proposed shipyard for the construction of a 
product tank vessel with assistance under this subtitle.
    ``(b) Amount of Assistance.--The contract shall provide that the 
Secretary of Transportation shall pay, subject to the availability of 
appropriations, up to 75 percent of the actual construction cost of the 
vessel, but in no case more than $50,000,000 per vessel.
    ``(c) Construction in United States.--A contract under this section 
shall require that construction of a vessel with assistance under this 
subtitle shall be performed in a shipyard in the United States.
    ``(d) Documentation of Vessel.--
            ``(1) Contract requirement.--A contract under this section 
        shall require that, upon delivery of a vessel constructed with 
        assistance under the contract, the vessel shall be documented 
        under chapter 121 of title 46, United States Code, with a 
        registry endorsement only.
            ``(2) Restriction on coastwise endorsement.--A vessel 
        constructed with assistance under this subtitle shall not be 
        eligible for a certificate of documentation with a coastwise 
        endorsement.
            ``(3) Authority to reflag not applicable.--Section 9(g) of 
        the Shipping Act, 1916, (46 U.S.C. App. 808(g)) shall not apply 
        to a vessel constructed with assistance under this subtitle.
    ``(e) Emergency Preparedness Agreement.--
            ``(1) In general.--A contract under this section shall 
        require that the person who will be the operator of a vessel 
        constructed with assistance under the contract shall enter into 
        an Emergency Preparedness Agreement for the vessel under 
        section 653.
            ``(2) Treatment as contractor.--For purposes of the 
        application, under paragraph (1), of section 653 to a vessel 
        constructed with assistance under this subtitle, the term 
        `contractor' as used in section 653 means the person who will 
        be the operator of a vessel constructed with assistance under 
        this subtitle.
    ``(f) Additional Terms.--The Secretary of Transportation shall 
incorporate in the contract the requirements set forth in this 
subtitle, and may incorporate in the contract any additional terms the 
Secretary considers necessary.''.
    (b) Priority for Title XI Assistance.--Section 1103 of the Merchant 
Marine Act, 1936 (46 U.S.C. App. 1273) is amended by adding at the end 
the following:
    ``(i) Priority.--In guaranteeing and entering commitments to 
guarantee under this section, the Secretary shall give priority to 
guarantees and commitments for vessels that are otherwise eligible for 
a guarantee under this section and that are constructed with assistance 
under subtitle B of title V of this Act.''.
    (c) Authorization of Appropriations.--There are authorized to be 
appropriated to the Secretary to carry out subtitle B of title V of the 
Merchant Marine Act, 1936, as added by subsection (a), a total of 
$250,000,000 for fiscal years beginning after fiscal year 2004.
    (d) Conforming Amendment.--Title V of the Merchant Marine Act, 1936 
is amended by inserting before section 501, the following:

      ``Subtitle A--General Subsidy for New Vessel Construction''.

            Amend the title so as to read ``A bill to authorize 
        appropriations for fiscal years 2004 through 2008 for certain 
        maritime programs of the Department of Transportation, and for 
        other purposes.''.




                                                       Calendar No. 361

108th CONGRESS

  1st Session

                                S. 1262

                          [Report No. 108-184]

_______________________________________________________________________

                                 A BILL

 To authorize appropriations for fiscal years 2004, 2005, and 2006 for 
certain maritime programs of the Department of Transportation, and for 
                            other purposes.

_______________________________________________________________________

                            November 3, 2003

         Reported with amendments and an amendment to the title