[Congressional Record Volume 149, Number 87 (Friday, June 13, 2003)]
[Senate]
[Pages S7877-S7881]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCAIN:
  S. 1262. 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; to the Committee on Commerce, 
Science, and Transportation.
  Mr. McCAIN. Mr. President, today I am introducing legislation to 
reauthorize the Maritime Administration, MARAD, for fiscal years 2004, 
2005, and 2006. The bill was developed in consultation with 
Administration officials and would provide for needed reforms in a 
number of maritime programs.
  The bill would authorize appropriations for MARAD operations and 
training, administrative costs associated with the shipbuilding loan 
guarantee program authorized by Title XI of the Merchant Marine Act of 
1936, and the disposal of vessels in the National Defense Reserve Fleet 
that have been identified by the Secretary of Transportation as 
obsolete.
  The bill is designed to reform how MARAD manages the Title XI 
maritime loan guarantee program. Both the Department of Transportation 
Inspector General and the General Accounting Office have found that 
MARAD has failed to provide effective oversight in receiving and 
approving loan guarantees; has failed to closely monitor the financial 
condition of borrowers during the term of the loan; and has failed to 
adequately monitor the condition of projects subject to guarantees. 
They also found that MARAD was flagrant in its use of authority in 
granting waivers to its own regulations governing the program without 
taking steps to better secure the taxpayer against defaults. The bill 
includes reform provisions to address these findings.
  Furthermore, the bill would amend the Merchant Marine Act to give the 
Secretary of Transportation the authority to convey obsolete National 
Defense Reserve Fleet vessels to nonprofit organizations, a State, 
Commonwealth, or possession of the United States or any municipal 
corporation or political subdivision thereof or the District of 
Columbia for their use and to U.S. territories and foreign governments 
for use as artificial reefs. The bill also would amend the Merchant 
Marine Act to allow, under certain circumstances, otherwise unqualified 
U.S.-flag vessels to carry reference cargo reserved for qualified U.S. 
vessels.
  Finally, the bill would amend requirements for enforcement of the 
commitment agreements for students at the United States Merchant Marine 
Academy, USMMA, and students at the state maritime academies who 
receive student incentive payments, SIP; allow MARAD to use funds 
received from a settlement for legally authorized purposes, including 
completion of repairs to the Merchant Marine Academy, Fitch Building; 
provide the Secretary with the authority to also exclude vessels from 
the carriage of Government

[[Page S7878]]

impelled cargoes that have been detained for violations of security 
standards contained within international agreements to which the United 
States is a party; allow MARAD to retain funds received as a result of 
final judgments and settlements in the Vessel Operations Revolving 
Fund; and clarify the decades-old authority of the Saint Lawrence 
Seaway Development Corporation, SLSDC, to carry out the provisions of 
the Ports and Waterways Safety Act, PWSA, in the case of the Saint 
Lawrence Seaway.
  I look forward to working on this important legislation and hope my 
colleagues will join me in expeditiously moving this authorization 
through the legislative process.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1262

       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''.

     SEC. 2. AUTHORIZATION OF APPROPRIATIONS FOR FISCAL YEARS 
                   2004, 2005, AND 2006.

       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 2006;
       (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, and 2006; and
       (3) for ship disposal, $11,422,000 for each of fiscal years 
     2004, 2005, and 2006.

     SEC. 3. 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.''.

     SEC. 4. CARGO PREFERENCE UNDER TITLE IX.

       (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.''.
       (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.''.

     SEC. 5. 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, 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 regulations shall 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.''.

     SEC. 6. 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--
       ``(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;
       ``(B) the economic soundness requirements set forth in 
     paragraph (1)(A) of this subsection are met after the waiver 
     of the financial condition requirement; and
       ``(C) 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.''.

     SEC. 7. 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 a quarterly 
     or monthly basis depending

[[Page S7879]]

     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 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, has been made through an 
     documented independent assessment conducted by offices with 
     expertise in technical, economic, and financial aspects of 
     the loan application process.
       ``(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.''.

     SEC. 8. DEFAULTS UNDER TITLE XI.

       (a) Actions To Be Taken in Event of Default.--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.''.
       (b) Restrictions.--
       (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;''.
       (2) Section 1104A(d)(1)(A) of the Merchant Marine Act, 1936 
     (46 U.S.C. App. 1274 (d)(1)(A)) is amended--
       (A) by striking ``and'' after the semicolon in clause (v);
       (B) by striking ``safety.'' in clause (vi) and inserting 
     ``safety; and''; and
       (C) by adding at the end the following:
       ``(vii) the past performance of the shipyard doing the 
     construction on commercial projects, including cost-over-runs 
     and on-time performance.''.

     SEC. 9. 270-DAY DECISION PERIOD.

       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:
       ``(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.''.

     SEC. 10. 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.
       ``(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.
       ``(F) 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) .

     SEC. 11. 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.

     SEC. 12. 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.--
       (1) Section 1103(h)(1) of the Merchant Marine Act, 1936 (46 
     U.S.C. App. 1273(h)(1)) is amended--
       (A) by striking ``subsection'' in subparagraph (A) and 
     inserting ``subsection, and update annually,'';
       (B) by inserting ``annually'' before ``determine'' in 
     subparagraph (B);
       (C) by striking ``and'' after the semicolon in subparagraph 
     (A);
       (D) by striking ``category.'' in subparagraph (B) and 
     inserting ``category; and''; and
       (E) 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.
       (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.

     SEC. 13. 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

[[Page S7880]]

     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.''.

     SEC. 14. 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 from 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

[[Page S7881]]

     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.''.

     SEC. 15. 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,''.

     SEC. 16. 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.''.

     SEC. 17. 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.''.

     SEC. 18. 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.

     SEC. 19. 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.
                                 ______