[House Report 104-375]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 1st Session                                                    104-375
_______________________________________________________________________


                 PROVIDING FOR CONSIDERATION OF THE BILL
 
              (H.R. 1350) THE MARITIME SECURITY ACT OF 1995

                                _______


 November 30, 1995.--Referred to the House Calendar and ordered to be 
                                printed

_______________________________________________________________________


   Mr. Quillen, from the Committee on Rules, submitted the following

                              R E P O R T

                       [To accompany H. Res. 287]

    The Committee on Rules, having had under consideration 
House Resolution 287, by a voice vote, report the same to the 
House with the recommendation that the resolution be adopted.

               brief summary of provisions of resolution

    The resolution provides for an open rule, with one hour of 
general debate divided equally between the chairman and ranking 
minority member of the National Security Committee. The rule 
makes in order as an original bill for the purposes of 
amendment the committee amendment in the nature of a 
substitute. Each section will be considered as read.
    Before the consideration of any other amendment, it will be 
in order to consider, without the intervention of points of 
order, the amendment printed in this report. The amendment may 
be offered only by the Chairman of the National Security 
Committee or his designee and will be debatable for 20 minutes 
equally divided between a proponent and an opponent. The 
amendment shall not be subject to amendment or demand for 
division of the question.
    The rule further provides priority in recognition to 
members who pre-print their amendments in the Congressional 
Record. Finally, the rule provides for one motion to recommit 
with or without instructions.

    The text of the Amendment To Be Offered by the Chairman of the 
   Committee on National Security, or His Designee, Debatable for 20 
                                Minutes

  Page 5, strike lines 18 through 23, and insert the following:
  ``(c) Regulatory Relief.--A contractor of a vessel included 
in an operating agreement under this subtitle may operate the 
vessel in the foreign commerce of the United States without 
restriction, and shall not be subject to any requirement under 
section 801, 808, 809, or 810. Participation in the program 
established by this subtitle shall not subject a contractor to 
section 805 or to any provision of subtitle A.
  Page 13, line 24, insert before the period the following: 
``and the Secretary of Defense''.
  Page 14, strike lines 1 through 13, and insert the following:
  ``(n) Nonrenewal for Lack of Funds.--If, by the first day of 
a fiscal year, sufficient funds have not been appropriated 
under the authority provided by section 655 for that fiscal 
year, the Secretary of Transportation shall notify the Congress 
that operating agreements authorized under this subtitle for 
which sufficient funds are not available will not be renewed 
for that fiscal year if sufficient funds are not appropriated 
by the 60th day of that fiscal year. If funds are not 
appropriated under the authority provided by section 655 for 
any fiscal year by the 60th day of that fiscal year, then each 
vessel covered by an operating agreement under this subtitle 
for which funds are not available is thereby released from any 
further obligation under the operating agreement, and the 
vessel owner or operator may transfer and register such vessel 
under a foreign registry deemed acceptable by the Secretary of 
Transportation, notwithstanding any other provision of law. If 
section 902 is applicable to such vessel after registration of 
the vessel under such a registry, the vessel is available to be 
requisitioned by the Secretary of Transportation pursuant to 
section 902.
  Page 16, strike line 21 and all that follows through line 8 
on page 17, and insert the following:
          ``(2) Terms of agreement.--An Emergency Preparedness 
        Agreement under this section shall require that upon a 
        request by the Secretary of Defense during time of war 
        or national emergency, or whenever determined by the 
        Secretary of Defense to be necessary for national 
        security (including any natural disaster, international 
        peace operation, or contingency operation (as that term 
        is defined in section 101 of title 10, United States 
        Code)), a contractor for a vessel covered by an 
        operating agreement under this subtitle shall make 
        available commercial transportation resources 
        (including services). The basic terms of the Emergency 
        Preparedness Agreements shall be established pursuant 
        to consultations among the Secretary, the Secretary of 
        Defense, and Maritime Security Program contractors. In 
        any Emergency Preparedness Agreement, the Secretary and 
        a contractor may agree to additional or modifying terms 
        appropriate to the contractor's circumstances if those 
        terms have been approved by the Secretary of Defense.
          ``(3) Participation after expiration of operating 
        agreement.--Except as provided by section 652(m), the 
        Secretary may not require, through an Emergency 
        Preparedness Agreement or operating agreement, that a 
        contractor continue to participate in an Emergency 
        Preparedness Agreement when the operating agreement 
        with the contractor has expired according to its terms 
        or is otherwise no longer in effect. After expiration 
        of an Emergency Preparedness Agreement, a contractor 
        may volunteer to continue to participate in such an 
        agreement.
  Page 18, after line 16, insert the following:
          ``(3) Approval of amount by secretary of defense.--No 
        compensation may be provided for a vessel under this 
        subsection unless the amount of the compensation is 
        approved by the Secretary of Defense.
  Page 20, strike lines 10 through 19, and insert the 
following:

                             ``definitions

  ``Sec. 654. In this subtitle:
          ``(1) Bulk cargo.--The term `bulk cargo' means cargo 
        that is loaded and carried in bulk without mark or 
        count.
          ``(2) Contractor.--The term `contractor' means an 
        owner or operator of a vessel that enters into an 
        operating agreement for the vessel with the Secretary 
        of Transportation under section 652.
          ``(3) Ocean common carrier.--The term `ocean common 
        carrier' means a person holding itself out to the 
        general public to operate vessels to provide 
        transportation by water of passengers or cargo between 
        the United States and a foreign country for 
        compensation, that--
                  ``(A) assumes responsibility for the 
                transportation from the port or point of 
                receipt to the port or point of destination, 
                and
                  ``(B) utilizes, for all or part of that 
                transportation, a vessel operating on the high 
                seas or the Great Lakes between a port in the 
                United States and a port in a foreign country, 
                except that the term does not include a common 
                carrier engaged in ocean transportation by 
                ferry boat, ocean tramp, or chemical parcel-
                tanker. As used in this paragraph, `chemical 
                parcel-tanker' means a vessel whose cargo-
                carrying capability consists of individual 
                cargo tanks for bulk chemicals that are a 
                permanent part of the vessel, that have 
                segregation capability with piping systems to 
                permit simultaneous carriage of several bulk 
                chemical cargoes with minimum risk of cross-
                contamination, and that has a valid certificate 
                of fitness under the International Maritime 
                Organization Code for the Construction and 
                Equipment of Ships Carrying Dangerous Chemicals 
                in Bulk.
          ``(4) Fleet.--The term `Fleet' means the Maritime 
        Security Fleet established pursuant to section 651(a).
          ``(5) LASH vessel.--The term `LASH vessel' means a 
        lighter aboard ship vessel.
          ``(6) United states-documented vessel.--The term 
        `United States-documented vessel' means a vessel 
        documented under chapter 121 of title 46, United States 
        Code.
  Page 23, strike lines 10 through 13, and insert the 
following:

SEC. 4. DOMESTIC OPERATIONS.

  (a) In General.--Subtitle B of title VI of the Merchant 
Marine Act, 1936, as amended by section 102 of this title, is 
further amended by adding at the end the following new section:

                    ``noncontiguous domestic trades

  ``Sec. 656. (a)(1) Except as otherwise provided in this 
section, no contractor or related party shall receive payments 
pursuant to this subtitle during a period when it participates 
in a noncontiguous domestic trade, except upon written 
permission of the Secretary of Transportation. Such written 
permission shall also be required for any material change in 
the number or frequency of sailings, the capacity offered, or 
the domestic ports called by a contractor or related party in a 
noncontiguous domestic trade. The Secretary may grant such 
written permission pursuant to written application of such 
contractor or related party unless the Secretary finds that--
          ``(A) existing service in that trade is adequate; or
          ``(B) the service sought to be provided by the 
        contractor or related party--
                  ``(i) would result in unfair competition to 
                any other person operating vessels in such 
                noncontiguous domestic trade, or
                  ``(ii) would be contrary to the objects and 
                policy of this Act.
  ``(2) For purposes of this subsection, `written permission of 
the Secretary' means permission which states the capacity 
offered, the number and frequency of sailings, and the domestic 
ports called, and which is granted following--
          ``(A) written application containing the information 
        required by paragraph (e)(1) by a person seeking such 
        written permission, notice of which application shall 
        be published in the Federal Register within 15 days of 
        filing of such application with the Secretary;
          ``(B) holding of a hearing on the application under 
        section 554 of title 5, United States Code, in which 
        every person, firm or corporation having any interest 
        in the application shall be permitted to intervene and 
        be heard; and
          ``(C) final decision on the application by the 
        Secretary within 120 days following conclusion of such 
        hearing.
  ``(b) Subsection (a) shall not apply in any way to provision 
by a contractor of service within the level of service provided 
by that contractor as of the date established by subsection (c) 
or to provision of service permitted by subsection (d).
  ``(c) The date referred to in subsection (b) shall be August 
9, 1995: Provided, however, That with respect to tug and barge 
service to Alaska the date referred to in subsection (b) shall 
be July 1, 1992.
  ``(d) A contractor may provide service in a trade in addition 
to the level of service provided as of the applicable date 
established by subsection (c) in proportion to the annual 
increase in real gross product of the noncontiguous State or 
Commonwealth served since the applicable date established by 
subsection (c).
  ``(e)(1) A person applying for award of an agreement under 
this subtitle shall include with the application a description 
of the level of service provided by that person in each 
noncontiguous domestic trade served as of the date applicable 
under subsection (c). The application also shall include, for 
each such noncontiguous domestic trade: a list of vessels 
operated by that person in such trade, their container carrying 
capacity expressed in twenty-foot equivalent units (TEUs) or 
other carrying capacity, the itinerary for each such vessel, 
and such other information as the Secretary may require by 
regulation. Such description and information shall be made 
available to the public. Within 15 days of the date of an 
application for an agreement by a person seeking to provide 
service pursuant to subsections (b) and (c) of this section, 
the Secretary shall cause to be published in the Federal 
Register notice of such description, along with a request for 
public comment thereon. Comments on such description shall be 
submitted to the Secretary within 30 days of publication in the 
Federal Register. Within 15 days after receipt of comments, the 
Secretary shall issue a determination in writing either 
accepting, in whole or part, or rejecting use of the 
applicant's description to establish the level of service 
provided as of the date applicable under subsection (c): 
Provided, That notwithstanding the provisions of this 
subsection, processing of the application for an award of an 
agreement shall not be suspended or delayed during the time in 
which comments may be submitted with respect to the 
determination or during the time prior to issuance by the 
Secretary of the required determination: Provided further, That 
if the Secretary does not make the determination required by 
this paragraph within the time provided by this paragraph, the 
description of the level of service provided by the applicant 
shall be deemed to be the level of service provided as of the 
applicable date until such time as the Secretary makes the 
determination.
  ``(2) No contractor shall implement the authority granted in 
subsection (d) of this section except as follows:
          ``(A) An application shall be filed with the 
        Secretary which shall state the increase in capacity 
        sought to be offered, a description of the means by 
        which such additional capacity would be provided, the 
        basis for applicant's position that such increase in 
        capacity would be in proportion to or less than the 
        increase in real gross product of the relevant 
        noncontiguous State or Commonwealth since the 
        applicable date established by subsection (c), and such 
        information as the Secretary may require so that the 
        Secretary may accurately determine such increase in 
        real gross product of the relevant noncontiguous State 
        or Commonwealth.
          ``(B) Such increase in capacity sought by applicant 
        and such information shall be made available to the 
        public.
          ``(C) Within 15 days of the date of an application 
        pursuant to this paragraph the Secretary shall cause to 
        be published in the Federal Register notice of such 
        application, along with a request for public comment 
        thereon.
          ``(D) Comments on such application shall be submitted 
        to the Secretary within 30 days of publication in the 
        Federal Register.
          ``(E) Within 15 days after receipt of comments, the 
        Secretary shall issue a determination in writing either 
        accepting, in whole or part, or rejecting, the increase 
        in capacity sought by the applicant as being in 
        proportion to or less than the increase in real gross 
        product of the relevant noncontiguous State or 
        Commonwealth since the applicable date established by 
        subsection (c): Provided, That, notwithstanding the 
        provisions of this section, if the Secretary does not 
        make the determination required by this paragraph 
        within the time provided by this paragraph, the 
        increase in capacity sought by applicant shall be 
        permitted as being in proportion to or less than such 
        increase in real gross product until such time as the 
        Secretary makes the determination.
  ``(f) With respect to provision by a contractor of service in 
a noncontiguous domestic trade not authorized by this section, 
the Secretary shall deny payments under the operating agreement 
with respect to the period of provision of such service but 
shall deny payments only in part if the extent of provision of 
such unauthorized service was de minimis or not material.
  ``(g) Notwithstanding any other provision of this subtitle, 
the Secretary may issue temporary permission for any United 
States citizen, as that term is defined in section 2 of the 
Shipping Act, 1916, to provide service to a noncontiguous State 
or Commonwealth upon the request of the Governor of such 
noncontiguous State or Commonwealth, in circumstances where an 
Act of God, a declaration of war or national emergency, or any 
other condition occurs that prevents ocean transportation 
service to such noncontiguous State or Commonwealth from being 
provided by persons currently providing such service. Such 
temporary permission shall expire 90 days from date of grant, 
unless extended by the Secretary upon written request of the 
Governor of such State or Commonwealth.
  ``(h) As used in this section:
          ``(1) The term `level of service provided by a 
        contractor' in a trade as of a date means--
                  ``(A) with respect to service other than 
                service described in (B), the total annual 
                capacity provided by the contractor in that 
                trade for the 12 calendar months preceding that 
                date: Provided, That, with respect to 
                unscheduled, contract carrier tug and barge 
                service between points in Alaska south of the 
                Arctic Circle and points in the contiguous 48 
                States, the level of service provided by a 
                contractor shall include 100 percent of the 
                capacity of the equipment dedicated to such 
                service on the date specified in subsection (c) 
                and actually utilized in that service in the 
                two-year period preceding that date, excluding 
                service to points between Anchorage, Alaska and 
                Whittier, Alaska, served by common carrier 
                service unless such unscheduled service is only 
                for carriage of oil or pursuant to a contract 
                with the United States military: Provided 
                further, That, with respect to scheduled barge 
                service between the contiguous 48 States and 
                Puerto Rico, such total annual capacity shall 
                be deemed as such total annual capacity plus 
                the annual capacity of two additional barges, 
                each capable of carrying 185 trailers and 100 
                automobiles; and
                  ``(B) with respect to service provided by 
                container vessels, the overall capacity equal 
                to the sum of--
                          ``(i) 100 percent of the capacity of 
                        vessels operated by or for the 
                        contractor on that date, with the 
                        vessels' configuration and frequency of 
                        sailing in effect on that date, and 
                        which participate solely in that 
                        noncontiguous domestic trade; and
                          ``(ii) 75 percent of the capacity of 
                        vessels operated by or for the 
                        contractor on that date, with the 
                        vessels' configuration and frequency of 
                        sailing in effect on that date, and 
                        which participate in that noncontiguous 
                        domestic trade and in another trade, 
                        provided that the term does not include 
                        any restriction on frequency, or number 
                        of sailings, or on ports called within 
                        such overall capacity.
          ``(2) The level of service set forth in paragraph (1) 
        shall be described with the specificity required by 
        subsection (e)(1) and shall be the level of service in 
        a trade with respect to the applicable date established 
        by subsection (c) only if the service is not abandoned 
        thereafter, except for interruptions due to military 
        contingency or other events beyond the contractor's 
        control.
          ``(3) The term `participates in a noncontiguous 
        domestic trade' means directly or indirectly owns, 
        charters, or operates a vessel engaged in 
        transportation of cargo between a point in the 
        contiguous 48 states and a point in Alaska, Hawaii, or 
        Puerto Rico, other than a point in Alaska north of the 
        Arctic Circle.
          ``(4) The term `related party' means--
                  ``(A) a holding company, subsidiary, 
                affiliate, or associate of a contractor who is 
                a party to an operating agreement under this 
                subtitle; and
                  ``(B) an officer, director, agent, or other 
                executive of a contractor or of a person 
                referred to in subparagraph (A).''.
  (b) Conforming Amendment.--Section 805 of the Merchant Marine 
Act, 1936 (46 App. U.S.C. 1223) is amended--
          (1) by striking ``title VI of this Act'' each place 
        it appears and inserting ``subtitle A of title VI of 
        this Act''; and
          (2) by striking ``under title VI'' each place it 
        appears and inserting ``under subtitle A of title VI''.
  Page 28, after line 26, add the following new sections:

SEC. 9. MERCHANT SHIP SALES ACT OF 1946 AMENDMENT.

  Section 11 of the Merchant Ship Sales Act of 1946 (50 App. 
U.S.C. 1744) is amended as follows:
          (1) In subsection (b)(2) by striking ``Secretary of 
        the Navy,'' and inserting ``Secretary of Defense,''.
          (2) By striking subsection (c) and redesignating 
        subsection (d) as subsection (c).

SEC. 10. REEMPLOYMENT RIGHTS FOR CERTAIN MERCHANT SEAMEN.

  (a) In General.--Title III of the Merchant Marine Act, 1936 
(46 App. U.S.C. 1131) is amended by inserting after section 301 
the following new section:
  ``Sec. 302. (a) An individual who is certified by the 
Secretary of Transportation under subsection (c) shall be 
entitled to reemployment rights and other benefits 
substantially equivalent to the rights and benefits provided 
for by chapter 43 of title 38, United States Code, for any 
member of a Reserve component of the Armed Forces of the United 
States who is ordered to active duty.
  ``(b) An individual may submit an application for 
certification under subsection (c) to the Secretary of 
Transportation not later than 45 days after the date the 
individual completes a period of employment described in 
subsection (c)(1)(A) with respect to which the application is 
submitted.
  ``(c) Not later than 20 days after the date the Secretary of 
Transportation receives from an individual an application for 
certification under this subsection, the Secretary shall--
          ``(1) determine whether or not the individual--
                  ``(A) was employed in the activation or 
                operation of a vessel--
                          ``(i) in the National Defense Reserve 
                        Fleet maintained under section 11 of 
                        the Merchant Ship Sales Act of 1946, in 
                        a period in which that vessel was in 
                        use or being activated for use under 
                        subsection (b) of that section;
                          ``(ii) that is requisitioned or 
                        purchased under section 902 of this 
                        Act; or
                          ``(iii) that is owned, chartered, or 
                        controlled by the United States and 
                        used by the United States for a war, 
                        armed conflict, national emergency, or 
                        maritime mobilization need (including 
                        for training purposes or testing for 
                        readiness and suitability for mission 
                        performance); and
                  ``(B) during the period of that employment, 
                possessed a valid license, certificate of 
                registry, or merchant mariner's document issued 
                under chapter 71 or chapter 73 (as applicable) 
                of title 46, United States Code; and
          ``(2) if the Secretary makes affirmative 
        determinations under paragraph (1) (A) and (B), certify 
        that individual under this subsection.
  ``(d) For purposes of reemployment rights and benefits 
provided by this section, a certification under subsection (c) 
shall be considered to be the equivalent of a certificate 
referred to in paragraph (1) of section 4301(a) of title 38, 
United States Code.''.
  (b) Application.--The amendment made by subsection (a) shall 
apply to employment described in section 302(c)(1)(A) of the 
Merchant Marine Act, 1936, as amended by subsection (a), 
occurring after the date of enactment of this Act.
  (c) Regulation.--Not later than 120 days after the date of 
the enactment of this Act, the Secretary of Transportation 
shall issue regulations implementing this section.

SEC. 11. TITLE XI LOAN GUARANTEES.

  Title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 
1271 et seq.) is amended--
          (1) in section 1101(b), by striking ``owned by 
        citizens of the United States'';
          (2) in section 1104B(a), in the material preceding 
        paragraph (1), by striking ``owned by citizens of the 
        United States''; and
          (3) in section 1110(a), by striking ``owned by 
        citizens of the United States''.

SEC. 12. EXTENSION OF WAR RISK INSURANCE AUTHORITY.

  Section 1214 of the Merchant Marine Act, 1936 (46 App. U.S.C. 
1294) is amended by striking ``June 30, 1995'' and inserting 
``June 30, 2000''.

SEC. 13. VESSEL LOAN GUARANTEE PROGRAM.

  (a) Risk Factor Determinations.--Section 1103 of the Merchant 
Marine Act, 1936 (46 App. U.S.C. 1273) is amended by adding at 
the end the following new subsection:
  ``(h)(1) The Secretary shall--
          ``(A) establish in accordance with this subsection a 
        system of risk categories for obligations guaranteed 
        under this title, that categorizes the relative risk of 
        guarantees made under this title with respect to the 
        risk factors set forth in paragraph (3); and
          ``(B) determine for each of the risk categories a 
        subsidy rate equivalent to the cost of obligations in 
        the category, expressed as a percentage of the amount 
        guaranteed under this title for obligations in the 
        category.
  ``(2)(A) Before making a guarantee under this section for an 
obligation, the Secretary shall apply the risk factors set 
forth in paragraph (3) to place the obligation in a risk 
category established under paragraph (1)(A).
  ``(B) The Secretary shall consider the aggregate amount 
available to the Secretary for making guarantees under this 
title to be reduced by the amount determined by multiplying--
          ``(i) the amount guaranteed under this title for an 
        obligation, by
          ``(ii) the subsidy rate for the category in which the 
        obligation is placed under subparagraph (A) of this 
        paragraph.
  ``(C) The estimated cost to the Government of a guarantee 
made by the Secretary under this title for an obligation is 
deemed to be the amount determined under subparagraph (B) for 
the obligation.
  ``(D) The Secretary may not guarantee obligations under this 
title after the aggregate amount available to the Secretary 
under appropriations Acts for the cost of loan guarantees is 
required by subparagraph (B) to be considered reduced to zero.
  ``(3) The risk factors referred to in paragraphs (1) and (2) 
are the following:
          ``(A) If applicable, the country risk for each 
        eligible export vessel financed or to be financed by an 
        obligation.
          ``(B) The period for which an obligation is 
        guaranteed or to be guaranteed.
          ``(C) The amount of an obligation, which is 
        guaranteed or to be guaranteed, in relation to the 
        total cost of the project financed or to be financed by 
        the obligation.
          ``(D) The financial condition of an obligor or 
        applicant for a guarantee.
          ``(E) If applicable, any guarantee related to the 
        project, other than the guarantee under this title for 
        which the risk factor is applied.
          ``(F) If applicable, the projected employment of each 
        vessel or equipment to be financed with an obligation.
          ``(G) If applicable, the projected market that will 
        be served by each vessel or equipment to be financed 
        with an obligation.
          ``(H) The collateral provided for a guarantee for an 
        obligation.
          ``(I) The management and operating experience of an 
        obligor or applicant for a guarantee.
          ``(J) Whether a guarantee under this title is or will 
        be in effect during the construction period of the 
        project.
  ``(4) In this subsection, the term `cost' has the meaning 
given that term in section 502 of the Federal Credit Reform Act 
of 1990 (2 U.S.C. 661a).''.
  (b) Application.--Subsection (h)(2) of section 1103 of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1273), as amended by 
subsection (a) of this section, shall apply to guarantees that 
the Secretary of Transportation makes or commits to make with 
any amounts that are unobligated on or after the date of 
enactment of this Act.
  (c) Guarantee Fees.--Section 1104A(e) of title XI of the 
Merchant Marine Act, 1936 (46 App. U.S.C. 1274(e)) is amended 
to read as follows:
  ``(e)(1) Except as otherwise provided in this subsection, the 
Secretary shall prescribe regulations to assess in accordance 
with this subsection a fee for the guarantee of an obligation 
under this title.
  ``(2)(A) The amount of a fee under this subsection for a 
guarantee is equal to the sum determined by adding the amounts 
determined under subparagraph (B) for the years in which the 
guarantee is in effect.
  ``(B) The amount referred to in subparagraph (A) for a year 
is the present value (determined by applying the discount rate 
determined under subparagraph (F)) of the amount determined by 
multiplying--
          ``(i) the estimated average unpaid principal amount 
        of the obligation that will be outstanding during the 
        year (determined in accordance with subparagraph (E)), 
        by
          ``(ii) the fee rate established under subparagraph 
        (C) for the obligation for each year.
  ``(C) The fee rate referred to in subparagraph (B)(ii) for an 
obligation shall be--
          ``(i) in the case of an obligation for a delivered 
        vessel or equipment, not less than one-half of 1 
        percent and not more than 1 percent, determined by the 
        Secretary for the obligation under the formula 
        established under subparagraph (D); or
          ``(ii) in the case of an obligation for a vessel to 
        be constructed, reconstructed, or reconditioned, or of 
        equipment to be delivered, not less than one-quarter of 
        1 percent and not more than one-half of 1 percent, 
        determined by the Secretary for the obligation under 
        the formula established under subparagraph (D).
  ``(D) The Secretary shall establish a formula for determining 
the fee rate for an obligation for purposes of subparagraph 
(C), that--
          ``(i) is a sliding scale based on the 
        creditworthiness of the obligor;
          ``(ii) takes into account the security provided for a 
        guarantee under this title for the obligation; and
          ``(iii) uses--
                  ``(I) in the case of the most creditworthy 
                obligors, the lowest rate authorized under 
                subparagraph (C) (i) or (ii), as applicable; 
                and
                  ``(II) in the case of the least creditworthy 
                obligors, the highest rate authorized under 
                subparagraph (C) (i) or (ii), as applicable.
  ``(E) For purposes of subparagraph (B)(i), the estimated 
average unpaid principal amount does not include the average 
amount (except interest) on deposit in a year in the escrow 
fund under section 1108.
  ``(F) For purposes of determining present value under 
subparagraph (B) for an obligation, the Secretary shall apply a 
discount rate determined by the Secretary of the Treasury 
taking into consideration current market yields on outstanding 
obligations of the United States having periods to maturity 
comparable to the period to maturity for the obligation with 
respect to which the determination of present value is made.
  ``(3) A fee under this subsection shall be assessed and 
collected not later than the date on which amounts are first 
paid under an obligation with respect to which the fee is 
assessed.
  ``(4) A fee paid under this subsection is not refundable. 
However, an obligor shall receive credit for the amount paid 
for the remaining term of the guaranteed obligation if the 
obligation is refinanced and guaranteed under this title after 
such refinancing.
  ``(5) A fee paid under subsection (e) shall be included in 
the amount of the actual cost of the obligation guaranteed 
under this title and is eligible to be financed under this 
title.''.

SEC. 14. MARITIME POLICY REPORT.

  (a) Report.--The Secretary of Transportation shall transmit 
to the Congress a report setting forth the Department of 
Transportation's policies for the 5-year period beginning 
October 1, 1995, with respect to--
          (1) fostering and maintaining a United States 
        merchant marine capable of meeting economic and 
        national security requirements;
          (2) improving the vitality and competitiveness of the 
        United States merchant marine and the maritime 
        industrial base, including ship repairers, 
        shipbuilders, ship manning, ship operators, and ship 
        suppliers;
          (3) reversing the precipitous decrease in the number 
        of ships in the United States-flag fleet and the 
        Nation's shipyard and repair capability;
          (4) stabilizing and eventually increasing the number 
        of mariners available to crew United States merchant 
        vessels;
          (5) achieving adequate manning of merchant vessels 
        for national security needs during a mobilization;
          (6) ensuring that sufficient civil maritime resources 
        will be available to meet defense deployment and 
        essential economic requirements in support of our 
        national security strategy;
          (7) ensuring that the United States maintains the 
        capability to respond unilaterally to security threats 
        in geographic areas not covered by alliance commitments 
        and otherwise meets sealift requirements in the event 
        of crisis or war;
          (8) ensuring that international agreements and 
        practices do not place United States maritime 
        industries at an unfair competitive disadvantage in 
        world markets;
          (9) ensuring that Federal agencies promote, through 
        efficient application of laws and regulations, the 
        readiness of the United States merchant marine and 
        supporting industries; and
          (10) any other relevant maritime policies.
  (b) Date of Transmittal.--The report required under 
subsection (a) shall be transmitted along with the President's 
budget submission, under section 1105 of title 31, United 
States Code, for fiscal year 1997.

SEC. 15. RELIEF FROM U.S. DOCUMENTATION REQUIREMENT FOR 3 VESSELS.

  (a) In General.--Notwithstanding any other law or any 
agreement with the United States Government, a vessel described 
in subsection (b) may be sold to a person that is not a citizen 
of the United States and transferred to or placed under a 
foreign registry.
  (b) Vessels Described.--The vessels referred to in subsection 
(a) are the following:
          (1) RAINBOW HOPE (United States official number 
        622178).
          (2) IOWA TRADER (United States official number 
        642934).
          (3) KANSAS TRADER (United States official number 
        634621).

SEC. 16. VESSEL REPAIR AND MAINTENANCE PILOT PROGRAM.

  (a) In General.--The Secretary of Transportation shall 
conduct a pilot program to evaluate the feasibility of using 
renewable contracts for the maintenance and repair of outported 
vessels in the Ready Reserve Force to enhance the readiness of 
those vessels. Under the pilot program, the Secretary, subject 
to the availability of appropriations and with 6 months after 
the date of the enactment of this Act, shall award 9 contracts 
for this purpose.
  (b) Use of Various Contracting Arrangements.--In conducting a 
pilot program under this section, the Secretary of 
Transportation shall use contracting arrangements similar to 
those used by the Department of Defense for procuring 
maintenance and repair of its vessels.
  (c) Contract Requirements.--Each contract with a shipyard 
under this section shall--
          (1) subject to subsection (d), provide for the 
        procurement from the shipyard of all repair and 
        maintenance (including activation, deactivation, and 
        drydocking) for 1 vessel in the Ready Reserve Force 
        that is outported in the geographical vicinity of the 
        shipyard;
          (2) be effective for 1 fiscal year; and
          (3) be renewable, subject to the availability of 
        appropriations, for each subsequent fiscal year through 
        fiscal year 1998.
  (d) Limitation of Work Under Contracts.--A contract under 
this section may not provide for the procurement of operation 
or manning for a vessel that may be procured under another 
contract for the vessel to which section 11(d)(2) of the 
Merchant Ship Sales Act of 1946 (50 U.S.C. App. 1774(d)(2)) 
applies.
  (e) Geographic Distribution.--The Secretary shall seek to 
distribute contract awards under this section to shipyards 
located throughout the United States.
  (f) Reports.--The Secretary shall submit to the Congress--
          (1) an interim report on the effectiveness of each 
        contract under this section in providing for economic 
        and efficient repair and maintenance of the vessel 
        included in the contract, no later than 20 months after 
        the date of the enactment of this Act; and
          (2) a final report on that effectiveness no later 
        than 6 months after the termination of all contracts 
        awarded pursuant to this section.

SEC. 17. STREAMLINING OF CARGO ALLOCATION PROCEDURES.

  Section 901b(c)(3) of the Merchant Marine Act, 1936 (46 App. 
U.S.C. 1241f(c)(3)) is amended--
          (1) in subparagraph (A)--
                  (A) by striking ``and consistent with those 
                sections,'' and inserting ``and, subject to 
                subparagraph (B) of this paragraph, consistent 
                with those sections,''; and
                  (B) by striking ``50 percent'' and inserting 
                ``25 percent''; and
          (2) by striking subparagraph (B) and inserting the 
        following new subparagraphs:
  ``(B) In carrying out this paragraph, there shall first be 
calculated the allocation of 100 percent of the quantity to be 
procured on an overall lowest landed cost basis without regard 
to the country of documentation of the vessel and there shall 
be allocated to the Great Lakes port range any cargoes for 
which it has the lowest landed cost under that calculation. The 
requirements for United States-flag transportation under 
section 901(b) and this section shall not apply to commodities 
allocated under subparagraph (A) to the Great Lakes port range, 
and commodities allocated under subparagraph (A) to that port 
range may not be reallocated or diverted to another port range 
to meet those requirements to the extent that the total tonnage 
of commodities to which subparagraph (A) applies that is 
furnished and transported from the Great Lakes port range is 
less than 25 percent of the total annual tonnage of such 
commodities furnished.
  ``(C) In awarding any contract for the transportation by 
vessel of commodities from the Great Lakes port range pursuant 
to an export activity referred to in subsection (b), each 
agency or instrumentality--
          ``(i) shall consider expressions of freight interest 
        for any vessel from a vessel operator who meets 
        reasonable requirements for financial and operational 
        integrity; and
          ``(ii) may not deny award of the contract to a person 
        based on the type of vessel on which the transportation 
        would be provided (including on the basis that the 
        transportation would not be provided on a liner vessel 
        (as that term is used in the Shipping Act of 1984, as 
        in effect on November 14, 1995)), if the person 
        otherwise satisfies reasonable requirements for 
        financial and operational integrity.''.

                                
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