[Senate Report 105-121]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 234
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-121
_______________________________________________________________________


 
   PROVIDING AN ADMINISTRATIVE PROCESS FOR OBTAINING A WAIVER OF THE 
                COASTWISE TRADE LAWS FOR CERTAIN VESSELS

                                _______
                                

                              R E P O R T

                                 of the

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                   on

                                 S. 661





                October 29, 1997.--Ordered to be printed


       senate committee on commerce, science, and transportation
                       one hundred fifth congress
                             first session

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             WENDELL H. FORD, Kentucky
TRENT LOTT, Mississippi              JOHN D. ROCKEFELLER IV, West 
KAY BAILEY HUTCHISON, Texas              Virginia
OLYMPIA SNOWE, Maine                 JOHN F. KERRY, Massachusetts
JOHN ASHCROFT, Missouri              JOHN B. BREAUX, Louisiana
BILL FRIST, Tennessee                RICHARD H. BRYAN, Nevada
SPENCER ABRAHAM, Michigan            BYRON L. DORGAN, North Dakota
SAM BROWNBACK, Kansas                RON WYDEN, Oregon
                       John Raidt, Staff Director
     Ivan A. Schlager, Democratic Chief Counsel and Staff Director



                                                       Calendar No. 234
105th Congress                                                   Report
                                 SENATE

 1st Session                                                    105-121
_______________________________________________________________________


   PROVIDING AN ADMINISTRATIVE PROCESS FOR OBTAINING A WAIVER OF THE 
                COASTWISE TRADE LAWS FOR CERTAIN VESSELS

                                _______
                                

                October 29, 1997.--Ordered to be printed

_______________________________________________________________________


       Mr. McCain, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                              R E P O R T

                         [To accompany S. 661]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 661) ``A Bill to provide an 
administrative process for obtaining a waiver of the coastwise 
trade laws for certain vessels'', having considered the same, 
reports favorably thereon without an amendment and recommends 
that the bill do pass.

                       purpose of the legislation

    S. 661, as reported, would authorize an administrative 
process through which the Secretary of Transportation could 
waive the United States-built requirement of the coastwise 
trade laws for certain vessels carrying no more than 12 
passengers for hire.

                          background and needs

    Subject to certain limited exceptions, the law known as the 
Jones Act (section 27 of the Merchant Marine Act, 1920), 
section 8 of the Act of June 19, 1886, and sections 12106 and 
12108 of title 46, U.S. Code (hereinafter referred to as ``the 
coastwise trade laws''), provide that only those vessels built 
in the United States, continuously documented under the laws of 
the United States, and continuously owned by U.S.citizens may 
transport merchandise or passengers in the coastwise trade or 
engage in the fisheries, of the United States. Section 1120(e) 
of the Coast Guard Authorization Act of 1996 (Pub. L. 104-324) 
amended section 27 of the Merchant Marine Act, 1920 to waive 
the requirement that vessels be continuously documented under 
the laws of the United States for vessels for lessthan 200 
gross tons. The United States-built requirement continues to apply for 
all vessels.
    Where the facts applicable to a particular vessel suggest 
the United States-built or continuous United States-documented 
requirements have not been satisfied, the Coast Guard may not 
issue a document granting coastwise trading or fisheries 
privileges for that vessel unless the requirements of the 
coastwise trade laws are statutorily waived.
    For the past several years, a number of bills that would 
waive the coastwise trade laws for vessels have been referred 
to the Commerce Committee. The majority of these waiver 
requests involve U.S. citizen vessel owners who intend to carry 
no more than 12 passengers for hire on vessels that do not meet 
either the United States-built or continuous United States-
documented requirements of those laws, or both. During the 
104th Congress, 73 of the 119 bills considered by the Commerce 
Committee were requests for a waiver of the coastwise trade 
laws for specific vessels. With the enactment of Public Law 
104-324, the majority of coastwise trade law waiver bills 
referred to the Committee during the 105th Congress concern 
foreign-built vessels. The Committee review and approval 
process is largely a ministerial function. The Committee 
believes it would be more appropriate for this function to be 
performed by an expert agency.
    Before introduction of S. 661, the Commerce Committee staff 
met with representatives of the U.S. vessel construction 
industry and coastwise trade operating industries to discuss 
the manner in which this ministerial function could be 
transferred to an appropriate administrative agency. After 
reviewing the recent history of Commerce Committee coastwise 
trade waivers, and the expected effect of the amendment to 
section 27 of the Merchant Marine Act, 1920 made by Public Law 
104-324, the Committee staff projected that most coastwise 
trade law waivers requested after the 104th Congress would 
concern foreign-built vessels carrying no more than 12 
passengers for hire. Because the commercial competition 
implications of waiving the U.S.-built requirement for vessels 
carrying a large number of passengers, engaged in commercial 
towing, or providing offshore marine services are often 
controversial, waiver authority for vessels that would be so 
employed was not considered for inclusion in S. 661. Similarly, 
because the Congress has recently enacted several legislative 
provisions aimed at reducing the existing overcapacity of U.S. 
fishing vessels, waiver authority for fisheries endorsements 
was not considered for inclusion in S. 661. The Committee knows 
of no industry or agency objections to S. 661. If S. 661 is 
enacted, only a few waiver requests would likely be considered 
by the Committee each year, allowing the Committee to focus its 
attention on more weighty matters.

                          LEGISLATIVE HISTORY

    S. 661 was introduced in the Senate on April 28, 1997, by 
Senator McCain. In open executive session on June 19, 1997, the 
Committee considered S. 661, and ordered the legislation 
reported favorably without objection.

                            estimated costs

    In accordance with paragraph 11(a) of rule XVI of the 
Standing Rules of the Senate and section 403 of the 
Congressional Budget Act of 1974, the Committee provides the 
following cost estimate, prepared by the Congressional Budget 
Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 14, 1997.
Hon. John McCain,
Chairman, Committee on Commerce, Science, and Transportation, U.S. 
        Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 661, a bill to 
provide for an administrative process for obtaining a waiver of 
the coastwise trade laws for certain vessels.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis.
            Sincerely,
                                         June E. O'Neill, Director.
    Enclosure.

               congressional budget office cost estimate

S. 661--A bill to provide for an administrative process for obtaining a 
        waiver of the coastwise trade laws for certain vessels

    S. 661 would authorize the Secretary of Transportation to 
issue certificates of documentation with appropriate 
endorsements for employment in the coastwise trade for certain 
eligible passenger vessels. The Secretary could issue 
certificates for vessels that carry up to 12 passengers and 
that were constructed or rebuilt outside the United States at 
least three years earlier, as long as coastwise employment of 
the vessel would not harm U.S. shipbuilders or coastwise 
operators of domestic vessels. Finally, the bill would allow 
the Secretary to revoke an endorsement under certain 
circumstances.
    CBO estimates that enacting S. 661 would have no 
significant impact on the federal budget because the U.S. Coast 
Guard already issues these certificates and would continue to 
do so in the same manner for about the same number of vessels 
after enactment of the bill. It is possible that the federal 
government may experience small savings in discretionary costs 
by eliminating the need to enact legislation approving each 
request for certification and endorsement, but the amounts 
involved would be negligible.
    S. 661 contains no private-sector or intergovernmental 
mandates and would impose no costs on state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Deborah Reis. 
The estimate was approved by Robert A. Sunshine, Deputy 
Assistant Director for Budget Analysis.

                      REGULATORY IMPACT STATEMENT

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:
    Because S. 661 would transfer a ministerial function from 
the Congress to the appropriate expert agency in the Department 
of Transportation, the legislation will have minimal additional 
regulatory impact, and will result in no additional reporting 
requirements. Because the statutory criteria of S. 661 for 
granting coastwise trade waivers is equivalent to the criteria 
currently used by the Congress, the legislation will have no 
further effect on the number or types of individuals and 
businesses regulated, the economic impact of such regulation, 
the personal privacy of affected individuals, or the paperwork 
required from such individuals and businesses.

                      SECTION-BY-SECTION ANALYSIS

    The bill consists of four sections.

Section 1. Findings

    This section includes four Congressional findings:
    First, the coastwise trade laws provide no administrative 
authority to waive the United States-built requirement of those 
laws for the limited carriage of passengers for hire on vessels 
built or rebuilt outside the United States.
    Second, requests for such waivers require the enactment of 
legislation by the Congress.
    Third, each Congress routinely approves numerous such 
requests for waiver and rarely rejects any such request.
    Fourth, the review and approval of such waiver requests is 
a ministerial function which properly should be executed by an 
administrative agency with appropriate expertise.

Section 2. Administrative waiver of coastwise trade laws

    This section provides that the Secretary of Transportation 
may waive section 12106 of title 46, U.S. Code, section 8 of 
the Act of June 19, 1886 (24 Stat. 81, chapter 421; 46 U.S. 
Code App. 289), and section 27 of the Merchant Marine Act, 1920 
(46 App. U.S.C. 883), and issue a certificate of documentation 
with the appropriate endorsement for employment in the 
coastwise trade as a passenger vessel, a small passenger 
vessel, or an uninspected passenger vessel for an eligible 
vessel, as defined by section 4 of the bill, authorized to 
carry no more than 12 passengers for hire if the Secretary 
determines that the employment of the vessel in the coastwise 
trade will not adversely affect United States vessel builders 
or thecoastwise trade business of any person who employs 
vessels built in the United States in that business.
    This section places four restrictions on the coastwise 
trade law waiver authority granted under the section. First, 
this waiver authority applies only to vessels which are 
employed as a passenger vessel, a small passenger vessel, or an 
uninspected passenger vessel, as defined in section 4 of the 
bill. Second, this waiver authority applies only to eligible 
vessels, as defined in section 4 of the bill. Third, vessels 
granted waivers under the authority of this section may carry 
no more than 12 passengers for hire. Finally, before such a 
waiver is granted, the Secretary must first determine that the 
employment of such vessel in the coastwise trade will not 
adversely affect U.S. builders of vessels employed in the 
coastwise trade or any coastwise trade business that employs 
the United States-built vessels.
    The first three restrictions define the type of coastwise 
trade law waivers that have been routinely approved by the 
Committee. The fourth restriction prescribes waiver approval 
criteria equivalent to that used by the Commerce Committee.
    The Committee routinely consults with representatives of 
the vessel construction industry (e.g., the National Marine 
Manufacturers Association, the National Shipyard Association, 
the Shipbuilders Council of America, and the American 
Shipbuilding Association) and the coastwise trade passenger 
vessel industry (e.g., the Passenger Vessel Association, the 
National Association of Charterboat Operators, and the National 
Party Boat Owners Alliance). The Committee expects these 
industries will continue to be provided the opportunity to 
review and comment on applications for waivers under this 
authority.
    Within the Department of Transportation, there are two 
agencies with responsibilities related to the coastwise trade 
laws. The Coast Guard issues the vessel documents and 
endorsements which authorize vessels to engage in the coastwise 
trade. The Maritime Administration assists domestic shippers in 
locating suitable coastwise trade eligible vessels and is 
authorized to grant waivers of the coastwise trade laws on a 
voyage basis. Of these two agencies, the Committee believes the 
Maritime Administration is better suited to determine the 
effect of vessel waivers of the coastwise trade laws on United 
States vessel builders and United States-built vessel coastwise 
trade businesses. The Committee expects the Coast Guard would 
continue to issue vessel documents and endorsements for vessels 
granted waivers under section 2 of this bill. The Committee 
expects the Coast Guard and the Maritime Administration would 
coordinate the processing of requests for waivers under section 
2 of this bill.

Section 3. Revocation

    This section authorizes the Secretary of Transportation to 
revoke a coastwise trade endorsement issued under section 2 of 
this bill under certain conditions. First, the Secretary must 
provide adequate notice to the vessel owner and an opportunity 
for public comment. Second, such an endorsement may only be 
revoked if the employment of the vessel in the coastwise trade 
has substantially changed. Finally, such an endorsement may 
only be revoked if the vessel is employed other than as a 
passenger vessel, small passenger vessel, or an uninspected 
passenger vessel (including carrying more than 12 passengers 
for hire), or the changed employment of the vessel adversely 
affects United States vessel builders or United States-built 
vessel coastwise trade businesses. An endorsement issued under 
section 2 of this bill may not be revoked in circumstances 
where changes in the passenger vessel market adversely affect 
United States vessel builders or United States-built vessel 
coastwise trade businesses, but the coastwise trade employment 
of the vessel operating under the authority provided for in 
section 2 of this bill has not substantially changed.

Section 4. Definitions

    This section defines three terms used in the bill:
    First, the term ``Secretary'' means the Secretary of 
Transportation.
    Second, the term ``eligible vessel'' means a vessel that 
was not built in the United States and is at least 3 years of 
age, or a vessel that was rebuilt outside the United States at 
least 3 years before the certification requested under section 
2 of the bill, if granted, would take effect. The purpose of 
the 3-year waiting period is to discourage vessel owners from 
purchasing new, foreign-built vessels for the purposes of 
immediately employing those vessels in the coastwise trade.
    Third, the terms ``passenger vessel'', ``small passenger 
vessel'', ``uninspected passenger vessel'', and ``passenger for 
hire'' have the meaning given such terms by section 2101 of 
title 46, United States Code.

                        changes in existing law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee states the bill as 
reported would make no change to existing law.

                                
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