[Senate Report 105-317]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 556
105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-317
_______________________________________________________________________


 
              FY 1999 MARITIME ADMINISTRATION AUTHORIZATION

                               __________

                              R E P O R T

                                 OF THE

           COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                                    ON

                                S. 2124





               September 9, 1998.--Ordered to be printed


       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       one hundred fifth congress

                             second 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

                       Mark Buse, Policy Director

                  Martha P. Allbright, General Counsel

     Ivan A. Schlager, Democratic Chief Counsel and Staff Director

             James S. W. Drewry, Democratic General Counsel

                                     

105th Congress                                                   Report
                                 SENATE

 2d Session                                                     105-317
_______________________________________________________________________


              FY 1999 MARITIME ADMINISTRATION AUTHORIZATION
                                _______
                                

               September 9, 1998.--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. 2124]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 2124) ``A Bill to authorize 
appropriations for fiscal year 1999 for the Maritime 
Administration and for other purposes'', having considered the 
same, reports favorably thereon with amendments and recommends 
the bill do pass.

                          Purpose of the Bill

  S. 2124, as reported, would authorize appropriations for 
fiscal year 1999 for the Maritime Administration covering two 
appropriations accounts: (1) operations and training and (2) 
the loan guarantee program authorized by title XI of the 
Merchant Marine Act, 1936; and one project to establish a 
clearinghouse for maritime information at a State Maritime 
Academy. Also, the bill would authorize the conveyance of four 
National Defense Reserve Fleet vessels and amend the Merchant 
Marine Act, 1936, to authorize the President to delegate his 
authority to approve war risk insurance for vessels.

                          Background and Needs

  The Maritime Administration administers various U.S. merchant 
marine support programs within the Department of 
Transportation. The Maritime Administration is composed of 
approximately 980 employees (including Ready Reserve Force 
management and U.S. Merchant Marine Academy staff). These 
programs include Operating-Differential Subsidy, Maritime 
Security Fleet Program, title XI maritime guaranteed loan 
program, various cargo preference programs, maintenance of the 
Ready Reserve Force and National Defense Reserve Fleet, 
operation of the U.S. Merchant Marine Academy at Kings Point, 
NY, and State maritime academy assistance.
  The Maritime Administration's annual discretionary 
appropriation does not include Operating Differential Subsidy 
contract authority costs; permanent, indefinite appropriations 
for cargo preference costs; or Ready Reserve Force and National 
Defense Reserve Fleet maintenance funding. Ready Reserve Force 
and National Defense Reserve Fleet maintenance is funded by the 
Department of Defense and administered by the Maritime 
Administration under permanent authority. Annual authorization 
of Ready Reserve Force and National Defense Reserve Fleet 
maintenance appropriations is included in Department of Defense 
authorization legislation. The Maritime Security Fleet Program 
commenced in fiscal year 1997 and was authorized at $100 
million annually, which would fund a fleet of 47 ships, through 
fiscal year 2005 by the Maritime Security Act of 1986 (Public 
Law 104-239). Maritime Security Fleet Program funding must be 
appropriated annually.
  The Maritime Administration's operations and training account 
funds the administration and staffing of Maritime 
Administration programs (other than the title XI maritime 
guaranteed loan program and Ready Reserve Force costs), the 
U.S. Merchant Marine Academy at Kings Point, NY, federal 
support for State maritime schools, training courses for 
merchant mariners, various operating programs, and research and 
development.
  The Maritime Administration's title XI loan guarantee account 
funds the Federal Ship Financing Guarantee Program, which 
supports commercial shipbuilding in the United States. For each 
loan guaranteed by the Maritime Administration, the agency sets 
aside a portion of the appropriated funds based on the dollar 
amount of the portion of the loan being guaranteed and the risk 
of default of the loan.

                          Legislative History

  S. 2124 was introduced in the Senate on May 22, 1998, by 
Senators Hutchison and Inouye. In open executive session on 
July 9, 1998, the Committee considered S. 2124, and ordered the 
legislation reported favorably without objection and with an 
amendment by Senator Hutchison. The House of Representatives 
Department of Defense Authorization bill (H.R. 3616) includes 
provisions similar or identical to the five sections of S. 
2124, as reported, which are within the jurisdiction of the 
Committee. The Committee anticipates the Senate Armed Services 
Committee will endorse the provisions of S. 2124, as reported, 
as the Senate position on the corresponding provisions in the 
House version of the Department of Defense Authorization 
legislation during the conference with the House of 
Representatives on that legislation.

                            Estimated Costs

  In accordance with paragraph 11(a) of rule XXVI 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, August 20, 1998.
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. 2124, a bill to 
authorize appropriations for fiscal year 1999 for the Maritime 
Administration and for other purposes.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Deborah Reis.
            Sincerely,
                                              James L. Blum
                                   (For June E. O'Neill, Director).
    Enclosure.

               congressional budget office cost estimate

S. 2124--A bill to authorize appropriations for fiscal year 1999 for 
        the Maritime Administration and for other purposes

    Summary: S. 2124 would authorize the appropriation of $71 
million for operation and training activities of the Maritime 
Administration (MARAD) during fiscal year 1999. The bill also 
would authorize $20 million for 1999 loan guarantees and 
related administrative expenses, as already authorized under 
the Merchant Marine Act of 1936. Other provisions of the bill, 
which would authorize the sale or donation of federally owned 
vessels and make technical changes to the 1936 Act, would have 
no effect on the federal budget.
    S. 2124 would not affect direct spending or receipts; 
therefore, pay-as-you-go procedures would not apply. The bill 
contains no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act (UMRA) and would 
have no impact on the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the bill is shown in the following table. 
The costs of this legislation fall within budget function 400 
(transportation).

----------------------------------------------------------------------------------------------------------------
                                                                  By fiscal years, in millions of dollars--     
                                                           -----------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
                                                                                                                
MARAD Spending Under Current Law:                                                                               
    Budget Authority \1\..................................       68        0        0        0        0        0
    Estimated Outlays.....................................       67        8        3        0        0        0
Proposed Changes:                                                                                               
    Authorization Level \2\...............................        0       71        0        0        0        0
    Estimated Outlays.....................................        0       60        7        4        0        0
MARAD Spending Under S. 2124:                                                                                   
    Authorization Level \1\...............................       68       71        0        0        0        0
    Estimated Outlays.....................................       67       68       10        4        0        0
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    
\2\ No amounts are included as proposed changes for loan guarantee subsidies or administrative costs because    
  those amounts are already authorized under current law.                                                       

    Basis of estimate: For the purposes of this estimate, CBO 
assumes that S. 2124 will be enacted by or near the start of 
fiscal year 1999 and that the authorized amount of $71 million 
for MARAD operation and training activities will be 
appropriated for that year. The estimate of outlays is based on 
historical spending patterns for MARAD. Because appropriations 
for maritime loan guarantees and related administrative costs 
are already authorized under existing law, the budgetary 
effects of S. 2124 would be limited to the $71 million of 
authorized expenditures for MARAD operations and training 
programs.
    Pay-as-you-go-considerations: None.
    Intergovernmental and private-sector impact: the bill 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would have no impact on the budgets of 
state, local, or tribal governments.
    Estimate prepared by: Deborah Reis.
    Estimate approved by: Paul N. Van de Water, 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:
  S. 2124, as reported, would authorize appropriations to 
continue existing Maritime Administration programs and would 
make one change in current law. While most sections of the bill 
would have minimal regulatory impact, the provisions of section 
5 of the bill would affect the Maritime Administration's war 
risk insurance program by expediting the approval of war risk 
insurance applications. This change will improve the 
responsiveness of the United States commercial shipping system 
to military requirements for ocean shipping into areas of armed 
conflict.
    Because S. 2124 does not create any new programs, the 
legislation will have no additional regulatory impact, and will 
result in no additional reporting requirements. 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

Section 1. Authorization of appropriations for fiscal year 1999

  Section 1 would authorize appropriations for fiscal year 1999 
for the Maritime Administration's operations and training and 
title XI loan guarantee accounts. For expenses necessary for 
operations and training activities, the bill would authorize 
$70,978,000 for fiscal year 1999. For expenses under the loan 
guarantee program authorized by title XI of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1271 et seq.), the bill would 
authorize $20,000,000. Of this amount, $16,000,000 is for the 
cost (as defined in section 502(5) of the Federal Credit Reform 
Act of 1990 (2 U.S.C. 661a(5)) of loan guarantees under the 
program, and $4,000,000 is for administrative expenses related 
to loan guarantee commitments under the program.
  The Administration's fiscal year 1999 budget request for the 
Maritime Administration included a similar provision that 
requested $70,553,000 for the operations and training account 
and $20,000,000 for the title XI loan guarantee account. The 
Administration budget request for fiscal year 1999 would phase 
out the Student Incentive Program (a Maritime Administration 
training program assisting students at State maritime 
academies) over a four-year period by stopping aid for new 
students. The Administration estimated this would result in a 
$350,000 savings in fiscal year 1999. The Administration 
indicated it wanted to continue the program under Department of 
Defense funding in the future, but alternate sources of funding 
had not been determined at the time of the Administration's 
proposal. The bill, as reported, would authorize an additional 
$425,000 above the Administration request to provide full 
funding for the Student Incentive Payment program (an 
additional $350,000) and funding for the clearinghouse for 
maritime information authorized by section 4 of the bill 
($75,000).
  The Committee understands that to educate and commission a 
maritime school graduate with a military reserve obligation 
costs the Federal government approximately half as much using 
the Student Incentive Program compared to using the U.S. 
Merchant Marine Academy, yet the Administration's budget 
request included a significant increase in funding for the U.S. 
Merchant Marine Academy and a significant decrease in State 
maritime academy funding. The Committee believes the Maritime 
Administration should continue funding the Student Incentive 
Payment program until an alternative source of funding is 
identified and place a greater emphasis on minimizing the 
Federal government cost of educating and commissioning maritime 
school graduates with a military reserve obligation.

Section 2. Authority to convey National Defense Reserve Fleet vessel

  Section 2 would authorize the Secretary of Transportation to 
convey the National Defense Reserve Fleet vessel M/V BAYAMON to 
a purchaser for use as a floating trade exposition to showcase 
United States technology, industrial products, and services. 
The provision would require that competitive procedures be used 
to sell the vessel and that the purchaser be selected on the 
basis of sealed bids solicited and evaluated in accordance with 
those procedures. Also, the provision would require the vessel 
be sold for not less than the fair market value of the vessel 
in the United States, as determined by the Secretary of 
Transportation. The amounts received by the United States as 
proceeds of the sale would be required to be deposited in the 
Maritime Administration's Vessel Operating Revolving Fund and 
be available and expended in accordance with section 6(a) of 
the National Maritime Heritage Act (16 U.S.C. App. 5405(a)). 
This provision also specifies certain terms of conveyance and 
required conditions typically required in Government vessel 
conveyance authorizations. As introduced, this section would 
have directed the vessel be conveyed to a specific company. In 
the interest of ensuring the Government receives the best value 
for the vessel, the reported bill replaces this directed sale 
procedure with a competitive sale procedure.

Section 3. Authority to convey certain National Defense Reserve Fleet 
        vessels

  Section 3 would authorize the Secretary of Transportation to 
convey the National Defense Reserve Fleet vessels BENJAMIN 
ISHERWOOD (TAO-191) and HENRY ECKFORD (TAO-192) to a purchaser 
for the purpose of reconstruction of those vessels for sale or 
charter. The provision would require competitive procedures to 
be used to sell the vessel and the purchaser to be selected on 
the basis of sealed bids solicited and evaluated in accordance 
with those procedures. Also, this provision specifies the same 
terms of conveyance and required conditions as are required in 
section 2 of the bill. The reported bill makes a few technical 
corrections to this section.

Section 4. Clearinghouse for maritime information

  Section 4 would authorize $75,000 of the amount authorized to 
be appropriated pursuant to section 1(1) of the bill for 
operations of the Maritime Administration to be available for 
the establishment at a State maritime academy of a 
clearinghouse for maritimeinformation that makes that 
information publicly available, including by use of the Internet.

Section 5. Act constituting presidential approval of vessel war risk 
        insurance requested by the Secretary of Defense

  Section 5 would amend section 1205(b) of the Merchant Marine 
Act, 1936 (46 U.S.C. App. 1285(b)), by adding at the end the 
following: ``The signature of the President (or of an official 
designated by the President) on the agreement shall be treated 
as an expression of the approval required under section 1202(a) 
to provide the insurance.''. This amendment would allow the 
President to delegate the approval authority for vessel war 
risk insurance to another Government official and is necessary 
to ensure vessel war risk insurance is available on a timely 
basis in the event commercial shippers providing sealift to the 
Department of Defense are unable to obtain commercial insurance 
on reasonable terms.
  The current authority appears to require consultation with 
the President by the Secretary of Transportation prior to each 
issuance of vessel war risk insurance. This amendment would 
ensure the availability of vessel war risk insurance can be 
predetermined and immediately available in the event of a 
national emergency or contingency. Recent approvals of vessel 
war risk insurance required approximately 3 weeks from request 
to approval. Such time may not be available in a national 
emergency. A similar amendment for aircraft war risk insurance 
is being considered by the Congress this session.
  This provision was included in the Administration's 
legislative request for the Maritime Administration and was 
added to the bill by Senator Hutchison's amendment.

Section 6. Conveyance of NDRF vessel ex-USS Lorain County

  Section 6 would authorize the Secretary of Transportation to 
convey the National Defense Reserve Fleet vessel ex-USS LORAIN 
COUNTY (LST-1177) to the Ohio War Memorial, Inc., located in 
Sandusky, Ohio for use as a memorial to Ohio veterans. This 
provision also specifies the same terms of conveyance and 
required conditions typically required by the Committee for 
Government vessel war memorial conveyance authorizations. This 
provision was added to the bill by the Committee.
  S. 2124, as introduced, included a provision that would have 
amended sections 508 and 510(i) of the Merchant Marine Act, 
1936, and section 801 of the Act of June 2, 1951 (65 Stat. 59; 
46 U.S.C. App. 1241a), to require that the proceeds of Maritime 
Administration vessel sales be credited to the Vessel 
Operations Revolving Fund and authorize costs incident to the 
sale of such vessels and not covered under the gross proceeds 
of the sale to be paid from balances in the Vessel Operating 
Revolving Fund derived from the sale of obsolete vessels. This 
provision was intended to assist the Maritime Administration in 
addressing the increased costs of scrapping obsolete Government 
vessels due to increased environmental requirements. The 
Committee struck the provision from the bill in the view that 
the issue of addressing the increasing restrictions on and 
costs of the Maritime Administration's vessel scrapping program 
require a more comprehensive review. This includes 
consideration of requiring agencies that transfer obsolete 
vessels to the Maritime Administration for disposal to fund the 
full costs of such disposal.

                        Changes in Existing Law

  In compliance with paragraph 12 of rule XXVI of the Standing 
Rules of the Senate, changes in existing law made by the bill, 
as reported, are shown as follows (existing law proposed to be 
omitted is enclosed in black brackets, new material is printed 
in italic, existing law in which no change is proposed is shown 
in roman):

                       MERCHANT MARINE ACT, 1936

Sec. 1205. (46 U.S.C. App. 1285) Insurance on Property of 
Government Departments and Agencies
    (a) Any department or agency of the United States may, with 
the approval of the President, procure from the Secretary any 
of the insurance as provided for in this title, except as 
provided in sections 1 and 2 of the Act of July 8, 1937 (50 
Stat. 479).
    (b) The Secretary is authorized with such approval to 
provide such insurance at the request of the Secretary of 
Defense, and such other agencies as the President may 
prescribe, without premium in consideration of the agreement of 
the Secretary of Defense or such agency to indemnify the 
Secretary against all losses covered by such insurance, and the 
Secretary of Defense and such other agencies are authorized to 
execute such indemnity agreement with the Secretary. The 
signature of the President (or of an official designated by the 
President) on the agreement shall be treated as an expression 
of the approval required under section 1202(a) to provide the 
insurance.

                                
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