[Senate Report 108-184]
[From the U.S. Government Publishing Office]
Calendar No. 361
108th Congress Report
1st Session SENATE 108-184
_______________________________________________________________________
MARITIME ADMINISTRATION AUTHORIZATION ACT OF 2003
__________
R E P O R T
of the
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 1262
November 3, 2003.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred eighth congress
first session
JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
SAM BROWNBACK, Kansas JOHN B. BREAUX, Louisiana
GORDON SMITH, Oregon BYRON L. DORGAN, North Dakota
PETER G. FITZGERALD, Illinois RON WYDEN, Oregon
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
FRANK LAUTENBERG, New Jersey
Jeanne Bumpus, Staff Director and General Counsel
Ann Begeman, Deputy Staff Director
Robert W. Chamberlin, Chief Counsel
Kevin D. Kayes, Democratic Staff Director and Chief Counsel
Gregg Elias, Democratic General Counsel
(ii)
Calendar No. 361
108th Congress Report
SENATE
1st Session 108-184
======================================================================
MARITIME ADMINISTRATION AUTHORIZATION ACT OF 2003
_______
November 3, 2003.--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. 1262]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 1262) to authorize
appropriations for fiscal years 2004, 2005, and 2006 for
certain maritime programs of the Department of Transportation,
and for other purposes, having considered the same, reports
favorably thereon with amendments and an amendment to the title
and recommends that the bill (as amended) do pass.
Purpose of the Bill
The purpose of the bill is to authorize appropriations for
Maritime Administration (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 for the disposal of vessels in the National
Defense Reserve Fleet (NDRF) that have been identified by the
Secretary of Transportation as obsolete. The bill includes
provisions designed to reform how MARAD manages the Title XI
Maritime Loan Guarantee Program.
The bill also would authorize funding for the Maritime
Security Program (MSP) through fiscal year (FY) 2015 and
establish a National Defense Tank Vessel Construction
Assistance program providing subsidies to domestic shipbuilders
in order to build five tank vessels for inclusion into the
Maritime Security Fleet. The bill would establish new cargo
guidelines for vessels receiving MSP funds while participating
in the Cargo Preference Program.
Background and Needs
MARAD's mission is to promote the development and maintenance
of an adequate, well-balanced United States merchant marine,
sufficient to carry the Nation's domestic waterborne commerce
and a substantial portion of its waterborne foreign commerce,
and capable of serving as a naval and military auxiliary in
times of war or national emergency. It also seeks to ensure
that the United States has adequate shipbuilding and repair
service, efficient ports, effective intermodal water and land
transportation systems, and reserve shipping capacity in times
of national emergency.
To meet its mission, MARAD administers various United States
merchant marine support programs within the Department of
Transportation (DOT). These programs include MSP, the Title XI
Maritime Loan Guarantee Program, various cargo preference
programs, maintenance of the Ready Reserve Force (RRF) and
NDRF, and operation of the United States Merchant Marine
Academy (USMMA) at Kings Point, New York. MARAD has
approximately 960 employees (including RRF and USMMA staff).
The MSP is an element of the United States maritime
transportation system providing funded operating agreements to
privately-owned, United States-flag, and United States-crewed
liner fleet in international trade. The MSP participant
vessels, ship capacity, and intermodal assets are committed to
Department of Defense contingency contracts to support national
defense and other security requirements. The MSP is designed to
support the labor base of skilled American seafarers who are
available to crew the United States Government-owned and/or
controlled strategic sealift ships as well as the United States
commercial fleet, both during times of peace and war.
Currently, the MSP is authorized through FY 2005 and subject to
a separate annual appropriation.
The purpose of the Title XI Maritime Loan Guarantee Program
is to promote the growth and modernization of the United States
merchant marine and United States shipyards. The program
enables owners of eligible vessels and eligible shipyards to
obtain long-term financing with attractive terms by using the
credit of the United States government to guarantee commercial
loans. Recently, both the DOT Inspector General and the United
States General Accounting Office (GAO) 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 a 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.
MARAD's operations and training account funds the
administration and staffing of MARAD programs (other than the
Title XI Maritime Loan Guarantee Program and RRF costs), the
USMMA, State maritime school costs associated with Federal
training ships, training courses for merchant mariners, various
operating programs, and research and development. The USMMA
educates young men and women to become officers in the American
merchant marine.
MARAD appropriations do not include funding for cargo
preference or RRF/NDRF maintenance funding. RRF/NDRF
maintenance is funded by the Department of Defense and
administered by MARAD.
Summary of Provisions
S. 1262 would authorize funding for MARAD activities for
fiscal years 2004 through 2008 as follows: $104,400,000 for FY
2004; $106,000,000 for FY 2005; $109,000,000 for FY 2006;
$111,000,000 for FY 2007; and $113,000,000 for FY 2008. These
funding levels cover multiple appropriated accounts: operations
and training; the Maritime Loan Guarantee Program authorized by
title XI of the Merchant Marine Act of 1936; administration of
the MSP; the tank vessel construction program; and the disposal
of vessels in the NDRF that have been identified by the
Secretary of Transportation as obsolete.
For administrative expenses under the Title XI Maritime Loan
Guarantee Program, the bill would authorize $6,000,000 for each
of fiscal years 2004 through 2008 and $50,000,000 for each of
fiscal years 2004 through 2008 for loan guarantees. The bill
also includes provisions designed to reform how MARAD manages
the Title XI Maritime Loan Guarantee Program through increased
oversight diligence and a variety of administrative and
financial mechanisms proposed by the DOT IG and GAO.
The bill would extend the authorization of the MSP from FY
2005 through FY 2015. The Department of Defense (DOD) has
expressed a desire to exercise more flexibility in determining
the composition of the Fleet, and the bill establishes a
prudent balance between the commercial interests of
participating vessels and the DOD's military sealift needs.
Further, the citizenship requirements of MSP participation have
been modified to accommodate the realities of the international
ocean carrier industry.
The bill would establish a new program, the National Defense
Tank Vessel Construction Assistance program, and would
authorize $250,000,000 for the domestic construction of five
new tank vessels. In Operation Iraqi Freedom, the Department of
Defense Transportation Command found itself forced to charter
foreign-owned vessels in order to satisfy the war's tank vessel
needs. This provision is designed to encourage the development
of a domestic tank vessel construction program in United States
shipyards.
Additionally, the bill would authorize $92,532,000 in ship
disposal funding for fiscal years 2004 through 2008. As
outlined in testimony during a July 7, 2003, Subcommittee on
Surface Transportation and Merchant Marine Field Hearing,
obsolete NDFR vessels pose environmental risks that require
immediate attention. Further, the bill would amend the Merchant
Marine Act to give the Secretary of Transportation the
authority to convey obsolete NDRF 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 United States territories and foreign governments for
use as artificial reefs.
The bill would amend requirements for enforcement of the
commitment agreements for students at the USMMA and students at
the State maritime academies who receive student incentive
payments (SIP); allow MARAD to use funds received from an
insurance 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 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.
Legislative History
S. 1262 was introduced by Senator McCain on June 13, 2003,
and referred to the Committee on Commerce, Science, and
Transportation. A hearing was held on Title XI Maritime Loan
Guarantee Program reform on June 5, 2003.
On June 19, 2003, the Committee on Commerce, Science, and
Transportation met to consider S. 1262. The Committee approved
an amendment offered by Senators McCain and Hollings to
reauthorize appropriations for two additional years for MARAD
training and operations, title XI administration, and ship
scrapping, expiring at the end of FY 2008. The Committee also
approved an amendment offered by Senator Hollings to make
technical corrections regarding the use of foreign-built launch
barges in the domestic trade and an amendment offered by
Senator Lott to authorize funding for the Title XI Maritime
Loan Guarantee Program and to provide direct construction
subsides for tank vessel construction. S. 1262 was ordered
reported as amended by voice vote.
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, July 31, 2003.
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. 1262, the Maritime
Administration Authorization Act of 2003.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Deborah Reis.
Sincerely,
Robert A. Sunshine
(For Douglas Holtz-Eakin, Director).
Enclosure.
S. 1262--Maritime Administration Authorization Act of 2003
Summary: S. 1262 would provide a multiyear authorization
for the Maritime Administration (MARAD). In addition to amounts
authorized under current law, S. 1262 would authorize the
appropriation of $1.4 billion over the 2004-2008 period and
$1.3 billion over the 2009-2015 period. (Another $280 million
is authorized for fiscal years 2004 through 2008 for maritime
loan guarantees that are already authorized under existing
law.)
CBO estimates that implementing S. 1262 would cost $95
million in fiscal year 2004 and $1.3 billion over the 2004-2008
period. (About $1.4 billion would be spent after 2008,
including the $1.3 billion that would be authorized for fiscal
years 2009 through 2015.) Enacting S. 1262 would increase
direct spending by $1 million in 2004 because it would allow
MARAD to spend certain funds collected for damages. Under the
bill, direct spending of other types of damage awards could
increase in later years as well, but by less than $500,000 a
year.
The bill would authorize MARAD to insure more foreign flag
vessels against war risks if those vessels are supporting
United States alliances with other nations. CBO has no basis
for estimating the net budget impact of this provision.
S. 1262 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary effects of S. 1262 are summarized in the following
table. The costs of this legislation fall within budget
functions 050 (national defense) and 400 (transportation).
------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------
2003 2004 2005 2006 2007 2008
------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION
MARAD spending for operations
and operating subsidies under
current law:
Authorization level 1,2... 201 100 100 0 0 0
Estimated outlays......... 195 119 105 8 0 0
Proposed changes:
MARAD operations:
Authorization level 2. 0 115 117 120 123 125
Estimated outlays..... 0 95 112 119 123 125
Maritime subsidies:
Authorization level 2. 0 0 0 436 186 186
Estimated outlays..... 0 0 0 234 248 248
MARAD spending for operations,
operating and construction
subsidies under S. 1262:
Authorization level....... 201 215 217 556 309 311
Estimated outlays......... 195 214 217 361 371 373
CHANGES IN DIRECT SPENDING
Estimated budget authority.... 0 1 * * * *
Estimated outlays............. 0 1 * * * *
------------------------------------------------------------------------
\1\ The 2003 level is the amount appropriated for that year for MARAD
operations and maritime operating subsidies. In 2004 and 2005, $100
million is authorized to be appropriated for maritime operating
subsidies under existing law.
\2\ These figures exclude the bill's authorization of $56 million a year
for maritime loan guarantees and associated administrative costs
because those activities are already authorized (in an indefinite
amount) under existing law and do not require annual authorization.
Notes.--*=less than $500,000.
Basis of estimate: For this estimate, CBO assumes that the
amounts authorized will be appropriated for each year.
Estimated outlays are based on historical spending patterns for
existing or similar programs. Estimated outlays for tanker
construction subsidies are based on information provided by
MARAD.
Spending subject to appropriation
The proposed changes in the table for title I include
between $115 million and $125 million annually in
authorizations for MARAD operations. Those amounts exclude $56
million annually for maritime loan guarantees and
administrative costs because appropriations for that program
are already authorized under existing law.
Beginning in 2006, the table shows new authorizations
proposed for maritime subsidies under title II. These
authorizations include $186 million annually through fiscal
year 2015 for MARAD's maritime security program (MSP), which
expires at the end of fiscal year 2005. The MSP provides
operating subsidies to owners or operators of U.S. flag vessels
that carry cargo between the United States and foreign ports.
The bill would expand the MSP to subsidize 60 ships at a cost
of $3.1 million a year per vessel. (The existing program
subsidizes 47 vessels at a cost of $2.1 million a year per
vessel.)
Title II would also authorize MARAD to provide subsidies
totaling $250 million for the construction of five commercial
product tankers in a U.S. shipyard after fiscal year 2004.
Shipping companies that enter into construction subsidy
agreements also would be eligible for MSP payments starting in
2006 for existing (but otherwise ineligible) tankers. Based on
information provided by MARAD, CBO expects that all such
agreements would be executed at one time--but not until the
amended MSP eligibility requirements become effective after
fiscal year 2005. Consequently, this estimate assumes
appropriation of the $250 million for fiscal year 2006 and
spending of those sums over the 2006-2009 period.
Direct spending
S. 1262 would allow MARAD to spend nearly $1 million
received from a settlement for damages from a fire at the
Merchant Marine Academy. The bill also would allow the agency
to spend damages recovered on accidents that may occur
involving vessels of the National Defense Reserve Fleet. CBO
estimates that enacting those changes would increase direct
spending by $1 million in fiscal year 2004 and by less than
$500,000 a year thereafter.
The bill would expand the authority of MARAD, acting on
behalf of the Department of Defense (DoD), to insure foreign
vessels under the agency's war-risk insurance program. This
provision would allow DoD to participate in international risk-
sharing arrangements that would cover vessels that support
operations of alliances such as the North Atlantic Treaty
Organization, regardless of the ships' registration or
ownership.
The effects of this provision are uncertain. On the one
hand, entering such agreements could make the federal
government liable for a share of any damages sustained by
foreign vessels, some of which the federal government might not
have been able to insure under existing authority. On the other
hand, such agreements could allow the government to share its
risk of damage on some vessels for which it would normally bear
all such risk. In the 50-year history of the existing war-risk
insurance program, MARAD has never paid any claim against the
United States involving vessels damaged in hostile actions.
Based on this experience, CBO expects that providing DoD with
authority to share such risks with other countries in the
future would not lead to significant savings. CBO has no
information on the experience of war-risk insurance programs
administered by other NATO members. In the absence of such
information, CBO has no basis for determining the cost of
absorbing some of the risks of those programs.
The bill would allow MARAD to charge fees to applicants for
maritime loan guarantees in order to recover the costs of
hiring independent contractors to assess certain applications.
The agency would be able to spend any amounts collected. Based
on information provided by MARAD, CBO estimates that amounts
collected and spent as a result of this provision would be less
than $500,000 and would offset each other.
Intergovernmental and private-sector impact: S. 1262
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Previous CBO estimate: On May 16, 2003, CBO transmitted a
cost estimate for H.R. 1588, the National Defense Authorization
Act for Fiscal Year 2004, as ordered reported by the House
Committee on Armed Services on May 14, 2003. S. 1262 contains
provisions very similar to those of title XXXV of H.R. 1588.
H.R. 1588 and S. 1262 would authorize different funding levels
for MARAD activities, and the CBO estimates reflect the higher
authorization levels in S. 1262.
Estimate prepared by: Federal Costs: Deborah Reis. Impact
on State, Local, and Tribal Governments: Gregory Waring. Impact
on the Private Sector: Cecil McPherson.
Estimate approved by: Peter H. Fontaine, 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:
The bill would create a new grant program, the National
Defense Tank Vessel Construction Assistance program, designed
to assist domestic vessel operators through competitively
issued grants of up to $50 million for the construction of tank
vessels in the United States. This program would not create new
mandatory paperwork or reporting requirements, nor would it
effect the number of people subject to regulation or impact
privacy issues. The grants in the program are intended to have
a positive economic impact on United States maritime interests
by subsidizing the cost of construction in United States
shipyards.
The bill also would reform the Title XI Maritime Loan
Guarantee Program, and could have an economic and regulatory
impact, as MARAD is given authority to determine if an
application needs the added oversight of a contractually
retained third party expert to review technical and financial
aspects of a loan guarantee application. There is a potential
for some applicants to incur additional expenses as part of the
application process.
The bill would grant enhanced discretion to the Secretary of
Transportation to enforce the terms of the commitment
agreements signed between students that have received SIP, at
either the USMMA or State maritime academies. The bill would
give the Secretary the ability to require students that have
attended either the USMMA or a State academy for two years or
more and have received SIP to either serve on active duty or
reimburse the government for education expenses. This policy
could have an economic impact on students or former students of
these academies.
This legislation should 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 or businesses.
Section-by-Section Analysis
Section 1. Short Title
Section 1 states the short title of the legislation, the
``Maritime Administration Authorization Act of 2003''.
TITLE I--MARAD REAUTHORIZATION
Sec. 101. Authorization of Appropriations for Fiscal Years 2004, 2005,
2006, 2007, and 2008
This section would authorize $104,400,000 for FY 2004;
$106,000,000 for FY 2005; $109,000,000 for FY 2006;
$111,000,000 for FY 2007; and $113,000,000 for FY 2008 for
expenses necessary for MARAD operations and training
activities. These activities include the costs incurred by
headquarters and regional staffs in the administration and
direction of the various MARAD programs, which cut across the
American maritime industries, including the following--
emergency planning and operations, including
administration of the MSP agreements;
negotiation of agreements, understandings,
and arrangements to reduce barriers that restrict
American access to foreign ports and markets;
port, intermodal, and environmental
activities;
labor, training, and safety activities;
administration of the capital construction
fund/construction reserve fund; and
monitoring compliance with cargo reservation
statutes.
Operations and training funds also allow MARAD to continue to
carry out its duties regarding citizenship verification of
certain fishing vessels pursuant to the American Fisheries Act
(P.L. 105-277). Among other things, the measure designates
MARAD as the primary agency responsible for ensuring that the
proper citizenship requirements are adhered to for ownership of
vessels 100 feet or greater that have, or are seeking, a
fisheries endorsement to their documentation. In enforcing
citizenship standards, MARAD is required to scrutinize
transfers of ownership or control rigorously, with particular
attention to leases, charters, mortgages, and financing
arrangements for fishing vessels. Further, MARAD approves
qualified trustees to hold mortgages where vessel financing is
procured through foreign lenders. MARAD also is required to
determine, upon request, whether an individual or an entity has
exceeded the statutory limitation on harvesting or processing
of pollock in the pollock fishery.
This section of the bill also would authorize $6,000,000
annually to cover the administrative costs associated with the
existing portfolio of loan guarantees under the Title XI
Maritime Loan Guarantee Program. Title XI authorizes the
Secretary of Transportation (delegated to the Maritime
Administrator) to enter into commitments to guarantee private-
sector debt financing for the construction or reconstruction of
United States-flag vessels and export vessels in United States
shipyards, and for United States shipyard modernization and
improvement projects. Additional funding of $50,000,000 for
fiscal years 2004 through 2008 is authorized for the Title XI
Maritime Loan Guarantees Program.
This section also would authorize $11,422,000 annually for
ship disposal for fiscal years 2004 through 2006, and
$12,000,000 annually for fiscal years 2007 and 2008. This
funding would enable MARAD to dispose of vessels in the NDRF
that pose the highest risk to the environment. Included in
these funds are staff and support costs associated with program
implementation. MARAD will contract with dismantling facilities
seeking best-value disposal consistent with P.L. 106-398, the
Department of Defense Authorization Act for Fiscal Year 2001
and P.L. 107-314, the Bob Stump National Defense Authorization
Act for Fiscal Year 2003.
Sec. 102. Conveyance of Obsolete Vessels Under Title V, Merchant Marine
Act, 1936
This section would amend the Merchant Marine Act to give the
Secretary of Transportation the authority to convey obsolete
NDRF 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.
This provision would end the need for special legislation each
time a veteran's group, museum, historical association or other
nonprofit organization, State, or municipality seeks to obtain
an obsolete vessel from the NDRF. It also would provide the
Secretary of Transportation with administrative authority to
oversee the conveyance of such vessels to nonprofit groups.
Under this section, vessel recipients must agree not to use
the vessel for commercial transportation purposes; to make the
vessel available to the government when needed; and, to hold
the government harmless for exposure to hazardous substances.
Prior to conveyance, the Secretary would approve conveyance and
business plans of the recipient and ascertain that the
recipient has sufficient resources to accomplish the transfer
and commence with the intended use of the vessel. The Secretary
also would be authorized to provide to the recipient additional
equipment from other obsolete vessels to assist the recipient
with maintenance, repairs or modifications. If at any time
prior to delivery of the vessel the Secretary determines that a
different use of the vessel would better serve the interests of
the government, the Secretary may terminate the proposed
transfer without liability.
Sec. 103. Cargo Preference
This section would amend section 901(b)(c)(2) of the Merchant
Marine Act, 1936, to make the cargo preference year coincide
with the Federal government fiscal year for determining
compliance with title IX. This would simplify record keeping
and management of the program without an adverse effect on
involved agencies or shippers and is supported by government
and industry stakeholders.
Sec. 104. Equity Payments by Obligor for Disbursement Prior to
Termination of Escrow Agreement Under Title XI
This section would amend the Merchant Marine Act and would
require the Secretary of Transportation to establish a system
of controls to ensure that no loan or portion of a loan is
disbursed to a ship owner or shipyard owner before the obligor
of a loan guarantee has met the cost-sharing obligation (25
percent or 12\1/2\ percent depending of the type of vessel) to
the actual total cost of the project. The section further would
require the Secretary to establish by regulation a transparent,
independent, and risk-based process for verifying and
documenting the progress of projects under construction before
disbursing guaranteed loan funds.
This section also would amend the Merchant Marine Act to
define ``total actual cost'' to include all amounts paid by or
for the account of the obligor.
Sec. 105. Waivers of Program Requirements Under Title XI
This section would amend the Merchant Marine Act to require
the Secretary of Transportation to establish regulations
governing the circumstances under which MARAD may waive
regulatory requirements concerning the financial condition of
the applicant. It specifically requires that a waiver of a
regulatory requirement be made only with the documented
concurrence of program offices; that the economic soundness
requirements of the program be met after the waiver of the
financial condition requirement; and that the wavier 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 regarding
the obilgor's financial condition.
Sec. 106. Project Monitoring Under Title XI
This section would amend the Merchant Marine Act to require
the Secretary to monitor the financial condition and operation
of the obligor on a regular basis during the term of the
guarantee and to document the results of the monitoring on a
quarterly or monthly basis depending upon the condition of the
obligor. It also would require the Secretary to take
appropriate action to limit potential losses in connection with
a default, if the Secretary determines that the financial
condition of the obligor warrants additional protections.
This section also would amend the Merchant Marine Act to
require the Secretary, prior to committing to a guarantee, to
certify that a full and fair consideration of all the
regulatory requirements, including economic soundness and
financial requirements applicable to the potential obligor and
related parties, has been made through a documented independent
assessment conducted by offices with expertise in technical,
economic, and financial aspects of the loan application
process.
This section further would amend the Merchant Marine Act to
require the Secretary to include in loan guarantee agreements
provisions that provide additional authority to the Secretary
to take appropriate action to limit potential losses in
connection with defaulted loans or loans that are in jeopardy
due to the deteriorating financial condition of obligors.
Sec. 107. Defaults Under Title XI
This section would amend the Merchant Marine Act to require
the Secretary of Transportation, in the event of default on an
obligation, to take actions to: maximize the net present value
return from the sale or disposition of assets associated with
the obligation; minimize the amount of any loss realized in the
resolution of the guarantee; ensure adequate competition and
minimize the amount of any loss realized in the resolution of
the guarantee; ensure adequate competition and fair and
consistent treatment of offerors; and require an appraisal of
assets by an independent appraiser.
Sec. 108. Decision Period
This section would require the Secretary of Transportation to
approve or deny an application for a loan guarantee within 270
days after the date on which the signed application is received
by the Secretary. It also would grant authority to the
Secretary of Transportation to extend the 270-day period for up
to two years.
Sec. 109. Loan Guarantees Under Title XI
This section would amend the Merchant Marine Act to give the
Secretary of Transportation the authority to require an
independent analysis to be conducted by third party experts if
the Secretary determines that risk factors associated with
markets, technology, financial structures, or other factors
need such analysis prior to making a determination on a loan
guarantee application. Any independent analysis conducted
pursuant to this provision would be performed by a party chosen
by the Secretary. The section also would give the Secretary the
authority to make a determination that an application under
this title requires additional equity prior to approval because
of increased risk factors associated with markets, technology,
financial structures, or other risk factors identified by the
Secretary.
The section also would provide the Secretary the authority to
charge and collect fees to cover the costs of any independent
analysis required under this section. Any fee collected under
this section would be credited as an offsetting collection to
the account that finances the administration of the loan
guarantee program and would be available for expenditure only
to pay the costs of the analysis.
Sec. 110. Annual Report on Title XI Program
This section would require the Secretary of Transportation to
report to Congress annually on the loan guarantee program under
title XI of the Merchant Marine Act, including the size, in
dollars, of the portfolio of loans guaranteed; the size, in
dollars, of projects in the portfolio facing financial
difficulty; the number and type of projects covered; a profile
of pending loan applications; the amount of appropriations
available for new guarantees; a profile of each project
approved since the last report; and a profile of any defaults
since the last report.
Sec. 111. Review of Title XI Loan Guarantee Program
This section would require the Secretary of Transportation to
conduct a comprehensive assessment of the personnel and other
resource needs in connection with the Title XI Maritime Loan
Guarantee Program under the Merchant Marine Act and to develop
an organizational framework for the program offices that
ensures that a clear separation of duties is established among
the loan application, project monitoring, and default
management functions.
This section would amend the Merchant Marine Act to require
that the loan guarantee program risk categories, and associated
subsidy rates, be updated annually. It also would require the
Secretary to use 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 and to
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 commitment. Finally, the section
would amend the Merchant Marine Act to require the Secretary to
consider the risk presented by an unduly large percentage of
loans outstanding by any one borrower or group of affiliated
borrowers prior to making an obligation or commitment.
This section would require the Secretary to report by January
2, 2004, 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 this section.
Sec. 112. War Risk Insurance
This section would enable the DOT to support shared logistics
operations with the North Atlantic Treaty Organization (NATO)
or similar international organizations or alliances. The
statutory ability to pay the United States' portion of a shared
loss pursuant to an agreement with these organizations would
allow the sharing of risk of loss between multiple countries.
Such a provision could allow greater use of foreign vessels and
distribute the risk of the loss of a ship during a contingency.
Currently there is a disproportionate reliance on U.S.-flag
carriers, and thus an increased risk of loss to the United
States.
The proposed changes also would allow the receipt of
contributions from other countries within the NATO or other
similar international organizations to offset losses sustained
by U.S.-flag carriers participating in shared logistics
operations that are insured under this program. These
contributions would be deposited in the fund and would relieve
the DOD or another United States
department or agency, of the obligation to reimburse the fund
to the extent of any contributions received.
Sec. 113. Maritime Education and Training
This section would amend enforcement of the commitment
agreements for students at the USMMA and students at the State
maritime academies who receive SIP. Currently, students have an
obligation to complete the course of instruction at USMMA or
the State academy unless the individual is separated by the
Academy. Students that leave USMMA voluntarily after spending
two years at the Academy may be required to serve on active
duty in the Navy. This section would amend current law such
that USMMA students and SIP recipients who have attended an
academy for two or more years may be required to serve on
active duty or reimburse the government for educational
expenses if the Secretary of Transportation determines that
such individual has breached their service agreement. If for
any reason the individual is not ordered to active duty, the
Secretary may seek to recover the educational costs provided.
This statutory change would bring the service obligation of
maritime academy students more in line with the requirements of
students at the other Federal service academies.
This section also would amend current law with respect to the
enforcement of the postgraduate service obligation for
graduates of the USMMA and State academy graduates who received
SIP payments. This section makes it clear that if a graduate
fails to fulfill the service obligation agreed to, that
individual may either be ordered to active duty in one of the
armed services or may be required to reimburse MARAD for
educational costs covered. Under this section, the Secretary of
Transportation would have the option of either recovering
educational costs or seeking to have the individual ordered to
active duty, whichever better serves the interest of the United
States. If for any reason the individual is not ordered to
active duty, the Secretary may seek to recover the educational
costs in an amount proportionate to the unfulfilled portion of
the service agreement as determined by the Secretary. This
amendment will bring the service obligation of maritime academy
students more in line with the requirements of students at the
other Federal service academies.
Additionally, this section would expand the options available
to the Secretary for recovery of the educational expenses
provided to an individual that has breached a service
agreement. Currently, the Secretary is authorized only to
request the Attorney General to commence court proceedings to
recover such costs. New language under this section would, in
order to aid in the recovery of educational expenses, authorize
the Secretary to seek the assistance of the Attorney General or
use Federal debt collection procedures or other applicable
administrative remedies.
This section also would amend the postgraduate commitment for
USMMA and State academy SIP recipient graduates to require them
to maintain a valid license with appropriate endorsements and
certification as required by the Coast Guard for service aboard
vessels on domestic or international voyages. Currently, USMMA
graduates and SIP recipients are required only to maintain a
license as an officer in the merchant marine. The additional
requirement imposed by this section has become necessary in
light of the International Convention for the Standards of
Training Certification and Watch-keeping (STCW). Under STCW,
mariners must possess, in addition to their license, an STCW
certificate for service aboard vessels on international
voyages. Mandating this certification will ensure that Academy
graduates possess the license and any additional certification
necessary to meet the economic and national security sealift
needs of the United States.
This section also expands the options available to Merchant
Marine Academy graduates and State academy SIP recipients to
allow them to fulfill their service obligation by accepting,
for a minimum of five years, Federal maritime related
employment. The focus of such employment must be to serve the
national security interests of the United States. Such
employment would be considered equivalent to sea service or
active service in the armed forces or National Oceanic and
Atmospheric Administration (NOAA).
This section would change the amount of SIP made to State
maritime academy students from $3,000 to $4,000 annually. The
increase would help to offset the increasing costs of higher
education and serve as an additional incentive for students at
State maritime academies to commit themselves to an obligation
to serve the maritime and national security needs of the United
States. This increase would have no effect on the Department's
overall budget, however, because increased payments would be
allocated to a fewer number of recipients.
This section also would authorize the Superintendent of the
USMMA to confer a masters degree upon any individual who has
met the regulatory conditions for a particular masters program
administered by the Academy. Any such program must be
accredited by the appropriate accreditation entity.
Finally, this section would authorize the Secretary to
establish a medals and awards program as part of the existing
United States Maritime Service. The awards program would
supplement existing programs and allow the Secretary to
recognize distinguished service and other commendable
achievements by personnel of the United States Maritime
Service.
Sec. 114. Prohibition Against Carrying Government Impelled Cargoes for
Vessels With Substandard Security Measures
Current law prevents vessels that have been detained by the
United States Coast Guard for violations of international
safety agreements from being allowed to carry United States
government impelled cargoes for up to one year after the
detention. This section would provide the Secretary with the
authority to also exclude vessels from the carriage of
government-impelled cargoes that have been detained for
violations of security standards contained within international
agreements to which the United States is a party.
Sec. 115. Authority To Convey Obsolete Vessels to U.S. Territories and
Foreign Countries for Reefing
The section would extend to the Secretary of Transportation
the authority to convey to United States territories and
foreign governments obsolete vessels for use as artificial
reefs. Currently, this authority is limited to the individual
States of the United States. MARAD has been contacted by
several foreign countries interested in obtaining obsolete
vessels for use as artificial reefs. Due to the existing
statutory constraints, MARAD has been unable to explore the
possibility of conveying obsolete vessels to other countries
for this use. This section also sets forth the information that
a State, Commonwealth, or foreign government would be required
to provide when applying for the use of a vessel as an
artificial reef, and the determinations that would need to be
made prior to conveyance of a vessel. This section builds upon
the existing framework for similar conveyances to States and
presents broader opportunities for MARAD to dispose of its
fleet of obsolete vessels at no cost to the government.
The section also would direct the Administrator of the
Environmental Protection Agency and the Secretary of
Transportation, in consultation with other interested Federal
and State agencies, to jointly develop guidance recommending
environmental best management practices to be used in the
preparation of vessels to be used as artificial reefs. The
guidance developed would serve as national guidance for Federal
agencies preparing vessels for use as artificial reefs. The
Secretary of Transportation would report on the environmental
best practices developed through the existing ship disposal
reporting requirements.
Sec. 116. Maintenance of Current Saint Lawrence Seaway Development
Corporation Safety Responsibilities
This section would clarify the decades-old authority of the
SLSDC to carry out the provisions of the PWSA in the case of
the Saint Lawrence Seaway. The PWSA specifies that certain
authorities over vessel operations in the Seaway, which are
vested with the Secretary of the Department in which the Coast
Guard is operating, shall not be delegated ``to any agency
other than the Saint Lawrence Seaway Development Corporation''
(33 U.S.C. 1229). This delegation underlies enforcement of the
joint United States-Canadian Seaway regulations governing
vessel operations in the Seaway, operations of the SLSDC Vessel
Traffic Center, and the SLSDC civil and criminal penalty
referral authority. This amendment would clarify the SLSDC's
continuing authority under the delegation and statute to
regulate vessel traffic in the Seaway, in conjunction with the
1954 agreement between Canada and the United States governing
vessel traffic in the Seaway, and subsequent agreements. The
amendment would retain the current definition for most
purposes, with the exception of those specific authorities for
which only the SLSDC may be designated. The authority of the
Coast Guard for security matters under the PWSA (33 U.S.C.
1226) would not be affected by the proposed amendment, which is
intended to maintain the status quo.
Sec. 117. Use of Insurance Proceeds for Repairs at the Merchant Marine
Academy
This section would allow MARAD to use funds received from an
insurance settlement for legally authorized purposes, including
completion of repairs to the Merchant Marine Academy, Fitch
Building which suffered fire damage on December 16, 1996. The
damages were estimated to be in excess of $1,100,000 to the
building and a loss of materials stored at the building. MARAD
contended that a contractor working on the building was at
fault. After unsuccessful negotiations and commencement of
litigation, a settlement was reached for $708,100.
To date, the USMMA has only been able to repair a portion of
the damages through appropriated funds, preventing the Academy
from financing other projects. If the contractor had repaired
the damage to the Fitch Building without the need for
litigation, there would be no need to return the funds received
to the Treasury as a miscellaneous receipt. Allowing MARAD to
use the settlement funds to repair the Fitch Building would
allow for the repair of damage for which the funds were meant
to compensate.
Sec. 118. Availability to the Vessel Operations Revolving Fund of Funds
from Lawsuits and Settlements
The VORF was created in 1951 to carry out vessel operating
functions of the Secretary of Transportation, including
charter, operation, maintenance, repair, reconditioning, and
betterment of merchant vessels under the jurisdiction of the
Secretary of Transportation. This provision would allow MARAD
to retain funds received as a result of final judgments and
settlements in the VORF. It would thus provide a potential
funding stream for the VORF to cover expenses that arise from
time to time as a result of damage incurred to NDRF vessels at
the hands of other parties.
Sec. 119. Eligibility of Tank Vessels for the Maritime Security Program
This section would allow foreign-built tank vessels to be
included in the Maritime Security Fleet if the owner enters
into a binding contract that requires the owner to replace the
tank vessel with a new tank vessel built in the United States
within four years.
Sec. 120. Correction of 2002 Coastwise Trade Authorization Provision
This section would make a technical correction to section
213(b) of the Maritime Policy Improvement Act of 2002 in order
to restrict coastwise trade authority of certain foreign-built
launch barge operations.
TITLE II--MARITIME SECURITY FLEET PROGRAM
Sec. 201. Short Title
This section would establish that this title may be referred
to as the ``Maritime Security Fleet Program Reauthorization Act
of 2003''.
Sec. 202. Amendment of Merchant Marine Act, 1936
This section would establish that except when otherwise
stated, this Act modifies only the Merchant Marine Act, 1936.
Sec. 203. Changes to Maritime Security Fleet Establishment Provisions
This section would amend 46 U.S.C. App. 1187 to reestablish
and enhance the MSP fleet. The Secretary of Transportation, in
conjunction with the Secretary of Defense in a consultative
role, is directed to establish an ``active, commercially
viable, militarily useful'' fleet of privately-owned, United
States-documented, oceangoing vessels, and to specifically
include ``tank vessels'' as eligible for membership in the
fleet.
This section would set forth citizenship eligibility
requirements for charters and owners in the following manner--
(1) vessels owned and operated by section 2 citizens
(as defined by section 2 of the Shipping Act of 1916);
(2) vessels owned by documentation citizen and
chartered to section 2 citizen;
if the vessel is demise chartered to
a section 2 citizen;
if the vessel is owned by a person
eligible to document the vessel under chapter
121 of title 46 U.S.C.;
(3) vessels owned by section 2 citizen and chartered
to documentation citizen;
if the vessel is demise chartered to
a person who is eligible to document the vessel
under chapter 121 of title 46, U.S.C.;
if the management and ownership of
the documentation citizen organization are
appointed and removed only with approval by the
Secretary of Transportation;
the contractor certifies that there
are no legal restrictions or treaties that
would prevent the contractor from fulfilling
the terms of an operating agreement;
the Secretaries of Transportation
and Defense certify to the House of
Representatives Armed Services Committee and
the Senate Committee on Commerce, Science, and
Transportation that they concur with the
previous certification
if a vessel is chartered to a person
who is controlled by a non-section 2 citizen,
this person must enter into an agreement with
the secretary of transportation not to
influence the operation of the vessel in a
manner that would adversely affect the United
States.
Deemed Ownership. If a vessel is owned by a trust and demise
chartered to a person who meets the requirements of a
documentation citizen, the vessel is deemed for eligibility
purposes to be owned by a section 2 citizen, only if the trust
meets the requirements of 12102(d) of title 46 U.S.C., as
qualified by paragraph (3) of that section.
The section would add vessel standards to the criteria for
participation, allowing the Secretary of Transportation to
determine if a non-documented vessel is eligible for a
certificate of inspection. The standards under which the
Secretary makes a determination are:
the vessel is classed and designed in
accordance with the rule of the American Bureau of
Shipping, or another classification society accepted by
the Secretary;
the vessel complies with international
guidelines as determined by the country in which the
vessel was immediately previously documented; and
that country has not been identified by the
Secretary as inadequately enforcing international
vessel regulations.
If the vessel fails to meet these standards, then the
certification of inspection does not apply to the vessel. Also,
the Secretary may accept the standards of a foreign
classification society if the society maintains records and
offices in the United States and provides reciprocal access to
records with the American Bureau of Shipping.
Sec. 204. Changes to Operating Agreements Requirements
This section would eliminate references to the expired
Operating Differential Subsidy program, which were required to
prevent subsidy overlaps with the ODS and the original MSP.
Also, the term ``foreign trade'' is defined in reference to
section 905(a) of the Merchant Marine Act which describes
foreign trade and commerce as being between the United States
and a foreign country. Participation in the ``coastwise trade''
is not allowed for MSP vessels.
This section deems a vessel's communication equipment to meet
Federal Communications Commission requirements as long as the
equipment complies with applicable international agreements and
guidelines, and was immediately previously documented in a
country that has not been identified by the Secretary as
inadequately enforcing international vessel regulations.
This section also extends the authorization of the MSP until
2015. It also eliminates specific reference to Lighter Abroad
Ship (LASH) vessels.
This section also would change the threshold for transporting
civilian bulk or bagged preference cargos to 2,500 tons. If a
MSP ship carries more than 2,500 tons of bagged or bulk
preference cargo, it is ineligible for MSP payment. However,
vessels that are owned and operated by section 2 citizens are
exempt from these cargo restrictions to MSP payments.
Sec. 205. Participating Fleet Vessel Defined
This section would amend section 654 (46 U.S.C. App. 1187c)
by adding a definition of ``Participating Fleet Vessel''. The
term would be defined to mean any vessel that on October 1,
2005, will meet the citizenship eligibility requirements of
this Act and will be less than 25 years of age or, if the
vessel is a LASH vessel, will be less than 30 years of age.
Further, on April 30, 2005, the vessel must be covered by an
operating agreement under subtitle B of title VI of the
Merchant Marine Act, 1936, and--
-is a replacement vessel described in this Act;
-is controlled by the person that controls such
replaced vessel;
-is eligible to be included in the Fleet; and
-is approved by the Secretaries of Transportation and
Defense.
Sec. 206. Authorization of Appropriations
This section would authorize $100,000,000 for each of fiscal
years 1997 through 2005 for the MSP, and such sums as may be
necessary not to exceed $186,000,000 for each fiscal year
thereafter through fiscal year 2015.
Sec. 207. Noncontiguous Domestic Trade
Section 207 would prohibit Jones Act vessels that operate in
the noncontiguous trade from receiving MSP payments while
operating in that trade, yet provides for a hearing and written
waiver from the Secretary for MSP vessels to participate in the
noncontiguous domestic trade. Vessel operators that serve the
noncontiguous domestic trade at the time of enactment of this
Act would not be prohibited from receiving MSP payments.
Sec. 208. Regulations
This section would amend subtitle B of title VI of the
Merchant Marine Act by adding a new section 657, authorizing
the Secretary of Transportation, in consultation with the
Secretary of Defense, to prescribe interim rules and final
rules as necessary. All interim rules expire no later than 270
days after the enactment of this Act.
TITLE III--NATIONAL DEFENSE TANK VESSEL CONSTRUCTION ASSISTANCE
Sec. 301. National Defense
This section would require the Secretary of Transportation to
establish a program to provide financial assistance for the
construction in the United States of a fleet of five privately-
owned tank vessels for enrollment in an emergency preparedness
agreement.
Further, the section would require the Secretary to establish
procedures to obtain competitive proposals for the construction
of new tank vessels to meet the commercial and national
security needs of the United States. This section also would
require the Secretary to give priority consideration to a
proposal submitted by a person that is a citizen of the United
States under section 2 of the Shipping Act, 1916 (46 App.
U.S.C. 802).
The section also would allow the Secretary to enter into a
contract to provide assistance for the construction of a new
tank vessel in the United States in an amount up to 75 percent
of the actual construction cost of the vessel, but in no case
more than $50 million per vessel. This section also provides
that a vessel constructed under this section is not eligible
for a certificate of documentation with a coastwise
endorsement. A vessel constructed under this section also must
enter into an emergency preparedness agreement under this
title.
Additionally, the section would require the Secretary of
Transportation to give priority to guarantees and commitments
for new product tank vessels that are otherwise eligible for a
guarantee under this section 1103 of the Merchant Marine Act,
1936 (46 App. U.S.C. 1273).
Finally, the section would authorize a total of $250 million
after fiscal year 2004 to carry out this subtitle.
Rollcall Votes in Committee
Senator Lott offered an amendment, to the amendment (in the
nature of a substitute) offered by Senator McCain, to authorize
funds for title XI of the Merchant Marine Act, 1936, to provide
direct subsidies for ship construction and for other purposes.
By rollcall vote of 18 yeas and 5 nays as follows, the
amendment was adopted:
YEAS--18 NAYS--5
Mr. Stevens\1\ Mr. Brownback\1\
Mr. Burns\1\ Mr. Fitzgerald\1\
Mr. Lott Mr. Ensign\1\
Mrs. Hutchison Mr. Sununu\1\
Ms. Snowe\1\ Mr. McCain
Mr. Smith\1\
Mr. Allen\1\
Mr. Hollings
Mr. Inouye\1\
Mr. Rockefeller\1\
Mr. Kerry\1\
Mr. Breaux\1\
Mr. Dorgan\1\
Mr. Wyden\1\
Mrs. Boxer\1\
Mr. Nelson\1\
Ms. Cantwell
Mr. Lautenberg\1\
\1\ By proxy
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):
Public Law 92-402
[16 U.S.C. 1220]
[Sec. 3. (a) Any State may apply to the Secretary of
Transportation (hereafter referred to in this Act as the
``Secretary'') for obsolete ships which, but for the operation
of this Act, would be designated by the Secretary for scrapping
if the State intends to sink such ships for use as an offshore
artificial reef for the conservation of marine life.
[(b) A State shall apply for obsolete ships under this Act in
such manner and form as the Secretary shall prescribe, but such
application shall include at least (1) the location at which
the State proposes to sink the ships, (2) a certificate from
the Administrator, Environmental Protection Agency, that the
proposed use of the particular vessel or vessels requested by
the State will be compatible with water quality standards and
other appropriate environmental protection requirements, and
(3) statements and estimates with respect to the conservation
goals which are sought to be achieved by use of the ships.
[(c) Before taking any action with respect to an application
submitted under this Act, the Secretary shall provide copies of
the application to the Secretary of the Interior, the Secretary
of Defense, and any other appropriate Federal officer, and
shall consider comments and views of such officers with respect
to the application.]
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.
PORTS AND WATERWAYS SAFETY ACT
[33 U.S.C. 1222]
Sec. 3. Definitions.--As used in this Act, unless the context
otherwise requires--
(1) ``Marine environment'' means the navigable waters
of the United States and the land and resources therein
and thereunder; the waters and fishery resources of any
area over which the United States asserts exclusive
fishery management authority; the seabed and subsoil of
the Outer Continental Shelf of the United States, the
resources thereof and the waters superadjacent thereto;
and the recreational, economic, and scenic values of
such waters and resources.
(2) ``Secretary'' means the Secretary of the
department in which the Coast Guard is [operating.]
operating, except that ``Secretary'' means the
Secretary of Transportation with respect to the
applicability of this Act to the Saint Laurence Seaway.
(3) ``State'' includes each of the several States of
the United States, the District of Columbia, the
Commonwealth of Puerto Rico, the Canal Zone, Guam,
American Samoa, the United States Virgin Islands, the
Trust Territories of the Pacific Islands, the
Commonwealth of the Northern Marianas, and any other
commonwealth, territory, or possession of the United
States.
(4) ``United States'', when used in geographical
context, means all the States thereof.
(5) ``Navigable waters of the United States''
includes all waters of the territorial sea of the
United States as described in Presidential Proclamation
No. 5928 of December 27, 1988.
TITLE 46. SHIPPING
SUBTITLE II. VESSELS AND SEAMEN
PART A. GENERAL PROVISIONS
CHAPTER 23. OPERATION OF VESSELS GENERALLY
Sec. 2302. Penalties for negligent operations and interfering with safe
operation
(a) A person operating a vessel in a negligent manner or
interfering with the safe operation of a vessel, so as to
endanger the life, limb, or property of a person is liable to
the United States Government for a civil penalty of not more
than $5,000 in the case of a recreational vessel, or $25,000 in
the case of any other vessel.
(b) A person operating a vessel in a grossly negligent manner
that endangers the life, limb, or property of a person commits
a class A misdemeanor.
(c) An individual who is under the influence of alcohol, or a
dangerous drug in violation of a law of the United States when
operating a vessel, as determined under standards prescribed by
the Secretary by regulation--
(1) is liable to the United States Government for a
civil penalty of not more than $5,000; or
(2) commits a class A misdemeanor.
(d) For a penalty imposed under this section, the vessel also
is liable in rem unless the vessel is--
(1) owned by a State or a political subdivision of a
State;
(2) operated principally for governmental purposes;
and
(3) identified clearly as a vessel of that State or
subdivision.
(e)(1) A vessel may not transport Government-impelled cargoes
if--
(A) the vessel has been detained and determined to be
substandard by the Secretary for violation of an
international safety convention to which the United
States is a party, including violations for substandard
security measures, and the Secretary has published
notice of that detention and determination in an
electronic form, including the name of the owner of the
vessel; or
(B) the operator of the vessel has on more than one
occasion had a vessel detained and determined to be
substandard by the Secretary for violation of an
international safety convention to which the United
States is a party, including violations for substandard
security measures, and the Secretary has published
notice of that detention and determination in an
electronic form, including the name of the owner of the
vessel.
(2) The prohibition in paragraph (1) expires for a vessel on
the earlier of--
(A) 1 year after the date of the publication in
electronic form on which the prohibition is based; or
(B) any date on which the owner or operator of the
vessel prevails in an appeal of the violation of the
relevant international convention on which the
detention is based.
(3) As used in this subsection, the term ``Government-
impelled cargo'' means cargo for which a Federal agency
contracts directly for shipping by water or for which (or the
freight of which) a Federal agency provides financing,
including financing by grant, loan, or loan guarantee,
resulting in shipment of the cargo by water.
MERCHANT MARINE ACT, 1936
TITLE V--CONSTRUCTION-DIFFERENTIAL SUBSIDY
SUBTITLE A--GENERAL SUBSIDY FOR NEW VESSEL CONSTRUCTION
SEC. 508. DISPOSITION OF VESSELS TRANSFERRED TO MARITIME ADMINISTRATION
OF DEPARTMENT OF TRANSPORTATION.
[46 U.S.C. APP. 1158]
(a) Authority To Scrap or Sell Obsolete Vessels._If the
Secretary of Transportation shall determine that any vessel
transferred to the Maritime Administration of the Department of
Transportation by section 202 of this Act, or hereafter
acquired, is of insufficient value for commercial or military
operation to warrant its further preservation, the Secretary of
Transportation is authorized (1) to scrap said vessel, or (2)
to sell such vessel for cash, after appraisement and due
advertisement, and upon competitive sealed bids, either to
citizens of the United States or to aliens: Provided, That the
purchaser thereof shall enter into an undertaking with sureties
approved by the Secretary of Transportation that such vessel
shall not be operated in the foreign commerce of the United
States at any time within the period of ten years after the
date of the sale, in competition with any other vessel owned by
a citizen or citizens of the United States and registered under
the laws thereof.
(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.
* * * * * * *
SUBTITLE B--NATIONAL DEFENSE TANK VESSEL CONSTRUCTION ASSISTANCE
SEC. 521. NATIONAL DEFENSE TANK VESSEL CONSTRUCTION PROGRAM.
The Secretary of Transportation shall establish a program for
the provision of financial assistance for the construction in
the United States of a fleet of up to 5 privately owned product
tank vessels--
(1) to be operated in commercial service in foreign
commerce; and
(2) to be available for national defense purposes in
time of war or national emergency pursuant to an
Emergency Preparedness Plan approved by the Secretary
of Defense pursuant to section 523(e) of this subtitle.
SEC. 522. APPLICATION PROCEDURE.
(a) Request for Proposals.--Within 90 days after the date of
the enactment of this subtitle, and on an as-needed basis
thereafter, the Secretary of Transportation, in consultation
with the Secretary of Defense, shall publish in the Federal
Register a request for competitive proposals for the
construction of new product tank vessels necessary to meet the
commercial and national security needs of the United States and
to be built with assistance under this subtitle.
(b) Qualification.--Any citizen of the United States or any
shipyard in the United States may submit a proposal to the
Secretary of Transportation for purposes of constructing a
product tank vessel with assistance under this subtitle.
(c) Requirement.--The Secretary of Transportation, with the
concurrence of the Secretary of Defense, may enter into an
agreement with the submitter of a proposal for assistance under
this subtitle if the Secretary of Transportation determines
that--
(1) the plans and specifications call for
construction of a new product tank vessel of not less
than 35,000 deadweight tons and not greater than 60,000
deadweight tons, that--
(A) will meet the requirements of foreign
commerce;
(B) is capable of carrying militarily useful
petroleum products, and will be suitable for
national defense or military purposes in time
of war, national emergency, or other military
contingency; and
(C) will meet the construction standards
necessary to be documented under the laws of
the United States;
(2) the shipyard in which the vessel will be
constructed has the necessary capacity and expertise to
successfully construct the proposed number and type of
product tank vessels in a reasonable period of time as
determined by the Secretary of Transportation, taking
into consideration the recent prior commercial
shipbuilding history of the proposed shipyard in
delivering a vessel or series of vessels on time and in
accordance with the contract price and specifications;
and
(3) the person proposed to be the operator of the
proposed vessel possesses the ability, experience,
financial resources, and any other qualifications
determined to be necessary by the Secretary for the
operation and maintenance of the vessel.
(d) Priority.--The Secretary of Transportation--
(1) subject to paragraph (2), shall give priority
consideration to a proposal submitted by a person that
is a citizen of the United States under section 2 of
the Shipping Act, 1916 (46 App. U.S.C. 802); and
(2) may give priority to consideration of proposals
that provide the best value to the Government, taking
into consideration--
(A) the costs of vessel construction; and
(B) the commercial and national security
needs of the United States.
SEC. 523. AWARD OF ASSISTANCE.
(a) In General.--If after review of a proposal, the Secretary
of Transportation determines that the proposal fulfills the
requirements under this subtitle, the Secretary may enter into
a contract with the proposed purchaser and the proposed
shipyard for the construction of a product tank vessel with
assistance under this subtitle.
(b) Amount of Assistance.--The contract shall provide that
the Secretary of Transportation shall pay, subject to the
availability of appropriations, up to 75 percent of the actual
construction cost of the vessel, but in no case more than
$50,000,000 per vessel.
(c) Construction in United States.--A contract under this
section shall require that construction of a vessel with
assistance under this subtitle shall be performed in a shipyard
in the United States.
(d) Documentation of Vessel.--
(1) Contract requirement.--A contract under this
section shall require that, upon delivery of a vessel
constructed with assistance under the contract, the
vessel shall be documented under chapter 121 of title
46, United States Code, with a registry endorsement
only.
(2) Restriction on coastwise endorsement.--A vessel
constructed with assistance under this subtitle shall
not be eligible for a certificate of documentation with
a coastwise endorsement.
(3) Authority to reflag not applicable.--Section 9(g)
of the Shipping Act, 1916, (46 App. U.S.C. 808(g))
shall not apply to a vessel constructed with assistance
under this subtitle.
(e) Emergency Preparedness Agreement.--
(1) In general.--A contract under this section shall
require that the person who will be the operator of a
vessel constructed with assistance under the contract
shall enter into an Emergency Preparedness Agreement
for the vessel under section 653.
(2) Treatment as contractor.--For purposes of the
application, under paragraph (1), of section 653 to a
vessel constructed with assistance under this subtitle,
the term `contractor' as used in section 653 means the
person who will be the operator of a vessel constructed
with assistance under this subtitle.
(f) Additional Terms.--The Secretary of Transportation shall
incorporate in the contract the requirements set forth in this
subtitle, and may incorporate in the contract any additional
terms the Secretary considers necessary.
* * * * * * *
TITLE VI--VESSEL OPERATING ASSISTANCE PROGRAM
SUBTITLE B--MARITIME SECURITY FLEET PROGRAM
SEC. 651. ESTABLISHMENT OF FLEET.
[46 U.S.C. APP. 1187]
(a) In General.--The Secretary of [Transportation]
Transportation, in consultation with the Secretary of Defense,
shall establish a fleet of active, commercially viable,
militarily useful, privately-owned vessels to meet national
defense and other security requirements and maintain a United
States presence in international commercial shipping. The Fleet
shall consist of privately owned, United States-flag vessels
for which there are in effect operating agreements under this
subtitle, and shall be known as the Maritime Security Fleet.
(b) Vessel Eligibility.--A vessel (including a tank vessel)
is eligible to be included in the Fleet if the vessel is self-
propelled and--
(1)(A) is operated by a person [as an ocean common
carrier;] in oceangoing transportation;
[(B) whether in commercial service, on charter to the
Department of Defense, or in other employment, is
either--
[(i) a roll-on/roll-off vessel with a
carrying capacity of at least 80,000 square
feet or 500 twenty-foot equivalent units; or
[(ii) a lighter aboard ship vessel with a
barge capacity of at least 75 barges; or]
(B) is in commercial service, on charter to the
Department of Defense, or in other employment;
(C) any other type of vessel that [is determined by
the Secretary to be] the Secretary, in conjunction with
the Secretary of Defense, has determined to be
commercially viable and suitable for use by the United
States for national defense or military purposes in
time of war or national emergency;
[(2)(A)(i) is a United States-documented vessel; and
[(ii) on the date an operating agreement covering the
vessel is entered into under this subtitle, is--
[(I) a LASH vessel that is 25 years of age or
less; or
[(II) any other type of vessel that is 15
years of age or less; except that the Secretary
of Transportation may waive the application of
clause (ii) if the Secretary, in consultation
with the Secretary of Defense, determines that
the waiver is in the national interest; or]
(2)(A)(i) is a United States-documented vessel; and
(ii) on the date an operating agreement covering the
vessel is entered into under this subtitle is 15 years
of age or less;
except that the Secretary of Transportation may waive
the application of clause (ii) if the Secretary, in
conjunction with the Secretary of Defense, determines
that the waiver--
(I) is in the national interest;
(II) is appropriate to allow the maintenance
of the economic viability of the vessel and any
associated operating network;
(III) is necessary due to the availability of
appropriate vessels that meet the operations
and commercial requirements; and
(IV) is consistent with such other factors as
the Secretaries consider appropriate; or
(B) it is not a United States-documented vessel, but
the owner of the vessel has demonstrated an intent to
have the vessel documented under chapter 121 of title
46, United States Code, if it is included in the Fleet,
and the vessel will be less than 10 years of age on the
date of that documentation;
(3) the Secretary of Transportation determines that
the vessel is necessary to maintain a United States
presence in international commercial shipping [or,
after consultation] and, in conjunction with the
Secretary of Defense, determines that the vessel is
militarily useful for meeting the sealift needs of the
United States with respect to national emergencies;
[and]
(4) at the time an operating agreement for the vessel
is entered into under this subtitle, the vessel will be
eligible for documentation under chapter 121 of title
46, United States [Code.] Code; and
(5) meets the requirements of paragraph (1), (2),
(3), or (4) of subsection (c).
(c) Requirements Regarding Citizenship of Owners and
Charterers.--
(1) Vessel owned and operated by section 2
citizens.--A vessel meets the requirements of this
paragraph if, during the period of an operating
agreement under this subtitle that applies to the
vessel, the vessel will be owned and operated by a
person that is a citizen of the United States under
section 2 of the Shipping Act, 1916 (46 U.S.C. App.
802).
(2) Vessel owned by documentation citizen and
chartered to section 2 citizen.--A vessel meets the
requirements of this paragraph if, during the period of
an operating agreement under this subtitle that applies
to the vessel, the vessel will be--
(A) owned by a person that is eligible to
document a vessel under chapter 121 of title
46, United States Code; and
(B) demise chartered to a person that is a
citizen of the United States under section 2 of
the Shipping Act, 1916 (46 U.S.C. App. 802).
(3) Vessel owned and operated by defense
contractor.--A vessel meets the requirements of this
paragraph if--
(A) during the period of an operating
agreement under this subtitle that applies to
the vessel, the vessel will be owned and
operated by a person that--
(i) is eligible to document a vessel
under chapter 121 of title 46, United
States Code;
(ii) operates or manages other United
States-documented vessels for the
Secretary of Defense, or charters other
vessels to the Secretary of Defense;
(iii) has entered into a special
security agreement for purposes of this
paragraph with the Secretary of
Defense;
(iv) makes the certification
described in paragraph (4)(A)(ii)(III);
and
(v) in the case of a vessel described
in paragraph (2)(B), enters into an
agreement referred to in that
paragraph; and
(B) the Secretary and the Secretary of
Defense certify to the House Armed Services
Committee and the Senate Commerce, Science and
Transportation Committee that they concur with
the certification, and have reviewed and agree
that there are no other legal, operational, or
other impediments that would prohibit the
contractor for the vessel from performing its
obligations under an operating agreement under
this subtitle.
(4) Vessel owned by section 2 citizen and chartered
to documentation citizen.--A vessel meets the
requirements of this paragraph if--
(A) during the period of an operating
agreement under this subtitle that applies to
the vessel, the vessel will be--
(i) owned by a person that is a
citizen of the United States under
section 2 of the Shipping Act, 1916 (46
U.S.C. App. 802); and
(ii) demise chartered to a person--
(I) that is eligible to
document the vessel under
chapter 121 of title 46, United
States Code;
(II) the chairman of the
board of directors, chief
executive officer, and a
majority of the members of the
board of directors of which are
United States citizens, are
appointed and subjected to
removal only upon approval by
the Secretary;
(III) that certifies that
there are no treaties,
statutes, regulations, or other
laws that would prohibit the
contractor for the vessel from
performing its obligations
under an operating agreement
under this subtitle; and
(IV) the Secretary and the
Secretary of Defense certify to
the House Armed Services
Committee and the Senate
Commerce, Science, and
Transportation Committee that
they concur with the
certification, and have
reviewed and agree that there
are no other legal,
operational, or other
impediments that would prohibit
the contractor for the vessel
from performing its obligations
under an operating agreement
under this subtitle; and
(B) in the case of a vessel that will be
chartered to a person that is owned or
controlled by another person that is not a
citizen of the United States under section 2 of
the Shipping Act, 1916 (46 U.S.C. App. 802),
the other person enters into an agreement with
the Secretary not to influence the operation of
the vessel in a manner that will adversely
affect the interests of the United States.
(d) Deemed Ownership.--Notwithstanding section 12102(d)(4) of
title 46, United States Code, in the case of a vessel that is
owned by a trust and that is demise chartered to a person
meeting the requirements of subsection (c)(4), the vessel is
deemed, for purposes of the eligibility requirements of this
section, to be owned and operated by a person that is a citizen
of the United States under section 2 of the Shipping Act, 1916
(46 U.S.C. App. 802) if the trust meets the requirements of
paragraph (2) of section 12102(d) of title 46, United States
Code, as qualified by paragraph (4) of that section.
(e) Vessel Standards.--
(1) Certificate of inspection.--A vessel used to
provide oceangoing transportation which the Secretary
of the department in which the Coast Guard is operating
determines meets the criteria of subsection (b) of this
section but which, on the date of enactment of the
Maritime Security Fleet Program Reauthorization Act of
2003, is not a documented vessel (as that term is
defined in section 12101 of title 46, United States
Code) shall be eligible for a certificate of inspection
if the Secretary determines that--
(A) the vessel is classed by and designed in
accordance with the rules of the American
Bureau of Shipping, or another classification
society accepted by the Secretary;
(B) the vessel complies with applicable
international agreements and associated
guidelines, as determined by the country in
which the vessel was documented immediately
before becoming a documented vessel (as defined
in that section); and
(C) that country has not been identified by
the Secretary as inadequately enforcing
international vessel regulations as to that
vessel.
(2) Continued eligibility for certificate.--Paragraph
(1) does not apply to a vessel after any date on which
the vessel fails to comply with the applicable
international agreements and associated guidelines
referred to in paragraph (1)(B).
(3) Reliance on classification society.--
(A) In general.--The Secretary may rely on a
certification from the American Bureau of
Shipping or, subject to subparagraph (B),
another classification society accepted by the
Secretary to establish that a vessel is in
compliance with the requirements of paragraphs
(1) and (2).
(B) Foreign classification society.--The
Secretary may accept certification from a
foreign classification society under
subparagraph (A) only--
(i) to the extent that the government
of the foreign country in which the
society is headquartered provides
access on a reciprocal basis to the
American Bureau of Shipping; and
(ii) if the foreign classification
society has offices and maintains
records in the United States.
SEC. 652. OPERATING AGREEMENTS.
[46 U.S.C. APP. 1187A]
(a) In General.--The Secretary of Transportation shall
require, as a condition of including any vessel in the Fleet,
that the owner or operator of the vessel enter into an
operating agreement with the Secretary under this section.
Notwithstanding subsection (g), the Secretary may enter into an
operating agreement for, among other vessels that are eligible
to be included in the Fleet, any vessel [which continues to
operate under an operating-differential subsidy contract under
subtitle A or] which is under charter to the Department of
Defense.
(b) Requirements for Operation.--An operating agreement under
this section shall require that, during the period a vessel is
operating under the agreement--
(1) the vessel--
(A) shall be operated exclusively in the
foreign [trade] trade, as that term is defined
in section 905(a) of this Act (without regard
to ``in the context of section 607 of this Act
concerning capital construction funds and
except that in the context of title V of this
Act concerning construction-differential
subsidy,''), or in mixed foreign and domestic
trade allowed under a registry endorsement
issued under section 12105 of title 46, United
States Code, and
(B) shall not otherwise be operated in the
coastwise trade; and
(2) the vessel shall be documented under chapter 121
of title 46, United States Code.
(c) Regulatory Relief.--
(1) In general._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. The restrictions of
section 901(b)(1) of this Act concerning the building,
rebuilding, or documentation of a vessel in a foreign
country shall not apply to a vessel for any day the
operator of that vessel is receiving payments under an
operating agreement under this subtitle.
(2) Telecommunications equipment.--The
telecommunications and other electronic equipment on an
existing vessel that is redocumented under the laws of
the United States for operation under an operating
agreement under this subtitle shall be deemed to
satisfy all Federal Communications Commission equipment
certification requirements, if--
(A) such equipment complies with all
applicable international agreements and
associated guidelines as determined by the
country in which the vessel was documented
immediately before becoming documented under
the laws of the United States;
(B) that country has not been identified by
the Secretary as inadequately enforcing
international regulations as to that vessel;
and
(C) at the end of its useful life, such
equipment will be replaced with equipment that
meets Federal Communications Commission
equipment certification standards.
(d) Effectiveness and Annual Payment Requirements of
Operating Agreements.--
(1) Effectiveness.--The Secretary of Transportation
may enter into an operating agreement under this
subtitle for fiscal year 1996. The agreement shall be
effective only for 1 fiscal year, but shall be
renewable, subject to the availability of
appropriations, for each subsequent fiscal year through
the end of fiscal year [2005.] 2015.
(2) Annual payment.--An operating agreement under
this subtitle shall require, subject to the
availability of appropriations and the other provisions
of this section, that the Secretary of Transportation
pay each fiscal year to the contractor, for each vessel
that is covered by the operating agreement, an amount
equal to $2,300,000 for fiscal year [1996 and] 1996,
$2,100,000 for each of fiscal years 1997 through 2005,
and $3,100,000 for each fiscal year thereafter in which
the agreement is in effect. The amount shall be paid in
equal monthly installments at the end of each month.
The amount shall not be reduced except as provided by
this section.
(e) Certification Required for Payment.--As a condition of
receiving payment under this section for a fiscal year for a
vessel, the contractor for the vessel shall certify, in
accordance with regulations issued by the Secretary of
Transportation, that the vessel has been and will be operated
in accordance with subsection (b)(1) for at least 320 days in
the fiscal year. Days during which the vessel is drydocked,
surveyed, inspected, or repaired shall be considered days of
operation for purposes of this subsection.
(f) Operating Agreement Is Obligation of United States
Government.--An operating agreement under this subtitle
constitutes a contractual obligation of the United States
Government to pay the amounts provided for in the agreement to
the extent of actual appropriations.
(g) Limitations.--The Secretary of Transportation shall not
make any payment under this subtitle for a vessel with respect
to any days for which the vessel is--
(1) [subject to an operating-differential subsidy
contract under subtitle A or] under a charter to the
United States Government, other than a charter pursuant
to section 653;
(2) not operated or maintained in accordance with an
operating agreement under this subtitle; or
[(3) more than 25 years of age, except that the
Secretary may make such payments for a LASH vessel for
any day for which the vessel is more than 25 years of
age if that vessel--
[(A) is modernized after January 1, 1994,
[(B) is modernized before it is 25 years of
age, and
[(C) is not more than 30 years of age.]
(3) beyond its economic life, as determined by the
Secretary.
(h) Payments.--With respect to payments under this subtitle
for a vessel covered by an operating agreement, the Secretary
of Transportation--
(1) except as provided in paragraph (2), shall not
reduce any payment for the operation of a vessel to
carry military or other preference cargoes under
section 2631 of title 10, United States Code, the Act
of March 26, 1934 (46 U.S.C. App. 1241-1), section
901(a), 901(b), or 901b of this Act, or any other cargo
preference law of the United States;
(2) shall not make any payment for any day that a
vessel is engaged in transporting more than [7,500]
2,500 tons of civilian bulk or bagged preference
cargoes pursuant to section 901(a), 901(b), or 901b
that is bulk or bagged [cargo; and] cargo unless the
vessel is owned and operated by persons that are
citizens of the United States under section 2 of the
Shipping Act, 1916 (46 U.S.C. App. 802); and
(3) shall make a pro rata reduction in payment for
each day less than 320 in a fiscal year that a vessel
covered by an operating agreement is not operated in
accordance with subsection (b)(1), with days during
which the vessel is drydocked or undergoing survey,
inspection, or repair considered to be days on which
the vessel is operated.
(i) Priority for Awarding Agreements.--Subject to the
availability of appropriations, the Secretary shall enter into
operating agreements according to the following priority:
(1) Vessels owned by citizens.--
(A) Priority.--First, for any vessel that
is--
(i) owned and operated by persons who
are citizens of the United States under
section 2 of the Shipping Act, 1916; or
(ii) less than 10 years of age and
owned and operated by a corporation
that is--
(I) eligible to document a
vessel under chapter 121 of
title 46, United States Code;
and
(II) affiliated with a
corporation operating or
managing for the Secretary of
Defense other vessels
documented under that chapter,
or chartering other vessels to
the Secretary of Defense.
(B) Limitation on number of operating
agreements.--The total number of operating
agreements that may be entered into by a person
under the priority in subparagraph (A)--
(i) for vessels described in
subparagraph (A)(i), may not exceed the
sum of--
(I) the number of United
States-documented vessels the
person operated in the foreign
commerce of the United States
(except mixed coastwise and
foreign commerce) on May 17,
1995; and
(II) the number of United
States-documented vessels the
person chartered to the
Secretary of Defense on that
date; and
(ii) for vessels described in
subparagraph (A)(ii), may not exceed 5
vessels.
(C) Treatment of related parties.--For
purposes of subparagraph (B), a related party
with respect to a person shall be treated as
the person.
(2) Other vessels owned by citizens and government
contractors.--To the extent that amounts are available
after applying paragraph (1), any vessel that is owned
and operated by a person who is--
(A) a citizen of the United States under
section 2 of the Shipping Act, 1916, that has
not been awarded an operating agreement under
the priority established under paragraph (1);
or
(B)(i) eligible to document a vessel under
chapter 121 of title 46, United States Code;
and
(ii) affiliated with a corporation operating
or managing other United States-documented
vessels for the Secretary of Defense or
chartering other vessels to the Secretary of
Defense.
(3) Other vessels.--To the extent that amounts are
available after applying paragraphs (1) and (2), any
other eligible vessel.
(j) Awarding New Agreements.--Subject to the availability of
appropriations and without regard to subsection (i), the
Secretary of Transportation shall enter into operating
agreements according to a priority determined by the
applicant's record of owning and operating vessels in
accordance with section 2 of the Shipping Act, 1916 (46 U.S.C.
App. 802) under the United States flag and its capability to
provide a sufficient level of military utility to the United
States, as determined jointly by the Secretary of
Transportation and the Secretary of Defense, based on the type
and number of vessels, and non-vessel assets the applicant
offers to the program.
(k) Reissuance of Operating Agreements.--Subject to the
availability of appropriations the Secretary of Transportation,
in conjunction with the Secretary of Defense, may reissue
operating agreements for participating fleet vessels. If the
Secretary fails to reissue an operating agreement, or if the
Secretary does not receive an application for reissuance of an
operating agreement for a participating fleet vessel, the
operating agreement will be awarded subject to subsection (j).
[(j)] (l) Transfer of Operating Agreements.--A contractor
under an operating agreement may transfer the agreement
(including all rights and obligations under the agreement) to
any person eligible to enter into that operating agreement
under this subtitle after notification of the Secretary in
accordance with regulations prescribed by the Secretary, unless
the transfer is disapproved by the [Secretary within] Secretary
and the Secretary of Defense within 90 days after the date of
that notification. A person to whom an operating agreement is
transferred may receive payments from the Secretary under the
agreement only if each vessel to be covered by the agreement
after the transfer is an eligible vessel under section 651(b).
[(k)] (m) Reversion of Unused Authority.--(1) The obligation
of the Secretary to make payments under an operating agreement
under this subtitle shall terminate with respect to a vessel if
the contractor fails to engage in operation of the vessel for
which such payment is required--
[(1)] (A) within one year after the effective date of
the operating agreement, in the case of a vessel in
existence on the effective date of the agreement, or
[(2)] (B) within 30 months after the effective date
of the operating agreement, in the case of a vessel to
be constructed after that effective date.
(2) If the Secretary of Transportation makes a determination
that the requirements set forth in this section are not
fulfilled while an operating agreement is in effect, the
Secretary may terminate the agreement and the Secretary shall
be free to enter into an operating agreement with another party
capable of fulfilling the requirements for an operating
agreement under this subtitle.
(n) Replacement Vessel.--The Secretary shall require the
replacement of any participating fleet vessel that does not
meet the requirements of section 651(b), and the Secretary, in
conjunction with the Secretary of Defense, may approve the
replacement of any participating vessel if the replacement
vessel is eligible under section 651(b).
[(l)] (o) Procedure for Considering Application; Effective
Date for Certain Vessels.--
(1) Procedures.--No later than 30 days after the date
of the enactment of the Maritime Security Act of 1996,
the Secretary shall accept applications for enrollment
of vessels in the Fleet, and within 90 days after
receipt of an application for enrollment of a vessel in
the Fleet, the Secretary shall enter into an operating
agreement with the applicant or provide in writing the
reason for denial of that application.
(2) Effective date.--Unless an earlier date is
requested by the applicant, the effective date for an
operating agreement with respect to a vessel which is,
on the date of entry into an operating agreement,
either subject to a contract under subtitle A or on
charter to the United States Government, other than a
charter under section 653, shall be the expiration or
termination date of the contract under subtitle A or of
the Government charter covering the vessel,
respectively, or any earlier date the vessel is
withdrawn from that contract or charter.
(3) Procedures for new awards.--No later than 60 days
after the date of issuance of interim final rules (or,
if earlier, 60 days after the date of issuance of the
final rule under section 657), the Secretary shall
accept applications for enrollment of 13 additional
vessels in the Fleet, and within 90 days after receipt
of an application for enrollment of a vessel in the
Fleet, the Secretary shall enter into an operating
agreement with the applicant or provide in writing the
reason for denial of that application.
(4) Procedures for reissuance of operating
agreements.--Not later than 60 days after the date of
issuance of interim final rules (or, if earlier, 60
days after the date of issuance of the final rule under
section 657), the Secretary shall accept applications,
from any person that is eligible to enter into an
operating agreement for a participating fleet vessel as
of October 1, 2005, for the reissuance of an operating
agreement for a participating fleet vessel. Within 90
days after receipt of an application for such a
reissuance, the Secretary shall enter into an agreement
with the applicant, or provide in writing a reason for
the denial.
(5) Limitation.--The Secretary may not award
operating agreements under this subtitle that require
payments under this section for more than 60 vessels in
any fiscal year.
(6) Effective date.--The effective date for an
operating agreement under paragraph (3) or (4) shall be
October 1, 2005, except for a vessel which is, on the
date of entry into an operating agreement, on charter
to the United States Government, other than a charter
under section 653, the effective date shall be the
expiration or termination date of the Government
charter covering the vessel, or any earlier date the
vessel is withdrawn from that contract or charter.
[(m)] (p) Early Termination.--An operating agreement under
this subtitle shall terminate on a date specified by the
contractor if the contractor notifies the Secretary, by not
later than 60 days before the effective date of the
termination, that the contractor intends to terminate the
agreement. Vessels covered by an operating agreement terminated
under this subsection shall remain documented under chapter 121
of title 46, United States Code, until the date the operating
agreement would have terminated according to its terms. A
contractor who terminates an operating agreement pursuant to
this subsection shall continue to be bound by the provisions of
section 653 until the date the operating agreement would have
terminated according to its terms. All terms and conditions of
an Emergency Preparedness Agreement entered into under section
653 shall remain in effect until the date the operating
agreement would have terminated according to its terms, except
that the terms of such Emergency Preparedness Agreement may be
modified by the mutual consent of the contractor and the
Secretary of Transportation and the Secretary of Defense.
[(n)] (q) 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.
[(o)] (r) Award of Operating Agreements.--
(1) In general.--The Secretary of Transportation,
subject to paragraph (4), shall award operating
agreements within each priority under subsection
(i)(1), (2), and (3) under regulations prescribed by
the Secretary.
(2) Number of agreements awarded.--Regulations under
paragraph (1) shall provide that if appropriated
amounts are not sufficient for operating agreements for
all vessels within a priority under subsection (i)(1),
(2), or (3), the Secretary shall award to each person
submitting a request a number of operating agreements
that bears approximately the same ratio to the total
number of vessels in the priority, as the amount of
appropriations available for operating agreements for
vessels in the priority bears to the amount of
appropriations necessary for operating agreements for
all vessels in the priority.
(3) Treatment of related parties.--For purposes of
paragraph (2), a related party with respect to a person
shall be treated as the person.
(4) Preference for united states-built vessels.--In
awarding operating agreements for vessels within a
priority under subsection (i)(1), (2), or (3), the
Secretary shall give preference to a vessel that was
constructed in the United States, to the extent such
preference is consistent with establishment of a fleet
described in the first sentence of section 651(a)
(taking into account the age of the vessel, the nature
of service provided by the vessel, and the commercial
viability of the vessel).
(5) Limitations.--With respect to the eligibility of
a tank vessel that was not built in the United States--
(A) the Secretary may award an operating
agreement for such vessel if--
(i) a binding contract for
construction in the United States of a
replacement vessel to be operated under
the operating agreement is executed
prior to the award of such operating
agreement; and
(ii) the replacement vessel is
eligible to be included in the fleet
under this section; and
(B) no payment under this subtitle may be
made for an existing tank vessel for which an
operating agreement is awarded under this
paragraph after the earlier of--
(i) the date that is 4 years after
the award of the operating agreement
for such tank vessel; or
(ii) the date of delivery of the
replacement tank vessel.
[(p)] (s) Notice to United States Shipbuilders Required.--The
Secretary shall include in any operating agreement under this
subtitle a requirement that the contractor under the agreement
shall, by not later than 30 days after soliciting any bid or
offer for the construction of any vessel in a foreign shipyard
and before entering into a contract for construction of a
vessel in a foreign shipyard, provide notice of the intent of
the contractor to enter into such a contract to each shipyard
in the United States that is capable of constructing the
vessel.
SEC. 653. NATIONAL SECURITY REQUIREMENTS.
[46 U.S.C. APP. 1187B]
(a) Emergency Preparedness Agreement.--
(1) Requirement to enter agreement.--The Secretary of
Transportation shall establish an Emergency
Preparedness Program under this section that is
approved by the Secretary of Defense. Under the
program, the Secretary of Transportation shall include
in each operating agreement under this subtitle a
requirement that the contractor enter into an Emergency
Preparedness Agreement under this section with the
Secretary. The Secretary shall negotiate and enter into
an Emergency Preparedness Agreement with each
contractor as promptly as practicable after the
contractor has entered into an operating agreement
under this subtitle.
(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.
(b) Resources Made Available.--The commercial transportation
resources to be made available under an Emergency Preparedness
Agreement shall include vessels or capacity in vessels,
intermodal systems and equipment, terminal facilities,
intermodal and management services, and other related services,
or any agreed portion of such nonvessel resources for
activation as the [Secretary] Secretary, in conjunction with
the Secretary of Defense, may determine to be necessary,
seeking to minimize disruption of the contractor's service to
commercial shippers.
(c) Compensation.--
(1) In general.--The Secretary of [Transportation]
Transportation, in conjunction with the Secretary of
Defense, shall provide in each Emergency Preparedness
Agreement for fair and reasonable compensation for all
commercial transportation resources provided pursuant
to this section.
(2) Specific requirements.--Compensation under this
subsection--
(A) shall not be less than the contractor's
commercial market charges for like
transportation resources;
(B) shall include all the contractor's costs
associated with provision and use of the
contractor's commercial resources to meet
emergency requirements;
(C) in the case of a charter of an entire
vessel, shall be fair and reasonable;
(D) shall be in addition to and shall not in
any way reflect amounts payable under section
652; and
(E) shall be provided from the time that a
vessel or resource is diverted from commercial
service until the time that it reenters
commercial service.
(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.
(d) Temporary Replacement Vessels.--Notwithstanding any other
provision of this subtitle or of other law to the contrary--
(1) a contractor or other person that commits to make
available a vessel or vessel capacity under the
Emergency Preparedness Program or another primary
sealift readiness program approved by the Secretary of
Defense may, during the activation of that vessel or
capacity under that program, operate or employ in
foreign commerce a foreign-flag vessel or foreign-flag
vessel capacity as a temporary replacement for the
activated vessel or capacity; and
(2) such replacement vessel or vessel capacity shall
be eligible during the replacement period to transport
preference cargoes subject to section 2631 of title 10,
United States Code, the Act of March 26, 1934 (46
U.S.C. App. 1241-1), and sections 901(a), 901(b), and
901b of this Act to the same extent as the eligibility
of the vessel or vessel capacity replaced.
(e) Redelivery and Liability of United States for Damages.--
(1) In general.--All commercial transportation
resources activated under an Emergency Preparedness
Agreement shall, upon termination of the period of
activation, be redelivered to the contractor in the
same good order and condition as when received, less
ordinary wear and tear, or the Government shall fully
compensate the contractor for any necessary repair or
replacement.
(2) Limitation on liability of united states.--Except
as may be expressly agreed to in an Emergency
Preparedness Agreement, or as otherwise provided by
law, the Government shall not be liable for disruption
of a contractor's commercial business or other
consequential damages to a contractor arising from
activation of commercial transportation resources under
an Emergency Preparedness Agreement.
(3) Limitation on application of other
requirements.--Sections 902 and 909 of this Act shall
not apply to a vessel while it is covered by an
Emergency Preparedness Agreement under this subtitle.
Any Emergency Preparedness Agreement entered into by a
contractor shall supersede any other agreement between
that contractor and the Government for vessel
availability in time of war or national emergency.
SEC. 654. DEFINITIONS.
[46 U.S.C. APP. 1187C]
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.
[(7) Participating fleet vessel.--The term
``participating fleet vessel'' means--
[(A) any vessel that--
[(i) on October 1, 2005
[(I) will meet the
requirements of paragraph (1),
(2), (3) of section 1187(c);
and
[(II) will be less than 25
years of age, or less than 30
years of age in the case of a
LASH vessel; and
[(ii) on December 31, 2003, is
covered by an operating agreement under
subtitle B of title VI of the Merchant
Marine Act, 1936 (46 App. U.S.C. 1187
et seq.); and
[(B) any vessel that--
[(i) is a replacement for a vessel
described in subparagraph (A);
[(ii) is controlled by the person
that controls such replaced vessel;
[(iii) is eligible to be included in
the Fleet under section 1187(b);
[(iv) is approved by the Secretary
and the Secretary of Defense; and
[(v) begins operation under an
operating agreement under subtitle B by
not later than the end of the 30-month
period beginning on the date the
operating agreement is entered into by
the Secretary.]
(7) Participating fleet vessel.--The term
``participating fleet vessel'' means--
(A) any vessel that is owned or demise
chartered and that--
(i) on October 1, 2005--
(I) will meet the
requirements of paragraph (1),
(2), (3), or (4) of section
651(c); and
(II) will be less than 25
years of age, or less than 30
years of age in the case of a
LASH vessel; and
(ii) on April 30, 2005, is covered by
an operating agreement under subtitle B
of title VI of the Merchant Marine Act,
1936 (46 U.S.C. App. 1187 et seq.); or
(B) any vessel that--
(i) is a replacement for a vessel
described in subparagraph (A);
(ii) is controlled by the person that
controls such replaced vessel;
(iii) is eligible to be included in
the Fleet under section 651(b); and
(iv) is approved by the Secretary and
the Secretary of Defense.''.
SEC. 655. AUTHORIZATION OF APPROPRIATIONS.
[46 U.S.C. APP. 1187D]
There are authorized to be appropriated for operating
agreements under this subtitle, to remain available until
expended, $100,000,000 for fiscal year [1996 and] 1996, such
sums as may be necessary, not to exceed [$100,000,000, for each
fiscal year thereafter through fiscal year 2005.] $100,000,000
for each of fiscal years 1997 through 2005, and such sums as
may be necessary, not to exceed $186,000,000, for each fiscal
year thereafter through fiscal year 2015.
[SEC. 656. NONCONTIGUOUS DOMESTIC TRADES.
[46 U.S.C. APP. 1187E]
[(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)(1) 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).
[(2) Subsection (a) shall not apply to operation by a
contractor of a self-propelled tank vessel in a noncontiguous
domestic trade, or to ownership by a contractor of an interest
in a self-propelled tank vessel that operates in a
noncontiguous domestic trade.
[(c) 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).]
SEC. 656. NONCONTIGUOUS DOMESTIC TRADES.
(a) In General.--Except as otherwise provided in this
section, no contractor or related party shall receive payments
pursuant to this part during a period when it participates in a
noncontiguous domestic trade, except upon written permission of
the Secretary of Transportation that is granted after a hearing
on the record under section 554 of title 5, United States Code,
and that states the capacity that may be offered in that trade.
The Secretary may grant such written permission pursuant to
written application of such contractor or related party unless
the Secretary finds that--
(1) existing service in that trade is adequate; or
(2) the service sought to be provided by the
contractor or related party--
(A) would result in unfair competition to any
other person operating vessels in such
noncontiguous domestic trade, or
(B) would be contrary to the objects and
policy of this Act.
(b) Grandfather.--
(1) Subsection (a) shall not apply to provision by a
contractor of service within the level of service
provided by that contractor as of the date of enactment
of the Maritime Security Fleet Program Reauthorization
Act of 2003, adjusted for increases in the real gross
product of the State or Commonwealth served since that
date.
(2) Subsection (a) shall not apply to operation by a
contractor of a self-propelled tank vessel in a
noncontiguous domestic trade, or to ownership by a
contractor of an interest in a self-propelled tank
vessel that operates in a noncontiguous domestic trade.
(c) Definitions.--In this section:
(1) Participates in a noncontiguous domestic trade.--
The term ``participates in a noncontiguous domestic
trade'' means directly or indirectly owns, charters, or
operates a vessel engaged in transportation of cargo
between a point in the contiguous 48 states and a point
in Alaska, Hawaii, or Puerto Rico.
(2) Related party.--The term ``related party''
means--
(A) a holding company, subsidiary, affiliate,
or associate of a contractor who is a party to
an operating agreement under this part; and
(B) an officer, director, agent, or other
executive of a contractor or of a person
referred to in subparagraph (A).
SEC. 657. REGULATIONS.
(a) In General.--The Secretary of Transportation, in
consultation with the Secretary of Defense, may prescribe rules
as necessary to carry out this subtitle and the amendments made
by this subtitle.
(b) Interim Rules.--The Secretary of Transportation, in
consultation with the Secretary of Defense, may prescribe
interim rules necessary to carry out this subtitle. For this
purpose the Secretary is excepted from compliance with the
notice and comment requirements of section 553 of title 5,
United States Code. All interim rules prescribed under the
authority of this subsection that are not superseded by final
rules shall expire no later than 270 days after the date of
enactment of the Maritime Security Fleet Program
Reauthorization Act of 2003.
* * * * * * *
SEC. 901B. SHIPMENT REQUIREMENTS FOR CERTAIN EXPORTS SPONSORED BY
DEPARTMENT OF AGRICULTURE.
[46 U.S.C. APP. 1241F]
(a) Minimum Requirement Respecting Gross Tonnage Transported
in United States-Flag Commercial Vessels; Implementation.--
(1) In addition to the requirement for United States-
flag carriage of a percentage of gross tonnage imposed
by section 901(b)(1) of this Act, 25 percent of the
gross tonnage of agricultural commodities or the
products thereof specified in subsection (b) shall be
transported on United States-flag commercial vessels.
(2) In order to achieve an orderly and efficient
implementation of the requirement of paragraph (1)--
(A) an additional quantity equal to 10
percent of the gross tonnage referred to in
paragraph (1) shall be transported in United
States-flag vessels in calendar year 1986;
(B) an additional quantity equal to 20
percent of the gross tonnage shall be
transported in such vessels in calendar year
1987; and
(C) an additional quantity equal to 25
percent of the gross tonnage shall be
transported in such vessels in calendar year
1988 and in each calendar year thereafter.
(b) Covered Export Activity.--This section shall apply to any
export activity of the Commodity Credit Corporation or the
Secretary of Agriculture--
(1) carried out under the Agricultural Trade
Development and Assistance Act of 1954 (7 U.S.C. 1691
et seq.);
(2) carried out under section 416 of the Agricultural
Act of 1949 (7 U.S.C. 1431);
(3) carried out under the Bill Emerson Humanitarian
Trust Act (7 U.S.C. 1736f-1 et seq.);
(4) under which agricultural commodities or the
products thereof are--
(A) donated through foreign governments or
agencies, private or public, including
intergovernmental organizations; or
(B) sold for foreign currencies or for
dollars on credit terms of more than ten years;
(5) under which agricultural commodities or the
products thereof are made available for emergency food
relief at less than prevailing world market prices;
(6) under which a cash grant is made directly or
through an intermediary to a foreign purchaser for the
purpose of enabling the purchaser to obtain United
States agricultural commodities or the products thereof
in an amount greater than the difference between the
prevailing world market price and the United States
market price, free along side vessel at United States
port; or
(7) under which agricultural commodities owned or
controlled by or under loan from the Commodity Credit
Corporation are exchanged or bartered for materials,
goods, equipment, or services produced in foreign
countries, other than export activities described in
section 901a(5).
(c) Terms and Conditions.--
(1) The requirement for United States-flag
transportation imposed by subsection (a) shall be
subject to the same terms and conditions as provided in
section 901(b) of this Act.
(2) In order to provide for effective and equitable
administration of the cargo preference laws the
calendar year for the purpose of compliance with
minimum percentage requirements shall be for 12 month
periods commencing April 1, [1986.] 1986, the 18-month
period beginning April 1, 2002, and the 12-month period
beginning October 1, 2003, and each year thereafter.
(3)(A) Subject to subparagraph (B), in administering
sections 901(b) and 901b (46 U.S.C. App. 1241(b) and
1241f), and, subject to subparagraph (B) of this
paragraph, consistent with those sections, the
Commodity Credit Corporation shall take such steps as
may be necessary and practicable without detriment to
any port range to allocate, on the principle of lowest
landed cost without regard to the country of
documentation of the vessel, 25 percent of the bagged,
processed, or fortified commodities furnished pursuant
to title II of the Agricultural Trade Development and
Assistance Act of 1954 (7 U.S.C. 1751 et seq.).
(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.
(4) Any determination of nonavailability of United
States-flag vessels resulting from the application of
this subsection shall not reduce the gross tonnage of
commodities required by sections 901(b) and 901b to be
transported on United States-flag vessels.
(d) ``Export Activity'' Defined.--As used in subsection (b),
the term ``export activity'' does not include inspection or
weighing activities, other activities carried out for health or
safety purposes, or technical assistance provided in the
handling of commercial transactions.
(e) Prevailing World Market Price.--
(1) The prevailing world market price as to
agricultural commodities or the products thereof shall
be determined under sections 901a through 901d in
accordance with procedures established by the Secretary
of Agriculture. The Secretary shall prescribe such
procedures by regulation, with notice and opportunity
for public comment, pursuant to section 553 of title 5,
United States Code.
(2) In the event that a determination of the
prevailing world market price of any other type of
materials, goods, equipment, or service is required in
order to determine whether a barter or exchange
transaction is subject to subsection (b)(6) or (b)(7),
such determination shall be made by the Secretary of
Agriculture in consultation with the heads of other
appropriate Federal agencies.
* * * * * * *
TITLE XI--FEDERAL SHIP FINANCING GUARANTEE PROGRAM
SEC. 1101. DEFINITIONS.
[46 U.S.C. APP. 1271]
As used in this title--
(a) The term ``mortgage'' includes--
(1) a preferred mortgage as defined in section 31301
of title 46, United States Code; and
(2) a mortgage on a vessel that will become a
preferred mortgage when filed or recorded under chapter
313 of title 46, United States Code.
(b) The term ``vessel'' includes all types, whether in
existence or under construction, of passenger cargo and
combination passenger cargo carrying vessels, tankers, tugs,
towboats, barges, dredges and ocean thermal energy conversion
facilities or plantships which are or will be documented under
the laws of the United States, fishing vessels whose ownership
will meet the citizenship requirements for documenting vessels
in the coastwise trade within the meaning of section 2 of the
Shipping Act, 1916, as amended, floating drydocks which have a
capacity of thirty-five thousand or more lifting tons and a
beam of one hundred and twenty-five feet or more between the
wing walls and oceanographic research or instruction or
pollution treatment, abatement or control vessels;
(c) The term ``obligation'' shall mean any note, bond,
debenture, or other evidence of indebtedness (exclusive of
notes or other obligations issued by the Secretary pursuant to
subsection (d) of section 1105 of this title and obligations
eligible for investment of funds under section 1102 and
subsection (d) of section 1108 of this title), issued for one
of the purposes specified in subsection (a) of section 1104 of
this title;
(d) The term ``obligor'' shall mean any party primarily
liable for payment of the principal of or interest on any
obligation;
(e) The term ``obligee'' shall mean the holder of an
obligation;
(f) The term ``actual cost'' of a vessel as of any specified
date means the aggregate, as determined by the Secretary, of
(i) all amounts paid by or for the account of the obligor on or
before that date, and (ii) all amounts which the obligor is
then obligated to pay from time to time thereafter, for the
construction, reconstruction or reconditioning of such vessel;
(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.
(g) The term ``depreciated actual cost'' of a vessel means
the actual cost of the vessel depreciated on a straightline
basis over the useful life of the vessel as determined by the
Secretary, not to exceed twenty-five years from the date the
vessel was delivered by the shipbuilder, or, if the vessel has
been reconstructed or reconditioned, the actual cost of the
vessel depreciated on a straightline basis from the date the
vessel was delivered by the shipbuilder to the date of such
reconstruction or reconditioning on the basis of the original
useful life of the vessel and from the date of such
reconstruction or reconditioning on a straightline basis and on
the basis of a useful life of the vessel determined by the
Secretary, plus all amounts paid or obligated to be paid for
the reconstruction or reconditioning depreciated on a
straightline basis on the basis of a useful life of the vessel
determined by the Secretary;
(h) The terms ``construction'', ``reconstruction'', or
``reconditioning'' shall include, but shall not be limited to,
designing, inspecting, outfitting, and equipping;
(i) The term ``ocean thermal energy conversion facility or
plantship'' means any at-sea facility or vessel, whether
mobile, floating unmoored, moored, or standing on the seabed,
which uses temperature differences in ocean water to produce
electricity or another form of energy capable of being used
directly to perform work, and includes any equipment installed
on such facility or vessel to use such electricity or other
form of energy to produce, process, refine, or manufacture a
product, and any cable or pipeline used to deliver such
electricity, freshwater, or product to shore, and all other
associated equipment and appurtenances of such facility or
vessel, to the extent they are located seaward of the highwater
mark;
(j) The term ``citizen of the Northern Mariana Islands''
means--
(1) an individual who qualifies as such under section
8 of the Schedule on Transitional Matters attached to
the Constitution of the Northern Mariana Islands; or
(2) a corporation, partnership, association, or other
entity formed under the laws of the Northern Mariana
Islands, not less than 75 percent of the interest in
which is owned by individuals referred to in paragraph
(1) or citizens or nationals of the United States, in
cases in which ``owned'' is used in the same sense as
in section 2 of the Shipping Act, 1916 (46 U.S.C. 802);
(k) The term ``fishery facility'' means--
(1) for operations on land--
(A) any structure or appurtenance thereto
designed for the unloading and receiving from
vessels, the processing, the holding pending
processing, the distribution after processing,
or the holding pending distribution, of fish
from one or more fisheries,
(B) the land necessary for any such structure
or appurtenance described in subparagraph (A),
and
(C) equipment which is for use in connection
with any such structure or appurtenance and
which is necessary for the performance of any
function referred to in subparagraph (A);
(2) for operations other than on land, any vessel
built in the United States used for, equipped to be
used for, or of a type which is normally used for, the
processing of fish; or
(3) for aquaculture, including operations on land or
elsewhere--
(A) any structure or appurtenance thereto
designed for aquaculture;
(B) the land necessary for any such structure
or appurtenance described in subparagraph (A);
(C) equipment which is for use in connection
with any such structure or appurtenance and
which is necessary for the performance of any
function referred to in subparagraph (A); and
(D) any vessel built in the United States
used for, equipped to be used for, or of a type
which is normally used for aquaculture; but
only if such structure, appurtenance, land,
equipment, or vessel is owned by an individual
who is a citizen or national of the United
States or a citizen of the Northern Mariana
Islands or by a corporation, partnership,
association, or other entity that is a citizen
of the United States within the meaning of
section 2 of the Shipping Act, 1916 (46 U.S.C.
802), and for purposes of applying such section
2 with respect to this section--
(i) the term ``State'' as used
therein includes any State, the
District of Columbia, the Commonwealth
of Puerto Rico, American Samoa, the
Virgin Islands of the United States,
Guam, the Northern Mariana Islands, or
any other Commonwealth, territory, or
possession of the United States; and
(ii) citizens of the United States
must own not less than 75 percent of
the interest in the entity and
nationals of the United States or
citizens of the Northern Mariana
Islands shall be treated as citizens of
the United States in meeting such
ownership requirement;
(l) The term ``fishing vessel'' has the meaning given such
term by section 3(11) of the Magnuson-Stevens Fishery
Conservation and Management Act of 1976 (16 U.S.C. 1802(11));
and any reference in this title to a vessel designed
principally for commercial use in the fishing trade or industry
shall be treated as a reference to a fishing vessel;
(m) The term ``United States'' when used in a geographical
context with respect to fishing vessels or fishery facilities
includes all States referred to in subsection (k)(i).
(n) The term ``Secretary'' means the Secretary of Commerce
with respect to fishing vessels and fishing facilities as
provided by this title, and the Secretary of Transportation
with respect to all other vessels and general shipyard
facilities (as defined in section 1112(d)(3)).
(o) The term ``eligible export vessel'' means a vessel
constructed, reconstructed, or reconditioned in the United
States for use in world-wide trade which will, upon delivery or
redelivery, be placed under or continued to be documented under
the laws of a country other than the United States.
* * * * * * *
SEC. 1103. AUTHORIZATION OF SECRETARY TO GUARANTEE OBLIGATIONS.
[46 U.S.C. APP. 1273]
(a) Principal and Interest.--The Secretary is authorized to
guarantee, and to enter into commitments to guarantee, the
payment of the interest on, and the unpaid balance of the
principal of, any obligation which is eligible to be guaranteed
under this title. A guarantee, or commitment to guarantee, made
by the Secretary under this title shall cover 100 percent of
the amount of the principal and interest of the obligation.
(b) Security Interest.--No obligation shall be guaranteed
under this title unless the obligor conveys or agrees to convey
to the Secretary such security interest, which may include a
mortgage or mortgages on a vessel or vessels, as the Secretary
may reasonably require to protect the interests of the United
States.
(c) Amount of Guarantee; Percentage Limitation; Determination
of Actual Cost of Vessel.--The Secretary shall not guarantee
the principal of obligations in an amount in excess of 75 per
centum, or 87\1/2\ per centum, whichever is applicable under
section 1104 of this title, of the amount, as determined by the
Secretary which determination shall be conclusive, paid by or
for the account of the obligor for the construction,
reconstruction, or reconditioning of a vessel or vessels with
respect to which a security interest has been conveyed to the
Secretary, unless the obligor creates an escrow fund as
authorized by section 1108 of this title, in which case the
Secretary may guarantee 75 per centum or 87\1/2\ per centum,
whichever is applicable under section 1104 of this title, of
the actual cost of such vessel or vessels.
(d) Pledge of United States.--The full faith and credit of
the United States is pledged to the payment of all guarantees
made under this title with respect to both principal and
interest, including interest, as may be provided for in the
guarantee, accruing between the date of default under a
guaranteed obligation and the payment in full of the guarantee.
(e) Proof of Obligations.--Any guarantee, or commitment to
guarantee, made by the Secretary under this title shall be
conclusive evidence of the eligibility of the obligations for
such guarantee, and the validity of any guarantee, or
commitment to guarantee, so made shall be incontestable.
Notwithstanding an assumption of an obligation by the Secretary
under section 1105(a) or (b) of this Act, the validity of the
guarantee of an obligation made by the Secretary under this
title is unaffected and the guarantee remains in full force and
effect.
(f) Limitation on Outstanding Amount.--The aggregate unpaid
principal amount of the obligations guaranteed under this
section and outstanding at any one time shall not exceed
$12,000,000,000, of which (1) $850,000,000 shall be limited to
obligations pertaining to guarantees of obligations for fishing
vessels and fishery facilities made under this title, and (2)
$3,000,000,000 shall be limited to obligations pertaining to
guarantees of obligations for eligible export vessels. No
additional limitations may be imposed on new commitments to
guarantee loans for any fiscal year, except in such amounts as
established in advance in annual authorization Acts. No vessel
eligible for guarantees under this title shall be denied
eligibility because of its type.
(g) Loan Guarantees for Export Vessels; Finding Required;
Termination of Authority.--
(1) The Secretary may not issue a commitment to
guarantee obligations for an eligible export vessel
unless, after considering--
(A) the status of pending applications for
commitments to guarantee obligations for
vessels documented under the laws of the United
States and operating or to be operated in the
domestic or foreign commerce of the United
States,
(B) the economic soundness of the
applications referred to in subparagraph (A),
and
(C) the amount of guarantee authority
available, the Secretary determines, in the
sole discretion of the Secretary, that the
issuance of a commitment to guarantee
obligations for an eligible export vessel will
not result in the denial of an economically
sound application to issue a commitment to
guarantee obligations for vessels documented
under the laws of the United States operating
in the domestic or foreign commerce of the
United States.
(2) The Secretary may not issue commitments to
guarantee obligations for eligible export vessels under
this section after the later of--
(A) the 5th anniversary of the date on which
the Secretary publishes final regulations
setting forth the application procedures for
the issuance of commitments to guarantee
obligations for eligible export vessels,
(B) the last day of any 5-year period in
which funding and guarantee authority for
obligations for eligible export vessels have
been continuously available, or
(C) the last date on which those commitments
may be issued under any treaty or convention
entered into after the date of the enactment of
the National Shipbuilding and Shipyard
Conversion Act of 1993 that prohibits guarantee
of those obligations.
(h)[(1)] Risk Factor Determinations._
(1) The Secretary shall--
(A) establish in accordance with this
[subsection] subsection, and update annually, 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) annually 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.]
category; and
(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)(A) Before making a guarantee under this section
for an obligation, and annually for projects subject to
a guarantee, 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.
(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.
(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).
(i) Priority.--In guaranteeing and entering commitments to
guarantee under this section, the Secretary shall give priority
to guarantees and commitments for vessels that are otherwise
eligible for a guarantee under this section and that are
constructed with assistance under subtitle B of title V of this
Act.
SEC. 1104A. ELIGIBILITY FOR GUARANTEE.
[46 U.S.C. APP. 1274]
(a) Purpose of Obligations.--Pursuant to the authority
granted under section 1103(a), the Secretary upon such terms as
he shall prescribe, may guarantee or make a commitment to
guarantee, payment of the principal of and interest on an
obligation which aids in--
(1) financing, including reimbursement of an obligor
for expenditures previously made for, construction,
reconstruction, or reconditioning of a vessel
(including an eligible export vessel), which is
designed principally for research, or for commercial
use (A) in the coastwise or intercoastal trade; (B) on
the Great Lakes, or on bays, sounds, rivers, harbors,
or inland lakes of the United States; (C) in foreign
trade as defined in section 905 of this Act for
purposes of title V of this Act; or (D) as an ocean
thermal energy conversion facility or plantship; (E)
with respect to floating drydocks in the construction,
reconstruction, reconditioning, or repair of vessels;
or (F) with respect to an eligible export vessel, in
world-wide trade; Provided, however, That no guarantee
shall be entered into pursuant to this paragraph (a)(1)
later than one year after delivery, or redelivery in
the case of reconstruction or reconditioning of any
such vessel unless the proceeds of the obligation are
used to finance the construction, reconstruction, or
reconditioning of a vessel or vessels, or facilities or
equipment pertaining to marine operations;
(2) financing, including reimbursement of an obligor
for expenditures previously made for, construction,
reconstruction, reconditioning, or purchase of a vessel
or vessels owned by citizens or nationals of the United
States or citizens of the Northern Mariana Islands
which are designed principally for research, or for
commercial use in the fishing trade or industry;
(3) financing the purchase, reconstruction, or
reconditioning of vessels or fishery facilities for
which obligations were guaranteed under this title
that, under the provisions of section 1105:
(A) are vessels or fishery facilities for
which obligations were accelerated and paid;
(B) were acquired by the Fund; or
(C) were sold at foreclosure instituted by
the Secretary;
(4) financing, in whole or in part, the repayment to
the United States of any amount of construction-
differential subsidy paid with respect to a vessel
pursuant to title V of this Act, as amended;
(5) refinancing existing obligations issued for one
of the purposes specified in (1), (2), (3), or (4)
whether or not guaranteed under this title, including,
but not limited to, short-term obligations incurred for
the purpose of obtaining temporary funds with the view
to refinancing from time to time;
(6) financing or refinancing, including, but not
limited to, the reimbursement of obligors for
expenditures previously made for, the construction,
reconstruction, reconditioning, or purchase of fishery
facilities; or
(7) financing or refinancing, including, but not
limited to, the reimbursement of obligors for
expenditures previously made, for the purchase of
individual fishing quotas in accordance with section
303(d)(4) of the Magnuson-Stevens Fishery Conservation
and Management Act (16 U.S.C. 1853(d)(4)).
Any obligation guaranteed under paragraphs (6) and (7) shall be
treated, for purposes of this title, in the same manner and to
the same extent as an obligation guaranteed under this title
which aids in the construction, reconstruction, reconditioning,
or purchase of a vessel; except with respect to provisions of
this title that by their nature can only be applied to vessels.
(b) Contents of Obligations.--Obligations guaranteed under
this title--
(1) shall have an obligor approved by the Secretary
as responsible and possessing the ability, experience,
financial resources, and other qualifications necessary
to the adequate operation and maintenance of the vessel
or vessels which serve as security for the guarantee of
the Secretary;
(2) subject to the provisions of subsection (c)(1)
and subsection (i), shall be in an aggregate principal
amount which does not exceed 75 per centum of the
actual cost or depreciated actual cost, as determined
by the Secretary, of the vessel which is used as
security for the guarantee of the Secretary: Provided,
however, That in the case of a vessel, the size and
speed of which are approved by the Secretary, and which
is or would have been eligible for mortgage aid for
construction under section 509 of this Act (or would
have been eligible for mortgage aid under section 509
of this Act except that the vessel was built with the
aid of construction-differential subsidy and said
subsidy has been repaid) and in respect of which the
minimum downpayment by the mortgagor required by that
section would be or would have been 12\1/2\ per centum
of the cost of such vessel, such obligations may be in
an amount which does not exceed 87\1/2\ per centum of
such actual cost or depreciated actual cost: Provided,
further, That the obligations which relate to a barge
which is constructed without the aid of construction-
differential subsidy, or, if so subsidized, on which
said subsidy has been repaid, may be in an aggregate
principal amount which does not exceed 87\1/2\ per
centum of the actual cost or depreciated actual cost
thereof: Provided further, That in the case of a
fishing vessel or fishery facility, the obligation
shall be in an aggregate principal amount not to exceed
80 percent of the actual cost or depreciated actual
cost of the fishing vessel or fishery facility, except
that no debt may be placed under this proviso through
the Federal Financing Bank: Provided further, That in
the case of an ocean thermal energy conversion facility
or plantship which is constructed without the aid of
construction-differential subsidy, such obligations may
be in an aggregate principal amount which does not
exceed 87\1/2\ percent of the actual cost or
depreciated actual cost of the facility or plantship:
Provided further, That in the case of an eligible
export vessel, such obligations may be in an aggregate
principal amount which does not exceed 87\1/2\ of the
actual cost or depreciated actual cost of the eligible
export vessel;
(3) shall have maturity dates satisfactory to the
Secretary but, subject to the provisions of paragraph
(2) of subsection (c) of this section, not to exceed
twenty-five years from the date of the delivery of the
vessel which serves as security for the guarantee of
the Secretary or, if the vessel has been reconstructed
or reconditioned, not to exceed the later of (i)
twenty-five years from the date of delivery of the
vessel and (ii) the remaining years of the useful life
of the vessel as determined by the Secretary;
(4) shall provide for payments by the obligor
satisfactory to the Secretary;
(5) shall bear interest (exclusive of charges for the
guarantee and service charges, if any) at rates not to
exceed such per centum per annum on the unpaid
principal as the Secretary determines to be reasonable,
taking into account the range of interest rates
prevailing in the private market for similar loans and
the risks assumed by the Secretary;
(6) shall provide, or a related agreement shall
provide, that if the vessel used as security for the
guarantee of the Secretary is a delivered vessel, the
vessel shall be in class A-1, American Bureau of
Shipping, or shall meet such other standards as may be
acceptable to the Secretary, with all required
certificates, including but not limited to, marine
inspection certificates of the United States Coast
Guard or, in the case of an eligible export vessel, of
the appropriate national flag authorities under a
treaty, convention, or other international agreement to
which the United States is a party, with all
outstanding requirements and recommendations necessary
for retention of class accomplished, unless the
Secretary permits a deferment of such repairs, and
shall be tight, stanch, strong, and well and
sufficiently tackled, appareled, furnished, and
equipped, and in every respect seaworthy and in good
running condition and repair, and in all respects fit
for service; and
(7) may provide, or a related agreement may provide,
if the vessel used as security for the guarantee of the
Secretary is a passenger vessel having the tonnage,
speed, passenger accommodations and other
characteristics set forth in title V of this Act, as
amended, and if the Secretary approves, that the sole
recourse against the obligor by the United States for
any payments under the guarantee shall be limited to
repossession of the vessel and the assignment of
insurance claims and that the liability of the obligor
for any payments of principal and interest under the
guarantee shall be satisfied and discharged by the
surrender of the vessel and all right, title, and
interest therein to the United States: Provided, That
the vessel upon surrender shall be (i) free and clear
of all liens and encumbrances whatsoever except the
security interest conveyed to the Secretary under this
title, (ii) in class, and (iii) in as good order and
condition, ordinary wear and tear excepted, as when
acquired by the obligor, except that any deficiencies
with respect to freedom from encumbrances, condition
and class may, to the extent covered by valid policies
of insurance, be satisfied by the assignment to the
Secretary of claims of the obligor under such policies.
The Secretary may not establish, as a condition of
eligibility for guarantee under this title, a minimum
principal amount for an obligation covering the
reconstruction or reconditioning of a fishing vessel or
fishery facility. For purposes of this title, the
reconstruction or reconditioning of a fishing vessel or
fishery facility does not include the routine minor
repair or maintenance of the vessel or facility.
(c) Security.--
(1) The security for the guarantee of an obligation
by the Secretary under this title may relate to more
than one vessel and may consist of any combination of
types of security. The aggregate principal amount of
obligations which have more than one vessel as security
for the guarantee of the Secretary under this title may
equal, but not exceed, the sum of the principal amount
of obligations permissible with respect to each vessel.
(2) If the security for the guarantee of an
obligation by the Secretary under this title relates to
more than one vessel, such obligation may have the
latest maturity date permissible under subsection (b)
of this section with respect to any of such vessels:
Provided, That the Secretary may require such payments
of principal, prior to maturity, with respect to all
related obligations as he deems necessary in order to
maintain adequate security for his guarantee.
(d) Restrictions.--
(1)(A) No commitment to guarantee, or guarantee of,
an obligation shall be made by the Secretary of
Transportation unless the Secretary finds that the
property or project with respect to which the
obligation will be executed will be economically sound.
In making that determination, the Secretary shall
consider--
(i) the need in the particular segment of the
maritime industry for new or additional
capacity, including any impact on existing
equipment for which a guarantee under this
title is in effect;
(ii) the market potential for the employment
of the vessel over the life of the guarantee;
(iii) projected revenues and expenses
associated with employment of the vessel;
(iv) any charters, contracts of
affreightment, transportation agreements, or
similar agreements or undertakings relevant to
the employment of the vessel;
(v) other relevant criteria; and
(vi) for inland waterways, the need for
technical improvements, including but not
limited to increased fuel efficiency, or
improved safety.
(B) No commitment to guarantee, or guarantee of, and
obligation shall be made by the Secretary of Commerce
unless the Secretary finds, at or prior to the time
such commitment is made or guarantee becomes effective,
that the property or project with respect to which the
obligation will be executed will be, in the Secretary's
opinion, economically sound and in the case of fishing
vessels, that the purpose of the financing or
refinancing is consistent with the wise use of the
fisheries resources and with the development,
advancement, management, conservation, and protection
of the fisheries resources, or with the need for
technical improvements including but not limited to
increased fuel efficiency or improved safety.
(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) 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 offsetting 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.
(2) No commitment to guarantee, or guarantee of an
obligation may be made by the Secretary under this
title for the purchase of a used fishing vessel or used
fishery facility unless--
(A) the vessel or facility will be
reconstructed or reconditioned in the United
States and will contribute to the development
of the United States fishing industry; or
(B) the vessel or facility will be used in
the harvesting of fish from, or for a purpose
described in section 1101(k) with respect to,
an underutilized fishery.
(3) No commitment to guarantee, or guarantee of an
obligation may be made by the Secretary under this
title for the construction, reconstruction, or
reconditioning of an eligible export vessel unless--
(A) the Secretary finds that the
construction, reconstruction, or reconditioning
of that vessel will aid in the transition of
United States shipyards to commercial
activities or will preserve shipbuilding assets
that would be essential in time of war or
national emergency, and
(B) the owner of the vessel agrees with the
Secretary of Transportation that the vessel
shall not be transferred to any country
designated by the Secretary of Defense as a
country whose interests are hostile to the
interests of the United States.
(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) the economic soundness requirements set
forth in paragraph (1)(A) of this subsection
are met after the waiver of the financial
condition requirement; and
(B) the wavier shall provide for the
imposition of other requirements on the obligor
designed to compensate for the increased risk
associated with the obligor's failure to meet
regulatory requirements applicable to financial
condition.
[(4)] (5) The Secretary may obtain independent
analysis of an application for a guarantee or
commitment to guarantee under this title.
(e) Guarantee Fees.--
(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.
(f) Investigation of Applications.--The Secretary shall
charge and collect from the obligor such amounts as he may deem
reasonable for the investigation of applications for a
guarantee, for the appraisal of properties offered as security
for a guarantee [(including for obtaining independent analysis
under subsection (d)(4)),] for the issuance of commitments, for
services in connection with the escrow fund authorized by
section 1108 and for the inspection of such properties during
construction, reconstruction, or reconditioning: Provided, That
such charges shall not aggregate more than one-half of 1 per
centum of the original principal amount of the obligations to
be guaranteed.
(g) Disposition of Moneys.--All moneys received by the
Secretary under the provisions of sections 1101-1107 of this
title shall be deposited in the Fund.
(h) Additional Requirements.--Obligations guaranteed under
this title and agreements relating thereto shall contain such
other provisions with respect to the protection of the security
interests of the United States (including acceleration,
assumptions, and subrogation provisions and the issuance of
notes by the obligor to the Secretary), liens and releases of
liens, payments of taxes, and such other matters as the
Secretary may, in his discretion, prescribe.
(i) Limitation on Establishment of Percentage.--The Secretary
may not, with respect to--
(1) the general 75 percent or less limitation in
subsection (b)(2);
(2) the 87\1/2\ percent or less limitation in the
1st, 2nd, 4th, or 5th proviso to subsection (b)(2) or
section 1112(b); or
(3) the 80 percent or less limitation in the 3rd
proviso to such subsection; establish by rule,
regulation, or procedure any percentage within any such
limitation that is, or is intended to be, applied
uniformly to all guarantees or commitments to guarantee
made under this section that are subject to the
limitation.
(j) Procedure Upon Receiving Loan Guarantee Application.--
(1) Upon receiving an application for a loan
guarantee for an eligible export vessel, the Secretary
shall promptly provide to the Secretary of Defense
notice of the receipt of the application. During the
30-day period beginning on the date on which the
Secretary of Defense receives such notice, the
Secretary of Defense may disapprove the loan guarantee
based on the assessment of the Secretary of the
potential use of the vessel in a manner that may cause
harm to United States national security interests. The
Secretary of Defense may not disapprove a loan
guarantee under this section solely on the basis of the
type of vessel to be constructed with the loan
guarantee. The authority of the Secretary to disapprove
a loan guarantee under this section may not be
delegated to any official other than a civilian officer
of the Department of Defense appointed by the
President, by and with the advice and consent of the
Senate.
(2) The Secretary of Transportation may not make a
loan guarantee disapproved by the Secretary of Defense
under paragraph (1).
(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 an annual or quarterly basis
depending upon the condition of the obligor. If the Secretary
determines that the financial condition of the obligor warrants
additional protections to the Secretary, then the Secretary
shall take appropriate action under subsection (m) of this
section. If the Secretary determines that the financial
condition of the obligor jeopardizes its continued ability to
perform its responsibilities in connection with the guarantee
of obligations by the Secretary, the Secretary shall make an
immediate determination whether default should take place and
whether further measures described in subsection (m) should be
taken to protect the interests of the Secretary while insuring
that program objectives are met.
(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, and a thorough assessment of the
technical, economic, and financial aspects of the loan
application has been made.
(m) Agreement With Obligor.--The Secretary shall include
provisions in loan agreements with obligors that provide
additional authority to the Secretary to take action to limit
potential losses in connection with defaulted loans or loans
that are in jeopardy due to the deteriorating financial
condition of obligors. Provisions that the Secretary shall
include in loan agreements include requirements for additional
collateral or greater equity contributions that are effective
upon the occurrence of verifiable conditions relating to the
obligors financial condition or the status of the vessel or
shipyard project.
(n) Decision Period.--
(1) In general.--The Secretary of Transportation
shall approve or deny an application for a loan
guarantee under this title within 270 days after the
date on which the signed application is received by the
Secretary.
(2) Extension.--Upon request by an applicant, the
Secretary may extend the 270-day period in paragraph
(1) to a date not later than 2 years after the date on
which the signed application for the loan guarantee was
received by the Secretary.
SEC. 1105. DEFAULTS.
[46 U.S.C. APP. 1275]
(a) Rights of Obligee.--In the event of a default, which has
continued for thirty days, in any payment by the obligor of
principal or interest due under an obligation guaranteed under
this title, the obligee or his agent shall have the right to
demand (unless the Secretary shall, upon such terms as may be
provided in the obligation or related agreements, prior to that
demand, have assumed the obligor's rights and duties under the
obligation and agreements and shall have made any payments in
default) at or before the expiration of such period as may be
specified in the guarantee or related agreements, but not later
than ninety days from the date of such default, payment by the
Secretary of the unpaid principal amount of said obligation and
of the unpaid interest thereon to the date of payment. Within
such period as may be specified in the guarantee or related
agreements, but not later than thirty days from the date of
such demand, the Secretary shall promptly pay to the obligee or
his agent the unpaid principal amount of said obligation and
unpaid interest thereon to the date of payment: Provided, That
the Secretary shall not be required to make such payment if
prior to the expiration of said period he shall find that there
was no default by the obligor in the payment of principal or
interest or that such default has been remedied prior to any
such demand.
(b) Notice of Default.--In the event of a default under a
mortgage, loan agreement, or other security agreement between
the obligor and the Secretary, the Secretary may upon such
terms as may be provided in the obligation or related
agreement, either:
(1) assume the obligor's rights and duties under the
agreement, make any payment in default, and notify the
obligee or the obligee's agent of the default and the
assumption by the Secretary; or
(2) notify the obligee or the obligee's agent of the
default, and the obligee or the obligee's agent shall
have the right to demand at or before the expiration of
such period as may be specified in the guarantee or
related agreements, but not later than 60 days from the
date of such notice, payment by the Secretary of the
unpaid principal amount of said obligation and of the
unpaid interest thereon. Within such period as may be
specified in the guarantee or related agreements, but
not later than 30 days from the date of such demand,
the Secretary shall promptly pay to the obligee or the
obligee's agent the unpaid principal amount of said
obligation and unpaid interest thereon to the date of
payment.
(c) Secretary To Complete, Sell or Operate Property.--In the
event of any payment or assumption by the Secretary under
subsection (a) or (b) of this section, the Secretary shall have
all rights in any security held by him relating to his
guarantee of such obligations as are conferred upon him under
any security agreement with the obligor. Notwithstanding any
other provision of law relating to the acquisition, handling,
or disposal of property by the United States, the Secretary
shall have the right, in his discretion, to complete,
recondition, reconstruct, renovate, repair, maintain, operate,
charter, or sell any property acquired by him pursuant to a
security agreement with the obligor or may place a vessel in
the national defense reserve. The terms of the sale shall be as
approved by the Secretary.
(d) Cash Payments; Issuance of Notes of Obligations.--Any
amount required to be paid by the Secretary pursuant to
subsection (a) or (b) of this section, shall be paid in cash.
If at any time the moneys in the Fund authorized by section
1102 of this Act are not sufficient to pay any amount the
Secretary is required to pay by subsection (a) or (b) of this
section, the Secretary is authorized to issue to the Secretary
of the Treasury notes or other obligations in such forms and
denominations, bearing such maturities, and subject to such
terms and conditions as may be prescribed by the Secretary,
with the approval of the Secretary of the Treasury. Such notes
or other obligations shall bear interest at a rate determined
by the Secretary of the Treasury, taking into consideration the
current average market yield on outstanding marketable
obligations of the United States of comparable maturities
during the month preceding the issuance of such notes or other
obligations. The Secretary of the Treasury is authorized and
directed to purchase any notes and other obligations to be
issued hereunder and for such purpose he is authorized to use
as a public debt transaction the proceeds from the sale of any
securities issued under the Second Liberty Bond Act, as
amended, and the purposes for which securities may be issued
under such Act, as amended, are extended to include any
purchases of such notes and obligations. The Secretary of the
Treasury may at any time sell any of the notes or other
obligations acquired by him under this section. All
redemptions, purchases, and sales by the Secretary of the
Treasury of such notes or other obligations shall be treated as
public debt transactions of the United States. Funds borrowed
under this section shall be deposited in the Fund and
redemptions of such notes and obligations shall be made by the
Secretary from such Fund.
(e) Actions Against Obligor.--In the event of a default under
any guaranteed obligation or any related agreement, the
Secretary shall take such action against the obligor or any
other parties liable thereunder that, in his discretion, may be
required to protect the interests of the United States. Any
suit may be brought in the name of the United States or in the
name of the obligee and the obligee shall make available to the
United States all records and evidence necessary to prosecute
any such suit. The Secretary shall have the right, in his
discretion, to accept a conveyance of title to and possession
of property from the obligor or other parties liable to the
Secretary, and may purchase the property for an amount not
greater than the unpaid principal amount of such obligation and
interest thereon. In the event that the Secretary shall receive
through the sale of property an amount of cash in excess of the
unpaid principal amount of the obligation and unpaid interest
on the obligation and the expenses of collection of those
amounts, the Secretary shall pay the excess to the obligor.
(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.
* * * * * * *
SEC. 1108. ESCROW FUND.
[46 U.S.C. APP. 1279A]
(a) Creation.--If the proceeds of an obligation guaranteed
under this title are to be used to finance the construction,
reconstruction, or reconditioning of a vessel or vessels which
will serve as security for the guarantee of the Secretary, the
Secretary is authorized to accept and hold, in escrow under an
escrow agreement with the obligor, a portion of the proceeds of
all obligations guaranteed under this title whose proceeds are
to be so used which is equal to: (i) the excess of the
principal amount of all obligations whose proceeds are to be so
used over 75 per centum, or 87\1/2\ per centum, whichever is
applicable under section 1104 of this title, paid by or for the
account of the obligor for the construction, reconstruction, or
reconditioning of the vessel or vessels; (ii) with such
interest thereon, if any, as the Secretary may require:
Provided, That in the event the security for the guarantee of
an obligation by the Secretary relates both to a vessel or
vessels to be constructed, reconstructed or reconditioned and
to a delivered vessel or vessels, the principal amount of such
obligation shall be prorated for purposes of this subsection
(a) under regulations prescribed by the Secretary.
(b) Disbursement Prior to Termination of Escrow Agreement.--
The Secretary shall, as specified in the escrow agreement,
disburse the escrow fund to pay amounts the obligor is
obligated to pay as interest on such obligations or for the
construction, reconstruction, or reconditioning of the vessel
or vessels used as security for the guarantee of the Secretary
under this title, to redeem such obligations in connection with
a refinancing under paragraph (4) of subsection (a) of section
1104 or to pay to the obligor at such times as may be provided
for in the escrow agreement any excess interest deposits,
except that if payments become due under the guarantee prior to
the termination of the escrow agreement, all amounts in the
escrow fund at the time such payments become due (including
realized income which has not yet been paid to the obligor)
shall be paid into the Fund and (i) be credited against any
amounts due or to become due to the Secretary from the obligor
with respect to the guaranteed obligations and (ii) to the
extent not so required, be paid to the obligor.
(c) Disbursement Upon Termination of Escrow Agreement.--If
payments under the guarantee have not become due prior to the
termination of the escrow agreement, any balance of the escrow
fund at the time of such termination shall be disbursed to
prepay the excess of the principal of all obligations whose
proceeds are to be used to finance the construction,
reconstruction, or reconditioning of the vessel or vessels
which serve or will serve as security for such guarantee over
75 per centum or 87\1/2\ per centum, whichever is applicable
under section 1104 of this title, of the actual cost of such
vessel or vessels to the extent paid, and to pay interest on
such prepaid amount of principal, and the remainder of such
balance of the escrow fund shall be paid to the obligor.
(d) Investment of Fund.--The Secretary may invest and
reinvest all or any part of the escrow fund in obligations of
the United States with such maturities that the escrow fund
will be available as required for purposes of the escrow
agreement.
(e) Payment of Income.--Any income realized on the escrow
fund shall, upon receipt, be paid to the obligor.
(f) Terms of Escrow Agreement.--The escrow agreement shall
contain such other terms as the Secretary may consider
necessary to protect fully the interests of the United States.
(g) Payments Required Before Disbursement.--
(1) In general.--No disbursement shall be made under
subsection (b) to any person until the total amount
paid by or for the account of the obligor from sources
other than the proceeds of the obligation equals at
least 25 per centum or 12\1/2\ per centum, whichever is
applicable under section 1104A, of the actual cost of
the vessel. The Secretary shall establish a system of
controls, including automated controls, to ensure that
no loan funds are disbursed to a shipowner or shipyard
owner before the shipowner or shipyard owner meets the
requirement of the preceding sentence.
(2) Documented proof of progress requirement.--The
Secretary shall, by regulation, establish a
transparent, independent, and risk-based process for
verifying and documenting the progress of projects
under construction before disbursing guaranteed loan
funds. At a minimum, the process shall require
documented proof of progress in connection with the
construction, reconstruction, or reconditioning of a
vessel or vessels before disbursements are made from
the escrow fund. The Secretary may require that the
obligor provide a certificate from an independent party
certifying that the requisite progress in construction,
reconstruction, or reconditioning has taken place.
* * * * * * *
TITLE XII--WAR RISK INSURANCE
[SEC. 1205. INSURANCE ON PROPERTY OF GOVERNMENT DEPARTMENTS AND
AGENCIES.]
[46 U.S.C. APP. 1285]
SEC. 1205. INSURANCE ON PROPERTY OF GOVERNMENT DEPARTMENTS, AGENCIES
AND INTERNATIONAL ORGANIZATIONS.
(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.
(c) Insuring International Operations.--The Secretary of
Transportation is authorized, upon the request of the Secretary
of Defense or any other agency, with the approval of the
President, to make payments on behalf of the United States with
regard to an international sharing of risk agreement or any
lesser obligation on the part of the United States for vessels
supporting operations of the North Atlantic Treaty Organization
or similar international organization or alliance in which the
United States is involved, regardless of registration or
ownership, and without regard to whether the vessels are under
contract with a department or agency of the United States. In
order to segregate moneys received and disbursed in connection
with an agreement authorized under this subsection, the
Secretary of Transportation shall establish a subaccount within
the insurance fund established under section 1208 of this Act.
(d) Receipt of Contributions.--
(1) In general.--Notwithstanding the provisions of
section 3302(b) of title 31, United States Code, if the
international agreements referenced in subsection (c)
of this section provide for the sharing of risks
involved in mutual or joint operations, contributions
for losses incurred by the fund subaccount or financed
pursuant to section 1208 that are received from foreign
entities, may be deposited in the fund subaccount.
(2) Indemnity agreement.--Such risk sharing
agreements shall not affect the requirement that the
Secretary of Defense or a head of a department, agency,
or instrumentality designated by the President make an
indemnity agreement with the Secretary of
Transportation under subsection (b) for a waiver of
premium on insurance obtained by a department, agency
or instrumentality of the United States Government.
(3) Crediting of contributory payments.--If the
Secretary of Defense, or a designated head of a
department, agency or instrumentality, has made a
payment to the Secretary of Transportation on account
of a loss, pursuant to an indemnification agreement
under subsection (b), and the Secretary of
Transportation subsequently receives from an entity a
contributory payment on account of the same loss,
pursuant to a risk sharing agreement referred to in
paragraph (1), the amount of the contribution shall be
deemed to be a credit in favor of the indemnifying
department, agency, or instrumentality against any
amount that such department, agency, or instrumentality
owes or may owe to the Secretary of Transportation
under a subsequent indemnification agreement.
* * * * * * *
SEC. 1208. INSURANCE FUND; INVESTMENTS; APPROPRIATIONS.
[46 U.S.C. APP. 1288]
(a) The Secretary shall create an insurance fund in the
Treasury to enable him to carry out the provisions of this
title. Moneys appropriated by Congress to carry out the
provisions of this title and all moneys received from premiums,
salvage, or other recoveries and all receipts in connection
with this title shall be deposited in the Treasury to the
credit of such fund. Payments of return premiums, losses,
settlements, judgments, and all liabilities incurred by the
United States under this title shall be made from such fund
through the Division of Disbursement, Treasury Department. Upon
the request of the Secretary of Transportation, the Secretary
of the Treasury may invest or reinvest all or any part of the
fund in securities of the United States or in securities
guaranteed as to principal and interest by the United States.
The interest and benefits accruing from such securities shall
be deposited to the credit of the fund.
(b) Such sums as shall be necessary to carry out the
provisions of this title are authorized to be appropriated to
such fund.
(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.
* * * * * * *
TITLE XIII--MARITIME EDUCATION AND TRAINING
SEC. 1302. DEFINITIONS.
[46 U.S.C. APP. 1295A]
For purposes of this title--
(1) the term ``Secretary'' means the Secretary of
Transportation;
(2) the term ``Academy'' means the United States
Merchant Marine Academy located at Kings Point, New
York which is maintained under section 1303;
(3) the term ``State maritime academy'' means any
maritime academy or college which is assisted under
section 1304 and which is sponsored by any State or
territory of the United States or, in the case of a
regional maritime academy or college, sponsored by any
group of States or territories of the United States, or
both; [and]
(4) the term ``merchant marine officer'' means any
person who holds a license issued by the United States
Coast Guard which authorizes service--
(A) as a master, mate, or pilot on board any
vessel of 1,000 gross tons or more as measured
under section 14502 of title 46, United States
Code, or an alternate tonnage measured under
section 14302 of that title as prescribed by
the Secretary under section 14104 of that title
which is documented under the laws of the
United States and which operates on the oceans
or on the Great Lakes; or
(B) as an engineer officer on board any
vessel propelled by machinery of 4,000
horsepower or more which is documented under
the laws of the United [States.] States; and
(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.
SEC. 1303. MAINTENANCE OF ACADEMY.
[46 U.S.C. APP. 1295B]
(a) Duty of Secretary.--The Secretary shall maintain the
Academy for providing instruction to individuals to prepare
them for service in the merchant marine of the United States.
(b) Nomination and Appointment of Cadets; Designation and
Licensing of Individuals From the Trust Territory of the
Pacific Islands, Western Hemisphere Nations and Nations Other
Than the United States.--
(1) Each Senator and Member of the House of
Representatives, the Panama Canal Commission, the
Governor of the Northern Mariana Islands, and the
Delegate from American Samoa may nominate for
appointment as a cadet at the Academy any individual
who is--
(A) a citizen of the United States or a
national of the United States; and
(B) a resident of the State represented by
such Senator if the individual is nominated by
a Senator, a resident of the State in which the
congressional district represented by such
Member of the House of Representatives is
located if the individual is nominated by a
Member of the House of Representatives (or a
resident of Guam, the Virgin Islands, the
District of Columbia, the Commonwealth of
Puerto Rico, or American Samoa if the
individual is nominated by a Member of the
House of Representatives representing such
area), a resident of the area or installation
described in paragraph (3)(A)(ii), or a son or
daughter of the personnel described in such
paragraph, if the individual is nominated by
the Panama Canal Commission, or a resident of
the Northern Mariana Islands if the individual
is nominated by the Governor of the Northern
Mariana Islands.
(2)(A) The Secretary shall establish minimum
requirements for the individuals nominated pursuant to
paragraph (1) and shall establish a system of
competition for the selection of individuals qualified
for appointment as cadets at the Academy.
(B) Such system of competition shall determine the
relative merit of appointing each such individual to
the Academy through the use of competitive
examinations, an assessment of the academic background
of the individual, and such other factors as are
considered effective indicators of motivation and the
probability of successful completion of training at the
Academy.
(3)(A) Qualified individuals nominated pursuant to
paragraph (1) shall be selected each year for
appointment as cadets at the Academy to fill positions
allocated as follows:
(i) Positions shall be allocated each year
for individuals who are residents of each State
and are nominated by the Members of the
Congress from such State in proportion to the
representation in Congress from that State.
(ii) Two positions shall be allocated each
year for individuals nominated by the Panama
Canal Commission who are sons or daughters of
residents of any area or installation located
in the Republic of Panama which is made
available to the United States pursuant to the
Panama Canal Treaty of 1977, the agreements
relating to and implementing that Treaty,
signed September 7, 1977, and the Agreement
Between the United States of America and the
Republic of Panama Concerning Air Traffic
Control and Related Services, concluded January
8, 1979, and sons or daughters of personnel of
the United States Government and the Panama
Canal Commission residing in the Republic of
Panama, nominated by the Panama Canal
Commission.
(iii) One position shall be allocated each
year for an individual who is a resident of
Guam and is nominated by the Delegate to the
House of Representatives from Guam.
(iv) One position shall be allocated each
year for an individual who is a resident of the
Virgin Islands and is nominated by the Delegate
to the House of Representatives from the Virgin
Islands.
(v) One position shall be allocated each year
for an individual who is a resident of the
Northern Mariana Islands and is nominated by
the Governor of the Northern Mariana Islands.
(vi) One position shall be allocated each
year for an individual who is a resident of
American Samoa and is nominated by the Delegate
to the House of Representatives from American
Samoa.
(vii) Four positions shall be allocated each
year for individuals who are residents of the
District of Columbia and are nominated by the
Delegate to the House of Representatives from
the District of Columbia.
(viii) One position shall be allocated each
year for an individual who is a resident of the
Commonwealth of Puerto Rico and is nominated by
the Resident Commissioner to the United States
from Puerto Rico.
(B) The Secretary shall make appointments of
qualified individuals to fill the positions allocated
pursuant to subparagraph (A) (from among the
individuals nominated pursuant to paragraph (1)) in the
order of merit determined pursuant to paragraph (2)(B)
among residents of each State, Guam, the Virgin
Islands, the Northern Mariana Islands, American Samoa,
the District of Columbia, and the Commonwealth of
Puerto Rico and among individuals nominated by the
Panama Canal Commission.
(C) If positions are not filled after the
appointments are made pursuant to subparagraph (B), the
Secretary shall make appointments of qualified
individuals to fill such positions from among all
individuals nominated pursuant to paragraph (1) in the
order of merit determined pursuant to paragraph (2)(B)
among all such individuals.
(D) In addition, the Secretary may each year appoint
without competition as cadets at the Academy not more
than 40 qualified individuals possessing qualities
deemed to be of special value to the Academy. In making
such appointments the Secretary shall attempt to
achieve a national demographic balance at the Academy.
(E) No preference shall be granted in selecting
individuals for appointment as cadets at the Academy
because one or more members of the immediate family of
any such individual are alumni of the Academy.
(F) Any citizen of the United States selected for
appointment pursuant to this paragraph must agree to
apply for midshipman status in the United States Naval
Reserve (including the Merchant Marine Reserve, United
States Naval Reserve) before being appointed as a cadet
at the Academy.
(G) For purposes of this paragraph, the term
``State'' means the several States.
(4)(A) In addition to paragraph (3), the Secretary
may permit, upon designation by the Secretary of the
Interior, individuals from the Trust Territory of the
Pacific Islands to receive instruction at the Academy.
(B) Not more than 4 individuals may receive
instruction under this paragraph at any one time.
(C) Any individual receiving instruction under the
authority of this paragraph shall receive the same
allowances and shall be subject to the same rules and
regulations governing admission, attendance,
discipline, resignation, discharge, dismissal, and
graduation as cadets at the Academy appointed from the
United States, subject to such exceptions as shall be
jointly agreed upon by the Secretary and the Secretary
of the Interior.
(5)(A) In addition to paragraphs (3) and (4), the
President may designate individuals from nations
located in the Western Hemisphere other than the United
States to receive instruction at the Academy.
(B) Not more than 12 individuals may receive
instruction under this paragraph at any one time, and
not more than 2 individuals receiving instruction under
this paragraph at any one time may be from the same
nation.
(C) Any individual receiving instruction under this
subparagraph is entitled to the same allowances and
shall be subject to the same rules and regulations
governing admission, attendance, discipline,
resignation, discharge, dismissal, and graduation as
cadets at the Academy appointed from the United States.
(6)(A) In addition to paragraphs (3), (4), and (5),
the Secretary may permit, upon approval of the
Secretary of State, individuals from nations other than
the United States to receive instruction at the
Academy.
(B) Not more than 30 individuals may receive
instruction under this paragraph at any one time.
(C) The Secretary shall insure that each nation from
which an individual comes to receive instruction under
this paragraph shall reimburse the Secretary for the
cost of such instruction (including the same allowances
as received by cadets at the Academy appointed from the
United States) as determined by the Secretary.
(D) Any individual receiving instruction at the
Academy under this paragraph shall be subject to the
same rules and regulations governing admission,
attendance, discipline, resignation, discharge,
dismissal, and graduation as cadets at the Academy
appointed from the United States.
(7)(A) The Secretary may permit, upon approval of the
Secretary of State, additional individuals from the
Republic of Panama to receive instruction at the
Academy, in addition to those individuals appointed
under paragraphs (3), (4), (5), and (6) of this
subsection.
(B) The Secretary shall be reimbursed for the cost of
that instruction (including the same allowances as
received by cadets at the Academy appointed from the
United States) as determined by the Secretary.
(C) An individual receiving instructions at the
Academy under this paragraph shall be subject to the
same rules and regulations governing admission,
attendance, discipline, resignation, discharge,
dismissal, and graduation as cadets at the Academy
appointed from the United States.
(8) An individual appointed as a cadet under
paragraph (3), or receiving instruction under paragraph
(4), (5), (6), or (7) of this subsection is not
entitled to hold a license authorizing service on a
merchant marine vessel of the United States solely by
reason of graduation from the Academy.
(c) Appointment of Cadet as Midshipman in the United States
Naval Reserve.--
(1) Any citizen of the United States who is appointed
as a cadet at the Academy shall be appointed by the
Secretary of the Navy as a midshipman in the United
States Naval Reserve (including the Merchant Marine
Reserve, United States Naval Reserve).
(2) The Secretary of the Navy shall provide for
cadets of the Academy who are midshipmen in the United
States Naval Reserve to be issued an identification
card (referred to as a ``military ID card'') and to be
entitled to all rights and privileges in accordance
with the same eligibility criteria as apply to other
members of the Ready Reserve of the reserve components
of the Armed Forces.
(3) The Secretary of the Navy shall carry out
paragraphs (1) and (2) in coordination with the
Secretary.
(d) Uniforms, Textbooks, and Transportation Allowances.--The
Secretary shall provide to any cadet at the Academy all
required uniforms and textbooks and allowances for
transportation (including reimbursement of traveling expenses)
while traveling under orders as a cadet of the Academy.
(e) Commitment Agreements.--
(1) Each individual appointed as a cadet at the
Academy after the date occurring 6 months after the
effective date of the Maritime Education and Training
Act of 1980, who is a citizen of the United States,
shall as a condition of appointment to the Academy sign
an agreement committing such individual--
(A) to complete the course of instruction at
the [Academy, unless the individual is
separated by the] Academy;
(B) to fulfill the requirements for a license
as an officer in the merchant marine of the
United States on or before the date of
graduation from the Academy of such individual;
[(C) to maintain a 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;]
(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;
(D) to apply for an appointment as, to accept
if tendered an appointment as, and to serve as
a commissioned officer in the United States
Naval Reserve (including the Merchant Marine
Reserve, United States Naval Reserve), the
United States Coast Guard Reserve, or any other
Reserve unit of an armed force of the United
States, for at least 6 years following the date
of graduation from the Academy of such
individual;
(E) to serve the foreign and domestic
commerce and the national defense of the United
States for at least 5 years following the date
of graduation from the Academy--
(i) as a merchant marine officer
serving on vessels documented under the
laws of the United States or on vessels
owned and operated by the United States
or by any State or territory of the
United States;
(ii) as an employee in a United
States maritime-related industry,
profession, or marine science (as
determined by the Secretary), if the
Secretary determines that service under
clause (i) is not available to such
individual;
[(iii) as a commissioned officer on
active duty in an armed force of the
United States or in the National
Oceanic and Atmospheric Administration;
or]
(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
(iv) by combining the services
specified in clauses (i), (ii), and
(iii); and
(F) to report to the Secretary on the
compliance by the individual to this paragraph.
[(2) 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)) described in paragraph
(1)(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 paragraph.
[(3)(A) If the Secretary determines that any
individual has failed to fulfill any part of the
agreement (required by paragraph (1)) described in
subparagraphs (B), (C), (D), (E), or (F) of paragraph
(1), 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 subparagraph (E)
of such paragraph. 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 paragraph.
[(B) If the Secretary of Defense is unable or
unwilling to order an individual to active duty under
subparagraph (A), the Secretary of Transportation--
[(i) may recover from the individual the cost
of education provided by the Federal
Government; and
[(ii) shall request the Attorney General to
begin court proceedings to recover the costs of
education if the Secretary decides to seek
recovery under clause (i).]
(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.
(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.
(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.
[(4)] (5) The Secretary may defer the service
commitment of any individual pursuant to subparagraph
(E) of paragraph (1) (as specified in the agreement
required by such paragraph) for a period of not more
than 2 years if such individual is engaged in a
graduate course of study approved by the Secretary,
except that any deferment of service as a commissioned
officer pursuant to paragraph (1)(E) must be approved
by the Secretary of the military department (including
the Secretary of Commerce with respect to the National
Oceanic and Atmospheric Administration) which has
jurisdiction over such service.
(f) Places of Training.--The Secretary may provide for the
training of cadets at the Academy--
(1) on vessels owned or subsidized by the United
States;
(2) on other vessels documented under the laws of the
United States if the owner of any such vessel
cooperates in such use; and
(3) in shipyards or plants and with any industrial or
educational organizations.
[(g) Bachelor of Science Degrees Awarded.--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.]
(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.
(h) Board of Visitors.--
(1) A Board of Visitors to the Academy shall be
established, for a term of two years commencing at the
beginning of each Congress, to visit the Academy
annually on a date determined by the Secretary and to
make recommendations on the operation of the Academy.
(2) The Board shall be composed of--
(A) 2 Senators appointed by the chairman of
the Commerce, Science, and Transportation
Committee of the Senate;
(B) 3 Members of the House of Representatives
appointed by the chairman of the Merchant
Marine and Fisheries Committee of the House of
Representatives;
(C) 1 Senator appointed by the Vice
President;
(D) 2 Members of the House of Representatives
appointed by the Speaker of the House of
Representatives; and
(E) the chairman of the Commerce, Science,
and Transportation Committee of the Senate and
the chairman of the Merchant Marine and
Fisheries Committee of the House of
Representatives, as ex officio members.
(3) Whenever a member of the Board is unable to
attend the annual meeting provided in paragraph (1),
another individual may be appointed in the manner
provided by paragraph (2) as a substitute for such
member.
(4) The chairmen of the Commerce, Science, and
Transportation Committee of the Senate and the Merchant
Marine and Fisheries Committee of the House of
Representatives may designate staff members of such
committees to serve without reimbursement as staff for
the Board.
(5) While away from their homes or regular places of
business in the performance of services for the Board,
members of the Board and any staff members designated
under paragraph (4) shall be allowed travel expenses,
including per diem in lieu of subsistence, in the same
manner as persons employed intermittently in the
Government service are allowed expenses under section
5703 of title 5, United States Code.
(i) Advisory Board.--
(1) An Advisory Board to the Academy shall be
established to visit the Academy at least once during
each academic year, for the purpose of examining the
course of instruction and management of the Academy and
advising the Maritime Administrator and the
Superintendent of the Academy.
(2) The Advisory Board shall be composed of not more
than 7 persons of distinction in education and other
fields relating to the Academy who shall be appointed
by the Secretary for terms not to exceed 3 years and
may be reappointed.
(3) The Secretary shall appoint a chairman from among
the members of the Advisory Board.
(4) While away from their homes or regular places of
business in the performance of service for the Advisory
Board, members of the Advisory Board shall be allowed
travel expenses, including per diem in lieu of
subsistence, in the same manner as persons employed
intermittently in the Government service are allowed
expenses under section 5703 of title 5, United States
Code.
(5) The Federal Advisory Committee Act (5 U.S.C. App.
1 et seq.) shall not apply to the Advisory Board
established pursuant to this subsection.
SEC. 1304. STATE MARITIME ACADEMIES.
[46 U.S.C. APP. 1295C]
(a) Cooperation and Assistance.--The Secretary shall
cooperate with and assist any State maritime academy in
providing instruction to individuals to prepare them for
service in the merchant marine of the United States.
(b) Regional Maritime Academies.--The Governors of all States
or territories of the United States, or both, cooperating to
sponsor a regional maritime academy shall designate in writing
one State or territory of the United States, from among the
sponsoring States or territories, or both, to conduct the
affairs of such regional maritime academy. Any regional
maritime academy shall be eligible for assistance from the
Federal Government on the same basis as any State maritime
academy sponsored by a single State or territory of the United
States.
(c) Training Vessels.--
(1)(A) The Secretary may furnish for training
purposes any suitable vessel under the control of the
Secretary or provided under subparagraph (B), or
construct and furnish a suitable vessel if such a
vessel is not available, to any State maritime academy
meeting the requirements of subsection (f)(1). Any such
vessel--
(i) shall be repaired, reconditioned, and
equipped (including supplying all apparel,
charts, books, and instruments of navigation)
as necessary for use as a training ship;
(ii) shall be furnished to such State
maritime academy only after application for
such vessel is made in writing by the Governor
of the State or territory sponsoring such State
maritime academy or, with respect to a regional
maritime academy the Governor of the State or
territory designated pursuant to subsection
(b);
(iii) shall be furnished to such State
maritime academy only if a suitable port for
the safe mooring of such vessel is available
while it is being used by such academy;
(iv) shall be maintained in good repair by
the Secretary; and
(v) shall remain the property of the United
States.
(B) Any department or agency of the United States may
provide to the Secretary to be furnished to any State
maritime academy any vessel (including equipment) which
is suitable for the purposes of this paragraph and
which can be provided without detriment to the service
to which such vessel is assigned.
(2) The Secretary may pay to any State maritime
academy the amount of the costs of all fuel consumed by
any vessel furnished under paragraph (1) while such
vessel is being used for training purposes by such
academy.
(3)(A) The Secretary may provide for the training of
individuals attending a State maritime academy--
(i) on vessels owned or subsidized by the
United States;
(ii) on other vessels documented under the
laws of the United States if the owner of any
such vessel cooperates in such use; and
(iii) in shipyards or plants and with any
industrial or educational organizations.
(B) While traveling under orders for purposes of
receiving training under this paragraph, any individual
who is attending a State maritime academy shall receive
from the Secretary allowances for transportation
(including reimbursement of traveling expenses) in
accordance with any regulations promulgated by the
Secretary.
(d) Annual Payments.--
(1)(A) The Secretary may enter into an agreement,
which shall be effective for not more than 4 years,
with one State maritime academy (not including regional
maritime academies) located in each State or territory
of the United States which meets the requirements of
subsection (f)(1), and with each regional maritime
academy which meets the requirements of subsection
(f)(1), to make annual payments to each such academy
for the maintenance and support of such academy.
(B) Subject to subparagraph (C), the annual payment
to such State maritime academy shall be at least equal
to the amount given to the academy for its maintenance
and support by the State in which it is located, and to
such regional maritime academy shall be at least equal
to the amount given the academy by all States and
territories cooperating to sponsor the academy.
(C) The amount under subparagraph (B) may not be more
than $25,000, except that the amount shall be--
(i) $100,000 to such State maritime academy
if the academy meets the condition set forth in
subsection (f)(2); or
(ii) $200,000 to such regional maritime
academy if the academy meets the condition set
forth in subsection (f)(2).
(2) The Secretary shall provide to each State
maritime academy guidance and assistance in developing
courses on the operation and maintenance of new
vessels, on equipment, and on innovations being
introduced to the merchant marine of the United States.
(e) Detailing of Personnel.--Upon the request of the Governor
of any State or territory, the President may detail, without
reimbursement, any of the personnel of the United States Navy,
the United States Coast Guard, or the United States Maritime
Service to any State maritime academy to serve as
superintendents, professors, lecturers, or instructors at such
academy.
(f) Conditions To Receiving Payments or Use of Vessels.--
(1) As a condition to receiving any payment or the
use of any vessel under this section, any State
maritime academy shall--
(A) provide courses of instruction on
navigation, marine engineering (including steam
and diesel propulsion), the operation and
maintenance of new vessels and equipment, and
innovations being introduced to the merchant
marine of the United States;
(B) agree in writing to conform to such
standards for courses, training facilities,
admissions, and instruction as are established
by the Secretary after consultation with the
superintendents of the State maritime
academies; and
(C) agree in writing to require, as a
condition for graduation, that each individual
who is a citizen of the United States and who
is attending the academy in a merchant marine
officer preparation program shall pass the
examination administered by the Coast Guard
required for issuance of a license under
section 7101 of title 46, United States Code.
(2) As a condition to receiving an annual payment of
any amount in excess of $25,000 under subsection (d), a
State maritime academy shall agree to admit to such
academy each year a number of individuals who meet the
admission requirements of such academy and who are
citizens of the United States residing in States and
territories of the United States other than the States
or territories, or both, supporting such academy. The
Secretary shall determine the number of individuals
under this paragraph for each State maritime academy so
that such number does not exceed one-third of the total
number of individuals attending such academy at any
time.
(g) Student Incentive Payment Agreements.--
(1) The Secretary may enter into an agreement, which
shall be effective for not more than 4 academic years,
with any individual, who is a citizen of the United
States and is attending a State maritime academy which
entered into an agreement with the Secretary under
subsection (d)(1), to make student incentive payments
to such individual, which payments shall be in amounts
equaling [$3,000] $4,000 for each academic year and
which payments shall be--
(A) allocated among the various State
maritime academies in a fair and equitable
manner;
(B) used to assist the individual in paying
the cost of uniforms, books, and subsistence;
and
(C) paid by the Secretary as the Secretary
shall prescribe while the individual is
attending the academy.
(2) Each agreement entered into under paragraph (1)
shall require the individual to accept midshipman and
enlisted reserve status in the United States Naval
Reserve (including the Merchant Marine Reserve, United
States Naval Reserve) before receiving any student
incentive payments under this subsection.
(3) Each agreement entered into under paragraph (1)
shall obligate the individual receiving student
incentive payments under the agreement--
(A) to complete the course of instruction at
the State maritime academy which the individual
is [attending, unless the individual is
separated by such academy;] attending;
(B) to take the examination for a license as
an officer in the merchant marine of the United
States on or before the date of graduation from
such State maritime academy of such individual
and to fulfill the requirements for such
license not later than 3 months after such
graduation date;
[(C) to maintain a 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;]
(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;
(D) to accept if tendered an appointment as,
and to serve as a commissioned officer in the
United States Naval Reserve (including the
Merchant Marine Reserve, United States Naval
Reserve), the United States Coast Guard
Reserve, or any other reserve unit of an armed
force of the United States, for at least 6
years following the date of graduation from
such State maritime academy of such individual;
(E) to serve the foreign and domestic
commerce and the national defense of the United
States for at least 3 years following the date
of graduation from the Academy--
(i) as a merchant marine officer
serving on vessels documented under the
laws of the United States or on vessels
owned and operated by the United States
or by any State or territory of the
United States;
(ii) as an employee in a United
States maritime-related industry,
profession, or marine science (as
determined by the Secretary), if the
Secretary determines that service under
clause (i) is not available to such
individual;
[(iii) as a commissioned officer on
active duty in an armed force of the
United States or in the National
Oceanic and Atmospheric Administration;
or]
(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
(iv) by combining the services
specified in clauses (i), (ii), and
(iii); and
(F) to report to the Secretary on the
compliance by the individual to this paragraph.
[(4) If the Secretary determines that any individual
who has accepted the payment described in paragraph (1)
has failed to fulfill the part of the agreement
(required by paragraph (1)) 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 paragraph.
[(5) If the Secretary determines that any individual
has failed to fulfill any part of the agreement
(required by paragraph (1)) described in subparagraphs
(B), (C), (D), (E), or (F) of paragraph (3), 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 subparagraph (E) of such
paragraph. 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
paragraph.]
(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.
(5)(A) If the Secretary determines that an individual
has failed to fulfill any part of the agreement
required by paragraph (1), as described in paragraphs
(3)(B), (C), (D), (E), or (F), such individual may be
ordered to active duty to serve a period of time not
less than 2 years and not more than the unexpired
portion, as determined by the Secretary, of the service
required by paragraph (3)(E). The Secretary, in
consultation with the Secretary of Defense, shall
determine in which service the individual shall be
ordered to active duty to serve such period of time. In
cases of hardship, as determined by the Secretary, the
Secretary may waive this provision in whole or in part.
(B) If the Secretary of Defense is unable or
unwilling to order an individual to active duty under
subparagraph (A), or if the Secretary of Transportation
determines that reimbursement of the cost of education
provided would better serve the interests of the United
States, the Secretary may recover from the individual
the cost of education provided in an amount
proportionate to the unfulfilled portion of the service
obligation as determined by the Secretary. In cases of
hardship the Secretary may waive this provision in
whole or in part.
(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.
[(6)] (7) The Secretary may defer the service
commitment of any individual pursuant to subparagraph
(E) of paragraph (3) (as specified in the agreement
required by such paragraph) for a period of not more
than 2 years if such individual is engaged in a
graduate course of study approved by the Secretary,
except that any deferment of service as a commissioned
officer pursuant to subparagraph (E) of such paragraph
must be approved by the Secretary of the military
department (including the Secretary of Commerce with
respect to the National Oceanic and Atmospheric
Administration) which has jurisdiction over such
service.
[(7)] (8) This subsection shall apply only to
individuals first entering a State maritime academy
after the date occurring 6 months after the effective
date of the Maritime Education and Training Act of
1980.
(h) Appointment of Cadet as Midshipman in United States Naval
Reserve.--Any citizen of the United States attending a State
maritime academy may be appointed by the Secretary of the Navy
as a midshipman in the United States Naval Reserve (including
the Merchant Marine Reserve, United States Naval Reserve).
* * * * * * *
SEC. 1306. UNITED STATES MARITIME SERVICE.
[46 U.S.C. APP. 1295E]
(a) Establishment and Maintenance.--The Secretary may
establish and maintain a voluntary organization for the
training of citizens of the United States to serve on merchant
marine vessels of the United States to be known as the United
States Maritime Service.
(b) Enrollment; Compensation; Course of Study and Periods of
Training; Uniforms.--The Secretary may determine the number of
individuals to be enrolled for training and reserve purposes in
such service, to fix the rates of pay and allowances of such
individuals without regard to the provisions of chapter 51 and
subchapter III of chapter 53 of title 5, United States Code
(relating to classification and General Schedule pay rates), to
prescribe the course of study and the periods of training in
such service, and to prescribe the uniform of such service and
the rules governing the wearing and furnishing of such uniform.
(c) Ranks, Grades, and Ratings Same as for United States
Coast Guard.--The ranks, grades, and ratings for personnel of
the United States Maritime Service shall be the same as are
then prescribed for the personnel of the United States Coast
Guard.
(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.
Maritime Policy Improvement Act of 2002
[PUBLIC LAW 107-295; 116 STAT. 2099]
SEC. 213. COASTWISE TRADE AUTHORIZATION.
(a) In General.--Notwithstanding section 207 of the Merchant
Marine Act, 1920 (46 App. U.S.C. 883), or any other provision
of law restricting the operation of a foreign-built vessel in
the coastwise trade of the United States, the following vessels
may, subject to subsection (b), engage in the coastwise trade
of the United States to transport platform jackets from ports
in the Gulf of Mexico to sites on the Outer Continental Shelf
for completion of certain offshore projects as follows:
(1) The H-114, H-627, and H-851 for the projects
known as Atlantis, Thunderhorse, Holstein, and Mad Dog.
(2) The I-600 for the projects known as Murphy
Medusa, Dominion Devil's Tower, and Murphy Front
Runner.
(b) Priority for U.S.-Built Vessels.--Subsection (a) shall
not apply in instances where a United States-built, United
States-documented vessel with the capacity to [transport and
launch] transport or launch the platform jacket involved or its
components is available to transport that jacket or its
components. In this section, the term ``platform jacket'' has
the meaning given that term under the thirteenth proviso of
section 27 of the Merchant Marine Act, 1920 (46 App. U.S.C.
883), as amended by subsection (c) of this section.
(c) Definition.--The thirteenth proviso (pertaining to
transportation by launch barge) of section 27 of the Merchant
Marine Act, 1920 (46 App. U.S.C. 883), is amended by striking
the period at the end and inserting the following: ``; and for
the purposes of this proviso, the term `platform jacket'
includes any type of offshore drilling or production structure
or components, including platform jackets, tension leg or SPAR
platform superstructures (including the deck, drilling rig and
support utilities, and supporting structure) hull (including
vertical legs and connecting pontoons or vertical cylinder),
tower and base sections of a platform jacket, jacket
structures, and deck modules (known as `topsides') of a
hydrocarbon development and production platform.''.