S.Amdt. 6454

SA 6454. Mr. YOUNG (for himself and Mr. Kelly) submitted an amendment
intended to be proposed by him to the bill S. 4784, to authorize
appropriations for fiscal year 2027 for military activities of the
Department of Defense, for military construction, and for defense
activities of the Department of Energy, to prescribe military personnel
strengths for such fiscal year, and for other purposes; which was
ordered to lie on the table; as follows:

At the appropriate place in title X, insert the following:

SEC. __. STRATEGIC COMMERCIAL FLEET.

(a) In General.--Part C of subtitle V of title 46, United
States Code, is amended by inserting after chapter 535 the
following:

``CHAPTER 536--STRATEGIC COMMERCIAL FLEET

``Sec.

[[Page S3581]]

``53601. Definitions.
``53602. Establishment of Strategic Commercial Fleet.
``53603. Operating agreements.
``53604. Payments.
``53605. National security requirements.
``53606. Regulations.

``Sec. 53601. Definitions

``In this chapter:
``(1) Administrator.--The term `Administrator' means the
Maritime Administrator.
``(2) Appropriate committees of congress.--The term
`appropriate committees of Congress' means--
``(A) the Committee on Armed Services, the Committee on
Commerce, Science, and Transportation, and the Committee on
Appropriations of the Senate; and
``(B) the Committee on Armed Services, the Committee on
Transportation and Infrastructure, and the Committee on
Appropriations of the House of Representatives.
``(3) Coastwise trade.--The term `coastwise trade' means
commerce or trade that is subject to the requirements of
section 55102 or 55103.
``(4) Covered entity.--The term `covered entity' means--
``(A) any owner or operator of a vessel eligible under
section 53602(d); or
``(B) a bid team consisting of--
``(i) an entity described in subparagraph (A);
``(ii) a shipyard in the United States with the ability,
experience, financial resources, and other qualifications
necessary for--

``(I) the construction of a vessel eligible for inclusion
in the Strategic Commercial Fleet; or
``(II) the repair of such a vessel; and

``(iii) another legal entity that is not a foreign entity
of concern.
``(5) Fleet.--The term `Fleet' means the Strategic
Commercial Fleet established under section 53602.
``(6) Foreign commerce.--The term `foreign commerce'
means--
``(A) commerce or trade between the United States, its
territories or possessions, or the District of Columbia, and
a foreign country; and
``(B) commerce or trade between foreign countries.
``(7) Foreign country of concern.--
``(A) In general.--The term `foreign country of concern'
means--
``(i) a country that is a covered nation (as defined in
section 4872(f)(2) of title 10); and
``(ii) any country that the Secretary of Transportation, in
consultation with the Secretary of Defense, the Secretary of
State, the Secretary of Commerce, the Director of National
Intelligence, the United States Trade Representative, and the
Chair of the Federal Maritime Commission, determines to be
engaged in conduct that is detrimental or potentially
detrimental to the national security or foreign policy of the
United States, until such time as the Secretary of
Transportation, in consultation with the heads of those
Federal agencies, determines that the country is no longer
engaged in such detrimental or potentially detrimental
conduct.
``(B) Country.--The term `country' means a foreign country
or a political subdivision, dependent territory, or
possession of a foreign country.
``(8) Foreign entity of concern.--The term `foreign entity
of concern' means any foreign entity that is--
``(A) designated as a foreign terrorist organization by the
Secretary of State under section 219 of the Immigration and
Nationality Act (8 U.S.C. 1189);
``(B) included on the list of specially designated
nationals and blocked persons maintained by the Office of
Foreign Assets Control of the Department of the Treasury;
``(C) owned by, controlled by, or subject to the
jurisdiction or direction of a government of a foreign
country of concern;
``(D) alleged by the Attorney General to have been involved
in activities for which a conviction was obtained under--
``(i) chapter 37 of title 18 (commonly known as the
`Espionage Act') (18 U.S.C. 792 et seq.);
``(ii) section 951 or 1030 of title 18;
``(iii) chapter 90 of title 18 (commonly known as the
`Economic Espionage Act of 1996');
``(iv) the Arms Export Control Act (22 U.S.C. 2751 et
seq.);
``(v) section 224, 225, 226, 227, or 236 of the Atomic
Energy Act of 1954 (42 U.S.C. 2274, 2275, 2276, 2277, and
2284);
``(vi) the Export Control Reform Act of 2018 (50 U.S.C.
4801 et seq.); or
``(vii) the International Emergency Economic Powers Act (50
U.S.C. 1701 et seq.);
``(E) designated by the Federal Maritime Commission as a
controlled carrier under chapter 407;
``(F) found by the Federal Maritime Commission to be
practicing unfavorable conditions in foreign trade under
chapter 421 or 423, until such time as the Federal Maritime
Commission determines that the entity is no longer practicing
such unfavorable conditions; or
``(G) determined by the Maritime Administrator, in
consultation with the Secretary of Defense, the Secretary of
State, the Director of National Intelligence, the Chair of
the Federal Maritime Commission, the Secretary of the
department in which the Coast Guard is operating, and the
United States Trade Representative to be engaged in conduct
that is detrimental or potentially detrimental to the
national security or foreign policy of the United States.
``(9) Qualified foreign built vessel.--The term `qualified
foreign built vessel'--
``(A) means a vessel that--
``(i) is not more than 14 years of age;
``(ii) is, prior to entry into the Fleet, documented under
the laws of the United States; and
``(iii) was constructed (or reconstructed) outside the
United States; and
``(B) does not include a vessel that--
``(i) was owned or operated by a foreign entity of concern;
``(ii) is a vessel of a foreign country of concern;
``(iii) was constructed by a shipyard that was owned or
operated by a foreign entity of concern or located in a
foreign country of concern; or
``(iv) was registered as a vessel of a foreign country of
concern at any time during the 3 years prior to entry into
the Fleet.
``(10) Secretary.--The term `Secretary' means the Secretary
of Transportation.
``(11) United states built vessel.--The term `United States
built vessel' means a vessel that is constructed in the
United States (and, if reconstructed, reconstructed in the
United States), consistent with the requirements of section
505 of the Merchant Marine Act, 1936 (46 U.S.C. 53101 note).
``(12) United states citizen trust.--The term `United
States citizen trust' has the meaning given such term in
section 53101.

``Sec. 53602. Establishment of Strategic Commercial Fleet

``(a) In General.--Subject to the availability of
appropriations, the Secretary, acting through the
Administrator and in consultation with the Secretary of
Defense, shall establish a fleet, to be known as the
`Strategic Commercial Fleet', of active, commercially viable,
privately owned vessels to meet national defense and other
security requirements and maintain a United States presence
in international commercial shipping.
``(b) Number of Vessels.--The Secretary shall seek to
select eligible vessels described in subsection (d) for the
Fleet through an annual competitive selection process.
Through such annual selection process, the Secretary shall--
``(1) select for inclusion in the Fleet not fewer than 10
vessels in the 12-month period that begins on the date that
is 2 years after the date of enactment of this section;
``(2) increase the number of vessels selected for inclusion
in the Fleet annually such that not later than 5 years after
such date of enactment, not fewer than 20 vessels are
selected for such inclusion annually; and
``(3) ensure that the total number of vessels included in
the fleet shall be not more than 250 vessels at any point in
time, except in wartime.
``(c) Solicitation; Entry Into Fleet.--
``(1) Solicitation.--
``(A) In general.--Not later than 1 year after the date of
enactment of this section, the Secretary shall solicit
proposals from covered entities to competitively select
vessels that are eligible under subsection (d) and meet the
requirements of this subsection for inclusion in the Fleet.
``(B) Public solicitation requirements.--In soliciting
proposals under subparagraph (A), the Secretary--
``(i) shall--

``(I) publish a notice in the Federal Register, which, at a
minimum, identifies the requirements for the number of
vessels as established by the Administrator; and
``(II) allow applicants such time as determined by the
Secretary, which shall not be less than 30 days, to submit a
proposal for entry into the Fleet; and

``(ii) may include in the notice in the Federal Register--

``(I) target numbers for each vessel type that will be
selected for inclusion in the Fleet each year; and
``(II) guidance on proposed annual operating support
payments and annual capital support payments for each vessel
type solicited, to ensure--

``(aa) covered entities submit proposals that are priced
competitively and meet the needs of the Fleet; and
``(bb) there is a competitive selection process as
described in this section.
``(2) Eligible proposals.--The Secretary shall solicit and
accept proposals in separate processes for each of the
following:
``(A) Newly constructed vessels.--
``(i) In general.--A covered entity may submit a proposal
for the Fleet that involves the construction of a United
States built vessel and operation of such vessel as a vessel
of the United States in foreign commerce.
``(ii) Interim vessel.--A proposal described in clause (i)
from a covered entity may propose the use of an interim
vessel, if such proposal provides that--

``(I) the covered entity will operate a qualified foreign-
built vessel as a vessel of the United States in foreign
commerce as part of the Fleet until the United States built
vessel described in such clause enters the Fleet, in
accordance with the milestones established within the
operating agreement under section 53603(c)(1);
``(II) when the United States built vessel enters the Fleet
or the covered entity fails to meet milestones established in
the operating agreement, the qualified foreign-built vessel
shall be removed from the Fleet; and
``(III) the covered entity may then transfer and register
the qualified foreign-built vessel under a registry of any
foreign country that is not a foreign country of concern.

[[Page S3582]]

``(B) Qualified foreign-built vessels.--
``(i) In general.--Through fiscal year 2032, a covered
entity may submit a proposal for the Fleet that involves the
operation of a qualified foreign-built vessel as a vessel of
the United States in foreign commerce.
``(ii) Exception.--After fiscal year 2032, the Secretary
may not enter into a new agreement to bring a qualified
foreign-built vessel into the Fleet unless--

``(I) the vessel is operating as an interim vessel under
subparagraph (A)(ii); or
``(II) the Secretary and Secretary of Defense jointly
certify to the appropriate committees of Congress that adding
additional qualified foreign-built vessels to the Fleet is
necessary for the national security of the United States
until replaced by a newly constructed vessel to meet the
schedule under subsection (b).

``(3) Procedure.--
``(A) In general.--A covered entity desiring to have a
vessel selected for the Fleet shall submit an eligible
proposal under paragraph (2) as at such time, in such manner,
and containing such information as the Secretary may require.
Such proposal shall include--
``(i) a proposed annual operating support payment, which
may cover the difference in operating costs (including costs
associated with vessel repair) associated with operating the
vessel as a vessel of the United States as compared to a fair
and reasonable estimate of the cost of operating that type of
vessel under the laws of a foreign country;
``(ii) in the case of a proposal described in paragraph
(2)(A), a proposed annual capital support payment, which may
cover the difference in capital costs associated with
constructing the vessel in the United States as compared to a
fair and reasonable estimate of the cost of constructing that
type of vessel in a foreign shipyard; and
``(iii) any other support payments needed to make a vessel
commercially viable in foreign commerce.
``(B) Bid team.--In the case of an eligible entity that is
a bid team described in section 53601(4)(B), such team
shall--
``(i) jointly submit a proposal under this subsection for
inclusion in the Fleet; and
``(ii) in such a proposal, clarify which entity of the bid
team shall receive each proposed annual operating support
payment and proposed annual capital support payment, and any
other proposed support payments.
``(4) Review of proposals.--
``(A) In general.--The Secretary shall conduct an
independent evaluation of each eligible proposal submitted
under paragraph (2), including evaluating the fair and
reasonable estimates made by the covered entity to support
the proposed annual operating payment, proposed annual
capital support payment, and proposed other support payments,
as applicable.
``(B) Savings provision.--Nothing in this provision shall
be construed to require compliance with part 15 of the
Federal Acquisition Regulation (or successor regulations).
``(5) Acceptance into fleet.--
``(A) In general.--The Secretary shall evaluate eligible
proposals submitted under this subsection in order to, in
accordance with this paragraph, select proposals that meet
the requirements of this section for acceptance in the Fleet.
``(B) Citizenship preference.--In selecting proposals to
meet the requirements of this section, the Secretary shall
ensure, to the extent sufficient qualified proposals are
received under this subsection, that not less than 25 percent
of vessels selected for the Fleet shall be owned or operated
by a covered entity that is, or a bid team led by, a citizen
of the United States under section 50501.
``(C) Priority.--In evaluating eligible proposals for
selection in the Fleet and subject to subparagraph (B), the
Secretary shall select proposals that represent the best
value to the Federal Government, taking into consideration
the vessel types and capabilities critical to the national
and economic security of the United States.
``(D) Relationship to the tanker security fleet.--If the
most recent Mobility Capability Requirements Study produced
by United States Transportation Command identifies a need for
a fleet of tanker vessels that are vessels of the United
States that exceeds the size of the Tanker Security Fleet
established under chapter 534 of this title, the Secretary
may select for inclusion in the Fleet a number of tanker
vessels that, when combined with the number of vessels in the
Tanker Security Fleet, is consistent with the requirements of
the Study.
``(E) Considerations for review.--In evaluating eligible
proposals submitted under this subsection for selection in
the Fleet, the Secretary shall--
``(i) determine that any vessel so selected will be
suitable for use by the United States in time of war or
national emergency;
``(ii) determine that any vessel so selected will aid in
the promotion and development of foreign commerce;
``(iii) determine that--

``(I) the proposed use of the vessel in commercial service
is reasonable; and
``(II) the owner or operator of the vessel possesses the
ability, experience, financial resources, and other
qualifications necessary for the operation and maintenance of
the vessel;

``(iv) determine that a shipyard selected to construct a
vessel under this section possesses the ability, experience,
financial resources, equipment, and other qualifications
necessary to properly construct the vessel;
``(v) determine that the cost of the construction (if
applicable) and cost of operation of a vessel under this
section is fair and reasonable;
``(vi) consider whether the covered entity commits to--

``(I) use equipment, materials, and supplies that are
produced in the United States; and
``(II) utilize, to the maximum extent practicable,
subcontractors and suppliers that are based in the United
States;

``(vii) consider whether the covered entity commits to
repair, repower, and recondition a vessel under this section
in a shipyard in the United States; and
``(viii) consider whether the covered entity has made
commitments to worker and community investment, including
through--

``(I) programs to expand employment opportunity for
economically disadvantaged individuals; or
``(II) securing commitments from regional educational and
training entities and institutions of higher education, as
defined in section 102 of the Higher Education Act of 1965
(20 U.S.C. 1002), to provide workforce training, including
programming for training and job placement of economically
disadvantaged individuals.

``(6) Timing.--
``(A) Qualified foreign vessel.--Not later than 180 days
after entering into an operating agreement under section
53603 with a covered entity for inclusion of a qualified
foreign-built vessel into the Fleet, such vessel shall be
placed into service as part of the Fleet.
``(B) Newly constructed vessel.--Not later than 36 months
after entering into an operating agreement under section
53603 with a covered entity for inclusion of a newly
constructed United States built vessel described in paragraph
(2)(A), such vessel shall be placed into service as part of
the Fleet.
``(C) Delayed admission.--The Secretary may delay the entry
of a vessel selected to participate in the Fleet for--
``(i) a delay in the construction of such vessel; or
``(ii) difficulty of the owner or operator of such vessel
in recruiting United States mariners as required under
section 53603(b)(1)(A).
``(d) Vessel Eligibility.--A vessel is eligible to be
included in the Fleet if--
``(1) the vessel--
``(A) is a vessel of the United States; or
``(B) is not a vessel of the United States, but--
``(i) the owner of the vessel has demonstrated an intent to
have the vessel documented under chapter 121 of this title if
it is included in the Fleet; and
``(ii) by the time an operating agreement is entered into
under section 53603, the vessel is documented under chapter
121 of this title;
``(2) the vessel is a United States built vessel or a
qualified foreign-built vessel;
``(3) the vessel is--
``(A) a bulk carrier vessel;
``(B) a tanker vessel;
``(C) a roll-on/roll-off vessel;
``(D) a liquefied natural gas tanker vessel;
``(E) a container vessel;
``(F) a multi-purpose vessel;
``(G) a cable vessel (as defined in section 53201 of this
title);
``(H) a heavy-lift vessel; or
``(I) any other type of vessel determined appropriate by
the Secretary;
``(4) the vessel is operated (or will be operated) in
providing transportation in foreign commerce;
``(5) the vessel meets the requirements of paragraph (1),
(2), (3), or (4) of subsection (e);
``(6) the vessel is self-propelled and is--
``(A) a newly constructed vessel;
``(B) a tank vessel that is 10 years of age or less on the
date the vessel is included in the Fleet; or
``(C) is not a tank vessel and is 15 years of age or less
on the date the vessel is included in the Fleet;
``(7) the vessel--
``(A) is suitable for use by the United States in time of
war or national emergency, as determined by the Secretary and
the Secretary of Defense;
``(B) is commercially viable, as determined by the
Secretary; and
``(C) has dedicated space for the training of--
``(i) cadets of the Merchant Marine Academy consistent with
the requirements of section 51307(b);
``(ii) students of a State maritime academy, consistent
with the requirements of section 51507; or
``(iii) participants in another workforce training program
identified by the Secretary; and
``(8) the vessel will, for the period of an operating
agreement under section 53603 that applies to the vessel,
meet any other requirement determined appropriate by the
Secretary.
``(e) Requirements Regarding Citizenship of Owners,
Charterers, and Operators.--
``(1) Vessel owned and operated by section 50501
citizens.--A vessel meets the requirements of this paragraph
if, during the period of an operating agreement under this
chapter that applies to the vessel, the vessel will be owned
and operated by 1 or more persons that are citizens of the
United States under section 50501.
``(2) Vessel owned and operated by a qualified
documentation citizen.--A vessel meets the requirements of
this paragraph if--

[[Page S3583]]

``(A) during the period of an operating agreement under
this chapter that applies to the vessel, the vessel will be
owned and operated by a person--
``(i) that is eligible to document the vessel under chapter
121 of this title;
``(ii) the chairman of the board of directors, the chief
executive officer, and a majority of the members of the board
of directors of which are citizens of the United States under
section 50501 of this title, and are appointed and subjected
to removal only upon approval by the Secretary; and
``(iii) that certifies to the Secretary that there are no
treaties, statutes, regulations, or other laws that would
prohibit the covered entity for the vessel from performing
its obligations under an operating agreement under this
chapter;
``(B) in the case of a vessel that will be owned and
operated by a person that is owned or controlled by another
person that is not a citizen of the United States under
section 50501 of this title, 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; and
``(C) the Secretary and the Secretary of Defense notify the
appropriate committees of Congress that they concur with the
certification required under subparagraph (A)(iii) and have
reviewed and agree that there are no other legal,
operational, or other impediments that would prohibit the
covered entity for the vessel from performing its obligations
under an operating agreement under this chapter.
``(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 chapter 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
this title;
``(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
(2)(A)(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 notify the
appropriate committees of Congress that they concur with the
certification required under subparagraph (A)(iv), and have
reviewed and agree that there are no other legal,
operational, or other impediments that would prohibit the
covered entity for the vessel from performing its obligations
under an operating agreement under this chapter.
``(4) Vessel owned by documentation citizen and chartered
to section 50501 citizen.--A vessel meets the requirements of
this paragraph if, during the period of an operating
agreement under this chapter that applies to the vessel, the
vessel will be--
``(A) owned by a person that is eligible to document a
vessel under chapter 121; and
``(B) demise chartered to a person that is a citizen of the
United States under section 50501.

``Sec. 53603. Operating agreements

``(a) In General.--The Secretary, acting through the
Administrator, shall require, as a condition of including any
vessel in the Fleet, that the covered entity for the vessel
enter into an operating agreement under this section.
``(b) Requirements.--
``(1) General requirements.--An operating agreement
required under subsection (a) shall require the vessel
subject to such agreement to meet the following requirements:
``(A) During the period in which the vessel is operating
under the agreement--
``(i) the vessel will be crewed in accordance with section
8103 of this title;
``(ii) the vessel shall be operated within the Fleet
exclusively in foreign commerce, or in mixed foreign and
domestic trade allowed under a registry endorsement under
section 12111 of this title, and not in coastwise trade; and
``(iii) the covered entity will have in effect an emergency
preparedness agreement described in section 53605 for the
period of such agreement.
``(B) Beginning on the first day of the operating
agreement, the vessel will be permanently ineligible for a
coastwise endorsement under section 12112 of this title or to
otherwise participate in the coastwise trade, even if the
operating agreement is terminated or not renewed.
``(2) Vessel repair requirements.--
``(A) In general.--Subject to subparagraphs (B) and (C),
the operating agreement required under subsection (a) shall--
``(i) require that the vessel subject to such agreement
undergo a set percentage, agreed to between the Secretary and
the covered entity, of repair work (excluding necessary
repairs as described in paragraph (1) of section 466(d) of
the Tariff Act of 1930 (19 U.S.C. 1466(d)(1)) at a shipyard
in the United States; and
``(ii) prohibit the vessel subject to such agreement from
receiving repairs at a shipyard in a foreign country of
concern (as defined in section 53601 of this title).
``(B) Exception for interim vessels.--The requirements of
clauses (i) and (ii) of subparagraph (A) shall not apply to
interim vessels included in the fleet under
53602(c)(2)(A)(ii).
``(C) Authority of the secretary.--Notwithstanding any
other provision of law, the Secretary may modify or waive any
requirement of subparagraph (A) only if the Secretary--
``(i) determines that waiving such requirements are in the
national security interest of the United States; and
``(ii) makes such a determination publicly available in
writing and submits the determination to the appropriate
committees of Congress (as defined in section 53601 of this
title).
``(3) Coordination with coast guard regarding coastwise
trade prohibition.--The Secretary shall coordinate with the
Secretary of the Department in which the Coast Guard is
operating to ensure that any vessel that is, or was, covered
by an operating agreement under this chapter is permanently
ineligible for a coastwise endorsement under section 12112 of
this title or to otherwise participate in the coastwise
trade, as required under paragraph (1)(B).
``(c) Milestones and Payments.--The operating agreement
shall--
``(1) prescribe specific milestones for project completion,
as agreed upon between the Secretary and the covered entity;
and
``(2) specify the schedule of operating support payments,
and as applicable, capital support payments and other
incentives and payments, based on completion of such
milestones and consistent with the eligible proposals
submitted by the covered entity under section 53602(c)(3)(A),
as agreed to by the Secretary and the covered entity.
``(d) Incentives.--
``(1) State of the art technology incentives.--An operating
agreement required under subsection (a) may include financial
incentives to support the testing or adoption of state of the
art technology, including artificial intelligence, advanced
shipbuilding techniques, automation, modern propulsion
systems, environmental performance, crew safety, national
defense features, and other technologies identified by the
Secretary to be relevant in advancing the military and
economic security of the United States.
``(2) Performance incentives.--The operating agreement may
include incentive payments for eligible entities that exceed
the milestones established under subsection (c)(1).
``(e) Term of Operating Agreement.--
``(1) In general.--An operating agreement to participate in
the Fleet shall be for a period of 7 years.
``(2) Renewal of agreement.--
``(A) In general.--A covered entity for a vessel
participating in the Fleet under an operating agreement under
this section may apply to renew such operating agreement.
``(B) Renewal limitation.--An operating agreement under
this section may be renewed not more than 2 times.
``(3) Termination payment.--
``(A) No-fault termination during contract.--Subject to
subparagraph (B), a covered entity for a vessel operating
under an operating agreement under this section that includes
a capital support payment shall receive a termination payment
if any of the following applies:
``(i) No-fault termination.--Capital support payments
provided to a covered entity under an operating agreement are
terminated during a contract term.
``(ii) No-fault non-renewal.--An operating agreement is not
selected to be renewed under paragraph (2).
``(B) Secretary determination for material lack of
compliance.--In any case in which the Secretary determines
under subsection (f) that a covered entity for a vessel
operating under an operating agreement under this section
materially fails to comply with the terms of the operating
agreement and, due to such failure to comply, the operating
agreement is terminated or not selected for renewal, the
Secretary may determine that the covered entity is not
entitled to a termination payment and subparagraph (A) shall
not apply.
``(C) Termination payment defined.--In this paragraph, the
term `termination payment' means a payment in an amount that
equals the product of--
``(i) the percentage of the remaining useful life of the
vessel, calculated using 21 years as the maximum useful life
of the vessel; multiplied by
``(ii) the difference in the cost of constructing the
vessel in the United States and the cost of constructing the
vessel in a foreign country, to the extent such cost
difference was not recovered by the covered entity through
payments received under any operating agreement under this
section.
``(f) Termination by Secretary for Lack of Program
Participant Compliance.--If a covered entity for a vessel
operating under an operating agreement under this section
materially fails to comply with the terms of the operating
agreement--
``(1) the Secretary shall notify the covered entity and
provide a reasonable opportunity to comply with the operating
agreement; and
``(2) if the covered entity fails to achieve such
compliance, the Secretary--
``(A) shall terminate the operating agreement;
``(B) shall not renew the operating agreement under
subsection (e)(2); and

[[Page S3584]]

``(C) may take steps to recover an amount equal to the
payments and incentives provided to the covered entity under
this chapter.
``(g) 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 this chapter for that fiscal
year, then the Secretary shall notify the appropriate
committees of Congress that operating agreements authorized
under this chapter 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.
``(h) Release of Vessels From Obligations.--
``(1) In general.--A vessel covered by an operating
agreement under this chapter is released from any further
obligation under the operating agreement, except for the
requirements of paragraph (2), if--
``(A) the Secretary terminated or did not renew the
operating agreement under subsection (f);
``(B) the covered entity elects to not renew its operating
agreement with the Secretary;
``(C) the vessel is ineligible for renewal under subsection
(e)(2); or
``(D) funds are not appropriated to the Secretary for
payments under the operating agreement under this chapter for
any fiscal year by the 60th day of that fiscal year.
``(2) Coastwise trade.--Consistent with the requirements of
subsection (b)(1)(B), a vessel released from obligations
under paragraph (1) shall remain permanently ineligible for a
coastwise endorsement under section 12112 of this title or to
otherwise participate in the coastwise trade.
``(3) Authority to transfer vessel.--
``(A) In general.--After a vessel is released from
obligations under paragraph (1), the covered entity may
transfer and register such vessel under a foreign registry
that--
``(i) is acceptable to the Secretary and the Secretary of
Defense, and allows the requisitioning of the vessel for
title or use, notwithstanding section 56101 of this title;
and
``(ii) is not a foreign country of concern.
``(B) Emergency acquisition of vessels.--If chapter 563 of
this title is applicable to a vessel after registration in a
foreign registry described in subparagraph (A), then the
vessel is available to be requisitioned by the Secretary
pursuant to such chapter.
``(i) Judicial Review.--No court shall have jurisdiction to
review the Secretary's decision with respect to the award or
non-award of an operating agreement issued under this
chapter.

``Sec. 53604. Payments

``(a) In General.--An operating agreement under this
chapter shall require that the Secretary make payments to the
covered entity, in accordance with the milestones established
under section 53603(c)(1) and the operating agreement under
section 53603 and subject to the availability of
appropriations.
``(b) Limitations.--Notwithstanding any other provision of
this chapter, the Secretary shall not make any payment under
this chapter for a vessel--
``(1) with respect to any day for which--
``(A) the vessel is not operated or maintained in
accordance with an operating agreement under this chapter;
``(B) the vessel is under a charter to the United States
Government; or
``(C) except as provided under subsection (c), the vessel
is engaged in transporting military or other preference
cargoes under section 55302(a), 55304, 55305, or 55314 of
this title, section 2631 of title 10, or any other cargo
preference law of the United States; or
``(2) that participates in the coastwise trade in violation
of the operating agreement and section 53603(b)(1)(B).
``(c) Preference Cargos.--
``(1) In general.--The Secretary may waive the requirement
of subsection (b)(1)(C) to the extent, in the manner, and on
the terms the Secretary prescribes, only if prior to
shipment--
``(A) the Administrator, acting in the Administrator's
capacity as Director of the National Shipping Authority--
``(i) determines the non-availability of qualified vessels
of the United States that are not enrolled in the Strategic
Commercial Fleet; and
``(ii) notifies the Secretary of such determination;
``(B) the Secretary ensures reasonable notice has been
provided to the owners and operators of qualified vessels of
the United States that are not enrolled in the Strategic
Commercial Fleet prior to making the waiver determination;
and
``(C) by not later than 7 days after issuing a waiver under
this subsection, the Secretary notifies the appropriate
committees of Congress and posts such waiver on a public
website of the Maritime Administration.
``(2) Non-delegation.--The Secretary shall not delegate the
waiver authority provided under paragraph (1).
``(d) Operating Agreement Is Obligation of United States
Government.--An operating agreement under this chapter
constitutes a contractual obligation of the United States
Government to pay the amounts provided for in the agreement,
subject to the availability of appropriations.
``(e) Clarification.--Notwithstanding any other provision
of law, the provision by the Secretary of a payment under
this section shall not be considered to be a major Federal
action under the National Environmental Policy Act of 1969
(42 U.S.C. 4321 et seq.) or an undertaking for the purposes
of division A of subtitle III of title 54.
``(f) Buy America.--Section 54101(d)(2) shall apply to any
funds obligated by the Secretary under this section that are
used to construct or repair a United States-built vessel.

``Sec. 53605. National security requirements

``(a) Emergency Preparedness Agreement Required.--The
Secretary, in coordination with the Secretary of Defense,
shall establish an emergency preparedness program under this
section under which the program participant for an operating
agreement under this chapter shall agree, as a condition of
the operating agreement, to enter into an emergency
preparedness agreement with the Secretary. The Secretary
shall negotiate and enter into an emergency preparedness
agreement with each program participant as promptly as
practicable after the program participant has entered into
the operating agreement.
``(b) Use of Existing Program.--The Secretary may use an
existing emergency preparedness program, as of the date of
enactment of this section, to satisfy the requirements of
subsection (a).
``(c) Terms of Agreement.--The terms of an emergency
preparedness agreement under this section shall--
``(1) provide that upon 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 or contingency operation (as that term is
defined in section 101(a) of title 10), the program
participant shall make available commercial transportation
resources (including services) described in subsection (e) to
the Secretary of Defense;
``(2) shall include such additional terms as may be
established by the Secretary and the Secretary of Defense;
and
``(3) shall allow for the modification or addition of terms
upon agreement by the Secretary and the program participant
and the approval by the Secretary of Defense.
``(d) Participation After Expiration of Operating
Agreement.--The Secretary may not require, through an
emergency preparedness agreement or an operating agreement,
that a program participant covered by an operating agreement
continue to participate in an emergency preparedness
agreement after the operating agreement has expired according
to its terms or is otherwise no longer in effect. After the
expiration of an emergency preparedness agreement, a program
participant may voluntarily continue to participate in the
agreement.
``(e) Resources Made Available.--The commercial
transportation resources to be made available under an
emergency preparedness agreement shall include vessels or
capacity in vessels, terminal facilities, management
services, and other related services, or any agreed portion
of such nonvessel resources for activation as the Secretary
of Defense may determine to be necessary, seeking to minimize
disruption of the program participant's service to commercial
customers.
``(f) Compensation.--
``(1) In general.--The Secretary shall include in each
emergency preparedness agreement provisions approved by the
Secretary of Defense under which the Secretary of Defense
shall pay 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 program participant's
commercial market charges for like transportation resources;
``(B) shall be fair and reasonable considering all
circumstances;
``(C) shall be provided from the time that a vessel or
resource is required by the Secretary of Defense until the
time it is redelivered to the program participant and is
available to reenter commercial service; and
``(D) shall be in addition to and shall not in any way
reflect amounts payable under section 53604 of this title.
``(g) Temporary Replacement Vessels.--Notwithstanding
section 55302(a), 55304, 55305, or 55314 of this title,
section 2631 of title 10, or any other cargo preference law
of the United States--
``(1) a program participant may operate or employ in
foreign commerce a foreign vessel, or capacity in a foreign
vessel, as a temporary replacement for a vessel of the United
States or vessel of the United States capacity that is
activated by the Secretary of Defense under an emergency
preparedness agreement or a primary Department of Defense
sealift-approved readiness program; and
``(2) such replacement vessel or vessel capacity shall be
eligible during the replacement period to transport
preference cargoes subject to sections 55302(a), 55304,
55305, and 55314 of this title and section 2631 of title 10,
to the same extent as the eligibility of the vessel or vessel
capacity replaced.
``(h) Redelivery and Liability of the 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 program participant in the same good order and
condition as when received, less ordinary wear and tear, or
the Secretary of Defense shall fully compensate the program
participant for any necessary repair or replacement.
``(2) Limitation on united states liability.--Except as may
be expressly agreed in

[[Page S3585]]

an emergency preparedness agreement, or as otherwise provided
by law, the Government shall not be liable for disruption of
a program participant's commercial business or other
consequential damages to the program participant arising from
the activation of commercial transportation resources under
an emergency preparedness agreement.

``Sec. 53606. Regulations

``The Secretary and the Secretary of Defense may each
prescribe rules as necessary to carry out their respective
responsibilities under this chapter.''.
(b) Conforming Amendments.--Section 51307(b) of title 46,
United States Code, is amended--
(1) in paragraph (1)--
(A) in the matter preceding subparagraph (A)--
(i) by striking ``, or the'' and inserting ``, the''; and
(ii) by inserting ``, or the Strategic Commercial Fleet
under chapter 536 of this title'' before ``to--''; and
(B) in subparagraph (A), by striking ``or Tanker Security
Fleet vessel'' and inserting ``Tanker Security Fleet vessel,
or Strategic Commercial Fleet vessel''; and
(2) in paragraph (2), by striking ``or 534'' and inserting
``534, or 536''.
(c) Clerical Amendment.--The table of chapters for subtitle
V of title 46, United States Code, is amended by inserting
after the item relating to chapter 535 the following:

``536. Strategic Commercial Fleet..........................53601''.....

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