Liner Development Act of 1986

Liner Development Act of 1986 - Amends the Merchant Marine Act, 1936 to authorize persons who qualify to enter into operating-differential subsidy contracts with the Secretary of Transportation. Authorizes any person currently under contract with the Secretary to have such contract amended to provide for the payment of such an operating-differential subsidy (ODS). Makes an owner or operator of a qualified vessel (certain liners) eligible to receive ODS payment if such vessel is operating in international trade on the date of enactment of this Act. Authorizes certain other vessel owners or operators to file for an amended contract under this Act.

Requires the Secretary, when entering into a contract or an amended contract under this Act, to provide that: (1) the contract vessel shall be manned exclusively by U.S. citizens; (2) such vessel shall be offered for enrollment in a sealift readiness program approved by the Secretary of Defense; and (3) the construction plan of vessels constructed after the enactment of this Act is reviewed by the Secretary of the Navy for possible equipment modification for purposes of national defense.

Terminates each ODS contract and contract amendments 15 years after enactment of this Act, with possible 15-year renewals. Allows each such contract or amended contract to be further amended or rescinded only upon the mutual consent of the Secretary and the contractor. Requires liner vessels receiving ODS payments under this Act to operate only in international trade or in accordance with the Merchant Marine Act, 1936. Prohibits any liner vessel receiving ODS payments under this Act from also receiving payments under the Merchant Marine Act, 1936.

Outlines administrative provisions concerning such contracts and contract amendments. Requires the Secretary to employ a wage index, revised at least every two years, for the purpose of calculating ODS payments. Requires the Secretary to make such ODS payments on a monthly basis. Provides that the computation of ODS payments shall be determined by the numbers and ratings of U.S. officers and crews on qualified vessels.

Prohibits any person who has entered into an ODS contract or contract amendment from directly or indirectly competing in international trade with any U.S.-built, U.S.-flag liner vessel which operated on an essential trade route, or service area to such route, in 1984, unless certain conditions are met. Allows such competition to occur if a rationalization agreement (a cooperative working arrangement using pooling or allocation of earnings, losses, or traffic) has been drawn up between such vessels. Provides for review and enforcement of such rationalization agreements by the Federal Maritime Commission (FMC).

Allows persons who have entered into ODS contracts or other such contracts under the Merchant Marine Act, 1936 to file complaints with the FMC. Requires the FMC to establish an Arbitration Board to hear such complaints within 15 days after receiving such complaint. Outlines administrative procedures relating to the hearing and decision process of the Arbitration Board of the FMC.

Establishes, three years after the enactment of this Act, the Maritime Policy Review Board. Requires such Board, within one year after its appointment, to report to the Congress on whether to continue provisions of this Act relating to rationalization agreements and complaint procedures.

Authorizes the FMC to investigate and, if necessary, issue remedial orders proscribing any activity or practice by any person, foreign or domestic, or by any foreign government, which the Commission considers to be contrary to the purposes of this Act. Outlines civil penalties for any person failing to comply with remedial orders.

Amends the Merchant Marine Act, 1936 to include the purposes of this Act within such Act's declaration of policy and purposes.

Provides for the waiver of certain restrictions (regarding transportation of Government cargoes) against vessels built or rebuilt outside the United States or documented under any foreign registry from operation in a specific trade route if every person operating a U.S.-flag liner vessel on such trade route agrees to waive such restrictions.

Makes funds authorized or appropriated under the Merchant Marine Act, 1936 for the operation of liner vessels available to satisfy obligations under this Act.

Authorizes certain persons operating steam-powered U.S.-flag vessels for a specified period to apply to the Secretary for a grant to repower such vessel with a diesel engine. Provides for resale to the Secretary of such vessels for their insurance value when the vessel reaches 25 years of age. Authorizes appropriations.

Requires any vessel of which the Secretary has custody or title on the effective date of this Act to be made available for charter in seaworthy condition.