Sec. 501. Shipbuilding financial incentives
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Part C of subtitle V of title 46, United States Code, is amended by inserting after chapter 537 the following: The Maritime Administrator shall establish a program that, in accordance with the requirements of this section, provides Federal financial assistance to covered entities to— aid in the construction of a vessel that shall be documented under the laws of the United States; or incentivize a qualified shipyard investment. In this section: The term appropriate committees of Congress means the Committee on Commerce, Science, and Transportation and the Committee on Appropriations of the Senate and the Committee on Armed Services and the Committee on Appropriations of the House of Representatives.
The term covered entity means— any proposed vessel purchaser who is a citizen of the United States; or any shipyard of the United States with the ability, experience, financial resources, and other qualifications to construct or repair a military vessel or a vessel to be used in the foreign commerce of the United States. The term foreign commerce means— commerce or trade between the United States, its territories or possessions, or the District of Columbia, and a foreign country; and commerce or trade between foreign countries.
The terms foreign country of concern and foreign entity of concern have the meanings given such terms in section 4 of the SHIPS for America Act of 2024 . The term qualified shipyard investment means an investment to construct, modernize, or expand— a shipyard of the United States that constructs or repairs civilian or military vessels; or a manufacturing facility— that is— a component supplier; a subcomponent supplier; a manufacturing equipment supplier; or a steel plate manufacturing facility; that is based in the United States; and at which at least 50 percent of the products produced will be sold to shipyards of the United States or used to construct vessels of the United States; or at which the investment will more than double the facility’s capacity to produce products to be sold to shipyards of the United Sates or used to construct vessels of the United States, as determined by the Administrator.
A covered entity desiring financial assistance under this section shall submit an application to the Maritime Administrator. In order for a covered entity to qualify for financial assistance under this section, the covered entity shall— for financial assistance related to construction of a vessel of the United States as described in subsection (a)(1)— enter into an agreement with the Maritime Administrator establishing that the vessel that is constructed with Federal financial assistance shall be, for a period of not less than 10 years, documented under the laws of the United States; and agree to carry out all construction in a shipyard of the United States as the result of competitive bidding, after due advertisement, with the right reserved by the Administrator to disapprove any or all bids; for financial assistance related to qualified shipyard investments as described in subsection (a)(2), use the financial assistance award amounts to incentivize investments in— facilities or equipment related to shipbuilding or ship repair; or maritime component suppliers, subcomponent suppliers, and steel plate manufacturing facilities with over 50 percent maritime use in each such investment; and make commitments to worker and community investment, including through— programs to expand employment opportunity for economically disadvantaged individuals; and securing commitments from regional educational and training entities and institutions of higher education to provide workforce training, including programming for training and job placement of economically disadvantaged individuals.
With respect to the review by the Maritime Administrator of an application submitted— the Maritime Administrator may not approve an application for construction of a vessel as described in subsection (a)(1) unless the Administrator— determines that a vessel funded through the program— will aid in the promotion and development of foreign commerce; and will be suitable for use by the United States for national defense or military purposes in time of war or national emergency; confirms that the vessel purchaser that received funding under this section possesses the ability, experience, financial resources, and other qualifications necessary for the operation and maintenance of the proposed new vessel; confirms that any shipyard selected to construct a vessel under this section possesses the ability, experience, financial resources, equipment, and other qualifications necessary to properly to construct the proposed vessel; confirms that any newly constructed vessel has dedicated space for the training of cadets of the United States Merchant Marine Academy (consistent with the requirements of section 51307(b)), State maritime academies (consistent with the requirements of section 51507), or other workforce training programs identified by the Administrator; and has notified the appropriate committees of Congress not later than 15 days before making any commitment to provide Federal financial assistance to any covered entity; the Maritime Administrator may not approve an application to incentivize qualified shipyard investments as described in subsection (a)(2) unless the Administrator— confirms that the covered entity has received an incentive offered by a governmental entity to a covered entity for the purposes of supporting a qualified shipyard investment within that jurisdiction; ensures that the covered entity has an executable plan to sustain the facility without additional Federal financial assistance under this subsection for the facility; determines that the project to which the application relates is in the economic and national security interests of the United States; and receives detailed information on— the customers, or categories of customers, which the covered entity plans to serve; the type of expenditures which the covered entity plans to make; and the workforce positions that the covered entity plans to employ, including any required recruitment, training, and hiring; and the Maritime Administrator may consider— whether the covered entity has previously received financial assistance under this section; the price for the construction or repair of a vessel that has been negotiated between a shipyard and proposed vessel purchaser, and whether the negotiated price is fair and reasonable; whether the covered entity commits to use equipment, materials, and supplies that are produced in the United States, and utilize, to the maximum extent practicable, subcontractors and suppliers that are based in the United States; and whether the covered entity commits to utilizing new or emerging technologies.
The Maritime Administrator may request records and information from the applicant to review the status of a covered entity. The applicant shall provide the records and information requested by the Administrator. In providing Federal financial assistance to covered entities under this section, the Maritime Administrator may— for an application for construction of a vessel as described in subsection (a)(1), give priority to applicants that— propose the construction of vessels of higher transport capability and productivity; commit to have modifications done in the United States to a vessel constructed with such financial assistance; or propose the construction or modification of a vessel to meet the national security needs of the United States; and for an application to incentivize a qualified shipyard investment as described in subsection (a)(2), give priority to applicants that— propose to expand production capacity to enable more military or commercial vessels to be constructed or repaired in the United States; commit to using new or emerging technologies or vessel design processes that increase production times or lower production costs; or have experience making qualified shipyard investments or operating shipyards for commercial or military oceangoing vessels.
Upon receiving an application for the construction of a vessel under this section, the Maritime Administrator shall submit to the Secretary of the Navy the plans and specifications for the proposed vessel for review. Not later than 30 days after the date of receiving the plans and specifications for a vessel as provided for under subparagraph (A), the Secretary of the Navy may make recommendations to the Maritime Administrator for the design of the vessel, which would enable the economical and speedy conversion of the vessel into a vessel suitable for use of the United States Government in times of war or national emergency.
If the Maritime Administrator agrees with such recommendations, the Maritime Administrator may require the covered entity to carry out such recommendations as a condition of receiving Federal financial assistance under this section with respect to that vessel. A covered entity may not receive financial assistance under this section for a vessel which is enrolled in the Strategic Commercial Fleet Program. For financial assistance related to construction of a vessel of the United States, as described in subsection (a)(1), the Maritime Administrator shall determine the appropriate amount and funding for each type of financial assistance award made under this section based on the difference in the cost of constructing the proposed vessel within the United States over the fair and reasonable estimate of cost of the construction of that type of vessel if it were constructed under similar plans and specifications (excluding national defense features as described in subsection (c)(4)) in a foreign shipbuilding center that is deemed by the Administrator to furnish a fair and representative example for the determination of the estimated foreign cost of construction of vessels of the type proposed to be constructed.
For financial assistance provided to incentivize qualified shipyard investments as described in subsection (a)(2), the Maritime Administrator shall determine the appropriate amount for each financial assistance award made to a covered entity to maximize private sector investments and to expand shipyard and ship building capacity of the United States. A covered entity that receives a financial assistance award under this section may only use the financial assistance award amounts to— finance the construction of a vessel to be built in the United States and documented under the laws of the United States; support site development, construction, and modernization for qualified shipyard investments; pay reasonable costs related to the operating expenses for a qualified shipyard investment, including specialized workforce, essential materials, and complex equipment maintenance, as determined by the Administrator; or support workforce development for a shipyard of the United States.
The Maritime Administrator may, if determined to be in the national and economic security interests of the United States and consistent with the requirements of this section, consider an application as described in subsection (a)(1), and award financial assistance under this section, for the reconstruction, reconditioning, or repowering of an existing vessel in a shipyard of the United States. The Maritime Administrator may, if determined to be in the national and economic security interests of the United States and consistent with all other requirements of this section (except the requirement under subsection (c)(3)(A)(i)(I)(aa)), establish a pilot program to consider an application as described in subsection (a)(1), and award financial assistance under this section for the construction of a vessel for use in service other than the foreign commerce.
In addition to all other requirements of this section (except the requirement under subsection (c)(3)(A)(i)(I)(aa)), a vessel qualifying for funding through the pilot program under this subsection shall only be eligible if the Administrator certifies that the vessel of the United States that will be constructed— will operate in an emerging industry or a new trade lane and will not compete with existing vessels of the United States; or will replace an existing vessel of the United States that is or will be acquired by the Administrator to be placed in the National Defense Reserve Fleet, pursuant to section 57101; and will operate for not longer than 21 years and upon disposition will be placed in the National Defense Reserve Fleet, pursuant to section 57101.
Nothing in this subsection shall be construed to alter the requirements under section 55102. For all awards to covered entities under this section, the Administrator shall, before the award is made, determine target dates by which the vessel’s construction or a qualified shipyard investment shall be completed. Subject to paragraph (3), if a covered entity does not meet such target dates, the Administrator shall progressively recover up to the full amount of an award provided to a covered entity under this section.
In the case of delays that do not meet such target dates, the Administrator may waive elements of the progressive recovery described in paragraph
(2)that is incorporated in each award after— making a formal determination that circumstances beyond the ability of the covered entity to foresee or control are responsible for delays; and submitting congressional notification. The Administrator shall notify the appropriate committees of Congress— of the target dates described in paragraph
(1)for each award; and of any waivers provided under paragraph
(3)not later than 15 days after the date on which such a waiver was provided. The Maritime Administrator shall require any vessel that is constructed with financial assistance under this section to enter into a Voluntary Intermodal Sealift Agreement or a Voluntary Tanker Agreement with the Maritime Administrator. The owner of any vessel that is constructed with financial assistance under this section and that has a Voluntary Intermodal Sealift Agreement or Voluntary Tanker Agreement with the Maritime Administrator shall agree to provide effective control of such vessel to the United States during— a national emergency declared by Presidential proclamation; or a period for which the President has proclaimed that the security of the national defense makes it advisable. During a period described in paragraph (1), the owner of a vessel described in such paragraph shall be compensated for the use of the vessel by the United States at the rate the Administrator considers just compensation for the use of the vessel. The provision by the Administrator of Federal financial assistance for a project described in 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, United States Code. Section 54101(d)(2) shall apply to any funds obligated by the Administrator under this section. The Comptroller General of the United States shall— not later than 2 years after the date of disbursement of the first financial award under this section, and biennially thereafter for 10 years, conduct a review of the program under this section; and submit to the appropriate committees of Congress the results of each review. No funds made available under this section may— be used to construct, modify, or improve a facility outside of the United States; or be provided to a foreign entity of concern or to support a foreign entity of concern. An entity receiving financial assistance under this section may not engage in any stock buyback for a period of 5 years after receiving such assistance. There is authorized to be appropriated to the Administrator, out of the Maritime Security Trust Fund established under section 9512 of the Internal Revenue Code of 1986, $250,000,000 for each of fiscal years 2025 through 2034 to provide financial assistance to covered entities under this section, to remain available until expended. . The table of chapters at the beginning of part C of subtitle V of title 46, United States Code, and at the beginning of subtitle V of such title, are each amended by inserting after the item relating to chapter 537 the following new item: 538. Shipbuilding financial incentives 53801 . Title V of the Act of June 29, 1936 (49 Stat. 1995; chapter 858) is repealed.
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- 49 Stat. 1995
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