The US Maritime Administration has proposed a broad overhaul of the Capital Construction Fund (CCF), a tax-deferral programme holding about $2.56bn for investment in US commercial vessels, Splash 247 reported. The changes would allow shipowners greater flexibility to revise investment plans that have become outdated, while introducing clearer deadlines for projects and inactive accounts.
MARAD published its notice of proposed rulemaking on 22 September, covering 129 CCF agreements. According to Splash 247, the agency said many agreements include vessel projects planned years earlier that are no longer viable. The regulations remain largely unchanged from those introduced in 1976, making the proposed revision the most extensive in decades.
The overhaul would give owners more scope to reorganise investment schedules, rather than keeping funds allocated to projects that will not move ahead or withdrawing the money and incurring tax penalties. It would also update the regulations to reflect earlier legislation that widened eligibility to US-built vessels employed in domestic and international commerce.
Reconstruction requirements are among the main proposed changes. Current rules generally set a minimum of $1m in work for each vessel when a fund does not include newbuilding investment. MARAD instead proposes a $3m threshold that could be met across several ships. Splash 247 reported that this approach could make the programme more accessible to smaller owners and support retrofit projects covering multiple vessels.
The proposal would also permit vessel acquisitions using CCF money in specified circumstances. Agreements could be ended if work towards a programme objective has not begun within 10 years, while vessel construction or reconstruction would generally need to finish within 36 months of starting.
The CCF enables eligible owners and operators to defer federal income tax on funds reserved for vessel construction, reconstruction or acquisition. MARAD says vessels financed through the programme must be built in the US and documented under US law. The proposed changes are subject to a 60-day public comment period.