Capital Construction Fund

Program Descriptions

Program Number

20.808

Title

Capital Construction Fund

Federal Agency

MARITIME ADMINISTRATION, DEPARTMENT OF TRANSPORTATION

Authorization

Merchant Marine Act of 1936, Section 607, as amended; Public Law 91-469, 84 Stat. 1018.

Status

Active

Objectives

To provide for replacement vessels, additional vessels or reconstructed vessels, built and documented under the laws of the United States for operation in the United States foreign, Great Lakes or noncontiguous domestic trades.

Types of Assistance

Direct Payments for Specified Use.

Uses and Use Restrictions

The capital construction fund program is a program created by the Merchant Marine Act of 1970 to help rejuvenate the American Merchant Marine. The assistance provided is not through payment of appropriated funds, but rather allows the fund holder to defer a portion of tax monies that would otherwise be paid to the U.S. Government during the tax year. The extension of tax deferral privileges encourages the accomplishment of the program objective by allowing the fund holder to accumulate and use otherwise taxable earnings for the purposes of acquiring, constructing or reconstructing vessels built and documented in the United States and operated in the United States foreign, Great Lakes or noncontiguous domestic trade and in the fisheries.

Eligibility Requirements

Applicant Eligibility

An applicant must be a U.S. citizen, own or lease one or more eligible vessels, have a program for the acquisition, construction or reconstruction of a qualified vessel and demonstrate the financial capabilities to accomplish the program.

Beneficiary Eligibility

U.S. citizen.

Credentials/Documentation

Be able to provide proof of requirements called for in the Applicant Eligibility section of this program. This program is excluded from coverage under OMB Circular No. A-87.

Application and Award Process

Preapplication Coordination

Contact the Maritime Administration, Office of Ship Financing. This program is excluded from coverage under OMB Circular No. A-102 and E.O. 12372.

Application Procedure

See Federal Register Notice (46 CFR Part 390, Appendix I) dated January 29, 1976. Persons seeking to enter into a Capital Construction Fund Agreement may make application by letter to the headquarters office shown below. This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110.

Award Procedure

The Office of Shipyards and Marine Financing reviews the application to determine the citizenship of the applicant, whether the applicant owns or leases one or more eligible vessels, has an acceptable program for the acquisition, construction or reconstruction of a qualified vessel and has the financial capability to accomplish the program. Approved by the Associate Administrator for Business and Workforce Development.

Deadlines

Applicant must execute a Capital Construction Fund Agreement prior to final due date for filing of Federal tax return to receive tax deferment for a given tax year.

Range of Approval/Disapproval Time

From 30 to 90 days.

Appeals

None.

Renewals

Assistance Considerations

Formula and Matching Requirements

Each agreement provides for a minimum deposit over a 3-year period to insure that the party is making a sufficient commitment to continue the agreement.

Length and Time Phasing of Assistance

Depends upon the individual program agreed to between the Maritime Administration and the applicant.

Post Assistance Requirements

Reports

Annual reports specified in the agreement and the rules and regulations.

Audits

All financial records are subject to audit by the Internal Revenue Service and/or the Maritime Administration, Department of Transportation.

Records

See Reports.

Financial Information

Account Identification

69-1750-0-1-403.

Obligations

(Salaries and expenses) FY 07 $0; FY 08 est not available; and FY 09 est not reported.

Range and Average of Financial Assistance

Applicant receives tax benefits for depositing assets in accordance with the program.

Program Accomplishments

As of March, 2008, there were a total of 160 active individual and consolidated Capital Construction Fund Agreements, with reported cumulative deposits since program inception in excess of $4.2 billion to accomplish construction and acquisition programs. Thus far in calendar year 2008, 2 applications have been approved.

Regulations, Guidelines and Literature

Capital Construction Fund Agreement; Parts 390 and 391, Title 46, CFR; Part 3, Title 26, CFR.

Information Contacts

Regional or Local Office

See Maritime Administration Regional Offices listed in Appendix IV of the Catalog.

Headquarters Office

Associate Administrator for Business and Workforce Development, Office of Shipyards and Marine Financing, Maritime Administration, 1200 New Jersey Avenue, S.E., Department of Transportation, Washington DC 20590. Telephone: (202) 366-5737.

Web Site Address

http://www.marad.dot.gov

Related Programs

20.802, Federal Ship Financing Guarantees
20.812, Construction Reserve Fund

Examples of Funded Projects

The types of projects funded through the CCF are the acquisition, construction, and reconstruction of qualified agreement vessels such as tugs, barges, break bulk cargo vessels, LNG carriers, tankers, etc. In addition, these vessels must be documented under the laws of the United States and operated in the United States foreign, Great Lakes or noncontiguous domestic trade. The definition of noncontiguous domestic trade includes trade between fixed drilling and production platforms located on the Outer Continental Shelf of the United States at a distance more than three miles from shore and the U.S. mainland.

Criteria for Selecting Proposals

See Award Procedure section of this program.