On December 19, 2024, Sens. Mark Kelly, D-Ariz., and Todd Young, R-Ind., and Reps. Trent Kelly, R-Miss., and John Garamendi, D-Calif., introduced the Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) for America Act (the Act) in both chambers of Congress. The proposed legislation provides a comprehensive approach to revitalizing the United States as a maritime nation by establishing national oversight and consistent federal funding for the US maritime industry, making US-flagged vessels commercially competitive in international trade, rebuilding the US shipyard industrial base, and expanding and strengthening the recruitment, training, and retention of mariners and shipyard workers. Running 343 pages in its official printed format, the Act contains many specific legislative proposals, grouped into seven titles. The following is a high-level summary of the subject matter covered by each title.

Title I of the Act addresses oversight and accountability by creating a White House-level position of Maritime Security Advisor, who in turn will lead an interagency Maritime Security Board tasked with making whole-of-government decisions to implement a national maritime strategy.

Title II of the Act establishes a Maritime Security Trust Fund similar to the dedicated trust funds that exist for other modes of transportation that are supported by user fees, such as the Highway Trust Fund. The purpose of the Maritime Security Trust Fund would be to provide funding for federal programs that support US maritime transportation independent of the annual congressional appropriations process. Funding of the Maritime Trust Fund is described in the summary of Title VII of the Act below.

Title III directs the Secretaries of Transportation, Defense, and Homeland Security to acquire and maintain sufficient commercial and military sealift capability to meet US national defense and economic security objectives. The Maritime Security Board is directed to leverage federal programs of financial assistance to expand the fleet of US vessels to the minimum number needed to accomplish these objectives.

Title IV of the Act establishes a new federal program, the Strategic Commercial Fleet Program, with the goal of establishing a fleet of 250 of privately owned, US-built, US-flagged, US-crewed vessels that operate in international trade. The program will provide annual support payments to cover the difference in capital costs and operating costs associated with constructing and operating a US-built, US-flagged vessel as compared to a fair and reasonable estimate of the costs of constructing and operating that type of vessel in a foreign shipyard or under a foreign flag. Title IV of the Act also increases the percentage of US government cargo that must sail on US-flagged vessels from 50% to 100%.

Title V of the Act establishes a shipbuilding financial incentive program that allows the US Maritime Administration (MARAD) to aid in the construction of US-built, US-flagged vessels (that are not part of the Strategic Commercial Fleet) and to make investments in US shipyards and facilities that produce critical components for shipyards. Preference is given to US-flagged vessels that will operate in foreign commerce, but there is provision for MARAD to establish a pilot program for assistance in building vessels that will operate in domestic trade under certain conditions. This title of the Act transforms MARAD’s Title XI program into a revolving loan fund, with proceeds generated by loans and loan guarantees reinvested into the program. The Act also provides greater flexibility in the Construction Reserve Fund and Capital Construction Fund (CCF) programs of MARAD. This includes expanding the CCF program to allow marine terminal operators to create CCF accounts and use deposited funds to replace cargo-handling equipment at marine terminals in the United States, but excluding equipment made by a Chinese-owned or controlled entity.

Title VI of the Act provides several incentives for recruiting and retaining mariners and shipyard workers. These include programs to qualify for public service loan forgiveness, to receive educational assistance under the GI bill, and to receive preference when applying for federal employment. This title of the Act requires MARAD to conduct a targeted public recruiting campaign, working with a national marketing firm, to promote the benefits of a career in the maritime industry. Title VI also creates a federal advisory committee at MARAD to bring together employers and educators to identify joint opportunities to train needed workers for maritime careers.

Title VII of the Act provides for the Maritime Security Trust Fund to be funded by duties, fees, penalties, taxes, and tariffs collected by Customs and Border Protection. This title creates an investment tax credit of up to 40.5% for investments to construct, repower, or reconstruct eligible oceangoing vessels in the United States, and a 25% investment tax credit for investments in a qualified shipyard in the United States.

The bipartisan sponsorship in both chambers of Congress and the initial support that the SHIPS Act has received from a large number of maritime industry stakeholders bodes well for its prospects in the new Congress, which convened last week. We expect a similar version of the proposed legislation to be re-introduced in the new Congress during the first quarter of this year.