Feds Revamp Ship Funds: No More Location Limits, Dormant Closures
Published Date: 9/22/2026
Proposed Rule
Summary
The Maritime Administration wants to update the Capital Construction Fund rules to include all U.S.-built ships in domestic and foreign trade, remove location limits, and clarify project timelines. They’ll also allow funds for certain purchases and close inactive accounts after 10 years. These changes affect ship owners and operators, with comments open until November 23, 2026, so get ready to weigh in!
Analyzed Economic Effects
7 provisions identified: 5 benefits, 2 costs, 0 mixed.
Eligibility Expanded to All U.S.-Built Ships
If you own or operate U.S.-built vessels, the proposed rule would let all U.S.-built ships engaged in United States domestic or foreign commerce use the Capital Construction Fund (CCF) Program and removes prior geographic trade limits. This change implements Section 3544 of the 2023 National Defense Authorization Act and aligns MARAD's regulations with that statutory expansion.
CCF Funds Can Be Used for Acquisitions
You could use CCF funds to acquire vessels or interests in certain cases: buy a new vessel from the constructing shipyard; buy a vessel more than one year old if substantial reconstruction will be completed within 18 months of withdrawing CCF funds; acquire a contract to construct a new qualified vessel; acquire an interest in a partnership or LLC; or acquire existing vessels as part of purchasing a company.
Reconstruction Rules: $3M Aggregate Threshold
The rule lets reconstruction costs be aggregated across multiple vessels so reconstruction projects collectively can meet a $3,000,000 minimum program threshold. The rule also disallows reconstruction projects for a vessel that is more than 25 years old at the time of withdrawal.
Automatic Termination for 10-Year Inactivity or Zero Balance
If a Schedule B project has not started within 10 years of establishing an Agreement, or if an Agreement's account balance is zero 10 years after establishment, MARAD may consider the Agreement inactive and subject it to termination. MARAD proposes this mechanism to address obsolete agreements and idle deposits.
Applicant and Vessel Citizenship and Manning Requirements
To be eligible, an applicant must be a U.S. citizen and must own or lease eligible vessels (or be party to a construction contract). CCF-funded vessels generally must be documented in the United States and manned with United States citizens.
36-Month Construction/Reconstruction Deadline
Construction or reconstruction projects funded through CCF must be completed within 36 months from the date work first commences, unless MARAD consents to a different schedule. This sets a clear maximum project timeline for CCF-funded work.
Prohibited Uses and Non-Qualified Operations
The rule bars certain objectives and uses of CCF funds: CCF funds cannot be used to pay principal on existing indebtedness, and MARAD will not approve applications that propose certain unacceptable objectives. It also lists non-qualified operations such as using vessels as fixed housing/restaurants, foreign-to-foreign trade with no domestic cargo operation, trade to/from U.S. oil rigs in international waters, bunkering for non-qualified trade, and using barges as docks or ramps.
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Key Dates
Department and Agencies
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