Construction Reserve Fund (20.812)

Program

20.812 Construction Reserve Fund

Federal Agency

Agency: Department of Transportation
Office: Maritime Administration (MARAD)

Authorization

Merchant Marine Act of 1936, Section 511, Public Law 74-835, 46 U.S.C 1161.

Program Number

20.812

Last Known Status

Active

Objectives

To promote the construction, reconstruction, reconditioning, or acquisition of merchant vessels built and documented under the laws of the United States for purposes of national defense and the development of U.S. commerce.

Types of Assistance

DIRECT PAYMENTS FOR A SPECIFIED USE

Uses and Use Restrictions

The Construction Reserve Fund (CRF), authorized under Section 511 of the Act, is a financial assistance program which provides tax deferral benefits to U.S. flag operators. The CRF permits the fundholder to deposit gains attributable to the sale of or indemnification for loss of vessels and to defer tax on such gains provided the gains are to be reinvested in vessels. Also the CRF allows the accumulation of earnings from operations of vessels documented in the U.S., or the earnings from the investment of the Fund. The ability to accumulate funds and the tax deferral provision have enabled fundholders to construct or reconstruct in the United States and documented under the laws of the United States larger, better-equipped vessels, reduce mortgage debt on the vessels and construct a greater number of vessels than would be possible without the program.

Eligibility Requirements

Applicant Eligibility

A Construction Reserve Fund (CRF) may be established by any citizen of the United States who owns, in whole or in part, a vessel or vessels operating in the foreign or domestic commerce of the U.S., or in the fisheries. Additionally, any citizen who is operating such vessel or vessels owned by another individual may establish a CRF.

Beneficiary Eligibility

Any citizen of the United States who owns, in whole or in part, a vessel or vessels operating in the foreign or domestic commerce of the U.S. or in the fisheries. Additionally, any citizen who is operating such vessel or vessels owned by another individual.

Credentials/Documentation

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

Application and Award Process

Preapplication Coordination

Contact the Maritime Administration, Office of Shipyards and Marine Financing. This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under E.O. 12372. Environmental impact information is not required for this program. This program is excluded from coverage under E.O. 12372.

Application Procedure

This program is excluded from coverage under OMB Circular No. A-102. This program is excluded from coverage under OMB Circular No. A-110. See Federal Register Notice (46 CFR 287.4). Persons seeking to establish a Construction Reserve Fund may make application by letter to the headquarters office shown below. This program is excluded from coverage under OMB Circular No. A-102 and A- 110.

Award Procedure

Review of the application by the Office of Shipyards and Marine Financing to determine citizenship of the applicant, if applicant is owner or operator of the vessel and if the proposed objective of construction, reconstruction or acquisition is acceptable.

Deadlines

Contact the headquarters or regional office, as appropriate, for application deadlines.

Range of Approval/Disapproval Time

From 60 to 90 days.

Appeals

Not Applicable.

Renewals

Not Applicable.

Assistance Considerations

Formula and Matching Requirements

This program has no statutory formula.

Matching requirements are not applicable to this program.

MOE requirements are not applicable to this program.

Length and Time Phasing of Assistance

Depends on each individual program agreed upon between the Maritime Administration and the applicant. Method of awarding/releasing assistance: by letter of credit.

Post Assistance Requirements

Reports

Audits

Not Applicable.

Records

See Reports section of this program.

Program Accomplishments

Fiscal Year 2008: As of March 2009, there were 30 construction reserve fund contracts with deposits totaling over $250,000,000 for the construction, reconstruction and acquisition of the proposed programs. Fiscal Year 2009: No Current Data Available Fiscal Year 2010: No Current Data Available

Financial Information

Account Identification

69-1750-0-1-403.

Obligations

(Direct Payments for Specified Use) FY 08 $0; FY 09 est $0; FY 10 est $0 - None. Company's own funds are used for the program.

Range and Average of Financial Assistance

Defer tax on gains by depositing the gains attributable to the sale of or
indemnification for loss of vessels in accordance with the program.

Regulations, Guidelines and Literature

Part 287, Title 46 CFR; Order and Form of Resolution which outlines details pertaining to the establishment and maintenance of the Construction Reserve Fund.

Related Programs

20.802 Federal Ship Financing Guarantees; 20.808 Capital Construction Fund

Information Contacts

Regional or Local Office

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

Headquarters Office

Brenda J. Bell 1200 New Jersey Avenue, S.E. , Washington, District of Columbia 20590 Phone: (202) 366-8797

Web Site Address

http://www.marad.dot.gov.

Examples of Funded Projects

Fiscal Year 2008: Vessels such as coastwise tankers, ocean tugs, chemical barges, and
crewboats are particular programs that have been or will be constructed,
reconstructed or acquired through the Construction Reserve Fund. These
vessels must be constructed in the United States and documented under the
laws of the United States. If the vessel is less than 12 knots speed and
2,000 gross tons, it must be determined as useful to the United States in
case of war or national emergency. Fiscal Year 2009: No Current Data Available Fiscal Year 2010: No Current Data Available

Criteria for Selecting Proposals