Shipbuilding financial incentives

(a) In general Part C of subtitle V of title 46, United States Code, is amended by inserting after chapter 537 the following: 538 Shipbuilding Financial Incentives (a) Establishment The Maritime Administrator shall establish a program that, in accordance with the requirements of this section, provides Federal grant assistance to covered entities to— (1) aid in the construction of a vessel that shall be documented under the laws of the United States; or (2) incentivize a qualified shipyard investment. (b) Definitions In this section: (1) Appropriate committees of congress The term appropriate committees of Congress means the Committee on Commerce, Science, and Transportation, the Committee on Armed Services, and the Committee on Appropriations of the Senate and the Committee on Armed Services, the Committee on Transportation and Infrastructure, and the Committee on Appropriations of the House of Representatives. (2) Covered entity The term covered entity means— (A) any proposed vessel purchaser who is a citizen of the United States; or (B) any shipyard of the United States with the ability, experience, financial resources, and other qualifications to construct or repair a military vessel or a vessel to be used in the foreign commerce of the United States. (3) Foreign commerce The term foreign commerce means— (A) commerce or trade between the United States, its territories or possessions, or the District of Columbia, and a foreign country; and (B) commerce or trade between foreign countries. (4) Foreign country of concern; foreign entity of concern The terms foreign country of concern and foreign entity of concern have the meanings given such terms in section 3604 of the SHIPS for America Act of 2026. (5) Qualified shipyard investment The term qualified shipyard investment means an investment to construct, modernize, or expand— (A) a shipyard of the United States that constructs or repairs civilian or military vessels; or (B) a manufacturing facility— (i) that is— (I) a component supplier; (II) a subcomponent supplier; or (III) a manufacturing equipment supplier; (ii) that is based in the United States; and (iii) (I) at which at least 50 percent of the products produced will be sold to shipyards of the United States or used to construct vessels of the United States; or (II) at which the investment will more than double the facility’s capacity to produce products to be sold to shipyards of the United Sates or used to construct vessels of the United States, as determined by the Administrator. (6) Shipyard of the united states The term shipyard of the United States has the meaning given that term in section 505 of the Merchant Marine Act,1936 (46 U.S.C. 53101 note). (c) Procedure (1) Application A covered entity applying for grant funding under this section shall submit an application to the Maritime Administrator. (2) Requirements In order for a covered entity to qualify for a grant under this section, the covered entity shall— (A) for grants related to construction of a vessel of the United States as described in subsection (a)(1)— (i) enter into an agreement with the Maritime Administrator establishing that the vessel that is constructed with Federal financial assistance shall be, for a period of not less than 10 years, documented under the laws of the United States; and (ii) agree to carry out all construction in a shipyard of the United States as the result of competitive bidding, after due advertisement, with the right reserved by the Administrator to disapprove any or all bids; (B) for a grant related to qualified shipyard investments as described in subsection (a)(2), use the award amounts for investments in— (i) facilities or equipment related to shipbuilding or ship repair; or (ii) maritime component suppliers and subcomponent suppliers with over 50 percent maritime use in each such investment; and (C) make commitments to worker and community investment, including through— (i) programs to expand employment opportunity for economically disadvantaged individuals; and (ii) securing commitments from regional educational and training entities and institutions of higher education to provide workforce training, including programming for training and job placement of economically disadvantaged individuals. (3) Review of applications (A) Considerations for review With respect to the review by the Maritime Administrator of an application submitted— (i) the Maritime Administrator may not approve an application for construction of a vessel as described in subsection (a)(1) unless the Administrator— (I) determines that a vessel funded through the program will aid in the promotion and development of foreign commerce; (II) determines that the vessel purchaser applying for funding under this section possesses the ability, experience, financial resources, and other qualifications necessary for the operation and maintenance of the proposed new vessel; (III) determines that the shipyard that will construct a vessel under this section possesses the ability, experience, financial resources, equipment, and other qualifications necessary to properly to construct the proposed vessel; (IV) confirms that any newly constructed vessel has dedicated space for workforce training programs identified by the Administrator; and (V) has notified the appropriate committees of Congress not later than 15 days before making any award to any covered entity; (ii) the Maritime Administrator may not approve an application for qualified shipyard investments as described in subsection (a)(2) unless the Administrator— (I) confirms that the covered entity has received an incentive offered by a governmental entity to a covered entity for the purposes of supporting a qualified shipyard investment within that jurisdiction; (II) ensures that the covered entity has an executable plan to sustain the facility without additional Federal financial assistance under this subsection for the facility; (III) determines that the project to which the application relates is in the economic interests of the United States; and (IV) receives detailed information on— (aa) the customers, or categories of customers, which the covered entity plans to serve; (bb) the type of expenditures which the covered entity plans to make; and (cc) the workforce positions that the covered entity plans to employ, including any required recruitment, training, and hiring; and (iii) the Maritime Administrator may consider— (I) whether the covered entity has previously received financial assistance under this section; (II) the price for the construction or repair of a vessel that has been negotiated between a shipyard and proposed vessel purchaser, and whether the negotiated price is fair and reasonable; (III) whether the covered entity commits to use equipment, materials, and supplies that are produced in the United States, and utilize, to the maximum extent practicable, subcontractors and suppliers that are based in the United States; and (IV) whether the covered entity commits to utilizing new or emerging technologies. (B) Records The Maritime Administrator may request records and information from the covered entity. The covered entity shall provide the records and information requested by the Administrator. (d) Award amounts (1) Construction of a vessel of the united states (A) In general For grant awards related to construction of a vessel of the United States, as described in subsection (a)(1), the Maritime Administrator shall determine the appropriate amount and funding for each financial assistance award made under this section. (B) Determination In making the determination under subparagraph (A), the Maritime Administrator shall consider the difference in the cost of constructing the proposed vessel within the United States over the fair and reasonable estimate of cost of the construction of that type of vessel if it were constructed under similar plans and specifications in a foreign shipbuilding center that is deemed by the Administrator to furnish a fair and representative example for the determination of the estimated foreign cost of construction of vessels of the type proposed to be constructed. (2) Qualified shipyard investments For grant awards provided to incentivize qualified shipyard investments as described in subsection (a)(2), the Maritime Administrator shall determine the appropriate amount for each financial assistance award made to a covered entity to maximize private sector investments and to expand shipyard and ship building capacity of the United States. (3) Use of funds A covered entity that receives a financial assistance award under this section may only use the financial assistance award amounts to— (A) (i) finance the construction of a vessel to be built in the United States and documented under the laws of the United States; or (ii) support site development, construction, and modernization for qualified shipyard investments; and (B) support workforce development for a shipyard or qualified shipyard investment. (e) Applications for reconstruction, conditioning, or repowering The Maritime Administrator may consider an application as described in subsection (a)(1), and award grants under this section, for the reconstruction, reconditioning, or repowering of an existing vessel in a shipyard of the United States. (f) Pilot program for vessels in domestic commerce (1) In general The Maritime Administrator may, if determined to be consistent with all other requirements of this section (except the requirement under subsection (c)(3)(A)(i)(I)(aa)), establish a pilot program to consider an application as described in subsection (a)(1), and award financial assistance under this section for the construction or repair of a vessel for use in service other than foreign commerce. (2) Eligible vessels In addition to all other requirements of this section (except the requirement under subsection (c)(3)(A)(i)(I)(aa)), funding through the pilot program under this subsection shall only be used for construction or repair of vessels of the United States that— (A) (i) will operate in an emerging industry or a new trade lane; (ii) will not compete with existing vessels of the United States; and (iii) will not serve a market already served by a vessel of the United States with a coastwise endorsement; (B) (i) will replace an existing vessel of the United States that is or will be acquired by the Administrator to be placed in the National Defense Reserve Fleet, pursuant to section 57101; and (ii) as consideration for the payment of financial assistance, will operate for not longer than 21 years, at which time ownership will be transferred to the Maritime Administrator and the vessel placed in the National Defense Reserve Fleet, pursuant to section 57101; or (C) will be an oceanographic research vessel (as defined in section 2101 of this title). (3) Rule of construction Nothing in this subsection shall be construed to alter the requirements under section 55102. (g) Clarification Notwithstanding any other provision of law, the provision by the Administrator of Federal financial assistance for a project described in this section shall not be considered to be a major Federal action under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) or an undertaking for the purposes of division A of subtitle III of title 54, United States Code. (j) Buy America Section 54101(d)(2) shall apply to any funds obligated by the Administrator under this section. (k) GAO review The Comptroller General of the United States shall— (1) not later than 2 years after the date of disbursement of the first financial award under this section, and biennially thereafter for 10 years, conduct a review of the program under this section; and (2) submit to the appropriate committees of Congress the results of each review. (l) Prohibition on use of funds (1) In general No funds made available under this section may— (A) be used to construct, modify, or improve a facility outside of the United States; (B) be provided to a foreign entity of concern or to support a foreign entity of concern; or (C) be used to purchase materials that are procured or sourced from a foreign entity of concern, if such funds are for construction of a vessel as described in subsection (a)(1). (2) Stock buybacks An entity receiving financial assistance under this section may not engage in any stock buyback for a period of 5 years after receiving such assistance.. (b) Clerical amendment The table of chapters at the beginning of part C of subtitle V of title 46, United States Code, and at the beginning of subtitle V of such title, are each amended by inserting after the item relating to chapter 537 the following new item: 538. Shipbuilding financial incentives 53801.