H.R. 3842 — To amend title 46, United States Code, to include the replacement or purchase of additional cargo handling equipment as an eligible purpose for Capital Construction Funds, and for other purposes.

This section establishes in 46 U.S.C. §53501 definitions of (1) cargo handling equipment as any vehicle or land-based equipment, and the associated marine terminal or port landside infrastructure, used at a marine terminal to lift or move cargo that is manufactured in the United States or, if manufactured outside the United States, not produced domestically in sufficient and reasonably available quantities or of satisfactory quality as determined by the marine terminal operator; and (2) marine terminal as wharves, bulkheads, quays, piers, docks, and other berthing locations and adjacent storage or areas and structures associated with the primary movement of cargo or materials from vessel to shore or shore to vessel, including areas devoted to receiving, handling, holding, consolidating, loading, or delivery of waterborne shipments and to maintenance of the terminal or equipment. (The Capital Construction Fund program allows vessel owners and operators to defer taxes on deposits used for constructing, reconstructing, or acquiring qualified vessels.)

This section revises the Capital Construction Fund program (i.e., a tax-deferred deposit program for U.S.-flag vessel owners to finance vessel construction, reconstruction, or acquisition) by (1) expanding eligibility to include operators of U.S. marine terminals (previously limited to U.S. citizens owning or leasing eligible vessels) and (2) modifying allowable purposes to replacement, additional, or reconstructed cargo handling equipment for U.S. marine terminals or U.S.-built vessels for foreign or domestic trade (previously U.S.-built vessels for foreign or domestic trade or U.S. fisheries).

This section expands the scope of activities and equipment subject to the ceiling on deposits into the Maritime Security Trust Fund under the Maritime Security Program (MSP)—which supports U.S.-flag commercial vessels available for national defense sealift needs—as follows: (1) to include the operation of a marine terminal in the United States in addition to operations in the fisheries of the United States; (2) to include cargo handling equipment in addition to agreement vessels; and (3) to include cargo handling equipment in addition to both instances of agreement vessel.

This section revises the conditions for qualified withdrawals from a Capital Construction Fund (CCF)—a program allowing U.S.-flag vessel operators to defer taxes on deposits used for qualified vessel-related expenditures—(1) by specifying that such withdrawals must be for the acquisition, construction, or reconstruction of a qualified vessel, barge or container that is part of a qualified vessel's complement, or cargo handling equipment, or for principal payments on indebtedness therefor; (2) by prohibiting withdrawals for fully automated cargo handling equipment that is remotely operated or monitored if the Secretary determines it would result in a net loss of jobs within a marine terminal; and (3) by prohibiting withdrawals for cranes manufactured in the People's Republic of China.

This section modifies the basis reduction rules applicable to qualified withdrawals from a capital construction fund (i.e., a tax-deferred fund available to U.S.-flag vessel operators for acquiring or reconstructing vessels and related equipment) by including cargo handling equipment, in addition to vessels, barges, and containers, as eligible property in (1) ordinary income account withdrawals (subsection (b)), (2) capital gain account withdrawals (subsection (c)), and (3) withdrawals to pay principal on indebtedness (subsection (d)).

This section directs the Secretary to annually publish in the Federal Register a request for information regarding the availability of cargo handling equipment manufactured in the United States and to share the results with capital construction fund holders. (As background, the Capital Construction Fund allows U.S.-flag vessel operators to defer taxes on income deposited for qualified vessel construction or reconstruction.)