National Defense Bill Lacks Maritime Prosperity Zones

Neither proposal for tax-incentivized Maritime Prosperity Zones in two recent House bills was included in the National Defense Authorization Act (NDAA), which typically covers some portion of maritime spending along with the Water Resources Development Act.

The two bills had raised questions in the maritime community for several reasons, including a cap of 100 facilities that would have been eligible for tax credits under that version of the MPZ proposal and the lack of involvement by the Maritime Administration or Coast Guard.

But observers say there remain several legislative pathways by which the MPZ proposals could still wind up in a major bill.

The original MPZ bill was passed on July 23, a day after the NDAA was completed. It was a revenue title, under the jurisdiction of the House Ways and Means Committee, and other committees routinely strip out tax provisions when they are marking up bills.

Several other bills in progress endorse the concept of MPZs but lack revenue and funding details. The FLEETS Now Act (H.R. 8615), for example, endorses MPZs as a policy framework only, with no tax mechanics.

“The NDAA amendments carried the regulatory and program side only, and even the $20 billion Maritime Security Trust Fund in the House bill is an empty shell with no revenue source,” Bob Brettell wrote to The Waterways Journal. Brettell, managing partner of The Prosody Group that advises clients on how to apply for grants to federal agencies, has been sending out informative newsletters about the MPZ proposals to maritime and terminal clients.

Bretell laid out two possible pathways by which an MPZ measure might find a home in a bill this year.

A year-end tax package or Opportunity Zone 2.0 reauthorization is the “natural fit,” he said, because H.R. 9911 is drafted as an Opportunity Zone extension, and its December 31, 2026, effective date signals the sponsors expect a late-2026 vehicle.

Secondly, the approximately $95 billion reconciliation package Republicans are pushing this fall could also carry a White House-priority shipbuilding incentive.

However, maritime attorney Jim Kearns, a special counsel at Jones Walker who has long specialized in shipyard incentives and funding, told The Waterways Journal that the fact that the MPZ proposals were left out of the NDAA does not bode well for it moving forward this year. The final shape and funding mechanism of any MPZs remain a matter of concern to ports and terminals, for obvious reasons, but this Congress has a packed agenda on many fronts with tight windows for many actions, mid-term elections looming and pressure to avoid a shutdown.

Sang Yi, president and CEO of the American Association of Port Authorities and a former deputy administrator of the Maritime Administration, said, “More direct investment in our nation’s ports and maritime assets through public grants, like the Port Infrastructure Development Program, and from private sources incentivized by tax credits remains vital to restoring American maritime dominance. AAPA supports the Trump administration’s efforts and applauds the legislative work by Rep. Mike Kelly (R-Pennsylvania) and Rep. Nathaniel Moran (R-Texas), who are championing Maritime Prosperity Zones and the construction of U.S. shipyards to build a stronger American maritime industrial base through long-lasting incentives.”