Marad proposes new Title XI financing criteria

The Maritime Administration wants to expand the criteria used to grant Title XI loan guarantees to include vessels designed for use in marine highways and those powered by alternative energy systems such as liquefied natural gas.

In a Feb. 24 notice in the Federal Register, Marad says these changes will allow the Title XI program to keep current with emerging trends, standards and technologies affecting the U.S. shipping industry. These include alternative fuel systems, hybrid propulsion systems, ballast water treatment technologies and anti-pollution technologies, as well as development of marine highway or short-sea shipping projects across the country.

“The demand for environmentally-friendly designs, fuels and technologies is growing rapidly throughout the maritime industry because, among other things, they meet new air emissions and other discharge standards and also present the potential for greater efficiencies and cost savings,” Marad said in its policy statement.

The agency said that continuing to update the 78-year-old loan program would further promote a “modernized and environmentally sustainable” marine transportation industry.

The move to expand the program can be seen as another vote of confidence in Title XI’s future.

The program has had a troubled history, and has been basically stagnant for many years, as successive administrations refused to fund it and several high profile defaults brought criticism. The administration of President George W. Bush branded it “an unwarranted corporate subsidy.”

Congress has a different view, stating that Title XI “provides for advancement of shipbuilding, aids the U.S.-flag fleet, and retains jobs in this critical a sector of our national defense.”

The program, which helps U.S. operators secure capital to build ships in U.S. yards, has long depended on Congress to appropriate money beyond administrative expenses. Just recently Congress provided a significant boost when $38.5 million was put in the fiscal year 2014 omnibus budget bill. This will allow Marad to issue the first new loans guarantees in several years.

The program’s financing criteria has been modified several times to meet new demands in the shipping industry to include, for example, guarantees for shipyard modernization and for vessels built for the export market.

Marad is accepting comments on the new expansion proposal until March 26.

To view the proposal: www.regulations.gov 

Docket number Marad-2014-0011

 

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