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New “green” criteria for Title XI loan guarantees You might have to “green up” your application for a Title XI loan guarantee before you hand it into the U.S. Maritime Administration. That’s because MarAd is proposing to add new environmental policy considerations to its six mandatory factors in determining the “economic soundness” for applicants. In a Maritime Development Advisory, maritime attorneys Blank Rome report that MarAd proposes to add as a contributing factor for federal decisions to award Title XI loan guarantees “whether approval will help a vessel meet or exceed environmental standards.” Comments on the notice must be received on or before March 26, 2014. Comments can be filed at www.regulations.gov. Currently, the six mandatory factors for determining the economic soundness of a project are: (1) the need in the particular segment of the maritime industry for new or additional capacity, including any impact on existing equipment for which a guarantee under this chapter is in effect;

(2) the market potential for employment of the vessel over the life of the guarantee; (3) projected revenues and expenses associated with employment of the vessel; (4) any charter, contract of affreightment, transportation agreement, or similar agreement or undertaking relevant to the employment of the vessel; (5) other relevant criteria; and (6) for inland waterways, the need for technical improvements, including increased fuel efficiency or improved safety. Blank Rome says that MarAd proposes to include in its consideration of “other relevant criteria” various environmental initiatives that are likely to increase efficiency and cost savings. Those “green” initiatives may include building Liquefied Natural Gas (LNG)-propelled vessels or converting existing ones to burn LNG, fuel cells, hybrid propulsion systems, ballast water treatment systems, or other environmentally friendly designs. As justification for this proposed policy change, says Blank Rome, MarAd references an increased demand for such

designs, fuels and new technologies, and the requirements to meet new air emission and other discharge standards. MarAd acknowledges, however, that these benefits cannot be quantified in a traditional manner, but may be able to be quantified by economists and environmental experts in qualitative terms. Blank Rome says that “trying to shoehorn analysis of the effect of the certain environmental issues and related social public benefits into ‘economic soundness’ is questionable. If MarAd wants to provide a basis to consider environmental factors in its evaluation of Title XI applications, it should incorporate a new priority factor that would allow the agency to do so.” Continues Blank Rome, “A regulatory proposal would allow for a full vetting of the scope of the environmental considerations MarAd should include in its evaluation of Title XI applications.” As we reported last month, MarAd received $38.5 million in appropriations for the Title XI loan guarantee program.

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March 2014 MARINE LOG 13

March 2014 Marine Log Magazine  
March 2014 Marine Log Magazine