The US Maritime Administration (MARAD) has cut the application fee for its federal vessel and shipyard financing programme by 80% to $1,000 as part of a wider overhaul of Title XI rules, according to MARAD.
The interim final rule took effect on 28 August and removes 14 of the existing regulation’s 34 sections. The Title XI regulations had remained substantially unchanged since 1978.
The application fee has been reduced from $5,000 to $1,000, while MARAD has replaced the previous investigation fee with a non-refundable commitment fee payable before financing documents are executed.
The new fee will be the lower of 0.25% of the debt approved for a MARAD guarantee or $250,000, minus professional-services fees that applicants are required to pay during due diligence.
MARAD has also changed the rules governing foreign-sourced equipment and services. Applications can now be processed and approved while waiver requests for foreign components are still under consideration. If a waiver is approved, the relevant costs can be included in the eligible project cost. If it is rejected, they will be excluded. Waivers remain unavailable for major foreign components forming part of a vessel’s hull or superstructure.
The revised rules also remove obsolete submission requirements and introduce expedited processing for priority projects.
Priority will be given to qualifying vessels that address shortfalls in US sealift capacity or capability, followed by Vessels of National Interest.
The overhaul follows a federal maritime action plan released in February that called for Title XI administration to be streamlined and the application process made less costly and burdensome.
MARAD is accepting comments on the interim rule until 27 October. MARAD is an agency of the US Department of Transportation.
Title XI provides US government-backed financing for eligible US-flag vessel construction, reconstruction, repair and reconditioning at US shipyards, as well as qualifying investment in privately owned US shipyards.
The programme can finance up to 87.5% of eligible costs for most vessel and shipyard modernisation projects, with repayment terms of up to 25 years or the useful life of the asset, whichever is shorter.
Since 1993, Title XI has issued 114 loan commitments worth more than $7.9bn for domestic vessel construction and shipyard modernisation.