80 FR 22421 - Final Action Regarding “Other Relevant Criteria” for Consideration When Evaluating the Economic Soundness of Title XI Maritime Loan Guarantee Program Applications
DEPARTMENT OF TRANSPORTATION
Maritime Administration Federal Register Volume 80, Issue 77 (April 22, 2015)
Maritime Administration
Federal Register Volume 80, Issue 77 (April 22, 2015)
| Page Range | 22421-22422 | |
| FR Document | 2015-09385 |
[Federal Register Volume 80, Number 77 (Wednesday, April 22, 2015)] [Rules and Regulations] [Pages 22421-22422] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-09385] [[Page 22421]] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF TRANSPORTATION Maritime Administration 46 CFR Part 298 [Docket Number MARAD-2014-0011] Final Action Regarding ``Other Relevant Criteria'' for Consideration When Evaluating the Economic Soundness of Title XI Maritime Loan Guarantee Program Applications AGENCY: Maritime Administration, Department of Transportation. ACTION: Final policy. ----------------------------------------------------------------------- SUMMARY: This document serves to inform interested parties and the public of the Maritime Administration's (MARAD) final policy regarding the factors MARAD will consider as ``Other Relevant Criteria'' in its review of the economic soundness of applications under the Title XI Loan Guarantee Program [also known as ``Title XI'' or the Federal Ship Financing Program (FSFP)]. On February 24, 2014, MARAD published a Notice of Proposed Policy (NPP) and sought comments relating to the agency's evaluation of Title XI Maritime Loan Guarantee applications. In this document MARAD: Responds to comments received during the public notice; clarifies and reinforces that applicants with projects to construct or reconstruct vessels to use alternative energies, or to meet current or future U.S. or international environmental and safety standards, are eligible and encouraged to apply for FSFP loan guarantees; and implements the final policy. DATES: This policy is effective April 22, 2015. FOR FURTHER INFORMATION CONTACT: Owen Doherty, Associate Administrator for Business and Finance Development, Maritime Administration, Telephone: 202-366-1883; Email: owen.doherty@dot.gov; Mail: MARAD, 1200 New Jersey Avenue SE., Washington, DC 20590. SUPPLEMENTARY INFORMATION: A. Introduction In order to be eligible for a FSFP loan guarantee an obligation must, among other things, aid the financing of the ``construction, reconstruction, or reconditioning of a vessel.'' 46 U.S.C. 53706. The terms construction, reconstruction and reconditioning are broadly defined to include ``designing, inspecting, outfitting, and equipping.'' 46 U.S.C. 53701(3). Chapter 537 of Title 46 of the United States Code, as implemented by part 298 of title 46 of the Code of Federal Regulations (CFR), details the factors MARAD must consider in processing FSFP loan guarantee applications. The factors include economic soundness, project feasibility and specifically enumerated priorities. For the economic soundness determination, 46 U.S.C. 53708(a) provides six mandatory factors MARAD must consider, but allows consideration of ``other relevant criteria'' as well. The accompanying regulation, 46 CFR 298.14(b), also provides that MARAD may take into account ``other relevant criteria.'' Sections 53708(a) and (b) explicitly provide ``the need for technical improvements, including increased fuel efficiency or improved safety'' as matters the Administrator and Secretary must consider with regard to applications for vessels intended for use on inland waterways and for fishing vessels, respectively. On February 24, 2014, MARAD published a Notice of Proposed Policy (79 FR 10075) in which it proposed to consider ``various environmental initiatives that are likely to increase efficiency and lead to future cost savings as `other relevant criteria' in evaluation of [the economic soundness of] Title XI loan guarantee applications.'' A non- exclusive list of such initiatives are alternative fuel systems designs, fuel cells, hybrid propulsion systems, air emissions reduction technologies and ballast water treatment technologies. The policy provides that, ``demand for environmentally friendly designs, fuel and technologies is growing rapidly throughout the maritime industry because, among other things, they meet new air emissions and other discharge standards, and present the potential for greater efficiency and cost savings.'' The proposed policy also stated, ``. . . that many of the economic benefits of environmentally friendly designs, fuels and technologies take the form of public benefits.'' Many of these public benefits cannot be captured by vessel owners and operators using traditional economic metrics, but are valuable nonetheless, because they contribute to environmental sustainability and human health. MARAD sought public comment on the NPP. In this final policy, MARAD is responding to the comments received, announcing that it intends to clarify and implement the policy as proposed in the prior notice, and clarifying that applicants with projects to construct or reconstruct vessels to be powered by alternative energies, or to meet U.S. or international environmental standards as required for continued operations, are eligible and encouraged to apply for FSFP loan guarantees. The comments received varied in the degree to which they directly addressed the substantive provisions in the policy. Some commenters expressed agreement with the general principle of considering environmental factors in the review of applications for FSFP loan guarantees. The majority disagreed with the proposal to include environmental considerations as a factor used to determine the economic soundness of projects. B. Comments MARAD received a total of 11 comments in response to the policy. Nine commenters disagreed with the proposal to include environmental considerations as ``other relevant criteria'' in the economic soundness analysis. MARAD received three comments indicating general support for including environmental considerations when evaluating FSFP applications. One commenter suggested that doing so could help accelerate replacement of an aging U.S.-flag fleet. Another stated that FSFP guarantees should be granted in order to make the new ships as environmentally friendly as possible. However, these commentators did not provide input on specific actions MARAD could take to further those interests. The comments, as submitted to the docket for the policy (Docket No. MARAD-2014-0011-0001) may be accessed via http://www.regulations.gov. While many of the other comments included general support for considering environmental factors at some point when evaluating applications that are otherwise economically sound, none of those commenters supported including such factors in the ``economic soundness'' analysis required under 46 U.S.C. 53703(b). Many commenters focused on the reference to ``public benefits'' in the original document. They expressed concern that it would be difficult and expensive for applicants and MARAD to incorporate the public benefits (e.g., human health and lower air emissions) of environmentally friendly technologies into a review of economic soundness, which is based on traditionally quantifiable financial factors. Commenters stated that attempting to address public benefits in the economic soundness analysis would result in additional time and expense, which would be inconsistent with MARAD's stated desire to streamline the application review process. Other commenters noted that cost savings from increased efficiency resulting from [[Page 22422]] the use of alternative fuels are already captured in the current economic soundness factors. MARAD received two comments that suggested that the policy might be interpreted to mean that MARAD does not consider projects to reconstruct or reconstruct vessels to use alternative energies (e.g., from a diesel propulsion system to a liquefied natural gas (LNG) propulsion or a hybrid diesel/LNG propulsion system) to be eligible for FSFP loan guarantees. Several commenters noted that MARAD is already authorized, under 46 U.S.C. 53706(c), implemented by 46 CFR 298.3(k), to prioritize applications for certain vessels, and that a formal rulemaking to add environmental considerations to that section would be more appropriate than adding such considerations to the economic soundness analysis. MARAD received three comments that referenced issues beyond the scope of the proposed policy. C. MARAD Response to Comments MARAD understands the concerns commenters expressed about potential ramifications of implementing this policy. In response to these concerns, MARAD clarifies the policy as described below. The Department of Transportation and MARAD are committed to supporting the development and implementation of technologies that help the U.S.-flag fleet meet or exceed national and international environmental standards and result in environmental improvements. MARAD is also determined to reduce FSFP application processing times and administrative burdens that potential applicants face. D. Final Policy By this document, MARAD announces that it will implement the core of the proposed policy. Under this final policy, in addition to the factors listed in 46 U.S.C. 53708(a)(1)-(4) and (6), MARAD will consider whether such projects include environmental initiatives that are likely to increase efficiency and lead to future cost savings. As noted by several commenters, cost savings resulting from increased fuel efficiency are captured in the current economic soundness analysis factors--most notably projected revenues and expenses of the vessel(s). This final policy merely states explicitly what MARAD is authorized to do under current law and regulations. MARAD clarifies that it will not require applicants to quantify the potential public benefits of environmentally friendly designs, fuels and technologies. MARAD encourages applicants to emphasize any public benefits or costs of greenhouse gas or criteria pollutant emissions caused or reduced by vessel(s) to be constructed or reconstructed. MARAD encourages applicants to quantify such public benefits to the extent practicable. Consult the following authorities for guidance for undertaking such calculations: (1) White House Office of Management and Budget, Circular A-94, Circular A-94 Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs (October 29, 1992) (https://www.whitehouse.gov/sites/default/files/omb/assets/a94/a094.pdf); Interagency Working group on Social Cost of Carbon, United States Government, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (May 2013; revised November 2013) (https://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf). In addition, MARAD considers as part of economic soundness the degree to which applications include the use of such designs, fuels or technologies for: (1) Reconstruction of vessels to ensure compliance with current or future environmental and safety operating standards, or (2) construction of new vessels to replace vessels that would not meet such standards. MARAD encourages applicants to include information in their applicants regarding the degree to which the vessel(s) to be constructed or reconstructed meets these components of economic soundness analysis. Consideration of the impact of environmental and safety standards on the economic soundness of an application is consistent with the factors MARAD is required to review. See, 46 U.S.C. 53708(a)(1)-(3). For example, pursuant to new global standards promulgated by the International Maritime Organization, and enforced in the U.S. by the Environmental Protection Agency, NOx emissions from large ``Category 3'' vessel engines are required to be substantially reduced by 2020. Implementation of these standards will result in many vessels currently in operation being taken out of service, unless they are converted to reduce emissions. These environmental factors directly impact the need for, and market potential and projected revenues and expenses of, any proposed construction or reconstruction. Further, MARAD clarifies that projects to reconstruct existing vessels are eligible for Title XI loan guarantees. Reconstruction includes conversion of vessels to LNG or dual-fuel power. Authority: 46 U.S.C. 53708. Dated: April 17, 2015. By Order of the Maritime Administrator. Thomas M. Hudson, Jr., Acting Secretary, Maritime Administration. [FR Doc. 2015-09385 Filed 4-21-15; 8:45 am] BILLING CODE 4910-81-P
![Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Rules and Regulations 22421
DEPARTMENT OF TRANSPORTATION of title 46 of the Code of Federal eligible and encouraged to apply for
Regulations (CFR), details the factors FSFP loan guarantees.
Maritime Administration MARAD must consider in processing The comments received varied in the
FSFP loan guarantee applications. The degree to which they directly addressed
46 CFR Part 298 factors include economic soundness, the substantive provisions in the policy.
[Docket Number MARAD–2014–0011] project feasibility and specifically Some commenters expressed agreement
enumerated priorities. For the economic with the general principle of
Final Action Regarding ‘‘Other soundness determination, 46 U.S.C. considering environmental factors in the
Relevant Criteria’’ for Consideration 53708(a) provides six mandatory factors review of applications for FSFP loan
When Evaluating the Economic MARAD must consider, but allows guarantees. The majority disagreed with
Soundness of Title XI Maritime Loan consideration of ‘‘other relevant the proposal to include environmental
Guarantee Program Applications criteria’’ as well. The accompanying considerations as a factor used to
regulation, 46 CFR 298.14(b), also determine the economic soundness of
AGENCY: Maritime Administration, provides that MARAD may take into projects.
Department of Transportation. account ‘‘other relevant criteria.’’ B. Comments
ACTION: Final policy. Sections 53708(a) and (b) explicitly
provide ‘‘the need for technical MARAD received a total of 11
SUMMARY: This document serves to improvements, including increased fuel comments in response to the policy.
inform interested parties and the public efficiency or improved safety’’ as Nine commenters disagreed with the
of the Maritime Administration’s matters the Administrator and Secretary proposal to include environmental
(MARAD) final policy regarding the must consider with regard to considerations as ‘‘other relevant
factors MARAD will consider as ‘‘Other applications for vessels intended for use criteria’’ in the economic soundness
Relevant Criteria’’ in its review of the on inland waterways and for fishing analysis. MARAD received three
economic soundness of applications vessels, respectively. comments indicating general support for
under the Title XI Loan Guarantee On February 24, 2014, MARAD including environmental considerations
Program [also known as ‘‘Title XI’’ or published a Notice of Proposed Policy when evaluating FSFP applications.
the Federal Ship Financing Program (79 FR 10075) in which it proposed to One commenter suggested that doing so
(FSFP)]. On February 24, 2014, MARAD consider ‘‘various environmental could help accelerate replacement of an
published a Notice of Proposed Policy initiatives that are likely to increase aging U.S.-flag fleet. Another stated that
(NPP) and sought comments relating to efficiency and lead to future cost FSFP guarantees should be granted in
the agency’s evaluation of Title XI savings as ‘other relevant criteria’ in order to make the new ships as
Maritime Loan Guarantee applications. evaluation of [the economic soundness environmentally friendly as possible.
In this document MARAD: Responds to of] Title XI loan guarantee However, these commentators did not
comments received during the public applications.’’ A non-exclusive list of provide input on specific actions
notice; clarifies and reinforces that such initiatives are alternative fuel MARAD could take to further those
applicants with projects to construct or systems designs, fuel cells, hybrid interests. The comments, as submitted
reconstruct vessels to use alternative propulsion systems, air emissions to the docket for the policy (Docket No.
energies, or to meet current or future reduction technologies and ballast water MARAD–2014–0011–0001) may be
U.S. or international environmental and treatment technologies. accessed via http://
safety standards, are eligible and The policy provides that, ‘‘demand for www.regulations.gov.
encouraged to apply for FSFP loan environmentally friendly designs, fuel While many of the other comments
guarantees; and implements the final and technologies is growing rapidly included general support for
policy. throughout the maritime industry considering environmental factors at
because, among other things, they meet some point when evaluating
DATES: This policy is effective April 22,
new air emissions and other discharge applications that are otherwise
2015.
standards, and present the potential for economically sound, none of those
FOR FURTHER INFORMATION CONTACT:
greater efficiency and cost savings.’’ The commenters supported including such
Owen Doherty, Associate Administrator factors in the ‘‘economic soundness’’
for Business and Finance Development, proposed policy also stated, ‘‘. . . that
many of the economic benefits of analysis required under 46 U.S.C.
Maritime Administration, Telephone: 53703(b). Many commenters focused on
environmentally friendly designs, fuels
202–366–1883; Email: owen.doherty@ the reference to ‘‘public benefits’’ in the
and technologies take the form of public
dot.gov; Mail: MARAD, 1200 New Jersey original document. They expressed
benefits.’’ Many of these public benefits
Avenue SE., Washington, DC 20590. concern that it would be difficult and
cannot be captured by vessel owners
SUPPLEMENTARY INFORMATION: expensive for applicants and MARAD to
and operators using traditional
A. Introduction economic metrics, but are valuable incorporate the public benefits (e.g.,
nonetheless, because they contribute to human health and lower air emissions)
In order to be eligible for a FSFP loan of environmentally friendly
environmental sustainability and
guarantee an obligation must, among technologies into a review of economic
human health. MARAD sought public
other things, aid the financing of the soundness, which is based on
comment on the NPP.
‘‘construction, reconstruction, or In this final policy, MARAD is traditionally quantifiable financial
reconditioning of a vessel.’’ responding to the comments received, factors. Commenters stated that
46 U.S.C. 53706. The terms announcing that it intends to clarify and attempting to address public benefits in
mstockstill on DSK4VPTVN1PROD with RULES
construction, reconstruction and implement the policy as proposed in the the economic soundness analysis would
reconditioning are broadly defined to prior notice, and clarifying that result in additional time and expense,
include ‘‘designing, inspecting, applicants with projects to construct or which would be inconsistent with
outfitting, and equipping.’’ 46 U.S.C. reconstruct vessels to be powered by MARAD’s stated desire to streamline the
53701(3). alternative energies, or to meet U.S. or application review process. Other
Chapter 537 of Title 46 of the United international environmental standards commenters noted that cost savings
States Code, as implemented by part 298 as required for continued operations, are from increased efficiency resulting from
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![22422 Federal Register / Vol. 80, No. 77 / Wednesday, April 22, 2015 / Rules and Regulations
the use of alternative fuels are already and technologies. MARAD encourages Reconstruction includes conversion of
captured in the current economic applicants to emphasize any public vessels to LNG or dual-fuel power.
soundness factors. benefits or costs of greenhouse gas or Authority: 46 U.S.C. 53708.
MARAD received two comments that criteria pollutant emissions caused or
suggested that the policy might be reduced by vessel(s) to be constructed or Dated: April 17, 2015.
interpreted to mean that MARAD does reconstructed. MARAD encourages By Order of the Maritime Administrator.
not consider projects to reconstruct or applicants to quantify such public Thomas M. Hudson, Jr.,
reconstruct vessels to use alternative benefits to the extent practicable. Acting Secretary, Maritime Administration.
energies (e.g., from a diesel propulsion Consult the following authorities for [FR Doc. 2015–09385 Filed 4–21–15; 8:45 am]
system to a liquefied natural gas (LNG) guidance for undertaking such BILLING CODE 4910–81–P
propulsion or a hybrid diesel/LNG calculations: (1) White House Office of
propulsion system) to be eligible for Management and Budget, Circular A–94,
FSFP loan guarantees. Circular A–94 Guidelines and Discount
Several commenters noted that DEPARTMENT OF COMMERCE
Rates for Benefit-Cost Analysis of
MARAD is already authorized, under 46 Federal Programs (October 29, 1992) National Oceanic and Atmospheric
U.S.C. 53706(c), implemented by 46 (https://www.whitehouse.gov/sites/ Administration
CFR 298.3(k), to prioritize applications default/files/omb/assets/a94/a094.pdf);
for certain vessels, and that a formal Interagency Working group on Social 50 CFR Part 622
rulemaking to add environmental Cost of Carbon, United States
considerations to that section would be Government, Technical Support [Docket No. 140818679–5356–02]
more appropriate than adding such Document: Technical Update of the
RIN 0648–BE47
considerations to the economic Social Cost of Carbon for Regulatory
soundness analysis. Impact Analysis Under Executive Order Fisheries of the Caribbean, Gulf of
MARAD received three comments 12866 (May 2013; revised November Mexico, and South Atlantic; Reef Fish
that referenced issues beyond the scope 2013) (https://www.whitehouse.gov/ Fishery of the Gulf of Mexico;
of the proposed policy. sites/default/files/omb/assets/inforeg/ Amendment 40
C. MARAD Response to Comments technical-update-social-cost-of-carbon-
for-regulator-impact-analysis.pdf). AGENCY: National Marine Fisheries
MARAD understands the concerns In addition, MARAD considers as part Service (NMFS), National Oceanic and
commenters expressed about potential of economic soundness the degree to Atmospheric Administration (NOAA),
ramifications of implementing this which applications include the use of Commerce.
policy. In response to these concerns, such designs, fuels or technologies for: ACTION: Final rule.
MARAD clarifies the policy as described (1) Reconstruction of vessels to ensure
below. The Department of compliance with current or future SUMMARY: NMFS implements
Transportation and MARAD are environmental and safety operating management measures described in
committed to supporting the standards, or (2) construction of new Amendment 40 to the Fishery
development and implementation of vessels to replace vessels that would not Management Plan for the Reef Fish
technologies that help the U.S.-flag fleet meet such standards. MARAD Resources of the Gulf of Mexico (FMP),
meet or exceed national and encourages applicants to include as prepared by the Gulf of Mexico
international environmental standards information in their applicants Fishery Management Council (Council).
and result in environmental regarding the degree to which the This final rule contains measures to
improvements. MARAD is also vessel(s) to be constructed or establish two components within the
determined to reduce FSFP application reconstructed meets these components recreational sector for Gulf of Mexico
processing times and administrative of economic soundness analysis. (Gulf) red snapper (a Federal charter
burdens that potential applicants face. Consideration of the impact of vessel/headboat (for-hire) component
environmental and safety standards on and private angling component) with a
D. Final Policy the economic soundness of an 3-year sunset provision; allocate the red
By this document, MARAD application is consistent with the factors snapper recreational quota and annual
announces that it will implement the MARAD is required to review. See, 46 catch target (ACT) between the
core of the proposed policy. Under this U.S.C. 53708(a)(1)–(3). For example, components; and establish separate red
final policy, in addition to the factors pursuant to new global standards snapper season closure provisions for
listed in 46 U.S.C. 53708(a)(1)–(4) and promulgated by the International the two components. The purpose of
(6), MARAD will consider whether such Maritime Organization, and enforced in Amendment 40 and this rule is to
projects include environmental the U.S. by the Environmental provide a basis for increased flexibility
initiatives that are likely to increase Protection Agency, NOx emissions from in future management of the
efficiency and lead to future cost large ‘‘Category 3’’ vessel engines are recreational sector, and reduce the
savings. As noted by several required to be substantially reduced by likelihood of recreational quota
commenters, cost savings resulting from 2020. Implementation of these standards overruns, which could negatively
increased fuel efficiency are captured in will result in many vessels currently in impact the rebuilding of the red snapper
the current economic soundness operation being taken out of service, stock.
analysis factors—most notably projected unless they are converted to reduce
DATES: This rule is effective May 22,
revenues and expenses of the vessel(s). emissions. These environmental factors
mstockstill on DSK4VPTVN1PROD with RULES
2015.
This final policy merely states explicitly directly impact the need for, and market
what MARAD is authorized to do under potential and projected revenues and ADDRESSES: Electronic copies of
current law and regulations. expenses of, any proposed construction Amendment 40, which includes an
MARAD clarifies that it will not or reconstruction. environmental impact statement, a
require applicants to quantify the Further, MARAD clarifies that fishery impact statement, a Regulatory
potential public benefits of projects to reconstruct existing vessels Flexibility Act analysis, and a regulatory
environmentally friendly designs, fuels are eligible for Title XI loan guarantees. impact review, may be obtained from
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Document Created: 2015-12-16 08:27:30
Document Modified: 2015-12-16 08:27:30
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Rules and Regulations | |
| Action | Final policy. | |
| Dates | This policy is effective April 22, 2015. | |
| Contact | Owen Doherty, Associate Administrator for Business and Finance Development, Maritime Administration, Telephone: 202-366-1883; Email: [email protected]; Mail: MARAD, 1200 New Jersey Avenue SE., Washington, DC 20590. | |
| FR Citation | 80 FR 22421 |
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