On August 28, 2026, the Maritime Administration (MARAD) published an interim final rule rewriting the regulations governing the Vessel and Shipyard Financing Program, commonly known as the Title XI Program, found at 46 CFR Part 298. The rule took effect immediately upon publication, though MARAD is accepting public comments through October 27, 2026. This is the first comprehensive revision of the Title XI regulations since they were originally promulgated in 1978, and the changes significantly affect federal loan guarantees to financing of vessel construction, reconstruction, reconditioning, repair, or shipyard modernization.
The most obvious structural change is consolidation of the rules. The new rule eliminates 14 of 34 sections and reorganizes the remainder into 20 renumbered sections with no subpart divisions. Much of the material that disappears from the regulatory text has not been deleted outright, but instead relocated into MARAD’s published loan agreement documents and application forms, which are now the source for terms such as escrow fund mechanics, required loan document provisions, examination and audit rights, reporting requirements, and remedies after default.
The rule also updates the regulations to reflect statutory changes made by the National Defense Authorization Act for Fiscal Year 2020. That legislation repealed the eligible export vessel financing authority previously found at 46 U.S.C. § 53732, and the new rule removes all references to export vessel financing, since MARAD no longer has authority to provide it. The 2020 NDAA also added a statutory directive requiring MARAD to apply modern federal credit best practices and to recommend financial covenants and ratios for applicants, which the rule implements by incorporating current Office of Management and Budget credit program standards that did not exist when the original 1978 regulations were written.
Additionally, the rule makes several financial changes for program applicants. The application fee is reduced from $5,000 to $1,000, a change MARAD describes as intended to lower barriers to entry for smaller participants. The former investigation fee is renamed and restructured as a commitment fee, calculated as one quarter of one percent of the guaranteed note amount or $250,000, whichever is less, reduced by any professional service fees already paid during due diligence. The rule also aligns the guarantee fee methodology with the credit subsidy fee calculation used elsewhere in federal credit programs. Finally, it introduces a new prioritization mechanism under which applications for vessels suitable for wartime or national emergency use, and applications for vessels designated as being of national interest, receive expedited processing ahead of other applications.
Other provisions include a new rule allowing MARAD to grant foreign component waivers after an application has already been approved, rather than requiring resolution before approval, which is intended to prevent waiver review from delaying project financing. The rule also consolidates all definitions into a single section, restates general credit standards and underwriting criteria such as collateral, working capital, and audited financial statement requirements in one place, and separately addresses vessel project requirements and shipyard project requirements in their own sections for clarity.
MARAD invoked the good cause exception to the Administrative Procedure Act’s notice and comment requirements, concluding that the changes largely codify existing administrative practice, implement statutory amendments, and adopt government-wide fiscal standards rather than reflect a discretionary policy shift. As a result, the rule is already in effect, though MARAD may revise it in response to comments received during the 60-day comment period.
Shipowners, operators, and shipyards currently participating in or considering the Title XI Program should review the revised Part 298 alongside MARAD’s updated loan agreement documents and application forms, since many previously codified terms now reside exclusively in those documents rather than in the regulatory text itself. For more information about this update, contact Liskow attorneys Leon Rittenberg III and Kevin Naccari, and visit Liskow’s Tax Practice page.