Oil Tanker Owner Denied Refinance Can Sue Feds

     WASHINGTON (CN) – American Petroleum Tankers Parent can fight for federal loan guarantees that would let it refinance the $400 million debt behind five tankers, a federal judge ruled.
     American Petroleum, a publicly traded private equity company owned by investment funds managed by affiliates of the Blackstone Group, owns five 49,000 deadweight ton petroleum tankers.
     It said that two of those tankers have specially designed features approved by the U.S. Navy, and are currently on charter to the Navy’s Military Sealift Command.
     The company applied for loan guarantees to refinance the $400 million it took to build the tankers under Title XI of the Merchant Marine Act in 2010, but the Maritime Administration twice denied its application.
     Alleging that the denials were arbitrary and capricious, and in violation of the Administrative Procedure Act, American Petroleum sued the U.S. government in 2012.
     The government told American Petroleum that the loan was not economically sound, and that two of the tankers were particularly vulnerable. The maritime administrator also said the project would “consume almost all of the remaining monies available for the ship financing program.”
     U.S. District Judge Colleen Kollar-Kotelly ruled Monday that the company may have a basis to challenge the denials since the administrator’s decision relied on the recommendation of the Transportation Department’s Credit Council.
     “In sum, Congress specifically amended the Title XI program so that the maritime administrator, rather than the secretary of transportation, would have authority to administer the program, request independent analysis of applications, and ultimately grant or deny applications,” she wrote. “The defendants failed to identify any statutory or other authority by which secretary of transportation can require the maritime administrator to submit applications for Title XI loan guarantees to the Credit Council to obtain the council’s recommendation before the administrator may grant or deny the applications.”
     Kollar-Kotelly said she may ultimately defer to the administrator’s decision to dole out Title XI money, but that she still has jurisdiction to review the threshold finding that American Petroleum’s “applications were not economically sound.”
     The judge refused, however, to disqualify the current administrator because she found that American Petroleum failed to state a claim under the Administrative Procedures Act.

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