O’Melveny Worldwide

Maritime Environmental Law Update (August 2020 Edition)

August 17, 2020

We are providing this update on significant, new developments in international and US environmental maritime law, regulation, technology, and enforcement, including a discussion on disruption caused by the current, novel coronavirus (COVID-19) outbreak. Our prior update was issued in March 2020, and can be found here. We hope that our readers remain safe during this difficult time.

International Developments

Global Governments Take Action to Protect Seafarers from COVID-19 Related Disruptions

Thirteen countries have joined with the International Maritime Organization (IMO) to issue a statement acknowledging the growing humanitarian crisis involving displaced crewmembers and committing to provide relief. The COVID-19 pandemic has disrupted international trade and travel, leaving an estimated 200,000 seafarers stranded on ships worldwide. The extended period of time on ships has led to worries of crew fatigue and mental health issues, which could result in serious maritime accidents if seafarers are not relieved and replaced.

The IMO and the 13 signatory countries seek to designate seafarers as essential workers, which would allow them to travel home by providing waivers to travel restrictions and increasing the availability of commercial flights to their countries of origin. The joint statement was signed by representatives of Denmark, France, Germany, Greece, Indonesia, the Netherlands, Norway, the Philippines, Saudi Arabia, Singapore, United Arab Emirates, the United Kingdom, and the United States.

IMO Issues Medical Care Guidelines for Seafarers During the Pandemic

The IMO has also endorsed a series of recommendations for ensuring access to onshore medical care for seafarers affected by COVID-19. These best practices are meant to streamline the process of allowing entry into countries where they may be treated for the virus. The recommendations also include measures to curb exposure to the virus, including pre-disembarkation testing, isolation of crew members with suspected or confirmed cases of the virus, use of personal protective equipment, and minimizing exposure to port personnel during disembarkation and onshore transfers.

Shipping’s Share of Global CO2 Emissions is Rising

The IMO has released its fourth study analyzing the shipping industry’s carbon footprint. The study found overall greenhouse gas emissions, including carbon dioxide, methane and nitrous oxide from shipping sources rose over nine percent during the 2012-2018 period. The findings indicate that much work remains to be done if the IMO is to meet its goal of reducing total greenhouse gases by 50 percent compared to 2008 by 2050.

China Reduces Oil Pollution Fees in Response to COVID-19 Pandemic

In an effort to reduce transport costs during the COVID-19 pandemic, the Chinese government has cut oil pollution compensation fees in half for ships leaving or entering the country’s ports. Fees have been cut to .15 yuan per metric ton of oil, which equates to roughly two US cents per metric ton of oil. The reduced fee policy will be in effect through the remainder of 2020.

Norway and IMO Move Forward on Ship Recycling Project in Bangladesh

Norway recently agreed to commit US$1.5 million to fund phase III of the IMO’s Safe and Environmentally Sound Ship Recycling Project in Bangladesh, known as SENSREC. Phase III focuses on improving ship recycling standards to meet the requirements of the Hong Kong Convention and working with the Bangladeshi Government to implement legislation and best practices to encourage responsible recycling in that country. These best practices include establishing a facility for treating and disposal of hazardous waste, as well as convening experts to study the impact of COVID-19 on the ship-recycling industry in Bangladesh. The agreement, which is expected to be implemented over the next 18 months, puts Bangladesh on course to become a party to the IMO’s Hong Kong Convention on ship recycling. 

US Developments

New York Region Maritime Supply Chains Disrupted by COVID-19

The outbreak of COVID-19 has forced companies to seek alternatives to shipping hubs in the New York/New Jersey metropolitan area due to staffing and other impacts caused by social distancing orders and other virus-related regulations. The disruptions have prompted a surge in investment in warehouse space in particular, as goods that were once scheduled to be shipped from the area are subject to delays. In the long term, companies are expected to make significant investments in resilience planning for future events with global impacts.

New Maritime Technologies

United Nations Launches Global Industry Alliance to Tackle Invasive Species and Greenhouse Gases

The United Nations has joined with private stakeholders in a new Global Industry Alliance (GIA) to address biofouling, the inadvertent transport of invasive marine species that latch onto ships’ hulls or other underwater structures. Biofouling leads to the introduction of invasive species to new environments, which can disrupt industries such as fishing, aquaculture, and ocean energy and cause the displacement of native species. The new public-private partnership aims to leverage human, technological, and financial resources to improve biofouling management.

The United Nations also hopes that this work will indirectly lead to a significant reduction of greenhouse gas emissions, by reducing drag on ships. By removing a buildup of marine life on hulls, ships will be able to maintain faster speeds and burn less fuel. The partnership is a first of its kind effort to address two of the major challenges facing the shipping industry as it seeks to become more sustainable.

Samsung Heavy Industries and Bloom Energy Form Clean Vessel Partnership

Samsung Heavy Industries, the world’s third-largest shipbuilder, has partnered with Bloom Energy to build eco-friendly transport ships powered by fuel-cell technology. The move comes in response to the IMO’s upcoming target of cutting maritime CO2 emissions 40 percent by 2030. Maritime emissions are estimated to account for two percent of global CO2 emissions. 

The fuel-cell technology, which creates electricity through chemical reaction, will also reduce particulate emissions by more than 99 percent.

The companies plan to release a design for the ships by 2022, the first of which would be ready for delivery two to three years after orders are placed.

Green Liquid Natural Gas Favored Fuel for Meeting IMO Targets

Bio-methane has emerged as a leading option for the shipping industry as it seeks to reduce its carbon footprint ahead of the IMO’s greenhouse gas reduction targets. A recent study confirmed that the availability and cost competitive potential of methane produced from biomass and synthetic methane “could be on par” with other low or zero carbon fuels such as hydrogen and ammonia. While methane produced from biomass is already widely available, the production of synthetic methane depends on renewable energy infrastructure, which requires further development if that fuel is to play a major role for the shipping industry. The IMO’s overall goal is to reduce yearly greenhouse gas emissions from shipping by at least 50 percent by 2050, compared to 2008 levels.


Princess Cruise Lines Avoid COVID-19 Tort Suits

The US District Court for the Central District of California dismissed two suits brought against Princess Cruise Lines by passengers alleging negligent infliction of emotional distress as a result of on-board restrictions during COVID-19 pandemic.

Judge R. Gary Klausner said that under applicable federal maritime law, plaintiffs must demonstrate they either suffered a physical impact or were placed in the immediate risk of physical harm from the defendant’s negligent conduct. Since none of the plaintiffs showed symptoms of the disease, the court ruled that the standard had not been met.

Enforcement Actions and Civil Penalties

CITGO Liable for US$133 Million in Cleanup Fees Based on Contractual “Guarantee”

The US Supreme Court ruled that CITGO must pay US$133 million in remediation expense for a 2004, 6,000 barrels of crude oil spill that occurred in the Delaware River. In a 7-2 decision, the justices affirmed the Third Circuit’s ruling that a ship charter provision requiring CITGO to “designate and procure” safe harbor was an implied guarantee of safety rather than a promise of due diligence. The decision follows British courts, which also interpret similar clauses as a guarantee.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Eric B. Rothenberg, an O’Melveny partner licensed to practice law in Missouri and New York, and Bob Nicksin, an O’Melveny counsel licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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