O’Melveny Worldwide

Maritime Environmental Law Update (August 2023 Edition)

August 9, 2023

We continue to follow significant new developments in international and US maritime law and related technology matters. The following updates our March 2023 alert, which can be found here.

International Developments

IMO Continues to Push for Zero Emissions

The latest meeting of the International Maritime Organization’s (“IMO”) Marine Environmental Protection Committee (“MEPC80”) took place in London in July 2023. MEPC80 adopted the IMO 2023 Strategy on the Reduction of Greenhouse Gas (“GHG”) Emissions from Ships (“GHG Strategy”). The revised strategy includes a goal of reaching net-zero GHG emissions from international shipping “close to 2050,” a commitment to ensure an uptake of alternative zero and near-zero GHG fuels by 2030, and interim goals to reduce GHG emissions from ships by at least 20% (striving for 30%) by 2030 and by at least 70% (striving for 80%) by 2040, all as compared to 2008 levels.

In March 2023, the IMO announced the Future Fuels and Technology for Low and Zero-Carbon Shipping Project (“FFT Project”). The FFT Project will focus on alternative sources of low carbon and zero carbon shipping fuels and technology to eliminate greenhouse gas emissions in international shipping. The FFT Project is a public-private partnership between the IMO and the Republic of Korea, which will provide funding for the project. The project will have a duration of three years (through 2025) and three phases analyzing: (i) potential training and safety issues; (ii) the current and projected dissemination of low and zero-carbon marine technology and fuels; and (iii) the development of potential pilot projects. This project will help advance the 2023 IMO GHG Strategy discussed above.

United Nations Prioritizes Marine Biological Diversity Conservation

In June 2023, the United Nations adopted the Biodiversity Beyond National Jurisdiction Treaty (“BBNJ Treaty”). This binding agreement, also known as the Treaty of the High Seas, is the first to establish large-scale marine protected areas beyond national jurisdiction and will serve to protect the biodiversity of these areas, which will represent approximately 60% of the world’s oceans. Its provisions regulate all activities relating to the exploration and exploitation of marine genetic resources, allowing for equal access to these resources and making new technology available to developing countries through an access and benefit-sharing committee. In addition to establishing new marine protected areas, the agreement seeks to enforce its goals by requiring environmental impact assessments by the U.N. member states for any planned activities on the high seas or deep seabed within their jurisdiction or control, and by creating governing bodies and an approval system for activities conducted in these areas. The term “jurisdiction or control” is not defined in the BBNJ Treaty. However, during negotiations, delegations understood the term as covering activities taking place in a state’s national territory and activities beyond national jurisdiction by ships flying their flags. The BBNJ Treaty will become effective 120 days after ratification by 60 U.N. Member States.

U.N. Continues to Develop Deep Sea Mining Rules

The International Seabed Authority (“ISA”) met in early July 2023 to continue developing an international regulatory framework for deep sea mining (“DSM”). So far, the ISA has developed regulations to govern DSM exploration and has awarded 31 exploration contracts. Regulations governing future commercial mining activities are still in development, with more than 20 member states calling for a moratorium or a complete ban on DSM in the international seabed. The ISA’s DSM regulations are being developed pursuant to the United Nations Convention on the Law of the Sea (“UNCLOS”), which the United States has not ratified. Instead, the United States has developed its own regime for DSM under the Deep Seabed Hard Mineral Resources Act (“DSHMRA”). The DSHMRA includes a licensing and permit process for the exploration and recovery of mineral resources by persons and entities under U.S. jurisdiction. No commercial DSM is currently being conducted under the DSHMRA, and the National Oceanic and Atmospheric Administration has stated that the DSHMRA is only intended to establish an interim regulatory regime pending the United States’ adoption of UNCLOS.

US Developments

MARPOL Enforcement Continues at Steady Pace in the United States

The United States has been aggressively enforcing compliance with MARPOL (The International Convention for the Prevention of Pollution from Ships) for decades. Criminal MARPOL cases can be very costly and disruptive to vessel owners and operators. For example, Greek vessel operator Zeus Lines Management SA will pay $2.25 million in penalties and serve four years of probation after failing to record 9,500 gallons of illegal ocean discharges of oily bilge water in Narragansett Bay in Rhode Island and report a faulty gas system aboard the tanker Galissas that could have caused an explosion. MARPOL enforcement is enabled in part by the statute’s whistleblower provision, under which whistleblowers can receive up to 50% of any criminal penalty imposed. Regulated parties operating in the United States should consider working with legal counsel to ensure compliance with MARPOL, including with respect to both vessel operations and shoreside management.

Biden Administration Focuses on Renewable Offshore Wind

Offshore wind development in the United States continues to ramp up. A recent report by Intelatus Global Partners revealed 70 US offshore wind projects involving the installation of around 78 GW of capacity between now and 2040. The White House has set targets of 30 GW of offshore wind capacity by 2030 and 110 GW by 2050. While the focus has been on bottom-fixed installations, the prospect of higher energy yields in deeper waters where the wind is stronger has prompted the White House to set a floating wind deployment target of 15 GW by 2035. There are some practical and regulatory challenges under the Jones Act facing offshore wind developers, including a shortage of installation vessels and restrictions around foreign vessels at US ports. However, the Inflation Reduction Act (“IRA”) may provide fiscal stimulus via tax credits for equipment suppliers and tax incentives for buying equipment from US suppliers. To qualify for the IRA’s tax credits, offshore wind projects installed before 2025 must source 20% of all equipment in the US. This rises to 55% in 2027. Furthermore, 100% of steel and iron construction materials must be made in the US.

Biden Administration Focuses on Ocean Justice

The National Oceanic and Atmospheric Administration is developing an “Ocean Justice Strategy” that aims to apply environmental justice practices to coastal communities near oceans and the Great Lakes that have been disproportionately affected by federal programs due to racial discrimination and marginalization, redlining, exclusionary zoning and other discriminatory decisions or patterns. For example, contaminated water flowing from Tijuana into the Pacific Ocean, which causes health risks for families visiting beaches in Southern San Diego County, may be alleviated via the ocean justice strategy. The Biden administration received 16,500 comments on the draft strategy during its public comment period in June and July. The administration will use the responses to assess how the federal government should define ocean justice and describe barriers to and opportunities for ocean justice. Read more about the strategy and other environmental justice topics in our latest Environmental Justice Alert.

New Maritime Technologies

Armach Robotics’ Hull Cleaning Robots Show Promise

Armach Robotics’ Hull Service Robots (“HSRs”), which provide hull cleaning services in low-visibility waters where traditional diver-operated solutions are not viable, have completed their first commercial cleaning operations. Maintaining a clean hull is becoming more critical than ever. In October 2022, the IMO released a report highlighting the significant fuel penalties caused by even a single layer of slime on a ship’s hull. Cruise ships have also been denied entry to ports in Australia and New Zealand due to fouling on their hulls, and other countries will likely follow in implementing similar biosecurity policies.

Norwegian Company Develops Zero-Emissions Cruise Ship

In July 2023, Hurtigruten, a Norwegian cruise company, revealed the design of its first zero-emissions cruise ship as part of research project, Sea Zero. The ship will hold 500 passengers and will use a combination of wind-powered retractable sails, solar panels, and 60-megawatt batteries to achieve a range of 300 to 350 nautical miles. The company hopes to finalize the design by 2026, start building in 2027, and set sail by 2030.

Anemoi Marine Technologies’ Rotor Sails Fuels Wind Propulsion Comeback

Shanghai Merchant Ship Design and Research Institute is designing a 210,000-DWT Newcastlemax bulk carrier installed with Anemoi Rotor Sails to improve efficiency and reduce environmental impact. Based on Anemoi’s Fuel Saving Assessment Model (“FSAM”), equipping vessels with Rotor Sails could reduce emissions by up to 13.5%, which may make Rotor Sails an attractive option for reducing carbon emissions.

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. John Rousakis, an O'Melveny partner licensed to practice law in New York, Eric Rothenberg, an O'Melveny of counsel licensed to practice law in New York and Missouri, and Chris Bowman, an O’Melveny associate 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.

© 2023 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, T: +1 212 326 2000.