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Recent Developments in Maritime Environmental Law (September 2013 edition)

September 9, 2013


 

Several significant developments in the areas of maritime environmental law, regulation, compliance, and enforcement follow our last (12/9/2012) update.

Arctic Council Countries Agree on Oil-Spill Response Plan

In May 2013, the eight Arctic Council Countries signed an Agreement on Cooperation on Marine Oil Pollution Preparedness and Response in the Arctic. It calls for the member nations (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, and the United States) to work together in responding to oil spills in the ecologically-sensitive Arctic region. Arctic countries will be required to notify one another in the event of an oil spill anywhere in the Arctic from any source. The Council intends to consider proposals to protect nature reserves, to ban vehicles from driving on the tundra, and to require mandatory environmental reviews for proposed industrial projects.

Separately, the Canadian government is soliciting proposals for an assessment of the risks of spills from ships in Canadian waters and the readiness of government responders. The study is expected to gauge the likelihood of spills in Canadian waters, including the Arctic, and the scope of potential impacts. It will also examine the risks associated with chemical spills resulting from collisions, fires, explosions, structural failures, and loading/off-loading operations at marine terminals.

The United States is also looking at oil-spill response in the Arctic. NOAA’s Office of Response and Restoration (“OR&R”) is working with other federal, state, and tribal agencies to better understand management of and potential impact of oil spills in the Arctic. OR&R has been conducting exercises based on simulated spills to test the government’s and the oil industry’s ability to respond to Arctic spills. OR&R is also continuing its efforts to establish an environmental baseline—data on pre-damage conditions—which will be necessary for measuring a spill’s effect on natural resources.

IMO Advances on Greenhouse-Gas (GHG) Programs

At its May 2013 meetings, the Marine Environment Protection Committee (“MEPC”) of the International Maritime Organization (“IMO”) adopted the Resolution on Promotion of Technical Cooperation and Transfer of Technology relating to the Improvement of Energy Efficiency of Ships, which, among other things, requests that the IMO help member states transfer energy-efficient technologies to developing countries. The MEPC also approved a study for an updated GHG emissions estimate for international shipping. As an initial step, the MEPC hopes to introduce a system of monitoring, reporting, and verifying air emissions from ships in order to equip regulators with better data.

At the same meeting, the MEPC delayed for five years a requirement for new large ships operating off the coasts of the United States and Canada to control emissions of nitrogen oxides. Ships with marine diesel engines with over 130 kilowatt output power now have until 2021 to reduce nitrogen oxide emissions in the U.S. and Canadian Emissions Control Areas (“ECA”)—designated waters within 200 miles of the nations’ coasts.

EU GHG Emissions Reporting Proposal

The European Commission is proposing that large vessels (5000 gross tons or more) docking in European Union ports report annual carbon dioxide emissions. The rule would apply to voyages to and from the European continent, regardless of the ship’s registration. The rule would take effect in 2018, and would require carbon dioxide monitoring and confirmation by an independent auditor. The European Commission has stated that it plans to eventually establish market-based measures to reduce greenhouse gases. The proposal will require approval by the European Council and Parliament before it becomes law.

Regulation of Ship-Breaking

The U.S. Environmental Protection Agency (“EPA”) has released draft technical guidance designed to help vessel owners comply with the Department of Transportation’s Maritime Administration requirement that ships not contain regulated levels of polychlorinated biphenyls (“PCBs”) before their export for continued use or scrapping. The EPA had requested comments on several key issues, including sampling procedures for PCBs in shipboard materials—such as paint, electrical cabling, and gaskets—and the possibility of identifying a manufacture date after which a ship can be reasonably assumed not to contain PCBs.

The guidance—Draft Technical Guidance for Determining Presence of PCBs at Regulated Concentrations on Vessels to be Reflagged—was posted January 31, 2013, with a comment period that closed on March 1, 2013. PCBs are generally regulated at levels greater than 50 parts per million. The Toxic Substances Control Act makes it illegal to export materials containing regulated levels of PCBs.

Meanwhile, the European Parliament has indicated its support for allowing ship-owners to legally send obsolete vessels to Asia for recycling, provided that the recycling facilities meet minimum environmental and worker-safety standards. Parliamentary lawmakers approved a European Commission proposal that would create a global list of approved facilities where EU ships could be sent for scrapping. Many ship-owners now sell obsolete vessels to non-EU owners or reflag them under non-EU flags before sending them for shipbreaking. The new regulation is intended to resolve this situation by giving ship-owners clear rights to recycle ships, even when the ships contain hazardous materials. The regulation will require an inventory of hazardous materials for each vessel before scrapping. Penalties will be imposed on ship-owners that sell obsolete ships to non-EU owners if the ships are scrapped in non-approved facilities within 12 months of the sale.

The final regulation must be jointly adopted by both the European Parliament and the EU Council before it goes into effect.

EPA Issues New Vessel General Permit

The EPA has released a final permit under the Clean Water Act that, for the first time, sets numeric effluent limits for ballast-water discharges from large commercial vessels. The new Vessel General Permit (“VGP”) covers commercial vessels longer than 79 feet, excluding military and recreational vessels, and will replace the current VGP when it expires in December 2013.

The new permit includes more stringent discharge limits for nonindigenous invasive species. The permit also contains special provisions for protection of the Great Lakes.
Vessel operators can achieve compliance by: (1) discharging water that meets the limits, (2) transferring the water to a third party for treatment (either to an onshore facility or to a water treatment barge), (3) using potable water as ballast-water, or (4) abating ballast discharges altogether.

The National Wildlife Federation (“NWF”) is challenging the VGP rule, before the U.S. Court of Appeals for the District of Columbia Circuit, claiming that VGP “will adversely affect the interests of petitioner and its members in the unique aquatic ecosystems found in the Great Lakes and other waters of the United States.”

In a related development, the U.S. Coast Guard has announced acceptance of nine Ballast Water Treatment Systems (“BWTS”) as Alternate Management Systems (“AMS”). AMS acceptance is a temporary designation given to a BWTS that has been approved by a foreign government, and allows the system to be used while the Coast Guard determines whether the system meets U.S. standards.

The accepted systems include those that utilize mesh screens, filters, biodegradable cleaning solutions, oxidation technologies, biocides, and UV disinfection.

Meanwhile, the Minnesota Pollution Control Agency (“MPCA”) has proposed new water quality permit regulations for Great Lakes vessels that would give them two more years to install ballast-water treatment technology.

Permits issued by MPCA in 2008 required lake-going vessels to hae water treatment technology in place by their first dry docking after Jan. 1, 2016. The proposed permit would give vessels until their first dry docking after March 30, 2018 to have the technology installed. The MPCA has determined that treatment technology is not yet available for vessels plying the Great Lakes. The state issued its first ballast-water quality permit in 2008 after concerns were raised about aquatic invasive species being carried in the ballast water of both lake-going and ocean-going vessels.

Naval Ship Disposal

The EPA has closed the comment period on two petitions asking it to impose stricter environmental standards on sinking and ocean floor disposal of U.S. Navy ships used in live-fire training. The petitions, submitted by the Basel Action Network, the Sierra Club, and the Center for Biological Diversity, called on the EPA to take immediate action under the Marine Protection, Research, and Sanctuaries Act (“MPRSA”) to protect the environment and humans from PCBs that may leach from ships used in the Navy’s “SINKEX” program.

Canada Tightens Air Emission Requirements

Owners of vessels operating in Canadian waters will be required to meet new standards for air emissions of sulfur oxides and nitrogen oxides, energy efficiency, and “gray water” discharges under final regulations published May 8, 2013 by Transport Canada. The air emissions standards are designed to satisfy Canada’s portion of the new North American ECA as required by the IMO.

The regulations establish special standards for the Great Lakes and St. Lawrence Seaway based on a fleet-averaging approach that will progressively reduce permissible emissions of sulfur oxides between 2013 and 2020. The regulations also bring Canada’s requirements for tankers transferring oil cargo at sea into compliance with international standards, and address concerns about the impact on coastal communities of gray-water discharges from vessels. Gray-water is non-sewage water drained from sinks, washing machines, bathtubs, shower stalls, and dishwashers.

    Highlights of the new regulations include:

  • A current maximum sulfur content of 3.5% for ship fuel for Canadian and foreign vessels of 400 gross tons will be in place until 2020, after which it drops to 0.5%. For vessels operating in the ECA, the sulfur limit is 1.0 % until January 1, 2015, when it will drop to 0.1%. Technological improvements can be used to achieve equivalent emissions reductions.
  • Vessels operating in the ECA after January 1, 2016 must adhere to the IMO’s “Tier III Standards” for nitrogen oxide emissions, which represent an 80% reduction from current emission standards.
  • New vessels (built under contracts placed after June 30, 2013) of 400 gross tons or more must meet the IMO’s “Energy Efficient Design Index” and carry an International Energy Efficiency Certificate. This will apply first to cargo, container, tanker, and combination carriers. Vessels of 400 gross tons or more must have a Ship Energy Efficiency Management Plan on board detailing how the vessel will increase its energy efficiency.
  • Discharges of gray water in Canadian waters other than Arctic waters must not result in the deposit of solids or cause any sheen on the water. New passenger vessels carrying more than 500 passengers must ensure that any gray water released from the vessel has been passed through a certified marine sanitation device, which must be done at least three nautical miles from shore.

Baltic Sea Shippers to Try LNG

The Baltic Sea may become a pilottest-area for the use of liquefied natural gas (“LNG”) in maritime applications. Russia, Norway, and other Baltic-area governments are encouraging a switch from diesel fuel to LNG, with the goal of eliminating much of the sulfur and particle emissions associated with diesel fuel and reducing emissions of nitrogen oxides and carbon dioxide.

With the Baltic region designated as an environmental conservation area—with a 0.1 percent limit on the sulfur content of fuel scheduled to go into effect in 2015—a switch to LNG would help solve anticipated fuel-supply issues. Russia’s Gazprom, one of the world’s largest natural gas companies, believes that LNG could become cost-competitive with low-sulfur diesel fuel once the strict emissions limits go into effect. About 40 LNG-fueled ships currently operate worldwide, the majority of them in the Baltic Sea.

With the growth in the use of LNG, some owners and operators are expressing concern about bunkering capabilities at ports. Large container ships require large quantities of LNG, more than is generally available at a port. Refueling several large ships at the same time is beyond the capability of all ports at the current time.

Cruise Line Tests Emissions Control Technologies

Carnival Corp. has reached an agreement with the EPA and the U.S. Coast Guard under which it will test new emissions control technologies in exchange for being excused from certain international treaty obligations. 

Carnival is to invest $180 million in exhaust gas cleaning systems that, if successful, will allow its ships to comply with international emissions limits, particularly the IMO-established Emissions Control Areas (“ECAs”), without having to switch to lower-sulfur fuels. 

The trial program will involve installation of sulfur oxide scrubbers and diesel particulate filters, technologies not commonly used in maritime applications. It is anticipated that the exhaust gas cleaning systems will be employed only while the ships are operating within the ECAs. Installation is anticipated in 2014 and 2015. 

Carnival Seeks to Have January 2013 Costa Concordia Accident Case Moved to Italy

Two separate Florida courts are considering whether to keep putative class actions filed by 104 survivors of the wrecked cruise ship Costa Concordia in their courts or to dismiss them for refiling in Italy. At issue is whether the putative class actions belong in Florida courts, where corporate parent Carnival Cruise Lines is based, or Italy, where the owners of the Costa Concordia are located. Plaintiffs have expressed concern about being able to collect a potential judgment if the cases are moved to Italy. However, the owners of the Costa Concordia claim to have $500 million in insurance and a pledge from Carnival to pay any judgment that the ship’s owners are unable to pay.

Meanwhile, in action at the federal Eleventh Circuit Court of Appeals, Carnival Corp. is arguing that the plaintiffs improperly split their initial suit into two separate actions to avoid federal jurisdiction under the Class Action Fairness Act (“CAFA”). In a February 15 ruling, the federal District Court denied Carnival’s request to remove the suits to federal court and ordered the claims of 104 passengers on the ill-fated cruise ship to state court, noting that neither suit individually met the 100-plaintiff requirement necessary under CAFA. Carnival is arguing that the District Court incorrectly found that the plaintiffs had not proposed for the cases to be tried jointly, and erred by allowing plaintiffs to artfully plead their way around CAFA.

Carnival Seeks Dismissal of the Carnival Triumph Class Action

Carnival Corp. has asked a Florida federal judge to dismiss a putative class action brought by the passengers of the Triumph, claiming that the plaintiffs waived their rights to a collective action and failed to state sufficient claims. While disputing various tort claims brought by the lead plaintiffs, Carnival also argues that passenger ticket contracts prevent plaintiffs from bringing a class action and that the case is not suitable for such proceedings since each passenger’s alleged injuries lack commonality. An engine-room fire aboard the Triumph knocked out the ship’s propulsion and power systems, leaving the ship adrift for several days before it was towed to port at Mobile, Alabama.

Hydrogen Fuel Cells an Option for Cold Ironing

Ports are taking an increasingly hard look at emissions from ships while at berth. Most commonly, the solution has been some form of “cold ironing” where a ship obtains electrical power from shore-side utilities. This approach moves emissions away from the port to the power plant and generally reduces overall emissions, since power plants tend to have better emission controls than shipboard auxiliary engines.

Now, scientists are looking into the feasibility of barge-based hydrogen fuel cells. With this approach, the barge would be moved into position after the ship has docked and would supply power directly to the ship without the need for electrical infrastructure improvements on the wharf. In other applications, container-based fuel cells could provide power for refrigerated containers on barges, therefore eliminating use of diesel generators.

The Sandia National Laboratory in the U.S. is continuing to conduct research regarding maritime fuel cell applications.

California Fines Ship-Owners for Using High-Sulfur Fuel

California air quality officials have announced fines totaling $404,250 against three international shipping firms whose vessels allegedly failed to use low-sulfur marine distillate fuel when sailing in the state’s waters. The enforcement action is based on the 2008 regulation limiting the use of higher-sulfur fuels within California’s territorial waters.

It is alleged that the vessel Hoegh Inchon (owned by Hoegh Autoliners Shipping AS Co. of Norway) used higher-polluting bunker fuel on 17 visits to California ports between 2009 and 2011. Air quality officials also assessed a fine against N.C.N. Corp. Panama and Twin Phoenix Shipping S.A. of Singapore for failing to comply with the fuel regulation.

Port Safety Raises Concerns

Although ports in the United States have made major strides over the last decade, threats to ports and surrounding areas remain a concern. In the wake of the 9/11 terrorist attacks, the U.S government passed the Maritime Transportation Security Act of 2002, the Security and Accountability for Every Port Act of 2006 (the “Safe Port Act”), and the 9/11 Commission Act of 2007. While these acts addressed threats that include potential nuclear attacks, U.S. government reports have raised concerns regarding whether the acts have been fully implemented. For example, the requirement that 100% of containers be screened for nuclear devises at certain ports was found to be unworkable, and implementation has been delayed for two years.

Legislation has been proposed to consolidate various port-safety programs under state control and to provide federal funding for implementation. However, the administration has rejected this approach. It remains to be seen whether Congress or the Administration will put forward any new proposals aimed at improving port security.

Shippers Make More Use of Private Security Forces

With the advent of new standards for the use of private security contractors aboard ships, the maritime industry is embracing the idea of armed guards aboard ships to combat or deter acts of piracy. The Security Association of the Maritime Industry has led the effort to develop maritime security standards; the IMO’s Maritime Safety Committee, which was then followed by issuing Interim Guidance for Flag States and for ship-owners on the use of security forces in high risk areas. More recently, the IMO has established its own security standards. Now that initial acceptance of private onboard security has been achieved, maritime interests are developing rules for the use of force.

Enforcement

  • Shippers Pay $7.5 Million for Natural-Resource Damage

Two Hong Kong-based companies, Cape Flattery Limited and Pacific Basin Limited, have agreed to pay $7.5 million to restore natural resources damaged by the 2005 grounding of their ship off Hawaii. The grounding of the M/V Cape Flattery damaged more than 19 acres of coral reef. As set forth in the January 8, 2013 edition of the U.S. Federal Register, $5.9 million of the penalty will go to designing, implementing, and monitoring efforts to restore the coral reef habitat and other resources affected by the grounding. The remaining funds will reimburse the Interior Department, the National Oceanic and Atmospheric Administration (“NOAA”), and the state of Hawaii for costs associated with assessing the damage.

  • Obstruction of Justice/Failure to Maintain Records

Two shipping companies based in Germany and Cyprus pleaded guilty in federal court to violating U.S. ocean laws and agreed to pay $10.4 million. The companies, Deutschland GmbH and Columbia Shipmanagement Ltd., have admitted to violating the Act to Prevent Pollution from Ships by by-passing pollution controls and failing to maintain an accurate oil-record book on ships that visited ports in New Jersey, Delaware, and Northern California; they also admitted to obstruction of justice and making false statements. A portion of the penalty is expected to go toward Super Storm Sandy remediation efforts.

  • Bypassing Oil-Water Separator/Failure to Maintain Records

The second engineer of the oil tanker M/T Stolt Facto pleaded guilty in U.S. District Court for the Eastern District of Louisiana, admitting that he directed engine-room workers to pump oily wastewater into the ocean and then falsified the vessel’s oil-record book to conceal the discharges, both violations of the Act to Prevent Pollution from Ships. Anselmo Capillanes faces up to six years in prison and a $250,000 fine.

Under Capillanes’s supervision, starting in October 2012, oily water from the bilge wells and bilge-holding tank was pumped into the sewage-holding tank, allowing it to bypass the oil water separator, and then was dumped overboard into the ocean. Capillanes did not record these transfers or discharges in the oil-record book or alert the chief engineer, who signed and maintained the oil-record book. Capillanes also admitted that he put either fresh water or sea water through the oil-water separator to create the appearance that the information in the oil record book was accurate.

  • Conspiracy/Failure to Maintain Records

Portuguese shipper Cimpship Transportes Maritimos SA has paid $1 million to settle charges that it conspired to pollute waterways in East Texas by failing to maintain an oil-record book. The settlement will be used to fund two Texas environmental conservation projects: The Conservation Fund, a nonprofit organization that works to conserve sensitive lands and ecosystems, will purchase a parcel in the Big Thicket National Preserve; and the National Marine Sanctuary Foundation, which supports federally protected underwater areas, will pay for research and monitoring at the Flower Garden Banks National Marine Sanctuary in the Gulf of Mexico. The allegations against Cimpship included failure to keep proper records, including those for oil contaminated wastewater and bilge waste, on board the 38,000-ton bulk freight carrier Niebla.

Climate Change

New research cited by insurers is showing that rises in sea levels due to climate change may not be gradual and that those along the coastal rim will have less time to respond. During the last period of global temperature increase, sea levels took a rapid jump, suggesting there may be a “tipping point” at which the huge Greenland and Antarctic ice sheets melt rapidly, leading to a corresponding spike in sea levels. The studies show an “abrupt jump” in sea levels from 3 to 4 meters up to more than 8.5 meters, suggesting a major ice sheet collapse event occurred. One such jump took place about 127,000 years ago, when the ocean rose about 12 feet in about 500 years. Then about 120,000 years ago, there was another jump of 18 feet over the course of 1,000 years.

This research appeared in the journal

Nature Geoscience.


 

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