14 NEWS
19 December 2014
SAFETY
US may shift
to stricter
ECA sulphur
enforcement
As emissions sulphur regulations
tighten, some warn of potential for
major fines and prison sentences
Eric Martin Stamford
US authorities could step up enforcement measures and pursue
stiffer penalties as emissions regulations tighten across the nation’s
coasts, according to shipping lawyers and communications from
authorities.
The rules, which under Marpol Annex VI will limit sulphur
content in marine fuels to just
0.1% from the current 1%, come
into force in January in the North
American emission control areas
(ECAs) and in 2016 for US Caribbean territories. Ships without exhaust scrubbers or LNG power will
have to switch to ultra-low sulphur fuels within 322 kilometres
(200 miles) of the coast, if such fuel
is available.
The US Coast Guard (USCG) and
US Environmental Protection
Agency (EPA) are gearing up to
work together to enforce the rules
and are both taking the tightened
regulations seriously. Legal experts say the agencies may mete
out the types of multimilliondollar fines and prison sentences
that have dogged the industry in
instances of oily water and bilge
dumping, particularly in cases in
which they can prove that documentation is falsified.
“In my view, I think you are going to see a lot more enforcement,
both civil and criminal, in the
coming year,” said K&L Gates lawyer Michael Chalos, who is well
known for defending shipowners,
operators and seafarers in environmental prosecutions. “It looks
to me like the shipping industry
has another issue to be concerned
about.”
Some legal experts expect Annex VI prosecutions to play out
much like prosecutions of Annex
I’s oil and bilge dumping rules,
which began targeting cruise
lines, major operators and listed
shipowners in the early years to
EmiSSioN coNtrol arEa (Eca) FactS
The North American emission control
area (ECA) includes all coasts in the
Lower 48 contiguous US states, the
eight main islands of Hawaii and southeast Alaska.
In Canada, it includes the west and
east coasts below the 60th north
parallel. It also includes French-con-
trolled islands off eastern Canada.
The International Maritime Organisation (IMO)’s Marpol Annex VI imposed
a 1% sulphur limit beginning in August
2012, although Canada delayed implementation until May 2013.
Beginning on 1 January, that limit
drops to 0.1% sulphur content.
The Caribbean ECA, which includes
Puerto Rico and the US Virgin Islands,
will have the same restrictions in 2016.
Both ECAs have been excluded from
the IMO’s delay in stricter engine standards for nitric oxide and nitrogen dioxide, collectively referred to as NOx, that
will come into force in 2016.
score company-wide victories,
and filing criminal charges focused on false documentation
and backed by whistle-blower allegations.
Granta Nakayama, a Kirkland
& Ellis lawyer who is a former
assistant administrator for the
EPA’s Office of Enforcement and
Compliance Assurance, has written that the agency will pursue
multiple investigations at the
same time so it can announce a
series of enforcement actions to
promote deterrence in the industry.
He tells TradeWinds that the
EPA may seek to garner large company-wide civil settlements.
“EPA has typically had very large
penalties in their civil cases compared to many of the other agencies,” Nakayama said.
Others, however, are less willing to pull out their crystal balls.
In addition to the handful of vessel detentions and small fines for
non-compliance, the EPA has issued subpoenas to a few major
operators, yet there has been no
action from the agency for more
than a year, TradeWinds understands.
Some shipowners and operators
have issued calls for strict enforcement of tighter ECA limits, arguing that otherwise those who do
not comply will have a competitive edge given the price difference between ultra-low-sulphur
fuels and dirtier bunkers.
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Jeanne Grasso, a lawyer at Blank
Rome whose specialties include
criminal enforcement of environmental laws, says one reason she
expects stricter US enforcement is
to keep a level playing field.
“The EPA will be trying to send
a message that non-compliance
won’t be tolerated, mainly because
of the competitive disadvantage
those that were trying to comply
will be put at,” said Grasso.
The USCG has a lead role in vessel inspections, while the EPA
takes charge of penalties. If a ship
is out of compliance, the EPA will
examine whether the operator
tried to comply and submitted
required reports, how much non-
news 15
19 December 2014
►us Coast guard: Patrol
boats off the coast of Miami
beach, Florida. Photo: SCANPIX
Top owners fear soft euro approach
Adam Corbett London
The prospect of a hard-line stance
towards strict compliance with
emission regulations in the US
contrasts with what appears to be
a more flexible approach from the
European authorities, who will enforce the same sulphur standards
from next year.
There has been an ongoing dialogue between the International
Chamber of Shipping (ICS) and the
Paris MOU port-state control (PSC)
authorities, which will police compliance in the North Sea and Baltic
areas, on achieving a consistent
approach from region to region.
A total of 14 separate inspection
authorities boarder the Baltic and
North Sea emission control areas
(ECAs).
Shipowners have won assurances that ships that do not meet
the required fuel standard will not
be penalised by detention if the
crew can demonstrate they made
“
Jeanne Grasso of Blank Rome:
The EPA [Environmental
Protection Agency] will be trying
to send a message that noncompliance won’t be tolerated,
mainly because of the competitive
disadvantage those that were
trying to comply will be put at.
compliant fuel was used and how
long the vessel spent in the ECA.
The agency will also look at how
much of a competitive advantage
was gained by falling afoul of the
rules.
“I believe penalties will be calculated looking at those factors
with a view toward looking at penalties that are a deterrent to noncompliance,” Grasso said.
Many lawyers believe that US
authorities will not levy heavy
fines on operators with minor
technical or unintentional violations.
But since the USCG and EPA cannot inspect every ship, when they
encounter significant violations
and false documentation, the
hammer will fall harder, they say.
“They are going to make examples out of the bad guys, I think, if
they can catch them,” said Eugene
O’Connor, a partner at law firm
Montgomery McCracken.
He also notes that charter contract terms may need to change to
set out responsibilities and liability in ECA fuel procurement and
there could be many charter-party
claims over ECA rules in the meantime.
The USCG and EPA have signalled that with the stricter rules
will come stricter enforcement.
And the tightened emissions
standards come after numerous
recent court rulings upholding
broad discretion of government
agencies’ efforts to investigate,
prosecute and penalise ship operators in pollution cases.
The agencies are working together to conduct joint boardings
and examine bunker delivery
notes and other records. And the
EPA has said it was experimenting with vessel overflights to test
emissions.
“Working closely with our
partners at the coast guard, we’re
stepping up our compliance efforts and will take targeted enforcement actions when necessary,” Cynthia Giles, assistant
administrator for the EPA’s Office
of Enforcement and Compliance
Assurance, recently said on the
USCG’s maritime industry blog.
“Making sure that everyone plays
by the rules will help level the
playing field for companies that
comply, while reducing harmful
air pollution in coastal and inland
communities.”
Under the Act to Prevent Pollution from Ships (APPS), the US
law that implements the Marpol
treaty, operators can face civil
fines of up to $25,000 per day and
criminal fines of up to $500,000
for each violation. But authorities
may implement so-called alternative fines, which can factor in any
competitive advantage or profit
gained by buying non-compliant
fuels.
Individuals face criminal fines
of up to $250,000 per violation and
can be imprisoned for up to five to
10 years.
So what is an operator to do?
Shipping lawyers widely agree
that shipping companies should
develop robust systems to ensure
compliance and they should document all steps they take to procure
compliant fuel.
“Best efforts and transparency
are great mitigating factors for any
enforcement action,” said Grasso.
the best efforts to bunker with the
correct fuel.
It has also hinted that the European authorities recognise there
may be some teething problems
and are prepared to be lenient in
the initial stages of implementation from January next year.
But there are some grey areas,
such as how European PSC will
test compliance on ships that
adopt alternative abatement technology to low sulphur fuel.
The call for a harder line in Europe seems to be coming mostly
from commercial shipping companies. The Trident Alliance is
made up of leading owners who
say they intend to comply with
the letter of the law in ECA regulation and claim they will be at a
commercial disadvantage if PSC
does not enforce the same standard across the board.
Owners’ association Bimco has
also said it wants to see strict enforcement.
►ICs: Secretary-general
Peter Hinchliffe. Photo: ICS
EPA confirms operators must include
MGO in search for compliant bunkers
Eric Martin stamford
Ship operators headed for US
waters within emission control
areas (ECAs) will have to include ultra-low-sulphur distillates, like marine gas oil (MGO),
in their search for compliant
fuel at the start of the year.
The US Environmental Protection Agency (EPA) said in
recently published guidance
to the industry that operators
cannot stop their search for
compliant fuel if they find no
ultra-low-sulphur residual fuel
oil with 0.1% sulphur content.
“The United States expects
that a ship will use any compliant fuel that is available…
including using distillate fuel
or marine gas oil with a much
lower sulphur content,” said the
agency.
Under Marpol Annex VI, operators are required to search
►PoLICy guIdanCe:
Gina McCarthy,
administrator of the
US Environmental
Protection Agency
(EPA). Photo: blooMbErG
for ultra-low-sulphur fuel before
entering an ECA. If none is available ahead of a call at a US port,
they must submit a report to US
authorities.
The latest policy guidance is
expected to raise safety concerns, given the greater potential for vessels to suffer engine
blackouts of thermal shock dur-
ing switches from bunker fuel to
distillates in mid-journey.
Off southern Florida, where
the ECA limit is smaller because
of proximity to the Bahamas, “all
of those major south-east Miami
ports are looking at a lot of ships
potentially changing fuel within
sight of the beach, practically”,
says a bunker market expert.
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