Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540...

28
MAINBRACE JULY 2019 • NO. 2 CONTENTS 1. Note from the Chair 2. Vessel Charters and the Stipulated Loss Value Clauses in U.S. Chapter 11 Reorganization 4. Keeping up with the Jones Act 6. Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019 7. Blank Rome Expands to Chicago with Addition of Four-Partner Group 9. Congress at Work on Maritime Programs 13. Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices 15. Safe Passage Blog 16. Arbitrating Maritime Disputes 18. 2018 Pro Bono Report 19. Blank Rome Relocates New York Office 20. Update on UNCITRAL Insolvency Working Group 22. Gulf Coast Update: Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena 24. Severe Weather Emergency Recovery Team 25. About Blank Rome 26. Risk Management Tools for Maritime Companies 27. Blank Rome’s Maritime Industry Team

Transcript of Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540...

Page 1: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

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James C Arnold ndash HOU

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Thomas H Belknap Jr ndash NYC

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Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

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David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

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EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Programensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements USrequirements for trading with Iran Cuba Russia Syria and other hotspotschange rapidly and US limits on banking and financial services andrestrictions on exports of US goods software and technology impactour shipping and energy clients daily Our team will review and update ourclientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos best-selling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

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For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 2: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Programensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements USrequirements for trading with Iran Cuba Russia Syria and other hotspotschange rapidly and US limits on banking and financial services andrestrictions on exports of US goods software and technology impactour shipping and energy clients daily Our team will review and update ourclientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos best-selling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 3: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

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For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

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Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

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Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 4: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 5: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

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LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

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PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

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PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 6: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

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Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

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Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 7: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

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LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 8: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

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Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

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Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 9: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 10: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

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PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 11: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

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LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 12: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

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LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 13: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 14: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankings are published in Chambers USA 2019

What the team is known for ldquoEsteemed practice with significant experience handling high-profile maritime litigation for national and international clients including PampI Clubs shipping companies and owners Highly regarded for crisis response and offering additional expertise in alternative dispute resolution Maintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentional misconduct allegations and casualty events as well as in a host of cybersecurity issues Recently active on a range of fuel contamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value the firmrsquos lsquoamazing array of subject matter experts across multiple disciplines and jurisdictionsrsquo and its lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by the firmrsquos lsquovery experienced and excellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision and contractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance and collisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual and collision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

thinspShipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band Two Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Notable Practitioners for Shipping Regulatory ndash Nationwide

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 15: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

What the team is known for ldquoHighly acclaimed practice well known for its representation of significant shipping clients on a range of regulatory matters Has expertise in Jones Act compliance environmental investigation defense of companies and individuals and government relations including legislative advice Advises on maritime cybersecurity issues including attacks and security breach avoidance Further strength in counseling shipowners and operators on US trade sanction issues Offers wider industry expertise in shipping within the context of offshore oil gas and wind energy compliance mattersrdquo

Strengths ldquoAccording to one market source lsquoTheyrsquore absolutely top of the line no question at allrsquo Interviewees say that the team has lsquoa lot of very successful and talented lawyersrsquo and also commend the firmrsquos lsquotruly international practicersquordquo

All referenced quotes commentary and rankingsare published in Chambers USA 2019

What the team is known for ldquoEsteemed practice withsignificant experience handling high-profile maritime litigation fornational and international clientsincluding PampI Clubs shippingcompanies and owners Highlyregarded for crisis response and offering additional expertise in alternative dispute resolutionMaintains an excellent reputation for advising maritime industry entities in federal investigations arising from intentionalmisconduct allegations and casualty events as well as in a host of cybersecurity issuesRecently active on a range of fuelcontamination cargo loss salvage and collision casesrdquo

Strengths ldquoClients value thefirmrsquos lsquoamazing array of subjectmatter experts across multiple disciplines and jurisdictionsrsquo andits lsquoassembling of the appropriate team to serve specific needsrsquo Sources are impressed by thefirmrsquos lsquovery experienced andexcellent teamrsquordquo

Band One

Thomas H Belknap JrthinspmdashthinspBand Two Chambers USA states ldquoThomas Belknap is commended for his handling of shipping litigation and arbitration His expertise includes cargo damage collision andcontractual disputes involving vesselsrdquo

William R Bennett IIIthinspmdashthinspBand Four Chambers USA states ldquoWilliam Bennett is noted for his cargo damage claims expertise while also handling collision contractual and maritime-related fraud disputes He is well placed to handle litigation arbitration and mediationrdquo

John D KimballthinspmdashthinspBand Two Chambers USA states ldquoJohn Kimball maintains a solid reputation in the market with clients extolling his lsquoextensive knowledge of admiralty lawrsquo He acts as both a litigator and arbitrator with a broad practice that covers salvage insurance andcollisionsrdquo

Richard V Singleton IIthinspmdashthinspBand Three Chambers USA states ldquoRichard Singleton handles matters such as fuel contamination contractual andcollision cases He advises domestic and international clients including energy suppliers and shipping companiesrdquo

Lauren B WilgusthinspmdashthinspUp and Coming Chambers USA states ldquoLauren Wilgus has a growing reputation in the market and has particular experience advising PampI Clubs as well as shipping and construction companies She often handles casualty claims including collisions as well as cargo damage and fraud mattersrdquo

Notable Practitioners for Shipping Litigation (New York) ndash Nationwide

thinspShipping Litigation (New York)thinspmdashthinspNationwide

Brett M Esber mdash Recognized Practitioner

Shipping FinancethinspmdashthinspNationwide

What the team is known for ldquoDistinguished team with sub-stantial experience across the full suite of contentious issues in the maritime sector Deep bench of expert lawyers routinely engaged to act on behalf of significant shipowners and operators PampI clubs and energy companies Impressive nationwide footprint complements the firmrsquos Gulf Coast-focused practice and strong Houston-based offering Boasts a dedicated maritime emergency response team to respond to casualties and pollution-related incidentsrdquo

Strengths ldquoA client remarks lsquoTheir service is excellent and they are very responsiversquo According to a market commentator lsquoBlank Rome has good geographical diversity and very sound lawyers who find efficient ways to handle casesrsquo Another source says the firm delivers lsquospot-on exemplary advicersquordquo

Michael K Bell mdash Band One Chambers USA states ldquoClients describe Michael Bell as lsquoprobably the top maritime lawyer in Houstonrsquo He has significant experience handling maritime casualties charterparty disputes and insurance coverage disputes as well as contentious environmental mattersrdquo

Jeremy A Herschaft mdash Band Three Chambers USA states ldquolsquoExcellent lawyerrsquo Jeremy Herschaft handles a wide range of disputes including those arising from bareboat charterparties voyage time cargo damage and vessel arrestrdquo

Keith B Letourneau mdash Band Two Chambers USA states ldquoKeith Letourneau leads the firmrsquos maritime and international trade group He routinely handles collisions and allisions fuel contamination claims insurance coverage disputes and wrongful-death chargesrdquo

Douglas J Shoemaker mdash Band Two Chambers USA states ldquoDouglas Shoemaker garners praise as lsquovery personable and very knowledgeable especially in the maritime industryrsquo He is called upon by clients for representation across a variety of shipping litigation including property damage cases seizure proceedings insurance coverage disputes and maritime arbitrationsrdquo

Notable Practitioners for Shipping Litigation (Outside New York) ndash Nationwide

Band One thinspShipping Litigation (Outside New York)thinspmdashthinspNationwide

Notable Practitioners for Shipping Regulatory ndash Nationwide

Jeanne M Grasso mdash Band One Chambers USA states ldquoJeanne Grasso is a preeminent maritime regulatory attorney and a leading expert on compliance with regulation pertaining to ballast water sulfur emissions and other pollution created by ships She is sought after by owners operators charterers and cargo owners for counsel on compliance enforcement and investigations Clients commend her lsquostraightforward no-nonsense approach to issuesrsquordquo

Jonathan K Waldron mdash Band One Chambers USA states ldquoJonathan Waldron is highly regarded for his work counseling US and international clients on compliance with environmental trade maritime security and Jones Act regulations One client comments lsquoJon has a great deal of experience and knowledge in the subject matter he understands all of the nuances and he finds ways forward with regulatorsrsquordquo

Matthew J Thomas mdash Band Three Chambers USA states ldquoMatthew Thomasrsquo area of particular expertise is in sensitive international trade sanctions issues and coastwise and citizenship rules Frequent clients include owners insurers ports and terminal operators Sources describe him as lsquovery bright and capablersquordquo

Band OnethinspShipping Regulatory mdashthinspNationwide

Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 16: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

1 5 bull M A I N B R A C E M A I N B R A C E bull 1 2

bill and [he would] continue putting in the legwork to make improvements to our nationrsquos infrastructure that Americans expect and deserverdquo

The Fixing Americarsquos Surface Transportation (ldquoFASTrdquo) Act the current bill that provides federal funding for surface transportation construction and maintenance expires in October 2020 As the FAST Act creeps closer to expiration lawmakers will feel more pressure to pass a new infrastruc-ture packagemdashwhether it is a reauthorization of the FAST act or a separate long-term infrastructure bill such as the two- trillion- dollar plan

Full Utilization of the Harbor Maintenance Trust Fund ActOn April 30 2019 Chairman DeFazio introduced HR 2440mdashthe Full Utilization of the Harbor Maintenance Trust Fund Actmdashwhich would unlock and utilize billions in already-col-lected fees in an effort to maintain our nationrsquos federal ports and harbors

Currently roughly $93 billion in revenue collected by the Harbor Maintenance Trust Fund sits idle in the US Treasury while ports and harbors of all sizes struggle to remain competitive in their respective industries Despite shippers paying into the Trust Fund for congressionally approved maintenance activities much of the funds have not been uti-lized for port maintenance The chairmanrsquos bill would make it easier for Congress to appropriate funds collected for autho-rized harbor maintenance needs while also enabling the expenditure of roughly $34 billion over the next decademdashallowing the US Army Corps of Engineers to dredge all federal harbors to their constructed widths and depths

According to the Congressional Budget Office (ldquoCBOrdquo) the Trust Fund will most likely collect an additional $245 billion in new revenue over the next decade to add to the estimated $93 billion in collected but unspent revenues However according to the CBO federal appropriations from the Trust Fund will only total $194 billion over the same decade resulting in the Trust Fund balance reaching $144 billion in FY2029 The DeFazio bill was ordered reported out of the full House Committee on Transportation and Infrastructure on May 8 2019 and is pending final House passage So far there is no companion bill in the Senate

Offshore Wind Developments on the Hill Included in the House Appropriation Committeersquos report of a $690 billion Defense spending bill on May 21 was a requirement that the secretary of defense submit a study to the congressional defense committees no later than one year after the enactment of the bill of ldquoany potential national security concerns with respect to the construction of offshore wind arrays to include an examination of legacy

We invite our readers to dive into our archive of Mainbrace newsletters and maritime development

advisories as well as keep abeam with all of our current and upcoming analyses on trending maritime

topics and legislation in our Safe Passage blog

safepassageblankromecom

blankromecommaritime

and new turbines and any appropriate mitigation measures that should be implemented to address these concernsrdquo The American Wind Energy Association has labeled the study as ldquoduplicativerdquo of existing statutory authority and the National Ocean Industries Association warned that this development ldquothreatens to derailrdquo the industry Some analysts believe that this could delay the construction of offshore wind farms and supporters of offshore wind energy are already promising to fight the measure Rep Joe Kennedy III a Massachusetts Democrat who has been a leader in the renewable energy industry noted that ldquoall proposed offshore wind devel-opments must already consider any national security implications and to date none have been raised as New England begins to build turbines off of [their] coast that can power homes and employ a new generation of workersrdquo We are watchful to see whether this language makes it through the final appropriations process

Offshore Wind Worker Shortages and SolutionsDespite several wind generation developers entering into partnerships with universities and providing state agencies with training curriculums for offshore wind jobs the pro-gressive renewable energy industry finds itself with a worker shortage problem as the lack of a workforce with skills for the job is becoming more apparent

To combat this issue five members of Congress from coastal states introduced HR 3068 the ldquoOffshore Wind Jobs and Opportunities Actrdquo If passed the measure would set aside $25 million annually in federal grants for the purposes of training workers for jobs within the offshore wind indus-try Sponsored by Democratic Representatives Donald McEachin (VA-4) Bill Keating (MA-9) Joe Kennedy (MA-4) Alan Lowenthal (CA-47) and Donald Norcross (NJ-1) the bill would issue grants to higher education institutions and labor organizations that could use the funds to develop or improve their offshore wind training programs

Conclusions While it seems from the media that Congress cannot chew gum and walk at the same time the committees that autho-rize and fund critical maritime programs seem to be trying to actually do something constructive this year before the election cycle starts in 2020 We are confident that Congress will enact the NDAA this year however enactment of the Coast Guard authorization and funding bills for FY2020 will be problematic unless Congress decides to focus on getting their job done despite the political distractions in Washington for the rest of the yearthinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Additional assistance with this article was provided by Blank Rome Government Relations LLC Research Analyst Alex Remy

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

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3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

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MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 17: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

1 1 bull M A I N B R A C E M A I N B R A C E bull 1 6

The ongoing tariff negotiations are also causing a decrease in US port infrastructure investment and a slowdown in the creation of new port jobs due to uncertainty and delays in the talks as well as a significant disruption on supply chains While a study from The Martin Associates shows that the total economic value of US coastal ports rose 17 percent from $46 trillion to $54 trillion and the number of jobs supported by cargo moving through US ports increased 34 percent to nearly 31 million jobs from 2014 to 2018 these trends could reverse due to the reorganization of global supply chains which may cause firms and companies to move their facilities to other locations or find alternative sources of import and export destinations

Recently a new exclusion process for the $200 billion tariffs was issued by the US Trade Representative (ldquoUSTRrdquo) on June 19 2019 The USTR began accepting submissions for exclusion requests on Sunday June 30 and will close their submission portal on Monday September 30 2019 The USTR has stated that they expect to receive roughly 60000 requests however they do tend to provide decisions most quickly to requests received early in the process Requests for exclusions can be submitted here on the USTR website

Status of Infrastructure ProgramsBUILD Grants (FY2019)Previously known as Transportation Investment Generating Economy Recovery (ldquoTIGERrdquo) Discretionary Grants on April 23 2019 the Department of Transportation released a Notice of Funding Opportunity for their recently renamed Better Utilizing Investments to Leverage Development (ldquoBUILDrdquo) Transportation Grants Program BUILD grants are awarded on a competitive basis to projects that will have a significant local or regional impact In the past these grants have supported projects that repair bridges implement safety improvements connect communities and people to jobs and education and spur economic revitalization and job growth in communities

Eligible applicants for these grants include state local and tribal governments including US territories transit agen-cies port authorities metropolitan planning organizations (ldquoMPOsrdquo) and other political subdivisions of state or local governments Eligible projects include but are not limited to road or bridge projects public transportation projects passenger and freight rail transportation projects port infrastructure investments and intermodal projects Final applications are due on July 15

Port Infrastructure GrantsThe port community represented by the American Association of Port Authorities (ldquoAAPArdquo) has long requested its own separate grant program although port projects can and have been funded with TIGERBUILD grants above

Starting in FY2019 ports were successful in having Congress create their own funding line for port infrastructure grants Included in the appropriations omnibus bill passed by Congress on February 14 2019 was funding for a new $293 million port infrastructure development grant program to be administered by MARAD These grants have a set aside of $92730000 for the 15 coastal seaports that handled the greatest number of loaded foreign and domestic 20-ft equivalent units of containerized cargo in 2016 as identi-fied by the US Army Corps of Engineers The remainder of the funds is available for all other grants MARAD has not yet published a notice for these new grants MARAD published a notice of funding availability on June 18 2019 and grants must be submitted on grantsgov on or before September 16 2019

The FY2020 T-HUD bill on the House side contains $225 million for this program thereby continuing this new port infrastructure program

Broader Infrastructure Package The chances of Congress passing a broad infrastructure package are looking less likely than ever after a controversial meeting between Democratic leaders and President Trump regarding how to pay for a proposed two-trillion-dollar infra-structure deal ended with President Trump walking out of the meeting Despite this setback lawmakers on the Senate Environment and Public Works Committee (ldquoEPWrdquo) stated that they would continue working on their own surface transportation bill with Sen Tom Carper (D-DE) the ranking member on the EPW Committee noting that the panel was still on track to approve the five-year highway bill by the end of July

In the House Chairman Pete DeFazio of the House Committee on Transportation and Infrastructure remains committed to passing infrastructure legislation After the failed meeting with President Trump he stated that ldquoeven if a transformative deal with the White House remains elusive in the near term [he would] continue to use [his] position as Chair of the House Committee on Transportation and Infrastructure to work with Republicans to move individual pieces of legislation that will make a difference [he would] continue to work on a surface transportation reauthorization

Congress at Work on Maritime Programs (continued from page 10)

When parties negotiate and draft maritime contracts they inevitably consider whether and if so how to define the process for dispute resolution While arbitration is prac-tically universal in ldquoblue-waterrdquo charterparties it is also common in other maritime agreements such as vessel sale construction and repair supplies commodity sale towing stevedoring and terminal agreements among many others Even though some parties and lawyers generally oppose arbitration the ldquoprosrdquo often outweigh the ldquoconsrdquo and most specific concerns can be resolved by careful drafting of the arbitration provision As stated by the US Supreme Court arbitration ldquois a matter of consent not coercionrdquo StoltndashNielsen SA v AnimalFeeds Intrsquol Corp 559 US 662 681 (2010) Parties may structure their arbitration agreements as they see fit

Efficiency and FlexibilityPerhaps the most important consideration for any com-mercial party is that an arbitration is (or should be) more efficient than litigation Arbitrations tend to be quicker and less costly While it is true that the parties must pay for the arbitratorsrsquo time this is offset by the streamlined and more flexible process Unlike some of the broader international arbitration organizations (such as the International Chamber of Commerce and American Arbitration Association) the established maritime arbitration organizations (eg the Society of Maritime Arbitrators (ldquoSMArdquo) of New York and the Houston Maritime Arbitration Association (ldquoHMAArdquo)) do not impose administrative fees

Subject to the circumstances of the case discoverymdashespe-cially the right to prehearing depositionsmdashis more restricted in an arbitration compared to litigation and there is usu-ally less need for expert witnesses since the arbitrators generally possess expertise in the industry The briefing and hearing schedule is flexible will account for particular circumstances confronting the parties and if unforeseen issues arise it is typically easier to schedule a hearing with arbitrators than conforming to a courtrsquos often full docket

Arbitrating Maritime DisputesBY THOMAS H BELKNAP JR AND DOUGLAS J SHOEMAKER

PARTNER

THOMAS H BELKNAP JRPARTNER

DOUGLAS J SHOEMAKER

(continued on page 17)

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

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3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

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MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 18: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 1 01 7 bull M A I N B R A C E

timing requirements of the project MARAD would then issue a notification in the federal register with the relevant information and request comments within 45 days If no information is received within 45 days or if an owner of a Jones Act qualified vessel submits information but MARAD determines that the vessel is not capable then a vessel can perform the work

This could create significant impediments to future invest-ment in not only the offshore oil and gas industry but also to the emerging wind industry Accordingly owners and operators of installation vessels and other stakeholders in these industries should not only review the 2019 CGAA to determine how it could affect their immediate operations but also how the legislation could potentially deter future offshore investment in the United States

Appropriations While authorizing committees can create new programs and reauthorize existing programs it is up to the Appropriation Committees to fund these programs hence the need to pay close attention to the work of these committees for mari-time programs

Transportation Housing and Urban Development Appropriations Maritime Programs Funded under the Transportation Housing and Urban Development Bill (ldquoT-HUDrdquo) On May 23 the House Appropriations Subcommittee on T-HUD and Related Agencies approved its FY2020 bill providing $1371 billion in budgetary resourcesmdasha six-billion-dollar increase from the FY2019 level and $173 billion above the presidentrsquos requested budget As it relates to the maritime community the bill allocates $11 billion for the Maritime Administrationmdash$395 million above President Trumprsquos budget request Included in the $11 billion allocation is $300 million for the Maritime Security Program $225 million for the Port Infrastructure Development Program $20 million for the Small Shipyard Grant Program a mere three million dollars allocated to the title XI loan guarantee program and $300 million to be dedicated to schoolship construction (MARAD recently selected Tote to manage this contract) Additionally the bill grants $40 million to the Saint Lawrence Seaway Development Corporation

The bill was favorably reported out of the full House Committee on Appropriations on June 4 and subsequently incorporated in the minibus package (HR 3055) that also includes appropriations bills for the Departments of Agriculture Commerce Justice and Science the Interior the Environment Military Construction and Veterans Affairs The minibus was then passed by the House on June 25 with a 227 to 194 vote

Department of Homeland Security Appropriations Funding for the Coast Guard is contained within the Department of Homeland Security FY2020 Appropriations Billmdashmost likely the last bill to be passed due to the fight over funding for the border wall The bill allocates $12 billion to the Coast Guard with eight billion dollars being provided to assist with Coast Guard operations and support Within those funds are $31 million dedicated for the purchase or lease of 25 replacement passenger motor vehicles and $340 million allocated for defense-related activities Additionally the measure provides $197 billion for Coast Guard pro-curement including $290 million for five Fast Response Cutters $215 million for two HC-130J aircraft $135 million for initial materials for a second Polar Security Cutter and $100 million for a 12th National Security Cutter This is good news for the Coast Guard as a February report from the US Government Accountability Office stated that the Coast Guard had a $26 billion maintenance and construction back-log The bill was reported favorably out of the full House Appropriations Committee on June 11 2019 containing a few amendments aimed at addressing the migrant crisis on the southern border

Additionally a supplemental aid package (HR 2157) was recently passed and signed into law by President Trump allocating $459 billion to cash-strapped agencies dealing with subpar conditions and overcrowded shelters along the southern border $134 billion of those funds are directed to be sent to the Department of Homeland Security $905 million of which will be used to set up temporary facilities for migrants and provide basic essentials such as food and medicine

Impact of Trade War on Maritime Community Recently President Trump made the decision to increase tar-iffs to 25 percent on roughly $200 billion in goods exported from China with a plan to impose 25-percent tariffs on the remaining $325 billion in Chinese imports in the future The ramifications of this decision are being felt across all fields of commerce including the maritime industry In a February 2019 study prepared by World Trade Partnership Worldwide it is shown that a 25-percent tariff on all Chinese imports would result in more than 22 million American job losses a reduction in the US gross domestic product by more than a full percentage point and a cost to the average family of four the equivalent of a full paycheckmdashover $2300mdashwithin one to three years after being imposed For the maritime community specifically the effects would be felt due to the increased cost of importing and exporting goods via ship-ping and waterways directly affecting commerce within the entire shipping industry

(continued on page 11)

Arbitration procedures can be specifically tailored to the cir-cumstances Arbitration hearings can often be set to fit the schedules and convenience of the parties and counsel and minor matters can often be dealt with via telephone And because the parties are more directly involved in the process and the arbitrators have expertise in the industry the results of an arbitration are more likely to be tailored to the com-mercial and practical requirements of the specific dispute

Further most arbitration rules provide for shortened pro-cedures Under the SMA Rules for Shortened Arbitration Proceedings the matter is heard by a sole arbitrator on documents only the award must be issued within 30 days after the proceedings close and the arbitratorrsquos fee will not exceed $3500 (or $4500 if there is a counterclaim) HMAA rules similarly provide for ldquoFast Track Arbitrationrdquo for claims below $100000

Industry ExpertiseWhile federal judges in most mar-itime centers (eg Houston New Orleans and New York) have experience with complex maritime legal issues it is rare to find judges with specific industry knowledge With maritime commodity and energy transactions we believe an understanding of the industry is extremely helpful for the fact-finder For this reason when maritime and energy cases do go to trial extensive expert testimony is almost always required In arbitration on the other hand this may not be necessary where the arbitrators have specific industry knowledge relevant to the issues in dispute and are thus better equipped to digest and under-stand both fact and expert evidence

Enforceability Because maritime transactions span the globe arbitration is clearly favorable to litigation with respect to international enforceability Because nearly all developed countries including the United States have ratified the Convention on the Recognition and Enforcement of Arbitral Awards (the New York Convention) enforcement of an arbitration award is far more reliable in an international setting The United

States is not a party to any similar international treaty relat-ing to the enforcement of judgments consequently parties must rely on arguments of judicial comity in seeking to enforce United Statesrsquo judgments abroad

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible Depending on the outcome this may feel like a pro or a con though in the broader sense an arbitration awardrsquos finality contributes to overall commercial efficiency

Legal Fees and Costs A common misconception is that a party cannot recover its attorneysrsquo fees and costs (including its share of arbitratorsrsquo

fees) in arbitration In fact under SMA Rules the panel is specifically empowered to award attorneysrsquo fees and costs to the prevail-ing party and under the HMAA Rules the panel will recognize

an agreement between the parties by which the prevailing party is entitled to recover attorneysrsquo fees and costs Indeed several New York courts have recognized arbitratorsrsquo inherent power to award fees and costs even where no arbi-tration rules are incorporated and the agreement does not specifically so provide (And since arbitration is a product of contract parties may retain the ldquoAmerican Rulerdquo where each party bears its own legal costs and the arbitrators will recognize that agreement)

While arbitration is not appropriate for all disputes with maritime transactions the ldquoprosrdquo outweigh the ldquoconsrdquo Arbitration unlike litigation affords the parties considerable autonomy and flexibility If the parties are careful in draft-ing the arbitration provision and in selecting the applicable rules and they select qualified arbitrators arbitration can be an efficient and effective process for dispute resolution pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in Texas Lawyer on April 29 2019 Reprinted with permission

Arbitrating Maritime Disputes (continued from page 16)

The Federal Arbitration Act and the New York Convention significantly limit the available grounds for challenging or refusing to enforce awards and an appeal ldquoon the meritsrdquo is rarely possible

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 19: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Welcome to Blank Romersquos 2018 Pro Bono Report which highlights various pro bono cases clinics and projects that our attorneys worked on throughout the year to provide equal access to justice in our communities

In particular we discuss our significant work on behalf of veterans immigrants LGBTQ+ individuals the homeless senior citizens and small business owners

Also featured in this report

bullthinspthinspthinspBlank Romersquos 2018 Pro Bono Year in Review bullthinspthinspthinspTribute to Mat Rotenberg a pro bono champion for local nonprofitsbullthinspthinspthinspSummary of pro bono awards presented to our Firm and attorneys bullthinspthinspthinspBlank Romersquos Community Partners and 2018 Pro Bono Honor Roll

M A I N B R A C E bull 1 89 bull M A I N B R A C E

Congress at Work on Maritime ProgramsBY JOAN M BONDAREFF AND JONATHAN K WALDRON

While much attention is being paid to the Mueller report and the internal Democratic fight regarding impeachment procedures for President Donald Trump the 116th Congress and its respective committees are trying to do their regular work in the meantimemdashincluding passing both authorization bills and appropriation bills for fiscal year 2020 Here are some key legislative developments relevant to the marine industry

Maritime Administration Authorization BillOn May 15 2019 the Senate Committee on Commerce Science and Transportation reported S 1439 the ldquoMaritime Administration Authorization and Enhancement Act for Fiscal Year 2020rdquo sponsored by Senator Roger Wicker (R-MS) Chairman of the Committee S 1439 hopes to accomplish a multitude of goals including a 10-year reauthorization of the Maritime Security Program a US-flagged fleet of commer-cial ships deemed critical for defense sealift operations and codifying President Trumprsquos ldquomilitary to marinerrdquo executive order (EO 13860) aimed at streamlining the transition of active duty and retired military into civilian maritime jobs

Additionally the bill includes the Port Operations Research and Technology (ldquoPORTrdquo) Act which authorizes $600 mil-lion for the secretary of transportation to make grants for port and intermodal infrastructure projects the Maritime SAFE Act aimed at combatting illegal fishing increased fundingmdashup to $40 million for FY2020mdashfor the Small Shipyard Grant Program and full funding ($33 million) for the Title XI maritime guaranteed loan program to support the maritime industrial base The bill requires that all com-ponents used in grant-funded projects are American-made and American-bought (a Baldwin amendment) The bill also authorizes a program to support infrastructure develop-ment at Department of Defense-designated Strategic Ports and enacts reforms at the US Merchant Marine Academy regarding sexual harassment and assault prevention

S 1439 was incorporated as title 85 of the National Defense Authorization Act (ldquoNDAArdquo) and approved by the Senate on June 27 2019 There is currently no companion Maritime Administration (ldquoMARADrdquo) bill in the House of Representatives but we expect many of these provisions to be adopted into the Coast Guard bill on the House side

Coast Guard Authorization Bill and Offshore Jones Act Waiver ProvisionBoth House and Senate staffs are working on bills to reauthorize the programs of the Coast Guard for FY2020 Chairman Wicker in particular wants the bill to be non-controversial and like the NDAA passed each year On the House Transportation and Infrastructure Committee it will be the first time in a while that Democrats are in charge of the process so it remains to be seen how policy differences between Democrats and Republicans are resolved

The House Committee on Transportation and Infrastructure marked-up and approved HR 3409 the Coast Guard Authorization Act of 2019 (ldquo2019 CGAArdquo) on June 26 2019 Section 305 of the reported bill contained a controversial provision on how the Jones Act applies to installation ves-sels working in the offshore oil amp gas and wind industries Specifically it outlines that MARAD would make a determi-nation within 180 days of enactment on whether a Jones Act qualified (ie US-owned -built -operated) installation vessel exists The bill would define an ldquoinstallation vesselrdquo as a vessel with a lifting capacity of 1000 metric tons (ldquomtrdquo) As such the bill would only affect larger lift vessels and would not impact operations by installation vessels less than 1000 mt If MARAD determines no coastwise qualified vessel exists then the CGAA would determine that lifting opera-tions were not Jones Act movements However if Congress reduced the crane capacity from 1000 mt to a number around 100 mt this could potentially affect almost all lifting operations offshore

Subsequently if an owner of a Jones Act installation vessel advises MARAD that it has a new installation vessel that can perform offshore lifting operations then any lifting oper-ations by an installation vessel would be prohibited unless MARAD determines that a Jones Act qualified installation vessel is unavailable To determine whether a Jones Act qualified vessel is available vessel ownersoperators will have to submit an application to MARAD one year before the installation date including engineering details and

OF COUNSEL

JOAN M BONDAREFFPARTNER

JONATHAN K WALDRON

To learn more about Blank Romersquos pro bono initiatives please visit blankromecompro-bono

Download Blank Romersquos 2018 Pro Bono Report

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

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PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 20: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

While the Firm identifies a permanent location Blank Romersquos Chicago office address is 10 South Riverside Plaza | Suite 875 | Chicago IL 60606

1 9 bull M A I N B R A C E M A I N B R A C E bull 8

2015 with five partners which has grown to more than 20 lawyers Additionally the Firm experienced significant growth in 2016 when it welcomed more than 100 attor-neys previously with Dickstein Shapiro to its Washington DC and New York offices

ldquoWith strong roots in Chicago and an exceptional national reputation Ken Karin Will and Paige are the perfect team to anchor our entrance into the marketrdquo stated Lawrence F Flick Chair of Blank Romersquos Financial Services Industry group ldquoBlank Rome has a number of clients who are based in or do business in Chicago so having an established presence in the city with a stellar group of attorneys will help us provide enhanced service to our clients In addition the teamrsquos significant experience in financing and restructuring in the healthcare industry will further expand our strong healthcare finance capabilitiesrdquo

ldquoBlank Rome has a proven track record of opening new offices across the United States through the hiring of lateral groups and we are very excited to join that legacyrdquo said Ken ldquoIn talking with Grant Larry and other partners from the Firmrsquos offices and practices we were energized by Blank Romersquos desire to open a Chicago office and its clear vision and commitment to growing in the market We were also impressed by the Firmrsquos strong culture of collaboration and innovative approach to client service Joining Blank Rome presented the perfect trifecta for our groupmdashcontinue to service clients on an expanded national platform facilitate growth in Chicago and contribute to innovation in our field We are thrilled to be a part of the teamrdquothinsppthinspthinspndashthinspcopy2019 BLANK ROME LLP

Kenneth J Ottaviano 3127762511

kottavianoblankromecomWeb Profile | VCard

Press Release

Karin H Berg 3127762513kbergblankromecomWeb Profile | VCardPress Release

William J Dorsey 3127762512

wdorseyblankromecom Web Profile | VCard

Press Release

Paige Barr Tinkham 3127762514ptinkhamblankromecomWeb Profile | VCardPress Release

ABOUT THE ATTORNEYS

Announcement

Blank Rome Relocates New York Office Dear Clients Alumni and Friends We are pleased to announce that we have successfully completed the relocation of our New York office from the Chrysler Building to our new home at the recently redesigned iconic 1271 Avenue of the Americas formerly known as the Time amp Life Building located in Rockefeller Center in Midtown Manhattan We designed our space to be modern bright collaborative and flexible so that we can continue to grow and meet the unique needs of our clients

For your records our full New York address is

1271 Avenue of the Americas | New York NY 10020 | 2128855000

We established our New York presence in 2000 when we combined with Tenzer Greenblatt LLPmdasha firm with New York roots dating back to 1937 Collectively we operated out of the Chrysler Building for 40 years With 150 attorneys our New York office is one of our largest locations and has experienced sustained growth over the past two decades This move underscores our continued commitment to our clients the New York market and our goals for ongoing expansion

Special thanks to Michael Mullman who led this important relocation project and Norman Heller Martin Luskin and Robert Mittman current and former chairs of our New York office for finding an ideal location with amenities that support our leading New York-based practices in financial services corporate mergers and acquisitions securities real estate maritime matrimonial and family law litigation business restructuring and bankruptcy business tax insurance recovery and trusts and estates

We look forward to serving our clients from our new office and invite you to come visit us soon

Regards

Grant S Palmer Managing Partner amp CEO Blank Rome LLP 2155695578 | palmerblankromecom

Alan J Hoffman Chair Blank Rome LLP 2155695505 | hoffmanblankromecom

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

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LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 21: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 07 bull M A I N B R A C E

Announcement

Blank Rome Expands to Chicago with Addition of Four-Partner GroupJune 11 2019thinspndashthinspBlank Rome LLP is pleased to announce that the Firm is expanding its national platform to Chicago with the addition of a four-partner group The Firm expects the new office will launch this week upon the completion of certain regulatory requirements

The Chicago office will be led by Kenneth J Ottaviano Prior to joining Blank Rome Ken served as a partner in the insolvency and restructuring group at Katten Muchin Rosenman LLP where he recently served on Kattenrsquos Board of Directors Also joining from Katten in Chicago are Karin H Berg William J Dorsey and Paige Barr Tinkham Ken Karin and Paige join as partners in the Firmrsquos Finance Restructuring and Bankruptcy group Will joins as a partner in Blank Romersquos Corporate Litigation group They will also be members of the Financial Services Industry group which has welcomed eight attorneys to date in 2019 and has more than 100 attorneys throughout the United States Collectively the grouprsquos experience spans the financial services sector with Ken Karin and Paige focusing their practices on financing insolvency and restructuring transactions and Will focusing his practice on commercial finance litigation real estate disputes and contested merger and acquisition transactions

ldquoKen Karin Will and Paige are outstanding people and we are thrilled to have them join us as the founding partners of our new Chicago officerdquo said Grant S Palmer Blank Romersquos Managing Partner and CEO ldquoThey are the epitome of Blank Rome lawyersmdashpremier practitioners in their fields who work collaboratively in teams with a singular focus on clientsrsquo needs Providing truly exceptional client service is our top priority and we are committed to expanding our depth breadth and capabilities across offices to continue to serve our clients at the highest levelsrdquo

Since its founding in 1946 Blank Rome has grown through a number of significant acquisitions combinations and lateral hires The Firm has been particularly successful in opening new offices through the hiring of entrepreneurial- minded lateral groups and effectively integrating the attorneys and professionals to allow for ongoing growth In the last decade alone the Firm opened its Los Angeles office in 2009 with the addition of five laterals and has grown to nearly 60 lawyers in 2011 the Firm opened its Houston office with five lawyers from Abrams Scott amp Bickley LLP and now has nearly 50 lawyers in Texas and most recently the Firm opened in Pittsburgh in

Update on UNCITRAL Insolvency Working GroupBY RICK ANTONOFF AND EVAN J ZUCKER

PARTNER

RICK ANTONOFFASSOCIATE

EVAN J ZUCKER

The Insolvency Working Group of the United Nations Commission on International Trade Law (ldquoUNCITRALrdquo)1 has been busy this past year working on three new model laws and developing work on at least two possible future projects2 The Insolvency Working Group is responsible for drafting the Model Law on Cross-Border Insolvency (the ldquoCBI Model Lawrdquo) in 1997 which has since been adopted in 46 countries and is under consideration in several others In 2005 the United States adopted the CBI Model Law as Chapter 15 of the United States Bankruptcy Code

Insolvency-Related Judgments In May 2018 the Insolvency Working Group completed its work on a Model Law on Recognition and Enforcement of Insolvency-Related Judgments (the ldquoIRJ Model Lawrdquo) The Insolvency Working Group determined that there was a need for the IRJ Model Law after judicial decisions in certain countries declined to recognize judg-ments related to foreign insolvency proceedings In addition the Insolvency Working Group noted that many inter-national treaties addressing foreign judgments exclude insolvency-related judgments and coun-tries that do recognize foreign insolvency-related judgments have inconsistent rules about when a judgment is related to an insolvency proceeding (For more information please read our article published in INSOL Internationalrsquos Special Report (March 2019) UNCITRALrsquos Model law on Recognition and Enforcement of Insolvency-Related JudgmentsmdashA Universalist Approach to Cross-Border Insolvency)

By providing a uniform set of definitions procedures and policies the IRJ Model Law facilitates an efficient streamlined path to recognition of foreign judgments It is drafted in a form that can either be integrated into the CBI Model Law or enacted as a stand-alone statutory regime

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group Nevertheless there is historically a gap of several years between the time UNCITRAL adopts a model law and the time countries begin to enact local legislation based on the model law

Enterprise Group Insolvency At its most recent session in May 2019 the Insolvency Working Group completed work on a Model Law on Enterprise Group Insolvency (the ldquoEnterprise Group Model Lawrdquo) The purpose of the Enterprise Group Model Law is ldquoto equip States with modern legislation addressing the domestic and cross-border insolvency of enterprise groupsrdquo (Enterprise Group Insolvency Draft Guide to Enactment 2 UNCITRAL (March 2019) available at undocsorgenACN9WGVWP165) The Enterprise Group Model Law addresses situations of multinational affiliated companies being the subject of insolvency proceedings in two or more countries It provides procedures to harmonize the various proceed-ings and address such issues as intercompany claims duties of directors in the period approaching insolvency avoiding inconsistent rulings affecting the enterprise group appoint-

ing a single group representative and developing a group insolvency solution for all or part of an enterprise group through a single insolvency proceeding in a jurisdiction where at least one group member has its center of main interest

It is expected that UNCITRAL will formally adopt the Enter-prise Group Model Law at its upcoming session this July

Micro- Small- and Medium-Sized EnterprisesDuring the May 2019 session the Insolvency Working Group made substantial progress on recommendations concerning the insolvency of micro- small- and medium-sized enterprises (ldquoMSMEsrdquo) The Insolvency Working Group has a mandate to prepare commentary and proposals on

In July 2018 UNCITRAL formally adopted the IRJ Model Law While it is too soon to gauge countriesrsquo reception to the IRJ Model Law it was strongly supported by the member countries of UNCITRAL represented in the Insolvency Working Group

(continued on page 21)

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

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SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

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About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 22: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 62 1 bull M A I N B R A C E

a simplified insolvency regime for MSMEs The issue arose from UNCITRALrsquos acknowledgment that ordinary business insolvency procedures are not always suited to individual entrepreneurs and businesses owned and operated by individuals or families with intermingled business and personal debts Such debtors may also be discouraged by current insolvency procedures that tend to be expensive drawn out subject to rigorous and inflexible rules and involve loss of control over the business At the same time MSMEs burdened by debt may become trapped in a cycle of debt or driven to non-traditional forms of debt from sources of questionable repute

The Insolvency Working Grouprsquos goal is to develop a simplified regime with a view to allowing MSMEs to remain commercially viable and retaining the entrepreneurrsquos or the familyrsquos know-how and skills

Possible Future WorkTwo topics for future work were discussed at the May ses-sion First members of the European Union proposed work to harmonize conflict-of-law issues The EU currently has two cross-border insolvency model laws the CBI Model Law and the Recast EU Insolvency Regulations They are not consistent in many respects and countries in the EU may be subject to both The proposal received broad support

Second the delegates discussed whether work on a model law on cross-border asset tracing and recovery is needed While support for this proposal is mixed a majority of members agreed to continue studying the issue to deter-mine whether it is an appropriate subject for the Insolvency Working Group

The Insolvency Working Group next meets in December 2019 It is expected to complete work on MSMEs at that session and to continue discussion on the proposals for future work Blank Romersquos attorneys are actively following these developments as selected observer-delegates to the Insolvency Working Group and we will continue to keep our readers informed pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Update on UNCITRAL Insolvency Working Group (continued from page 20)

1ensp UNCITRAL was established in 1966 with a ldquomandate to further the progressive harmonization and modernization of the law of international trade by preparing and promoting the use and adoption of legislative and non-legislative instruments in a number of key areas of commercial lawrdquo (A Guide to UNCITRAL Basic Facts about the United Nations Commission on International Trade Law United Nations (2013) available at uncitralunorgsitesuncitralunorgfilesmedia-documentsuncitralen12-57491-guide-to-uncitral-epdf)

2ensp ldquoA model law is a form of text recommended to States for incorporation into their national law through the enactment of legislationrdquo (UNCITRAL Enterprise Group Insolvency Draft Guide to Enactment para 6 (2019) available at uncitralunorgenworking_groups5insolvency_law)

Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

Top-Tier FirmTransport Shipping ndash FinanceTransport Shipping ndash LitigationTransport Shipping ndash Regulation

Leading Lawyers Brett M Esber (Transport Shipping ndash Finance)Jeanne M Grasso (Transport Shipping ndash Regulation)John D Kimball (Transport Shipping ndash Litigation)R Anthony Salgado (Transport Shipping ndash Finance)Jonathan K Waldron (Transport Shipping ndash Regulation)

Next Generation LawyersJeremy A Herschaft (Transport Shipping ndash Litigation)

Rising StarsLauren B Wilgus (Transport Shipping ndash Litigation)

Blank Romersquos maritime practice and attorneys were highly ranked and recommended in The Legal 500 United States 2019 receiving the following rankings

TRANSPORT SHIPPING ndash LITIGATIONenspThomas M Belknap JrenspbullenspMichael K BellenspbullenspWilliam R Bennett Jeremy A HerschaftenspbullenspJay T HuffmanenspbullenspJohn D KimballenspbullenspKeith B LetourneauenspbullenspJeffrey S Moller Douglas J ShoemakerenspbullenspRichard V SingletonenspbullenspLauren B Wilgus

TRANSPORT SHIPPING ndash FINANCEenspBrett M EsberenspbullenspR Anthony Salgado

TRANSPORT SHIPPING ndash REGULATORYenspKate B BelmontenspbullenspJeanne M GrassoenspbullenspGregory F Linsin Matthew J ThomasenspbullenspJonathan K Waldron

Recommended Lawyers

Blank Rome also received high rankings and recommendations for our Energy Regulation Oil and Gas Government Contracts Insurance Advice to Policyholders and MampACorporate and CommercialthinspndashthinspMampA Middle-Market (sub-$500M) practices as well as for attorneys in those practices

To view Blank Romersquos full Legal 500 rankings please click here

For more information on The Legal 500 United States 2019 please visit legal500com

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

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thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 23: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 25 bull M A I N B R A C E

Keeping up with the Jones Act (continued from page 4)Jones wrote that the 1920 Merchant Marine Act was intended to ldquobuild up and maintain an adequate American merchant marinerdquo A strong merchant marine was viewed as necessary for future commercial growth national defense and ensuring worldwide peace and safety

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

Can the Jones Act Be Waived Waivers of the Jones Act are possible but rare The Jones Act can be waived by the secretary of the Department of Homeland Security if it is ldquonecessary in the interest of national defenserdquo

Waivers are not possible simply due to lack of availability of Jones Act qualified vessels They have been granted to meet urgent Department of Defense domestic transportation needs and to allow prompt response to domestic needs in the event of catastrophe war or substantial disruption to US energy supplies

Is the Jones Act SuccessfulThe Jones Act regulates only domestic trade It has not resulted in a bustling internationally trading American mer-chant marine

Maritime Administrator Mark Buzby a retired Navy rear admiral noted during a May 7 interview at the Navy Leaguersquos Sea Air Space conference that only 81 interna-tionally trading vessels sail under a US flag Of those 81 vessels 60 receive stipends to remain US flag as part of the Maritime Security Program

Whether a particular contract is ldquomaritimerdquo is a legal question that can often arise in disputes subject to potential adjudication in the US court system There can be several reasons for this One concerns determining whether a civil action can be heard in federal court versus state court If a maritime contract is at issue a case

might be litigated in federal instead of state courts andor a plaintiff might have the ability to file an action in federal court for a pre-judgment arrest or attachment of a vessel or other property of a defendant

While a seemingly simple question courts and litigants have long struggled with assessing whether or not a particular contract is a maritime one In 2004 in an effort to provide clarity and guidance on the issue the US Supreme Court issued its decision in Norfolk v Kirby in which it held that

To ascertain whether a contract is a maritime one we cannot look to whether a ship or other vessel was involved in the dispute as we would in a putative maritime tort case Nor can we simply look to the place of the contractrsquos formation or performance Instead the answer depends uponthinspthinspthe nature and character of the contract and the true criterion is whether it has reference to maritime service or maritime transactions1

The Fifth Circuit Court of Appealsrsquo Test for Assessing Whether a Contract Is Maritime The US Fifth Circuit Court of Appealsrsquo jurisdiction includes the states that generate the majority of oil and gas drilling exploration and production activities in the United Statesrsquo inshore and offshore waters off the Gulf of Mexico (Texas Louisiana and to a lesser extent Mississippi and Alabama) It is common practice in that industry for service contracts to contain provisions assigning defense indemnity and additional insured obligations between the contracting parties for casualties that occur in the course of work under the contract Under the US general maritime law such clauses are generally enforceable However several states such as Texas and Louisiana have enacted laws

limiting the scope and validity of such provisions when the contract at issue concerns oil and gas exploration drilling and production activities Such state laws if applicable will control the question of the enforceability of a contractrsquos defense and indemnity provisions to the exclusion of any other law that might have otherwise have deemed them enforceable

As a result the Fifth Circuit and the lower courts within its jurisdiction see a large amount of litigation concerning the enforceability of contractual defense and indemnity provisions in which the controlling question is whether the contract at issue is maritime (or not) For many years the Fifth Circuit utilized a six-part highly fact-specific test often referred to as the Davis amp Sons test2 for answering that question However in January of 2018 the Fifth Circuit issued In re Larry Doiron Inc 879 F3d 568 (5th Cir 2018) which sets forth a new seemingly simpler test that consists of just two questions

1ensp Is the contract one to provide services to facilitate the drilling or production of oil and gas on navigable waters

2ensp Does the contract provide or do the parties expect that a vessel will play a substantial role in the completion of the contract

If the answer to both questions is yes then the contract is maritime and thus subject to federal maritime law

Does Doiron Apply to Contracts That Do Not Involve Oil and Gas Activities The Fifth Circuit expressly stated in Doiron that it was only dealing ldquowith determining the maritime or nonmaritime nature of contracts involving the exploration drilling and production of oil and gasrdquo Several subsequent decisions including one from the Fifth Circuit have applied the new Doiron test to such contracts3

However a more difficult question for courts within the Fifth Circuit is whether Doiron also applies to contracts that are potentially maritime even though they do not involve the

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services ArenaBY DAVID G MEYER

OF COUNSEL

DAVID G MEYER

(continued on page 23)

The US Merchant Marine is not currently capable of meeting the demands of a sustained sealift Buzby noted that at least 86 more tankers would be needed to move enough petroleum to sustain afloat and ashore forces in a major sealift effort

He also said that about 1800 more mariners would be needed to crew the Ready Reserve Fleet and Military Sealift Command vessels the United States already has

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

Despite higher costs the US flag included nearly 20000 inspected vessels in 2018 The vast majority of the US flag

consists of tug boats barges and passenger vessels operating domestically under the Jones Act

Echoing the same senti-ments as Sen Jones Rear Adm Buzby stated ldquoTo

have a Merchant Marine thatrsquos available in time of war they need to be around in time of peace They have to existrdquo

Suggestions for strengthening the US merchant fleet have included expanding US cabotage laws or providing incen-tives for non-Jones Act vessels to join the US flag fleet

At this point itrsquos unclear what the United States would do if it urgently needed to meet the demands of a sustained sealift pthinspthinspndashthinspcopy2019 BLANK ROME LLP

This article was first published in USNI News on June 4 2019 Reprinted with permission

Most major maritime countries have laws reserving domestic trade for their own citizens These are generally known as cabotage laws US cabotage laws however are some of the strictest in the world

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 24: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

In the last several weeks the Jones Act has drawn headlines over how it has shaped the US and worldwide shipping industry After almost 100 years as a part of federal law therersquos much misunderstanding as to what the law actually does

The Jones Act requires that all merchandise loaded at one US port and unloaded at another US port be transported on vessels that are

thinspthinspthinspbull built in the United Statesthinspthinspthinspbull documented under the laws of the United Statesthinspthinspthinspbull owned by US citizens andthinspthinspthinspbull never sold to a foreign citizen

The Jones Act only applies to domestic US trade It has no impact on vessels transporting cargo to or from another country

Similar laws also apply to domestic transportation of passengers towing dredging salvage and fishing

2 3 bull M A I N B R A C E M A I N B R A C E bull 4

Keeping up with the Jones ActBY DANA S MERKEL

Why Does the US Have the Jones ActThe Jones Act was named for its sponsor Sen Wesley Jones (R-Wash) and is part of the Merchant Marine Act of 1920

During World War I the United States lacked the merchant vessels it needed to supply US troops and support its allies Jones noted that before the war shipping ldquocould be done more cheaply by others and so we had nonerdquo

The US government struggled to build and man enough ships to support the war effort Jones described ldquohundreds of millions of dollars in higher freight rates or business lossesrdquo and millions wasted in ldquohasty building of shipsrdquo to meet the demand

ASSOCIATE

DANA S MERKEL

US flag vessels have higher operating and maintenance costs higher taxes and more stringent requirements than foreign-flag vessels These higher costs apply to all US flag vessels both Jones Act and non-Jones Act

exploration drilling and production of oil and gas Doiron cannot reasonably be interpreted as holding that any such contract is automatically non-maritime or stated another way it would be unreasonable to read Doiron as holding that every contract that fails to meet the first prong of its test is non-maritime Indeed despite its express limitation to oil and gas service contracts Doiron included a footnote stating that ldquo[i]f an activity in a non-oil and gas sector involves maritime commerce and work from a vessel we would expect that this test would be helpful in determining whether a contract is maritimerdquo

But is it Only two cases have addressed the application of Kirby and Doiron outside the oilfield services arena The first Lightering LLC v Teichman Group LLC 328 F Supp 3d 625 (SD Tex 2018)4 involved a contract for wharfage dockside storage of vessel equipment and when requested vessel loading and unloading services The plaintiffsrsquo position was that it was a maritime contract the defendantsrsquo position was that it was not The plaintiffs argued that because the contract at issue was not one to provide services to facilitate the drilling or production of oil and gas on navigable waters Kirby as opposed to Doiron controlled The defendants argued that Kirby and Doiron both controlled The district court sided with the defendants in holding that the contract was non-maritime However to reach that conclusion instead of asking Kirbyrsquos single question or Doironrsquos two questions the district court created a seemingly new three-part test

Under Doiron and Kirby determining whether a contract is maritime requires three steps (1) the activity must be maritime commerce (2) the activity must involve work from a vessel and (3) the contract must provide or the parties must expect that a vessel will play a substantial role in completing the contract If all three are satisfied then the contractrsquos principal objective is maritime commerce and the contract is maritime in nature

So far the only reported decision applying Lightering is from an Eastern District of Louisiana case Barrios v Centaur LLC5 which involved a contract for the construction of a

containment wall on a dock The district court led off by noting that Lightering ldquowas first to consider the Doiron test in a non-oil and gas contextrdquo However the district court did not address or apply Lighteringrsquos three-part test for determining whether a contract is maritime Instead it held that the Supreme Courtrsquos Kirby decision ldquoinstructs that [courts] should consider whether the lsquoprincipal objectiversquo of a contract is maritime commercerdquo Because the primary objective of the contract at issue was the construction of a concrete lip on a dock which the district court said ldquomerely facilitates the traditional maritime commerce activity of loading and unloading vesselsrdquo it held that the contract was non-maritime and it therefore did not need to consider ldquothe other Doiron factorsrdquo

Conclusion The Doiron opinion is still relatively young and it remains to be seen how it will continue to be used and developed in the courts However the Lightering and Barrios decisions arguably reflect Doironrsquos potential for conflict with Kirby For example would Lighteringrsquos three-part test which combined elements from both opinions run afoul of Kirbyrsquos mandate to focus only on whether the contract had maritime com-merce as its principal objective And if the court in Barrios had found the contract at issue did have maritime commerce as its principal objective which is the Kirby standard would it have then gone on to apply the ldquoother Doiron factorsrdquo Presumably the court was referring to the second part of the Doiron test (ie whether the contract provided or the parties expected that a vessel will play a substantial role in the completion of the contract) However the use of the plural ldquofactorsrdquo could indicate that the court was referring to parts two and three of the Lightering test not just part two of the Doiron test or something else entirelymdashthough of course there is no way of ever knowing for sure what if anything was intended

The Lightering case resolved by settlement before any of these issues were briefed on appeal to the Fifth Circuit However the parties in Barrios recently concluded briefing to the Fifth Circuit and the question of whether the contract at issue is maritime is front and center As such there may be further guidance on these issues in the near future pthinspthinspndashthinspcopy2019 BLANK ROME LLP

Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena (continued from page 22)

1enspNorfolk S Ry Co v Kirby 543 US 14 23ndash24 (2004) (internal citations omitted)

2enspFor the opinion in which it first appeared Davis amp Sons Inc v Gulf Oil Corporation 919 F2d 313 (5th Cir 1990)

3enspSee eg In re Crescent Energy Services LLC 896 F3d 350 (5th Cir 2018) Gulf Crane Services Inc 2019 WL 1434436 (SD Tex April 1 2019)

4enspAttorneys with Blank Rome including the author represented one of the plaintiffs Lightering LLC in the case

5ensp345 FSupp3d 742 (ED La 2018)

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 25: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Blank Romersquos Severe Weather Emergency Recovery Team (ldquoSWERTrdquo) helps those impacted by natural disasters like Hurricanes Florence Harvey Irma and Maria and by wildfires and mudslides in California and Colorado We are an interdisciplinary group with decades of experience helping companies and individuals recover from severe weather events Our team includes insurance recovery labor and employment government contracts environmental and energy attorneys as well as government relations professionals with extensive experience in disaster recovery

Learn more blankromecomSWERT

Severe Weather Emergency Recovery Team

3 bull M A I N B R A C E M A I N B R A C E bull 2 4

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization (continued from page 2)

provisions debtors fight to limit the assertion of such claims as penalties or as otherwise unenforceable under the terms of the underlying contract

If a SLV provision and related guaranties are enforced the allowance of the full SLV claim can have a significant inflat-ing impact on a claims pool reducing general recoveries to creditors So the power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when les-sorscharterers seek to enforce SLV provisions

Republic Airways and Tidewater This year in Republic Airways the New York Bankruptcy Court found that a SLV-based damage claim was an unen-forceable penalty and accordingly refused to enforce an otherwise unconditional guaranty of the true lease in question The debtors in that case had rejected the aircraft lease and the lessor had asserted damages under the SLV as a result of that rejection The court found that the SLV damage measure acted as a penalty because it effected an unconditional transfer of residual value risk upon the rejec-tion without a cognizable connection to the anticipated harm caused by the breach or default itself The court then refused to enforce the lease guaranty of the SLV damage claim because the SLV claim was subject to an unwaivable defense (this is contra the holding in 136 Field Point Circle)

Further in an unreported decision In re Tidewater Inc Bankr Case No 17-11132 (BLS) (Bankr D Del Aug 31 2017) the Delaware Bankruptcy Court reached a similar result In the context of the rejection of bareboat charter agreements for certain vessels the Delaware Court ruled

that the SLV provisions in the charters were penalties unen-forceable as a matter of public policy and relevant Third Circuit precedent which the court found was not abrogated by the adoption of UCC section 2-A-504 after those senior circuit decisions were handed down The Delaware Court took under advisement the question of the enforceability of a related guaranty

Unresolved Tensions in the Law Relating to SLV Enforcement in US BankruptcyIt is important to note that the Republic AirwaysTidewater opinions have not settled this area of the law at all Each decision is highly fact sensitive and lessor interests in each case had very colorable grounds for appeal For example the Tidewater courtrsquos insistence on the enforcement of circuit precedent that addressed the character and nature of liqui-dated damages as an unenforceable penalty before Article 2A was amended can be challenged because among other things Article 2A contemplates residual value loss as an ele-ment of damages that can be liquidated in true leases

In respect of the Republic Airways decision in determin-ing whether SLV claims were punitive the New York court focused on the lessorrsquos actual damages at the point of rejection rather than considering whether the damage claim based on the SLV at issue would have been deemed ldquoreason-able at the outset of the leaserdquo (the UCC section 2-A-504 standard) Further the Republic Airways courtrsquos refusal to enforce a surety on the grounds that a defense existed to the guaranteed liquidated damages provision in question is inconsistent with a number of federal and state court decisions applying New York law to enforce unconditional guaranties strictly

This is an important battleground in maritime bankruptciespthinspthinspndashthinspcopy2019 BLANK ROME LLP

1ensp See eg In re Republic Airways Holdings Inc 598 BR 118 123-25 (Bankr SDNY 2019) (liquidated damages were calculated in one of three ways 1) stipulated loss value (a scheduled downward adjusting amount corresponding to investor fundinglessor cost to wit the amount residual value necessary to enable the lessor to achieve a four-percent return on cost) minus the present fair market rental value of the aircraft for the remainder of the lease term 2) the stipulated loss value minus the fair market sales value of the aircraft or 3) the present value of the rent reserved for the remainder of the lease term minus the fair market rental value of the aircraft for the remainder of the lease term)

2ensp Official Comment to NY UCC section 2-A-504

3ensp ldquoDamages payable by either party for defaultthinsphellipthinspincluding indemnity for loss or diminution of anticipated tax benefits for loss or damage to lessorrsquos residual interest may be liquidated in the lease agreement but only at an amount or by a formula that is reasonable in light of the then anticipated harm caused by the defaultthinsphelliprdquo NY UCC section 2-A-504(1)

4ensp See eg Republic Airways 598 BR at 122 126

5enspSee eg 136 Field Point Circle holding Co LLC v Invar Intrsquol Holding Co 644 Fed Appx 10 (2d Cir 2016) (non-precedential)

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 26: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

Blank Rome is an Am Law 100 firm with 14 offices and more than 600 attorneys and principals who provide comprehensive legal and advocacy services to clients operating in the United States and around the world Our professionals have built a reputation for their leading knowledge and experience across a spectrum of industries and are recognized for their commitment to pro bono work in their communities Since our inception in 1946 Blank Romersquos culture has been dedicated to providing top-level service to all of our clients and has been rooted in the strength of our diversity and inclusion initiatives

Our attorneys advise clients on all aspects of their businesses including

CHICAGO10 South Riverside Plaza Suite 875 Chicago IL 60606

CINCINNATI 1700 PNC Center 201 East Fifth Street Cincinnati OH 45202

FORT LAUDERDALE Broward Financial Centre 500 East Broward Boulevard Suite 2100 Fort Lauderdale FL 33394

HOUSTON 717 Texas Avenue Suite 1400 Houston TX 77002

LOS ANGELES 2029 Century Park East 6th Floor Los Angeles CA 90067

NEW YORK 1271 Avenue of the AmericasNew York NY 10020

PHILADELPHIA One Logan Square 130 North 18th Street Philadelphia PA 19103-6998

PITTSBURGH Union Trust Building 501 Grant Street Suite 850 Pittsburgh PA 15219

PRINCETON 300 Carnegie Center Suite 220 Princeton NJ 08540

SAN FRANCISCO 555 California Street Suite 4925 San Francisco CA 94104

SHANGHAI Shanghai Representative Office USA 45F Two IFCthinsp 8 Century Avenue Pudong Shanghai 200120 China

TAMPA Fifth Third Center 201 East Kennedy Boulevard Suite 520 Tampa FL 33602

WASHINGTONthinsp1825 Eye Street NW Washington DC 20006

WILMINGTON 1201 N Market Street Suite 800 Wilmington DE 19801

thinspthinspthinspbull corporatethinspthinspthinspbull cross-border internationalthinspthinspthinspbull environmentalthinspthinspthinspbull finance and restructuringthinspthinspthinspbull government contracts amp regulatorythinspthinspthinspbull government relations amp political lawthinspthinspthinspbull insurance recoverythinspthinspthinspbull intellectual property

thinspthinspthinspbull investigations amp risk managementthinspthinspthinspbull labor amp employmentthinspthinspthinspbull litigationthinspthinspthinspbull maritimethinspthinspthinspbull matrimonial amp family lawthinspthinspthinspbull taxthinspthinspthinspbull trusts amp estatesthinspthinspthinspbull white collar defense amp investigations

For more information please visit blankromecom

OFFICE LOCATIONS

About Blank Rome

2 5 bull M A I N B R A C E M A I N B R A C E bull 2

Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 ReorganizationBY MICHAEL B SCHAEDLE AND JOSE F BIBILONI

In complex long-term charters for vessels or finance leases in respect of vessels under the US Uniform Commercial Code (ldquoUCCrdquo) and its Article 2A (governing commercial mat-ters relating to finance leases) and under other similar law a chartererrsquos or lessorrsquos damages under a charter or leasemdashboth generally upon a payment default or in the event of a casualtymdashare often liquidated in stipulated loss value (ldquoSLVrdquo) provisions These provisions ensure that the lessor charterer gets the benefit of its bargain It insulates the lessor charterer in part from unusual market down-turns impacting vessel value or casualties

A typical SLV calculation enables the present value recovery of the chartererrsquoslessorrsquos unrecovered investment residual value in the vessel and the recapture of tax benefits and certain fees and costs less a credit for the value of the vessel if the stipulated loss value is repaid by the charter partylessee a net proceeds measure1 Schedules to identify the stipulated loss are a common feature of such charters and leases2 Now any SLV provision under Article 2A of the US UCC for exam-ple must be reasonable as of leasecharter commencement3 Oftentimes these kinds of charters and leases are backed by absolute unconditional guaranties of such loss value from affiliates of the charter parties4

SLV Provisions Consistent with Article 2A of the US UCC and Related Law and PolicyArticle 2A and maritime law relating to vessel leases and charters are supported by public policy valuing free contractual relations clearly contemplating lease counterparties entering liquidated damage provisions

SLV agreements are usually negotiated by sophisticated parties where the lesseecharter party benefits from the lease structure in various ways (off balance sheet equipment financing that is tax beneficial etc)

Reasonableness in this context focuses on whether the lesseecharter partyrsquos exposure to the SLV is based on understood market conditions at the time the leasecharter closed reduces over time as payments are made and is further reduced by the recapture of the vesselrsquos value if and when the SLV is satisfied Likewise under many sovereignsrsquo commercial law such as the law of New York sureties abso-lute unconditional guaranties of exposures by sophisticated parties are generally enforcedmdashnotwithstanding whether the underlying primary obligation is unenforceable (in whole or in part)5

Conflicting Law and Policy Bankruptcy Lawrsquos Commitment to Distributional EquityUS bankruptcy law looks to state law to determine the extent of the contractual rights of a debtor and its contract counter parties But any bankruptcy in the United States is a collective proceeding balancing the interests not just of a debtor and a specific creditor or counter party but of all a debtorrsquos creditors and other stakeholders Accordingly as a

chapter 11 debtor inventories its executory contracts (like charters) and decides whether to reject (making an eco-nomic breach of the contract and fixing resulting damages as of the petition date of the bankruptcy) or assume the same as it reconciles claims against its estate the debtor as a trustee has tools to maximize value for the collective by pressing down and reducing claims Claims that are unen-forceable as penalties for example will not be allowed And in all yield maintenance contexts including in respect of SLV

PARTNER

MICHAEL B SCHAEDLEASSOCIATE

JOSE F BIBILONI

(continued on page 3)

The power of the bankruptcy court to identify and disallow penalty claims and the duty of that same court to enforce underlying non-bankruptcy commercial law when defining contract rights does come into tension when lessorscharterers seek to enforce SLV provisions

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 27: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

M A I N B R A C E bull 2 6

COMPLIANCE AUDIT PROGRAMBlank Rome Maritime has developed a flexible fixed-fee Compliance Audit Program to help maritime companies mitigate the escalating risks in the maritime regulatory environment The program provides concrete practical guidance tailored to your operations to strengthen your regulatory compliance systems and minimize the risk of your com-pany becoming an enforcement statistic To learn how the Compliance Audit Program can help your company please visit blankromecomcomplianceauditprogram

MARITIME CYBERSECURITY REVIEW PROGRAMBlank Rome provides a comprehensive solution for protecting your companyrsquos property and reputation from the unprecedented cybersecurity challenges present in todayrsquos global digital economy Our multidisciplinary team of leading cybersecurity and data privacy professionals advises clients on the potential consequences of cybersecurity threats and how to implement comprehensive measures for mitigating cyber risks prepare customized strategy and action plans and provide ongoing support and maintenance to promote cybersecurity and cyber risk management awareness Blank Romersquos maritime cyber risk management team has the capability to address cybersecurity issues associated with both land-based systems and systems onboard ships including the implementation of the Guidelines on Cyber Security Onboard Ships and the IMO Guidelines on Maritime Cyber Risk Management in Safety Management Systems To learn how Blank Romersquos Maritime Cyber Risk Management Program can help your company please visit blankromecomcybersecurity

TRADE SANCTIONS AND EXPORT COMPLIANCE REVIEW PROGRAMBlank Romersquos Trade Sanctions and Export Compliance Review Program ensures that companies in the maritime transportation offshore and commodities fields do not fall afoul of US trade law requirements US requirements for trading with Iran Cuba Russia Syria and other hotspots change rapidly and US limits on banking and financial services and restrictions on exports of US goods software and technology impact our shipping and energy clients daily Our team will review and update our clientsrsquo internal policies and procedures for complying with these rules on a fixed-fee basis When needed our trade team brings extensive experi-ence in compliance audits and planning investigations and enforcement matters and government relations tailored to provide practical and busi-nesslike solutions for shipping trading and energy clients worldwide To learn how the Trade Sanctions and Export Compliance Review Program can help your company please visit blankromecomservicescross- border-internationalinternational-trade or contact Matthew J Thomas (mthomasblankromecom 2027725971)

Risk Management Tools for Maritime CompaniesNote from the ChairBY WILLIAM R BENNETT III

The central theme of Dan Brownrsquos bestselling book Origin involves answering the long-debated questions on evolution Where do we come from Who are we And where are we going When you think about it those three simple questions when answered by any individual group or organization will in all likelihood include an assessment of their own evolution Blank Rome Maritimersquos evolution in and of itself is quite extraordinary

Where did we come from On January 1 2003 the firm Dyer Ellis amp Joseph PC joined Blank Rome bringing with them a group of talented attorneys that focused on maritime regulatory environmental and transactional matters formally launching Blank Rome Maritime Three years later on October 1 2006 the firm Healy amp Baillie LLP joined Blank Rome bringing with them a group of attorneys who had a broad array of dispute resolution skills focused on international shipping disputes and transactional matters Then on August 1 2013 the firm Bell Ryniker amp Letourneau PC joined Blank Rome expanding Blank Rome Maritimersquos geographic footprint by adding shipping lawyers in Houston Texas In the intervening years since 2003 Blank Rome Maritime has added many talented partners and associates expanding each office and broadening the scope of matters we presently handle today

Who are we With nearly 40 shipping lawyers in New York Washington DC Houston and Philadelphia Blank Rome Maritime has the largest and most comprehensive maritime practice in the United States Our maritime attorneys include former shiprsquos officers US Coast Guard and Navy officers representatives and senior staff from congressional committees PampI Club claim executives and high-level officials of government agencies including the Department of Justice Maritime Administration US Securities and Exchange Commission and the National Oceanic and Atmospheric Administration We handle a broad array of issues for our clients operating in the maritime and international trade sector and routinely represent our clients both in court and in arbitration as well as before numerous governmental regularity bodies And Blank Rome Maritime is nationally recognized and ranked in leading surveys and publications including The Legal 500 United States and Chambers USA (see pages 6 and 13 respectively for our recently announced 2019 rankings) to name a couple

Where are we going Blank Rome Maritime will continue to evolve to meet the ongoing needs of our clients and has a bright future ahead with our younger colleagues collaborating with our seasoned attorneys on enhancing our maritime services and capabilities

With this overview of Blank Rome Maritimersquos evolution we hope you enjoy our summer edition of Mainbrace and the timely topics discussed ranging from current congressional updates to discussions on evolving maritime policies laws and trends and we welcome your feedback as always

PARTNER

WILLIAM R BENNETT III

EDITOR Mainbrace

THOMAS H BELKNAP JRPartner2128855270tbelknapblankromecom

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team

Page 28: Blank Rome’s Maritime Industry Team...PRINCETON 300 Carnegie Center Suite 220 Princeton, NJ 08540 SAN FRANCISCO 555 California Street Suite 4925 San Francisco, CA 94104 SHANGHAI

BankruptcyCOMMITTEE CHAIR

Michael B Schaedle ndash PHL

Ira L Herman ndash NYC

Regina Stango Kelbon ndash PHLWIL

Rick Antonoff ndash NYC

CorporateFinancial TransactionalCOMMITTEE CHAIRS

Stephen T Whelan ndash NYC

Grant E Buerstetta ndash NYC

Michael K Clare ndash WAS

Brett M Esber ndash WAS

Lawrence F Flick II ndash NYCPHL

Michael Kim ndash NYC

R Anthony Salgado ndash WAS

Peter Schnur ndash NYC

Brad L Shiffman ndash NYC

Scott R Smith ndash NYC

James C Arnold ndash HOU

Dispute Resolution (Litigation Arbitration and Mediation)COMMITTEE CHAIRS

Thomas H Belknap Jr ndash NYC

Douglas J Shoemaker ndash HOU

Michael K Bell ndash HOU

William R Bennett III ndash NYC

Alexandra Clark ndash NYC

Noe S Hamra ndash NYC

Jeremy A Herschaft ndash HOU

Jay T Huffman ndash HOU

Emma C Jones ndash WAS

John D Kimball ndash NYC

Keith B Letourneau ndash HOU

David G Meyer ndash HOU

Jeffrey S Moller ndash PHL

James J Quinlan ndash PHL

Richard V Singleton II ndash NYC

Alan M Weigel ndash NYC

Lauren B Wilgus ndash NYC

EmploymentLaborTaxIPCOMMITTEE CHAIR

Joseph T Gulant ndash NYC

Susan B Flohr ndash WAS

Anthony B Haller ndash PHL

Brooke T Iley ndash WAS

EnforcementCriminalCOMMITTEE CHAIRS

Jeanne M Grasso ndash WAS

Gregory F Linsin ndash WAS

Government ContractsCOMMITTEE CHAIR

Brian S Gocial ndash PHL

David M Nadler ndash WAS

Harvey Sherzer ndash WAS

RegulatoryEnergy EnvironmentalCOMMITTEE CHAIRS

Kevin J Bruno ndash NYC

Matthew J Thomas ndash WAS

George T Boggs ndash WAS

Joan M Bondareff ndash WAS

Kierstan L Carlson ndash WAS

Kevin R Doherty ndash NYC

Frederick L Ikenson ndash WAS

Dana S Merkel ndash WAS

Stefanos N Roulakis ndash WAS

Jonathan K Waldron ndash WAS

C J Zane ndash WAS

Please click on attorney namesfor contact information

Attorney Office Locations HOU ndash HoustonenspbullenspNYC ndash New York CityenspbullenspPHL ndash PhiladelphiaenspbullenspWAS ndash Washington DCenspbullenspWIL ndash Wilmington

Maritime Emergency Response Team (ldquoMERTrdquo)We are on call 24 7 365

In the event of an incident please contact any of our MERT members listed in red below

Blank Romersquos Maritime Industry TeamOur maritime industry team is composed of practice-focused subcommittees from across many of

our Firmrsquos offices with attorneys who have extensive capabilities and experience in the maritime industry and beyond effectively complementing Blank Rome Maritimersquos client cases and transactions

Thomas H Belknap Jr ndash NYCCO-CHAIR MARITIME INDUSTRY TEAM

Matthew J Thomas ndash WASCO-CHAIR MARITIME INDUSTRY TEAM

Jeanne M Grasso ndash WASVICE CHAIR BLANK ROME MARITIME

William R Bennett III ndash NYCCHAIR BLANK ROME MARITIME

Keith B Letourneau ndash HOU CHAIR BLANK ROME MARITIME

Jeremy A Herschaft ndash HOUCO-CHAIR MARITIME INDUSTRY TEAM

MAINBRACEJULY 2019 bull NO 2

Attorney advertising copy2019 Blank Rome LLP All rights reserved Please contact Blank Rome for permission to reprint Notice The purpose of this update is to identify select developments that may be of interest to readers The information contained herein is abridged and summarized from various sources the accuracy and completeness of which cannot be assured

This update should not be construed as legal advice or opinion and is not a substitute for the advice of counsel

CONTENTS

1 Note from the Chair

2 Vessel Charters and the Stipulated Loss Value Clauses in US Chapter 11 Reorganization

4 Keeping up with the Jones Act

6 Blank Rome Maritime Highly Ranked in The Legal 500 United States 2019

7 Blank Rome Expands to Chicago with Addition of Four-Partner Group

9 Congress at Work on Maritime Programs

13 Chambers USA 2019 Honors Blank Rome Maritime Attorneys and Practices

15 Safe Passage Blog

16 Arbitrating Maritime Disputes

18 2018 Pro Bono Report

19 Blank Rome Relocates New York Office

20 Update on UNCITRAL Insolvency Working Group

22 Gulf Coast Update Applying Doiron for Assessing Maritime Contracts Outside the Oilfield Services Arena

24 Severe Weather Emergency Recovery Team

25 About Blank Rome

26 Risk Management Tools for Maritime Companies

27 Blank Romersquos Maritime Industry Team