Will “Magic Fuel” ” Be The Next “Magic Pipe?” · Chalos O'Connor LLP. Will “Magic...
Transcript of Will “Magic Fuel” ” Be The Next “Magic Pipe?” · Chalos O'Connor LLP. Will “Magic...
Chalos O'Connor LLP
Will Will ““Magic FuelMagic Fuel”” Be The Next Be The Next ““Magic Pipe?Magic Pipe?””
Discussion of the Shipping IndustryDiscussion of the Shipping Industry’’s Criminal Exposure for s Criminal Exposure for Violations of New MARPOL Annex VI Air Emissions RequirementsViolations of New MARPOL Annex VI Air Emissions Requirements
Michael G. Chalos, March 2013
Chalos O'Connor LLP
Overview
1. WHAT ARE THE NEW STANDARDS?
2. HOW DID THE NEW STANDARDS COME ABOUT?
3. WHICH U.S. AGENCIES WILL ENFORCE THE NEW STANDARDS AND HOW?
4. WHAT IS THE EXPOSURE FOR SHIPS CALLING THE U.S.?
5. WRAP UP: WHERE DO WE GO FROM HERE AND “PLAYING DEFENSE”
Chalos O'Connor LLP
MARPOL ANNEX VI More Than Just Sulphur…
Regulation 12 - Ozone Depleting Substances
Regulation 13 - Nitrogen Oxides (NOx)
Regulation 14 - Sulphur Oxides (SOx)*
Regulation 15 - Volatile Organic Compounds (VOCs)
Regulation 16 - Shipboard Incineration
Regulation 18 – Fuel Oil Availability & Quality Control*
* Addressed In This Presentation
Chalos O'Connor LLP
The Two Sets of Engine Emissions Standards
MARPOL Annex VI consists of two sets of engine emissions standards aimed at controlling emissions from ships:
1. The “global” standards for the minimum sulphur content of fuel and nitrogen oxides (NOx) emissions from engines apply to ships at all times; and
2. The “geographic” based standards that require ships operating in designated Emission Control Areas (ECAs) to comply with more stringent fuel sulphur and engine NOx limits.
Chalos O'Connor LLP
Applicability of Annex VI Low Sulphur Fuel Requirements
IN GENERAL…
1. Global Standards
Commercial Vessels Greater than 400 Gross Tons Engaged in International Voyage.
2. Geographic (North American Emissions Control Area (ECA)
With limited exceptions, all vessels operating within the ECA.
The Phased Standards By the Numbers
Standard Year Fuel Sulphur Content (parts
per million)GeographicEmission Control Area Standard
Pre 201220122015
15,000 ppm10,000 ppm1,000 ppm
Global StandardPre Jan 2012
2012-2020As of 01 Jan 2020
45,000 ppm35,000 ppm5,000 ppm
Chalos O'Connor LLP
Emissions Control Areas IN GENERAL…
• The U.S. deposited its “Instrument of Ratification” of Annex VI with the International Maritime Organization on October 8, 2008
• The EPA “applied” to create the North American ECA with the IMO after consultation with Canada and Mexico
• EPA used ambient air quality data from contiguous 48 states to support health benefits of lower emissions
Chalos O'Connor LLP
The North American ECA (Enforced as of August 1, 2012)
Chalos O'Connor LLP
Key Annex VI/ECA Recordkeeping Requirements
Bunker delivery notes - Regulation 18.5 and 40 C.F.R. § 1043.70. (Maintained for 3 years).
Maintain Representative fuel oil samples, taken at the time of fuel oil delivery, sealed/signed by Master or Officer In Charge. Regulation 18.8.1 and 40 C.F.R. § 1043.70. (Maintained for 1 year).
Written fuel oil changeover procedures, which shows how and when the fuel oil changeover is to be done to ensure that only compliant fuel oil is burned within the ECA. Regulation 14.6 and 40 C.F.R. § 1043.70.
Chalos O'Connor LLP
Key Annex VI/ECA Recordkeeping
Requirements (cont’d)
Fuel Oil Changeover Logbook (a.k.a. Sulphur Record Book)- See Annex VI Regulation 14.6 and 40 C.F.R. §§
1043.70.
Vessels Must Log:– vessel’s position throughout transit of ECA– type of fuel burned – sulphur content after each bunkering operation– position, date and time of any fuel-oil-change-over
operation prior to entering or after exiting an ECA – Any procedures used to comply with the new
emissions limits.– MUST BE COMPLETE, ACCURATE & TRUTHFUL
Chalos O'Connor LLP
Key Annex VI/ECA Recordkeeping
Requirements (cont’d)
Other Important Records:
Record Book of Diesel Engine Parameters – Regulation 13, 40 CFR 1043.70
Ozone Depleting Substances Record Book –Regulation 12, 40 CFR 1043.100(a)
Chalos O'Connor LLP
Alternatives & Exceptions
Alternative Means of Compliance:
– Zero sulphur fuel (i.e. LNG)– Installing gas cleaning systems (“scrubbers”);
must be of an approved type.
Some Very Limited Exceptions (i.e. steamships)
Chalos O'Connor LLP
Inadequate Supply Chains? The Fuel Non-Availability Report
Report of Non-Availability
Allows Vessels Without Compliant Fuel to Enter US
Submitted to the EPA > 96 hours of arrival.
Not a “Get Out of Jail Free” Card.
It amounts to permission to ask for leniency.
Must demonstrate that company made “best efforts”to obtain compliant low sulphur fuel.
Must be signed “under penalty of law”
Must be accurate & truthful
Legal Minefield
Chalos O'Connor LLP
The Act to Prevent Pollution From Ships (“APPS”) – An Overview
• Implements MARPOL Annex VI (and all of MARPOL) in U.S. domestic law
• Enacted in 1980
• Creates comprehensive administration, inspection and enforcement regime
• Provides authority to U.S. Coast Guard and EPA with respect to enforcement of international environmental laws and treaties (MARPOL)
• Criminal and Civil Penalties for violations
Chalos O'Connor LLP
U.S. Enforcement of Annex VI Under APPS
2011 MOU Between USCG and EPA:
• Delineates responsibilities for administration and enforcement between agencies
• Referral of evidence & violations
• Provision of technical expertise (EPA)
Chalos O'Connor LLP
Coast Guard Enforcement What the Inspectors Will Look At
Basic Inspection• Review IAPP Certificate • Review the EIAPP Certificate• Review Exhaust Cleaning Systems
Documentation (If Fitted) for each engine• Review Type Approval Certificate for Incinerator• Examine the Vessel’s Incinerator• Review Bunker Delivery Notes (spot check) for
each fuel delivery• Verify Fuel Samples Onboard (spot check) for
each fuel delivery• Verify vessel is utilizing low sulphur fuel oil*• Examine Any Alternative Compliance Methods
used (if applicable)
* Will entail review of logbook, sounding records, changeover procedures, and informal queries of crew to ensure they understand the policies
“Expanded” ExamMight include…
• Review Technical File• Review Record Books• Review Reports of Non-Compliance provided
to Flag• Sound Tanks and Compare With Shipboard
Annex VI Records• Examine/Test Equipment Used to Switch Over
to ECA Compliant Fuel• Review any Report of Non-Availability• Inspect potential sources of Ozone Depleting
Substances• Test Incinerator
Chalos O'Connor LLP
Criminal LiabilityAPPS (33 U.S.C. §1908): A person who knowingly violates MARPOL…or the regulations thereunder commits a Class D Felony
Fines of $250,000 per count proven or plead to ($500,000 for corporations such as owners and operators)
Corporate vessel interests can be charged for the acts of their employees, even if acting contrary to written company policy.
Source:U.S. Coast Guard
Chalos O'Connor LLP
Other Criminal Statutes Related to the Investigation
• The U.S. Department of Justice often charges multiple counts to increase the possible sentence that will be imposed against seafarers, Owners and Operators of vessels
• DOJ regularly prosecutes the following statutes:– False Statement Act (18 U.S.C. § 1001)– Conspiracy (18 U.S.C. § 371)– Obstruction of Justice (18 U.S.C. § 1505)– Tampering with Witnesses (18 U.S.C. § 1512)– Sarbanes Oxley (18 U.S.C. § 1519)
Chalos O'Connor LLP
Other Consequences
Generally speaking, there is a variety of tools prosecutors may use against crewmembers, owning and managing corporations, and individuals in such corporations once a vessel is merely “suspected” of violating MARPOL and the APPS.
For example, prosecutors can (and will):
• arrest, detain and/or confiscate vessels to obtain security and/or collect fines/penalties based on whistleblower allegation alone;
• criminally charge and/or hold vessel personnel as “material witnesses” for an indefinite period of time as part of the new USCG/DOJ strategy in, particularly, environmental prosecutions;
• criminally charge owning/operating and/or management companies under a theory of vicarious liability; and
• criminally charge responsible corporate officers, as well as, managing company personnel.
Chalos O'Connor LLP
Potential Similarities?
Oily Water Separator Bypass Connection
Jurisdiction
Authority to Investigate
Recordkeeping RequirementsStatutory Offense
Framework
Whistleblower RewardsFines & Publicity for
DoJ
Chalos O'Connor LLP
Voluntary Reporting Appendix V Disclosures
• The Coast Guard Environmental Crimes Voluntary Disclosure Policy
• Applies broadly “to criminal violations under all of the Federal environmental statutes that the Coast Guard administers.”
• Provides that entities who maintain compliance management programs to prevent, detect and correct MARPOL violations and who promptly report such violations within 21 days of discovery may avoid criminal charges so long as:
1. the Coast Guard is satisfied the violation is not part of a pattern or broader practice;
2. the violation does not involve a “prevalent management philosophy or practice that conceals or condones environmental regulations;” and
3. The violation does not reveal conscious involvement or disregard by senior management.
Chalos O'Connor LLP
“Playing Defense”
Expect scrutiny of logbooks and records by Coast Guard Port State Control inspectors
Practice sound International Safety Management (ISM) Code policies and procedures
Train onboard vessel personnel
Know the requirements, policies and options available
Accuracy of ship records is essential:– i.e., if there is a discrepancy between bunker delivery notes
and sampling results, log it accurately in the official records and ensure appropriate company officials are informed!
Chalos O'Connor LLP
For more information, please contact us at:
(516) 767-3600
Or visit our website at:http://www.codus-law.com