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Changing Regulations and Legal Implications

Winds of Change in Shipping. Changing Regulations and Legal Implications. February 19, 2014 Jeanne M. Grasso. What We’ll Be Talking About …. Legislative Update Regulatory Developments EPA’s Vessel General Permit Ballast Water MARPOL Enforcement Update Legal Implications.

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Changing Regulations and Legal Implications

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  1. Winds of Change in Shipping Changing Regulations and Legal Implications February 19, 2014 Jeanne M. Grasso

  2. What We’ll Be Talking About … • Legislative Update • Regulatory Developments • EPA’s Vessel General Permit • Ballast Water • MARPOL Enforcement Update • Legal Implications

  3. Congressional Action 2014 • House Coast Guard & Maritime Transportation Act of 2014 (H.R. 4005) • Reported by the full House T&I Committee on February 11 • Possible House Floor action next month Key Provisions • Protection and Fair Treatment of Seafarers • Permanent exemption from EPA’s Vessel General Permit for vessels less than 79 feet and fishing vessels • National Maritime Strategy • Competition by US flag Vessels • Senate Action – Early summer?

  4. EPA’s 2013 Vessel General Permit • Effective date December 19, 2013 • 27 discharges covered • Some key differences from 2008 VGP • Ballast water (IMO standards / numeric limits) • Oil to Sea Interfaces / Environmentally Acceptable Lubricants • Monitoring requirements for ballast water, bilge water, graywater and exhaust gas scrubber effluent

  5. Environmentally Acceptable Lubricants • Must be used in oil-to-sea interfaces unless “technically infeasible”: • None meet manufacturers’ specs • No alternatives • Changeover must await vessel’s next drydocking • Document why not….

  6. Ballast Water Conundrum • Ballast Water (USCG Final Rule in March 2012) • EPA’s Vessel General Permit 2013 • The Conundrum • USCG Extension Letter • EPA “Low Enforcement Priority” Letter • UV / Filtration Systems • Non enforcement  Compliance • Implications • P&I cover • Charters / Vetting • Enforcement

  7. CorrectiveActions / Enforcement • Triggers – Any violation of the VGP • Corrective Action Assessment – Description, cause, corrective action plan, and signed and certified documentation • Implications • Corrective action does not mean no violation! • Enforcement • Cruise Ship ($20,000) • Ferry ($25,000) • Ship Management Company ($5,000)

  8. Criminal Enforcement – Companies and Seafarers • Department of Justice’s Vessel Pollution Initiative • Investigations start many ways • It’s mostly about coming into port with false records covering up illegal discharges elsewhere

  9. 2012-2013: MARPOL Prosecutions • More than 20 criminal prosecutions • Companies and individuals • > $30 million in fines • > 40 months in prison • OWS cases • Fishing Vessels • Annex V – plastics • Ballast water

  10. Trends • Cases continue apace • Penalties higher and more jail time • More whistleblower awards • Increased International Cooperation • Expanding theories of liability and additional regulation • Vessel General Permit? • Banning of ships • Jurisdictional challenges and more trials • Convictions and an acquittal

  11. Examples: Whistleblower Awards • 2012 • 9 awards for > $1 million • 2011 • 8 awards for > $1.6 million • 2010 • 7 awards for > $950,000 • “In the discretion of the Court, • an amount equal to not more than • ½ of such fine • may be paid to the person • giving information • leading to a conviction.”

  12. Avoiding This Trend • “The Department of Justice will continue to prosecute shipping companies who break the laws that protect our oceans.” • Comprehensive Environmental Compliance Program • Good Company Culture! • Transparency with regulators • Enhanced Compliance Training • Open Reporting System • Internal Investigations • Audit Program

  13. ECP – Open Reports • “Chief give instruction to engineer and oiler to pump out engine room bilges and bilge holding tank through fire and GS pump to overboard.” • “My Chief Engineer is pumping out bilges to sea without passing through OWS. He’s doing it by bypassing duct keel.”

  14. When you don’t want to be “wanted”…

  15. Do not be complacent… “Those who cannot remember the past are condemned to repeat it.” - George Santayana, The Life of Reason, 1905

  16. Questions? Jeanne M. Grasso Blank Rome LLP Grasso@BlankRome.com Tel: (202) 772-5927 Mob: (202) 431-2240 www.BlankRomeMaritime.com

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