or SAIL! Updates on Maritime i Issues for Chemical & Energy Companies Sink or Sail: Updates on Maritime Issues for

Transcription

1 SINK or SAIL! Updates on Maritime i Issues for Chemical & Energy Companies Sink or Sail: Updates on Maritime Issues for Chemical & Energy Companies PRESENTED BY Richard V. Singleton II, Blank Rome LP Jonathan K. Waldron, Blank Rome LLP 1

2 Sink or Swim: Updates on Maritime Issues for Chemical & Energy Companies Jonathan K. Waldron October 17, 2012 The information contained herein is abridged and summarized from numerous sources, the accuracy and completeness of which cannot be assured. This should not be construed as legal advice or opinion and is not a substitute for the advice of counsel. STATUS OF LEGISLATION AND ACTION BY CONGRESS Coast Guard and Maritime Transportation Act of 2011 (H.R. 2838) Introduced in House on September 2, 2011 Passed by House on November 15, 2011 Referred to Senate Committee on Commerce, Science and Transportation Coast Guard Authorization Act for FY 2012 and 2013 (S.1665) Introduced in Senate on October 6,

3 STATUS OF LEGISLATION AND ACTION BY CONGRESS Congressional Activity 2012 S Commerce, Science and Transportation Committee substitute amendment reported on January 26, 2012 H.R Coast Guard and Maritime Transportation Act of 2012 introduced June 1, 2012 H.R Senate passed its version of the Coast Guard and Maritime Transportation Act of 2011 on September 22, 2012 KEY PROVISIONS OF LEGISLATION H.R (House Version) Authorizes FY appropriations for Coast Guard Internal Coast Guard Reform Shipping and Navigation o (Sec. 401) Establishes the Committee on the Marine Transportation System to assess the adequacy of the marine transportation system and coordinate policies among federal agencies and local businesses 3

4 KEY PROVISIONS OF LEGISLATION H.R (House Version) o (Sec. 406) Expands the DOT s short sea transportation program but terminates it on September 30, 2017 o (Sec. 410) Amends Jones Act waiver procedures Miscellaneous o (Sec. 603) Prohibits notice of arrival regulations from applying to U.S.-flag vessels unless such vessels arrive from a foreign port or place KEY PROVISIONS OF LEGISLATION H.R (House Version) o (Sec. 608) Requires that a standby vessel be located within a specified distance from offshore facilities during operations o (Title VII) Commercial Vessel Discharges Reform Act of 2011 would preempt state law unless state program approved by the federal government o (Title VII) Piracy Suppression Act of

5 KEY PROVISIONS OF LEGISLATION H.R (Senate Version) Authorizes FY appropriations for Coast Guard Internal Coast Guard Matters Shipping and Navigation o (Sec. 504) Directs the Commandant to study and report to Congress on the feasibility and potential of establishing a deep water sea port in the Arctic KEY PROVISIONS OF LEGISLATION o (Sec. 505) Directs the Commandant to: (1) assess the ( ) ( ) increased vessel traffic in the Salish Sea (including Puget Sound, the Strait of Georgia, Haro Strait, Rosario Strait, and the Strait of Juan de Fuca) that may occur from the transport of Canadian tar sands oil; and (2) recommend options to Congress for the management of increasing maritime traffic and minimizing the increased likelihood of an oil spill 5

6 KEY PROVISIONS OF LEGISLATION Maritime Administration o (Sec. 602) Requires a Report on the Marine Transportation System by October 1, 2013 see Sec. 401 of House version o (Sec. 605) Amends Jones Act Waiver procedures see Sec. 410 of House version o (Sec. 703) Directs the Secretary of the Treasury to increase the amount invested in income producing securities under specified provisions i of the Oil Pollution Act of 1990 by a specified amount o (Sec. 706) Prohibits notice of arrival regulations from applying to U.S.-flag vessels unless such vessels arrive from a foreign port or place see Sec. 603 of House version CONGRESSIONAL SCHEDULE Congress returned on September 10 House and Senate recessed September 22 Election Day is November 6 and Congress will return on November 13 (Lame Duck) and is expected to remain in session until the Thanksgiving break during the week of November 19 Congress is expected to return on November 26 and possibly remain in session until just before Christmas or - just go home? 6

7 REGULATORY INITIATIVES VESSEL GENERAL PERMIT Current VGP After years of litigation the 2008 VGP became effective in February 2009 covering 26 types of discharges incidental to normal vessel operations It applies to commercial vessels, U.S. flag or foreign flag, at least 79 feet in length State 401 certifications Expires on December 19, 2013 REGULATORY INITIATIVES VESSEL GENERAL PERMIT VGP Phase II Litigation Requirements: Further litigation over VGP ended in a settlement that required EPA to: o Include more stringent numeric effluent limits to control the release of non-indigenous invasive species in ballast water discharges o Publish a draft VGP by November 30, 2011 o Issue the final VGP by November 30, 2012 so that the industry has enough time to become familiar with the new VGP requirements o Allow states six months after the publication of the new VGP to accept, accept with conditions, or reject 7

8 REGULATORY INITIATIVES FINAL RULE ON BALLAST WATER Final Rule Published on March 23, 2012 Requirements: requires all vessels, with certain exemptions, to install and operate an approved ballast water management system ( BWMS ) to discharge ballast water in U.S. waters. The rule was effective on June 21, 2012, though the particular requirements are phased in over a several year period Practicality Review: practicability review findings must be published no later than January 1, If the Coast Guard finds a significantly more stringent standard can be practically implemented, it must initiate a rulemaking no later than January 1, 2017 REGULATORY INITIATIVES FINAL RULE ON BALLAST WATER Coast Guard Approved Systems: Coast Guard does not anticipate Coast Guard approved systems until prior to 2015 Alternative Management Systems (AMS): AMS is an interim measure to allow foreign-type approved systems to be used on a vessel for up to 5-years to allow sufficient time to obtain U.S. type approval 8

9 REGULATORY INITIATIVES NORTH AMERICAN EMISSION CONTROL AREA ENFORCEMENT AND FUEL AVAILABILITY The ECA: Established in 2009 pursuant to Annex VI of MARPOL, implemented domestically through the Act to Prevent Pollution from Ships ( APPS ). The ECA encompasses most of the United States and Canada s coastal waters out to 200 nautical miles from the coastline, though it does not include the Pacific U.S. territories, smaller Hawaiian Islands, Puerto Rico, the U.S. Virgin Islands, the Aleutian Islands and Western Alaska, and the U.S. and Canadian Arctic REGULATORY INITIATIVES NORTH AMERICAN EMISSION CONTROL AREA ENFORCEMENT AND FUEL AVAILABILITY The Standard: Vessels subject to MARPOL, with limited exceptions, will be required to use fuel with a sulfur content not exceeding 1.00% or install and use an equivalent compliance method approved by the flag state, such as an exhaust gas scrubber. Beginning in 2015, the ECA sulfur limit will be further reduced to 0.10% Enforcement: Began on August 1,

10 REGULATORY INITIATIVES NORTH AMERICAN EMISSION CONTROL AREA ENFORCEMENT AND FUEL AVAILABILITY The EPA/Coast Guard MOU: Sets forth the terms by which the agencies agree to cooperate in connection with MARPOL Annex VI o The MOU provides that EPA will maintain a register of local fuel oil suppliers and verify compliance with fuel oil requirements o The Coast Guard will examine bunker delivery notes and records during its routine port state control inspections REGULATORY INITIATIVES NORTH AMERICAN EMISSION CONTROL AREA ENFORCEMENT AND FUEL AVAILABILITY o The agencies intend to share information about o The agencies intend to share information about inspections, examinations, and investigations. When a violation is suspected, the agency with the relevant expertise will investigate and initiate enforcement action as appropriate, which may include civil and criminal penalties 10

11 REGULATORY INITIATIVES NORTH AMERICAN EMISSION CONTROL AREA ENFORCEMENT AND FUEL AVAILABILITY ECA-Compliant Fuel Availability: EPA expects ECA-compliant fuel to be widely available, but recognizes there may be availability issues in some regions o If a vessel is unable to get ECA-compliant fuel -it must use the lowest sulfur fuel available and obtain compliant fuel at the first U.S. port at which it is available o Although EPA stated that it expects distillate fuels to be used as blending agents to produce ECAcompliant fuel - it will not require vessels to blend fuel onboard, purchase distillate fuel to meet the ECA requirements, or deviate from their intended voyage DEEPWATER HORIZON UPDATE Spill Legislation A multitude of legislation proposed in 2010 and again in 2011 No spill legislation proposed in 2012 BP Settlement with Plaintiffs (April 18, 2012) One covers economic losses, including business and individual lost profits, coastal property damage, wetlands destruction and vessels property damage. The agreement sets aside about $2.3 billion for economic losses the Gulf seafood industry suffered following the spill The second settlement would compensate cleanup workers and dgulf lfcoast residents who suffered respiratory, neurological and other health problems as a result of the spill. 11

12 DEEPWATER HORIZON UPDATE BP estimated a payout of about $7.8 billion but actually no cap Liability trial adjourned in the meantime The private claims against BP approved by the court effective June 4, 2012 under the $7.8 billion settlement agreement. Claimants now submit claims directly against BP through the court approved process August 31, 2012 was the last day to object to the $7.8 billion BP private party settlement DOJ filed an objection on the last day asking the court to not take evidence or make factual al or legal findings regarding liability and damages issues that could adversely affect its civil penalties claims against BP. In essence, DOJ is concerned about its claims for gross negligence or willful misconduct DEEPWATER HORIZON UPDATE Final settlement hearing is scheduled for November 8 Trial date for the rest of the litigation, including the DOJ claims for penalty damages, is now scheduled for January 14, 2013 almost a year later than the original schedule Law Suits Against Responders Litigation continues Motions for Summary Judgment (Preemption and Derivative Immunity) filed May 18, 2012 Oral argument heard July 13, 2012 Responder Immunity Coalition Latest Settlement Information? 12

13 REGULATORY INITIATIVES NEW REQUIREMENTS AND POLICIES FOR OFFSHORE DRILLING The Bureau of Safety and Environmental Enforcement ( BSEE ) issued three significant documents addressing response, enforcement, and safety issues related to offshore operations in August 2012 Regional Oil Spill Response Plans ( OSRPs ) o BSEE published Notice to Lessees ( NTL ) No N-06 titled Guidance to Owners and Operators of Offshore Facilities Seaward of the Coast Line Concerning Regional OSRPs on August 10, 2012 REGULATORY INITIATIVES NEW REQUIREMENTS AND POLICIES FOR OFFSHORE DRILLING o Intended to provide clarification, guidance, and information concerning the preparation and submittal of a regional OSRP for owners and operators of oil handling, storage, or transportation t ti facilities, including pipelines, located seaward of the coast line. 13

14 REGULATORY INITIATIVES NEW REQUIREMENTS AND POLICIES FOR OFFSHORE DRILLING BSEE Enforcement Action Against Contractors o BSEE published Interim Policy Document ( IPD ) No titled Incidents of Non-Compliance (INC) to Contractors on August 15, 2012 o IPD formally sets forth BSEE s intention to issue INCs to contractors for serious violations of BSEE regulations REGULATORY INITIATIVES NEW REQUIREMENTS AND POLICIES FOR OFFSHORE DRILLING o Any individual or entity performing an activity o Any individual or entity performing an activity under an OCS lease must comply with regulations related to such activity o Enforcement actions will continue to focus primarily on lessees and operators but INCs will be issued directly to contractors in appropriate circumstances 14

15 REGULATORY INITIATIVES NEW REQUIREMENTS AND POLICIES FOR OFFSHORE DRILLING Final Rule on Well-Control o BSEE published its Final Rule titled Increased Safety Measures for Energy Development on the OCS on August 22, 2012 and it becomes effective on October 22, 2012 o It amends drilling, well completion, well workover, and decommissioning regulations related to well control. It modifies the Interim Rule based on comments received and the recommendations of the Deepwater Horizon Joint Investigation Team final report RIGHTS AND OBLIGATIONS OF DOCK AND MARINE TERMINAL OWNERS/OPERATORS FOR MARINE CASUALTIES Richard V. Singleton New York, NY October 17,

16 4th Annual Common Scenarios Ship damages dock, dolphin or other structure or other vessel Some defect in wharf or port that causes damage to ship Ship p sinks at dock Damage to cargo

17 4th Annual

18 4th Annual Legal Obligations: Damage to Dock or Structures Ship must use ordinary care (good seamanship) in approaching, docking, and departing - Onshore or offshore - Is responsible for all provable damages caused by failure to do so Ship must use reasonable care while at dock to avoid damage to persons and property [Kinsman Transit Case; Barcelona Yacht Case] Vessel owner liability includes environmental damage resulting from oil spill or otherwise

19 4th Annual

20 4th Annual Legal Obligations: Damage to Ship Wharfinger one who provides dock or berth - Duty to provide a safe dock and warn of unknown dangers Stevedore one who loads/discharges cargo from vessels - Ordinary negligence/possible WWLP Doesn t matter if services or dockage are free Liability includes environmental damage Terminal operator may be considered a bailee and must exercise due care 206 Legal Obligations Damage to Another Ship If caused solely by negligence of the ship ship solely responsible If caused solely by condition of dock or berth dock owner solely responsible If caused by both, damages are apportioned (absent contract with moored ship)

21 4th Annual 208 Legal Obligations: Vessel Sinks Vessel owner has obligation to not obstruct berth Dock owner has obligation to mitigate damages Wreck Act and Removal Obligations - Contact USGC - Wrecks in navigable waters/channels - Government removal: owner responsible for all costs - Vessel owner may not limit liability for wreck removal

22 4th Annual Legal Obligations: Vessel Sinks (cont d) With chemicals or oil, a host of other problems environmental issues Battleground is cause of sinking: unseaworthiness vs. negligence in cargo operations 210 Legal Obligations: Damage to Cargo Terminal is considered bailee of cargo must exercise due care Terminal has burden of proving cause of loss/damage after discharging from ship Unexplained loss = terminal responsible Battleground with liquid cargos: contamination onboard ship vs vs. in terminal s terminal s pipes or tanks

23 4th Annual Contractual Allocation of Risk Can allocate risk for damage in contract for use of facility Most common is to require customer to indemnify dock owner for all damage arising out of call at terminal Important if recovery against ship is limited Special problems with Pilots employed by terminal or where approach or docking directed by terminal Additional assured under customer s policy with waiver of subrogation 212 Damage Principles Basic Principle: Full compensation for damages If structure repaired measure of damages is cost of repairs If replaced new for old allowance; depreciation - Determine remaining useful life - Wood structure: probe & rot - Steel/Concrete: gauging/wastage; defects & cracks Betterment not allowed

24 4th Annual Replacement of Part of Larger Structure Full Recovery Allowed if Damage is to Integral Part Determination of Integral Part - Repair would not extend useful life of entire structure; or - Necessary for operation of facility Fact Intensive Analysis - Examples 214 Consequential Damages Lost Profits/Loss of Use Reasonably Foreseeable & Causative Difficult to prove Historical use/revenue evidence/market evidence

25 4th Annual Casualty Response Initial Action Inform counsel Determine relevant witnesses Determine vessel s owner, operator, charterer, P&I Club Obtain information from the ship: chart; ECDIS; SVDR; course recorder tape; decklog (rough and smooth); engine log; bellbook; engine logger tape; general arrangement plan Photograph all damage, including damage to ship Avoid providing information about terminal/terminal operations/facts of casualty, etc. Preserve records 216 Secure Potential Claims Demand security and/or arrest vessel Security can be a club P&I letter, a bond, or escrow agreement Consult with counsel on the wording of the agreement to insure i adequately d l coveredd in i scope and d amount off security

26 4th Annual Set Litigation Position y to act as fact witnesses Retain Surveyors Retain experts in case the matter goes to trial Preserve all records (issue litigation hold throughout company) p y)

27 Oil Spills The Initial Response Activate your company s response plan What does it say? Notifications Federal, State, Local, Counsel, Insurers Establish type of and severity of the incident gather as many facts as possible ship/facility, amount reported spilled, who has been activated, who is in charge Assess potential liabilities Incident I tcommand What is your role? RP? Third party? Cooperate with the response; the investigation is handled differently