Category: Marine Regulation

Finally—A Path Forward for Implementation of the Vessel Incidental Discharge Act

Jeanne M. Grasso and Dana S. Merkel

Background

In December 2018, the Vessel Incidental Discharge Act (“VIDA”) was signed into law and intended to replace the Environmental Protection Agency’s (“EPA”) 2013 Vessel General Permit (which has been in place for nearly ten years) to bring uniformity, consistency, and certainty to the regulation of incidental discharges from U.S. and foreign-flag vessels. VIDA amended the Clean Water Act and will substantially alter how EPA and the United States Coast Guard (“USCG”) regulate vessel discharges. VIDA required EPA to finalize uniform performance standards for each type of incidental discharge by December 2020, a deadline that the EPA has missed by nearly three years, and requires the USCG to implement EPA’s final standards within two years thereafter.

In October 2020, EPA published a proposed rule titled Vessel Incidental Discharge National Standards of Performance to implement VIDA, but the proposal languished with the change from the Trump Administration to the Biden Administration. In January 2023, more than two years later, EPA announced its plans to issue a Supplemental Notice of Proposed Rulemaking in the Fall of 2023. EPA indicated that the Supplemental Notice was intended to clarify its proposed rule, share ballast water data compiled by the USCG, and propose additional regulatory options.

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Evolution of Offshore Wind and the Coastwise Laws

Jonathan K. Waldron, Dana S. Merkel, and Vanessa C. DiDomenico


Over the past year, a number of new interpretations related to the application of the coastwise laws to the developing offshore wind industry in the United States have clarified how construction and operation of offshore wind farms will proceed. The U.S. coastwise laws, which impose restrictions on the transportation of merchandise and passengers, as well as towing and dredging operations, are interpreted and enforced by U.S. Customs and Border Protection (“CBP”).

There was much uncertainty in the offshore wind industry for many years with respect to how the coastwise laws should apply to offshore wind farm construction and operation. Following the 2021 National Defense Authorization Act, which clarified that the coastwise laws apply to offshore wind on the U.S. outer continental shelf (“OCS”) as they do for oil and gas, CBP began issuing rulings applying the laws to the offshore wind industry—and industry is requesting more and more CBP rulings to clarify how the contemplated offshore wind work can be performed in compliance with the law. Although some issues are still pending, this article provides an update on some of the most recent and noteworthy interpretations.

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Will Jones Act Waivers Be a Viable Option in the Future?

Dana S. Merkel, Jonathan K. Waldron, and Jeanne M. Grasso


Companies often ask if it is possible to obtain a Jones Act waiver in emergency circumstances or otherwise when they know that there may not be domestic Jones Act vessels available to perform the transportation or installation of cargo. Historically, waivers have been very difficult to obtain and recent Congressional developments will make them even more difficult to obtain.

Background

The Jones Act prohibits the “transportation of merchandise by water, or by land and water, between points in the United States . . . either directly or via a foreign port” unless the vessel is U.S. built, U.S.-flag, and 75 percent U.S. owned. Jones Act requirements can only be waived if “necessary in the interest of national defense.” 46 U.S.C. § 501 (the “Waiver Provision”).

It is extremely difficult and rare to obtain a waiver of the Jones Act. The Waiver Provision has always limited waivers to situations where such waiver is needed for national defense purposes.

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A Practical Approach to Reduce MARPOL Enforcement Risks in the United States

Kierstan L. Carlson and Jeanne M. Grasso


Readers of Mainbrace know well that the United States has been aggressively enforcing compliance with MARPOL for decades. Often referred to as “magic pipe” cases, the U.S. Department of Justice (“DOJ”) has brought criminal MARPOL prosecutions against owners and operators of ships running the gamut from fishing vessels to bulkers, tankers, container ships, and cruise ships. These prosecutions have involved underlying violations of MARPOL Annex I (oil), but also Annex V (garbage) and more recently Annex VI (air emissions).

Criminal MARPOL cases are extraordinarily costly and disruptive to vessel owners/operators. Not only are significant fines levied against violators, but companies convicted of MARPOL violations suffer attendant reputational damage that can impact charter hire prospects and incur significant costs for paying wages, housing, and per diem to the crew members whom the government requires to remain in the United States for the duration of the criminal case. On top of that are the costs associated with a comprehensive Environmental Compliance Plan for the fleet, along with costs associated with a Third-Party Auditor and a Court-Appointed Monitor.

Unlike other areas of U.S. criminal enforcement, MARPOL prosecutions have continued at a steady pace, across administrations led by different political parties. This is due, in part, to the fact that the Act to Prevent Pollution from Ships (“APPS”), the U.S. statute that implemented MARPOL, is enforced by the U.S. Coast Guard (“USCG”), which is typically less affected by political change than other executive agencies responsible for criminal enforcement. Perhaps more importantly, APPS includes a whistleblower provision pursuant to which anyone who provides information to the USCG that leads to a conviction may be awarded up to 50 percent of the criminal penalty imposed under APPS. Potential awards incentivize seafarers to report misconduct to the USCG instead of to the company, even in cases where there is an open-reporting program. It also gives the USCG and DOJ a significant advantage, as they often receive photos and videos of the alleged improper conduct before their investigation even begins.

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Transfer of Offshore Wind Safety and Environmental Responsibilities

Dana S. Merkel and Jonathan K. Waldron

The Department of the Interior (“DOI”) transferred safety and environmental oversight for the Outer Continental Shelf (“OCS”) renewable energy program from the Bureau of Ocean Energy Management (“BOEM”) to the Bureau of Safety and Environmental Enforcement (“BSEE”) on January 31, 2023. Importantly, the transfer does not affect current regulatory requirements for offshore wind development, but merely the agency responsible for oversight and enforcement.

Background

A number of reorganizations have occurred over the years since the Energy Policy Act of 2005 authorized the Secretary of Interior to grant OCS leases for renewable energy activities. When the Minerals Management Service was divided in 2011 following the Deepwater Horizon incident, the Secretary of Interior highlighted the importance of separating the lease planning and management functions and safety and environmental enforcement functions into two separate entities, creating BOEM and BSEE, respectively. A third entity was also created to manage the royalty and revenue management functions.

The renewable energy program, however, remained with BOEM entirely as the program was still in early development. It was noted that the renewable energy program would be split between the entities when it is determined that “an increase in activity justifies transferring the inspection and enforcement functions” to BSEE.

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Compliance, Enforcement Risks, and Emerging Issues Regarding EPA’s Vessel General Permit

Jeanne M. Grasso and Dana S. Merkel

About a year ago, we wrote about a rise in enforcement of the U.S. Environmental Protection Agency’s (“EPA”) Vessel General Permit (“VGP”). In the words of one EPA attorney, that was “just the beginning” and we have continued to see more aggressive reviews of VGP compliance and penalty demands, particularly on the U.S. West Coast. Since then, EPA has continued demanding significant penalties for alleged violations, sometimes citing interpretations of the VGP that are not outlined in any guidance documents. Additionally, in January 2023, EPA published an Enforcement Alert, EPA Reminder About Clean Water Act Vessel General Permit Requirements, reminding the maritime industry of the VGP requirements and impacts of non-compliance, and citing recent enforcement examples.

The VGP and VIDA Implementation

The VGP was issued under the Clean Water Act’s (“CWA”) National Pollutant Discharge Elimination System (“NPDES”) program and provides permit coverage nationwide for discharges incidental to the normal operation of commercial vessels more than 79 feet in length. EPA issued the first version of the VGP in 2008 and then another, more stringent version in 2013. The VGP set effluent limits and mandated Best Management Practices to control certain types of incidental discharges. It also required vessels to conduct routine and annual inspections and imposed numerous recordkeeping obligations, as well as monitoring and reporting requirements.

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Maritime Decarbonization

Stefanos N. Roulakis and Vanessa C. DiDomenico

Stefanos N. Roulakis

As the international shipping industry prepares to reduce emissions, there are many recent developments that present both obstacles and opportunities that must be explored while preparing to set sail on the challenge.

IMO Timeline and Introduction to Initial Strategy

Shipping is already the most carbon-friendly form of transportation. Despite carrying approximately 90 percent of the world’s goods, shipping only accounts for about 2.9 percent of global greenhouse gas emissions. While the maritime industry and its regulatory body, the International Maritime Organization (“IMO”), rightly are trying to reduce this number, the outsized role of shipping in the world economy and its relative impact on global emissions should be the starting point of any analysis.

A key aspect in the debate on how to decarbonize centers is between the difference in gross output as opposed to efficiency. The IMO’s strategy contains targets for both types of metrics. The current goal seeks to cut overall greenhouse gas (“GHG”) emissions by at least half by 2050 (using 2008 as a baseline). On the efficiency side, the shipping industry seeks to reduce GHG emissions per transport work by 40 percent in 2030 and 70 percent by 2050.

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Can the Biden Administration Meet Its Offshore Wind Goals?

Joan M. Bondareff and Dana S. Merkel

Joan M. Bondareff

UPDATE: In the first week of his presidency, President Biden, by Executive Order, set a goal of doubling offshore wind by 2030—an ambitious goal to help put the United States on a path to meet its commitments under the Paris Climate Accords, which President Biden rejoined. To implement the general goal, the three lead departments—Interior (“DOI”), Energy (“DOE”), and Commerce (“DOC”)—subsequently committed to working towards a specific 30 gigawatts (GW) goal by 2030 while protecting biodiversity, promoting ocean co-use, and creating tens of thousands of jobs. (See FACT SHEET: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.) This article describes the progress made thus far in meeting this goal and discusses any remaining impediments.

Current Progress on Offshore Wind in the United States

To date, the Biden administration, along with previous administrations, have:

      • Approved 18 offshore wind leases in federal waters;
      • Approved the largest offshore wind farm to be constructed in federal waters (e., the Vineyard Wind project off the coast of Massachusetts);
      • Identified five new Wind Energy Areas (“WEAs”) for potential leasing in the area of the New York Bight;
      • Began the process of identifying additional WEAs in the Gulf of Mexico and off California; and
      • Issued several notices of intent to begin the environmental review process under the National Environmental Policy Act (“NEPA”) for additional wind farms off New York, North Carolina, and South Carolina.

These steps alone have moved the administration closer to meeting or even exceeding its 30 GW goal with a total of 35,000 megawatts (MW) plus in the pipeline, according to a recent definitive report from the DOE’s National Renewable Energy Laboratory. (See Offshore Wind Market Report: 2021 Edition Released.)

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Mainbrace Live: U.S. Maritime Regulatory Update

Blank Rome’s internationally recognized Maritime & International Trade practice group presents a new series of informative webinars covering hot topics in the shipping industry and key insights into 2021 and beyond. Sessions will cover:

    • Sanctions and international trade
    • Offshore wind developments
    • Shipping litigation
    • Maritime regulation
    • Ship finance
    • And more!

For the fourth webinar in our Mainbrace Live series, Blank Rome LLP attorneys Jeanne M. Grasso, Dana S. Merkel, and Stefanos N. Roulakis presented “U.S. Maritime Regulatory Update” on Tuesday, June 22, 2021.

Jeanne, Dana, and Stefanos discussed:

    • The conundrum in ballast water management: VIDA, VGP, and the IMO
    • Ongoing industry challenges as COVID-19 continues
    • Emerging greenhouse gas regulation and shipping

MODERATOR

    • Jeanne M. Grasso, Partner and Co-Chair, Maritime & International Trade Practice Group

PRESENTERS

    • Dana S. Merkel, Associate, Maritime Practice Group
    • Stefanos N. Roulakis, Associate, Maritime Practice Group

To watch a recording of this webinar, please go to the webinar on-demand registration page here.

Considerations on the Use of Offshore Wind Vessels for U.S. Operations

Jonathan K. Waldron and Dana S. Merkel

As the offshore wind industry is growing in the United States, there is an influx of vessels that are considering operating on the U.S. outer continental shelf (“OCS”), both foreign- and U.S.-flag Jones Act-qualified vessels. An important consideration in planning for operations on the U.S. OCS is how the vessel must be crewed for such operations, which is often overlooked or misunderstood. 

Foreign-Flag Vessels

The U.S. Outer Continental Shelf Lands Act (“OCSLA”) generally requires all vessels that are engaged in “OCS activities” to crew the vessels with U.S. citizens. The U.S. Coast Guard defines “OCS Activity” as “any offshore activity associated with exploration for, or development or production of, the minerals of the Outer Continental Shelf.” There is an exception to this rule that allows foreign-flag vessels that are over 50-percent foreign owned or controlled by foreign citizens to engage in U.S. OCS activities using foreign-citizen crewmembers. To use this exception, a formal application to the U.S. Coast Guard is required, which if validated by the U.S. Coast Guard, results in the issuance of a letter of non-applicability stating that the U.S. manning requirements do not apply to the vessel.

With respect to offshore wind farm work, the U.S. Coast Guard has taken the position that such work is not an OCS activity subject to this OCSLA requirement and the U.S. crew requirement does not apply. However, OCSLA was amended on January 1, 2021, to expressly clarify that U.S. laws, including the Jones Act, apply to offshore wind farm work in the same manner as they do to oil and gas work. The U.S. Coast Guard is now reviewing this change and, ultimately, we expect the Coast Guard to change its position on OCS activities and begin applying the U.S. citizen crew requirements to vessels engaged in offshore wind farm work. 

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