The Impact of COVID-19 on Blockchain Advancement

Keith B. Letourneau and Vanessa DiDomenico*

Blockchain technology ensures security and transparency within transactions. The endless possibilities and solutions that blockchain can provide to a multitude of industries and consumers created a surge of interest over the past several years. Recently, the need for blockchain technology was amplified when a single microbe showed just how interconnected the world is and how fragile supply-chain networks and logistics providers are when unexpected demand for critical goods (personal protective equipment and testing kits) arose due to the COVID-19 pandemic.

Global Supply-Chain Disruption

The various levels of regulations imposed by national and local governments throughout the world because of COVID-19 concerns delayed and disrupted virtually all supply-chain networks. For example, customs clearance processes have become more laborious and many factories have converted into producers of essential equipment, resulting in the delayed assembly of integral components relied upon by other manufacturers.

Before the global pandemic, companies were racing to become as lean as possible, cutting costs and sourcing multiple components from a variety of manufacturers in different countries. Reducing the costs of making a product would allow for more profit. Producers and manufacturers used complex supply-chain networks to maximize comparative advantage strategies. Often, products would be shipped to another country merely to perform a certain task, or to simply add a singular component, and then the item would be returned to origin for sale to a consumer. Continue reading “The Impact of COVID-19 on Blockchain Advancement”

New Legislation to Apply the Jones Act to Offshore Renewables

Jonathan K. Waldron and Stefanos N. Roulakis

Stefanos N. RoulakisThe House of Representatives passed legislation, H.R. 4447, the Expanding Access to Sustainable Energy Act of 2019, on September 24, 2020, that included a provision from Representatives Garamendi and Lowenthal (“Amendment 33”) to amend the Outer Continental Shelf Lands Act (“OCSLA”) that would confirm the Jones Act applies to all offshore energy development on the Outer Continental Shelf (“OCS”), including wind energy. Passage of this provision now appears imminent, as it has been recently included in the National Defense Authorization Act (“NDAA”). From an operational standpoint, while most offshore projects are planned with Jones Act compliance in mind, enactment of this provision would be a welcome development to stakeholders and bring needed clarity to renewable energy development offshore. 


Background

The Coastwise Merchandise Statute, commonly known as the Jones Act, has evolved over time. The U.S. cabotage laws date back to the founding of the Republic and were enshrined in their current form in the Merchant Marine Act of 1920. These were originally laws that dealt with transportation issues for domestic voyages. However, as time progressed and production of marine resources became feasible, the U.S. Congress passed OCSLA, which extended federal law to installations on the OCS. 

Continue reading “New Legislation to Apply the Jones Act to Offshore Renewables”

Cruise Industry Compliance Tips: Enhancing the Traveler Experience with Facial Recognition

Jeffrey N. RosenthalDavid J. Oberly, Jeanne M. Grasso, and Douglas J. Shoemaker

In the past few years, the commercial use of facial recognition technology has advanced at an explosive rate, expanding into numerous industries and trades. For instance, facial biometrics is increasingly relied on by airlines and airports across the globe; a similar trend is starting to take hold in the maritime industry, particularly in the cruise sector.  

While this expansion is occurring, states and cities across the country—as well as the federal government—are attempting to enact strict laws regulating the use of facial recognition technology by commercial entities. Facial recognition has also recently emerged as an increasingly popular target for bet-the-company privacy class action litigation.

As the cruise industry moves toward the widespread adoption of facial recognition technology, companies should implement robust, adaptable biometric privacy programs to ensure compliance with today’s growing body of law to reap the benefits of this exciting technology while mitigating liability exposure.

Overview Facial Recognition Technology

Facial recognition technology involves the use of facial “biometrics”—i.e., the individual physical characteristics of a person’s face—to digitally map one’s facial “geometry.” These measurements are then used to create a mathematical formula known as a “facial template” or “facial signature.” This stored template/signature is then used to compare the physical structure of an individual’s face to identify that individual.

Continue reading “Cruise Industry Compliance Tips: Enhancing the Traveler Experience with Facial Recognition”

MARPOL Electronic Recordkeeping—Finally a Reality

Joan M. Bondareff and Dana S. Merkel

Joan M. BondareffLong-awaited amendments to the International Convention for the Prevention of Pollution from Ships (“MARPOL”) entered into force on October 1, 2020, which expressly permit the use of electronic record books for certain MARPOL-required logs. Although the United States reserved its decision regarding adoption of the amendments when they were approved by the International Maritime Organization (“IMO”) in May 2019, the United States ultimately accepted their adoption in accordance with the tacit acceptance procedure. This is a significant and welcomed development.

Background

Electronic record books have been the subject of much debate and consideration at the IMO and within the United States for a number of years. During MEPC 74 in May 2019, amendments were approved, revising MARPOL Annexes I, II, V, and VI to allow the use of electronic record books approved by the vessels’ Administration for the Oil Record Book (“ORB”), Cargo Record Book, Garbage Record Book, and Annex VI air pollution prevention recordkeeping requirements. In adopting the amendments, the IMO stated the use of electronic record books “should be encouraged as it may have many benefits for the retention of records by companies, crew, and officers.” These amendments entered into force on October 1, 2020, although a number of flag States believed the previous MARPOL language provided them with the discretion to allow the use of electronic record books and had already approved their use on vessels for some years. Even so, the permissibility of using electronic record books to meet MARPOL requirements is now clear.

Continue reading “MARPOL Electronic Recordkeeping—Finally a Reality”

All Aboard! Major Shipping Lines Secure Antitrust Immunity for TradeLens Blockchain Agreement

Jeremy A. Herschaft and Matthew J. Thomas

February 6, 2020, marked an important milestone for the implementation of blockchain technology in the container shipping sector, as the Federal Maritime Commission (“FMC”) completed its review of an agreement among five major carriers to collaborate on a new blockchain platform called “TradeLens,” which aims to modernize the international logistics arena. Blockchain itself has already received considerable attention in other commercial areas (particularly digital currencies), and we have previously penned various articles on the basic structure of the technology, including Heads or Tails? Making Sense of Crypto-Tokens Issued by Emerging Blockchain Companies (Mainbrace, April 2019). The purpose of this article will specifically focus on the TradeLens concept, which leverages the shipping industry’s unique antitrust exemption to create standardized blockchain tools for a number of major carriers.

The TradeLens Concept

TradeLens was launched on August 9, 2018, through a joint collaboration between Maersk GTD and IBM. The TradeLens model seeks to apply distributed ledger technology to the global logistics industry and is described as an effort to “reduce the cost of global shipping, improve visibility across supply chains and eliminate inefficiencies stemming from paper-based processes. In short, to bring global supply chains into a more connected and digitized state—for everyone.”1 Shippers, freight forwarders, ports, terminals, ocean carriers, intermodal operators, government authorities, and customs brokers are the intended users of the electronic platform. Continue reading “All Aboard! Major Shipping Lines Secure Antitrust Immunity for TradeLens Blockchain Agreement”

Carbon-Free Ships: The EVs of the Seas?

Frederick M. Lowther

Much has been made of the future of electronic vehicles (“EVs”). Governments around the world are setting ambitious goals for EVs based on the notion that the vehicles themselves are carbon-free and thus a climate-friendly alternative to internal combustion vehicles. Among other things, the prospect of millions of EVs has supercharged the battery industry and spurred efforts to develop new energy storage technologies. So why not electric vessels, or vessels which are in other respects carbon-free?

There are many obvious differences between EVs and oceangoing vessels: size, weight, distance traveled, water-resistance, etc. Nonetheless, there is no inherent limitation on using an electric propulsion system for a vessel; it’s more a matter of scale rather than feasibility. The real issues are cost (capital and operating) and, just as important, the net environmental impacts.

Cost and Operational Considerations

On the cost and operational side, there are a number of key considerations. In listing the issues, I am focused on newly constructed vessels versus retrofits (but some of the same considerations would apply to retrofits). What is the weight of a battery/electric propulsion system versus diesel or turbine engines and a load of fossil fuel? Batteries are very heavy, and weight is a significant factor for vessel operations. What is the cost of the system(s) to keep the batteries charged, both at sea and in port? The single biggest issue with EVs is the operating distance between charges, and that would be a significantly greater issue with oceangoing vessels, especially those traveling over vast stretches of water. It’s the difference between hundreds of miles and increasingly frequent options for recharging EVs versus thousands of miles with no “in transit” recharging stations for oceangoing vessels.

To the extent that batteries are recharged in port, the time required for recharging becomes crucial since the in-port turnaround time for many vessels is very short, often measured in hours. If (as is highly likely) the vessels are hybrids (i.e., include engines or other devices that can charge batteries while the vessel is in motion), that adds to the cost/weight equation (as well as the environmental equation). What is the operating life of the batteries and what is the cost of replacing them and disposing of the spent batteries (another environmental issue)? Battery life/disposal has not (yet) been a major problem with EVs, but that platform is far different from an oceangoing vessel platform where the constant demand for power over long periods of time and against the resistance of water impacts battery functionality and life. Finally, batteries stacked in large bundles (as is the case for wind and solar generator storage installations) are known to have elevated fire risks. What is the cost of appropriate onboard vessel fire suppression systems? Continue reading “Carbon-Free Ships: The EVs of the Seas?”

Heads or Tails? Making Sense of Crypto-Tokens Issued by Emerging Blockchain Companies

Jeremy A. Herschaft and Michelle Ann Gitlitz

Over the past 18 months, members of the international maritime community have expressed a keen interest in exploring how 21st century blockchain technology can modernize the ancient world of seaborne commerce. Blockchain has in turn spawned many novel business ideas from various startup companies throughout the marine industry. These new business ventures all generally seek to employ blockchain to streamline the logistics process and to provide greater security and transparency to the commercial endeavor. At the same time, these companies are setting a new course through uncharted waters with respect to how they 1) generate startup capital, and 2) propose to conduct day-to-day business in the electronic, digital asset (or crypto) realm.

This article explores these dual business components using two types of digital assets: the “security token” to attract capital, and the “utility token” to carry out business interactions. Both are well suited for the maritime area, though maritime blockchain startup companies should be mindful of the regulatory requirements for implementing tokens into their business in the United States. Continue reading “Heads or Tails? Making Sense of Crypto-Tokens Issued by Emerging Blockchain Companies”

The Vision Is Clearer—Offshore Wind Farms Are Appearing on the U.S. Horizon

Joan M. Bondareff

The United States is on the precipice of developing a robust offshore wind (“OSW”) industry. This article reviews recent developments on the federal and state level that have made it so.

The Trump administration, while demonstrating a clear preference for fossil fuels, has continued the past precedents of permitting offshore wind farms. To date, the Bureau of Ocean Energy Management (“BOEM”) at the Department of the Interior has approved 16 commercial wind leases, and more sales in wind energy areas (“WEAs”) along the Atlantic Coast are expected later this year. A major auction was conducted on December 14, 2018, for three leases off the coast of Massachusetts, resulting in a total auction price of $405 million. Even BOEM found this to be a “bonanza.” The winners were Equinor (former Statoil), Vineyard Wind (Copenhagen and Avangrid renewables), and Mayflower (Shell and EDP Renewables). The West Coast and Hawaii are considering floating wind platforms.

The first commercial OSW farm has been in operation for over one year in state waters without any hiccups in providing clean reliable energy to the residents of Block Island, Rhode Island. European developers are partnering with U.S. companies to share their expertise in OSW development, and the production tax credit was left intact in the 2017 tax reform legislation.

These are all positive signs for the U.S. OSW market. In addition, the price of both wind and solar is declining and becoming more competitive with natural gas. Continue reading “The Vision Is Clearer—Offshore Wind Farms Are Appearing on the U.S. Horizon”

Stronger Winds Blowing Off the Atlantic Coast

Joan M. Bondareff and Jonathan K. Waldron

 We are seeing strong signs of a burgeoning offshore wind industry off the Atlantic Seaboard. While modest, the first offshore wind project, Deepwater Wind, is fully operational in Rhode Island state waters, bringing low-cost renewable energy to the residents of Block Island. In addition, new projects in Massachusetts and Rhode Island, described further below, are setting the stage for the construction of much larger offshore wind farms in federal waters. From Maine to North Carolina, governors and states are lining up to be a part of the offshore wind revolution. This is good news for developers, suppliers, consumers, and the environment.

Why This Is Happening Now

There are several reasons why offshore wind is taking off now. In the first place, the price of offshore wind is coming down—largely based on Europe’s expe­rience with offshore wind and bringing this experience to the United States as lessees, partners, and contractors, as well as the development of improved and more efficient turbines and other related technologies. Indeed, European developers and contractors are now looking to part­ner with U.S. interests. In addition, companies are finding ways to work within the framework of the Jones Act, as discussed in more detail below. Continue reading “Stronger Winds Blowing Off the Atlantic Coast”

Advanced Automation in Shipping Takes Center Stage at IMO

Sean T. Pribyl

Advanced automation in the inter­national maritime industry has officially arrived on the international stage, as the International Maritime Organization’s (“IMO”) Maritime Safety Committee (“MSC”) 99th session fur­thered the discussion on Maritime Autonomous Surface Ships (“MASS”). The topic garnered a great deal of attention, with the IMO receiving 19 papers from industry and various countries in support of the MASS regulatory scoping exercise. The international interest in this topic echoes senti­ments of the IMO Secretary-General Kitack Kim, who recently acknowledged that digitalization—including autonomous ships—remains at the top of his agenda, along with climate change and seafarer issues.

It is clear that technology continues to outpace the regulators, however, and more is still needed in the way of cultural acceptance. In fact, the industry challenges that the IMO faces over the next decade harkens those of disruptive technologies at the end of the 19th century with the advent of the automobile. Continue reading “Advanced Automation in Shipping Takes Center Stage at IMO”