Category: Mainbrace | March 2020 (No. 1)

Note from the Editor

Thomas H. Belknap Jr.

Happy (almost) spring! Every year seems to be a new adventure and a new challenge, and this year, on top of the dramatic new International Maritime Organization 2020 bunker regulations that have now come into force after much trepidation, we find ourselves watching as the shipping world (and everyone else) wrestles with the many market disruptions that have resulted from the global spread of COVID‒19, otherwise known as coronavirus. Throw in a presidential election in November, and there’s plenty of uncertainty to keep everyone guessing this year.

It’s not all bad news, however. Uncertainty brings risk, but it also generates opportunity, and the shipping world has always depended on its creativity and ingenuity to survive and thrive. We have every confidence that it will continue to do so in the future.

As always, we aim with this issue of Mainbrace to offer a diverse look at different aspects of the shipping industry: Jeanne M. Grasso and Kierstan L. Carlson take a look at the growing enforcement in the United States in respect of MARPOL Annex VI emissions violations; Jeremy A. Herschaft and Matthew J. Thomas bring us up to speed on recent developments in the emerging maritime blockchain platform, TradeLens; William R. Bennett, III, Charles S. Marion, and Anthony Yanez help us consider when a contract may or may not be a “maritime” one—and why it matters; Frederick M. Lowther imagines the future of carbon-free vessels; Joan M. Bondareff and Stefanos L. Roulakis give us an update on maritime-related developments in Congress; and William R. Bennett, III, and Lauren B. Wilgus take us through the complicated ins and outs of a maritime casualty investigation in the United States.

Added to the mix of current maritime news and trends, we also include some timely Firm announcements regarding new partners and teams who have joined us since January 1 as well as highlight the elevation of Lauren B. Wilgus to Maritime partner and our Chambers Global 2020 rankings. Additionally, we provide some important Blank Rome diversity and inclusion updates, including the sad news of the loss of our beloved colleague and friend Judge Nathaniel R. Jones, our Firm’s first Chief Diversity and Inclusion Officer.

We hope you enjoy this issue. As always, we welcome your comments and suggestions for articles in future issues of Mainbrace.

EDITOR, Mainbrace
THOMAS H. BELKNAP JR.
Partner
212.885.5270
tbelknap@blankrome.com

Firm News & Announcements

Lauren B. Wilgus Elevated to Maritime Partner

Blank Rome is pleased to announce that Lauren B. Wilgus was elevated from of counsel to partner, effective January 1, 2020. In addition to Lauren, the Firm elevated 10 associates and one additional of counsel to partner, and five associates to of counsel. 

Lauren B. Wilgus – Maritime and International Trade • New York

Lauren focuses her practice on international and maritime litigation, alternative dispute resolution, and business matters, notably involving domestic and foreign corporate interests as well as disputes concerning international and domestic commercial contracts, marine insurance coverage, and charterparties. She counsels on claims involving the Carriage of Goods by Sea Act, maritime attachment and vessel arrest actions, marine casualty investigations, recognition and enforcement of foreign arbitration awards and judgments, and commercial negotiations and dispute resolutions. Lauren is an active member of Blank Rome’s Maritime Emergency Response Team and leading maritime organizations and associations.

To view all of the Firm’s 2020 promotions, please visit Blank Rome Announces 2020 Promotions: 12 Partners, 5 Of Counsel.

Blank Rome Continues Expansion in 2020 with New Lateral Partners

Since January 1, Blank Rome has welcomed a number of lateral partners across its U.S. offices, enhancing the Firm’s services and capabilities throughout its various practices.

CRAIG R. CULBERTSON, Corporate, M&A, and Securities, CHICAGO – Press Release

JODI L. LASHIN, Corporate, M&A, and Securities, NEW YORK – Press Release

WILLIAM E. LAWLER, III, White Collar Defense & Investigations, WASHINGTON, D.C. – Press Release

STACY H. LOUIZOS, Corporate, M&A, and Securities, NEW YORK – Press Release

DEAN S. NORDLINGER, Corporate, M&A, and Securities, WASHINGTON, D.C. – Press Release

VANESSA G. TANAKA, Finance, Restructuring, and Bankruptcy, CHICAGO – Press Release

MASHA TRAINOR, Corporate, M&A, and Securities, PITTSBURGH – Press Release

PAUL H. TZUR, White Collar Defense & Investigations, CHICAGO – Press Release

LATERAL PARTNER TEAM: Tax, Benefits, and Private Client, NEW YORK – Press Release

      • CRAIG B. FIELDS
      • HOLLY L. HYANS
      • NICOLE L. JOHNSON
      • MITCHELL A. NEWMARK

MARPOL Annex VI Enforcement—Are You Prepared?

Tips to Enhance Compliance and Reduce Enforcement Risk

Jeanne M. Grasso and Kierstan L. Carlson

The United States has been aggressively enforcing compliance with the International Convention for the Prevention of Pollution from Ships (“MARPOL”) for nearly 30 years. Enforcement actions have been brought against ship owners and operators across the industry, as well as against individual masters, engineers, shoreside personnel, and other corporate officers.

To date, most MARPOL prosecutions have involved violations of MARPOL Annex I through “magic pipe” bypasses of the Oily Water Separator (“OWS”) or improper discharges of sludge, though some have involved Annex V garbage violations and, very recently, Annex VI emissions violations. Few, other than in the early 1990s, have involved illegal discharges in U.S. waters; rather, virtually all cases have been brought for false entries in the ship’s records, including the Oil Record Book (“ORB”) and Garbage Record Book. This is because maintaining inaccurate records while in domestic waters or presenting inaccurate records to the U.S. Coast Guard (“USCG”) during an inspection is a crime and the jurisdictional hook needed for prosecution. Most cases also involve some kind of unlawful “post-incident conduct” that constitutes an independent crime under U.S. law, such as destroying records or lying to USCG inspectors or special agents. Continue reading “MARPOL Annex VI Enforcement—Are You Prepared?”

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”

Chambers Global 2020 Ranks Blank Rome Attorneys and Shipping Litigation Practice

Mainbrace | March 2018 (No.1)

Chambers Global 2020 recognized Blank Rome as a global leader in Shipping: Litigation–Global-wide, as well as Partner John D. Kimball as a leading shipping litigation attorney. Continue reading “Chambers Global 2020 Ranks Blank Rome Attorneys and Shipping Litigation Practice”

Analyzing Maritime (or Non-Maritime) Contracts and Practical Considerations for Litigation Strategy

William R. Bennett, III, Charles S. Marion, and Anthony Yanez

In many civil disputes, the application of choice of law principles as well as the jurisdiction in which the lawsuit is filed can have a significant impact on the outcome of a case. This is especially true where one of the parties conducts business in the maritime industry and the other does not. Some parties may prefer that state law be applied to the dispute because of a favorable state statute (such as a statute of limitations) or because the state’s courts have rendered decisions that support the parties’ position on a substantive issue. Others may prefer that federal law apply where it is more advantageous to a party given the facts of the case. Of course, some parties prefer to litigate in federal court rather than state court, or vice versa, for cost or other reasons.

There is a small subset of cases in which the question of whether maritime or admiralty law should be applied arises. One of the most significant decisions addressing that question is Norfolk Southern R. Co. v. James N. Kirby Pty, Ltd., 543 U.S. 14 (2004). In Kirby, the U.S. Supreme Court held that the liability of a rail carrier that transported over land cargo that was brought to the United States from Australia on board ships, through bills of lading calling for carriage from Australia to Huntsville, Alabama, via the Port of Savannah, Georgia, for damage to the cargo that occurred during that leg of the journey should be determined by applying maritime law, because the entire contract of carriage, and not just the ocean segment of it, constituted a maritime contract. More specifically, the court in Kirby determined that the default liability rule in the Carriage of Goods by Sea Act (“COGSA”) ($500 per package) applied to a train wreck that allegedly caused $1.5 million in damages. Continue reading “Analyzing Maritime (or Non-Maritime) Contracts and Practical Considerations for Litigation Strategy”

Diversity & Inclusion News

In Memoriam: Judge Nathaniel R. Jones

It is with great sadness that we share the news that our beloved colleague and friend Judge Nathaniel R. Jones passed away on Sunday, January 26, at age 93. Judge Jones joined Blank Rome in 2002 and served as our first Chief Diversity and Inclusion Officer.

He was integral in helping to foster and promote our rich culture of inclusion throughout the Firm, and selfless in sharing his time and unmatched perspective with so many of us who are better people for having known him. In collaboration with Chris Lewis and Sophia Lee—his successors in the Chief Diversity and Inclusion Officer role—we have developed a thriving and nationally recognized diversity and inclusion program that reflects his vision and passion. In 2013, we developed the Honorable Nathaniel R. Jones Diversity and Inclusion Award, which is presented annually to a Blank Rome attorney or professional who has demonstrated outstanding leadership in promoting diversity and inclusion. We are grateful to have the opportunity to honor and remember Judge Jones through this important award that will forever bear his name.

In Judge Jones’ obituary, our Cincinnati Office Chair Michael Cioffi notes, “Nate Jones was the kind of hero America needed that (Martin Luther) King described as ‘an extremist for justice’ in ‘Letter from Birmingham Jail.’ Nate’s unwavering commitment to justice, equality, and the rule of law made him a great lawyer and great man. His genuine humility and everyday kindness made him loved by all, including those on the other side of the political spectrum. His life is an important lesson and model to us all.” We couldn’t agree more. While we have lost one of the brightest legal minds and civil rights advocates of our time, his groundbreaking work, steadfast compassion, and inspirational life and legacy will surely live on through the countless lives he has touched—both at Blank Rome and around the world.

To learn more, please visit In Memoriam: Judge Nathaniel R. Jones.

Blank Rome Announces 2020 Diversity and Inclusion Leadership Update

Sophia Lee Continues as Chief Diversity and Inclusion Officer in 2020; Christopher Lewis Transitions to Emeritus Role

Blank Rome is pleased to announce that Sophia Lee will serve as Blank Rome’s Firm-wide Chief Diversity and Inclusion Officer and Christopher A. Lewis has transitioned to an emeritus role, effective January 1, 2020. Sophia and Chris have served as co-chiefs since January 2019, when Sophia joined Chris in this capacity. Chris was appointed to the role in May 2011 and has transformed the Firm’s diversity and inclusion efforts in significant ways.

As Chief Diversity and Inclusion Officer, Sophia will continue to work closely with the Firm’s leadership on strategic initiatives and programming, including recruiting and mentoring; client partnerships, education programs, and special events; general counsel and thought leader roundtables; career development and advancement programs; and ongoing community outreach. She will also continue to chair the Firm’s Diversity and Inclusion Committee and work closely with the Firm’s BR Pride, BR United, and Women’s Forum affinity groups.

“I am excited to step into the role of Chief Diversity and Inclusion Officer, leading the Firm’s charge of increasing diversity, embracing inclusion, and advancing equity as we look to the future of the legal profession—from addressing the concerns of our legal communities to meeting the need of our clients,” said Sophia. “Standing on the shoulders of those who have come before me, the Honorable Nathaniel R. Jones, our Firm’s first Chief Diversity and Inclusion Officer, followed by Chris Lewis, I will be a steadfast advocate for diversity, inclusion, and equity who recognizes the legacy of our Firm’s founders, elevates our difficult discussions, and continues to push forward toward our ambitious goals and objectives. On a personal note, I am grateful to Chris for his mentorship, championship, and friendship as we have worked together over the years on the Firm’s diversity and inclusion initiatives and with the broader legal community.”

To learn more, please visit Blank Rome Announces 2020 Diversity and Inclusion Leadership Update.

Blank Rome Earns Perfect Score in 2020 Corporate Equality Index

Firm Receives 100 Percent for the Fifth Year in a Row on Human Rights Campaign Foundation’s Scorecard on LGBTQ Workplace Equality

Blank Rome is proud to announce that the Firm has received a perfect score of 100 percent on the 2020 Corporate Equality Index (“CEI”), a national benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality, administered by the Human Rights Campaign (“HRC”) Foundation. With this score, Blank Rome has been designated for the fifth year in a row as a “Best Place to Work for LGBTQ Equality” by the HRC, and joins the ranks of major U.S. businesses that earned top marks this year.

The 2020 CEI rated 1,059 businesses in the report and evaluates LGBTQ-related policies and practices, including non-discrimination workplace policies, domestic partner benefits and transgender-inclusive health care benefits, competency programs, public commitment to the LGBTQ community, and responsible citizenship. Blank Rome’s efforts in satisfying all of the CEI’s criteria results in a 100 percent ranking and the designation as a “Best Place to Work for LGBTQ Equality.”

To learn more, please visit Blank Rome Earns Perfect Score in 2020 Corporate Equality Index.

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?”

Congress Acts on Major Maritime Programs in 2019 and Postpones Work on Coast Guard Bill

Joan M. Bondareff and Stefanos N. Roulakis

We are in the middle of the two-year term of the 116th Congress. In 2019, Congress reauthorized and funded several maritime programs, described below. Impeachment and a busy Senate calendar have delayed the 2019 Coast Guard Authorization Act (“CGAA”) until the second session, which began on January 6, 2020.

Coast Guard Bill Delayed by Jones Act Waiver in House Bill

The main delay to finalizing the CGAA is how to handle a provision regarding installation vessels. This provision seeks to affirm that the Jones Act applies to “lifting operations” while instituting a government-run waiver process that may allow use of foreign-flag vessels. (For a complete summary of the House-passed bill, please see our advisory, Potential Impacts of Offshore Legislation on Industry.) In contrast, U.S. Customs and Border Protection (“CBP”) has recently issued a customs bulletin interpreting the Jones Act as specifically not applying to “lifting operations” in addition to creating new criteria for when a Jones Act vessel must be used in transporting items offshore. (For a complete summary of the CBP Notice, please see our advisory, U.S. Customs and Border Protection Decision Makes Substantial Changes Affecting the Offshore Industry.) Procedurally, the Jones Act waiver provision is in the House-passed bill (H.R 3409). The companion Senate bill (S. 2297) lacks a similar provision. As such, proponents of the CBP’s notice are encouraging Congress not to enact the House-installation vessel provision.

The specifics of the House provision would regulate lifting operations offshore. The provision states that until a coastwise qualified (i.e., U.S.-built, U.S.-citizen owned, and U.S.-flagged) lifting vessel is built, “lifting operations” are not subject to the Jones Act. Once such a vessel is built, the bill would charge the Maritime Administration (“MARAD”) with implementing a waiver provision for “lifting operations” requiring crane capacity greater than 1,000 MT. If MARAD determines that a U.S. Jones Act qualified vessel is available, only a coastwise-qualified vessel can perform the lift. As of this publication date, it remains to be seen how the House and Senate bills will be reconciled in conference. Continue reading “Congress Acts on Major Maritime Programs in 2019 and Postpones Work on Coast Guard Bill”

Anatomy of a Marine Casualty Investigation

William R. Bennett III and Lauren B. Wilgus

Blank Rome’s maritime attorneys have represented clients in some of the largest maritime casualties in the last 20 years, including the Staten Island Ferry allision with a maintenance pier in New York, the blow out and eventual loss of the Deepwater Horizon drilling rig in the Gulf of Mexico, the sinking of the El Faro during Hurricane Joaquin, and the collision between the Navy Destroyer USS John S. McCain and the tanker ALNIC MC in the Singapore Strait. These casualties have resulted in the catastrophic loss of life, significant personal injuries, damage to the environment, and property damage.

Our experience investigating and providing legal representation for clients because of these casualties has shown that, despite decades of implementing international safety protocols, advancements in ship design, and an industry-wide focus and dedication to improved safety, marine casualties will continue to occur; maybe not as often, but they will happen. And following all the safety protocols put in place may not be enough to avoid a casualty. Simply put, large vessels transiting the world’s oceans subjects them to influences beyond their control and creates the inherent risk of a casualty occurring.

Obviously, the shipping industry’s primary goal should always be to have zero lost days due to accidents. But, equally, the industry should also always be prepared to immediately respond to and investigate unfortunate events when they occur. In this regard, it is critical to understand the investigative process that occurs when there is a significant marine casualty.

First, it is important to note that although not required, it is not unusual for the National Transportation Safety Board (“NTSB”) and the United States Coast Guard (“USCG”) to coordinate, in part, their efforts to investigate and establish the root cause of a marine casualty. The process by which the NTSB and USCG investigate a casualty are similar in many ways, but different in some key areas. And recommendations made by the NTSB and/or the USCG, if any, following the conclusion of their respective investigations, differ in scope. Continue reading “Anatomy of a Marine Casualty Investigation”