Mainbrace | May 2021 Archives

Now Available—Print Edition of MAINBRACE: May 2021

Did you miss our digital edition of MAINBRACE: May 2021?

You can download our newly released PDF version here.

Note from the Editor

When Mainbrace started some 30 years ago, it was a traditional print newsletter that went out by mail. Over the years, the publication has seen many updates in form and format, mirroring the industry-wide evolution from print to digital. This spring, Mainbrace took the next step in its evolution with the launch of our Mainbrace Live virtual webinar series. In April, we hosted two webinars, the first on preparing for the Biden administration’s maritime and foreign policy and the second on providing an update on the offshore wind industry. If you missed these presentations, you can still view them using the links in our Mainbrace Live section below. I also encourage you to register for our upcoming sessions, U.S. Maritime Litigation Trends (May 18) and U.S. Maritime Regulatory Update (June 22). If you miss them, don’t worry—recordings will be posted for later viewing. And keep an eye out for more Mainbrace Live sessions in due course.

As you will see from this latest newsletter issue, we aren’t abandoning or replacing the traditional print version of Mainbrace—we view Mainbrace Live as an addition to our communications toolbox. We are grateful for these opportunities to communicate with our clients and colleagues in the industry, and we hope that you enjoy this latest issue which, we think, dovetails nicely with the subjects covered in our new webinar series. As always, we welcome suggestions for new topics for Mainbrace, and now for Mainbrace Live as well.

MAINBRACE LIVE WEBINAR SERIES

UPCOMING WEBINAR:

U.S. MARITIME REGULATORY UPDATE
June 22, 2021
6:00–7:00 a.m. PDT / 9:00–10:00 a.m. EDT / 1:00–2:00 p.m. GMT

Join Blank Rome maritime attorneys as they discuss the latest U.S. maritime regulatory updates, including:

The 8-year conundrum in ballast water management: VIDA, VGP, and IMO
Ongoing industry challenges as COVID-19 continues
Emerging greenhouse gas regulations and shipping

REGISTER HERE »

IN CASE YOU MISSED IT…

PREPARE FOR THE BIDEN ADMINISTRATION’S MARITIME & FOREIGN POLICY

Blank Rome LLP and Blank Rome Government Relations LLC maritime attorneys and professionals discussed the outlook for maritime policymaking under the new Biden administration and Congress, as well as its impacts on the global shipping industry, including international trade sanctions, foreign policy, and enforcement trends. VIEW WEBINAR »

U.S. OFFSHORE WIND INDUSTRY UPDATE

Blank Rome maritime attorneys discussed U.S. offshore wind development projects and infrastructure, the Biden administration’s commitments to expand renewable energy, the Jones Act’s impacts on existing and planned offshore wind installation and servicing projects, and pitfalls and opportunities for contractors and service providers looking to enter the industry. VIEW WEBINAR »

U.S. MARITIME LITIGATION TRENDS
Blank Rome maritime attorneys discussed the latest U.S. maritime litigation trends, including the purpose of and criteria for section 1782; judgment enforcement; timeline of a federal case; and spill investigations. VIEW WEBINAR »

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.

Criminal Enforcement under the Biden Administration

Kierstan L. Carlson

We are nearly six months into the Biden administration and its civil and criminal enforcement policies are taking shape. Under the Trump administration, the government’s enforcement focus shifted away from white collar crimes and violations towards immigration, violent crimes, opioids, and the like. Environmental enforcement in particular dipped dramatically. Although the Biden administration has not formally announced enforcement priorities, it is expected to shift back and renew the government’s focus on corporations and certain white collar crimes. This likely will be true for the Department of Justice (“DOJ”) as well as at the agency level, as agency heads are expected to be given a high degree of independence and agencies to be empowered to pursue enforcement actions and refer serious cases to the DOJ.

The Biden administration also has made some major policy changes with respect to environmental enforcement. Earlier this year, the Deputy Assistant Attorney General sent a memorandum to the heads of each section in the DOJ’s Environmental and Natural Resources Division, which includes the sections that bring civil and criminal maritime environmental cases referred to the DOJ by the U.S. Coast Guard (“USCG”) and the Environmental Protection Agency (“EPA”). The memorandum revoked nine policy directives that had been in place under the Trump administration. It also stated that the Biden administration will be focusing on climate change and environmental justice.

What does all of this mean for the maritime industry? There are a few key takeaways: 1) enforcement of MARPOL Annex I cases will continue and we may see an increased focus on MARPOL Annex VI and EPA emissions standards, as well as on ballast water; and 2) we also expect a continued focus on non-environmental enforcement areas that have long posed significant risks to the industry: sanctions, anti-corruption, anti-money laundering, and antitrust. This is not a complete list of the risks facing our very heavily regulated industry, but it captures the enforcement trends and what are, in our view, the most critical risks.

Favorable Offshore Winds Blowing from the Biden Administration

Joan M. Bondareff

As part of his Executive Order on Tackling the Climate Crisis at Home and Abroad (EO 14008)—issued on the first day he took office—President Biden made significant commitments to renewable energy. These commitments include collaborating with multiple federal agencies in the United States and promoting critical industry support for the acquisition of electric vehicles for the federal fleet, as well as rejoining the Paris Climate Agreement, the landmark international agreement signed in 2015 to limit global warming. The goal is to have net-zero greenhouse gas (“GHG”) emissions by 2050.

Former Secretary of State John Kerry was appointed as the international climate envoy, and former Environmental Protection Agency (“EPA”) Administrator Gina McCarthy was designated as the domestic climate czar. They have their work cut out for them, as the goal of simply meeting the present Paris Climate Agreement goals may not reduce GHG emissions to the required levels.

Offshore wind will be a critical part of reaching the new domestic and international climate goals. President Biden recognizes this fact in the EO by promising to double offshore wind by 2030. This means, according to the new Director of the Bureau of Ocean Energy Management (“BOEM”), “30 GW of offshore wind by 2030”—a catchy and ambitious goal. Developers also recognize the connection by touting reductions in GHG emissions with each project. But playing the numbers game for this goal is too simplistic. For the United States to realistically double the amount of offshore wind, the states, private sector, and federal government must work together to take the necessary steps to meet and exceed this extraordinary commitment.

A first step was taken with the issuance of the final Environmental Impact Statement (“EIS”) for the Vineyard Wind Project, discussed below. (See Vineyard Wind 1 Offshore Wind Energy Project Final EIS.)

The next step was taken by the Cabinet officials of the departments of Interior (“DOI”), Energy (“DOE”), Commerce (“DOC”), and Transportation (“DOT”) on March 29, 2021, when they made the following commitments:

- - DOI will establish a new priority wind energy area in the New York Bight between Long Island and New Jersey;
  - DOI will issue new lease sales and complete review of at least 16 construction and operation plans (“COPs”) by 2025;
  - DOI/BOEM will issue a notice of intent to prepare an EIS for ocean wind off the coast of New Jersey;
  - DOT will notice $230 million in funding for port infrastructure, with a focus on offshore wind ports;
  - DOE will make available three billion dollars in loan guarantees under the title XVII Innovative Energy Loan Guarantee Program;
  - DOC/National Oceanic and Atmospheric Administration (“NOAA”) will enter into a memorandum of understanding (commonly known as an “MOU”) with Ørsted to share physical and biological data in leased areas; and
  - $20 million will be made available under the National Offshore Wind Research and Development Consortium funded by DOE and the New York State Energy Research and Development Authority.

These steps are taken with a goal of creating 44, 000 new jobs in the offshore wind industry by 2030. (See Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.)

Risks Attendant to U.S. Rule B Alter-Ego Vessel Seizures

Keith B. Letourneau

A recent wave of vessel seizures premised on alter-ego theories has swept through various U.S. federal courts. These cases present significant risks for vessel owners and ship managers, even if the underlying claims are ultimately defensible. Plaintiffs employ Supplemental Admiralty Rule B as the procedural device to seize vessels as an asset of the target defendant. Rule B requires a prima facie showing that the defendant is not present within the district to satisfy the existence of general-personal jurisdiction. The Supreme Court’s general jurisdiction ruling in Daimler AG v. Bauman, 134 S.Ct. 746 (2014), has made it much easier to meet Rule B’s requirement because such jurisdiction is now predicated upon proof that the defendant’s systematic and continuous contacts render it essentially at home within the district, effectively requiring its principal place of business to lie within the district. Given the peripatetic existence of merchant ships and their ownership—often by single ship-owning companies incorporated within flag-of-convenience countries—satisfying Rule B’s “presence within the district” standard now is nearly automatic.

Plaintiff Strategies

Plaintiffs couple Rule B’s easy compliance with alter-ego allegations that the ship manager or ship-owning group are dominated and controlled by a single individual or entity to the disadvantage of the plaintiffs and that the target defendant is but a corporate extension of the company with whom the plaintiffs’ real dispute exists (and that dispute may have absolutely no connection with the United States). Supplemental Admiralty Rule E(4)(f) permits a defendant whose property has been seized to an immediate post-seizure hearing. While the federal courts are not aligned as to the standard that applies at such a hearing, it is fair to say that plaintiffs are required, at minimum, to meet the probable-cause test, which equates to reasonable grounds for supposing the allegations are well founded.

Seaman’s Manslaughter: An Arcane Statute Turned Present-Day Enforcement Risk

Jeanne M. Grasso and Kierstan L. Carlson

Owners and operators of ships calling on the United States know well that criminal prosecutions are now a regular occurrence in the maritime industry. Most relate to environmental violations and post-incident conduct like false statements and obstruction of justice. Recently, however, prosecutors also have used the Seaman’s Manslaughter Statute as an enforcement tool.

The statute allows for federal charges against vessel officers and corporate executives of the vessel owner or charterer if a death results from negligence aboard a vessel. Several high-profile casualties have clearly placed the statute back on the government’s radar and it is now an enforcement risk for passenger and cargo vessels alike.

The Statute

The Seaman’s Manslaughter Statute criminalizes negligence and inattention to duties by a captain, engineer, pilot, or other person employed on a vessel. Violations can result in up to 10 years’ imprisonment, a fine, or both. The statute stems from 19th century laws aimed at preventing deaths from fires on steamboats, which were designed to punish ship’s officers for negligent conduct. A similar focus exists today. Under the statute, vessel officers and shoreside employees may be liable for manslaughter if their negligent conduct causes a fatality. This is a “simple negligence” standard, meaning that the government need not prove the conduct was willful, knowing, or reckless.

However, a heightened, “gross negligence” standard applies for cases against executives of corporate vessel owners or charterers. There, the government must prove that the individual corporate executive: 1) had “control and management of the operation, equipment, or navigation” of the vessel; and 2) “knowingly or willfully caused or allowed” the negligent conduct that resulted in a death.

Prosecutions through the 2000s

Few Seaman’s Manslaughter cases were brought before the 2000s. The most notable was the General Slocum disaster in 1904, where over 1,000 people died in a vessel fire in New York. The captain, corporate executives, and the vessel inspector were indicted when the investigation revealed serious violations of safety standards and false records covering up the deficiencies. This incident lead to major regulatory change and reform of the predecessor agency to the U.S. Coast Guard.

Blank Rome Announces 2021 Promotions: Kierstan L. Carlson Elected as Maritime Partner

Effective January 1, 2021, Blank Rome announced the election of Kierstan L. Carlson to partner in the firm’s Maritime and International Trade practice group. In total, the firm elected eight associates and five of counsel to partner, and elevated four associates to of counsel.

In addition to Kierstan, the newly elected partners are Ory Apelboim, Michael J. Barry, Shaun J. Bockert, Melanie S. Carter, Thomas A. Cournoyer, Molly E. Crane, Ryan E. Cronin, Stephanie M. Harden, Martin S. Krezalek, Kevin M. O’Malley, Michael D. Silberfarb, and John P. Wixted. The new of counsel are Samir Ahuja, Kevin M. Eddy, Alexander S. Perry, and Michael P. Trainor.

“We congratulate this outstanding group of talented attorneys on their new roles at Blank Rome,” said Grant S. Palmer, Managing Partner and CEO. “Our firm’s elevation decisions are a long-term investment in the future of Blank Rome, and we are confident that this impressive group of attorneys will continue to promote our culture of teamwork and collaboration while providing exceptional service to our clients.”

Jeanne M. Grasso Named a Top Woman in Shipping 2020 by All About Shipping

Jeanne M. Grasso, co-chair of Blank Rome’s Maritime and International Trade group, was named among All About Shipping’s “Top Women in Shipping” for the second year in a row. She is notably ranked in the top 30 of the 189 women from all sectors of the shipping industry recognized for 2020.

To determine the Top Women in Shipping, All About Shipping collects data and notes on the leading women in the industry who have offered and influenced the shipping world and the wider female community to all intents and purposes. The honorees for 2020 were particularly commended for being “valiant and admirable women” who outperformed during such a challenging year. At Blank Rome, Jeanne focuses her practice on maritime, international, and environmental law for clients worldwide. She counsels owners and operators of vessels, charterers, cargo owners, and facilities, including manufacturing facilities, both marine-side and inland. She writes and lectures extensively on criminal enforcement of environmental laws and U.S. Coast Guard regulatory matters, and also conducts training sessions and helps clients establish compliance programs in an effort to avoid enforcement actions. Jeanne is highly ranked by Chambers USA for her work in shipping regulatory matters, and has also been recognized as a leading maritime attorney by The Legal 500 United States, Who’s Who Legal, Lloyd’s List, Best Lawyers in America, and Super Lawyers.

Chambers Global 2021 Ranks Blank Rome Attorneys and Shipping and Energy Practices

Chambers Global 2021 recognized our firm’s attorneys, including our maritime partner John D. Kimball, for their industry knowledge and leading practices, as well as Blank Rome LLP as a global leader in “Shipping: Litigation — Global-wide” and “Energy: Oil & Gas (Regulatory & Litigation).”

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