The U.S. State Department published new guidance on visas issued to crewmembers who will work aboard vessels engaged in offshore wind farm operations. Vessel owners and project managers in the offshore wind sector should examine these changes and implement internal procedures to facilitate future wind farm projects.
The State Department has updated its policy guidance in the Foreign Affairs Manual of the United States (the “FAM”) to include a visa category for offshore wind projects. Blank Rome coordinated this effort along with the relevant agencies in the U.S. government. This new guidance solves a regulatory hurdle that had been causing logistical problems for the industry by clarifying the correct type of visa that will be issued by U.S. embassies to crewmembers working on vessels on offshore wind projects.
The traditional method of obtaining visas for crewmembers engaged on energy projects located on the U.S. Outer Continental Shelf (“OCS”) is to obtain a B-1 visa with an OCS annotation. Crewmembers are issued such a visa on the basis of a letter of non-applicability, which is issued by the U.S. Coast Guard (the “Coast Guard” or “USCG”) when it is determined that a vessel is owned or controlled more than 50 percent by foreign interests so that foreign citizens can crew a vessel engaged in OCS energy projects. The authority to regulate offshore wind farm energy projects was authorized pursuant to Section 388 of the Energy Policy Act of 2005, which amended the Outer Continental Shelf Lands Act. 43 U.S.C. § 1337(p)(1)(c). Nevertheless, the Coast Guard takes the position that it lacks statutory authority to regulate wind farms located on the OCS. As a result, the Coast Guard will not issue letters of non-applicability, which refusal rendered the State Department unable to issue B-1 (OCS) visas for offshore wind projects.
This has created confusion in industry as to the type of visa that an embassy will issue because crews could no longer obtain a B-1 (OCS) visa. A normal C-1/D crewman visa is not a viable option as it is only valid for 29 days. This type of visa would have provided an inadequate amount of time for the crew to conduct wind farm-related operations offshore. Such an issue could have proven to be a large impediment to the development of the nascent offshore wind sector in the United States.
The U.S. Coast Guard has published new guidance setting forth its interpretation of when a vessel’s keel is considered laid and building progression standards to determine what may be accepted in establishing the build date for a vessel. Shipyards and prospective shipowners and operators should be cognizant of this new guidance and its significant implications on the regulatory requirements applicable to a vessel.
The U.S. Coast Guard has issued a Work Instruction providing guidance on when a vessel’s keel is considered to be laid or the vessel is at a similar stage of construction. This guidance is intended to address law and regulations that refer to when a vessel is “new” or “existing,” “built,” or “constructed.” The Work Instruction, “Determinations for a Vessel’s Keel Laid Date or Similar Stage of Construction,” CVC-WI 015(1), was published on August 27, 2019, and is available here.
U.S. law and regulation often refers to new or existing vessels or when a vessel is built or constructed to determine the applicability of newer construction, safety, and environmental standards. The definitions of these terms invariably discuss the vessels’ keel laid date or similar stage of construction. However, there has historically been scant guidance addressing when a vessel’s keel is considered laid or when a vessel can be considered at a similar stage of construction and how these terms should be applied for different regulatory purposes.
The Coast Guard has identified issues in the past with undefined structural members being placed in a shipyard without vessel construction plans in place or even intent to build a specific vessel to act as a regulatory placeholder. This is particularly a problem in the period before a newer, more stringent standard will come into effect, and shipbuilders or other companies seek to claim a keel laid date before a new standard takes effect by taking some action to start the building of a vessel with no firm planned completion date.
The U.S. House of Representatives has introduced legislation that could potentially greatly alter the landscape for oil, gas, and wind installation and decommissioning activities on the U.S. Outer Continental Shelf (“OCS”). Stakeholders should examine the legislation for impacts to their operations.
The House Committee on Transportation and Infrastructure marked up and approved H.R. 3409, the Coast Guard Authorization Act of 2019 (“2019 CGAA”) on June 26, 2019. This legislation, if enacted, could have significant impacts on how oil, gas, and wind vessel activities are conducted on the OCS. Of particular note, the legislation could have an outsized effect on offshore wind in the United States, which is at a nascent stage and requires installation activities of the type contemplated in the 2019 CGAA.
In January 2017, U.S. Customs and Border Protection (“CBP”) proposed to overturn decades of precedent with regard to offshore operations potentially subject to the Jones Act in its “Proposed Modification and Revocation of Ruling Letters Relating to Customs Application of the Jones Act to the Transportation of Certain Merchandise and Equipment Between Coastwise Points” (the “Notice”). The Notice, which was published in the CBP Customs Bulletin, proposed the modification of approximately 25 CBP rulings that delineated the difference between “equipment of the vessel,” the transportation of which does not implicate the Jones Act, and “merchandise,” which may only be transported by qualified vessels under the Jones Act.
A recent United States Supreme Court ruling held that a plaintiff may not recover punitive damages on a maritime claim of unseaworthiness. This new ruling has resolved a split among the circuits and has essentially reinforced an otherwise long-standing precedent.
On June 24, 2019, the United States Supreme Court decided Dutra Group v. Batterton, holding 6-3, that a plaintiff may not recover punitive damages on a claim of unseaworthiness. Justice Alito delivered the opinion of the Court in which Justices Roberts, Thomas, Kagan, Gorsuch, and Kavanaugh joined. Justice Ginsburg filed a dissenting opinion in which Justices Breyer and Sotomayor joined.
This case arose from a personal injury incident aboard a vessel. Christopher Batterton was working as a deckhand on the vessel, which The Dutra Group owned and operated, when a hatch cover blew open and severely injured his hand. Batterton sued Dutra, asserting a variety of claims, including unseaworthiness, and sought general and punitive damages. Dutra moved to dismiss the punitive damages claim, arguing that such damages were not available on claims for unseaworthiness. The District Court denied Dutra’s motion, and the Ninth Circuit affirmed. But the Supreme Court reversed.
The Court noted that the overwhelming historical evidence suggests that punitive damages are not available for unseaworthiness claims and that the lack of punitive damages in traditional maritime law cases is “practically dispositive.” The Court said, “because there is no historical basis for allowing punitive damages in unseaworthiness actions, and in order to promote uniformity with the way courts have applied parallel statutory causes of action, we hold that punitive damages remain unavailable in unseaworthiness actions.”
As attacks on vessels increase the risk of shipping in the Straits of Hormuz and throughout the Persian Gulf, vessel owners and operators, as well as shippers, should review their charter parties and assess risk management plans to ensure the safety of crews and vessels transiting the Persian Gulf.
U.S.-Iranian tensions recently came to a head when four tankers were attacked off Fujairah in May, a port in the United Arab Emirates in the Gulf of Oman. This was followed up by an attack on two Japanese vessels, the M/T Front Altair and M/T Kikuko Courageous, in the Gulf of Oman on June 13, 2019. U.S. government agencies have accused Iran of being behind the attacks. Tensions continue to rise, although President Trump has called the attacks “very minor.” In the meanwhile, shipping companies are taking steps to reduce their risks transiting in the Straits of Hormuz and Gulf of Oman.
The attacks and tankers in the Persian Gulf region are reminiscent of the incidents involving international shipping surrounding regional conflicts, including the “Tanker War” in the 1980s and the re-flagging of Kuwaiti vessels to the U.S. registry during the Gulf War in the 1990s. During the Tanker War period in 1984, and the eight-year Iraq-Iran conflict, both sides attacked tankers and merchant ships in the Persian Gulf. At that time, the U.S. military provided escorts to tankers, some of which carried the U.S. flag.
As regards recent tensions with Iran, since withdrawing from the Joint Comprehensive Plan of Action (“JCPOA”) on May 8, 2018, tensions between the United States and Iran have been ratcheting to their most tense level in years. These flames have been fanned by hardliners on both sides. Credible analyses have noted that the White House has been intensely working on a future strategy to address these developments. And, as a result, shipping companies operating in the Persian Gulf region have been taking additional steps to manage their risks.
On March 19, 2019, the U.S. Supreme Court in Air & Liquid Systems Corp. v. Devries held that, under maritime law, a product manufacturer has a duty to warn of asbestos or other hazardous parts when its own product, although not containing such hazardous parts, requires its later incorporation, and the manufacturer knows or has reason to know that the integrated part is likely to be dangerous for its intended use. The Supreme Court’s decision settles a longstanding conflict between federal and state courts regarding the applicable rule in maritime tort cases. Manufacturers of such products must take this ruling into account when evaluating product warnings.
For years, federal and state courts have struggled to find consensus on the applicable rule regarding a manufacturer’s duty to warn of the danger of its products when those products later had dangerous parts added to them. Prior to Devries, courts generally applied one of three approaches.
The first approach, viewed as plaintiff-friendly, relied on mere foreseeability. Under this approach, if it was foreseeable that the manufacturer’s product would be used with another product or part, even if the manufacturer’s product did not require use or incorporation of that other product or part, then the manufacturer could face liability for failure to warn.
The second approach, viewed as defendant-friendly, relieves manufacturers of any liability if they do not make, sell, or distribute the dangerous part or incorporate the dangerous part into the product, even if the product requires incorporation of the part and the manufacturer knows that the integrated product is likely to be dangerous for its intended use (this is also known as the “bare-metal defense”).
The International Maritime Organization (“IMO”), in preparing for the global 0.5 percent fuel oil sulfur limit, recently adopted an amendment to MARPOL Annex VI to support consistent implementation and enforcement of the new requirement. At the same time, the IMO rejected a proposal for an “experience building phase” during the first months of implementation. This put to rest any rumors of a delay in implementation. Meanwhile, the U.S. Coast Guard published procedures by which owners may seek authorization to operate engines that do not meet MARPOL Annex VI NOx Tier III requirements for qualified vessels.
The IMO adopted an amendment to support consistent implementation of the forthcoming 0.5 percent limit on sulfur in ships fuel oil on October 26, 2018, during the recent session of its Marine Environment Protection Committee (“MEPC 73”). This amendment, effective on March 1, 2020, prohibits the carriage of non-compliant fuel oil for use on the vessel unless the vessel is outfitted with an exhaust gas cleaning system, often referred to as a scrubber. The amendment does not alter the January 1, 2020 implementation date for the 0.5 percent sulfur limit.
Also related to MARPOL Annex VI, the U.S. Coast Guard published an enforcement Work Instruction formally addressing how the U.S. Coast Guard will enforce the Annex VI nitrogen oxides (“NOx”) Tier III standards within the North American and U.S. Caribbean Sea Emission Control Areas (“ECAs”). SeeExercise of Enforcement Discretion with Regard to MARPOL Annex VI Regulation 184.108.40.206; CVC-WI-014(1) (October 17, 2018). Because engines meeting the NOx Tier III standards were largely unavailable after the Tier III standards took effect in 2016, the U.S. Coast Guard is allowing impacted vessels to instead be certified as meeting U.S. Environmental Protection Agency (“EPA”) Clean Air Act Tier 3 requirements pursuant to 40 C.F.R. Part 1042. Once individually recognized by the U.S. Coast Guard, such engines may be used indefinitely, even after NOx Tier III compliant engines become available.
The U.S. Environmental Protection Agency (“EPA”) recently published an update on its website notifying the industry that it would administratively continue the 2013 Vessel General Permit (“VGP”) until a new permit is issued sometime in 2019.
EPA’s 2013 VGP, which regulates incidental discharges from vessels, is set to expire on December 18, 2018. On October 10, 2018, EPA issued a statement on its website that the current 2013 VGP will not be reissued prior to the expiration date, but will be administratively continued and remain in effect until the new VGP is issued. EPA identifies its target timeframe for publishing a draft VGP, for public comment, as spring 2019. This will likely include a comment period of at least 30 days. This will be followed by a few months of EPA review before a new final VGP is published, likely during the summer. The link to the website can be found at epa.gov/npdes/vessels-vgp.
Practically, this means that vessels currently covered under the 2013 VGP will automatically be covered by the administrative continuance without further action, and new vessels with keels laid prior to December 18, 2018, must file a Notice of Intent (“NOI”) prior to December 18, 2018, to be covered by the 2013 VGP, otherwise they will not be covered until the 2018 VGP is finalized. If new vessels do not file an NOI before December 18, 2018, they will not be able to discharge in the United States, which basically prohibits them from operating in the United States.
On March 19, 2018, the U.S. Coast Guard published its long-awaited final rule on Marine Casualty Reporting Property Damage Thresholds. In what was widely viewed as a common-sense and non-controversial adjustment, the final rule amends the monetary property damage threshold amounts for reporting a marine casualty and serious marine incidents (“SMI”). These amended thresholds ease the reporting burdens for industry stakeholders and also reduce the administrative burden on the U.S. Coast Guard associated with investigating these incidents.
Marine Casualty Reporting Requirements
Generally, when a marine casualty or accident occurs on navigable waters (within 12 nautical miles), or involving a U.S.-flag vessel wherever it is operating, the owner, operator, master, or person in charge of the vessel involved may have an obligation to immediately report it to the U.S. Coast Guard. Not all marine casualties are reportable, as such reporting is dependent on the type of incident, e.g., grounding, allision, loss of propulsion, injury requiring professional medical treatment, or property damage, and whether the damage meets property damage thresholds. U.S. Coast Guard regulations consider a marine casualty to be reportable when it meets distinct criteria, and has therefore developed regulations that define reporting thresholds and the manner of reporting a marine casualty or an SMI, which also requires drug and alcohol testing. See 46 CFR Subpart 4. Continue reading “U.S. Coast Guard Publishes Final Rule That Increases the Marine Casualty Reporting Thresholds”
On December 18, 2017, the U.S. Court of Appeals for the Fifth Circuit dismissed the U.S. government’s appeal regarding a Bureau of Safety and Environmental Enforcement (“BSEE”) Notification of Incident of Noncompliance (“INC”) civil penalty issued against an oilfield contractor. This development brings closure to the long-standing question of whether BSEE has authority to enforce civil and criminal penalties against offshore contractors.