Maritime Environmental Law Update (July 2021 Edition)

We are providing this update on significant, new developments in international and U.S. environmental maritime law, regulation, technology, and enforcement, including an update on the continuing disruption caused by the novel coronavirus (COVID-19) outbreak. Our prior update was issued in February 2021 and can be found here. We hope that our readers remain safe during this difficult time.

International Developments

MEPC Adopts Energy Efficiency Requirements as Amendments to MARPOL

In June 2021, the Marine Environmental Protection Committee (MEPC) adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI. The amendments include technical and operational requirements to improve the energy efficiency of ships in order to meet the targets established in the 2018 Initial IMO Strategy on Reduction of GHG Emissions from Ships. Among other requirements, the amendments will require all vessels to calculate their Energy Efficiency Existing Ship Index (EEXI), take certain technical steps to improve their energy efficiency, and establish their annual operational carbon intensity indicator (CII), which compares a vessel’s GHG emissions to the transport work performed by such vessel. The amendments to MARPOL Annex VI will take effect on November 1, 2022, with the EEXI and CII certification requirements coming into effect on January 1, 2023. The IMO is also required to review the effectiveness of the EEXI and CII requirements by January 1, 2026. 

Biden Administration Signals Intent to Urge IMO to Accelerate Decarbonization of Shipping

On April 20, 2021, U.S. Special Presidential Envoy for Climate John Kerry formally announced that “the United States is committing to work with countries in the IMO to adopt a goal of achieving zero emissions from international shipping by 2050.” This policy will be carried out by a U.S. delegation at the IMO consisting of representatives from the U.S. Coast Guard and other agencies. The U.S. delegation actively participated in the 76th Session of the MEPC, during which the above MARPOL Annex VI amendments were negotiated. The U.S. is expected to continue pushing for more aggressive emissions requirements and timelines going forward.

IMO Releases Ship-Port Interface Guide to Reduce GHG Emissions

In March 2021, the IMO announced the release of the Ship-Port Interface Guide, which was developed by the Global Industry Alliance to Support Low Carbon Shipping pursuant to the IMO-Norway GreenVoyage2020 project and the United Nations’ 2030 Agenda for Sustainable Development. The Guide contains practical, low-cost recommendations to reduce GHG emissions in the global shipping industry. Such recommendations include reducing the time that vessels remain in ports (e.g., by conducting repairs and hull cleaning at the same time as cargo loading and offloading), reducing waiting time for clearance into ports, and improving ship/berth compatibility and deadweight optimization through improved Port Master Data.

U.S. Developments

USCG Environmental Crimes Voluntary Disclosure Policy Remains an Effective Shield Against Prosecution

In 2007, the U.S. Coast Guard (USCG) issued a formal policy for owners and operators of foreign flag vessels who self-disclose potential criminal violations of MARPOL. Under the terms of the Policy, if a vessel owner or operator satisfies the Policy’s requirements and reports a violation to the USCG, the USCG “will not recommend” to the DOJ or other prosecuting authority that criminal charges be brought against the disclosing entity. The requirements include discovery of the violation through an environmental audit or compliance management system, prompt disclosure to USCG within 21 days of discovery, correction and remediation within 60 days of discovery (or “as expeditiously as possible”), and improvements to the entity’s environmental auditing or compliance system to prevent future violations. 

New Maritime Technologies

Hexagon Purus Accelerates Efforts to Bring Zero Emission, Hydrogen Power Technology to the Maritime Industry

Hexagon Purus (HPUR), a global supplier of zero emission mobility technology and equipment, recently announced that it will accelerate its commercial efforts to bring zero emission technology into the maritime industry. HPUR will focus its initial efforts on Norway, which the company’s CEO says “can serve as a display window for the rest of the world.” In particular, HPUR will focus on expanding its hydrogen storage and distribution business into the expanding maritime hydrogen market. In the U.S., HPUR also helped launch a new hydrogen-powered catamaran ferry, the “Sea Change,” in the San Francisco Bay Area.

Vale Equips Ore Carrier with Rotor Sails, Anticipates 8% Emissions Reduction

Vale S.A. recently announced launch of  the first vessel equipped with a rotor sails system. The vessel, which has a cargo capacity of 325 thousand tons of iron ore and pellets, is equipped with five rotor sails, which are anticipated to achieve an 8% reduction in GHG emissions. If the project proves to be effective, Vale estimates that at least 40% of the fleet at Vale’s service will be able to use the technology. 

Autonomous and GHG Reducing Technology Continues to Advance

Autonomous marine technologies continue to be developed and have begun moving into true implementation, with numerous traditional equipment companies teaming up with data scientists and information providers to launch new projects on larger scales. For example, Svitzer recently announced a partnership with Kongsberg Marine to develop a remote-controlled tug business (RECOTUG), which will build on a 2017 concept developed by Svitzer and Rolls Royce. Svitzer hopes that the RECOTUG project will lead to a commercially viable product that the company can use across its worldwide operations. The automation of vessels is also increasingly tied to the reduction of GHG remissions, as autonomous operations can be optimized to manage and reduce fuel consumption. According to one expert, autonomy can help identify small gains in fuel efficiency that can add up to create substantial emissions reductions when implemented across multiple vessels.

Shell Partners with MSC to Develop Emissions Reduction Technologies

Shell International Petroleum Company and MSC Mediterranean Shipping Company have agreed to work closely together to develop a range of sustainable and competitive technologies to reduce emissions from existing assets and enable a net-zero emissions future for the shipping industry. The partnership aims to contribute towards a zero-carbon flexi-fuel concept vessel and will collaborate to develop net-zero solutions including zero-emission fuels. The companies indicated that they foresee a range of fuel solutions and are exploring options such as hydrogen-derived fuels and methanol. 

New Dual-Fuel Hydrogen Ferry Completed in Japan

The world’s first hydrogen-fueled passenger ferry using a dual-fuel combustion engine completed construction in Japan and is preparing for deployment. The vessel, the “Hydro Bingo,” is part of a program run by Belgium’s CMB.Tech that aims to develop different engine sizes that will operate solely on hydrogen. The Hydro Bingo is an aluminum alloy catamaran capable of transporting 80 passengers with a crew of two. The vessel’s co firing engine combines hydrogen with diesel fuel.

Litigation

Cargo Tanker Crewman Convicted for Illegal Dumping

In April 2021, a California jury found the first engineer of an oil tankship guilty of helping to intentionally dump oily bilge into the Pacific Ocean. The defendant was charged with three violations of federal law after directing crew members of the M/T Zao Galaxy, a vessel operated by Singaporean company Unix Line PTE Ltd., to discharge oily bilge water in a manner that bypassed the vessel’s oil-water separator. The defendant was committed to three years of probation, 200 hours of community service, and a $2500 fine. Unix Line PTE Ltd. previously pled guilty paid a fine of $1.65 million and committed to a four-year probation in connection with the same incident. After the guilty verdict was announced, acting U.S. Attorney Stephanie M. Hinds stated that the verdict would set an example going forward, suggesting that the federal government may continue to bring charges against individual crew members in connection with similar incidents.

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This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. Eric Rothenberg, an O’Melveny Of Counsel licensed to practice law in New York and Missouri, Melody Drummond Hansen, an O’Melveny Partner licensed to practice law in California, the District of Columbia, and Illinois, and Chris Bowman, an O’Melveny Associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

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