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Environmental Compliance webinar Q&A
News & Insights 28 June 2021
During our recent webinar on the topic of Environmental Compliance, we received many questions from those who registered and joined the live session. Due to time constraints, not all were answered live, however our industry expert panelists have kindly provided written answers to all questions submitted.
What would be your recommendation for owners and operators upon discovering a potential breach/non-compliance?
It would depend on the scope of the breach/non-compliance. If pollution by liquid is suspected from the vessel, then it is recommended to immediately suspend all pumping operations and promptly follow notification procedures as per company’s safety management system (SMS) and SOPEP guidelines. This will generally include notification to the company’s designated person ashore (DPA), P&I club and local port authorities.
Proactively investigate every allegation of pollution. Identify the source and cause - examine what went wrong and why it happened (instead of focussing on who did it). Implement proper corrective and preventive measures. Take photographs relating to the incident and collect any evidence or documentation relating to the incident, including any defective equipment. Store it in a safe place and clearly label it.
Depending on the scope and severity of the incident, careful consideration should be given to engaging outside counsel to conduct an internal investigation to assist in developing a complete factual record and to advise on any reporting obligations and the preparation of written reports. The P&I club can assist in recommending counsel.
Co-operate fully with the authorities in all cases. They will consider following factors:
- Was the non-compliance self-reported, and how quickly?
- Was a comprehensive corrective action plan implemented?
- What efforts were made to come into compliance?
When is the new VGP update expected?
The requirements of the 2013 VGP will continue to be in effect until the regulations promulgated under the Vessel Incidental Discharge Act (VIDA) with respect to every discharge incidental to the normal vessel’s operation are final, effective, and enforceable. As such, all vessels trading to the US should continue to maintain compliance with the existing VGP requirements until the new regulations are finalized (projected by late 2022).
For more details on VIDA, please refer to the club’s news-item.
In terms of ensuring proper recordkeeping in the Oil Record Book (RORB) and Garbage Record Book (GRB), what would you recommend to the attendees?
Since the ORB is supposed to record all shipboard oil transfers, and all bilge water and sludge discharge operations, it must be filled out properly, in accordance with the guidance contained in IMO MEPC.1/Circ.736/Rev.2
During a PSC inspection, the USCG may question the engine room staff to determine if the ORB entries represent actual procedures followed by shipboard personnel. If the vessel is utilizing the incinerator to dispose of sludge, the USCG will compare the entries in the Incinerator Log against ORB. If there is a discrepancy between these numbers or if the log indicates that the incinerator is working beyond its rated capacity, suspicions will be raised that the vessel is improperly disposing of sludge.
Similarly, USCG will verify accuracy of GRB entries. If the vessel has transited through the Wider Caribbean MARPOL Annex V Special Area, they may check entries of food waste discharged to sea and distance from the nearest land with or without using an approved comminutor.
Do we see electronic record books (ORB) replacing hard copies in near future? How should ship management companies drive this if not made mandatory by IMO?
From 1 October 2020, MARPOL amendments enables the use of Electronic Record Books (ERBs) in lieu of paper record books entered into force. Details of these amendments were published on the club’s website here.
The USCG has accepted these amendments and published a blog clarifying that the electronic record books (ERBs) will be examined in a similar manner as written record books. Vessel representatives should be prepared to provide the inspector with written a confirmation from the Flag Administration that the electronic system meets the criteria provided in IMO Resolution MEPC.312(74). Details can be accessed through: Amendments to MARPOL 73/78 accepting electronic record books – Coast Guard Maritime Commons Blog
Would like to know more about the Exhaust Gas Cleaning System (EGCS) compliance and action to be taken in case of a malfunction.
In May-2019, IMO issued a circular (MEPC.1/Circ.883) that provides guidance on the actions to take if the Exhaust Gas Cleaning System (EGCS) fails to meet the provisions of the 2015 EGCS Guidelines (resolution MEPC.259(68)).
Further guidelines for the use of scrubbers in US waters is published on the club’s website, and in USCG Office of Commercial Vessel Compliance (CG-CVC) Mission Management System (MMS) Work Instruction (WI): CVC-WI-022(1).
Can panellists give a few words about future evaluation of day-by-day emission of methane, F-gases, water blow-down (like bottom blow of boilers water), etc. if any? Will such emission be under assessment, regulation or you think it will not?
In October 2020, the U.S. Environmental Protection Agency (EPA) published a proposed rule under the Vessel Incidental Discharge Act (VIDA) that would establish national standards of performance for marine pollution control devices for discharges incidental to the normal operation of vessels plying in U.S. waters and its contiguous zone.
The proposed rule details specific discharge standards that would apply to 20 different types of vessel equipment and systems, as well as general discharge standards that would apply more broadly to all types of incidental vessel discharges.
It should be noted that until the rule making process is complete and the USCG publishes regulations for implementation and compliance under VIDA (not expected until 2022), the current interim requirements will remain in force, including compliance with the 2013 Vessel General Permit requirements.
For more details, please refer to the club’s update.
Similar to the above, should an owner make a voluntary disclosure to the CG if they detect a problem? Does that protect the owner from liability?
The Coast Guard has a formal Environmental Crimes Voluntary Disclosure Policy (the “Policy”). The Policy states that if a company promptly and voluntarily discloses a violation and the conditions in the Policy are otherwise satisfied, the Coast Guard “will not recommend” the matter for criminal prosecution. The Policy does not protect individuals who have committed criminal violations, but it can afford protection to corporate entities against criminal prosecution although civil fines may still be imposed. There are several steps and conditions which must be satisfied for a corporate entity to invoke the Policy successfully. As such, U.S. legal counsel should be consulted promptly when a violation or potential violation is discovered to evaluate whether and how a voluntary disclosure should be made and to ensure the Policy’s conditions are satisfied.
Has the USCG made any updates to the Voluntary Disclosure policy since 2007?
We are not aware of significant substantive changes to the Policy since it was created in 2007. Consistent with the suggestion above, if an owner or operator is considering a voluntary disclosure, we suggest that U.S. legal counsel be consulted to review the Policy in effect at that time and ensure compliance with its conditions.
If an owner believes the Coast Guard has unreasonably detained the vessel, can the owner sue?
As explained during the webinar, MARPOL is implemented in the United States through the Act to Prevent Pollution from Ships (“APPS”). APPS authorizes the Coast Guard to detain a vessel if there is reasonable cause to believe the “ship, its owner, operator, or person in charge” may be liable for APPS violations. APPS also contains a provision which permits a vessel “unreasonably detained or delayed” to recover “any loss or damage suffered thereby.” 33 U.S.C. § 1904(h). Thus, technically speaking, an owner may be able to sue and seek damages if its vessel is unreasonably detained by the Coast Guard for alleged APPS violations.
However, the courts have narrowly construed this damage remedy provision and confirmed that the Coast Guard has wide discretion to set the terms for the release of a vessel pending a MARPOL/APPS investigation and prosecution. Among other things, the US courts have held that it is reasonable for the Coast Guard to detain a vessel until legal proceedings are complete. Further, generally, any bond amount set below the maximum criminal fine is reasonable. Given the discretion afforded to the Coast Guard in these matters, the damages remedy set forth in § 1904(h) is likely to apply in only the rarest situations. No such recovery has been successful to date.
If an owner is unfortunate enough to have a MARPOL breach / violation, what is the process for seeking reimbursement from the club?
MARPOL claims usually involve a 2 or 3 stage process, depending on whether security is sought:
- Notification – When the club is notified of a discretionary matter, the discretionary nature of cover is explained in full to the member.
- Security – If security is required in respect of a discretionary claim, security may only be issued once appropriate counter-security has been received from the member either by way of cash deposit or a first-class bank guarantee. The provision of security by the club on behalf of the member remains wholly discretionary at all times – see rule 9.1.
- Reimbursement – Once a member’s liability in respect of a discretionary claim has crystallised and all fees and expenses have been paid, a request for reimbursement should be submitted to the club. Following receipt of a member’s request, a report will be prepared for submission to the board at its next meeting. The report is prepared by the club in conjunction with the member, who will have the opportunity to review the report before it is submitted. The report may be supported by a further report from lawyers and / or experts retained by the club to investigate and scrutinise in detail the full circumstances surrounding the events giving rise to the fine, as well as (so far as is relevant) the member’s policies and procedures, and compliance with the same. Ahead of submission to the Board, the club’s internal discretionary claims committee, made up of senior claims personnel, will review and test the report(s) to ensure that all relevant points have been addressed.
Are MARPOL fines to shipowners covered by club? (I assume it is on case-by-case basis. If so, what would be the conditions for the cover?)
P&I cover for pollution fines and associated expenses is only available on a discretionary basis under club rule 3.16.4. R. 3.16.4 provides for a two-stage test applied by the board:
- The first stage is consideration of whether there is to be any recovery at all. In this regard there is only a recovery “to the extent that the member has satisfied the board that it took all such steps as appear to the board to be reasonable to avoid the event giving rise to the fine” (quote from r. 3.16.4). This is a very difficult test to meet.
- The second stage concerns the amount of any recovery. The amount of that recovery is at the discretion of the Board.
More information can be found here on the club’s website here.
And how about direct fines to the crews?
In short, this will be covered in most circumstances, but as with all MARPOL matters, it will be reviewed on a case-by-case basis.
The starting point is rule 3.16, which expressly deals with “Fines imposed on the member or upon any other person whom he reasonably reimburses or is legally liable to indemnify…” (emphasis added) – so if the member steps in to reasonably reimburse parties with whom the member is associated, including master and crew, then the rule applies (as does the discretionary approach under r. 3.16.4).
However, there may be cases where this doesn’t apply, ie if it’s not reasonable for the member to step in on the crew’s behalf – for example, where there is clear criminal culpability on the crew’s part.
What can be done if we are told that we are unable to discharge our waste at a facility?
I would engage the local COTP and submit a Report on Alleged Inadequacy of Port Reception Facilities as soon as possible. It is important that this report is timely, and provides all information, including communications with Ship Agent and Facility.
Have you ever had a case where the vessel owner came forward with information of an illegal discharge that occurred before the ship arrived in your port?
Yes, a copy of the ORB was presented along with details on corrective actions and their communication with the Flag Administration.
What is your recommendation to help facilitate a smooth Coast Guard examination?
Effectively implemented SMS. Invest in crew training, effective internal audits and corporate encouragement of a safety culture and this will reap a smooth CG exam, among other things.
High disposal charges levied by ports for waste disposal. Any consideration on that from the USCG?
Currently, as far as I am aware, adequacy criteria in U.S. is waste disposal accessibility.
What you recommend to Capt if he see any pollution in the sea around the vicinity of the ship?
Conduct an assessment to determine the source of the pollution and resolve if coming from your ship. Whether it is coming from your ship or not, if in the United States, also contact the National Response Centre (NRC).
When it comes to VGP compliance, what are the typical onboard sampling tests which EPA or coast guard will carry out?
If samples are collected on-board a ship by CG, using strict chain of custody procedures, they are sent to the Coast Guard Marine Safety Laboratory for forensic oil analysis.
Given the potential criminal liabilities that can arise from statements during a PSC exam interview (before referral to DOJ), has the USCG developed a policy/guidance/legal opinion on whether mariners should be afforded Miranda warnings (or similar) during an expanded PSC exam? I understand that possible guidance in this regard was being discussed in 2016 (as announced during an ABA AMLC presentation), so any updates from that time are welcome.
Interviews do not occur during an expanded PSC exam nor has there been a determination of a potential crime at this stage. From my experience, a collaborative effort with CG PSC and ship crew to identify and resolve any pollution concerns, (or conclude there is no concern which is often concluded), is the best course of action at this stage. If someone committed or encouraged an illegal discharge, trying to conceal is never a good strategy from my experience.
In case of failure of OWS, could we evaporate water from E/R bilges (assuming we don’t have many oil generating in bilges) in waste oil treatment (settling) tanks? How USCG will react to that if receive such information from ship’s manager/captain of ship (in advance of cause).
CG expectations is compliance with MARPOL Annex I Requirements for machinery spaces of all ships. Ships are fitted with a standard discharge connection that I have seen used to facilitate disposal of residues from machinery bilges to a reception facility when the OWS is inoperable.
How will USCG check effectiveness of ship’s crew drills (oil spill)? What the point is indication that drill is not carried out or carried out not effectively, just ticked checklist?
Review records, crew explanations of a process that is consistent with their documented procedures, check pollution response equipment maintenance/availability, assess the pollution prevention condition of the ship since those who do the best job in preventing in the first place are often the ones who are best at responding if there is a spill. The CG may conduct an unannounced exercise as well. Drills and exercises are ultimately the responsibility of the vessel owner or operator. It would behove a company owner/Master to ensure an effective drill/exercise to ensure crew is best prepared in the event of an actual pollution incident.
How to educate and improve compliance and what is the fundamental question which would help companies and organizations in preparing themselves for an adverse consequence?
- Encourage and enforce compliance
- Support sea staff with environmental issues and to increase their awareness
- Increase the connectivity between shore and sea staff
- Inform – Reform – Transform
- If you are unsure, ask! / If you have a problem, tell! / If you made a mistake, yell!
- Vessel visits / Audits / Coaching / Queries / Assistance / Monitoring / On board training – Environmental compliance, ORB and process / procedures
- Is the corporation’s compliance programme well-designed?
- Is the programme being applied earnestly and in good faith? In other words, is the programme being implemented effectively?
- Does the corporation’s compliance programme work in practice?
What are few desired behaviours which a company would like their seafarers and office staff to comply with?
- Report any MARPOL non-compliance.
- Falsified entries in Oil Record book NOT to be made as it may be used as criminal evidence.
- ZERO tolerance to tampering MARPOL equipment's bypassing the oily water separator.
- No compromise and no shortcuts.
- MARPOL violations can NEVER benefit company or personnel involved
- Violations harm EVERYONE
- Change your MINDSET and upgrade PRIORITY for MARPOL matters
What do you think are the main reasons, despite the number of prosecutions, the significant fines, and the unprecedented prison sentences, many seemingly are not learning from the mistakes of others as this disturbing trend continues unabated through the present?
- Perceived commercial pressure.
- May think it is too costly or complicated to operate.
- May do it to be more efficient and faster with their shipboard operations.
- May do it because they do not have the expertise to operate the machine correctly.
- May do it because someone told them to do it that way.
- May be sloppy.
The recording of this webinar is hosted on our Youtube channel.
With thanks to:
- John Hillen, Safety and Security Division Chief at U.S. Coast Guard, Sector NY
- Capt. Atul Vatsa, Director at AV Global Marine