2020: Keeping Compliant in the United States


In this article, author George Chalos of Chalos Law gives an overview on keeping compliant in the United States.

The shipping industry has been preparing – or perhaps more aptly bracing – for the implementation of the IMO 2020 global sulphur cap.

As the deadline for use of compliant fuel draws near, it is important to consider how the largest environmental regulatory regime in the world, the United States, is likely to treat enforcement.

Enforcing MARPOL in the United States

MARPOL has been implemented (and is enforced) in the United States through the Act to Prevent Pollution from Ships or “APPS”. APPS and U.S. regulations apply to all U.S. flagged ships anywhere in the world and all foreign-flagged vessels calling at a U.S. port or terminal or while operating in U.S. navigable waters, the U.S. ECA and/or the Exclusive Economic Zone of the United States. The US government routinely takes direct enforcement actions against the owners, managers and crewmembers of foreign-flagged vessels alleged to have violated MARPOL, APPS and U.S. regulations.

The actions can be administrative, civil and even criminal in nature. As part of its port state authority, the Coast Guard is authorized to review vessel records and documents maintained on board to ensure compliance.

Dealing with violations

Although MARPOL anticipated that port states that discover suspected violations may refer the matter to the vessel’s Flag State, the Coast Guard and U.S. government almost always elect to retain the investigation.

Since 1998, the investigation of alleged false records (mostly Oil Record Books Part I, which failed to record discharges of bilge water and/or sludge) regardless of where the actual act of pollution took place, has led to over 200 criminal prosecutions and the collection of nearly US$ 1 billion in criminal fines by the U.S. government.

Approximately 9,500 scheduled port state control exams are conducted by the Coast Guard every year. Since 2015, approximately 80 MARPOL Annex VI deficiencies (such as those relating to bunker fuel sulphur compliance) have been documented by the Coast Guard and over a dozen enforcement actions have taken place.

2019 saw the first criminal prosecution of a MARPOL Annex VI violation, pursued by the Coast Guard and Department of Justice (DOJ). In that matter the owner and operator of a foreign-flagged vessel each paid a criminal fine of US$ 1.5 million for the use of non-compliant fuel (above 0.10%) in the Caribbean Emission Control Area (ECA) and the crew’s failure to accurately record the actual bunker transfers and consumption in the vessel’s Oil Record Book.

It is reasonable to expect that the Coast Guard will be focused on ensuring vessel compliance with the new global 0.50% sulphur cap starting in 2020 as part of its port state control inspections.

Perceptions in the United States

When analysing the enactment and enforcement of IMO 2020 in the United States, it is critical to be aware of the Coast Guard and DOJ’s perception. Senior Coast Guard officials have made clear that it is the agency’s belief that compliant fuel oil is not going to be a problem in 2020. The failure to have compliant fuel on board of a vessel will be viewed as a failure of preparedness and not a failure of accessibility of resources. Parenthetically, the Coast Guard motto is “Always Ready.”

In addition, the DOJ perceives that there are vessels breaking the rules each day, and strongly believes in its mission to seek out non-compliance and prosecute alleged criminal activity accordingly.

Proving compliance

To successfully demonstrate compliance with IMO 2020 regulations, shipowners and operators must ensure their vessels have the required documentation ready for port state control inspections.

Critical records include:

  • Vessel bunkering and oil transfer procedures, as well as the preloading plan,
  • The Declaration of Inspection (a U.S. regulatory requirement anytime fuel/oil/bunkers are transferred to or from a vessel) which is retained for at least thirty (30) days,
  • Bunker delivery notes (BDN), to be retained onboard for a minimum of three (3) years,
  • Declaration that fuel conforms to MARPOL Annex VI and does not exceed maximum sulphur content,
  • Fuel changeover plan,
  • Oil Record Books (with accurate and timely information properly recorded therein),
  • Fuel oil non-availability reports (FONAR).

The best practices for shipowners and operators to avoid any issues during inspections by the Coast Guard is to obey the law and applicable regulations and have good policies and procedures for IMO 2020 compliance in place.

Our grateful thanks to George M. Chalos of CHALOS & Co, P.C. – International Law Firm for writing this article. www.chaloslaw.com