Skuld outlines ECA issues

Dec 19 2014

The US Environmental Protection Agency (EPA) has issued an update to its guidance on upcoming ECA fuel sulphur content compliance.

All owners/operators trading to and from the North American ECA will need to take note of, the change, leading insurance group Skuld warned.

In the US there are two federal agencies, which have regulatory enforcement powers with respect to MARPOL compliance - the EPA as well as the US Coast Guard (USCG).

The new EPA guidance essentially means that for the purpose of compliance, vessels will have to consider the use of distillate fuels if no other compliant ultra low sulphur fuel is available prior to entering the ECA zones.

This is a development over the previous position in 2012 when it would appear that the use of distillates was not necessary for compliance in the absence of the availability of other compliant fuel.

All indications are that the new regulations will be strictly enforced and that there will be continuous lobbying from interested parties and groups towards governments and enforcement agencies to promote rigorous enforcement, Skuld warned.

Members should therefore ensure that they are fully ready, on board the vessel, shore side and contractually, to meet the new requirements. To help its members, Skuld has produced a detailed guide.

Skuld acknowledged Messrs Montgomery McCracken Walker & Rhoads as helping with advice.

In addition, the new MARPOL Annex VI ultra low sulphur fuel oil regulations coming in to force on 1st January, 2015 will make voyage planning aligned to fuel strategies even more important, Skuld said.

This change, which comes with a significant financial penalty, will necessitate more careful voyage planning in the future to ensure the right fuel is available, making it clear for what periods it will be used and whether it is possible to avoid entering into ECA zones altogether, or to limit the time spent in ECAs.

Such measures will come with the need to consider both legal and insurance implications, or risk charterparty breaches, as well as prejudice to cover, Skuld said.

The insurance group, together with law firm Hill Dickinson, has also reviewed the situation with regard to the continuing situation in the Mediterranean with distressed persons.  

Skuld said that it had received repeated requests from members about the financial cost of complying with the legal obligation on Masters to assist distressed persons at sea and to follow the instructions of government authorities to participate in search & rescue operations.

While the obligation to assist is clear, as are the possible criminal and civil legal consequences of failing to do so, it may not be an entirely straight forward consideration as to where the cost will fall as between an owner or a charterer (and their respective insurers, to a certain degree).

Hill Dickinson reviewed the position under English law with respect to both the legal obligation to render assistance, as well as the charterparty consideration of who will bear the time, fuel and other costs associated with the rescue.

Skuld said that its P&I cover can help shipowners whose vessels have deviated for the purpose of saving life at sea and for subsequently taking those saved to place for safety ashore. With respect to a charterer's possible liability in such a situation, Skuld's dedicated charterers' rules can provide liability cover.

In so far as there may be disputes between owners and charterers as to the actual deviation and who will bear what element of the cost incurred, members with Skuld FD&D cover will be able to have the advice and assistance of our defence staff.

It must be kept in mind, however, that basic P&I cover does not address the loss of time which may arise from deviations connected with the saving of life at sea. Such cover may, however, be afforded by way of loss of hire/business interruption insurance and Skuld is able to assist members with respect to such cover through its Syndicate 1897 at Lloyds'.

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