Doc. No.: 765
Date: May 3, 2002
REGULATION OF VESSEL OPERATIONS, SAFETY, SECURITY AND NAVIGATION
FORMAL REPORT OF THE COMMITTEE ON
NAVIGATION, COAST GUARD AND GOVERNMENT REGULATION
This regularly scheduled meeting of the Committee was opened at 1605 by Chairman Dennis Bryant in the
offices of Haight Gardner, Holland & Knight, 195 Broadway, New York, New York.
Attendees at the meeting are those members and guests on a list attached to the original of this report, including
special guests Captain Joseph F. Ahern (U.S. Coast Guard), J. Patrick Wiese (Acting Chief Counsel, MARAD), David
Miles (Acting Chief Counsel, Federal Maritime Commission) and William R. Dorsey, III President, MLA. The meeting
followed the format of the agenda attached to the original of this report. Dennis Bryant covered some of the agenda
items in a document attached to the original of this report that was distributed to the attendees.
After the meeting was opened by Dennis Bryant, the first to speak was Captain Ahern. He noted that he and
the rest of the U.S. Delegation had recently returned from a meeting of IMO Legal Committee in Europe. The U.S.
achieved most of its goals regarding enhancement of maritime security and work was underway to revise the
International Convention for the Suppression of Unlawful Acts against the Safety of Navigation and its associated
protocol. He reported that the United States will lead the working group on the Rome Convention this summer and will
be seeking to add items pertaining to terrorism and use of a ship as a weapon. He also indicated that the Athens
Convention is being revisited. Finally he noted that most Coast Guard rule-making has come to a halt unless related
to security issues. One exception is the proposed rule, now out for public comment, pertaining to the documentation
application package to support approval for lease financing deals. The final rule is expected in the fall.
Pat Wiese, the Acting Chief Counsel for MARAD spoke next. He discussed the fact that the Maritime
Administration had a proposed rule-making out in published form pertaining to the provisions of the American Fisheries
Act. He noted that the comment period was scheduled to close on May 17 and urged attendees to review the material
if they thought it would be applicable to their clients. Pat also mentioned the fact that the new chief of the Maritime
Administration, William Shubert, has been appointed and approved. Mr. Shubert's agenda is heavily involved with port
security. The Maritime Administration will be leading an evaluation committee pertaining to the allowance and
distribution of federal port security grants. Mr. Shubert would push to obtain reauthorization of the maritime security
program. The cargo preference program administered by MARAD was taking on a security-related hue. There will
be stringent enforcement of the cargo preference rules and participants would be carefully examined in light of
MARAD's security concerns. Another important item on Mr. Shubert's agenda will be issues involving the scrapping
of vessels in the ready reserve fleet in the James River. He also intends to push for an expansion of the Capital
Construction Fund, the tax deferment program, to open up the program to coverage for coastwise trade and offshore
Dave Miles, the Acting Chief Counsel for the Federal Maritime Commission spoke next. He discussed the fact
that FMC was now down by two members but President Bush has recently nominated Steve Blust as Chairman. Mr.
Blust is currently president of a terminal operating company in the port of Tampa. The current FMC chair, Howard
Creel, will stay on as a regular member. Mr. Miles also mentioned the fact that the FMC had published a Notice of
Proposed Rule Making on April 17, 2002 pertaining to the issue of proof of financial responsibility for passenger
vessels. The FMC is quite concerned that bankruptcies in that industry due to low use and over capacity have left the
possibility that U.S. citizens who are personally injured as passengers will not be properly compensated. The Notice
of Proposed Rule Making eliminates self-insurance, discontinues the use of a sliding scale and requires coverage for
nonperformance. The next item of concern at the FMC is the ongoing battle with China pertaining to their unfair foreign
maritime practices. Apparently there are pending diplomatic negotiations on that front. The Chinese recently passed
a maritime law which will supposedly soon be available on the Chinese government's web site. The FMC would be
very interested in comments from the U.S. shipping industry as to the strictures in this law. Dave also reported on the
tug franchise case. There are now apparently 12 respondents in the show cause proceeding before the ALJ for initial
decision. That decision is scheduled for July but will probably be continued to a later date. The FMC case in the
Supreme Court, FMC v. South Carolina State Port Authority, was expected to be decided soon. (In fact such decision
has been issued since the meeting. It held that the FMC could not act on a private party's complaint against a state port
authority in light of the state sovereign immunity provision of the Eleventh Amendment.)
Committee member Larry Kiern spoke with regard to the proposed maritime legislation in Washington. Again,
port security is the number one issue. The Senate, in December 2001, passed a maritime security bill that had its genesis
back in 1999. At its original inception, the Senate bill had focused on port-related crime, but since 9/11 the focus has
shifted to terrorism. There is also a port security bill which has reported out of the House Transportation Committee.
When the House passes its version of the port security bill, there will be a conference committee to bring together the
two versions. In general terms, the Senate bill focuses on ports and crime whereas the House bill focuses on the overall
maritime transportation system and terrorism. The resulting law will probably give wide discretion to the Secretary of
Transportation, will have a distinct focus on the threat posed by containerized cargo, will include provisions requiring
regional security contingency plans and assessments but will probably not include a requirement for onerous background
checks since the various unions have opposed this. There is likely to be some amount of focus on the issue of ship
ownership and control, with a goal of increasing transparency. Other than these (and related) port and maritime security
bills, there is no other real maritime legislation pending. The Coast Guard reauthorization bill may get attached as a
rider to the emergent port security bill.
Larry made mention of the fact that in October 2001, a notice had been published in the Federal Register by
the Coast Guard pertaining to the constitution of an "Oily Water Separator Task Force." The Coast Guard is
increasingly concerned with findings that foreign and domestic vessels have found ways to avoid use of the oily water
separator systems. The task force is supposed to help identify problems, develop standards and help the Coast Guard
to identify these problems via inspections. It's clear that the Coast Guard is redoubling its efforts to try to detect
violations of oil transfer regulations in light of such cases as the Carnival Cruise Line case. It is also clear that the Coast
Guard is primarily focusing on the idea that the bypassing of the system is generally tied in with a falsification of the
oil record book. Any falsification of the oil record book is guaranteed to be referred to the Department of Justice for
prosecution under 18 U.S.C. § 1001. Larry also noted that the Coast Guard had distributed a questionnaire inviting
individual merchant mariners to respond to the oily water separator issue. A lot of responses were received.
Next to report was Skip Volkle, Legal Counsel at Maritrans. He reported that the "Takings" case, which his
company had filed against the U.S. government in the Court of Claims, based upon the OPA 90 double hull
requirements had been unfavorably decided by the Court of Claims recently. The strange twist in the case was that the
Court of Claims sided with an unlikely argument made by the government to the effect that Maritrans had made a
sufficient return on its investment by the time the OPA regulations came into effect and therefore the regulations were
not an unconstitutional or unreimbursed taking. The question of the sufficiency of a return on investment is most
problematic, particularly if the vessels have existing future life expectancy. Skip noted that Maritrans is taking an appeal
and that its appeal brief would be due on May 10. He was optimistic with regard to the outcome of an appeal but felt
that the recent decision of the United States Supreme Court pertaining to Lake Tahoe development was an indication
that the 20-year positive (i.e., pro-property owner) trend in "takings" cases has come to a halt.
Dave Dickman gave an informative talk with regard to the trend for criminal prosecutions for environmental
crimes. He noted that the EPA has recently published enforcement statistics indicating that of 480 charges made, 370
had lead to convictions and a trend of increasing amounts of jail time was notable. Dave continued the theme begun
by Larry Kiern indicating that the general trend was that the Department of Justice and the other federal agencies were
focusing on oily water separator cases and turning them into cases under 18 U.S.C. 1001 for falsifying oil record books
and obstruction of justice. The advice was given that an oily water separator case could only be made worse by attempts
to influence witnesses or tamper with evidence. Dave also noted a disturbing trend in the continued judicial dilution
of the defense pertaining to corporate officers' responsibility. He discussed the Fourth Circuit decision in U.S. v. Hong
and the Eleventh Circuit decision in U.S. v. Hansen, 262 F.3d 1217. In Hong, the defendant was found guilty even
though he was a financier to the corporation and held no official employment or officer position. In Hansen, the
defendant was found liable for acts which took place after he had left the company and had relinquished control.
Dave also went on to discuss various other issues which could draw the focus of criminal prosecutors including
oil record book falsifications, the failure to report hazardous conditions on tankers which could be chargeable as
criminal violations of the Oil Pollution Act, the disposing of ship-generated waste without a permit, which could cause
a violation of the Ocean Dumping Act, and prosecutions for maritime manslaughter when corporate officers and ships
officers might be held criminally responsible for wrongful deaths occurring on vessels. Dave noted that the MLA
Committee on criminal liability had put together a position paper and had finally managed to convince officials in the
Coast Guard and the Department of Justice to review the position paper and attend a meeting. Fred Kuffler, the Chair
of this Special Subcommittee, would be leading the meeting which was scheduled to take place in June. Among the
things mentioned in the MLA's position paper was the recommendation that strict liability statutes be limited or
eliminated, that the negligence standard should be raised to criminal rather than simple negligence and that the DOJ
tactics of running rough shod on attorney-client privilege be halted.
Member Naresh Maniar, a professional naval architect, discussed the important and emerging issue of ship
recycling (i.e., ship breaking). It is clear that the U.S. government has a number of vessels to dispose of and that the
environmental restrictions in the United States have made recycling ships a very expensive proposition. MARAD has
this item as one of its top ten management issues because it will cost at least $10 million per vessel to recycle ships here
in the United States and MARAD has over 130 ships to be scrapped. A search is on for innovative, cost-effective
methods. While there is capacity in U.S. yards to institute recycling programs, there is very little U.S. government
money currently allocated.
Finally, member Andy Anderson suggested that an ad hoc Study Group be formed to address the issue of the
Coast Guard's increasing failure to give notice and opportunity to have counsel present when maritime casualty
investigations are undertaken. The problem is apparently very widespread and has much to do with the fact that Coast
Guard has limited resources. Even though the ultimate reports are not admissible in evidence at civil proceedings,
statements may be used against individual mariners in criminal prosecutions and in other ways. The Study Group
proposal was duly moved and approved. Andy will chair the Study Group. Anyone who would like to work on this
issue should contact Andy.
The meeting was then adjourned.
This ensuing memorandum addresses some of the items on the Committee agenda that have not been assigned
to other individuals.
Immediately following the terrorist attacks of September 11, 2002, the U.S. Coast Guard utilized its broad
authority regarding port security to impose a 96-hour advance notice of arrival requirement and to establish numerous
security zones. (1) Vessels were boarded and examined for suspected security threats. Overall, the Coast Guard did a
tremendous job in regulating vessel traffic in U.S. ports and ensuring the American people that the terrorism threat in
the maritime sector was significantly reduced. Sometimes though, the boardings of commercial vessels were performed
by USCG personnel who were not trained marine inspectors, with the result that some unsafe situations were
inadvertently created. The Customs Service, meanwhile, is struggling to examine or x-ray more of the approximately
5 million containers that enter the U.S. each year. The Coast Guard, the Customs Service, the marine industry, and the
maritime bar must work cooperatively to improve maritime security while maintaining safety.
Various bills are pending in Congress that would mandate even higher maritime security levels. (2) Once the
legislation is enacted (and it may be sooner rather than later), the federal agencies (primarily the Coast Guard and the
Customs Service), the marine industry, and the maritime bar must work cooperatively to develop an effective and
efficient implementation process.
Port State Control
Increased scrutiny under the port security program has lead to detection of more than the usual number of
discrepancies on vessels under the port state control program. Ship owners and operators would be well-advised to
redouble their efforts to ensure full compliance by their vessels with all applicable international conventions and U.S.
law prior to entry into U.S. waters.
One area receiving heightened review by the Coast Guard is with regard to entries in Oil Record Books. These
Books are routinely presented to the Coast Guard boarding party when the vessels arrive in U.S. ports. If a Book
contains an entry that a senior officer (such as the Chief Engineer) knows to be materially incorrect, the officer and the
company may be charged criminally with making a false statement to a federal agent. The recent cases involving
Carnival Cruise Line (3) and the two cargo vessels in Alaska (4) should serve as examples of what can happen if owners and
operators do not institute programs to prevent such activity by crewmembers.
Aquatic Nuisance Species
In July 1999, the U.S. Coast Guard instituted its voluntary ballast water management program. (5) Legislation
directed that the program is to be made mandatory if compliance with the voluntary program is not "adequate." (6)
Incomplete results indicate that the compliance rate with the reporting provision is approximately 25%. Compliance
with the actual high seas ballast water exchange provision is even lower. The marine industry and the maritime bar
should assume that the U.S. ballast water management program will become mandatory in the near future. Meantime,
the Coast Guard is working to develop standards by which alternative technology might be used to significantly reduce
the level of potentially harmful aquatic species from ballast water. This remains a contentious issue.
The record-keeping requirements relating to ballast water management provide yet another area where
improper entries may lead to legal difficulties for ship owners and operators. The maritime bar should caution their
clients to institute comprehensive systems designed to reduce the risk of inappropriate entries in official records.
The press is reporting that various environmental advocacy groups have brought suit in California against four
cruise lines for violating the California ballast water management regulations. Those regulations require, among other
things, that vessels entering California waters undertake a high seas ballast water exchange. Cruise ships operating
between ports in California and the Pacific coast of Mexico do not routinely travel more than 200 miles offshore. The
environmental groups are seeking an injunction against the practice of not exchanging ballast water and payment into
the state exotic species fund of all monies allegedly saved by the cruise lines in not sailing more than 200 miles off the
Automatic Identification System (AIS)
The IMO has mandated the gradual deployment of AIS on most vessels engaged in international commerce. (7)
The phase-in schedule under SOLAS for such vessels runs from 1 July 2002 for newly constructed vessels to 1 July
2007 for ships (other than passenger ships and tankers) of 300 gross tonnage and upwards but less than 3,000 gross
tonnage. Congress is likely to enact legislation mandating installation of such devices on virtually all commercial
vessels calling at U.S. ports not later than December 31, 2004. Meanwhile, the Marine Board of the National Academy
of Science is examining the various possible display technologies. The Marine Board report is expected by the end of
Proposed Navigation User Fees
The Clinton Administration introduced legislation to assess navigation user fees against commercial vessels
utilizing U.S. ports and waterways. (8) The bill encountered stiff opposition in Congress. President Bush's budget for
FY2003 included a provision for navigation user fees, but no legislation has been introduced, to date. The maritime
bar should continue to monitor this issue, as the Administration may attempt to assess such a fee in an effort to balance
OSHA Regulation of Uninspected Vessels
On January 9, 2002, the U.S. Supreme Court held, in Chao v. Mallard Bay Drilling, Inc., (9) that the Occupational
Safety and Health Administration (OSHA) could exercise jurisdiction over working conditions on uninspected vessels
of the United States to the extent that those conditions were not affirmatively regulated by the U.S. Coast Guard or
another federal agency. (10) Mallard Bay Drilling, Inc. operated a fleet of barges used primarily for oil and gas exploration.
On April 29, 1997, one of these barges, RIG 52, was towed to a manmade canal in marshland near the Atchafalaya River
approximately 30 miles northwest of Morgan City, Louisiana for the purpose of drilling a natural gas well. On June
16, 1997, an explosion occurred on the barge, killing four crewmembers and injuring two others. The U.S. Coast Guard
conducted a marine casualty investigation, which was limited in scope because RIG 52 was an uninspected vessel.
Subsequently, OSHA assessed civil penalties for violation of its regulations and Mallard Bay appealed. While the
decision by the Supreme Court reversed the holding of the Fifth Circuit that OSHA authority was preempted by the
Coast Guard, (11) it was consistent with the positions taken by three other Circuits. (12) It was also in line with a 1983
Memorandum of Understanding between the U.S. Coast Guard and OSHA. (13)
Codification of Title 46, U.S. Code
Since February 2001, the Maritime Law Association of the United States has been deeply involved in efforts
to codify the currently uncodified portions of Title 46, U.S. Code. The codification project is headed by Thomas
Herlihy, Assistant General Counsel for Legislation of the U.S. Department of Transportation. Mr. Herlihy obtained
approval from the Office and Management and Budget (OMB) for the MLA to officially participate in this on-going
effort. Most of the MLA Committees, including the Committee on Navigation, Coast Guard, and Government
Regulation, have submitted comments on the draft codification documents. The vast majority of the MLA comments
have been accepted and integrated into the draft documents. While Mr. Herlihy originally hoped that the codification
project could be wrapped up quickly, the breadth of the effort and outside factors have slowed the effort to a great
degree. Completion of documents for submittal to Congress continues, but at a slower pace. The MLA and this
Committee will continue to monitor the situation and provide comments to Mr. Herlihy as appropriate.
Dennis L. Bryant, Chair
1. Regulation of anchorage and movement of vessels during national
emergency, 50 U.S.C. § 191. This authority is implemented via
regulations found at 33 CFR Part 6. The Coast Guard also relied upon its
authority under the Ports and Waterways Safety Act, 33 U.S.C. § 1221 et
2. The principal maritime security bills currently pending in Congress are
the Port and Maritime Security Act of 2001, S. 1214 (adopted by the
Senate on December 20, 2001); the Maritime Transportation
Antiterrorism Act of 2002, H.R. 3983 (adopted by the Committee on
Transportation and Infrastructure of the House of Representatives on
March 18, 2002); and the Ship, Seafarer, and Container Security Act of
2002, S. 2329 (introduced in the Senate on April 25, 2002).
3. See Press Release of U.S. Attorney for Southern District of Florida (April
4. See Department of Justice Press Release (March 22, 2002).
5. 33 CFR Part 151, Subpart D.
6. 16 U.S.C. § 4711(f).
7. MSC 73 (2000) adopted Regulation 19 of the new Chapter V of
SOLAS-Carriage requirements for shipborne navigational systems and
8. Harbor Services Fund Act of 1999, 106 H.R. 1947 (Introduced May 26,
9. Chao v. Mallard Bay Drilling, Inc., No. 00-927 (January 9, 2002).
10. Justice Stevens delivered the opinion of the Court, in which all Members
joined, except Justice Scalia, who took no part in the decision of the case.
11. Mallard Bay Drilling, Inc. v. Herman, 212 F.3d 898 (5th Cir. 2000).
12. Donovan v. Red Star Marine Services, Inc., 739 F.2d 774 (2d Cir. 1984),
cert. denied, 470 U.S. 1003 (1985); In re Inspection of Norfolk Dredging
Company, 783 F.2d 1526 (11th Cir. 1986); Herman v. Tidewater Pacific,
Inc., 160 F.3d 1239 (9th Cir. 1998).
13. Memorandum of Understanding between the United States Coast Guard
and the Occupational Safety and Health Administration concerning their
Authority to Prescribe and Enforce Standards or Regulations affecting the
Occupational Safety and Health of Seamen Aboard Vessels Inspected and
Certificated by the U.S. Coast Guard, 48 Fed. Reg. 11365 (March 17,