NEWS ANALYSIS


Regulations close in on shipowners


for many. Te industry preparedness for new bits of regulation has long been a bone of contention and the new low sulphur rules which came into force this month are no exception, writes Sandra Speares. “Te ballast water treatment legislation hangs like


A


a dark cloud over all technical ship managers. Tis represents a huge investment accompanied by a high level of risk,” said one respondent to the survey. Another observed: “Regulation is becoming more strict, and now accounts for a greater slice of operational expenses than it did a few years ago. Tis is bad. But, it is the only way to push older tonnage out of the market.” Another respondent


emphasised: “There seems to be a lack of willingness to acknowledge the negligible level of pollution caused by shipping in relation to the volume of merchandise which is shipped globally.” Other comments included: “New EU environmental regulations will have a knock-on effect beyond the primary maritime industries,” and “Freight rates will not compensate completely for the additional cost involved in operating on low-sulphur fuel.” While the rules are fairly explicit in terms of the


nyone looking at Moore Stephen’s latest survey on industry confidence can see that regulation is presenting a gloom and doom scenario


in lying to the US Coast Guard or falsifying oily water record books. Whistle blowing has also provided evidence for


prosecutors, and whistleblowers can get a share of any fine levied against a company. While the US has generally been ahead of the game


“What actually happens from 1 January in terms of pricing, for


in piling on pressure to comply with environmental regulations – largely by the use of punitive fines – others have been somewhat more low key. At a conference at law firm Norton Rose Fulbright it was suggested that the level of fines imposed in similar incidents in the UK were much lower, with the suggestion being made that if the bar was not liſted in terms of fines levied, shipowners might just be tempted to hope for the best and “wing it”. What actually happens from


example, and how the industry meets the challenges of the low sulphur regime in emission control areas


remains to be seen”


penalties that will be faced as far as burning anything that is not 0.1% low sulphur in emission control areas are concerned, those penalties may not be as prohibitive, at least in certain jurisdictions, to stop companies trying to “wing it”, thinking that the chances of being caught are outweighed by the costs of either buying low sulphur product, or fitting expensive scrubbing technology. It will evidently be difficult to inspect every ship entering, for example, US waters, so companies seen to be complying with the regulations on low sulphur, or if low sulphur is not available, are seen to be addressing the problem as best they can, may not have the rule book thrown at them. In the frequent so called “magic pipe” incidents


resulting in US prosecutions in recent years, it has to be noted that allegations brought against companies in the US were not as a result of dumping oily water at sea, but


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1 January in terms of pricing, for example, and how the industry meets the challenges of the low sulphur regime in emission control areas remains to be seen. In the view of Paul Davies of PriceWaterhouseCoopers: “compliance is not an option”. In his experience in other industries, he said, regulators would not necessarily create a vast empire of people to look over every ship, but what was more likely to happen is that they would find a few key transgressors, “fine them to oblivion and the rest of us will quickly follow suit” Davies


said. As far as the issue of choosing between high priced low sulphur fuel or scrubbing technology he said for charterers, it would be more competitive to use scrubbers. Te last element, he said was the classic shipping question of why should I do anything if nobody else is? Another issue that Philip Roche, a partner with Norton


Rose Fulbright mentions is whether port state control authorities like the Maritime and Coastguard Agency will have the funds to invest in expensive testing equipment to ensure that shipowners are compliant with the new rules in force from 1 January 2015. In cases where shipowners are found not to have bothered to comply, they are likely to have the book thrown at them. However, those who can show port state control they tried to comply but their efforts have broken down through some deficiency or because they were supplied with the wrong fuel, are likely be greeted with a more pragmatic and cautious response on the part of the MCA, he said. NA


The Naval Architect January 2015


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