Houston Marine Insurance Seminar 2002

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Houston Marine Insurance Seminar2002
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Pollution Basics

• Exposures
• OPA 90
• CERCLA
• State law
• Cargo owners contingent exposures
• Criminal and civil penalties

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OPA 90 Definitions

• Act of god
• Gross ton- ITC verses GRT
• Owner and operator
• Means owner and operator
• Demise charterer
• Shipyards and boat dealers
• Tank vessel

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OPA 90 Amendments

• Exclusions from definition of tank vessel
• Edible oils financial responsibility
• Offshore facility financial responsibility
• Interim payments
• Response vessel financial responsibility
• Clarification of liability in response

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Additional OPA 90 Issues

• Act of war /terrorism
• Mobile offshore drilling unit (MODU)
• Carrying oil from an offshore facility
• Failure to cooperate

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State Regulation

• Liability limits often greater than federal
  limits
  
• Financial responsibility requirements
• Response/contingency planning

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State Regulationcontinued

• Alaska
• California
• State law broader in scope

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State Regulationcontinued

• OPA 90 does not preempt state law in many areas
  of regulation
  
• U.S. v. Locke (INTERTANKO)
• Supreme Court Decision
• Federal law controls equipment and operating
  standards
  
• State standards OK for liability and financial
  responsibility
  
• Bottom Line States continue to pass new
  requirements for financial responsibility,ballast
  water, and in other environmental areas.

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Criminal Liability

• Background
• Greater potential that environmental violations
  will be treated criminally
  
• Statutory Basis for Liability
• OPA 90
• Migratory Bird Treaty Act
• Refuse Act
• Unseaworthyness

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Ballast Watercontinued

• Issue non-indigenous aquatic species
• Federal act ineffective
• States have enacted mandatory ballast water
  management programs
  
• Problematic statutory solutions
• Greywater regulations in Alaska

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Incident Response

• Coverage conflicts among pollution, hull and P
  I and underwriters
  
• Salvage/wreck removal
• Firefighting
• Pollution

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Ballast Water

• Should invasive species events be considered
  pollution?
  
• Will industry react?

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Criminal Liability

• One Example Eklof Towing (1998)
• 9.5 million fine
• Fine and Probation for company president and tug
  captain
  
• Collateral Consequences
• Lose Govt Contracts
• Onerous terms of Probation

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Criminal Liability

• Other Examples
• Canadian Prosecution for Migratory Bird
  Convention Act (2001)
  
• Other U.S. Prosecutions for Deliberate Discharges
  or falsification of Log Books
  

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Criminal Liability

• Miscellaneous issues
• No more insurance for fines?
• Financial guarantee system
• Effect of criminal investigation on spill
  response efforts
  

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Criminal Liability

• Solutions
• Legislative
• Educate Employees
• Identify Criminal Defense Counsel
• EPA / DOJ want compliance programs
• Choose Location of a Violation Carefully

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Defense Fines and Penalties Endorsement

• Covers Certain fines under FWPCA, Refuse act and
  MBTA.
  
• Legal Defense
• Public policy

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Foreign Asset Control Act

• The Cuban Assets Control Regulations, 15 CFR Part
  515
  
• issued by the U.S.Government on 8 July 1963 under
  the Trading With the Enemy Act in response to
  certain hostile actions by the Cuban
  government.
• Administered by the U.S.Treasury Department's
  Office of Foreign Assets Control.
  
• www.ustreas.gov/ofac
• Goal of the sanctions is to isolate the Cuban
  government economically and deprive it of U.S.
  dollars.

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Foreign Asset Control Act Continued

• Criminal penalties for violating the sanctions
  range up to 10 years in prison,1,000,000 in
  corporate fines,and 250,000 in individual
  fines.Civil penalties up to 55,000 per violation
  may also be imposed.
• ...No products,technology,or services may be
  exported from the united states to Cuba, either
  directly or through third countries,such as
  Canada or Mexico.Provision of consulting
  services is also prohibited.

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Cargo Owners

• Alaska
• California
• Florida(contingent)
• Maryland
• New Jersey (contingent)
• North Carolina
• Oregon
• Washington

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Additional Endorsements

• Offloading
• Public vessels
• Derelict substance
• Marina coverage
• Storage ashore

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Further Information

• WWW.WQIS.COM