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What maritime risks must be covered under the law and what is the mandatory level of coverage?
The Oil Pollution Act and the Comprehensive Environmental Response, Compensation and Liability Act set out limits of liability and require a vessel “certificate of financial responsibility” for tank and other vessels. The certificate is issued by the USCG National Pollution Funds Centre on evidence of financial responsibility from a guarantor (ie, insurer) or a self-insured applicant.
Insurable risks and ships
What other risks are typically covered by marine insurance contracts concluded in your jurisdiction and what ships are insurable?
US insurance contracts include traditional subjects of marine coverage, including:
- war risk;
- protection and indemnity;
- demurrage and defence;
- charterers’ risk; and
- cargo-related coverage.
Oil pollution is a particular subject of coverage.
What is the legal regime governing marine insurers’ subrogation rights?
The right to subrogation exists in the law and is generally widely allowed. Courts sitting in admiralty will resolve specific questions of subrogation by application of relevant state law.
Collision and pollution
What rules and procedures (under both domestic and international law) apply to the prevention of, liability for and remedy of:
The United States has incorporated the International Regulations for Preventing Collisions at Sea by statute. Separate but similar rules apply to the country’s inland waters. The United States is not a party to the 1910 Brussels Collision Convention. Collision law is based on fault, including proportionate fault, but is different from international law.
Casualties – including incidents causing injury or death, grounding, bridge strike, environmental harm or property damage in excess of $25,000, – must be reported to the US Coast Guard (USCG).
(b) Oil pollution?
The Oil Pollution Act of 1990 provides the framework for liability for discharge of petroleum products into or upon navigable waters, shorelines or the US exclusive economic zone. Generally the responsible party (for vessels in particular, an owner, operator or demise charterer) is liable for damages, including costs of removal, damage to natural resources and property, lost revenues and profits. The act identifies defences to liability, including acts of god, war and acts of third parties.
Responding to oil pollution is primarily the responsibility of the USCG. Its National Response Centre is the point of contact for reporting oil spills.
The USCG aggressively enforces criminal laws against the discharge of oily waste water (‘magic pipe cases’) and related record-keeping violations, and maintains a whistle-blower bounty programme to encourage the reporting of discharge violations.
(c) Other environmental damage caused by a ship?
The United States has ratified the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78) and its annexes, excluding Annex IV. The Act to Prevent Pollution from Ships implements MARPOL and its annexes. This act applies to vessels in US waters and US-flagged ships worldwide. The USCG and Environmental Protection Agency (EPA) are the principal agencies involved in rulemaking and enforcement under US environmental laws.
The United States maintains International Maritime Organisation (IMO) designated emission control areas – implementing MARPOL Annex VI – that apply sulphur fuel and engine nitrogen oxide standards to vessels operating off the United States, Puerto Rico and the US Virgin Islands.
The United States is not a signatory to the IMO Ballast Water Management Convention. However, USCG regulations govern ballast water management and generally prohibit ballast water discharge into US waters. The United States has not yet approved ballast water treatment systems and is not in accord with other IMO member states on standards for such systems.
The United States is not a party to MARPOL Annex IV regulating sewage discharges. However, ocean-going vessels operating in US navigable waters which are registered in foreign countries may be subject to Annex IV requirements. The Clean Water Act and related regulations and programmes govern sewage discharge.
Solid waste discharge is governed by the Act to Prevent Pollution from Ships and the Marine Protection, Research and Sanctuaries Act and federal regulations. Hazardous waste management and disposal can be subject to the Resource Conservation and Recovery Act and the Clean Water Act, as well as federal regulations. Grey-water discharge is also regulated by the EPA.
Vessel owners and operators meeting certain requirements may elect to follow the discharge requirements of the EPA’s Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels, which covers 27 types of discharge (excluding sewage, oil, garbage and certain others). The permit is subject to forthcoming updates by the EPA.
Chemical releases are reported to the National Response Centre.
What is the legal regime governing salvage and general average?
The United States is a party to the 1910 Brussels Salvage Convention and the 1989 Salvage Convention. However, salvage cases are usually decided under principles of the general maritime law. Federal courts have exclusive jurisdiction over salvage cases brought in rem.
The law recognises two types of salvage: pure and contract. ‘Pure salvage’ is the salvage of property exposed to a marine peril, where the salvage service is voluntary and successful in whole or in part. Salvage awards are based on numerous factors, including the degree of peril. ‘Contract salvage’ is as described and courts will generally enforce a salvage contract that was fairly bargained for. Finds (ie, the salvage of abandoned vessels) may be subject to federal law protecting archaeological remains and defining ownership of shipwrecks.
General average is recognised within the general maritime law and is not statutory. The York-Antwerp Rules are generally inserted into bills of lading and charterparties. Bills of lading and other contracts of carriage often contain a ‘Jason’ or ‘New Jason’ clause which provides that the carrier is entitled to a general average contribution even when the loss arises from its own fault, if it is absolved from liability by law or contract in the circumstances.
Places of refuge
What framework governs access to places of refuge for ships in distress?
USCG captains of the port are responsible for decision making with respect to whether a vessel needs to be moved to a place of refuge and, if so, what place of refuge to use. While place of refuge decision making is undertaken on a case-by-case basis, potential places of refuge may be identified for evaluation for use in specific incidents. In accordance with IMO Resolution A.949(23) on places of refuge, the National Response Team – a federal interagency organisation – has promulgated the “Guidelines for Places of Refuge Decision Making” which describes procedures and processes with respect to incident-specific incidents, as well as pre-incident identification of potential places of refuge.
What rules and procedures apply to the removal of wrecks in your jurisdiction?
Federal statutes and regulations, including the Wreck Removal Act of 1889 and the Oil Pollution Act of 1990, apply to the removal of wrecks and associated environmental concerns.
Under what circumstances can the authorities order removal of wreckage?
The owner, lessee or operator of a wrecked vessel located in navigable waters has strict duties under the Wreck Removal Act to mark and then promptly remove the wreck (in consultation with the USCG and the Army Corps of Engineers), and could face civil or criminal liability for failure to do so. Casualty reports must, in certain circumstances, be filed with the USCG within 72 hours. If the responsible parties fail to remove the wreck promptly, the government will assume responsibility for marking and removal, and may then seek reimbursement under the Wreck Removal Act and take other action under related statutes and regulations. The National Response Team has promulgated guidance with respect to abandoned vessels.
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