January 1, 2020 looms large for the shipping community. On the one side there is a view of what is coming as a modern-day apocalyptic vision of Hell for shipping; an ominous specter of a catastrophe for the industry as a whole. “May God be with us” said the President of the Union of Greek Shipowners in a press conference last June, referring to the chaos that seems to lie ahead with availability issues, compatibility issues, and not only.  Some industry analysts have characterized it as a coming Tsunami. On the other side, Tradewinds reported recently that certain shipowners’ organizations are lobbying hard for the full implementation of the January 1, 2020 IMO regulations – among them are:  The World Shipping Council, BIMCO, the Cruise Lines International Association (CLIA), and the International Parcel Tankers Association (IPTA), all whom urge full compliance. Several NGOs mark this as the first step in a carbon free shipping industry where ships will be propelled by batteries, hydrogen, and ammonia cells.

Some countries, like Indonesia, have declared they will not enforce the 2020 regulations. The rush to implement the sulfur cap some five years earlier than it might have been adopted, together with the IMO’s Initial Strategy goals of reducing greenhouse gas emissions by 50% by 2050, perhaps signals an alarm. This is what happens if policy is left to unelected bureaucrats and technocrats who are not focused on the economic, engineering, and logistical issues, and are not answerable to the public. But this is political talk, and I am getting out of it fast.  I will stick with the laws.

Until recently, lawyers were being asked what the U.S. authorities will do to enforce the 0.50 cap on sulfur imposed by regulation 14 of MARPOL Annex VI.  The industry is interested in what is done in the U.S.A. because in some ways the U.S.A. pioneered enforcement of MARPOL Annex I with criminal enforcement of the regulations.  Will the same thing happen with MARPOL Annex VI?  Until a few months ago, the position was unclear.  There was speculation, but there was nothing definitive from the U.S. authorities charged with the enforcement of MARPOL. We were all guessing. But now the government has spoken, in more or less clear terms, and we have a fairly good idea what they might be up to and what to expect by way of enforcement.



On June 20, 2019, the United States Coast Guard and the Environmental Protection Agency issued a revised protocol on referral under MARPOL Annex VI. This tells us exactly what these two agencies will do for the enforcement of Annex VI.  It is all posted online, and I would recommend that legal departments and quality and safety management departments obtain a copy as a guide on what to expect.

Though the 2019 protocol doesn’t state anything about January 1, 2020, the timing of its issuance and the replacement of a similar protocol issued in 2015 hint at the reason why it was issued just three months ago.


Here is briefly what we learn from this protocol:

First, there is not going to be a moratorium in enforcement of the 0.50 sulfur cap requirements in America. The document of recent issuance anticipates enforcement.

Second, whatever enforcement will be taken will be in accordance with the U.S. Federal statute 33 U.S.C. §§ 1901-1912 known as the Act to Prevent Pollution from Ships, or “APPS” for short.  This is the law that adopts MARPOL in the U.S.A. and gives authority to its agencies to enforce this international convention when it comes to foreign and U.S. flag ships. APPS gives authority to two government agencies to enforce MARPOL: the Environmental Protection Agency (“EPA”); and the Secretary of the Department of Homeland Security – meaning essentially the United States Coast Guard.  In very broad terms, these two government agencies have agreed, for purposes of enforcement of APPS, to do what each of them knows how to do best.

Third, in accordance with APPS, a 2011 memorandum of understanding between the two agencies, and the most recent 2019 Protocol, the United States Coast Guard has the authority and is expected to do the following:

  1. Conduct inspections as part of its role as the port state control authority of the United States, or as part of its Certificate of Compliance inspection for Foreign flag vessels.
  2. Detain vessels if it considers a deficiency or violation sufficiently serious to keep the ship from sailing until the deficiency is corrected.
  3. Issue a letter of warning (“LOW”) if the non-compliance is not of such magnitude to warrant another sanction.
  4. Issue a notice of violation (“NOV”) if the non-compliance is greater.

Warning letters do not carry a monetary sanction, while notices of violation carry a predetermined monetary sanction.

  1. If the violation is sufficiently serious, the United States Coast Guard may treat the matter as a Class I Administrative Civil Penalty, to be adjudicated by the United States Coast Guard Hearing Office or, alternatively, may refer it to the EPA for administrative action. This means that the matter will be dealt with for imposition of civil penalties, which under APPS, carry a penalty of $25,000 each day that the violation continues. If the matter is considered serious enough for the imposition of a civil penalty, the United States Coast Guard may also request the customs authorities to withdraw the sailing clearance of the vessel and require a bond or letter of undertaking to cover the civil penalties claimed.
  2. If the non-compliance with MARPOL is so severe that the imposition of a civil penalty is an inadequate sanction for the violations, the United States Coast Guard may refer the matter to the Department of Justice for criminal prosecution.

If the matter is referred to the Department of Justice (DOJ), the sanctions are considerably more severe if the owner is found guilty of having intentionally violated MARPOL Annex VI regulation 14.  The MARPOL violations in themselves are sanctioned as class D felonies that carry a maximum fine - for organizational defendants - of no more than $500,000 for each violation.  (33 U.S.C. § 1908(a)).

Often times when a matter is referred to the DOJ for prosecution, MARPOL violations under APPS are not the only offenses that the government will charge.  Often times, the violation also involves using false records to cover up the MARPOL violation.  Such offenses are also separately charged as obstruction of justice under 18 U.S.C. §1505, which carries a penalty in an equal amount. Also, part of the “package” of criminal charges that are frequently included in charging offenders in criminal proceedings is “making false statements to the government” under 18 U.S.C. §1001, another felony.

Accordingly, the penalties for intentional violations of Annex VI, Regulation 14 of MARPOL can be quite severe, amounting to hundreds of thousands of dollars, if not more.

But here we may be running a bit ahead of ourselves, and it may be worthwhile pausing for a minute to consider whether the January 1, 2020 sulfur cap is carrying an increased risk of criminal sanctions while trading in the United States.


The experience with the North America Emission Control Area

Trading in the North America and U.S. Caribbean Emission Control Areas (ECAs) has required vessel owners to comply with low sulfur oxides emissions fuels since 2012 and has required an even stricter ultralow sulfur cap of 0.1% since 2015.  There is already an established track record of enforcement of compliance.  There is accordingly, experience on the part of the industry, and on the part of the U.S. compliance-enforcing authorities.  Since 2015, trading in North America and U.S. Caribbean ECAs has required vessels to use Ultra Low Sulfur bunkers, to switch bunkers to Ultra Low Sulfur before coming into these ECAs, and to maintain suppliers’ bunker receipts and records reflecting when and where they sourced the Ultra Low Sulfur bunkers.  These requirements have been in place for four years at least, and the U.S. authorities have been enforcing them and will continue to enforce them, whether or not the 0.5% sulfur cap comes into effect in 2020.

Let’s be clear as to exactly what enforcement the U.S. authorities will be conducting once January 1, 2020 arrives.  As a port state, the U.S.A. will not be able to impose either civil or criminal sanctions on foreign flag vessels for having consumed bunkers higher than the 0.5% cap before entering the ECAs over which it has jurisdiction.   Outside these areas the United States does not have enforcement jurisdiction.  American case law supports this.  See e.g., United States v. Abrogar, 459 F.3d 430 (3d Cir. 2006); United States v. Kun Yun Jho, 534 F.3d 398 (5th Cir. 2008).  These cases hold that the MARPOL Annex I violations for which the defendants were prosecuted were not acts of discharging oily wastes in areas of the oceans and seas outside of the jurisdiction of the U.S.A.   Rather, the offense was the act of maintaining falsified oil record books while their respective vessels were in the United States.  That being said, the United States does have jurisdiction under APPS to criminally enforce violations of Annex VI committed within its Exclusive Economic Zone (“EEZ”) and ECAs within its jurisdiction under 33 U.S.C. §1902(a)(5)(C) (i) and (2).  The EPA has specific authority in this regard under 33 U.S.C. §1903(b)(3).  These provisions are implemented by EPA regulations that extend to navigable waters of the United States and its EEZ. See, 40 C.F.R. §1043.10.  40 C.F.R. §1043.60 adopts into the federal regulations the sulfur cap set out in Annex VI.

So, the Coast Guard and the EPA have authority to enforce Annex VI regulations with both administrative-regulatory proceedings and criminal proceedings for non-compliance that takes place within the navigable waters of the United States, the EEZ, and the respective North American and US Caribbean ECAs.

The question then is what, if any, violations of the 0.5% sulfur cap might the competent U.S. law enforcement authorities choose to prosecute? And what kind of proceedings will they bring for a foreign flag vessel’s violation of Annex VI while in the United States?  We noted already that for violations committed outside the ECAs or navigable waters of the United States, the Coast Guard does not have jurisdiction, thus there can be no prosecution, nor a proceeding for a civil penalty.  However, I believe that the following circumstances might provide the basis for a criminal prosecution or administrative enforcement action for violations of the 0.5% sulfur cap:

Entering a port/place in the United States while maintaining a falsified oil record book, or falsified bunker delivery notes that conceal/misrepresent the use of such fuel while the vessel was sailing outside the U.S.A. or its ECA.  In the United States v. Kun Yun Jho, 534 F.3d 398 (5th Cir. 2008), falsified records were the basis for criminal prosecution for violations of Annex I.  The same principle would apply to violations of Annex VI by analogy.  The falsification of such records is a violation of MARPOL and APPS which is a class D felony.  See, 33 U.S.C. §1908(a).  In addition, maintaining such records while the vessel is in the U.S.A. could expose the owner/operator to prosecution for obstruction of justice under 18 U.S.C. §1505 for the presentation of such documents to the United States Coast Guard.  The point is to keep truthful records such as ORB; bunker delivery notes; samples, etc.

Other grounds that would justify U.S. law enforcement authorities to enforce the 0.5% sulfur cap might include: entering the United States with bunkers onboard of a higher sulfur content.  See, MEPC.1/Circ. 881, 21 May 2019.


Have there been criminal prosecutions under APPS for violations of Annex VI?

Of course, there have been no criminal prosecutions for violations of the January 1, 2020 sulfur cap, which has yet to come into effect. To my knowledge, there has been a single prosecution in the United States involving a product tanker that called in a U.S. jurisdiction.  This was an extraordinary case because, it seems, everything was done on the vessel’s side by the “how not to do it” book.  The vessel was regularly calling in a U.S. jurisdiction ECA without any required 0.1% bunkers onboard; the source of the bunkers were the cargo tanks; there were false entries in both oil record books No. 1 and No. 2; and there were fictitious bunker delivery receipts.  Pleas of guilty were entered.  This is the one and only case criminally prosecuted under APPS for violations of ANNEX VI.  It is an extraordinary case on its facts and one would not expect to see something like this repeated.  Nevertheless, it lays down a pattern of what one might expect when engaging in gross violations of Annex VI.

The EPA has taken administrative action to enforce civil penalties in a number of reported cases of vessels trading within the North America ECA.  None of these cases have involved anything spectacular other than entering the ECA with bunkers that had a sulfur content higher than permissible.  These cases have been generally settled with the EPA under a letter of consent involving the payment of an agreed civil penalty amount.

The indications we have from the enforcement of Annex VI sulfur cap cases in the North American ECA, and the U.S. Caribbean ECA, is that the most likely violations and enforcement actions will be administrative proceedings centering around arrivals of vessels with ROB bunkers of 3.5% sulfur content.  These, according to MARPOL guidelines, will probably be resolved through measures dealing with the management of such bunkers – ranging from blending of the ROBs, to being required to discharge and replace.  See, Guidance of the Marine Environment Protection Committee at MEPC.1/Circ. 881, 21 May 2019.

Referral to the U.S. Department of Justice for criminal proceedings appears to be unlikely, except in cases of intentional, deliberate, and egregious violations.


Above article is an edited version of Mr Gaitas' presentation during the 2019 SAFETY4SEA Athens Forum.

The views presented hereabove are only those of the author and not necessarily those of SAFETY4SEA and are for information sharing and discussion purposes only.

About George Gaitas, Attorney and Partner, Gaitas & Chalos, P.C

George Gaitas is the managing partner of the law firm GAITAS & CHALOS, P.C. which is based in Houston, Texas and has maritime law as its sole area of practice, and more specifically, shipping law, in the broader commercial sense of this term. Advising and representing shipowners in matters of marine regulatory compliance is also part of the firm’s work. The client base of GAITAS & CHALOS includes several Greek vessel owners. George was born in Greece and pursued all of his university studies in the United States. In the field of maritime law, he completed his studies at Tulane University School of Law from where he received his LL.M. in 1977. Of his 40 years of practice of maritime law, he has spent more than one half of these working in Greece as counsel of shipping companies, and the rest in the U.S.A. in private practice in the field of his specialization.