Articles by Juan Obregon

New Version of Nautical Rules of the Road Published

The United States Coast Guard has published a new amalgamated version of the nautical Rules of the Road to improve the readability and understanding of the navigation rules (commonly called “Rules of the Road”). The version combines the Rules of the Road and associated regulations. This edition shows the rules in a one-page format—as opposed to the previous two page, side-by-side. Rule differences are shown in either a two-column table or in bracketed text. Italics text is used to differentiate the Inland Rules from the International Rules. This new edition is available online.

Implementation and Concerns Pertaining to the IMO’s Verified Gross Mass Regulations

The International Maritime Organization’s (“IMO”) amendments to the Safety of Life at Sea (SOLAS) convention will become legally binding on July 1, 2016.  The changes to SOLAS require exporters to verify the weight of the containers before they are received at the port and loaded aboard the ship.

 

The rules provide two methods for a shipper may obtain the verified gross mass (VGM):

  • Method 1, upon the conclusion of packing and sealing a container, the shipper may weigh, or have arranged that a third party weigh, the packed container.
  • Method 2, the shipper or, by arrangement of the shipper, a third party may weigh all packages and cargo items, including the mass of pallets, dunnage and other packing and securing material to be packed in the container, and add the tare mass of the container to the sum of the single masses of the container’s contents.

 

The new rules have raised numerous concerns, some of which include:

  • Whether there is an agreed format to communicate the verified gross mass;
  • Whether there is a deadline for when the information must be received by the carrier and the terminal operator;
  • Whether the rules obligate the carrier to check the values given by the shipper; and,
  • Whether there is an acceptable margin of error when establishing the verified gross mass.

 

Although there are many more concerns, there is no doubt that additional unforeseen issues may arise once the requirements are put into practice.

 

http://www.aaei.org/resources/new-solas-regulations-and-resources/

Hercules Offshore Finished with Chapter 11 Bankruptcy

In September of this year, the U.S. Bankruptcy Court in Delaware approved Hercules Offshore’s restructuring plan, which proposed to give control of the company to its bondholders in exchange for debt forgiveness. Under the plan, the bondholders swap out $1.2 Billion in debt for control of the company. The bondholders pledged a $450 million dollar loan to fund the company’s exit, which would fast-track its exit out of Chapter 11. With a signed deal with the bondholders, along with its 900 million in revenue, and roughly 80 million in cash on hand, Hercules Offshore believed it was in a good position to overcome the industry’s downturn due to record low oil prices. At the time of the approved restructuring plan, the company stated it hoped to be out of bankruptcy by November.

 

True to its word, during the first week of November, the company confirmed it has completed its financial restructuring and has emerged from Chapter 11 bankruptcy.

 

http://www.worldoil.com/news/2015/11/09/hercules-offshore-emerges-from-bankruptcy

 

Coast Guard to Increase the Limits of Liability under Oil Pollution Act of 1990

The Coast Guard is issuing a final rule which increases the statutory limits of liability for vessels, deepwater ports, and onshore facilities, under the Oil Pollution Act of 1990 (OPA 90). The increase is standard procedure for the Coast Guard, as it is required by the OPA 90 to adjust the statutory limits every three years to reflect the increases in the Consumer Price Index. Under Title I of the OPA 90, the responsible party for any vessel or any facility from which oil is discharged, or which poses a substantial threat of discharge of oil, into navigable waters or adjoining shorelines…are strictly liable, jointly and severally, under 33 U.S.C. §2702 for removal costs and damages resulting from the incident. Yet, a responsible party’s liability is limited to a specified dollar amount, pursuant to 33 U.S.C. §2702.

 

To prevent the real value of the statutory limits from depreciating over time, and preserve the “polluter pays” principle embodied in the OPA 90, 33 U.S.C. §2704(d)(4) requires that the limits of liability be adjusted “not less than every three years…to reflect significant increases in the Consumer Price Index.” The timing of the three-year adjustment is rather unfortunate for oil and gas companies, given that the industry is currently facing bleak economic conditions with record low oil prices.