(PDF) Regulatory Framework

5 Regulatory Framework Introduction This chapter explains the regulatory context that SSS abides to. As Fig. 5.1 shows, three distinct perspectives of the regulatory environment will be described herein, more precisely: • The Business and Commercial Regulations • Operational Regulations • Labour Regulations It must be noted that the regulatory landscape is vast with many differ- ent regulations and many different jurisdictions imposing different rules. This chapter attempts to describe some important regulations that affect key functions of the SSS industry. Material from the IMO website www.imo.org is reproduced with the permission of the International Maritime Organization (IMO), which does not accept responsibility for the correctness of the material as reproduced: in case of doubt, IMO’s authentic text shall prevail. Readers should check with their national maritime Administration for any further amendments or latest advice. International Maritime Organization, 4 Albert Embankment, London, SE1 7SR, United Kingdom. © The Author(s) 2018 71 S. Papadimitriou et al., The Dynamics of Short Sea Shipping, Palgrave Studies in Maritime Economics, https://doi.org/10.1007/978-3-319-98044-7_5 72 S. Papadimitriou et al. Business & Commercial • Company Formations • Tax • eBusiness Labor Operations • Crew Compositions • Operations • ILO • Customs • Directives, • Safety & Security Certifications & • Ports & Terminals Qualifications • Environment Fig. 5.1 Regulatory landscape. (Source: Authors) Business and Commercial Company Formations Shipping companies and SSS companies can take many forms from the legal perspective. The decision of how to set up the type of corporation is based entirely on three criteria: 1. The business model that the entity works with including the availabil- ity to break apart certain functions or revenue streams 2. The broader context and business environment including the risk management approaches 3. The vision of the company leadership Regulatory Framework 73 From the legal perspective, the most common types of business struc- tures are: • S.A. (Société Anonyme) • S.E. (Societas Europaea) • LLC (Limited Liability Company or Ltd) The S.A.—Société Anonyme type is particularly popular as it limits the owner’s risk and liability for the company’s acts, thus protecting his/ her personal assets. To be valid, an S.A. must have articles of incorpora- tion, a board of directors, and a unique name. Other regulatory require- ments vary by country. In Belgium, for example, an S.A. must be funded with at least €61,500 (as of 2014) and have at least two partners. In Costa Rica, non-residents can start an S.A. without a Costa Rican partner. There are typically fees, which vary by location, for completing the vari- ous legal steps for forming an S.A. Similarly, the LLC—Limited Liability Company / Limited or Ltd may be private or public and has one or more shareholders, the liability of which is limited only to the originally invested capital, whereas the own- ers are not personally responsible for liabilities. The S.E.—Societas Europaea was introduced in 2004, establishing a public company in accordance with the corporate law of the EU, to make transferring to or merging with businesses in the rest of the Member States an easier procedure. Modern SSS companies use these types interchangeably depending on the three criteria described above. The selection of corporate structures, assign- ment of activities, and relationships is generally used to enable advanced tax planning, reduce risk, and facilitate day-to-day business operations. Taxation Taxation of Companies According to the Corporate Tax Law each governmental jurisdiction sets forth, all corporate structures are expected to pay a certain amount of taxes. These Corporate Taxes are usually twofold: 74 S. Papadimitriou et al. 1. Profit based Taxes 2. Dividend Based Taxes Corporate tax may apply to any of the following activities: • Corporations incorporated in the country and doing business in the specific country / jurisdiction. • Corporations that are established outside the country (jurisdiction) but have a permanent establishment/address in that country and pro- ducing income. • Corporations that are considered to be resident (or domiciled) for tax purposes in the country. In the specific case that a company is recognized as of special interest, some or all these taxes may be alleviated, reduced, or removed completely. For example, Greece, Cyprus, Malta, the UK, and Singapore have com- pletely removed the abovementioned tax regimes in favour of the tonnage tax. The tonnage tax scheme is an alternative way of calculating taxable profits of shipping businesses, based on the premise of internationalized revenue-making capacity and transfer pricing availability. The way the Tonnage Tax Scheme works is twofold: • Vessels pay a fixed tax depending on the tonnage and on the age of the ship, irrespective of the amount of the company’s annual income. • The profits arising out of the operation of a vessel (or capital gains in case of asset divestiture) are not subject to any further income or divi- dend tax. Additionally, bilateral agreements are in force to exempt taxes or to avoid double taxation issues. For example, the US Internal Revenue Service has agreements with other jurisdictions that allow ships making calls on US ports to be automatically exempt from US income tax. Regarding the taxation of vessels in the US, the North American Free Trade Agreement (NAFTA) has been in effect since January 1, 1994, while the US–Canada FTA had already been in effect. US tariffs on most Mexican commodities were low, while Mexico had the highest protective Regulatory Framework 75 trade barriers. Within the agreement, the US and Canada obtained further access to the Mexican market, while Mexico was the biggest exporter of both goods and services in the US at the time. Key NAFTA clauses included tariff and non-tariff trade liberalization, rules of origin, services trade, foreign investment, intellectual property rights protection, govern- ment procurement, and dispute resolution. Labour and environmental clauses were included in separate NAFTA side agreements. In November 2003, Canada, Mexico, and the US (the three NAFTA countries) signed a Memorandum of Cooperation on Sharing Short Sea Shipping Information and Experience to support SSS to shift cargo volumes from the roads to the sea and improve the problem of congestion. The Harbour Maintenance Tax (HMT) was enacted as part of the Water Resources Development Act of 1986 and requires those who ben- efit from maintenance of US ports and harbours to share the cost of the maintenance. HMT accounts for 0.125% of the value of the commercial cargo shipped through seaports only. As a result, shippers moving goods into the US will choose to move cargo over land rather than water, even if that means long border crossing delays and increased costs. The Short Sea Shipping Act of 2011, to amend the Internal Revenue Code of 1986, was enacted to exempt certain shipping routes from the HMT. It is underlined that commercial cargo (other than bulk cargo) loaded at a port located in the US mainland and unloaded at another US mainland port, following exclusively coastal route or river, is exempted from the obligation to pay the HMT. The same conditions apply to com- mercial cargo loaded at a port in the US mainland and unloaded at a port in the Great Lakes St Lawrence Seaway System1 in Canada, and vice versa. e-Business and Digital Agenda for Europe The Digital Agenda for Europe (DAE), one of the initiatives of the Europe 2020 strategy, establishes actions to be taken for Europe to suc- 1 The term ‘Great Lakes St Lawrence Seaway System’ means the waterway between Duluth, Minnesota, and Nova Scotia, encompassing the five Great Lakes, their connecting channels, and the St Lawrence River. 76 S. Papadimitriou et al. ceed in its objectives. Generally, the Digital Agenda aims to maximize economic and social benefits from a digital single market, using Information and Communications Technology (ICT), in a sustainable way. Member States must report their progress via the DAE website, regarding the actions of the seven DAE pillars: • Digital Single Market (DSM) (Two Actions): The DSM was adopted on May 6, 2015, and its initiatives have been delivered by the Commission until January 2017. It aims at improving citizens’ access to information and culture, promoting modern open government, and therefore enhancing job opportunities. The challenges identified by the Commission mainly include cyber security matters. • Interoperability and Standards (Two Actions): One of the EU ini- tiatives was the improvement and connection of e-Health services. The Commission published the e-Health Action Plan 2012–2020, which focuses on setting common rules to promote interoperable healthcare systems among Europe that will maximize the benefit for patients as well as final users. • Trust and Security (Four Actions): The EU cyber security strategy was adopted in 2013 and reviewed in 2017, setting several measures for the protection of fundamental rights online. Some of them are the e-Privacy domain, Safer Internet Programme and the e-Inclusion policy. • Very Fast Internet (Four Actions): The Commission proposed a set of measures on September 14, 2016, to make sure that people will have adequate internet connection to participate fully in the digital economy, such as the European Electronic Communications Code, the 5G Action Plan, the Wifi4EU initiative, and the Common EU broadband targets for 2025. • Research and Innovation (Two Actions): The EU invests in stimulat- ing innovation in Europe by promoting research and encouraging public procurement of innovative ICT solutions. • Enhancing e-Skills (Three Actions): The Commission promotes vari- ous actions to increase digital skills’ training, modernize education, and promote the development of new types of jobs. The Skills Agenda for Europe, published on June 10, 2016, presents several measures to Regulatory Framework 77 improve the skills’ quality, whereas the Digital Skills and Jobs Coalition is one of them. • ICT for Societal Challenges (Six Actions): Several actions were taken by the Commission for the development of cross-border digital public services and the modernization of the e-Government for citizens and businesses. Two of them are the e-Health Action Plan and the develop- ment of self-driving cars. In this context, the EU has set forth the development of an e-Maritime Framework with the specific focus of helping companies that are offering SSS-based services compete with more legacy transport modes. The objective is to increase operational automation and, overall, to increase the competitiveness of the European maritime sector whereas at the same time, extending the current communications and data sharing infrastruc- ture to promote interaction of the e-Maritime Applications and produce additional e-Freight Applications. e-Customs In June 15, 2016, the EC published the ‘2015 e-­Customs Progress Report’, which is the eighth report, prepared as stated in Article 12 of the Decision 70/2008/EC “on a paperless environment for customs and trade”, known as the e-Customs Decision. According to this report, each Member State is required to publish an annual report evaluating its progress and setting its operational and financial objec- tives towards the implementation of the e-Customs initiative. The Commission along with the Member States should establish a Multi- Annual Strategic Plan (MASP), an essential tool for managing and coordinating the projects related to the e-Customs initiative at Community and national level. Towards the modernization of the EU customs legal regime and the evolution of the EU Customs Union, the Commission adopted the Union Customs Code (UCC) as Regulation 952/2013 that will be implemented gradually from May 1, 2016, until the end of 2020, serving as the legal foundation for the e-customs modern environment. 78 S. Papadimitriou et al. SafeSeaNet SafeSeaNet is a vessel traffic monitoring and information system that aims to improve maritime safety and security, protect the environment, and enhance the efficiency of maritime transport. It was established mainly as a network for maritime data exchange among the European maritime authorities, some of which are: • Automatic ship identification systems (AIS)-based information (posi- tion, flag, speed, dimensions etc.) • Historical ship positions • Estimated and actual times of arrival/departure • Information on security, safety, and pollution related incidents There is a constantly rising volume of information provided via the SafeSeaNet system, giving the opportunity to more and different types of users to benefit from it. Vessel Specific Regulations United Nations Convention on the Law of the Sea The United Nations Convention on the Law of the Sea (UNCLOS), also called the Law of the Sea Convention, came into force in 1994 and has been ratified by 167 countries and the EU.2 However, the US, because of their disagreement to part XI of the Convention, is still not a part of it. The UNCLOS lays out guidelines for commercial activities, the manage- ment of the marine habitat and its economic utilization, defining both the rights as well as the responsibilities of nations. It consists of 17 parts (containing 320 articles) and 9 annexes, briefly summarized in the table below: 2 As of June 2016. Regulatory Framework 79 Part Description Preamble Introduction Use of terms and scope Territorial sea and General provisions and limits, rules according to contiguous zone ship type Straits used for Legal status, duties of ships and States, sea lanes, international navigation pollution reduction Archipelagic States Baselines, existing agreements, duties of ships and States Exclusive Economic Zone Specific legal regime, conservation and (EEZ) utilization of resources, delimitation of the EEZ between neighbouring States, charts of geographical coordinates Continental Shelf Definition, legal status, rights and charts High Seas Right of navigation, definition of piracy, fishing rights, conservation of the living resources, duty of States Regime of islands Definition and regime Enclosed or semi-closed seas Definition and cooperation of States Right of access of Customs duties and taxes, free zones, measures landlocked States to and to avoid delays, and equal treatment in ports from the sea and freedom of transit The area Legal status, responsibility, production policies, protection of environment and human life, financial arrangements of the authority, and annual audit Protection and preservation Pollution reduction methods, cooperation, of the marine technical assistance, environmental assessment, environment and international/national legislation Marine scientific research Conduct and promotion, equipment and responsibility Development and transfer Coordination of international programmes, of marine technology establishment of marine scientific and technological centres Settlement of disputes General Provisions, compulsory procedures, and exceptions General provisions Good faith, abuse of rights, and responsibility Final provisions Exceptions, relation to other conventions and amendments Annexes http://www.un.org/depts/los/convention_agreements/texts/unclos/UNCLOS-TOC. htm 80 S. Papadimitriou et al. As the technology is developing and the needs of people are growing, nautical laws such as the UNCLOS become a necessity, so that the marine environment and reserves can be properly safeguarded. e Concept of ‘Genuine Link’ in the International Maritime Th Law The concept of ‘Genuine Link’ and the necessity of its existence between a ship and the State, are provided in Article 5 of the 1958 Convention on the High Seas and Article 91 of the 1982 UNCLOS. However, neither of them explicitly defines the meaning of the term, nor do they state the consequences of its absence. The 1986 UN Convention on Conditions for Registration of Ships claims that an international instrument is, for the first time, defining the elements of the ‘Genuine Link’, however it still has not resolved the issue. According to International Maritime Law, the following conclusions may legitimately be drawn: • A ship registration does not itself make the link, between the ship and the State, genuine. It is, also, essential that such circumstances exist which show that the link is not casual or artificial. • A criterion based on which the genuineness of a link is proved does not exist. Every State must ensure that the ships having its nationality have a genuine link with it, such as its ability to exercise its authority over the ship. Although this ability is not an obligatory criterion, it is one of the dominant methods for the demonstration of the link’s genuineness. • In case of non-existence of a genuine link, the State may be unwilling to diplomatically protect a ship flying its flag. The Blue Belt Pilot Project The EC, in cooperation with the European Maritime Safety Agency (EMSA), initiated the Blue Belt pilot project in the seas around Europe, with a view to minimize unnecessary administrative burden for intra- Community trade, simplify the formalities for vessels travelling between Regulatory Framework 81 EU ports and enhance the attractiveness of SSS European Commission (2011). When one of the ‘Blue Belt Ships’ is expected to arrive in a port, maritime customs authorities are already being informed auto- matically to commence risk assessment and avoid unnecessary customs controls that increase red tape and delays. Two hours prior to the ves- sel’s arrival at an EU port, EMSA via the SafeSeaNet system sends a report to customs officers containing several details including informa- tion about the ship, the captain, the port of sailing, the voyage, the route sailed and International Ship and Port Facilities Security (ISPS) data about the ten previous ports of call, thus concluding an important part of risk analysis for them. Upgrades for the Blue Belt system include improving the information customs officials obtain as well as Machine Learning and Artificial Intelligence-based analytics for several behavioural aspects like unfore- seen events, route deviations, unexpected stops, and speed changes. Labour Regulations Crew Compositions In many respects there are fundamental differences between deep sea shipping and SSS. Although each ship type requires a different crew com- position, short sea vessels may be less complex regarding legal issues, operations, and manning. The final report of the ‘Impact on Short Sea Shipping of the “Maritime Unmanned Navigation through Intelligence in Networks”’ (MUNIN) project, which was co-funded by the Commission within the Seventh Framework Programme, discusses such issues and pro- poses cases for unmanned short sea ships. The report indicates that, in general, the concept of the unmanned ship is easier to adopt in the SSS and it will result in lower investment costs and smaller risk. The results of the project implicate that there will be a shift of the naval professions from ship to shore, which opens new professional per- spectives for mariners and sets the foundations for the development of ‘shore-based seafaring’. 82 S. Papadimitriou et al. Regulation 14 of the International Convention for the Safety of Life at Sea (SOLAS Convention), Chapter V, defines specific requirements for the safe manning of vessels to ensure navigational safety. The number of crew members must always be sufficient for the safety and efficiency of shipping operations. The Regulation states that all vessels to which SOLAS Chapter I applies must hold a safe manning document, and those are ships on international voyages—cargo ships of 500 GT or more and all passenger ships. The number and grades of personnel should be sufficient to ensure that they obtain enough rest, the required watchkeep- ing standard can be maintained, no overtime duties are required, they are able to perform their duties in accordance with the International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW) Code, and the crew members are not required to work under conditions threatening their health and safety. ILO The International Labor Organization (ILO) sets international labour standards through international agreements and conventions. These Conventions cover issues such as: equal remuneration, abolition of forced labour, freedom of association and protection of the right to organize and discrimination. The ILO has developed various supervisory mechanisms to assess the application of conventions and agreements, the submission of periodic reports on a regular basis and the special procedures. The Maritime Labour Convention (MLC) was adopted in February 2006, came into force on August 20, 2013, and it is widely known as the ‘seafarers’ bill of rights’. It establishes minimum labour and living requirements for seafarers working at vessels flying the flags of countries that have ratified the Convention.3 The MLC defines seafarers as “all persons who are employed or are engaged or work in any capacity on board a ship to which the Convention applies”, which basically includes both people responsible for the operation of the ship, as well as people who work for the entertainment of a cruise’s 3 The Convention’s requirements are applicable to vessels sailing in international/national or domestic voyages. Exceptions include those navigating exclusively in inland waters or waters within or close to areas where port regulations apply; those engaged in fishing or similar pursuits; and ships of traditional build such as dhows and junks and warships or naval auxiliaries. Regulatory Framework 83 passengers. Some of the conditions include requirements on employment conditions, recruitment practices, hours of work, annual leave, accommoda- tion, recreational facilities, occupational safety and health and onshore wel- fare services. The first amendments to the MLC were approved by the 103rd Conference of ILO on June 11, 2014, in Geneva and entered into force on January 18, 2017. They require that shipowners provide appropriate com- pensation to seafarers and their families in cases of abandonment, death or long-term disability due to a job-related injury, illness or hazard, via a finan- cial security system. Moreover, they introduce two new situations of aban- donment: they refer to when a seafarer is being left without the appropriate support or when the shipowner fails to pay wages of at least two months. Indicatively, regulations on the MLC as amended state that: • The basic monthly wage of an able seafarer should be no less than the amount periodically set by the Joint Maritime Commission (JMC) or other body authorized by the Governing Body of the International Labour Office. • Each Member shall require that shipowners take measures, to provide seafarers with a means to transmit all or part of their earnings to their families or legal beneficiaries. • Maximum hours of work shall not exceed 14 hours in any 24-hour period; and 72 hours in any seven-day period. On the other hand, minimum rest hours shall not be less than 10 hours in any 24-hour period; and 77 hours in any seven-day period. • Financial assistance should be sufficient to cover the cost of repatria- tion, the essential needs of the seafarer and any other expenses that emerge from the abandonment. The amendments of 2016 to the MLC are not yet in force, but the expected date of enforcement is January 8, 2019. EU Directives for Labour Matters The EC strives to improve employment and working conditions for seafarers, which is essential for upholding maritime safety, protecting the marine environment and overall supporting the growth of 84 S. Papadimitriou et al. the European maritime industry and ‘blue economy’. With a view to promote the attractiveness of maritime professions the EC has funded relevant projects4 and makes continuous effort to update the EU legis- lation and monitor the implementation of the EU enforcement instruments. In January 2009, the Commission issued a communication on strate- gic goals and recommendations for the EU’s maritime transport policy until 2018 (COMM/2009/0008). Among others it was identified that exploiting the full potential of SSS, increasing the attractiveness of ­maritime professions, and improving seafarers’ training form impending challenges for the maritime transport industry. With regard to the labour conditions, the Commission proposed the development of a framework for the safe manning of ships, highlighting the issue of tiredness and adequate supervision. The EU also aims to ensure the implementation of the ILO 2006 MLC to improve working and living conditions on board ships. EU social partners agreed on the implementation of cornerstones of this Convention, which is a fact that demonstrates the wide support of the industry. Directive 2012/35/EU amending Directive 2008/106/EC on the min- imum level of training of seafarers, specifies that the training and certifi- cation of seafarers is regulated by the IMO International Convention on Standards of Training, Certification and Watchkeeping for Seafarers (STCW Convention). Directive 2015/1794/EU revised the context of five directives5 on informing and consulting workers, work councils, col- lective redundancies and employer insolvency and included seafarers so that they would have the same rights as the onshore employees and be covered by them in all Member States. The purpose of those inclusions was to increase the number of seafarers, which is gradually declining the last few years, by boosting the attractiveness of the maritime sector. 4 For example, Train-MOS, Trainmos II, KNOW-ME / Go Maritime—The European Maritime Career Portal, ‘Vasco Da Gama – Training for Greener and Safer Maritime Transport’ to name but a few. 5 2008/94/EC: Protection of employees in the event of the insolvency of their employer. 2009/38/EC, 2002/14/EC: Information and consultation of employees. 98/59/EC: Approximation of MS laws on collective redundancies. 2001/23/EC: Approximation of MS laws on safeguarding employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses. Regulatory Framework 85 Operations International Convention for the Safety of Life at Sea The SOLAS Convention in its successive forms is generally regarded as the most important of all international treaties concerning the safety of merchant ships. The first version was adopted in 1914, in response to the Titanic disaster, the second in 1929, the third in 1948, and the fourth in 1960. The 1974 version includes the tacit acceptance procedure which provides that an amendment shall enter into force on a specified date unless, before that date, objections to the amendment are received from an agreed number of Parties. As a result, the 1974 Convention has been updated and amended on numerous occasions. The Convention in force today is sometimes referred to as SOLAS, 1974, as amended. Technical Provisions The main objective of the SOLAS Convention is to specify minimum stan- dards for the construction, equipment and operation of ships, compatible with their safety. Flag States are responsible for ensuring that ships under their flag comply with its requirements, and a number of certificates are prescribed in the Convention as proof that this has been done. Control provisions also allow Contracting Governments to inspect ships of other Contracting States if there are clear grounds for believing that the ship and its equipment do not substantially comply with the requirements of the Convention—this proce- dure is known as Port State Control. The​current SOLAS Convention includes Articles setting out general obligations, amendment procedure, and so on, followed by an Annex divided into 14 Chapters. Chapter I: General Provisions Includes regulations concerning the survey of the various types of ships and the issuing of documents signifying that the ship meets the require- ments of the Convention. The Chapter also includes provisions for the control of ships in ports of other Contracting Governments. 86 S. Papadimitriou et al. Chapter II-1: Construction: Subdivision and Stability, Machinery, and Electrical Installations The subdivision of passenger ships into watertight compartments must be such that after assumed damage to the ship’s hull, the vessel will remain afloat and stable. Requirements for watertight integrity and bilge pump- ing arrangements for passenger ships are also laid down as well as stability requirements for both passenger and cargo ships. The degree of subdivision—measured by the maximum permissible distance between two adjacent bulkheads—varies with ship’s length and the service in which it is engaged. The highest degree of subdivision applies to passenger ships. Requirements covering machinery and electrical installations are designed to ensure that services which are essential for the safety of the ship, passengers and crew are maintained under various emergency conditions. ‘Goal-based standards’ for oil tankers and bulk carriers were adopted in 2010, requiring new ships to be designed and constructed for a speci- fied design life and to be safe and environmentally friendly, in intact and specified damage conditions, throughout their life. Under the regulation, ships should have adequate strength, integrity, and stability to minimize the risk of loss of the ship or pollution to the marine environment due to structural failure, including collapse, resulting in flooding or loss of watertight integrity. Chapter II-2: Fire Protection, Fire Detection, and Fire Extinction Includes detailed fire safety provisions for all ships and specific measures for passenger ships, cargo ships and tankers. They include the following principles: division of the ship into main and vertical zones by thermal and structural boundaries; separation of accommodation spaces from the remainder of the ship by thermal and structural boundaries; restricted use of combustible materials; detection of any fire in the zone of origin; containment and extinction of any fire in the space of origin; protection of the means of escape or of access for fire-fighting purposes; ready availability of fire-extinguishing appliances; minimization of the possibility of ignition of flammable cargo vapour. Regulatory Framework 87 Chapter III: Life-Saving Appliances and Arrangements The Chapter includes requirements for life-saving appliances (LSAs) and arrangements, including requirements for life boats, rescue boats and life jackets according to type of ship. The International LSA Code gives spe- cific technical requirements for LSAs and is mandatory under Regulation 34, which states that all LSAs and arrangements shall comply with the applicable requirements of the LSA Code. Chapter IV: Radiocommunications The Chapter incorporates the Global Maritime Distress and Safety System (GMDSS). All passenger ships and all cargo ships of 300 gross tonnage and upwards on international voyages are required to carry equipment designed to improve the chances of rescue following an acci- dent, including satellite emergency position indicating radio beacons (EPIRBs) and search and rescue transponders (SARTs) for the location of the ship or survival craft. Regulations in Chapter IV cover undertakings by contracting govern- ments to provide radiocommunication services as well as ship require- ments for carriage of radiocommunications equipment. The Chapter is closely linked to the Radio Regulations of the International Telecommunication Union. Chapter V: Safety of Navigation Chapter V identifies certain navigation safety services which should be provided by Contracting Governments and sets forth provisions of an operational nature applicable in general to all ships on all voyages. This is in contrast to the Convention as a whole, which only applies to certain classes of ship engaged on international voyages. The subjects covered include the maintenance of meteorological ser- vices for ships; the ice patrol service; routeing of ships; and the mainte- nance of search and rescue services. This Chapter also includes a general obligation for masters to proceed to the assistance of those in distress and for Contracting Governments to ensure that all ships shall be sufficiently and efficiently manned from a safety point of view. 88 S. Papadimitriou et al. The Chapter makes mandatory the carriage of voyage data recorders (VDRs) and AIS. Chapter VI: Carriage of Cargoes The Chapter covers all types of cargo (except liquids and gases in bulk) “which, owing to their particular hazards to ships or persons on board, may require special precautions”. The regulations include requirements for stowage and securing of cargo or cargo units (such as containers). The Chapter requires cargo ships carrying grain to comply with the International Grain Code. Chapter VII: Carriage of Dangerous Goods The regulations are contained in four parts: Part A—Carriage of dangerous goods in packaged form—includes provi- sions for the classification, packing, marking, labelling and placarding, documentation, and stowage of dangerous goods. Contracting Governments are required to issue instructions at the national level and the Chapter makes mandatory the International Maritime Dangerous Goods (IMDG) Code, developed by IMO, which is con- stantly updated to accommodate new dangerous goods and to supple- ment or revise existing provisions. Part A-1—Carriage of dangerous goods in solid form in bulk—covers the documentation, stowage, and segregation requirements for these goods and requires reporting of incidents involving such goods. Part B covers Construction and equipment of ships carrying dangerous liquid chemicals in bulk and requires chemical tankers to comply with the International Bulk Chemical Code (IBC Code). Part C covers Construction and equipment of ships carrying liquefied gases in bulk and gas carriers to comply with the requirements of the International Gas Carrier Code (IGC Code). Part D includes special requirements for the carriage of packaged irradi- ated nuclear fuel, plutonium and high-level radioactive wastes on board ships and requires ships carrying such products to comply with the International Code for the Safe Carriage of Packaged Irradiated Regulatory Framework 89 Nuclear Fuel, Plutonium and High-Level Radioactive Wastes on Board Ships (INF Code). The Chapter requires carriage of dangerous goods to be in compliance with the relevant provisions of the IMDG Code. Chapter VIII: Nuclear Ships Gives basic requirements for nuclear-powered ships and is particularly concerned with radiation hazards. It refers to detailed and comprehensive Code of Safety for Nuclear Merchant Ships which was adopted by the IMO Assembly in 1981. Chapter IX: Management for the Safe Operation of Ships The Chapter makes mandatory the International Safety Management (ISM) Code, which requires a safety management system to be estab- lished by the shipowner or any person who has assumed responsibility for the ship (the ‘Company’). Chapter X: Safety Measures for High-Speed Craft The Chapter makes mandatory the International Code of Safety for High-Speed Craft (HSC Code). Chapter XI-1: Special Measures to Enhance Maritime Safety The Chapter clarifies requirements relating to authorization of recog- nized organizations (responsible for carrying out surveys and inspections on Administrations’ behalves); enhanced surveys; ship identification number scheme; and Port State Control on operational requirements. Chapter XI-2: Special Measures to Enhance Maritime Security Regulation XI-2/3 of the Chapter enshrines the ISPS Code. Part A of the Code is mandatory and part B contains guidance as to how best to com- ply with the mandatory requirements. Regulation XI-2/8 confirms the role of the Master in exercising his professional judgement over decisions necessary to maintain the security of the ship. It says he shall not be con- strained by the Company, the charterer or any other person in this respect. 90 S. Papadimitriou et al. Regulation XI-2/5 requires all ships to be provided with a ship security alert system. Regulation XI-2/6 covers requirements for port facilities, pro- viding among other things for Contracting Governments to ensure that port facility security assessments are carried out and that port facility security plans are developed, implemented and reviewed in accordance with the ISPS Code. Other regulations in this Chapter cover the provision of information to IMO, the control of ships in port, (including measures such as the delay, detention, restriction of operations including movement within the port, or expulsion of a ship from port), and the specific responsibility of Companies. Chapter XII: Additional Safety Measures for Bulk Carriers The Chapter includes structural requirements for bulk carriers over 150 metres in length. Chapter XIII: Verification of Compliance Makes mandatory from January 1, 2016, the IMO Member State Audit Scheme. Chapter XIV: Safety Measures for Ships Operating in Polar Waters The Chapter makes mandatory, from January 1, 2017, the Introduction and Part I-A of the International Code for Ships Operating in Polar Waters (the Polar Code)​. Amendments The 1974 Convention has been amended many times to keep it up to date. See History of SOLAS http://www.imo.org/en/About/Conventions/ Pages/Action-Dates.aspx. International Convention on Standards of Training, Certification, and Watchkeeping for Seafarers The 1978 STCW Convention was the first to establish basic require- ments on training, certification and watchkeeping for seafarers on an international level. Previously the standards of training, certification and Regulatory Framework 91 watchkeeping of officers and ratings were established by individual gov- ernments, usually without reference to practices in other countries. As a result, standards and procedures varied widely, even though shipping is the most international of all industries. The Convention prescribes minimum standards relating to training, certification, and watchkeeping for seafarers which countries are obliged to meet or exceed. The 1995 amendments represented a major revision of the Convention, in response to a recognized need to bring the Convention up to date and to respond to critics who pointed out the many vague phrases, such as ‘to the satisfaction of the Administration’, which resulted in different inter- pretations being made. The 1995 amendments entered into force on February 1, 1997. One of the major features of the revision was the division of the technical annex into regulations, divided into Chapters as before, and a new STCW Code, to which many technical regulations were transferred. Part A of the Code is mandatory while Part B is recommended. Dividing the regulations up in this way makes administration easier and it also makes the task of revising and updating them more simple: for procedural and legal reasons there is no need to call a full conference to make changes to Codes. Another major change was the stipulation that Parties to the Convention are required to provide detailed information to IMO con- cerning administrative measures taken to ensure compliance with the Convention. This represented the first time that IMO had been called upon to act in relation to compliance and implementation—generally, implementation is down to the flag States, while Port State Control also acts to ensure compliance. Under Chapter I, regulation I/7 of the revised Convention, Parties are required to provide detailed information to IMO concerning administrative measures taken to ensure compliance with the Convention, education and training courses, certification procedures, and other factors relevant to implementation. The information is reviewed by panels of competent persons, nominated by Parties to the STCW Convention, who report on their findings to the IMO Secretary-General, who, in turn, reports to the Maritime Safety Committee (MSC) on the Parties which fully comply. The MSC then produces a list of ‘confirmed Parties’ in compliance with the STCW Convention. 92 S. Papadimitriou et al. STCW Convention Chapters Chapter I: General provisions Chapter II: Master and deck department Chapter III: Engine department Chapter IV: Radiocommunication and radio personnel Chapter V: Special training requirements for personnel on certain types of ships Chapter VI: Emergency, occupational safety, medical care and survival functions Chapter VII: Alternative certification Chapter VIII: Watchkeeping The STCW Code The regulations contained in the Convention are supported by sections in the STCW Code. Generally speaking, the Convention contains basic require- ments which are then enlarged upon and explained in the Code. Part A of the Code is mandatory. The minimum standards of competence required for seagoing personnel are given in detail in a series of tables. Part B of the Code contains recommended guidance which is intended to help Parties imple- ment the Convention. The measures suggested are not mandatory and the examples given are only intended to illustrate how certain Convention requirements may be complied with. However, the recommendations in gen- eral represent an approach that has been harmonized by discussions within IMO and consultation with other international organizations. The Manila amendments to the STCW Convention and Code were adopted on June 25, 2010, marking a major revision of the STCW Convention and Code. The 2010 amendments entered into force on January 1, 2012, under the tacit acceptance procedure and are aimed at bringing the Convention and Code up to date with developments since they were initially adopted and to enable them to address issues that are anticipated to emerge in the foreseeable future. Amongst the amendments adopted, there are a number of important changes to each chapter of the Convention and Code, including: Regulatory Framework 93 • Improved measures to prevent fraudulent practices associated with certificates of competency and strengthen the evaluation process (monitoring of Parties’ compliance with the Convention); • Revised requirements on hours of work and rest and new requirements for the prevention of drug and alcohol abuse, as well as updated stan- dards relating to medical fitness standards for seafarers; • New certification requirements for able seafarers; • New requirements relating to training in modern technology such as electronic charts and information systems (ECDIS); • New requirements for marine environment awareness training and training in leadership and teamwork; • New training and certification requirements for electro-technical officers; • Updating of competence requirements for personnel serving on board all types of tankers, including new requirements for personnel serving on liquefied gas tankers; • New requirements for security training, as well as provisions to ensure that seafarers are properly trained to cope if their ship comes under attack by pirates; • Introduction of modern training methodology including distance learning and web-based learning; • New training guidance for personnel serving on board ships operating in polar waters; and • New training guidance for personnel operating Dynamic Positioning Systems. MARPOL 73/78 The International Convention for the Prevention of Pollution from Ships (MARPOL) is the main international convention covering prevention of pollution of the marine environment by ships from operational or acci- dental causes. The MARPOL Convention was adopted on November 2, 1973, at IMO. The Protocol of 1978 was adopted in response to a spate of tanker accidents in 1976–1977. As the 1973 MARPOL Convention had not yet 94 S. Papadimitriou et al. entered into force, the 1978 MARPOL Protocol absorbed the parent Convention. The combined instrument entered into force on October 2, 1983. In 1997, a Protocol was adopted to amend the Convention and a new Annex VI was added which entered into force on May 19, 2005. MARPOL has been updated by amendments through the years. The Convention includes regulations aimed at preventing and mini- mizing pollution from ships—both accidental pollution and that from routine operations—and currently includes six technical Annexes. Special Areas with strict controls on operational discharges are included in most Annexes. Annex I Regulations for the Prevention of Pollution by Oil (Entered into Force October 2, 1983) Covers prevention of pollution by oil from operational measures as well as from accidental discharges; the 1992 amendments to Annex I made it mandatory for new oil tankers to have double hulls and brought in a phase-in schedule for existing tankers to fit double hulls, which was sub- sequently revised in 2001 and 2003. Annex II Regulations for the Control of Pollution by Noxious Liquid Substances in Bulk (Entered into Force October 2, 1983) Details the discharge criteria and measures for the control of pollution by noxious liquid substances carried in bulk; some 250 substances were eval- uated and included in the list appended to the Convention; the discharge of their residues is allowed only to reception facilities until certain con- centrations and conditions (which vary with the category of substances) are complied with. In any case, no discharge of residues containing noxious substances is permitted within 12 miles of the nearest land. Annex III Prevention of Pollution by Harmful Substances Carried by Sea in Packaged Form (Entered into Force July 1, 1992) Contains general requirements for the issuing of detailed standards on packing, marking, labelling, documentation, stowage, quantity limita- tions, exceptions, and notifications. For the purpose of this Annex, “harmful substances” are those sub- stances which are identified as marine pollutants in the International Regulatory Framework 95 Maritime Dangerous Goods Code (IMDG Code) or which meet the cri- teria in the Appendix of Annex III. Annex IV Prevention of Pollution by Sewage from Ships (Entered into Force September 27, 2003) Contains requirements to control pollution of the sea by sewage; the discharge of sewage into the sea is prohibited, except when the ship has in operation an approved sewage treatment plant or when the ship is discharging comminuted and disinfected sewage using an approved sys- tem at a distance of more than three nautical miles from the nearest land; sewage which is not comminuted or disinfected has to be discharged at a distance of more than 12 nautical miles from the nearest land. Annex V Prevention of Pollution by Garbage from Ships (Entered into Force December 31, 1988) Deals with different types of garbage and specifies the distances from land and the manner in which they may be disposed of; the most important feature of the Annex is the complete ban imposed on the disposal into the sea of all forms of plastics. Annex VI Prevention of Air Pollution from Ships (Entered into Force May 19, 2005) Sets limits on sulphur oxide and nitrogen oxide emissions from ship exhausts and prohibits deliberate emissions of ozone depleting sub- stances; designated ECAs set more stringent standards for SOx, NOx, and particulate matter. A chapter adopted in 2011 covers mandatory technical and operational energy efficiency measures aimed at reducing greenhouse gas emissions from ships. Port State Control Port State Control is an internationally agreed regime to assure compliance with the requirements of conventions, such as SOLAS, STCW, MARPOL, and the MLC. The procedure involves the inspection of foreign vessels and particularly verification of the ships’ condition, equipment, and crew, by Port State Control (PSC) inspectors. In addition, it involves checking of 96 S. Papadimitriou et al. important documents6 and technical details in the engine room of the ves- sel, some of which are: • General appearance and cleanliness, compliance with the garbage management plan • Checks on safety and emergency equipment • Inspection of LSAs and Firefighting appliances (FFA) • Machinery inspection in Engine and Steering room for abnormalities, leakages, and/or deficiencies • Checking of the Oily Water Separator Port State Control was established in 1982, after the agreement of the Paris Memorandum of Understanding (Paris MoU), followed by several other regional MoUs7 (Fig. 5.2). • Paris MoU—Blue • Tokyo MoU—Red • Acuerdo Latino—Yellow • Indian Ocean MoU—Green • Mediterranean MoU—Dark green • Caribbean MoU—Olive • Black Sea MoU—Cyan • Riyadh MoU—Navy blue Customs Authorized Economic Operator (AEO) The AEO concept was introduced by the World Customs Organization (WCO), to strengthen the safety and security of international trade and 6 Such as: Cargo Record Book, International tonnage certificate, Compliance and Safety Management Certificate (ISM Code), International Load Line Certificate, Cargo ship safety radio- telegraphy and radiotelephony certificates or GMDSS, Passenger ship safety certificate, BWM plan, Engine room and deck log book and Stowage plan. 7 The U.S.A. is not a member of any PSC MoU, and the inspections are being carried out by the United States Coast Guard (USCG). Regulatory Framework 97 Fig. 5.2 Port State Control Nations in highlight. (Kristofferjay—Own work/CC BY-SA 3.0) simplify customs procedures. The EU established the AEO concept through security amendments to Regulation (EC) 648/2005 (Community Customs Code—CCC). It lays a commonly agreed regulatory framework for goods brought into or out of the Community to ensure harmonized customs con- trols, better transparency and risk minimization to the Member States and their citizens. The legislation offers several direct and indirect benefits to natural and legal persons involved in international trade, some of which are: • Fewer physical and document inspections, fewer delays • Prior notification and priority when selected for inspection • Ability to request desired place for control • Reduction of the administration costs • Improved customer service • Better planning of operations There are three types of AEO certificates, the AEOC (Customs Simplifications), the AEOS (Security and Safety), and the AEOF (Customs Simplifications/Security and Safety), each of which has 98 S. Papadimitriou et al. different requirements and benefits. An AEO is expected to act in line with customs, whereas customs, in return, are expected to provide them with certain benefits. The five basic criteria for becoming an AEO are: • Compliance with customs and taxation legislation and taxation rules. • Customs will review the company’s records of customs and tax ­compliance over the last three years, as well as possible infringements committed by the company or any other person in the company related to customs and legal matters. • Appropriate record keeping system and procedures. • There should be a satisfactory and appropriate logistical and account- ing system with internal audits and controls. • Financial solvency. • The company will have to show proof of the company’s financial sol- vency for the last three years before the date of the application. • Proven standards of competence and qualifications. • Evidence should be demonstrated regarding practical competence for the past three years, for different people varying according to business size and type. • Appropriate security and safety standards (only for AEOS or AEOF). • A safety and security risk assessment must be carried out, such as the prevention of unauthorized access to cargo and shipping areas, stor- ages, and so on. Customs Trade Partnership Against Terrorism The Customs Trade Partnership Against Terrorism (CTPAT) is a volun- tary public-private sector initiative, launched in November 2001, aiming to improve international supply chains and enhance US border security. According to the CTPAT, the U.S. Customs and Border Protection (CBP) can provide cargo security at the highest degree only when cooperating closely with the stakeholders of the international supply chain. Entities who join CTPAT agree to work with CBP on identifying security issues and implementing best practices, and enjoy a variety of benefits, such as: Regulatory Framework 99 • Lower number of CBP examinations • Reduced examination cost for importers • Shorter waiting period at the borders—CTPAT shipments are being processed ahead of any non-CTPAT ones • Access to the Free and Secure Trade (FAST) Lanes • Access to the CTPAT web-based system and the ‘Public Document Library’ with training materials on supply chain security, as well as lists of best practices • Additional possible benefits to foreign Customs administrations that have Mutual Recognition Arrangements (MRA) with the US On May 4, 2012, the US and the EU signed a Mutual Recognition Arrangement of the CTPAT and the AEO programmes. Each customs authority recognizes the members of the other as its own and treats them accordingly, to the extent possible. In addition, the exchange of programme information between the two parties is a requirement for the implementation of Mutual Recognition, creating a unified and sus- tainable security perspective, while avoiding duplicated security controls. Terminals and Ports Regulation (EU) 2017/352 of the European Parliament and of the Council is part of the revised TEN-T guidelines and was adopted on February 15, 2017. Its basic objectives are to establish a framework for the protection of port services and port operators against uncertainties and to set up basic principles on ports’ financial transparency. This strat- egy covers 319 major seaports and creates a more stable legal environ- ment for port investments without affecting the application of social and labour rules of the Member States. Short sea vessels often remain in a port for an average of six hours, dur- ing which power is necessary to run on-board systems, such as heating and other similar equipment. Consequently, residents must put up with emissions as well as noise that deteriorate the quality of life and requires additional investment on the vessel and ashore. 100 S. Papadimitriou et al. Similarly, the EU Water Framework Directive (WFD)8 was adopted on October 23, 2000, and came into force almost two months later, to address the issue of water pollution after high demand by citizens. Its purpose is to set up a framework to protect inland surface waters, ­transitional waters, coastal waters and groundwater. The Directive sup- ports that water should be treated and protected as a heritage and that an effective water policy should consider the vulnerability of aquatic ecosystems by progressively reducing the discharges of dangerous sub- stances, while providing economic benefits at the same time. The Environmental Liability Directive,9 which was adopted on April 30, 2004, establishes rules based on the ‘polluter-pays’ principle. In other words, an operator responsible for environmental damage to water, land or natural habitats is liable for it and must bear all the costs related to mandatory preventive or remedial actions. Those actions should be evaluated based on numerous criteria, such as their effect to public health and safety, the implementation cost, the likelihood of success and the extent to which each one will prevent future damage, so that appropriate decision can be taken by the competent authority. The Environmental Impact Assessment (EIA) Directive10 focuses on protecting the environment and the quality of life by assessing various public and private projects (defined in Annexes I and II) to make sure that they are environmentally sustainable. The EIA procedure strives to ensure that environmental deliberations are being considered in the decision-­making process, that there is more transparency and therefore social acceptance. A summary of the EIA report should be provided to the people who will be affected by the proposed project, some of which are the investors, residents and local companies. The Strategic Environmental Assessment (SEA) Directive11 is applica- ble to several public plans and programmes (e.g. on energy, transport, 8 Directive 2000/60/EC of the European Parliament and of the Council establishing a framework for the Community action in the field of water policy. 9 Directive 2004/35/EC on environmental liability regarding the prevention and remedying of environmental damage. 10 The initial Directive 85/337/EEC on the assessment of the effects of certain public and private projects on the environment as amended by Directives 97/11/EC, 2003/35/EC and 2009/31/EC, have been codified by Directive 2011/92/EU of 13 December 2011. Directive 2011/92/EU has been amended in 2014 by Directive 2014/52/EU. 11 Directive 2001/42/EC on the assessment of the effects of certain plans and programs on the environment. Regulatory Framework 101 waste/water management) and must be done much earlier in the decision-­ making process than EIA, making it a key tool for sustainable develop- ment. At the end of the evaluation phases the Directive establishes the creation of a necessary environmental report available to the public, which provides information such as the main objectives of the plans and the foreseen measures to reduce negative effects on the environment. With respect to charges, dues and financial related expenses applicable to sea transport there are numerous business models adopted by the port authorities and pertaining to the types of the authorities themselves. For example, the Norwegian ports, being closely connected to the municipal- ity, are structured based on municipal port districts containing publicly as well as privately held piers. The Norwegian Port and Seaways Act, according to which each municipality manages their port district, indi- cates that there should be a distinction between port funding and munic- ipal economy, highlighting that any possible charges collected by the ports should be used for the sole purpose of benefiting them. Even in port districts that are owned by municipalities, several operations, such as cargo handling, are being performed by private companies Finger and Holvad (2013). As far as the charging regime is concerned, the charges are associated partially to the port use and partially to the operation of ship inspection systems, navigation through waterways, and so on. An indicative port dues structure includes the following cost elements: • Navigation Charges –– Coastal fees –– Pilotage fees and Readiness fees –– Safety fees • Port Charges –– Wharfage –– Harbour charges –– Additional charges • Goods Charges usually calculated per tonne and normally differenti- ated by product type. 102 S. Papadimitriou et al. The costs and the quality of the offered port services are a major factor for European business, since port costs is a major determinant of the total logistics. Servicing and Repairs The MSC 96 has approved amendments to SOLAS Regulation III/20 concerning maintenance, inspections, and operational readiness. More specifically, resolution MSC 402(96) adopted “Requirements for mainte- nance, thorough examination, operational testing, overhaul and repair of lifeboats and rescue boats, launching appliance and release gear”, which will become effective from 2020. Environment Emissions Airborne emissions from ships account approximately for 50,000 prema- ture deaths annually in Europe according to recent studies (CEEH March 2011). Particles directly emitted by ships, such as black carbon, as well as secondary particles resulting from chemical reactions, increase the nega- tive health impacts of shipping and are associated with premature deaths. The shipping industry attains a vast array of tools and techniques to reduce pollution, most of which are available, easily implementable, and compliant with the international environmental regulations. Ballast Water Management The IMO’s International Convention for the Control and Management of Ships’ Ballast Water and Sediments (BWM) was adopted in February 13, 2004, and entered into force in September 8, 2017. It establishes standards and guidelines for the management of ships’ ballast water, to prevent the spreading of aquatic organisms from one region to another. Under the Convention, ships which are engaged in international voyages Regulatory Framework 103 are required to manage their ballast water and sediments according to a ship-specific BWM plan, approved by the Member’s Flag Administration, as well as carry a Ballast Water Record Book and an international BWM certificate. Eventually, most vessels will be required to install an on-board ballast water treatment system in compliance with the IMO’s standards. The US is not a State Party to the BWM Convention, but it has adopted the US Coast Guard (USCG) Regulations. Those Regulations require that most ships operating in US waters, must have installed a BWM sys- tem according to the USCG’s standards after January 1, 2016. The State of California has its own BWM standards, stricter than those of the USCG. The main difference between the USCG regulations and the BWM Convention lies in the testing and verification protocols. In 2008 the IMO updated the recommendatory G8 Guidelines for the approval of ballast water management systems (BWMS), which do not require type-approval testing to be done by an independent of the manufacturer organization. On the contrary, the corresponding Coast Guard proce- dures are detailed and mandatory. he EU MRV (Monitoring, Reporting, and Verification) T Plan The EU Regulation 2015/757 on the monitoring, reporting, and verifica- tion of carbon dioxide emissions from maritime transport (MRV Shipping Regulation) includes a strategic framework that needs to be implemented for the GHG emissions to be reduced. It was proposed by the European Commission (EC) in June 2013, adopted by the European Parliament in April 2015 and came into force on July 1, 2015. The strategy consists of three consecutive steps: • Design of a globally accepted system to monitor, report, verify, and measure the footprint of CO2 emissions, as part of the IMO regulatory framework. • Implementation and submission of the monitoring plan to a verifier12 indicating the methodologies used and other appropriate data. It can be A legal entity accredited by a national accreditation body under Regulation 765/2008, carrying 12 out verification activities to assess the conformity of the documents transmitted by the company. 104 S. Papadimitriou et al. written in any language agreed between the MRV company and the veri- fier, but it is obligatory to assure that an English version of the plan is made available. The submission date and the content of the Monitoring Plan are provided in Article 6 of the MRV Shipping Regulation. • Identification of whether the efficiency standards according to the EU are achieved, and if not, detection of the problem and determination of what else should be done towards achieving the goals (Fig. 5.3). The requirements are addressed to vessels that are equal to or larger than 5000 GT on a per-voyage basis, at all EU ports from January 1, 2018 (Fig. 5.4). Emission Control Areas Annex VI, Regulations for the Prevention of Air Pollution from Ships (1997 Protocol), was first added to MARPOL 73/78 in 1997 aiming at Fig. 5.3 MRV regulation. (Source: http://www.greece.lrqa.com/standards-and- schemes/MRV-GR.aspx). Used with permission from Lloyd’s Register; includes data from Regulation (EU) No. 525/2013 (28/06/2013) Regulatory Framework 105 Company Verifier GAP Analysis for Plan Development Plan Development Plan Verification Process Monitoring Process Verification Data Collection Bunker Tank Emission Flow Meters Delivery Note Sounding Measurement Annual Emission Report Report Verification Process Submit Report Verification Keep Updated Document of Issue Document of Compliance on Compliance Board OK NOT OK Fig. 5.4 CO2 monitoring and reporting compliance flow chart for EU MRV. (Source: https://www.green4sea.com/what-eu-mrv-plan-requires/) 106 S. Papadimitriou et al. controlling and reducing the main air pollutants produced by maritime transport, especially sulphur oxides (SOX) and nitrous oxides (NOX). Annex VI came into force on May 19, 2005, and after three years of examination the revised Annex VI was completed and came into force in July 1, 2010. The result was stricter emissions limits that pose challenges to ships entering ECAs, which are sea areas with fragile ecosystems, where stricter standards apply to control and minimize vessels’ airborne emis- sions. The existing ECAs include: • Baltic Sea area (SOx, adopted 1997; enforced 2006) • North Sea area (SOx, adopted 2005; enforced 2007) • North American area (NOx, SOx, and PM, adopted 2010; enforced 2012) • United States Caribbean Sea area including Puerto Rico and the US Virgin Islands (SOx, NOx, and PM, adopted 2011; enforced 2014) In 2013 new regulations, included in the revised MARPOL Annex VI, were adopted to improve “energy efficiency of international shipping” and apply to vessels of 400 gross tonnage or above. The use of the Energy Efficiency Design Index (EEDI) was also required by MARPOL, as a performance-based mechanism to ensure that energy efficiency level requirements are fully met. Furthermore, ships were obliged to have a Ship Energy Efficiency Management Plan (SEEMP) to assist shipowners, operators, and seafarers in maintaining and optimizing the fleet’s effi- ciency performance. In 2015 the Chinese Ministry of Transportation introduced the ‘Ship and Port Pollution Prevention Special Action Plan (2015–2020)’, to reduce ship-generated airborne emissions, by designating the Pearl River Delta, Yangtze River Delta and the Bohai Sea as ECAs.13 Some key points about the regulation are presented below: 1. The three established ECAs include 11 ‘key ports’: • Pearl River Delta: Shenzhen, Guangzhou, and Zhuhai 13 Despite the use of ‘ECA’, the Chinese regulations are not associated with MARPOL’s ECA ones. Regulatory Framework 107 • Yangtze River Delta: Shanghai, Ningbo-Zhoushan, Suzhou, and Nantong • Bohai Sea: Tianjin, Qinhuangdao, Tangshan, and Huanghua 2. January 1, 2016: Ships berthed at the key ports in Yangtze River Delta ECA have been required to use fuel with a sulphur content not exceed- ing 0.5%—except one hour after arrival and one hour before departure. 3. January 1, 2017: Ships berthed at all 11 key ports have the same obligation, 4. January 1, 2018: The obligation will be extended to all ports within the ECAs. 5. January 1, 2019: Vessels must use fuel with a sulphur content not exceeding 0.5% while operating within the ECAs and no fuel change-­ over operation is allowed inside the ECAs. 6. Towards the end of 2019, Chinese authorities will assess the results with a view to adopting stricter measures, such as reduction of the max- imum sulphur content from 0.5% to 0.1%, expansion of the geograph- ical areas and consideration of further initiatives (Figs. 5.5 and 5.6). Fig. 5.5 Yangtze River Delta ECA (Source: https://www.green4sea.com/china- announces-new-ship-emission-control-areas). 108 S. Papadimitriou et al. Fig. 5.6 ECAs in China—(a) core ports in the Yangtze River Delta are Shanghai, Ningbo, Zhoushan, Suzhou, and Nantong, (b) core ports in Bohai Bay are Tianjin, Qinhuangdao, Tangshan, and Huanghua, and (c) core ports in the Pearl River Delta are Shenzhen, Guangzhou, and Zhuhai. Adapted from The North of England P&I Association (http://www.nepia.com/insights/signals-online/regulation/new- emission-control-areas-in-china/new-emission-control-areas-in-china/); Yangtze River Delta by SY (CC BY-SA 4.0; https://creativecommons.org/licenses/by-sa/4.0) from Wikimedia Commons; Bohai Bay by Kmusser (self-made, based on DCW data) (CC BY-SA 2.5; https://creativecommons.org/licenses/by-sa/2.5), from Wikimedia Commons; Pearl River Delta from Google Maps Measures and procedures to comply with those regulations will result in higher costs to the industry, which many firms claim are unbearable. In addition, the introduction of more Sulphur Emission Control Areas (SECAs) around the world and the limited capacity of alternative fuels, could result in stabilization of high fuel prices in the long-term. Port Waste Reception Facilities Many different types of ship waste are generated due to vessels’ opera- tional, maintenance, and repair procedures as well as life on board, and that needs to be disposed of correctly. Proper ship waste management and disposal is a major issue that legislation strives to promote on a global level. The EU Directive 2000/59/EC on port reception facilities for ship-­ generated waste and cargo residues (“the PRF Directive”), which is based on the requirements included in the IMO MARPOL 73/78, aims to reduce pollution from waste produced by ships. The purpose of this Directive is to prevent illegal ship-generated waste discharges into the sea by promoting the development and use of port reception facilities, Regulatory Framework 109 thereby intensifying marine environment and biodiversity protection. According to a report published in March 2016 by the Commission to assess and monitor the PRF Directive (European Commission, 2016/0168 final), apart from the MARPOL’s requirements, it provides several addi- tional elements: • Development of waste reception and handling plans in ports; • Advance Notification of waste by ships before entry into port; • Mandatory delivery of ship-generated waste; • Payment of fees by ships for the reception of their ship-generated waste; • Exemptions for ships engaged in scheduled traffic with frequent and regular port calls; • Inspections to verify that ships comply with the delivery requirements; • Development of an information and monitoring system. European shipowners claim that “ships engaged in short sea shipping do not need to dispose of their waste at every single port call” European Community Shipowners’ Associations (n.d.) (ECSA). They also promote that the revised PRF Directive should clarify the exceptions regime to offer them more flexibility without putting in danger the Directive’s goals. The Marine Environment Protection Committee (MEPC) strongly encouraged the provision of port reception facilities developed an internet-­ based port reception facility database (PRFD) as part of the IMO Global Integrated Shipping Information System (GISIS), which went live on March 1, 2006. In October of the same year, MEPC 55 approved “the Action Plan for tackling the alleged inadequacy of port reception facilities”, an action plan to contribute to the effective implementation of MARPOL and boost environmental consciousness among the shipping community, while MEPC 63 in March 2012 completed the last item of the plan. In July 13, 2016, the Commission launched the Open Public Consultation (OPC) on the Impact Assessment for the revision of Directive 2000/59/EC on port reception facilities, which was open until October 16, 2016. The OPC questionnaire included general information about the respondents, assessment of the current functioning and appropriateness of the EU system on PRF, evaluation of the EU role and examination of the various policy 110 S. Papadimitriou et al. measures for a possible revision of the PRF Directive. The main goal of the OPC was to examine the extent to which the problems and inadequacies of port reception facilities result to illegal discharges and whether the proposed preliminary policy measures by the Commission answer to these problems. Noise Levels on Board Ships The ‘Code on Noise Levels on Board Ships’ regulated by the amendments to SOLAS regulation II-1/3–12, was adopted in November 30, 2012, and came into force on July 1, 2014. The Code was developed to provide inter- national standards for the protection of the seafarers against hazardous noise levels and noise-induced accidents. It is comprised of seven chapters, including measuring equipment specifications, measurement procedures, noise level limits, and noise exposure limits. It is applicable to new ships equal to or larger than 1600 GT which follow certain criteria mainly con- cerning their building contract date, and does not apply to several ship types, such as dredgers, crane barges, and fishing vessels. The Code may also be applied to new ships smaller than 1,600 GT, “as far as reasonable and practical, to the satisfaction of the Administration”, as the Code states. Although the Code clearly underlines that it is the owner/operator who is mainly responsible to comply with its requirements, it also emphasizes that the role of the seafarer in the compliance of the Code is of vital impor- tance. It is, therefore, crucial to ensure that seafarers receive adequate and regular training on the Code and the equipment it involves, to receive the maximum benefit from it and not diminish its value. The Code also states that the measurement of noise levels should take place after the construc- tion of the ship using a survey report, a model format of which is set out in Appendix 1 of the Code. The report should include information about the noise levels in various locations on board, which must be marked on accommodation drawings or identified with a different way (Table 5.1). Directive 2003/10/EC of the European Parliament and of the Council of February 6, 2003, on the minimum health and safety requirements regarding the exposure of workers to the risks arising from physical agents (noise), is also in force, laying down minimum requirements for the protection of workers from health and safety risks likely to arise from Regulatory Framework 111 Table 5.1 Noise level limits. Source: Adoption of the Code on Noise Levels on Board Ships (MSC 91/22/Add.1, Annex 1, pp. 17–18, http://www.imo.org/en/ K n owledgeCentre/IndexofIMOResolutions/Do c u me nts/ M S C % 2 0 - % 2 0 Maritime%20Safety/337(91).pdf) Limits for noise levels (dB(A)) are specified for various spaces as follows: Ship size 1600 up to ≥10,000 Designation of rooms and spaces 10,000 GT GT 4.2.1 Work spaces (see section 5.1 of the Code) Machinery spacesa 110 110 Machinery control rooms 75 75 Workshops other than those forming part of 85 85 machinery spaces Non-specified work spacesb (other work areas) 85 85 4.2.2 Navigation spaces Navigating bridge and chartrooms 65 65 Look-out posts, incl. navigating bridge wingsc and 70 70 windows Radio rooms (with radio equipment operating but 60 60 not producing audio signals) Radar rooms 65 65 4.2.3 Accommodation spaces Cabin and hospitalsd 60 55 Mess rooms 65 60 Recreation rooms 65 60 Open recreation areas (external recreation areas) 75 75 Offices 65 60 4.2.4 Service spaces Galleys, without food processing equipment 75 75 operating Serveries and pantries 75 75 4.2.5 Normally unoccupied spaces Spaces referred to in section 3.14 of the Code 90 90 a If the maximum noise levels are exceeded when machinery is operating (only permitted if dispensation is granted in accordance with paragraph 1.3.6 of the Code), stay should be limited to very short periods or not allowed at all. The area should be marked according to section 7.4 of the Code b Examples are open deck workspaces that are not machinery spaces, and open deck workspaces where communication is relevant c Reference is made to the Recommendation on methods of measuring noise levels at listening posts (resolution A.343(IX)) which also applies d Hospitals; treatment rooms with beds 112 S. Papadimitriou et al. exposure to noise. According to the Directive, the employer must carry out a risk assessment in accordance to the obligations of Directive 89/391/EEC “on the introduction of measures to encourage improve- ments in the safety and health of workers at work”, giving special atten- tion to the level, type and duration of exposure, exposure limits, health effects due to sensitivity of the worker and interactions with other risks such as vibrations. Alternative Fuels for the SSS Industry Alternative Marine Power Alternative Marine Power (AMP) or ‘Cold Ironing’ or Onshore Power Supply (OPS) is the process of providing electrical power to ships at birth by plugging them into an onshore power source, thus enabling them to shut off their main and auxiliary engines. Consequently, ships receive constant power supply for emergency, ventilation, lighting, cool- ing/heating, refrigeration (‘Hoteling activities’), and other equipment while loading or discharging their cargo. Today, although the practice of ships shutting down their main engines while in port is being followed by most of shipping companies, auxiliary engines continue to be the primary source of air emissions produced by ships in ports. The most hazardous emissions produced by such activities are SOX, NOX, and CO2. These pollutants pose a significant threat to the environment as well as the surrounding communities and CI aims at eliminating them. Of course, there is not a zero-emission solution. The provision of electri- cal power from shore supplies also results in minimal carbon emissions, which are a result of the electrical losses during the process and the addi- tional emissions generated from transferring the energy from its source to the ship (Fig. 5.7). The benefits of the CI process are substantial to the environment and public health. Some of them are: • Promotion of ports’ efficiency and sustainability. • Reduction of air pollutants in ports and the surrounding areas. Regulatory Framework 113 Fig. 5.7 SWOT Shore power. (Source: Altran, 2008, p. 34. Tool Kit / Shore Power) • Compliance with the 2014/94/EU on the deployment of alternative fuels infrastructure. • Compliance with the objectives of the Clean Air Program and its main legislative instrument, EU Directive 2016/2284 on the reduction of national emissions of certain atmospheric pollutants. • Elimination of noise pollution and vibrations associated with ship engines. • Revival of the local shipbuilding industry. • Low operating costs for shipowners. Despite of the many advantages of the Cold Ironing (CI) process, there are also several downsides: • The electricity cost will be extremely high for bigger vessels, as well as the electricity consumption. • Ports will need large-scale investments to set up the necessary equipment. • Excessive cost required for non-compatible vessels to make use of the CI process. 114 S. Papadimitriou et al. The Port of Los Angeles (LA) was the first port in the world to use CI technology for containerships, in 2004. Other major US West Coast ports, such as Long Beach, Seattle, San Francisco and San Diego are using CI and have recorded positive results regarding air emissions in surround- ing areas. European ports have, also, included the CI process in their investment plans. Sweden, followed by Germany, Belgium, Norway, and The Netherlands have already moved towards this solution. As of July 1, 2015, Antwerp offers a discount to vessels that make use of the CI tech- nology, thus ships can benefit from an up to 30% reduction in port fees. The Chinese Ministry of Transport agreed to install 130 small shore power facilities to public ports along the China Grand Canal, on the east coast and along the Yangtze River by 2019. LNG Use The approach on energy use has changed a lot throughout the last years within the shipping industry due to the international regulatory environ- mental framework and the arising of potential economic benefits. The use of LNG as an alternative marine fuel is one of the most environmen- tally and economically sustainable solutions to reduce harmful emissions and comply with the regulations. Short sea routes represent an ideal can- didate for the beginning of the switch to LNG-powered shipping. The reason lies in the fact that bunkering in SSS can be done on a regular basis and consequently it will be possible that LNG will be carried in smaller quantities, thus reducing the size of the LNG tanks on board. According to the final report of a feasibility study into the possibilities of LNG as a transport fuel for the SSS sector, published in November 2015,14 there are hardly any technological obstacles, but there are eco- nomic constraints. Regulations regarding the positioning of LNG tanks and equipment on board, the safety distances and the venting are often too strict, posing a serious challenge in the practical use of them in the SSS business. The report also highlights that placing new LNG tanks, with the technology we currently have available and the existing regula- tory framework, is a viable solution for larger short sea vessels, whereas 14 http://www.lngholland.com/files/LNGSSSpublicfinalreport.pdf Regulatory Framework 115 for the smaller ones the conversion seems unlikely. The ‘LNG Bunkering Infrastructure Survey of 2014’15 of the Lloyd’s Register, was responded by operators of 22 ports, 73% of which were part of an ECA. ECA ports respondents expected that by 2020 about 13%, and by 2025 about 24% of the total bunkering volume for SSS will be LNG. Additionally, barges are still considered as the best option for bunkering of LNG. Training Requirements Due to the different characteristics of Heavy Fuel Oil (HFO) and LNG, the bunkering process of natural gas-powered vessels as well as the train- ing requirements of people in charge and on board, also deviate from each other. The extensive training requirements are in Chapter 8 of IMO’s ‘Guidelines on Safety for Natural Gas Fuelled Engine Installations in Ships’ and these state that training related to safety, operations, and main- tenance is obligatory to be provided prior to the commencement of the crew members’ duties to verify that, in case of any emergency, they will be able to successfully handle it. In addition, those who are directly responsible for equipment and operations related to gas should receive further special training, resulting in the acquisition of certain knowledge maintained at all times according to the company’s documentation. There are three categories of gas-fuelled ships’ training: 1. Category A—General training for basic safety crew It includes theoretical and practical training on the technical prop- erties of gas, risk minimizing rules and procedures during usual opera- tion and in cases of emergency. 2. Category B—Supplementary training for deck officers 3. Category C—Supplementary training for engineer officers The company and the master should arrange Category B and C train- ing, taking into consideration the crew members’ area of responsibility and duties. 15 http://www.lngbunkering.org/sites/default/files/2014%20Lloyds%20Register%20LNG%20 Bunkering%20Infrastructure%20Survey.pdf 116 S. Papadimitriou et al. Standardization Bodies IEC/ISO/IEEE 80005 The Standard IEC/ISO/IEEE 80005—Utility connections in port, was developed jointly between International Electrotechnical Commission (IEC) technical committee 18: Electrical installations of ships and of mobile and fixed offshore units, International Standardization Organization (ISO) technical committee 8: Ships and marine technology, subcommit- tee 3: Piping and machinery, and the Institute of Electrical and Electronics Engineers (IEEE) Industry Applications Society (IAS), the Petroleum and Chemical Industry Committee (PCIC) Marine industry subcommittee. The purpose of the Standard is to lay down the requirements for efficient, safe, and compatible shore to ship connections. It consists of three parts: • Part 1 (2012): High Voltage Shore Connection (HVSC) Systems— General requirements • Part 2 (2016): High and Low Voltage Shore Connection Systems— Data communication for monitoring and control • Part 3 (2014): Low Voltage Shore Connection (LVSC) Systems— General requirements Several technical annexes are also included in the Standard. ISO 20519:2017 ‘Ships and Marine Technology: Specification for Bunkering of Liquefied Natural Gas Fuelled Vessels’ As the demand for LNG-powered vessels, efficient and practical bunker- ing is increasing, the development of an international standard to ensure safety of bunkering operations is also becoming a top priority. The new ISO 20519 ‘Ships and marine technology – Specification for bunkering of liquefied natural gas fuelled vessels’, was produced to assist operators in the selection of fuel providers that meet defined quality principles, while it contains terms that are not covered by the International Code of the Regulatory Framework 117 Construction and Equipment of Ships Carrying Liquefied Gases in Bulk (IGC Code). The utilization of LNG as a vessel fuel is generally new, so the standard should be raised to date periodically to consolidate lessons learned over time and technological changes. References CEEH. 2011. Scientific Report No. 3 – Assessment of health-cost externalities of air pollution at the national level using the EVA Model System. Roskilde: CEEH, March. ECSA, European Community Shipowners’ Associations. n.d. Shipowners call for adequate and workable European port reception facilities. https://www.ecsa.eu/ news/shipowners-call-adequate-and-workable-european-port-reception-facilities European Commission. 2011/144 final. White Paper. Roadmap to a Single European Transport Area – Towards a competitive and resource efficient transport system. n.d. ———. 2016/0168 final. Report from the Commission to the European Parliament and the Council: REFIT Evaluation of Directive 2000/59/EC on port reception facilities for ship-generated waste and cargo residues. n.d. Finger, Matthias, and Torben Holvad. 2013. Setting the scene: Background and overview of regulatory reform in the transport sector. In Regulating Transport in Europe, ed. Matthias Finger and Torben Holvad. Cheltenham: Edward Elgar. Official Journal of the European Union. n.d. Regulation (EU) 2017/352 of the European Parliament and of the Council of 15 February 2017, establishing a framework for the provision of port services and common rules on the finan- cial transparency of ports. Sakintuna B. and M. Jak. 2008. Tool kit shore power, 34. Altran.