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CSA round-up for the month ending 28 February 2010 - Amendments to the US Iran Sanctions Act |
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Saturday, 06 March 2010 |
 As a result of recent activities by Iran relative to development of a national nuclear program, the US Congress is proposing to modify the current Iran Sanctions Act. There are a number of bills in both the Senate and House which relate to this issue, most notably HR 2194 and S 908. While the current law found at 50 US Code 1701 already imposes sanctions on entities which “directly and significantly contribute to the enhancement of Iran’s ability to develop petroleum resources”,
the proposed bills specifically define this development of petroleum
resources into two categories: production of refined petroleum products
and exportation of refined petroleum products to Iran. Within the
context of this latter category, entities which are specifically defined
include ships or other means of delivering refined petroleum products
to Iran, the provision of services relating to the shipping or other
transportation of refined petroleum products to Iran and entities which
underwrite or insure such activities. With regard to impacts in the
maritime transportation sector, any entities as defined above which are
identified by the US government as triggering this criteria would be
subject to a variety of sanctions which could arguably include denial of
entry into US ports. While the current and more general provisions of
existing law could result in similar sanctions, these bills, if enacted,
would clearly mandate the imposition of these sanctions on vessels.
Relative to when action can be expected on any of these bills, normally
the House and Senate like to see their own bills enacted and then
adopted by the other body e.g. House bill to Senate for Senate adoption
and enactment or vice versa. Since S 908 is a companion bill to HR 2194,
the Senate Banking Committee could move this bill quite easily to the
floor for a vote from a purely procedural perspective, although the
committee staff indicates that there is no committee action scheduled on
either S 908 or HR 2194. Politically this is very understandable, as it
is the Senate Banking Committee that has jurisdiction over all the
economic incentive packages and Congressional oversight of current
economic/financial issues and, since these issues are very much in the
political spotlight, those are the issues that will be occupying the
Committee’s attention for a long time to come. That doesn’t mean they
would not act on the Iran sanctions issue; it just means that it is not
at the top of their priority list. CSA will continue to monitor actions
on these legislative initiatives and provide updates if and when new
developments occur.
Fuel switching issues in California ports
As related in previous updates, vessels calling in California ports
subject to the CARB low sulphur fuel requirements continue to experience
fuel switching issues particular at low manoeuvring speeds. Recently, a
letter was sent to vessel operators from the Captain of the Port, San
Francisco which notes an increase in the number of vessels experiencing
propulsion losses and fuel related failures. The letter also notes that,
prior to implementation of the requirements on July 1, 2009, the Coast
Guard met with industry leaders to identify the concerns and challenges
involved in safely implementing these requirements. In spite of this
valuable discussion, he notes that recent propulsion failures and
instances of erratic engine performance related to fuel switching, most
prevalent during slow speed manoeuvring, continue to arise. He urges the
industry to take proactive measures to improve fuel switching safety to
prevent future occurrences, including the creation of proper
procedures, crew training and maintenance essential to vessel safety
during the switch between heavy/intermediate fuel oils and low sulphur
marine distillates. Finally, he indicates that vessels experiencing one
or more engine performance issues, particularly those with a history of
repeated propulsion losses and equipment failures, will likely receive
USCG orders requiring tug escorts until the USCG is satisfied that these
outstanding issues have been addressed.
Piracy and discussions on ransom payments
As noted in our previous update, rumours have been abounding that the US
government was about to make a decision on the legality of ransom
payments, with the scope of this decision extending to the payment of
ransom for acts of piracy. More recent information has suggested that
the US would seek this result in a multi-lateral fashion through the use
of the UN Security Council rather than via a unilateral decision by the
US government. As of this writing, CSA is unaware of any public actions
and/or documents that suggest the US has embarked upon this route. CSA
and all national ship owner associations have been urged to weigh in
with their respective governments opposing any such action. CSA has
communicated its strong opposition to this approach in both verbal
communications and a written communication addressed to the US
Secretaries of Defense, Homeland Security, State and Transportation. The
text of this letter signed by CSA President Joseph Cox and Chairman of
the Board, Mike Bohlman follows. Ship owners and national associations
are urged to communicate a similar message to their respective
governments.
“The purpose of this letter is to record the strongly held belief of the
American maritime community that any action by any nation to make
payment of ransoms to pirates an illegal act is completely unacceptable
and would be counterproductive.
The Chamber of Shipping of America (CSA) is an organization that
represents the interests of ship owners and operators engaged in the
domestic and international trades of the United States. CSA has its
origins dating to 1917. Members of CSA operate ships and vessels in all
waters of the world and are exposed to the piratical acts currently
centred mainly in the waters of the Indian Ocean. Our members’ vessels
frequently transit the waters off the Horn of Africa and it is important
to note that a large percentage of the world’s trade transits this
area.
To date, CSA and our colleague associations around the world have been
actively engaged in anti-piracy protective measures. As an industry, we
have developed best management practices and have partnered with various
governments to coordinate maximum protection. For our US flag ships, we
utilize anti-piracy measures that are approved by the US Coast Guard.
We applaud the United States for taking a leadership role among others
to address this ancient criminal activity of piracy. As chairmen of
Working Group Three of the United Nations Contact Group on Piracy, the
US has been in the forefront of the partnership developed among
concerned governments and the maritime community.
We strongly urge you to oppose any action to make payment of ransoms
illegal.
In spite of our preventive actions, for which a US flag ship receives
formal US government approval, what happens in the event of a successful
pirate attack? We are very concerned with the safety and well being of
our seafarers. We have a duty to take care of them in these
circumstances which can mean months of being held hostage in appalling
conditions with their lives at serious risk, and with no hope for
rescue.
We are concerned with the circumstance of those seafarers currently
being held hostage. While we agree that every opportunity to regain
control of the vessel should be reviewed, what would be the effect on
their status as hostages should a government or governments in concert
make ransom payments illegal? Ransom payments are only considered once
other options have proven ineffective in obtaining the safe return of
the vessel and crew.
While the welfare of our seafarers is our predominant concern, if ransom
payments were to be made illegal, there would also be commercial
ramifications. Most likely, the majority of ship owners would avoid the
Gulf of Aden, the Suez Canal and the north west Indian Ocean altogether
(most large ships would divert around the Cape of Good Hope). Many
ships’ crews would also be likely to refuse to sail in the danger area
(which covers well over a million square miles). This would clearly have
a significant effect on the flow of a large proportion of international
trade, and, more importantly, would send a signal to the effect that
the international community has been unable to prevent the creation by
the pirates of a huge ‘no go’ area in a region of great strategic
importance. This would encourage an expansion of the pirate operating
area.
For these reasons, we very strongly object to action by any government
to make ransom payments illegal. We urge you to take all necessary steps
within our government to oppose any suggestion along these lines and to
actively oppose other governments who may be considering such moves.
Finally, we urge you to continue your leadership and partnership with us
in taking steps to eradicate piracy from all waters.”
Source: Bimco
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