Full fathom five thy father lies,
Of his bones are coral made,
Those are pearls that were his eyes,
Nothing of him that doth fade,
But doth suffer a sea-change,
into something rich and strange,
Sea-nymphs hourly ring his knell,
Ding-dong.
Hark! now I hear them, ding-dong, bell.

William Shakespeare, The Tempest

As originally discussed in a recent post on Striding the Quarterdeck (December 9, 2013), amendments to 28 U.S.C. §1441 have effected a sea-change in admiralty procedure by ostensibly allowing removal of general maritime law (GML) claims on a federal question basis, notwithstanding the Savings to Suitors Clause and the long line of jurisprudence under Romero espousing the proposition that GML claims do not “arise under” the Constitution or law of the United States.  The jurisprudential trend affirming removal of GML claims under the revised version of §1441, which began with Judge Gray Miller’s decision in Ryan v. Hercules Offshore, Inc., 945 F.Supp.2d 772 (S.D. Tex. 2013), has continued, suggesting that this sea-change may in fact ring the knell of the old Romero non-removability rule. (more…)

In a marine builder’s risk policy coverage dispute decided under Washington state law, the United States Court of Appeals for the Ninth Circuit reversed and remanded a grant of summary judgment for Underwriters. Alaska Village Electric Cooperative, Inc. v. Zurich American Insurance Company, et al, 2014 WL 185778 (Jan. 17, 2014) (unpublished).  Lead Underwriter Zurich American Insurance Company and four other subscribing underwriters (“Underwriters”) jointly issued the builder’s risk policy in connection with the construction of two barges. The policy is a standard form American Institute of Marine Underwriters (“AIMU”) policy but in this case did not include Addendum No. 2, a standard addendum that expressly excludes coverage for the cost to repair faulty workmanship. (more…)

On September 10th of this year, the President and CEO of the American Waterways Operators (AWO) appeared before the House Subcommittee on Coast Guard and Maritime Transportation and called for finalization by late 2013 or early 2014 of the long-languishing Subchapter M regulations relating to inspection of uninspected towing vessels (UTVs). http://transportation.house.gov/sites/republicans.transportation.house.gov/files/documents/2013-09-10-Allegretti.pdf. Thus, after more than a decade of regulatory delays and industry uncertainty, it appears that UTV operators can now bank (very literally) on the reality of mandatory Subchapter M compliance in the very near future. (more…)

In a 106-page Notice of Proposed Rulemaking issued Monday, January 13, 2014, the United States Coast Guard (USCG) has undertaken a wide-ranging overhaul of the standards for fire protection, detection and extinguishment equipment aboard inspected and uninspected vessels, mobile offshore drilling units (MODUs), deepwater ports, and Outer Continental Shelf (OCS) facilities. This comprehensive and expansive overhaul is intended to “harmonize [USCG] regulations with appropriate national and international consensus standards; address advances in fire protection technologies and standards; update [USCG] approval processes for fire detection and alarm systems; and revise [USCG] regulations for other types of equipment or components.” 79 Fed. Reg. 2254, 2254 (Jan. 13, 2014). The proposed regulations span several chapters and subparts of two different C.F.R. titles – namely Title 46 (covering the USCG’s more historic shipping purview with respect to vessels) and Title 33 (covering the USCG’s hybrid/share authority over certain units/facilities/vessels engaged in operations on the OCS). (more…)

In the continuing regulatory response – even more than three years after the fact – to the DEEPWATER HORIZON disaster, the United States Coast Guard (USCG) has led off 2014 with proposed regulations that significantly change the reporting requirements for incidents on the Outer Continental Shelf (OCS). Most importantly, these new regulations broaden the types of reportable incidents for foreign-flagged vessels/units/facilities operating on the OCS. (more…)

For insurers concerned about the effect of tolling agreements between an insured and a third party, the United States District Court for the Eastern District of Louisiana recently confirmed that the proper policy language will ensure that such an agreement tolls only the statute of limitations and does not affect the coverage period or notice obligations. In XL Specialty Insurance Company v. Bollinger Shipyards, Inc., et al, 12CV2071 (E.D. La. Jan. 3, 2014) (Vance, J.), the Court was asked to determine whether a Directors, Officers, and Private Company Liability Insurance Policy (D&O policy) covered claims made by the United States against Bollinger Shipyards, Inc. in related litigation. The United States’ claims against Bollinger arose from Bollinger’s performance of subcontract work to convert 110-feet patrol boats into 123-foot patrol boats. Upon delivery, the “lengthened” vessels suffered structural failures. (more…)

The federal district court for the Eastern District of Louisiana in Johnson v. PPI Technology Services, Inc. (Case No. 11-2773, Rec. Doc. 305 (E.D. La. Dec. 17, 2013)) has scuttled an insurer’s attempt to avoid coverage for an act of piracy off the coast of Nigeria under the “Terrorism Exclusion” in a so-called Foreign Commercial Package Policy. The Johnson decision should be viewed as a jolly roger warning-flag to insureds and insurers alike to review their policies (hull, P&I, and general liability) regarding the applicability (or not) of terrorism/war risk exclusions to acts of piracy – particularly for companies working in the booming but dangerous oil fields off Africa, the haunt of modern day Barbary corsairs. The rash of recent piracy attacks on oilfield interests off the western coast of Africa has been widely publicized, but with a somewhat surprising dearth of litigation defining the potential liabilities for such incidents (at least in the United States). As such the Johnson decision is particularly important given the relatively scarce jurisprudence regarding insurance issues inherent in piracy events. (more…)

In a moment as pivotal as the Battle of San Jacinto, groundbreaking reform in Mexico may bring a Lone Star-sized opportunity to the American maritime industry. On December 20, 2013, Mexican President Enrique Pena Nieto signed into law constitutional reforms that will open the country’s energy sector to private investment. www.fuelfix.com/blog/2013/12/29/qa The reform will end the long-held monopoly by state-owned Petróleos Mexicanos (“Pemex”), allowing private companies to explore for and produce oil and gas under a variety of contracts, including services, production, profit-sharing and licenses. The reform was driven by a number of factors, including Pena’s broad political agenda, aging refineries, lack of deep-water drilling capability and dwindling oil production. The “easy” oil is drying up, and Pemex lacks the funds and technology to get at the difficult stuff. http://www.nytimes.com/2013/08/14/business/global/in-mexico-a-proposal-to-revamp-oil-policy.html?_r=0. (more…)

The United States Court of Appeals for the Second Circuit in American Petroleum & Transport, Inc. v. New York, 2013 WL 6332548 (2d Cir. Dec. 6, 2013) recently – albeit reluctantly – joined the fleet of other federal circuit courts that have applied the United States Supreme Court’s decision in Robins Dry Dock as a per se bar against purely economic damages resulting from a maritime tort (i.e. economic damages in the absence of any physical property damage). Nonetheless, the court voiced its doubts regarding the validity of the majority rule derived from Robins Dry Dock: “Although we conclude that Robins Dry Dock has been overread to establish a rule barring damages for economic loss in the absence of an owner’s property damage, we believe the rule has been so consistently applied in admiralty that it should continue to be applied unless and until altered by Congress or the Supreme Court.” (more…)

*Herman Melville, Moby Dick; Or, the Whale

Just under a year after the November 16, 2012 rig fire that left three workers dead, a joint investigative panel of BSEE and the United States Coast Guard has issued a report regarding the causes of the incident and recommending various enforcement actions/regulatory responses in the wake of the incident (“the Report”). http://www.bsee.gov/uploadedFiles/BSEE/Enforcement/ Accidents_and_Incidents/Panel_Investigation_Reports/Final%20BSEE%20Black%20Elk%20report.pdf. This Report and the ensuing Incidents of Non-Compliance (INCs) issued by BSEE are yet another reinforcement of BSEE’s controversial, unprecedented, and arguably ultra vires extension of its regulatory enforcement jurisdiction to offshore contractors in addition to its historic and statutorily supported jurisdiction over OCS operators and lessees. (more…)