Date: 24/06/2019
The 74th session of the IMO’s Marine Environment Protection
Committee (MEPC 74) took place on 13-17 May 2019 at the IMO headquarters in
London.
A key
area of interest for shipowners preparing for IMO’s 2020 global sulphur cap is
fuel oil non-availability reporting (FONAR) which may be necessary if,
despite best efforts, a ship is unable to obtain compliant fuel.
What is a FONAR?
The
starting point is that individual Member States will implement their own
regulations and penalties in order to implement the global sulphur cap.
Regulation
18 of Annex VI of the MARPOL Convention sets out factors to be taken into
consideration by a Member State Party in situations where a ship is found not
to be compliant with the sulphur limits. Factors to consider include steps
taken by the ship to mitigate the risk of non-compliance. Specifically, a ship
may provide records of its attempts to achieve compliance with the limits, and
evidence of its best efforts to obtain compliant fuel.
If,
despite best efforts, a ship is unable to obtain compliant fuel, the ship’s
Flag State as well as the competent authority of the port of destination should
be notified . This notification is commonly referred to as a Fuel Oil
Non-Availability Report (FONAR).
The
submission of a FONAR is not expected to result in waiver or an exemption from
compliance with the global sulphur cap. However, it will be a key
document or piece of evidence in assessing whether, in the eyes of the
authorities, the unavailability of compliant fuel is reason for a ship not
having compliant fuel. It will also be a key document for the IMO (as
Member States are required to upload a FONAR to an online system for the IMO)
to monitor the availability of compliant fuel.
This FONAR system is not new for shipowners. A FONAR system is
already in use in the North American ECA which came into force on 1 August
2012. Accordingly, there is already about 7 years of experience with the
application of such a system and the United States Environmental Protection
Agency (US EPA) has issued useful guidance to assist shipowners and operators which may be found at,
What should a FONAR contain?
The
FONAR should present a record of actions taken by the ship in her attempts to
bunker compliant fuel oil and provide evidence of attempts to purchase
compliant fuel oil in accordance with her voyage plan. Further, if
compliant fuel was not made available at the point or location stipulated in
the voyage plan, the FONAR should record evidence of attempts to locate
alternative sources of such fuel oil.
For
more detailed guidance on what should be included in a FONAR, this will be up
to each individual Member State. However, the US EPA model does provide
helpful guidance on how authorities might approach FONAR from 2020. Adapting
the useful guidance provided by the US EPA to a global sulphur cap, it could
reasonably be expected that a FONAR should contain:
1. the ship’s name, flag, and IMO number.
2. copy of the ship’s voyage plan in place at the time of
the relevant voyage in question the date/time and location of the ship
when it first received notice of the proposed voyage
3. a description of the actions taken to attempt to achieve
compliance with sulphur regulations
4. a description of why compliant fuel oil was not available
In
cases of fuel oil supply disruption, the name of the port at which the ship was
scheduled to receive compliant fuel oil and the name of the fuel oil supplier
that is now reporting the non-availability of compliant fuel oil.
If
applicable, identify and describe any operational constraints that prevented
the ship from using available compliant fuel oil, for example with respect to viscosity
or other fuel oil parameters. Specify steps the ship has taken, or is taking,
to resolve these operational constraints that will allow the ship to use all
commercially available residual fuel oil blends and any operational constraints
preventing the use of compliant fuel oil. This is a possibility as some
ships may have operational constraints with very low viscosity compliant
blended fuel availability of compliant fuel oil at first port of call and plans
to obtain that fuel oil if compliant oil is not available at the relevant port
of call, then the sulphur content of any alternative fuel oil available.
Details
of any calls to the subject Member State ports in the prior 12 months including
whether the ship used compliant fuel oil details of any previous FONARs
submitted in the last 12 months. It is not clear whether a ship owner
could be required to submit FONARs previously submitted anywhere in the world
or just previous FONARs submitted to the Member state in question.
Key
contact information for the master, ship operator, ship agent and ship
owner. Further, the designation of a corporate official authorized to
answer additional questions in the event of investigations by the relevant
authorities.
The US
EPA regime guidance provides that ships are not required to deviate from their
intended voyage in order to obtain compliant fuel although a ship operator is
expected to make “any adjustments that can be made” to allow the purchases of
compliant fuel. Further, it is not expected that a ship is to subject
itself to undue delays in order to achieve compliance. Member States are
obliged to take reasonable steps to promote the availability of compliant fuel
oils. It is not unforeseeable however that disputes could arise as to whether a
delay to a ship is to be considered undue or unreasonable in the context of
achieving compliance.
However,
it must be stressed that individual Member States may develop more detailed
guidance for the consistent use and acceptance of these reports, including what
evidence is needed to accompany a report. Accordingly, whilst the current
guidance from the US EPA is useful in planning for the global sulphur cap, this
should be further reviewed on a country by country basis as Member States issue
their own regulations and guidance.
When should a FONAR be submitted?
A
FONAR should be submitted as soon as it is determined, or when the ship becomes
aware, that compliant fuel oil will not be available. A copy of the FONAR
should be kept on board for inspection for at least 36 months.
There
have been discussions regarding the types of situations in which a FONAR should
be submitted. The paradigm example of where there is a genuine lack of supply
of compliant fuel is a clear scenario where a FONAR would be required. It
is less clear however whether a FONAR should be submitted in other situations
such as, where, following delivery, bunkers represented in the BDN to be
compliant have, according to Owner’s analysis, a non-compliant level of
sulphur. Another example could be a breakdown of a scrubber system on a ship
with limited reserves of LSMGO. According to the PSC Guidelines approved at
MEPC74, such situations should be notified in writing to the ship’s flag state,
the relevant port of destination and the authorities where the bunkering took
place. It seems that the FONAR format may not to be used in such
situations. It should be borne in mind that FONAR is a reporting format;
the main concern following any non-compliance is to get the information out to
the flag state/port state. On a practical level, subject to further
developments and guidance, if the circumstances are not clear, the safest
approach would be to issue a FONAR and also to inform the flag state, port of
destination and place of bunkering of the situation by email. In real terms,
ship managers should also be calling the flag state over the phone or meeting
the local representatives to make necessary representations.
Charterparty Implications
Under
a voyage charter party, Owners are responsible for fuel. It therefore
follows that compliance with the sulphur regulations and the FONAR procedure
are all comfortably within the Owners’ sphere of responsibility.
However,
in the case of a time charter party, it is the charterers who supply fuel to
the ship whilst the Owners remain responsible for compliance with the sulphur
regulations. The regulations include requirements to use “best efforts”
to supply compliant fuel and the FONAR requirements. However, a tension exists
as the evidence required for the FONAR will be in the control of the charterers
as it is the charterers who are in communication with bunker suppliers and
brokers. It follows that Owners will be entirely dependent on charterers to
provide the paper trail to demonstrate that “best efforts” have been made to
find compliant fuel.
BIMCO
and INTERTANKO have both released clauses dealing with the respective
obligations between Owners and Charterers in relation to compliance with the
global sulphur cap. However, these were drafted prior to the IMO
Guidelines with respect to FONAR and Owners should consider whether the
existing clauses are sufficient to deal with issues which might arise in this
area.
For
example, it is not yet known how authorities will interpret the requirement to
use “best efforts” to find compliant fuel. Is this a requirement that can
be delegated to charterers? To what extent are the Owners required to make
their own enquiries to find compliant fuel?
Another
potential issue could arise if it proves necessary to deviate from the intended
route for the purpose of bunkering the ship with compliant fuel (where, for
instance, no fuel is available on the intended route).
There
is a strong argument that the parties’ respective obligations with regard to
“best efforts” to supply compliant fuel and FONAR are within the scope of the
BIMCO clause. So, a shipowner should be able to establish liability and
enforce the indemnity requiring charterers to supply evidence of “best efforts”
to supply compliant fuel for the purpose of submitting a FONAR. That
said, in the absence of express wording dealing with “best efforts” and FONAR,
there is scope for argument that the BIMCO clause would not apply to that
situation. Similar issues arise under the Intertanko clause.
Additional wording to the charterparty and bills of lading might also be
required to allow for a deviation in order to bunker with compliant fuel.
In order that parties better know where they stand, it would be
preferable to include express wording to the BIMCO/Intertanko clauses specifically
addressing these issues. Please contact your usual claims contact who can
assist you in this regard.
Club Cover
Members
will be aware that the UK P&I Club provides broad cover for ship-sourced
pollution liabilities. This not only includes liabilities relating to
ship-sourced oil pollution but also pollution caused by cargoes onboard ships,
hazardous and noxious substances, garbage, sewage, ballast water and exhaust
emissions.
P&I
cover for claims arising under the 2020 global sulphur cap is still under discussions
between the International Group of P&I Clubs. These discussions are
to ensure consistency of cover across the IG Clubs for liabilities which might
arise non-compliance. The UK P&I Club expects to be able to report
further to members in this regard soon.
Additional useful links at,
IMO standard reporting FONAR format may be found at,
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