New Ship Recycling Convention on the Horizon

On May 15, 2009, sixty-three nations, including the United States, acting through the auspices of the International Maritime Organization (IMO), adopted a new convention in Hong Kong to regulate the management and disposal of ships containing hazardous materials. Entitled the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 (Convention), the Convention represents the first international agreement specifically focused on the combined subjects of the recycling of merchant ships and the protection of human health and the environment, throughout a ship’s operating life. The scrapping of ships, which is primarily for resource reclamation purposes, continues to be a viable business in certain countries throughout the world—in 2008 alone, approximately 1,000 ships were recycled or disposed of for scrap. Additionally, given the impending phase out of single hull tankers, the percentage of the world’s fleet slated for scrapping is due to significantly increase in the coming years.

Entry into Force

Before the Convention can enter into force, it must be ratified by 15 nations with a combined fleet of not less than 40% of the gross tonnage of the world’s merchant shipping. Additionally, the combined maximum annual ship recycling volume (evaluated over the preceding 10 years) of the States satisfying the ‘number of states’ requirement accounts for 3% of the gross tonnage of those States’ combined merchant shipping. This qualifier is an unusual addition to ratification, but certainly ensures that the countries most impacted by the Convention have the most say in its success. The Convention is open for signature from September 1, 2009 to August 31, 2010. It remains to be seen as to whether or not the United States will become a Party to the Convention.

Government Ships Exempt

If the Convention enters into force and is ratified by the United States, it will apply to U.S.-flag ships over 500 GT and to ship recycling facilities within the jurisdiction of the United States. The agreement exempts government ships and those ships operating, throughout their respective lifetimes, solely in waters subject to the sovereignty or jurisdiction of a Single Party. However, parties are encouraged to act consistent with the purposes of the Convention for exempt ships. The Convention regulates the management of hazardous materials on ships from cradle to grave through a series of government-required surveys, inspections, and certificates of compliance; and regulates the ship recycling activities of facilities through an authorization process and a ship-specific recycling plan approval process. To be suitable for authorization and operations, facilities must meet substantive requirements established under the Convention and engage in planning processes. For the Convention to come into force for the United States, it will require not only Senate approval, but more likely implementing legislation as discussed below.

Key Requirements

Each party to the Convention will be required to conduct a survey of its ships subject to the Convention, and prepare Certificates on Inventory of Hazardous Materials to accompany the ship during its lifetime and before it goes for recycling. An International Certificate on Inventory of Hazardous Materials may be issued for a period of 5 years or less; Part I of the Inventory of Hazardous Materials must be updated and maintained throughout the operational life of the ship. This inventory will include the ship’s particulars, and will certify that the ship complies with the Convention’s controls on hazardous materials, as well as keep track of the specific hazardous materials listed in the Convention, including lead, mercury, radioactive substances, and certain chlorinated paraffins. There are also particular controls contained in the Convention concerning the following hazardous materials:

• Asbestos – the new installation of materials containing asbestos is prohibited for all ships.
• PCBs – the new installation of materials containing PCBs is prohibited for all ships.
• Ozone-depleting substances – new installations that contain ozone-depleting substances shall be prohibited on all ships, except new installations of hydrochlorofluorocarbons, which are permitted until January 1, 2020.
• Anti-fouling compounds – neither new or existing ships may apply anti-fouling compounds, whose application is prohibited by the International Convention on the Control of Harmful Anti-Fouling Systems on Ships, 2001 (AFS). Compounds may not be used in a manner inconsistent with the AFS Convention on new ships or new installations on existing ships.

At the end of the ship’s useful life, a Ready for Recycling Certificate will need to be completed that certifies, among other things, that the ship has been surveyed for hazardous materials, that it has a current inventory of hazardous materials onboard, and that the ship recycling facility where the ship will be recycled holds a valid authorization in accordance with the Convention. Each ship recycling facility must be authorized by the Competent Authority of the State in which it is situated. Authorization and operation is contingent upon satisfaction of environmental and safety requirements, including the safe management of hazardous materials and worker protection measures (e.g., the establishment of “safe-for-entry” and “safe-for-hot-work” conditions throughout recycling and the use of personal protective equipment). These requirements and others must also be accounted for in the Ship Recycling Facility Plan. In addition, facilities must seek explicit or tacit approval (according to election under national law) of ship specific “Ship Recycling Plans” prior to the commencement of recycling.

A key aim of the Convention is to promote worker protection, but, according to its critics, the Convention did not go far enough. In the late 1990s, a series of Baltimore Sun newspaper articles introduced the world to the shipbreaking industry and focused its attention on the deplorable health and environmental conditions that went hand-in-hand with this necessary resource reclamation function. While conditions in these facilities have slowly improved, the Convention does not ban certain practices used in ship recycling nations, such as India and Bangladesh that traditionally dispose of ships by beaching them and manually dismantling them in poor conditions rather than in dry docks. For this reason, NGOs, such as Greenpeace and Friends of the Earth, are not satisfied with the final text.

Analysis

From a logistical standpoint, it remains to be seen how the United States would enforce the Convention once it enters into force. Presumably, the Coast Guard would be responsible for conducting the surveys and issuing the Certificates of Inventory of Hazardous Materials and Ready for Recycling Certificates, and the Environmental Protection Agency (EPA) would be responsible for approving the ship recycling facility plans. The Maritime Administration would likely be a technical advisor.

Congress also would have to address the relationship between the Convention and the Toxic Substances Control Act of 1976 (TSCA), (15 U.S.C. §§ 2601, et. seq.), which specifically bans the introduction of PCBs and regulates all usage of PCBs in amounts higher than 50 parts per million. Under TSCA, the United States cannot export PCBs in regulated quantities, and through a court decision and U.S. policy, the export of a vessel containing PCBs in banned amounts has been construed to be an export prohibited under TSCA (unless EPA grants a waiver). If ratified, the Convention would give Congress the opportunity to establish a policy for the disposal of U.S. merchant ships which heretofore has not directly been addressed.

Conclusion

If the major recycling nations such as India, Bangladesh, and Pakistan ratify the Convention, it would certainly go a long way to improving current ship disposal conditions in those countries. If any of the major scrapping countries were to eventually develop truly green recycling yards, the impediment to sending ships to those countries for disposal would seem to be removed. However, funding and implementation will continue to be issues.