United States: A Practical Proposal for Maritime Security

This article was co-authored by Mark J. Graffagnini

Since the wake of the September 11 destruction, America has scrambled to craft a Maritime Security policy that guards our nation’s maritime assets and critical ports from similar attacks. The reaction to gaps in security has been swift and is quite admirable. The nation now, however, stands at a crucial juncture for implementing measures that guarantee our continued safety. "Terrorist Threat Continues," The Herald Rock, Aug. 24, 2003, at 2E ("While the government has poured resources into beefing up airline security, port security has taken a back seat. And while the nation must be on guard against another airline hijacking like that of September 11, 2001, our ports may be even more vulnerable."). Most of the scholarly analyses on the issue of maritime security have focused on two issues: (1) liability in the event of maritime terrorism; and (2) possible scenarios for maritime terrorism. In today’s environment, "[c]onventional maritime law just does NOT suffice," and new angles fresh with maritime industry perspective will be needed. James T. O’Reilly, Planning for the Unthinkable: Environmental Disaster Planning Issues in An Age of Terroristic Threats, 9 Wid. L. Symp. J. 261, 262 (2003).

Indeed, there is no dearth of descriptions of a possible future attack on the maritime industry. Predictions span the gamut of possibilities: attacks aimed at vessels containing hazardous materials, H.D.S. Greenway, Is It Safe? How Do Law Enforcement Agencies Protect a 900-foot Liquefied-Natural-Gas Tanker from Potential Attack? With Everything They’ve Got, Boston Globe, Jul. 27, 2003, at 12; scenarios involving stowaway terrorists subsiding within containers aboard large cargo vessels; hidden WMD and "dirty bombs" aboard ships destined for U.S. waters; chemical and biological weapons attacks on cruise ship passengers; to attacks on structures within ports. "Who, What, and Where Will Terrorists Strike Next?" Security Director’s Report, Aug. 2003, at 1; see also, Justin S.C. Mellor, Missing the Boat: The Legal and Practical Problems of the Prevention of Maritime Terrorism, 18 Am. U. Int’l L. Rev. 341, 346-366 (2002) (describing possible scenarios and current shortcomings of policy presented by a new era of terrorism).

All of these predictions have helped those in the maritime industry prepare for possible attacks in the future. Likewise, the existing descriptions and explanations of current security assessments and pending regulations have guided those in the industry in charting the post 9-11 course. Despite this volume of knowledge, scholars and practitioners have overlooked some of the simplest, most practical efforts aimed at preventing terrorist incidents. This article attempts to fill that gap by suggesting some simple regulatory measures based on the practical recommendations of those within the maritime industry. In this article, we advocate a few simple steps that might help the nation and the world maritime industry prevent a debilitating attack on world commerce and shipping.

A host of new domestic and international security measures now occupy the maritime field. An outline of some of the more important of those measures highlights some of the gaps that exist and points the way toward future progress.

The Maritime Transportation Security Act ("MTSA") implements the security policies formulated by the International Maritime Organisation ("IMO"), including several antiterrorism amendments to the International Convention for the Safety of Life at Sea ("SOLAS") and the International Ship and Port Facility Security ("ISPS") Code. Admiral Thomas H. Collins, Prepared Testimony Before the House Committee on Transportation and Infrastructure Subcommittee on Coast Guard and Maritime Transportation, Fed. News Serv., Jun. 3, 2003. Key domestic features of the MTSA include the following:

• Port security and vulnerability assessments

• Detailed security plans to address those assessments

• Designation of the Captains of the Ports to a Federal Maritime Security Coordinator position and empowerment of those Coordinators to make and implement specific port security measures

• Requirements and standards for hiring and training security personnel.

Id. On the international front, the changes to SOLAS and ISPS resulted in several new security requirements that ships display Identification Numbers permanently in a visible place on the vessel. In addition, ISPS requires that vessel owners implement the following measures:

• Designated sea officers

• Plans to address risks such as terrorist boardings or hidden bombs

• Tracking devices to prevent hijacking and monitor routes

• Alarm systems to notify authorities of security breaches.

Murray Strachan, Tough New Rules on the Horizon, Aberdeen Press J., Sep. 1, 2003, at 10. In addition, ISPS requires ports to (1) conduct more stringent risk analysis of berthing ships; (2) be able to shut down and eliminate possible threats; and (3) establish procedures to detain or banish vessels posing threats to security. Id.

CSI represents an effort by the U.S. to cooperate with significant port states on inspecting containerized cargo. CSI specifically places U.S. Customs officers in ports of origin to pre-screen and inspect high risk containers. "U.S. Customs Implementing New Maritime Anti-Terrorism Regulation," Jan. 16, 2003, available at http://www.uspolicy.be/Issues/Terrorism/cust.011603.htm, [hereinafter "Customs New Regulations"]. Under CSI port states and Customs officers work side-by-side to target high risk containers and to inspect those containers before lading.

The Advance Manifest Regulation, or "24-hour rule," requires that shippers and carriers provide Customs with specific information for containerized cargo at least 24 hours prior to lading. "Customs New Regulations," supra. Once effective, U.S. Customs will no longer tolerate vague descriptions of cargo or blank manifests for ships planning to enter U.S. ports. Included in this new prohibition on vague descriptions are terms such as "Freight of All Kinds," or "FAK." Id. Finally, the regulations allow non-vessel operating common carriers ("NVOCCs") having International Carrier Bonds to electronically present cargo manifest information to customs. 16 Fed. Reg. 66318 (2003). NVOCCs electing to so provide electronic cargo manifests but failing to do so in an accurate and timely manner, face liquidated damages under the regulations. 67 Amendments to C.F.R., part 4, 173, 178, §§ 4.7 (2003). The new regulations require that electronic submissions and disclosures be made through the vessel’s AMS system. Id.

Despite some monumental first steps and increased attention to maritime security, shortcomings remain. Some of the current limitations highlight the simple changes that might enable greater homeland security.

First, Customs and Coast Guard agents do not have sufficient resources to effectively pre-screen all potentially dangerous cargo. Robert G. Clyne, Port/Cargo Security: Developments and Implications for Maritime Cargo Recoveries, 77 Tul. L. Rev. 1183, 1207-08 (June 2003). An effective strategy would enable the U.S. and port states to selectively target those containers with the most risk while allowing shipping low risk containers to bypass some inspection measures.

Second, the current manifest reporting requirements result in much overlap and undue delay that may be easily eliminated. "The new requirements for submission of a manifest whenever U.S.-bound cargo is loaded at any loadport might well create a logistical nightmare for carriers and regulators alike." Clyne, supra. For instance, shippers visiting several different ports within the U.S. must submit manifest information in advance of calling on each different port. This requirement is probably unnecessary once a vessel reports its manifest the first time because simply updating the AMS database manifest after loading and unloading would prevent any uncertainty.

Third, current regulations and agency responses evince a certain lack of uniformity and coordination that not only hinders commerce but also reduces security. For example, agencies recently brought together under the Homeland Security Department lack unified databases and strategies for identifying and targeting risks. Eric Chabrow, Share and Share Alike—Government Agencies Struggle to Overcome the Many Barriers to Collaboration, InformationWeek, Sep. 1, 2003, at E6. Any solution focused on facilitating maritime commerce must begin collecting data in once place and distribute that centralized information later to other interested agencies.

Fourth, disclosure, while improved, remains inadequate. Parties involved throughout the maritime shipping chain remain a mystery in many cases. Current "unspoken" practices in the industry make current carrier bonds susceptible to pay to play. For instance, many brokers and freight forwarders currently charge for Customs Bond usage, and many agents file bonds which are not held in their own name or the name of the company the bond is ostensibly posted under. This may be symptomatic of longstanding practices in the industry. As one commentator explains:

In an age of new and potentially catastrophic terrorism, courts have an imperative to put this expertise to use and to cease these practices.

We suggest four practical steps to improve maritime security. None of our proposals dramatically change the current landscape from a state of relative insecurity to one free from threat. Rather, our proposal attempts to incorporate the perspectives of those intimately involved within the maritime industry to better position ourselves to prevent attack.

U.S. Customs should first slightly modify and strengthen existing regulations such as the 24-hour Advance Manifest Regulation to close loopholes. This proposal includes streamlining and consolidating reporting procedures under the 96-hour vessel arrival regulations to reduce delays and increase the responsiveness of government agencies in identifying possible risks. This proposal also seeks to address the concerns of many shippers and agents that reporting information to multiple agencies not only produces delays and confusion but may allow security breaches to slip through the cracks.

Second, the U.S. Government should require that vessel owners place with the government a Maritime Security Bond similar to the bonds required under the Oil Pollution Act of 1990. As an extra precaution, neither Customs nor the Coast Guard should allow these bonds to become fungible as has happened in the case of International Carrier Bonds and Entry Bonds.

In addition, the U.S. should press for fuller disclosure of the parties involved in maritime commerce, including vessel owners, bareboat charterers, time charterers, vessel managers, and manning companies.

Finally, lawyers should take a greater lead in consulting clients on possible security issues including new liability issues that may confront them on a daily basis. While the liability issues involved in the event of a terrorist incident have been widely discussed, these more mundane, but more probable issues have been largely ignored. Greater attorney-client communication will better ensure that those in the maritime industry are able to cope with the threats. Attorneys also may bring to the table some expertise and experience useful to navigating the troubled waters that lie ahead in terms of regulatory compliance.

As the attacks on September 11 demonstrated to the world, terror is by nature an unpredictable enterprise, and no amount of preparation will entirely eliminate all risk. It is equally clear, however, that preparation is our best ally and our most certain means of protection. With the insight and experience of those within the shipping industry, the carefully tailored measures we advocate may result in greater productivity and safety of our nation’s ports for the benefit of all.

The U.S. should first streamline current 24-hour manifest regulations to require reporting of cargo to only one agency: the U.S. Coast Guard, NVMC. The Coast Guard is already taking the lead in container security through its CSI program is can be expected to further take the lead in these efforts. Consequently, it makes sense to distribute these manifests first to Coast Guard so that it may take appropriate measures to target risks accordingly. Given the manpower and resource constraints, this information would go a long way to increasing our risk-targeting ability.

By centralizing the manifest reporting in one database, other government agencies such as Customs and INS can easily access data and double check security. Current regulations and agency oversight often cause agents and others to report information contained on the manifest and crew list to several different agencies at different points resulting in delay and overlap. Coordinating data into one database would allow each agency to target its resources directly on the issues for which each is responsible and would eliminate the delay associated with multiple reporting. Finally, such a strategy would help ease the Homeland Security Department’s consolidation of agency information as the Department moves toward greater collaboration and centralization.

Any effective security policy adequately balances the need for free trade and commerce with the need to target risks and protect only legitimate uses of international waterways. Ken Cottrill, Counting the Cost; How Productivity is Affected by Tighter Rules on Security is Being Studied by a Georgia Facility, Traffic World, Aug. 25, 2003, at 35. Two recent scholars noted the difficulty of the task ahead:

While current efforts may result in some delays and lower productivity, preliminary studies remain inadequate and incomplete. Cottrill, supra. Fuller disclosure and information, such as provided for in the Advance Manifest Regulation, may actually drive market efficiencies by allowing more directed resource allocation and pre-planning at ports. Id. Streamlining reporting into one central database accessible by several government agencies will only help coordinate the screening process and port productivity. See Firestone, & Corbett, supra (discussing the inefficiencies and delays associated with the current fragmented system).

The U.S. should also press for complete disclosure of all parties in the maritime commerce chain. Such disclosure includes the names and locations of vessel owners, bareboat charterers, time charterers, vessel managers, and manning companies for all vessels entering U.S. ports. Many will no doubt object to this proposal for various reasons, but it is an inevitable and necessary step for future security of world commerce.

One common objection may be that such disclosure exposes new parties to liability and increases the amount of discoverable information if suit is filed. Several arguments may somewhat alleviate this concern. First, fuller disclosure may result in fewer vessel arrests and attachments if parties are able to identify the owner and that owner is amenable to jurisdiction. Second, a proactive approach imposes much fewer burdens on global shippers than would a harsh reaction following a terrorist attack on or by a "rogue" vessel. Third, disclosure may result in an economic advantage for reputable companies and result in a long-term productivity improvement. Fourth, current reporting requirements already result in much more access to previously unknown information, and future technological advance such as the inclusion of transponders will have the same result. See Clyne, supra at 1208 ("A collateral effect of documented ownership history, detailed vulnerability assessments and security plans, increased surveillance and monitoring, automatic identification systems for vessels, crew identification cards, and the like will be an increase in relevant information for discovery purposes."). Finally, the government may be able to include confidentiality measures prohibiting outside access to the information if objections are too great.

While the U.S. currently has bond requirements under the Oil Pollution Act of 1990 and bonds warranting Customs passage, the U.S. lacks a similar security bond requirement. The U.S. should impose a requirement on vessel owners to have in place a Maritime Security Bond warranting that vessel owners have (1) provided accurate, timely advance manifest information and crew lists; and (2) complied with ISPS vessel security requirements. Furthermore, the U.S. must take immediate steps to ensure that freight forwarders and agents cease providing International Carrier Bonds to Customs and the Coast Guard not actually issued to the party presenting the bond.

A new Maritime Security Bond will go a long way to providing vessel owners and agents (those most directly involved in the daily operation and control of shipping activities) a realistic and daily stake in ship and port security. The Security Bond accomplishes this by attaching a financial incentive to security violations. Second, a Security Bond will encourage the issuer to ensure that vessel owners and operators actually take steps to comply with security regulations. This ensures a desirable modicum of oversight enforced by powerful players in the maritime industry. Finally, ceasing the practice of bond sharing and bond usage charges restores a degree of openness, accountability, and integrity essential to an effective security strategy.

Some critics may raise objections similar to those raised against the OPA surety bonds. These critics may posit that vessel owners cannot obtain such bonds because of P&I club terrorism exclusions and the high cost of obtaining such a bond. See Jeffrey D. Morgan, The Oil Pollution Act of 1990: A Look at Its Impact on the Oil Industry, 6 Fordham Envtl. L. J. 1, 16 (1994).

This possibility seems unlikely for a few reasons. The major objection to the OPA bonding requirements was that the Act dramatically expanded liability for spills and that more parties were liable. Id. The Terrorism Risk Insurance Act ("TRIA"), however, creates a risk-sharing program for the maritime industry allocating risk of loss for terrorism among the U.S. Government, insurers, and insureds. Patrick Bonner, Insurance Liability Issues Relating to An Oil Spill Caused by Terrorism, 77 Tul. L. Rev. 1157, 1173-74 (2003). Under this risk-sharing program, the U.S. assumes 90% of the losses resulting from a certified act of terrorism. Id. As a result, foreign insurers may find providing such insurance desirable because policies are likely to cover only those certified acts of terrorism included in TRIA. Id. In addition, the Security Bond would not be designed to redress all of the economic consequences of an attack (unlike the surety bond under the OPA)—the consequences would likely be too large in any event. Instead, the Bond would be mandated as a preventative measure certifying crew compliance with already established international security standards. The bond, like an entry bond, could also be collected in the event of a breach of the regulations without damage. This would ensure every effort to maintain tight ship security on a daily basis. Finally, the U.S. Government can minimize objections by offering to waive some of the burdensome security requirements it currently imposes if owners are willing to take other steps to guarantee security and be willing to carry the Security Bond.

Debates continue over what acts of terrorism are foreseeable in a post 9-11 world, and much literature has discussed liabilities in the event of a future attack. See Anthony Sobok, Hearing on 9-11 Tort Cases Raises Difficult Questions of Who Owed Duty to Whom, 13 Ins. Coverage Litig. Rptr. 34 (2003); Jim Gash, At the Intersection of Proximate Cause and Terrorism: A Contextual Analysis of the (Proposed) Restatement Third of Torts’ Approach to Intervening and Superseding Causes, 91 Ky. L. J. 523 (2002-2003). Much less attention has focused on more frequently occurring liability issues posed by passage of myriad security regulations. Here we attempt to fill some of this gap in the maritime security context by identifying possible issues for consideration. In addition, we advocate a greater role for lawyers in consulting clients before these issues arise.

Recent security regulations may present new issues of causation in Jones Act and other personal injury cases. The Jones Act incorporates Federal Employer’s Liability Act ("FELA") liability provisions. FELA imposes liability without negligence where an employer’s violation of Coast Guard safety regulations causes injury. Kernan v. American Dredging, Co., 355 U.S. 426 (1958) (imposing liability where employer violated the Safety Appliance and Boiler Inspection Acts). Moreover, where violation of a safety regulation causes injury, the fact that the regulation was not designed to protect the injured party provides no defense. Id; see also Eckert v. Aliquippa, S.R., Co., 828 F.2d 183, 187 (3d. Cir. 1987).

Because many of the new regulations may be construed as safety regulations, owners and maritime employers will likely face new hurdles in defending personal injury cases since contributory negligence defenses are barred by such a violation. Many new requirements undoubtedly will be considered security regulations rather than safety regulations. Many other regulations, however, do have a characteristically safety "feel" because they are designed to protect the crew and vessel from dangers presented by attacks and require both technological and manning responses to the threat of terrorism.

In Kernan, the Supreme Court held that "when an employee is injured as a result of the employer’s violation of a statute, the employer must pay damages even if the injury the employee suffered was not an injury that the statute was specifically aimed at protecting against." Roy Crook & Sons, Inc. v. Allan, 778 F.2d 1037 (5th Cir. 1986). The practical effect is also to deny an employer the contributory negligence defense and concomitant reduction in damage. Id. at 1039. A Jones Act seaman, therefore, recovers 100% for injuries resulting from violations of these type of regulations.

Claims by longshoremen may also arise with greater frequency. "Violations of Coast Guard regulations concerning shipment of hazardous materials may constitute negligence and make the shipper liable in tort to a longshoreman injured as a result." Neal v. Saga Shipping Co., 404 F.2d 481, 486, n.6 (5th Cir.), cert. Denied, 395 U.S. 986 (1969). The contributory negligence defense, however, will likely still be available in the event that an injury occurs to a longshoreman from a violation because longshoremen are not included in either the Jones Act or FELA. Id. Castorina v. Lykes Bros S.S. Co., 758 F.2d 1025, 1033 (5th Cir. 1985), identifies the three general duties a vessel owner owes to longshoremen it employs directly in its "owner" capacity: (1) before turning the vessel over, the vessel owner must exercise ordinary care under the circumstances to have the ship and equipment in such a condition that a stevedore may carry on its cargo operations with reasonable safety by exercising reasonable care; (2) vessel owners must warn the stevedore of any hazards of the ship or equipment of which the ship owner is aware or should be made aware in the exercise of reasonable care (and those hazards are not obvious or anticipated by reasonably competent longshoremen); (3) vessel owners are liable only when actual knowledge of a dangerous condition and a stevedore’s unreasonable conduct in dealing with the hazard. Id. Despite this general rule requiring knowledge of the owner before recovery may be made by an injured longshoreman, vessel owners may be negligent for violations of safety statutes where the statutes impose penalties for unknowing violations. Many of the current security regulations governing hazardous materials and vessel security features may result in similar liability on the part of vessel owners. Consulting legal experts about which security regulations may impose such a duty on vessel owners with regard to longshoremen will limit exposure to liability.

So far, courts seem to reject the claim that violations of safety regulations make a vessel per se negligent or patently unseaworthy when those violations cause damage to cargo. Folger Coffee Co. v. M/V OLIVEBANK, 201 F.3d 632 (5th Cir. 2000).

Because security regulations require a greater number of inspections and screenings by a variety of security personnel and officers, vessel owners may face suits arising from these inspections. As inspections, searches, and vessel boardings increase, so does the potential for injury and liability.

The sovereign immunity doctrine likely shields the Coast Guard from most suits arising from negligently performing new security duties. Lawson v. U.S., 1197 US App LEXIS 23227 at *15 (6th Cir. 1997). Likewise, failing to perform most of the new security duties will also be shielded by the sovereign immunity doctrine. Id. In Lawson, the court held that a Coast Guard decision to place lights on a breakwater was shielded from liability because it was a discretionary decision. The court noted, however, that once the Coast Guard decided to place the lights on the breakwater, it undertook an affirmative duty to maintain the lights without negligence; therefore, failing to maintain the lights might subject the Coast Guard to liability because vessel owners relied on the Coast Guard to do so. Unlike the unilateral Coast Guard decision to place lights on a breakwater, most of the new security regulations require that vessel owners affirmatively comply with security standards, so they would be less likely to claim reliance in the event of terrorism. See Good v. Ohio Edison Corp., 149 F.3d 413 (6th Cir. 1998); see also Mid-South Holding Co. v. U.S., 225 F.3d 1201 (11th Cir. 2000) (holding no liability to Coast Guard for ship that sank after Coast Guard searched it). In addition, because of the resource constraints involved in the new security environment, courts may be more willing to find a discretionary function inherent in Coast Guard duties than in bygone days.

In Tarkington v. American President Lines, Ltd., 1955 AMC 114 (1954), a Customs officer was injured while inspecting a ship for contraband. The court first rejected the officer’s argument that the vessel owner owed him a duty as a business invitee. The court next rejected the argument that the vessel owner owed a duty of seaworthiness because an officer searching for contraband is not in a position of performing services normally done by seamen. Id. The court did state that the result might change where a Customs officer was also performing a seaman’s duties in addition to contraband inspection, but did not reach a decision on the facts. Id. At least one other court has agreed with the analysis in Tarkington. In Royston v. Pacific Far East Lines, Inc., the court held that "[m]aritime surveyors, custom inspectors, inspectors aboard vessels for the purpose of making recommendations for repairs or improvements, and other shoreside specialists whose sole duty it is to survey and inspect, are not entitled to the warranty of seaworthiness." 190 F. Supp. 450 (N.D. Cal. 1960.

New security regulations present a variety of possible situations that will impact more frequent and common issues in litigation than liability after an attack. Statutes and a vessel’s compliance will likely arise in a variety of other personal injury contexts. As attorneys and clients consult over some of these issues, compliance is likely to increase for the benefit of all concerned.

Terrorism has demonstrated its ability to wreak appalling destruction in unthinkable ways. The U.S. and the world have taken heed of recent events and admiration is undoubtedly in order. As the maritime community grapples with the coming challenges, a practical look at current limitations and future opportunities for improvement may help us to prevent such catastrophes in the future. The recommendations provided herein are not a panacea by any means. They merely spring from the practical experience of those most involved on the frontlines: vessel owners and agents, attorneys and shippers. In this uncertain time, the only reality comes in the form of the old adage: an ounce of prevention is worth a pound of cure.