We have obtained a further update of Shanghai ECA from Haiton & Partners, Shanghai, Chinese law firm.

Summary:

Shanghai MSA published the revised Guidelines on Supervision and Administration of ECA during Interim Period (“Guidelines”). The Guidelines consist of eight chapters, namely General rules, Exhaust emissions of navigating ships, Spot inspection, Alternative measures, Exemption and immunity, Management on oil supply operation, Legal liability, Supplementary articles, and six appendixes. We read and translate the Guidelines (see the attachment) and compare it with the previous edition of 2016. We would summarize the main contents as follows: We would summarise the main contents as follows:

• Scope of Application 
1. The Guidelines shall only apply to the jurisdiction water of Shanghai MSA. Ships navigating, mooring, operating in the Shanghai port shall strictly obey the Guidelines, except for military ships, sports ships and fishing boats.


2. The Guidelines will be effective from 1 October 2018 to 31 December 2018. The former edition which was issued by Shanghai MSA in 2016 will be abolished from the effective date of the Guidelines.


• Inspection on ship’s changing low sulphur fuel oil

Preliminary screening: Exhaust emissions of navigating ships

3. Local MSAs under the Shanghai MSA shall be equipped with exhaust emission monitoring equipment, such as unmanned aerial vehicle with sniffing device, to supervise on the navigating ships. The monitoring equipment together with AIS data and ship report system would help local MSAs to identify those ships that are suspected of using high sulphur oil.


4. Navigating ships that are suspected of using high sulphur oil would be reported to the local MSAs where ships would be berthing at.  



Spot inspection

5. Ships who committed illegal emission previously, or having been suspected of using high sulphur fuel by exhaust monitoring would be the key objects of spot inspection. The spot inspection includes,
1. Documentation inspection: to check the International Air Pollution Prevention Certificate, formulated plan for changing oil, records in engine book, etc. (article 7);
2. Oil record inspection: engine book, oil record book and supply documents;
3. Oil pipe, instrument and apparatus inspection (article 9);
4. Inspection on quantity of ship fuel (article 10).
5. Quick check on fuel: article 11 set forth very clearly that in which part of oil pipe would the sample of fuel be taken by the local MSA;
6. Keep oil sample and laboratory inspection: the suspected ships that are found during the exhaust monitoring and quick check procedure would be the key objects of being sampled. Article 12 provides for concrete steps for taking samples on ships.



Alternative measures

6. Ships are allowed to use the following alternative measures:
1. Shore power (article 14): ships that are capable of using shore power shall use the same when they are berthing at terminals equipped with shore power facilities. And the local MSAs may conduct spot inspection to check whether there is a written procedural manual and safety operation guide provided by the terminal to the ship and whether ships obey these rules strictly;
2. Clean energy (article 15): type of clean energy, records in engine book, etc.;
3. Exhaust after-treatment facility (article 16): related certificate issued by Classification Society, records in engine book, the residuals of exhaust treatment shall not be discharged into water or burned on board, and shall be discharged into a receipt facility on shore.


• Exemption
7. If using low sulphur fuel would pose danger to ships, the Guidelines allows shipowners or ship agencies to submit written application to the Shanghai MSA in advance to exempt from liability. In order to apply for an exemption, ships are required to submit (article. 17):
1. Certification issued by Classification Society;
2. Product specification or Operation Manual of the fuel oil equipment;
3. Statement of Shipowner company and transformation plan of fuel oil equipment.


8. Under the following five circumstances, ships may apply for an exemption to the local MSA (article 18):
1. There is a formulated plan on board the ship to change the fuel, the ship has tried its best but it is unreasonable for it to fulfil the change operation before entering into Shanghai port;
2. Ship encountered an accident and, as the result, cannot depart from shanghai port in estimated time;
3. The ship was misled by oil suppliers for using non-compliant fuel;
4. Ship has tried the best but cannot obtain the low sulphur fuel;
5. An emergency occurs and ship cannot obtain standard-compliant fuel.


9. The exemption shall only be effective for a single voyage (article 19).


• Punishment
10. If the alternative measures and exemption causes are not accepted by the local MSA, the ships would be required to rectify immediately, failing which, the ship may be ordered to stop the operation, forbidden from entering, departing, or berthing at Shanghai port (article 23). 
11. The punishment on non-compliance will be educating and warning during 1 October 2018 to 31 December 2018. However, for those serious breach or repeat offender, the MSA may decide to levy a fine in accordance with the law and regulation (article 24):
1. 106 of the Air Prevention and Control Law of PRC: where the ship or the supplier does not keep supply documents or oil sample, a fine of RMB 10,000 – RMB 100,000 will be levied;
2. 85 (2) of Regulations of Shanghai Municipality on the Prevention and Control of Atmospheric Pollution (2014 Revision): where a ship navigating in the jurisdiction area of Shanghai discharge pollutants in excess of the emission standard or visible black smoke can be seen, the MSA shall order the ship to rectify, and may levy a fine of RMB 1,000 to 10,000 on those ships, and if such breach is serious, a fine of RMB 10,000 to RMB 50,000 may be levied on those ships


12. To avoid delay of a ship because of waiting for the result of the sample test, article 25 provides that the local MSA may require the ship to issue an Entrustment Letter authorising her local agent to settle down the administrative punishment in case of non-compliance.


• Management on oil supply operation
13. The Guidelines request the local MSAs under the Shanghai MSA to check and record the oil quality inspection report of each oil suppliers, conduct quick check on the quality of oil, and keep oil samples (article 20).