Maritime Environmental Law Update (March 2024 Edition)

We continue to follow significant new developments in international and US maritime law and related technology matters. The following updates our August 2023 alert, which can be found here. 

Climate Disclosure Rules

New climate disclosure rules in California and the EU may apply to maritime shippers and other companies operating in the maritime space. We discussed California’s SB 253 and SB 261 in our September 2023 Alert. In the EU, the Corporate Sustainability Reporting Directive (“CSRD”) will require companies that operate in the EU and meet certain criteria (including revenue thresholds) to file annual sustainability reports in accordance with the EU Sustainability Reporting Standards, beginning with the 2024 fiscal year. The European Council also recently approved the Corporate Sustainability Due Diligence Directive (“CSDDD”). This directive, which is currently being considered by the European Parliament, would establish a corporate due diligence standard for businesses operating in the EU. Since the original draft of the CSDDD (discussed in our February 2023 Alert), certain changes have been made to the proposed directive, including increasing the applicability thresholds from 500 employees and revenue of €150 million, to 1,000 employees and revenue of €450 million.

International Developments

US and UK Request Information to Establish Zero-Emission Maritime Route 

In August 2023, the US Department of Energy and the UK Department for Transport simultaneously requested information relating to the establishment of a green shipping corridor (“GSC”) between the countries. The US defines GSCs as “maritime routes that showcase low- and zero-emission lifecycle fuels and technologies with the ambition to achieve zero greenhouse gas emissions across all aspects of the corridor.” The requests called on a variety of stakeholders to weigh in—from vessel operators and fuel producers to academics and governmental agencies. Ultimately, the US and UK hope that the information learned will help lay the groundwork for the development of more GSCs around the globe.

GSCs have been gaining popularity in recent years. In 2021, nearly two dozen nations expressed their support for the zero-emission routes by signing onto the Clydebank Declaration, which sets the goal of establishing at least five GSCs by 2025. Since then, development has begun on two such corridors—one between Los Angeles and Shanghai, and the other between Montreal and Antwerp. The recent requests for information may be a sign that another GSC is soon to be underway.

IEMA Unites for Decarbonization

In September 2023, a group of boat builders, electric motor manufacturers, infrastructure specialists, and others formed the International Electric Marine Association (“IEMA”). The IEMA, which has grown to almost 40 members in just six months, is dedicated to the decarbonization of the global maritime industry. The organization seeks to establish and promote safety standards for electric technologies, develop infrastructure for the electrification of ports and marinas, and implement educational programs and research projects relating to clean technologies. This year, the IEMA will assist with the 2024 Ocean Decade Conference in Barcelona (April 10-12) and hold its first annual members’ meeting at the Monaco Energy Boat Challenge (July 1-6).

US Developments

House Bill Seeks to Provide Credits for Use of Ship Fuel

In December 2023, the Renewable Fuel for Ocean-Going Vessels Act (H.R. 6681) was introduced in the US House of Representatives. The Bill seeks to amend the Clean Air Act to add fuel for oceangoing vessels to the list of renewable fuels for which credits may be generated. If passed, the Bill would take effect at the start of the year following its enactment. H.R. 6681 has been referred to the House’s Subcommittee on Environment, Manufacturing, and Critical Materials for consideration.

Updates Expected to US Decarbonization Plan

In January 2023, the Biden-Harris Administration released the US National Blueprint for Transportation Decarbonization (the “Blueprint”). The Blueprint, which was jointly authored by several US federal agencies, provides a roadmap toward decarbonizing the US transportation sector by 2050. Using the Blueprint as a guide, the agencies will periodically publish more detailed addenda, or Decarbonization Action Plans, that address specific ways to enable and accelerate decarbonization across all transportation modes.

In late 2023, the US Department of Energy hosted a Marine Decarbonization Action Plan Workshop that will likely help shape the contents of the 2024 Decarbonization Action Plan (the “2024 Plan”). The 2024 Plan is expected to outline various decarbonization pathways in the maritime sector, including alternative fuels, energies, and technologies across vessel types. With transportation being the largest source of greenhouse gas emissions in the US, collaboration will be vital to achieving net-zero emissions by 2050.  

EPA to Distribute up to US$3 Billion in Grants

The US Environmental Protection Agency (the “EPA”) plans to distribute up to US$3 billion in grants through its Clean Ports Program. Most of the funds (about US$2.6 billion) will go to update existing port equipment and infrastructure with zero-emission technologies, and the remainder (about US$300 million) will go to help ports develop climate action plans aimed at reducing air pollution. The application period is anticipated to open in late winter 2024, and run through May 2024, with the grants being awarded at the end of the year in December 2024. Eligible applicants include: (1) port authorities; (2) state, regional, local, and tribal agencies with jurisdiction over a port; (3) air pollution agencies; and (4) private entities that apply in partnership with an eligible entity and own, operate, or use facilities, cargo-handling equipment, transportation equipment, or related technology of a port.

EPA Supplements Proposed Ship Discharge Regulations

In October 2023, the EPA issued a supplemental proposed rule aimed at regulating certain types of ship discharges, including the discharge of ballast water, which has been known to contribute to the spread of invasive species. The proposed discharge standards apply to: (1) commercial vessels greater than 79 feet in length; (2) other non-recreational ships, such as research and emergency rescue vessels; and (3) all fishing vessels and small ships (ships less than 79 feet in length), but only with respect to ballast water discharge. The EPA has said that it intends to finalize the rule by September 2024.   

Seafood Company to Pay Almost US$1 Million in Fines

In September 2023, American Seafoods Co. LLC, a Seattle-based seafood company, agreed to pay US$999,000 in EPA fines for dumping seafood processing waste into protected waters and failing to comply with certain recordkeeping requirements in violation of the Clean Water Act. The EPA alleged that the company, which has a fleet of ships and processes, packages, and freezes products while on the water, amassed hundreds of Clean Water Act violations over time. In addition to paying the fines, a separate administrative order requires American Seafoods to institute wide-ranging, systematic changes to its operations going forward.

This memorandum is a summary for general information and discussion only and may be considered an advertisement for certain purposes. It is not a full analysis of the matters presented, may not be relied upon as legal advice, and does not purport to represent the views of our clients or the Firm. John Rousakis, an O'Melveny partner licensed to practice law in New York; Eric Rothenberg, an O'Melveny of counsel licensed to practice law in New York and Missouri; Chris Bowman, an O'Melveny associate licensed to practice law in California; and David Safarian, an O'Melveny associate licensed to practice law in California, contributed to the content of this newsletter. The views expressed in this newsletter are the views of the authors except as otherwise noted.

© 2024 O’Melveny & Myers LLP. All Rights Reserved. Portions of this communication may contain attorney advertising. Prior results do not guarantee a similar outcome. Please direct all inquiries regarding New York’s Rules of Professional Conduct to O’Melveny & Myers LLP, Times Square Tower, 7 Times Square, New York, NY, 10036, T: +1 212 326 2000.