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Recent Developments in Maritime Environmental Law

November 16, 2011

Court Upholds State-Specific Conditions in EPA’s Vessel General Permit

Petitioners hoping to avoid having to comply with both federal and state conditions in permits issued under the U.S. Clean Water Act were dealt a setback by the D.C. Circuit in a decision that supports state-imposed conditions on vessel operators.

At issue was whether state-specific conditions for “incidental” wastewater discharges, along with nationwide conditions, could be included in the Environmental Protection Agency’s (“EPA”) Vessel General Permit (“VGP”). The Clean Water Act’s § 401 certification process generally allows each state to impose its own requirements for vessels operating within state waters.

In this case, Lake Carriers’ Association v. EPA, shipping industry interests argued that the EPA violated procedural laws by including the state requirements in a final permit without receiving and considering comments regarding the impact of the requirements on the shipping industry.

The court found that the EPA lacks the ability to alter or reject state certification conditions incorporated into the EPA’s draft nationwide permit for discharges of pollutants incidental to normal operations of vessels, and was therefore not required to provide notice and opportunity for comment on state conditions before issuing a final permit.

As a result, vessels that operate in multiple jurisdictions may be forced to comply with potentially conflicting conditions specific to waters of each state through which they travel.

California Revises Ocean-Going Vessel Regulations

The California Air Resources Board (“CARB”) has revised fuel sulfur content and other operational requirements for ocean-going vessels operating within California waters and within 24 nautical miles of the California coast.

Changes to the fuel requirements include:

  • The Phase I marine gas oil (DMA) sulfur limit has been reduced from 1.5% to 1%, with an effective date of August 1, 2012; and
  • Implementation of the Phase II marine gas oil (DMA) or marine diesel oil (DMB) sulfur content limit of 0.1% has been delayed from January 1, 2012 to January 1, 2014.

In addition, the 24-mile regulatory boundary was expanded in Southern California. This boundary now includes the region 24 nautical miles (“nm”) from the shoreline of the Channel Islands. Earlier regulations had calculated the 24-nm regulatory area based on the coast of mainland California. The CARB notes that there is also a small region near the north end of the Santa Barbara Channel that was excluded from the regional boundary to encourage vessels to use the established shipping lanes in the Channel.

Changes to the rules will be enforced by the CARB beginning on December 1, 2011.

NOAA Study Supports California Emission-Reduction Efforts

A group of scientists from the National Oceanic and Atmospheric Administration (“NOAA”) monitored the emissions of a container ship that met California standards by reducing speed and switching to the low-sulfur fuel as it neared within 24 miles of the California coast. The study reported that emissions of certain air pollutants, including sulfur dioxide and particulates, dropped by as much as 90 percent through compliance with the California requirements. Decreased black carbon levels were also reported, with reductions of 41 percent.

NOAA believes that the findings have national and global significance, in that they support new international regulations by the International Maritime Organization requiring vessels to switch to lower-sulfur fuel near U.S. and international coasts beginning in 2012.

EPA to Reconsider Ban on High-Sulfur Fuel

The EPA has agreed to reconsider a U.S. Clean Air Act rule that would have terminated production of marine diesel fuel containing sulfur greater than 500 parts per million. In an effort to resolve a lawsuit brought by refiners and related parties, the proposal, if finalized by the court, would allow refiners to continue producing 500 ppm sulfur fuel, but would bar the use of such fuel in Northeast and Mid-Atlantic U.S. waters.

The refiners had argued that the EPA failed to consider the effects of the sulfur-limiting rule on small businesses such as their own. These businesses take a by-product of pipeline transportation, known as “transmix,” and refine the mixture into different fuels.

Under the terms of the proposed settlement agreement, the EPA anticipates that it will sign a notice of proposed rulemaking that includes the terms of the settlement proposal by December 31, 2011.

Environmental Groups Press for Carbon “Tax”

Environmental groups—WWF and Oxfam International—are encouraging the finance ministers from the Group of 20 nations and the climate envoys from the United Nations to adopt a pricing mechanism for emissions from maritime transport to help raise funds for climate protection.

The groups have suggested a price of $25 per ton, which they believe will motivate significant cuts in maritime emissions. They believe it would increase the cost of shipping by 0.2 percent, or $2 for every $1,000 traded, and would raise $25 billion per year.

The International Maritime Organization (“IMO”) has been unable to agree on measures to curb emissions from ships for more than a decade. The European Union, which runs the world’s largest emissions trading system, has indicated that it may present its own proposal next year to limit the maritime industry’s emissions if the IMO fails to find a solution.

Around 40 percent of revenues generated by a fuel levy or by sales of carbon allowances to the shipping industry under an emissions-trading system would be used as compensatory rebates for carbon emission control in developing countries, according to the environmental groups.

Study Reports on Carbon Emission Reductions from IMO Energy Efficiency Measures

A new study commissioned by the IMO finds that the IMO’s mandatory energy efficiency measures could reduce greenhouse gas emissions from international shipping fleets by almost a quarter by 2030.

Earlier this year, the IMO adopted energy efficiency measures for ships weighing 400 metric tons or more. The new rules affect bulk carriers, gas carriers, tankers, container ships, general cargo ships, refrigerated cargo ships, and combination carriers. Passenger ships and roll-on/roll-off ships are excluded. The regulations are expected to take effect on January 1, 2013.

The IMO regulations, including the Ship Energy Efficiency Management Plan (“SEEMP”), which utilizes best practices with existing technology for more efficient operations, and the Energy Efficiency Design Index (“EEDI”) requirements, which will apply only to new ships, should reduce CO2 emissions by an average of 151.5 million tons annually by 2020. This reduction should increase to 330 million tons annually by 2030, or a 23 percent reduction of CO2 emissions.

The study also reports that the SEEMP and the EEDI will provide significant fuel savings. The average annual fuel cost saving is estimated at between US$20 and US$80 billion (average US$50 billion) by 2020, and between US$90 and US$310 billion (average US$200 billion) by 2030. These fuel price estimates take into account anticipated increases in fuel prices as a result of the IMO’s low-sulfur fuel requirements, which go into effect in 2020.

Despite the significant cuts in carbon dioxide emissions that both EEDI and SEEMP can provide, the study highlights that using these two measures alone, a reduction in total CO2 emissions from the 2010 level does not appear feasible. The projected growth in world trade is expected to outweigh the emission reductions using EEDI and SEEMP, giving an upward emissions trend, albeit at a very much reduced rate. The study notes that other efforts, including market-based programs, will be needed to achieve more dramatic reductions in CO2.