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Proposed Air and Water Regulations in the U.S. Will Establish Greener Standards for Ships

Client Advisory

January 3, 2008

Shipping companies will recall the slow pace at which oil pollution laws evolved in the United States. After the 1967 oil spill by the Liberian tanker Torrey Canyon near the Channel Islands, it took another 23 years -- until after the 1989 Exxon Valdez Alaskan oil spill -- to trigger the passage of the Oil Pollution Act of 1990 (“OPA”). OPA’s passage involved considerable debate among states’ rights advocates, environmental groups and shipping companies on issues such as whether the OPA should preempt state regulation, the enforcement role of the U.S. Environmental Protection Agency (“EPA”) versus the U.S. Coast Guard (“USCG”), and enforcement of U.S. standards on foreign-flagged ships. These same issues will again be debated as Congress determines how it should regulate the discharge of ballast water from ships under the Clean Water Act (“CWA”) and air pollutants emitted from diesel engines under the Clean Air Act (“CAA”). This advisory provides a brief summary of the current status of U.S. regulation of ballast water discharges and air emissions from ships and expectations for the coming year. 

CWA Regulation of Ballast Water

Since 1973, EPA has exempted any “discharge incidental to the normal operation of a vessel” from its CWA National Pollutant Discharge Elimination System (“NPDES”) permit program. See 40 CFR § 122.3(a). In a suit brought by a coalition of environmental groups concerned about the increased rise in aquatic invasive species in U.S. waters and the damaging ecological impacts from such invasive species, the United States District Court for the Northern District of California held in favor of the environmental groups, finding that the NPDES exemption was beyond EPA’s authority, and ordered EPA to repeal it.  See Northwest Environmental Associates v. EPA, 61 ERC 1245 (Mar. 31, 2005). In September 2006, the Court announced it would provide EPA until September 30, 2008 to issue a rule to regulate such discharges from ships before vacating the 1973 exemption. See 63 ERC 1915 (Sept. 18, 2006). EPA appealed the decision and oral argument was held before the Ninth Circuit in August 2007; however, to date, no decision on the appeal has been issued.   

In the meantime, EPA published a notice of its intent to regulate ballast water and other discharges from ships on June 21, 2007. See 72 Fed. Reg. 34241 (June 21, 2007). The EPA notice essentially sought comments on how to structure the NPDES program and establish both technology-based and water quality-based effluent limits. To date, EPA has not published a proposed NPDES rule or provided any other information as to how it intends to move forward on implementing a NPDES permit program for ships. If EPA does not win its appeal in the Ninth Circuit, it is unlikely that EPA will have a NPDES program in place by September 2008. But even if no NPDES permit program is in place, after September 30, 2008, shipping companies could still be found in violation of the CWA for any ballast water discharges in U.S. waters that occur without a NPDES permit.

In 2008, Congress could enact ballast water legislation that would eliminate any requirement for shipping companies to obtain NPDES permits. Senate bill 1578 to amend the Nonindigenous Aquatic Nuisance Prevention and Control Act of 1990 would provide strict technology performance standards to reduce aquatic invasive species in ballast water and compliance timeframes beyond those required by the International Maritime Organization (“IMO”). This bill would require enforcement of the program by USGC, not EPA, and would generally preempt state requirements. House of Representatives bill 2830 to authorize appropriations for the Coast Guard also proposes the same technology performance standards as the Senate bill and would preempt inconsistent state laws, although it would permit the states to administer their own inspection and enforcement programs; however, the House bill does not address EPA’s authority under the CWA.

Accordingly, throughout 2008, shipping companies will need to monitor the ballast water developments in the courts, Congress and regulatory agencies because, based on the current status quo, NPDES permits for discharges of ballast water in U.S. waters could be required starting October 1, 2008.

CAA Regulation of Marine Diesel Air Emissions

In April 2007, the U.S. proposed to the IMO a series of amendments to Annex VI of the MARPOL treaty, establishing a new tier of emission standards and stringent requirements for ships in high-traffic coastal areas. Negotiations for amended standards are continuing and are expected to be completed in 2008.

On November 29, 2007, the EPA buttressed its proposal to IMO by announcing its intention to develop more stringent emission standards under the CAA for new marine diesel engines with per-cylinder displacement of 30 liters or greater (“Category 3” engines).[1] The EPA is concerned about the “relatively modest” existing Tier 1 emission standards, as established by the IMO and adopted by EPA in 2003, which do not fully address marine engines’ significant contribution to U.S. pollution.[2] EPA estimates that ships have contributed a significant and growing percentage of all mobile-source nitrogen oxide (“NOx”), fine particulate matter (“PM”), and sulfur oxide (“SOx”) emissions in the United States. 

The EPA’s proposal would introduce three new tier levels for Category 3 engines’ NOx emissions: Tiers 2, 3, and 4.[3] The new Tier 2 standards, which could begin as early as 2011, would require 15 to 25% lower emissions for new engines than current Tier 1 levels, generally expected to be accomplished by a mix of in-cylinder controls and water-based technologies. Tier 3 standards, which could begin as early as 2016 and which would apply to ships when operated in specially designated areas (generally along the coast), would reduce NOx to 80% below the Tier 2 standards through the installation of selective catalytic reduction technology. These designated areas would also see tightened performance-based SOx and PM standards as early as 2011, which could be met by using low-sulfur distillate fuel (1,000 ppm) or exhaust after-treatment technologies like SOx scrubbers. The new Tier 4 standards would call for high-efficiency catalytic after-treatment and the use of ultra-low sulfur diesel fuel on new, large engines by 2014. EPA is also considering requiring all previously grandfathered marine engines to meet Tier 1 standards. The EPA will accept written public comment on these proposals through February 29, 2008.[4]

 


Questions regarding this client advisory should be directed to Donald J. Kennedy (kennedy@clm.com), Cliff Case (case@clm.com) or Christine Fazio (fazio@clm.com).



Endnotes

[1] Category 3 marine diesel engines are primarily used on large foreign-flagged ocean-going vessels.

[2] The current regulation for Category 3 marine engines is found at 68 Fed. Reg. 9746 (Feb. 28, 2003). EPA’s existing standards are equivalent to MARPOL Annex VI NOx limits.

[3] EPA’s advance notice of proposed rulemaking and other information about marine engines is available at www.epa.gov/otaq/oceanvessels.htm.

[4] In March 2007, EPA proposed regulating marine diesel engines below 30 liters per cylinder displacement. This proposal for smaller engines seeks to cut PM emissions by 90% and NOx by 80%.



Carter Ledyard & Milburn LLP uses Client Advisories to inform clients and other interested parties of noteworthy issues, decisions and legislation which may affect them or their businesses. A Client Advisory does not constitute legal advice or an opinion. This document was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. © 2017 Carter Ledyard & Milburn LLP.
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