Maritime Alert
June 2008
Authors:
Susan B. Geiger
susan.geiger@klgates.com
202.661.3818
Barry M. Hartman
barry.hartman@klgates.com
202.778.9338
John F. Spinello
john.spinello@klgates.com
973.848.4061
Yvette T. Wissmann
yvette.wissmann@klgates.com
202.661.3829
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California Air Resources Board Issues Draft
Clean-Fuel Regulations for Oceangoing
Vessels
The California Air Resources Board (CARB) has released draft clean-fuel regulations for
oceangoing vessels that would require U.S.- and foreign-flagged vessels sailing within 24
miles of the California coastline to use low sulfur marine fuels rather than bunker fuel to
power main propulsion engines, auxiliary engines and boilers. The CARB proposal would
affect approximately 2,000 oceangoing vessels annually and will be considered by CARB
at its July 24 and 25 meetings. These draft regulations, which were issued on June 10, 2008,
would replace a measure adopted in 2005, which a federal court later decided required a
Clean Air Act preemption waiver.
On May 8, 2008, CARB suspended enforcement of a rule that required ships to use the low
sulfur fuels in onboard auxiliary diesel engines after a federal court ruled that the measure
was an emissions standard that was preempted by federal law. (See Pacific Merchant
Shipping Association v. Goldstene, 9th Cir., No. 07-16695, 4/18/08.) The decision focused
on provisions in CARB’s auxiliary engines regulation that allowed vessel operators
to demonstrate compliance “by showing equivalence to using the specified low sulfur
distillates.” The court ruled that the provision constituted an emissions standard. As such,
CARB redrafted the proposed regulations, which are outlined below.
Under the proposal, by January 1, 2009, cargo and container ships would be required to
switch either to marine gas oil with no more than 1.5 percent sulfur or marine diesel oil with
0.5 percent or less sulfur. By 2012, only marine gas oil and marine diesel oil fuels with 0.1
percent sulfur would be allowed. The proposed regulations specify the fuel that can be used,
based on the amount of sulfur, and do not specifically address emissions. Consequently,
CARB says that a Clean Air Act Section 209(e) waiver would not be required because
the regulations set out operational fuel use requirements and not emissions standards. At
the same time, in the proposed regulations, CARB said that while it still plans to ask the
Environmental Protection Agency for a waiver to implement the rule, due to the time a
request will take and an uncertain outcome, the state is moving ahead with regulations to
address this source of emissions.
In the proposed regulations, CARB also included a provision that would allow a vessel
owner or operator, under restricted and specified circumstances, to pay a fee in lieu of
complying with the in-use operational requirements. This mechanism would require the
vessel owner or operator to notify CARB of the vessel’s non-compliance condition prior
to the vessel entering California waters. If utilizing a waiver, a mitigation fee would
be applied, which would increase substantially with each subsequent port visit. The
progressive fee structure is intended to deter use of waivers and to encourage vessel owners
and operators to meet in-use operational requirements as quickly as possible.
Through December 31, 2014, all or part of the fuel use requirements would be waived for
vessels that require essential modifications to its fuel system in order to use the specified
fuel. However, to obtain a waiver, certain requirements must be satisfied, fully documented
and approved by CARB. Even with such a waiver, vessel operators would also be required
Maritime Alert
to use the low sulfur fuel to the maximum extent
possible without the need for essential modifications
(i.e. closer to shore).
The proposed regulations also contain several
exemptions. The following would not require
compliance with these regulations:
• Vessel voyages comprised of continuous and
expeditious navigation through any Regulated
California Waters for the purpose of traversing
such waters without entering California internal or
estuarine waters or calling at a port, roadstead, or
terminal facility;
• Steamships whose primary propulsion and electrical
power are provided by steam boilers;
• Vessels owned or operated by any branch of
local, state, or federal government, or by a foreign
government, when the vessels are operated on a
government non-commercial service;
• Emergency generators, auxiliary engines, main
engines, and auxiliary boilers while such engines
are using alternative fuel in Regulated California
Waters;
• If a vessel master reasonably and actually
determines that compliance with the requirements
would endanger the safety of the vessel, crew,
cargo, or passengers because of severe weather
conditions, equipment failure, fuel contamination,
or other extraordinary reasons beyond the mater’s
reasonable control; and
CARB has estimated that implementation of the draft
regulations would reduce toxic particulate matter
emissions from diesel vessel engines by 15 tons per
day, an 80 percent reduction from current uncontrolled
emissions. Sulfur oxide and nitrogen oxide emissions
would also be reduced by 90 and 6 percent, respectively.
The emissions reductions would help the South Coast
Air Quality Management District meet federal clean
air requirements for fine particulate matter by 2014.
The proposed regulations are also needed so CARB
can achieve its targeted 85 percent reduction of diesel
particulate matter by 2020.
CARB’s proposed regulations estimate the added
annual fuel cost for a typical vessel operator to be
between $300,000 and $700,000 per company. For the
entire oceangoing shipping fleet that visits California,
the estimated annual fuel cost will range from
approximately $140 million in 2009 (when the rule is
implemented mid-year) to $360 million in 2014 (the
final year of cost analysis). CARB states that the added
costs of the regulations represent about 1 percent of the
total costs of an average trans-Pacific voyage and says
that it does not expect that the regulations will result
in significant capital costs to ship operators, since most
vessels will not likely need to make modifications to
burn distillate fuel.
http://www.
arb.ca.gov/regact/2008/fuelogv08/fuelogv08.
htm
The draft regulations are available at:
• Vessels that have been granted a temporary
experimental exemption by CARB for the duration
of the approved exemption.
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