01 AUG 2005
By Matthew Vafidis, Partner, Holland & Knight LLP, San Francisco
While the delay in ratifying Annex VI is certainly an indication that the current priorities of the US Senate lie elsewhere, it should be noted that the adoption of Annex VI has received widespread support in the United States. As early as 2002, the US Department of State, in consultation with other federal agencies, began preparing appropriate documents for submission to the President for transmittal to the US Senate for its advice and consent to ratification, and in 2003, president Bush formally requested the Senate to ratify Annex VI. Although differences of opinion currently exist as to the nature of the enabling legislation, it is generally understood that Annex VI will be ratified by the United States sooner or later.
Effect on shipping
Control of sulphur oxide
Environmentalists and regulators have recognised that the greatest environmental danger of SOx emissions from vessels is posed in areas where ship traffic is relatively close to population centres. The International Maritime Organization (IMO) has estimated that 85 per cent of international shipping traffic occurs in the northern hemisphere and 70 per cent of that is within 240 miles (400 km) of land. In the Protocol of 1997, which added Annex VI to MARPOL, the Baltic Sea was therefore designated as a SECA, and will become a SECA in May 2006. Moreover, in March 2000 the North Sea was added as a SECA, expected to be enforced from early 2007; and it is possible that there may be other SECAs established, for example to the west of the British Isles, west of continental Europe and the Mediterranean.
In the United States, there are also several geographical areas with a similarly high concentration of commercial ship traffic relatively close to urban populations, and it is not surprising that these areas – for instance, the Los Angeles/Long Beach port area, other West Coast ports, Baton Rouge/ New Orleans and ports in certain parts of Texas – have been identified as examples of areas where the problem of air pollution from ships is most acute. There have therefore been calls for the creation of SECAs to cover all or part of the United States coastal areas or ports, and for these SECAs to be established under the auspices of Annex VI once ratification occurs. The federal agency charged with responsibility for air quality regulation and control, the US Environmental Protection Agency (EPA), has indeed indicated that, once Annex VI is in force, EPA will assist other federal agencies in investigating and developing an application by the United States to IMO for designating relevant US coastal and port areas as SECAs, and intends to work for the establishment of a North American SECA.
Clean Air Act
The EPA has identified six common air pollutants that are harmful to health, the environment and property, and developed health-based criteria as the basis to set standards of permissible levels of these pollutants.6 These pollutants, which are referred to as “criteria pollutants”,7 are: ground-level ozone,8 PM,9 carbon monoxide, nitrogen dioxide, sulphur dioxide, and lead. One major target of the statute is urban smog, which is caused by combining ground level ozone, carbon monoxide and larger PM.
The principal goal of the Clean Air Act is to “encourage or otherwise promote reasonable federal, state and local government actions, consistent with the provisions of [the] Act, for pollution prevention”.10 Accordingly, responsibility for meeting the EPA standards for criteria pollutants falls largely on the states, which are required to establish their own regulatory bodies, for example, the California Air Resources Board, to implement the federal standards. These state authorities must develop and obtain approval from the EPA for a compliance plan, comprised of a set of air pollution regulations.11 States are also permitted to impose stronger air pollution controls than the federal standards. In many states, such as California, substantial regulatory and enforcement functions are further delegated by the state to regional air quality management districts, which in California are established geographically to cover each “air shed” (i.e., the air supply for a particular geographic region).12 Under the circumstances, all levels of government – federal, state and local – are effectively involved in air quality regulatory schemes and programmes, with significant activities taking place on a local level.
Until 1990, the activities of the EPA and the relevant state and local bodies were focused on reducing and regulating air emissions from on-road vehicles and stationary sources, such as power plants, refineries and other industrial facilities. In 1990, however, the Clean Air Act was amended to add a provision authorising the EPA to establish emissions standards for “nonroad engines and nonroad vehicles”. Accordingly, in the 1990s the EPA turned its attention to other non-stationary sources of air-borne pollution, including ships. In 1998, the EPA announced that it intended to set Clean Air Act emissions standards at the same level as Annex VI for marine engines, including large so-called “Category 3 engines” with a per-cylinder displacement of 30 litres or more.13 Following a series of scientific studies, the EPA concluded that residual diesel fuel burned by Category 3 diesel engines has higher contents of ash, metals, sulphur and nitrogen, which increase emissions of criteria pollutants, and that the fuel burned by these engines had a higher variability than other fuels, which makes engine emissions more difficult to control. According to the EPA, emissions from Category 3 marine engines in the United States contribute to ozone, carbon monoxide, NOx and dangerous PM levels, especially near commercial ports such as Baton Rouge/New Orleans, Los Angeles, Wilmington, N.C., Miami/Fort Lauderdale and Corpus Christi, TX, and in coastal areas such as Santa Barbara. Notably, the EPA has been and remains particularly concerned about the SOx emissions from Category 3 engines.
Emission standards for marine diesel engines
These potential regulatory limits on SOx emissions should be seen in a broader context of the EPA’s regulation of emissions from on-road vehicles and regulation of marine distillate diesel fuel. Beginning in 2000, the EPA committed to a comprehensive nationwide programme designed to control emissions from heavy duty road vehicles and engines, specifically to reduce PM and NOx emission levels to less than 90 per cent and 95 per cent of standard levels in effect today. Under the EPA Rule, beginning in 1st June 2006 all diesel fuel refiners must begin producing highway diesel fuel that meets a maximum sulphur standard of 15 ppm, or 0.0015 per cent per m/m.18 Moreover, the EPA has established a sulphur limit for marine distillate fuel oil of 500 ppm, or 0.05 per cent per m/m, lowering to 15 ppm by 2012. In the light of these regulations, it is reasonable to presume that there would be little opposition to standards far less stringent being applied to residual fuel oil burned in large ocean-going vessels.
Generally, the shipping industry and ports in the US appear to have responded reasonably, by recognising the need to be open to new vessel technologies and to adapt to new developments such as the use of low sulphur fuel. On the US West Coast, operators of ships and marine terminals have been experimenting with voluntary measures to reduce air pollution, such as slow steaming, late gates and use of new technologies. Following the lead of European ports and a project underway in Juneau, Alaska, some terminals at West Coast ports are exploring the use of alternative maritime power, i.e., drawing on shore side electric power to avoid use of ship board generators when in port.
Inevitably, perhaps, these issues have not escaped the notice of the plaintiffs’ bar in the United States. In what may be an ominous development, in October 2004 a family living in the vicinity of the port of Los Angeles filed a lawsuit in the Los Angeles Superior Court, initially against about 120 defendants, including the City of Los Angeles, the port and other public authorities, terminal operators, ship owners and operators, trucking companies and other businesses using or based at the harbour, contending that the defendants’ conduct and activities at the port over a number of years exposed them to “hazardous and toxic emissions and known carcinogens” along with increased noise levels. In this lawsuit20 the plaintiffs’ seek unspecified general damages for personal injuries and other losses, and punitive damages. This action clearly raises concern that it may be the start of a series of similar lawsuits brought by other plaintiffs in Southern California, and perhaps elsewhere in the country, seeking to charge the maritime industry with responsibility, amongst other things, for emissions from vessels and terminal operations.