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By Matthew Vafidis, Partner, Holland & Knight LLP, San Francisco

Although the United States have not ratified Annex VI of MARPOL, air pollution from ships and port activities is a continuing target of US federal and state regulation.

When compared with the European Union, the United States appears to be lagging behind in taking steps to reduce or regulate harmful emissions from ocean-going vessels. The US is one of several maritime countries that have not yet ratified Annex VI of MARPOL,1 which came into force on 19th May 2005. In several respects, air pollution control measures due to be implemented in Europe go beyond anything proposed in the United States. This is not, however, a reflection of US indifference or inactivity with respect to air quality issues. To the contrary: there is every indication that the dangers of air pollution from ships and port activities will be a continuing target of federal and state regulation, and, inevitably, the subject of potential litigation against ship owners and operators.

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
As a practical matter, the delay in ratification of Annex VI is expected to have little effect on shipping in the United States since owners or operators of both US and foreign flag vessels calling at US ports and US bunker suppliers are expected, in advance of ratification, to comply with the requirements of Annex VI. Vessels in the United States will therefore be expected in due course to carry the required Annex VI certificates2 and procedures, and to comply with Annex VI’s nitrogen oxide (NOx) emissions standards for diesel engines and the regulations limiting the sulphur content of fuel oils,3 even though, as a formal matter, the US Coast Guard is not currently charged with responsibility for enforcing Annex VI.

1  MARPOL 73/78 was amended in 1997 to add Annex VI, titled “Regulations for the Prevention of Air Pollution from Ships”. See article “Annex VI of Marpol 73/78 - Regulations for the Prevention of Air Pollution from Ships” in Gard News issue No. 176.
2  The International Air Pollution Prevention (IAPP) certificate and Engine International Air Pollution Prevention (EIAPP) certificate.
3  Annex VI imposes a limit on the sulphur content of fuel oil to 45,000 ppm, or 4.5 per cent per m/m, which, as a practical matter, does not appear to present an issue for bunker suppliers or ship operators.

Control of sulphur oxide
From the perspective of those concerned with air quality in the United States, perhaps the most important aspect of Annex VI may lie in its provisions relating to the regulation and control of sulphur oxide (SOx) emissions from ocean-going vessels. Sulphur dioxide, one of the SOx gases, has been linked to serious respiratory illness in both its gaseous form and, after reaction with other chemicals in the air, as sulphate particles, a harmful particulate matter (PM), and it is one of the components of acid rain. Annex VI allows for the establishment of “SOx Emission Control Areas”, or SECAs, with more stringent controls on SOx emissions. In SECAs, the sulphur content of the fuel oil burned may not exceed 15,000 ppm, or 1.5 per cent per m/m; alternatively, ships operating in SECAs may meet the requirement by using an exhaust gas cleaning system or another appropriate technological method to limit SOx emissions.

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
Meanwhile, there is a parallel approach to the problem of air pollution from ships that is also being followed by the United States pursuant to the Clean Air Act, the governing federal air pollution prevention and control legislation.4 The Clean Air Act of 19905 is the latest in a series of clean air and air quality control acts beginning in the mid-1950s. It reflects the increasing sensitivity of Americans during the 1980s to the potentially harmful levels of pollutants, particularly urban smog, acid rain and toxic air emissions, in many significant population areas in the United States.

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.

4  See article “Pollution by Air” in Gard News issue No. 150.
5  Also significantly amended in 1997; codified at 42 U.S.C section 7401, et seq.
6  Termed National Ambient Air Quality Standards (NAAQS).
7  One set of standards or limits, the so-called “primary standard”, is designed to protect health; the other set of limits, the “secondary standard”, is intended to protect the environment and property. According to the EPA, currently about 90 million Americans live in geographical areas that fail, to varying degrees or “classes”, to meet the primary standard – these areas are termed “non-attainment areas”.
8  The product of a chemical reaction between nitrogen oxides and volatile organic compounds (VOCs) in the presence of sunlight.
9  Particulate matter is of two types: PM2.5 (2.5 micrometres or smaller in diameter) and PM10 (particles with a diameter of 10 micrometres or smaller).
10  42 U.S.C. section 7401c.
11  This is termed a “state implementation plan”, or SIP.
12  The Los Angeles/Long Beach area is under the jurisdiction of the South Coast Air Quality Management District, whereas the air quality issues for San Francisco Bay Area ports are regulated by the Bay Area Air Quality Management District. The regulations of each district, while similar, are distinct.
13  Category 3 engines are those used primarily “for propulsion power on ocean-going vessels such as container ships, tanker, bulk carriers, and cruise ships.”

Emission standards for marine diesel engines
In February 2003 the EPA promulgated a rule setting emission standards for marine diesel engines.14 In its 2003 Rule, the EPA proposed to address regulation of emissions from Category 3 engines in two stages, the so-called “two tier approach”. The first stage, or Tier 1, which came into effect on 1st January 2004, involves expanding the use and optimisation of existing and new advanced engine technologies to reduce dangerous emissions, particularly of NOx. The Tier 1 standards track the Annex VI emissions standards, and apply only to US ships.15

The EPA has postponed adopting the Tier 2 standards until April 2007, but has committed to doing so. As part of this process, the EPA has promised to consider more stringent standards than those available internationally, and to impose those standards to engines on foreign flag vessels in US ports.16 This leaves open the very real possibility that by April 2007 the United States may choose to impose emissions standards on shipping that go beyond those currently imposed under Annex VI.17

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.

Concluding comments
As might be expected, these developments over the past few years have been accompanied by – and, indeed, have promoted – extensive public debate about the potential effects to health and property of harmful emissions from ships. Newspapers and journals, air quality and trade conferences, and environmental advocacy groups have begun to focus on the issue and call for increased regulation of shipping in US ports, often by reference to alarming scientific data. For example, in June 2004, the non-profit organisation Environmental Defense, citing EPA figures, claimed that smog-producing ship pollution would increase four-fold between now and 2030, that each year commercial marine vessels are estimated to discharge into the air we breathe 1 million tons of NOx, 400,000 tons of PM and 160,000 tons of SOx, and that some 159 million Americans in 474 counties live in areas with unhealthy smog levels.19 The group stated that in the port of Houston, for instance, where vessel traffic is predicted to increase threefold in the coming decades, vessel pollution was already the equivalent of that produced by 288,000 cars. Studies of other ports are equally specific. According to a report prepared for the South Coast Air Quality Management District in 1996, ships were said to account for approximately 31 per cent of the total daily sulphur inventory of the air shed that includes Los Angeles/ Long Beach harbour. It should be noted that this percentage of the total will likely increase if, as expected, SOx emissions diminish from other sources, particularly stationary sources and on-road vehicles.

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.

14   The 2003 Rule also adopted standards for smaller engines (Category 1 and 2) installed on vessels flagged or registered in the United States
15  In a lawsuit decided in 2004, the environmental group Bluewater Network contended that the Tier 1 standards adopted by the EPA were merely an iteration of the status quo and were ineffective to reduce harmful emissions, since they did not regulate foreign vessels. The EPA’s approach was upheld. Bluewater Network v. EPA, 372 F.3d 404 (DC Cir. 2004).
16  See 68 Fed. Reg. 9746.
17  Some environmental groups in the US, for instance Bluewater Network, have contended that the Annex VI standards do not go far enough.
18  It should be noted that the equivalent European Union standard for on-road diesel fuel, which will be implemented at the same time, is 10 ppm, 0.0010 per cent per m/m.
19  Environmental Defense: “Smog Alert, How Commercial Shipping is Polluting Our Air.”
20 Bradfield, et al v. China Shipping (North America) Holding, et al., L.A. Superior Court, BC 322640.


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Gard News is published quarterly by Gard AS, Arendal, Norway.