Beveridge & Diamond
 

Emerging Ocean Law Issues: Shipping and the Environment

Beveridge & Diamond, P.C., November 20, 2006

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Ocean-based commerce through international and domestic shipping is a critical and growing component of the U.S. and global economy.  The value of oceans-based trade is projected to at least double in the next twenty years.  The number and size of ships is increasing and older fleets and vessels are being decommissioned.  Ports around the world are upgrading their facilities and environmental requirements to accommodate these trends, in turn causing a need for improvements in land-based infrastructure to support the shipping economy.  All of these developments have potentially significant environmental impacts. 

Accordingly, there are numerous initiatives to address the impact of shipping activities on the environment, both in the United States and at the International Maritime Organization.  Many of these initiatives will lead to new requirements for the design, construction and operation of vessels, ports, and other critical ocean infrastructure.  Such changes are needed to support the growth in ocean-based commerce while reducing environmental impacts and maintaining maritime safety.  The future is apparent: as the overall volume and environmental impact of global oceanic activity increases, the regulatory framework governing the shipping industry will also expand, resulting in new compliance challenges.

This summary presents an overview of recent domestic and international environmental regulatory initiatives that reflect these trends.  The issues we address include air and water emissions from ships and related port-based pollution initiatives, ballast water discharge developments, oceans and global climate change, noise and other impacts of shipping on marine mammals, and ship end-of-life activities such as conversion to artificial reef habitat and ship breaking.  All of these issues involve not only environmental concerns, but also vital security, commerce and infrastructure considerations. 

  • Air Emissions.   Ships and support operations in ports account for significant air emissions from engine combustion, cargo transfer and fueling operations, among other sources. Regulatory attention to the environmental impact of air emissions from ships is currently most concentrated on the aggregate effects seen in coastal and port areas, though the contribution to global climate change from ocean-based industry has also recently taken on new urgency (see below).  
    • In the U.S., EPA has proposed important new diesel fuel standards and emissions limits for new engines.  But the real action to reduce air emissions from shipping activities is being driven by port authorities.  For example, the busy ports of Los Angeles and Long Beach recently adopted a Clean Air Action Plan that represents an unprecedented and comprehensive plan to rapidly reduce air emissions in the affected port community.  The Clean Air Action Plan requires a minimum of 50% reduction in air emissions over five years from ships, trucks, trains, cargo-handling equipment and harbor craft.  Ports around the country and the world are viewing the Plan, which was developed in conjunction with EPA, the California Air Resources Board, and the South Coast Air Quality Management District, as the “green” standard for this industry, and elements of the Plan are and will be implemented in other areas.  For shipping companies, meeting these new emission reductions requirements will be directly tied to the ability to continue doing business in these ports.  
    •  Internationally, the IMO has adopted Annex VI to the MARPOL agreement, which entered into force in 2005 for the 37 states that have ratified it.  Annex VI establishes limits on NOx and SO2 emissions from ships, and addresses the sulfur content of bunker fuels as well as VOC emissions.  Although the Senate has already given its advice and consent to ratification, the United States is not yet a party, pending the consideration and adoption of implementing legislation.  A version of such legislation is pending now:  implementing measures for Annex VI are included in the Coast Guard Reauthorization Act of 2006 (H.R. 5681), which has passed in the House and is pending in the Senate.  The legislation would require EPA and the USCG to promulgate regulations to implement vessel emissions standards set out in Annex VI.  For ships engaged in international trade, however, Annex VI will have implications regardless of its status under U.S. law.  
  • Water Discharges.  Ships generate a variety of wastewaters as part of normal operations:  marine engine effluent (mixed with exhaust), “gray” water (used potable water) and “black” water (sewage wastes), ballast and bilge water, and deck runoff.  Longstanding Clean Water Act programs require proper management of such wastewaters or exempt them from regulations.  The Coast Guard has historically provided over sight of these programs with some EPA input.  However, states and environmental groups are increasingly frustrated by the growing environmental impacts of such wastewaters and perceived under-regulation by USCG and EPA, and are successfully forging new ground towards more stringent water discharge requirements.
  • Ballast water.   Ballast water is the latest and most significant of these efforts.  For years, EPA regulations exempted ballast discharges from federal wastewater permitting requirements.  Nevertheless, ballast water often carries invasive species, and the costs associated with the destruction and economic disruption caused by such species on natural habitats is enormous and well-documented:  their introduction into coastal and Great Lakes waters has cost billions of dollars.   Stemming and eliminating the spread of aquatic nuisance species through the discharge of ballast water is the subject of extensive federal and state legislative, regulatory and judicial attention. 
    • One bill pending in the Senate (S. 363), for example, would require certain vessels to conduct all ballast water management operations in accordance with a written plan and to treat ballast water so that the discharged water will contain no more than a specified level of living organisms or microbes.  
    • Three states -- California, Washington and Michigan -- have adopted ballast water        management requirements that require the use of new technologies and specify acceptable ballast water management practices.  These new and unprecedented requirements vary depending on the jurisdiction, creating a patchwork approach to compliance that threatens the economics and feasibility of shipping across the country and in international waters.  
    • Perhaps most significantly, a federal court in Northern California issued an order in September 2006 that rejects EPA’s longstanding permit exemption for ballast water discharges.  Notably, the court’s decision extends to not just ballast water, but all types of ship wastewater, thus raising significant new issues for the shipping industry before an agency -- EPA -- with which the industry has little experience.[1]  The court order gives EPA a mere two years to develop a comprehensive national strategy to manage and control these currently unregulated waste streams.  Likely outcomes to this decision include an appeal of this decision to the Ninth Circuit, federal legislation to countermand the decision, and/or an EPA rulemaking to contend with the merits of the court’s decision. 
  • Climate Change and Shipping.  Climate change and global warming is the number one “hot button” environmental issue today in terms of popular and media attention.  Climate change is likely to affect shipping in a variety of ways.  For example, shipping will face new challenges and opportunities such as increased polar ice movement, rising sea levels and increased storm intensity.  
    • Shipping may also face efforts to impose new international rules or guidelines that are aimed at mitigating the greenhouse gas contributions from all industry sectors.  The Kyoto Protocol included a carve-out that excluded emissions from marine bunker fuels, but called for the Parties to work through the IMO to pursue the limitation or reduction of GHG emissions from international shipping.  The issue remains high on the IMO’s agenda. 
    • In the United States, the recent adoption of California’s “Global Warming Solutions Act of 2006” could well entail new restraints on greenhouse gas emissions connected with ports and shipping.  The statute directs the California Air Resources Board to identify “significant” sources and source categories that will fall within the statute’s mandatory restrictions on GHG emissions.  Although the transportation sector is a major source of GHG emissions in California, it is unclear how the CARB will address the shipping industry, with its international dimension.  The regulatory process to flesh these issues out has already been initiated.  In addition, the Democratic takeover of Congress could well to lead to new national initiatives at the federal level that may well have implications for the maritime transportation industry. 
  • Shipping Noise and Protection of Marine Mammals.  Anthropogenic sound in the ocean has grown significantly in recent years, most prominently through the use of various frequency sonar technologies by navies and for oil and gas exploration and as a byproduct of increased vessel traffic, including noise associated with the growing number, size and routes of marine vessels (cargo ships, cruise ships, jet skis, etc.).  There are increasing scientific efforts to understand the potentially adverse impacts of ocean noise from shipping activities.  In the meantime, documented whale strandings and other marine mammal effects believed to be tied to manmade ocean noise has added to the growing pressure to address this issue through new legislation or other control measures.  Environmental groups have targeted the U.S. Navy sonar programs thus far in their litigation efforts, but successful results in that arena may turn the focus to industry.  Moreover, in 2003, Congress directed the Marine Mammal Commission to “fund an international conference or series of conferences to share findings, survey acoustic ‘threats’ to marine mammals, and develop means of reducing those threats while maintaining the oceans as a global highway of international commerce.”  The MMC established an advisory committee that, after several rounds of meetings, was unable to reach consensus on a report to the MMC.  The individual statements of its members, however, did identify a number of common concerns and potential control measures to be further studied, including new technologies and areas to be avoided.  There is also a growing understanding that this issue will likely need to be the subject of international cooperation, with rules and standards to be agreed at IMO.  http://mmc.gov/sound/committee/pdf/soundFACAreport.pdf.
  • Ship Strikes and Protection of Marine Mammals:  Collisions with vessels pose an additional threat to marine mammals.  This risk is particularly acute in the case of the endangered Northern Right Whale, which is significantly threatened both because of its very low population numbers and because of its migratory pattern through busy North Atlantic sea lanes.  Although the federal government has already imposed a mandatory reporting and notification requirement for ships entering U.S. ports that sight right whales, there is pressure to do more to protect this dwindling species.  In June 2006, NOAA released a notice of proposed rulemaking -- a “Strategy to Reduce Ship Strikes to North Atlantic Right Whales” -- which calls for a speed cap of 10 knots on specific routes during calving season for vessels 20 meters or longer.  After the World Shipping Council and others expressed their interest in studying the proposal carefully, the proposal was extended for public comments until October 5, 2006 (http://www.nmfs.noaa.gov/pr/shipstrike/).  In a recent affidavit filed in connection with litigation brought by a coalition of groups suing the National Marine Fisheries Service (NMFS) and U.S. Coast Guard concerning the alleged failure of these agencies to take immediate steps to protect the North Atlantic right whale from ship strikes, NMFS indicated that it will not take final action on the proposed rule until June 2007.   
  • Ship End-of-Life Issues:  Recycling by Reef Conversion and “Ship Breaking”.  The environmental hazards associated with end-of-life ship activity have attracted increasing attention in recent years.  The issue has become more important as the pace of ship decommissioning increases.  Among the factors affecting ship turnover are rules adopted at the IMO, in Europe and in the United States (under OPA 90) that require a phase-out of single hull oil tankers.  Apart from these regulatory drivers, shipping companies and ship builders are responding to increased global demand for ocean-borne cargo by launching increasingly larger ships.  Ships destined for decommissioning may contain numerous chemicals and materials that, under international and domestic laws, require special handling and disposal.  
    • For example, in 2003 the IMO adopted non-binding guidelines for ship recycling.  Last year, however, the IMO decided to initiate the negotiation of a new instrument that will set minimum standards for ship scrapping facilities and impose certain design-for-recycling requirements on new ship construction, to be completed during the 2008-2009 biennium.  The agreement will ultimately affect both portside scrapping facilities, ship-owners, and ship construction firms globally.  http://www.imo.org/Environment/mainframe.asp?topic_id=1108.  
    • In a similar vein, EPA is developing Best Management Practices for recycling of vessels into artificial reefs.  The guidelines will focus on managing chemical, oil and ballast water wastes when vessels are decommissioned and prepared  for final use underwater as artificial reefs.  

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Beveridge & Diamond has a long and outstanding record of working with industries to address new and unprecedented environmental initiatives, and we are well-positioned to lead and assist industry efforts to develop sensible regulatory programs with international, federal and state governments.  We welcome your inquiries about these issues.  Please contact Karen Hansen (khansen@bdlaw.com, 202-789-6056) or Russ LaMotte (rlamotte@bdlaw.com, 202-789-6080) for further information. 


[1]  Northwest Envtl. Advocates v. United States EPA, 2006 U.S. Dist. LEXIS 69476 (D. Cal. 2006).  The Court struck down EPA’s regulatory exemption at 40 C.F.R. § 122.3(a), which exempted wastewater discharges "incidental to the normal operation of a vessel."

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