Maritime Industry Faced with New Proposals for Regulating Air and Water Discharges As a Result of Environmental Group Action; Comment Opportunities Limited

Thursday, July 29th, 2010

The U.S. Environmental Protection Agency (“EPA”) is continuing its efforts to expand and change how it regulates the environmental impact of maritime operations. One effort addresses water pollution issues while vessels are underway, while the other addresses air pollution issues when at shore. The water pollution proposal seeks comments on whether it should grant a request for rulemaking that seeks to vastly change and upgrade marine sanitation devices. Comments are due by November 9, 2010. In the air pollution proposal, the agency plans to settle a lawsuit by proposing that it reconsider its current regulations of hazardous air pollutants (HAPs) emitted from tank vessel loading operations. Comments in this proposal settlement are due by August 13, 2010. Both initiatives were triggered by environmental groups. This alert discusses each of these new initiatives.

Potential New Requirements for Marine Sanitation Devices
Asserting that current marine sanitation devices (“MSDs”) are inadequate to protect U.S. waters, Friends of the Earth ("FOE") filed a petition in April 2009 with EPA, asking the agency to require substantial changes in the standards governing discharges from MSDs. Based on information gathered several years ago from a voluntary sampling program by cruise ships in Alaskan waters, FOE supports its petition by noting “the average concentration of fecal coliform in MSD effluent exceeded the [current] EPA standard by 10,200 times.” The agency is now asking for industry comments on the petition and whether it should begin a rulemaking to change standards governing MSDs.

Although based on a sampling program in the cruise industry, FOE asks EPA to update the standards for all Type II MSDs and require advanced wastewater treatment systems for all vessels discharging treated sewage. In addition, the petition seeks to have EPA consider upgrades to this technology including biological nitrification, ion exchange, reverse osmosis and chemical precipitation to achieve reductions in the levels of ammonia, nitrogen, phosphorus and metals.

Sewage discharges from vessels are regulated under the Clean Water Act, which requires vessels to install an MSD approved by the Coast Guard for treatment of such discharges. Currently, vessel sewage discharges are not subject to Clean Water Act permitting requirements because such discharges are specifically regulated under other provisions of the Act. Under current regulations, vessels need only have a Coast Guard-approved MSD installed on-board that is designed to meet discharge performance standards.

As noted in the petition, vessel operators are not required to monitor sewage discharges on a continual basis or to record compliance throughout the life cycle of their MSDs. FOE is asking EPA to establish monthly monitoring and reporting of discharges from Type II MSDs as well as daily observations of treatment equipment operation. Requiring more extensive testing, sampling, and recording of data relating to these discharges could result in a major new responsibility for vessel operators.

In response to this petition, EPA issued a request for information relating to MSDs. Many of the highlighted questions are addressed to equipment manufacturers, but vessel owners should note the following questions:

Whether EPA should revise the existing performance standards for MSDs, and if so, what should be the basis for those revisions?

What revisions to the existing performance standards are necessary for each type of MSD?

What are the likely impacts of revising MSD performance standards?

What are the practical limitations or burdens associated with implementing testing, monitoring or reporting of sewage discharges from vessels, in particular the costs associated with complying with these requirements or vessel retrofitting for testing and monitoring?

Comments are due on November 9, 2010. It is important to note that EPA has been considering this petition for over a year. It must now decide whether to formally propose regulations to revise the program. The regulated community has only a few months to respond. Whether and how the agency will decide to grant this petition and proceed with rulemaking will be heavily influenced by comments received during this period.

Possible New Hazardous Air Pollutant Standards for Tank Vessel Loading Operations
On July 7, 2010, EPA and numerous environmental groups lodged a proposed consent decree in the United States District Court for the Northern District of California, settling a deadline suit over EPA’s alleged failure to review and revise National Emission Standards for Hazardous Air Pollutants (“NESHAP”) for 28 categories of sources, including marine tank vessel loading operations. The suit, filed by the Sierra Club, alleged that EPA violated the Clean Air Act ("CAA") by failing to review and revise the NESHAPs for these source categories over the previous eight years as required by Sections 112(d)(6) and 112(f)(2) of the CAA. EPA filed the notice of the Consent Decree in the Federal Register on July 14, 2010. The potential for changes to the tank vessel loading NESHAP instigated by this Consent Decree is significant.

The NESHAP for tank vessel loading operations was issued on September 19, 1995. The rule is concerned with the potential for the discharge of benzene, toluene, hexane, xylene, and ethylbenzene from gasoline and crude oil as it is loaded into a tank vessel. Basically, it requires marine terminals to reduce emissions of HAPs and volatile organic compounds (“VOCs”) by certain percentages based upon when the terminal began operations and the amount of emissions currently created by loading operations. Existing terminals (those online before November 1994) that were emitting more than 10 tons of any individual HAP or more than 25 tons of combined HAPs, and handling commodities with a vapor pressure of 1.5 psia or greater, were required to reduce their emissions of HAPs by 97 percent by September 1999. New terminals in a location that emit greater than the 10/25 ton threshold (even if the terminal itself is not responsible for all of these emissions) are required to reduce emissions by between 95 and 98 percent upon startup.

In both cases, EPA requires marine terminals exceeding that threshold to implement maximum achievable control technology (“MACT”) for reducing these emissions. Marine terminals not exceeding that threshold are required only to use reasonably available control technology (“RACT”), except for the Alyeska Pipeline Valdez Terminal, which is subject to its own requirements. Notably, existing minor source terminals (i.e., those that do not meet the throughput limits), as well as existing major source terminals located more than 0.5 miles offshore, are not required to meet the MACT requirements. Moreover, terminals collocated at petroleum refineries (regulated by a separate NESHAP) are permitted to average their emissions with the refinery operations.

Many of the requirements and exclusions included in the original NESHAP responded to feedback from industry through the comment process. For example, EPA based its decision to choose a “no control” level for offshore operations on the fact that “omments in response to this request indicated that these types of vessel loading operations face significant challenges in controlling emissions that were different from land-based, contiguous loading operations,” and “data submitted by commenters showed that the costs associated with the control of offshore terminals are between two and five times more expensive than comparable onshore control techniques.” Similarly, when considering whether to permit averaging of emissions from loading operations collocated with refinery operations, EPA cited “more cost effective emission reduction” and the fact that “emission calculation procedures for loading are well established and that adding marine loading to the averaging provisions will not appreciably increase the complexity of enforcement” as support for averaging emissions. Given that these determinations were made 15 years ago, it is almost certain that changes in technology, costs and other processes could well alter the agency’s view regarding whether and how these parameters will continue.

Comments on the proposed Consent Decree are due to EPA by August 13, 2010. This would include comments regarding whether the timeframe under which the agency has agreed to review these rules is sufficient. The Consent Decree, if approved, would require EPA to propose changes to the marine tank vessel loading operations NESHAP and residual risk standards by September 14, 2010, and a final rule by March 31, 2011. There will be a separate comment period sometime after September 14, 2010, but it has not yet been scheduled. Changes to the rule could revisit the criteria by which a facility is subject to MACT requirements, revise or eliminate the rules related to averaging emissions at a particular location, or even impose more stringent requirements on the entire industry. While the Consent Decree gives the EPA the option of declaring that changes to the marine tank vessel loading operations NESHAP are unnecessary, it is somewhat likely that any such decision would be subject to challenge by the same environmental groups that brought the deadline suit in the first place. Indeed, to protect their victory in obtaining this Consent Decree, it is likely that plaintiffs will actively participate in the rulemaking process for this and other NESHAPs subject to the Consent Decree. Industry members should consider participating as well.
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