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American Shipper

Ocean carriers and SoCal ports announce low-sulfur fuel subsidy program

Ocean carriers and SoCal ports announce low-sulfur fuel subsidy program

Ocean carriers serving the West Coast have partnered with two Southern California ports to develop a fuel subsidy program to help offset the cost of using cleaner burning low-sulfur diesel fuel in their main engines.

   The one-year program will see the ports of Long Beach and Los Angeles pay the price differential between the cost of bunker fuel and low-sulfur fuel for use in the main engines of participating vessels. The cost to the two ports, which reported more than 5,700 vessel calls last year, is estimated at more than $18 million for the year.

   The voluntary fuel subsidy plan was first presented to the ports by the Pacific Merchant Shipping Association, which counts as its members about 60 international shipping lines and marine terminal operators.

   'The voluntary incentive-based program is the direct result of a coordinated partnership between the ports and their tenants to reduce ship emissions,' said John McLaurin, president of the association. 'PMSA and its members have been actively involved in virtually every successful voluntary port improvement program and are leaders in the reduction of emissions throughout the goods movement industries.'

   The individual PMSA membership, and the group's board, have agreed to the fuel subsidy program in concept, but it will be up to each individual firm to decide whether to participate.

   According to details of the plan released by the ports, to receive the subsidies, a vessel must use the low-sulfur fuel in their main engines when coming within 20 miles of the ports. Vessels must also run the low-sulfur fuel in their auxiliary engines while at berth and participate in a program that encourages vessels to reduce their speed to 12 knots or less as they near the ports.

   The voluntary program, if approved, will take affect July 1 and run through June 30, 2009 unless extended by the commission. However, a California Air Resources Board regulation requiring the use of low-sulfur fuel in California-calling ocean-going vessels within 24 nautical miles of the coast is set to take effect July 1, 2009. Unless postponed or litigated, the CARB rule would supersede any extension of the port subsidy program.

   Long Beach Mayor Bob Foster called the subsidy plan 'a collaborative and creative effort to tackle the single-largest source of pollution from these two ports and is a big step forward in our efforts to clean the air.”

   Los Angeles Mayor Antonio Villaraigosa, as well as the presidents of the two harbor commissions, also issued statements supporting the plan.

   The two ports commissions will vote to approve the fuel subsidy plan during a special joint session on March 24.

   The fuel plan comes on the heels of a Ninth District Appeals court ruling that struck down a CARB regulation requiring marine vessels to use low-sulfur fuel in their auxiliary engines. The PMSA, as plaintiff in the case, argued that the locally imposed environmental regulations should not trump federal legislation such as the Clean Air Act.

   CARB put the Marine Vessel Rules into effect Jan. 1, 2007, mandating that all vessels calling at California ports use the low-sulfur fuel in their auxiliary or diesel-electric engines within 24 miles of the state coast.

   The PMSA sued the state agency, arguing that while the federal Clean Air Act allows individual states to adopt 'standards and other requirements relating to the control of emissions,' the regulations must be reviewed and approved by the U.S. Environmental Protection Agency. CARB failed to obtain a waiver from the EPA regarding the regulation.

   'In the end,' wrote presiding District Judge Barry Silverman, 'The Clean Air Act preempts the Marine Vessel Rules and requires California to obtain EPA authorization prior to enforcement because the Rules are 'emissions standards' that require that engines 'not emit more than a certain amount of a given pollutant.' '

   Following the court's striking of the CARB fuel rule, the PMSA advised its members to continue abiding by the CARB rule voluntarily. The PMSA said its members have continued to use the low-sulfur fuel since the original Superior Court ruling.

   While not originally named by the PMSA filing, the National Resources Defense Council, the Coalition for Clean Air, the South Coast Air Quality Management District and the City of Long Beach asked to be included as co-defendants after the suit was filed, which the court allowed. ' Keith Higginbotham

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