The document discusses shipping regulations and enforcement in the United States, particularly regarding emissions control areas (ECAs). It notes that stricter enforcement of ECA fuel sulfur limits is expected, as non-compliance could provide an unfair competitive advantage. Violators may face significant fines or penalties, though minor technical violations may result in lighter penalties. The California Air Resources Board fined an ocean carrier over $129,000 for failing to switch to low-sulfur fuel within 24 nautical miles of California as required. ECA regulations are aimed at improving air quality and reducing health costs.

1. ROLL OUT THE TNT, ANCHORS AWEIGH !
SAIL ON TO VICTORY, AND SINK THEIR BONES TO DAVY JONES,
HOORAY !
Anchors Away | USN | 1997
RATE HIKES COMING: MATSON CHRISTENS
BIG OVERPRICED INOUYE BOAT
Hawaii Free Press
July 3, 2018, accessed July 10, 2018
http://www.hawaiifreepress.com/ArticlesMain/tabid/56/ID/21931/Rate-Hikes-Coming-Matson-
Christens-Big-Overpriced-Inouye-Boat.aspx
Internal Citation to:
Drewry Shipping Consultants Limited, London, UK
US cabotage protection gets more expensive
November 17, 2013, accessed July 10, 2018
http://www.tradewindsnews.com/incoming/327687/drewrycabotage-protection-gets-more-
expensivepdf/BINARY/Drewry-Cabotage%20protection%20gets%20more%20expensive.pdf
The continuing reservation of US cabotage cargo to US fagged vessels
only is getting increasingly costly for US consumers. The recent news
that Matson has ordered two 3,600 teu vessels from Aker Philadelphia
Shipyard in the US for approximately $209 million each underlines the
possibility that US fag protectionism is an increasingly expensive luxury.
[Emphasis Supplied]
Ignoring diferences in ship specifcation, comparable sized vessels could
be built in Asia today for less than a ffth of that price. As Matson's last
order for 4 x 2,890 teu vessels, delivered between 2003 and 2006, cost
around $125 million each, which was around four times higher than the
market price in Asia at the time, the diferential appears to be getting
bigger.

2. Matson's new 3,600 teu vessels will only be delivered in 2018, however,
so the price diferential will change in the interim – for better or worse.
Moreover, the new vessels are being built to a high specifcation, having
a high reefer intake, double hull fuel tanks, and the ability for their main
engine to be run on LNG as well as normal bunker fuel, which explains
some of the price diferential.
On the face of it, shipping lines therefore appear ready to order
extremely expensive ships in the US mainly to have access to protected
transport between its mainland and island states, such as HAWAII,
PUERTO RICO and Virgin Islands, where there is little to no competition
from other transport modes. In other words, the lack of a vibrant coastal
feeder shipping industry in the US is just an unfortunate by-product of
the JONES ACT. [Emphasis Supplied]
Our View As the political need for the US' Jones Act is much diminished,
and most of its foreign trade is already carried in non-US fag vessels,
there are strong commercial and environmental arguments in favour
of its repeal. [Emphasis Supplied]
____________________________________________________________
PUERTO RICO
Characteristics of the Island's Maritime Trade and Potential
Efects of Modifying the Jones Act
United States General Accountability Ofce (GAO)
March 2013, accessed July 10, 2018
https://www.gao.gov/assets/660/653046.pdf
Operating costs for carriers . . . contributes to the determination of
freight rates. Most of the carriers' operating costs (about 69 percent based
on carrier data for 2011) are non-vessel operating costs, including such
things as terminal and port costs, among others — and are not directly
afected by Jones Act requirements.

3. Vessel operating costs (which include crew costs, insurance, maintenance
and repair, and fuel costs, among others) comprise about 31 percent of
the carriers' operating costs on average.
Fuel is one of the largest vessel operating cost for the Jones Act carriers
in this market—representing an average of about 64 percent of the four
major Jones Act carriers' vessel operating costs in 2011—and fuel costs
have increased substantially over the last ten years.
Crew costs in this trade represented an average of about 20 percent of
vessel operating costs in 2011. According to MARAD, the standard of
living in the United States, labor agreements negotiated with mariner
unions, benefts included in overall compensation, and government
manning requirements, all afect crew costs. According to a MARAD
report, the combination of these various requirements and work rules can
result in overall crewing costs for U.S. fag operators that are roughly 5
times greater than crewing costs for foreign-fag carriers, on average.
U.S.-fag vessels are subject to government safety inspections and
vessels have to comply with a variety of construction, safety, and
environmental regulatory requirements, which afect their costs.
[Emphasis Supplied]
____________________________________________________________
DESIGNATION OF NORTH AMERICAN EMISSION CONTROL AREA TO
REDUCE EMISSIONS FROM SHIPS
The area of the NORTH AMERICAN ECA INCLUDES WATERS
ADJACENT TO THE PACIFIC COAST, THE ATLANTIC/GULF
COAST AND THE EIGHT MAIN HAWAIIAN ISLANDS.

4. It extends up to 200 nautical miles from coasts of the United States,
Canada and the French territories, except that it does not extend
into marine areas subject to the sovereignty or jurisdiction of other
States.
As used here, the main Hawaiian Islands include the islands of
Hawaii, Maui, Oahu, Molokai, Niihau, Kauai, Lanai, and Kahoolawe.
These islands are the main populated islands of the Hawaiian Islands
chain, with the exception of Kahoolawe, which is an uninhabited
nature reserve.
Source: US Environmental Protection Agency. Accessed July 10, 2018
https://www.epa.gov/regulations-emissions-vehicles-and-engines/designation-north-
american-emission-control-area-marine
____________________________________________________________
IMPACT OF NORTH AMERICAN EMISSION CONTROL AREA (ECA) ON
THE U.S AND THE SHIPPING INDUSTRY
By Chief Ofcer Abhishek Bhanawat. Marine Environment. July 21, 2016, accessed
July 10, 2018 https://www.marineinsight.com/environment/impact-of-north-american-emission-
control-area-eca-on-the-u-s-and-the-shipping-industry/
From 1st August 2012 onwards the third Emission Control Area came
into force. The North American Emission Control Area is applicable for
ships trading in areas of the Coasts of Canada, The United States and
French majorities of Saint – Pierre and Miquelon, including areas around
Hawaii Islands.
Under the International Convention for Prevention of Pollution from
Ships (MARPOL – Annex VI), with efect from 1st August 2012, all ships
calling US ports are required to change over to low sulphur fuel oil
(LSFO) for general steaming and usage in US waters, under co-ordinates
prescribed in Annex VI of the new MARPOL.

5. However, there is no need to change over to marine gas oil (MGO) for
emission control at berth like that suggested by EU directive. The North
America ECA covers waters adjacent to the Pacifc coast, Atlantic/Gulf
coast and eight Hawaiian Islands. It extends up to 200 miles from the
coast of United States, Canada and the French territories.
The fourth ECA which is the United States Caribbean Sea ECA and
covers waters adjacent to Puerto Rico and the United States Virgin
Islands, was designated under the MARPOL amendments of July 2011
and will be enforced in Jan.2013 with new ECA to be efective from Jan
2014.
MARPOL comprises of two methods for emission control. The frst one
deals with control of emission from all ships due to fuel sulfur content
and nitrogen oxide (NOx) emissions from the engines, while the second
one specifes areas for emission control with more strict limits on Sulfur
content of fuel and nitrogen oxide emissions.
For ships operating, trading or transiting The North American Emission
Control Area, the sulfur content of fuel is required to be not more than
1.0% m/m (expressed in terms of % m/m – that is, by weight) or 10000
ppm, and which will be further reduced to 0.1% m/m or 1000 ppm by 1st
January 2015.
Most of the ships have storage capacity to store and use two or more
diferent types of fuel, but for complying with 2015 requirements, some
vessels will need to be modifed to store the distillate fuel.
Some ship owners might also opt to control the sulfur content in their
ships’ exhaust by ftting scrubbers or other exhaust gas cleaning devices.

6. There was a general sentiment in the shipping market that the
designation of North American ECA will encourage shipping companies
to divert shipments from U.S. ports to nearby ports, which are not
designated as ECA. However ECA designation did not afect this
underlying reason for preferring one port over the other as lot of other
factors such as facilities, land based multi-modal means of transport and
their geographic location were in favor of U.S. Ports. This rule is thus
expected to increase the operating cost for a ship by about 3 percent.
However Canada has delayed its implementation and is expected to
follow by November 2012.
The favorable impact of the ECA will be reduction of air pollution
(emission control) from ships with cleaner air and downsize of health
expenses being incurred even miles inland in the US and Canada. The
core ideology of the North American ECA role played by EPA of the US
has been to reduce air pollution from ships by keeping a check on the
emission control. The EPA claims that implementation of North American
ECA will improve air quality signifcantly in Grand Canyon National Park
and the Great Smoky mountains. Adding up other benefts it is said that
by 2020 it will prevent 5,500 to 14000 premature deaths and 49, 00,000
cases of acute respiratory symptoms, which surely saves huge spending
on health care benefts.
Thus North American ECA implementation proves to be a win-win
situation for the US Health Care Department. The North American EPA
will ease of the costs of health care and welfare in US by keeping a
check on emission control from ships and will also prevent taking a toll
on budgets of ship owners and operators.
US MAY SHIFT TO STRICTER ECA SULPHUR ENFORCEMENT
As emissions sulphur regulations tighten, some warn of potential for
major fnes and prison sentences
By Eric Martin Stamford. TradeWinds. December 19, 2018, accessed July 10, 2018
http://www.klgates.com/fles/Publication/9214964b-1efb-4790-a346-
c9f5c326379b/Presentation/PublicationAttachment/7b9b6a4a-ec85-4015-89e0-
ce93da10669b/US_May_Shift_to_Stricter_ECA_Sulpher_Enforcement.pdf

7. 'KEEPING LEVEL PLAYING FIELD' Jeanne Grasso, a lawyer at Blank
Rome whose specialties include criminal enforcement of environmental
laws, says one reason she expects stricter US enforcement is to keep a
level playing feld. “The EPA will be trying to send a message that non-
compliance won't be tolerated, mainly because of the competitive
disadvantage those that were trying to comply will be put at, said Grasso.
The USCG has a lead role in vessel inspections, while the EPA takes
charge of penalties. If a ship is out of compliance, the EPA will examine
whether the operator tried to comply and submitted required reports,
how much noncompliant fuel was used and how long the vessel spent in
the ECA. The agency will also look at how much of a competitive
advantage was gained by falling afoul of the rules.
'I believe penalties will be calculated looking at those factors with a view
toward looking at penalties that are a deterrent to noncompliance,”
Grasso said.
Many lawyers believe that US authorities will not levy heavy fnes on
operators with minor technical or unintentional violations.
But since the USCG and EPA cannot inspect every ship, when they
encounter signifcant violations and false documentation, the hammer
will fall harder, they say. “They are going to make examples out of the
bad guys, I think, if they can catch them,” said Eugene O'Connor, a
partner at law frm Montgomery McCracken.
The USCG and EPA have signaled that with the stricter rules will come
stricter enforcement. And the tightened emissions standards come after
numerous recent court rulings upholding broad discretion of government
agencies' eforts to investigate, prosecute and penalize ship operators in
pollution cases

8. CALIFORNIA FINES OCEAN CARRIER FOR FUEL VIOLATION
By Charlie Papavizas, Esq. and Jarrod A. Rainey, Esq.
Winston & Strawn LLP |North America|Europe|Asia|Middle East|
March 7 2016, accessed July 10, 2010
https://www.lexology.com/library/detail.aspx?g=b3092837-fcfb-42ac-907f-269f116e370c
On March 3, 2016, the California Air Resources Board announced that it
had fned an ocean carrier $129,500 for failure to switch its engines over
to low-sulfur fuel when close to the coast of California. The Air Resources
Board conducts an estimated 800-1,000 vessel inspections each year,
checking for compliance with California fuel use requirements.
Currently, vessels that come within 24 nautical miles of California’s
baseline must comply with both state and federal vessel fuel content
requirements, though the practical requirements are largely the same.
Since July 2009, vessels have had to comply with the California Air
Resources Board’s Ocean-Going Vessel (OGV) Fuel regulation, which
requires covered vessels to use reduced-sulfur fuel when operating in
California waters (i.e. waters out to 24 nautical miles from the California
baseline). The maximum sulfur content was decreased in phases
beginning in 2009, and since 2012, vessels may only use marine gas oil
and marine diesel oil fuels that are at most 0.1 percent sulfur.
Efective January 2012, the U.S. Environmental Protection Agency
promulgated a rule implementing the International Maritime Organization
designation of the North American Emissions Control Area (ECA), which
requires covered vessels to use reduced-sulfur fuel in the ECA (i.e. within
200 nautical miles of the coastlines of the United States, Canada, and
Mexico). Like the California OGV regulation, the ECA regulation provided
for maximum sulfur content that decreased in phases, and since 2015,
the maximum sulfur content is the same as the California OGV
regulation.

9. Although the California and federal vessel fuel requirements currently
have the same maximum sulfur content (0.1 percent), the regulations are
not identical. For example, unlike the ECA regulation, the California OGV
regulation does not contain an equivalency provision that allows vessel
operators to use an equivalent method of compliance.
____________________________________________________________
ADDITIONAL REFERENCES
NORTH AMERICAN ECA WILL CHANGE SHIPPING FOREVER
By Tim Gossett. American Nautical Services
March 9, 2012, accessed July 10, 2018
https://www.amnautical.com/blogs/news/5833134-north-american-eca-will-change-shipping-
forever#.W0TtMdhKii4
ENFORCEMENT OF FUEL SWITCHING REGULATIONS – PRACTICES
ADOPTED IN THE US, EU AND OTHER REGIONS, AND LESSONS
LEARNED FOR CHINA
Natural Resource Defense Council (NRDC) New York; Washington D.C.; San
Francisco and San Diego, California; Chicago, Illinois; Bozeman, Montana;
Beijing, China. November 2016, accessed July 10, 2018
https://assets.nrdc.org/sites/default/fles/enforcement-of-fuel-switching-regulations-practices-
adopted-in-the-us-eu-and-other-regions-and-lessons-learned-for-china_2017-12-18.pdf
TRADING IN US WATERS
American Bureau of Shipping
US Environmental Protection Agency|US Coast Guard
December 2014, accessed July 10, 2018
https://ww2.eagle.org/content/dam/eagle/publications/reference-
report/Trading_in_US_Waters_Dec2014.pdf

10. GUIDELINES FOR COMPLIANCE AND ENFORCEMENT OF THE
EMISSION CONTROL AREAS ESTABLISHED WITHIN THE UNITED
STATES JURISDICTION AS DESIGNATED IN MARPOL ANNEX VI
REGULATION 14
Commandant, United States Coast Guard, Commercial Vessel Compliance
(CVC). July 25, 2012, accessed July 10, 2018
http://www.bluewatershipping.com/uploads/ECA%20Compliance%20and%20enforcement
%20guidelines.pdf
NORTH AMERICAN EMISSION CONTROL AREA (ECA)
U.S. Coast Guard Ofce of Commercial Vessel Compliance.
December 3, 2014, accessed July 10, 2018
https://www.dco.uscg.mil/Portals/9/DCO%20Documents/5p/CG-5PC/CG-
CVC/CVC2/psc/general/marpolVI/USCG_ECA_faqs_Rev_12-3-14.pdf
COMPLIANCE WITH EPA GUIDELINES
We ensure compliance by scheduled and unscheduled examinations
and inspections. In the case of the ECA we may also rely on remote
sensors to help identify vessels that may not be in compliance. We
are incorporating compliance checks with the new ECA standard into our
ongoing compliance inspections and we require non-compliant vessels to
come into compliance when we discover defciencies. Non-compliant
vessels may also be subject to fnes.