Comment Log Display

 

October 24, 2007


Mary D. Nichols
Chairman
California Air Resources Board
1001 I Street
Sacramento, CA 95814

Re:	AWO Comments on Harbor Craft Regulation

Dear Ms. Nichols:

The American Waterways Operators (AWO) is the national trade
association for the U.S. tugboat, towboat and barge industry.  AWO
members are vital to the nation’s economy, transporting goods to
American homes and business, including 20 percent of America's
coal and over 60 percent of U.S. grain exports. In California, the
towing industry keeps the nation's two busiest container ports, the
Ports of Los Angeles and Long Beach, running. The industry also has
a strong commitment to environmental protection, marine safety and
national security, evidenced by AWO’s Safety Partnership with the
U.S. Coast Guard, the AWO Alternative Security Program and the AWO
Responsible Carrier Program (RCP).  The RCP is a U.S. Coast
Guard-recognized code of “best practices” for towing companies to
use when developing safety and environmental programs.  Achieving
third-party audited compliance with the RCP is required for
membership in AWO.  

The areas in which AWO member companies work and do business are
the same areas where they live and raise their families.  The
protection of the environment is of paramount importance to our
organization and its membership, personally and professionally. 
In fact, waterways transportation is the most
environmentally-friendly mode of commercial freight transportation
due to the enormous capacity of a barge. For example, a typical
inland barge has a capacity 60 times greater than one semi trailer
truck, making it more fuel efficient to transport goods via barge. 
The barges that operate along the California coast move freight off
of the state’s crowded highways, helping to reduce congestion and
traffic.
 

Even though AWO supports, and has advocated for, environmental
measures such as ones that would help achieve the goals of
reducing diesel Particulate Matter (PM) and Oxides of Nitrogen
(NOx), we oppose the California Air Emissions Board’s draft harbor
craft regulation. It places unnecessary and overly burdensome
regulations on the tugboat, towboat and barge industry that have
the potential to put many operators out of business, thereby
striking a severe blow to California’s economy, as well as the
nation’s. AWO believes that because many of the businesses in
California operate in multiple states, it makes more sense to
tackle the problem of engine emissions at the federal level.  This
alleviates the burden of a company trying to adhere to a patchwork
of state regulations to achieve significant emissions reductions.

Unfortunately, AWO’s concerns with previous drafts of the harbor
craft regulation have, in large part, gone unaddressed, and we are
now presented with a draft regulation that will have an enormously
negative economic impact on the tug and barge industry. AWO has no
choice but to strongly oppose the proposed California Air Resources
Board (CARB) regulation on harbor craft vessels for the following
reasons:

1.	It does not accurately address the true economic impact of the
regulation;
2.	It unfairly requires ocean-going tugs to comply with the
low-sulfur fuel regulation;
3.	It does not explicitly accept existing engine hour meters to
comply with the regulation;
4.	It sets unrealistic compliance dates; 
5.	It contains a burdensome application for extension process;
and
6.	Sections of the regulation are unconstitutional in their
current form.  

These points are detailed below, followed by an example of the
impact of the regulation on one tugboat company, as well as
suggestions on how California and the towing industry can work
together to achieve emissions reductions. The comments presented
in this document are meant to assist CARB in the adoption and
implementation of a harbor craft regulation that will meet the
goals of reducing emissions while protecting the marine industry. 
AWO urges CARB to amend the current draft regulation in order to
reduce emissions while not doing harm to the tug and barge
industry.

1. Ocean-Going Tugboats 

The harbor craft regulation states,

(b) Applicability.
	(4) Notwithstanding the provisions of title 13, CCR, section
2299.1 and title 17, 
CCR, section 93118, this section shall apply to any ocean-going
tugboats and towboats and shall supersede the requirements of 13
CCR 2299.1 and 17 CCR 93118 in their entirety for ocean-going
tugboats and towboats. For purposes of this paragraph,
“ocean-going tugboats and towboats” shall mean tugboats and
	towboats with a “registry” (foreign trade) endorsement on its
United States Coast Guard certificate of documentation, or
tugboats and towboats that are registered under the flag of a
country other than the United States.

AWO recommends that ocean-going tugboats be required to adhere to
the low-sulfur fuel guidelines contained within the regulation. 
Ocean-going tugs operate in similar fashion to ships, in that they
make calls to California ports but their home ports are often
outside California waters.  These vessels are involved in
interstate commerce and are not utilized in ship assist work or
other duties generally assigned to harbor craft.  The growing
demand on the national transportation system means that
ocean-going tugs will be a major component of the future of
commodity transportation, and including them into the harbor craft
regulation will only limit the number of vessels able to service
California ports. 

2. Economic Impact

The ramifications of this regulation have not been adequately
addressed by CARB staff in the economic impact statement.  For
example, imposing a short life cycle on marine engines will be so
costly that it will push smaller vessel operators out of business,
which will decimate the ship assist business in California waters
and cause employees to lose family-wage jobs, and also possibly
severely limit the number of vessels that operate in California
from outside of the state and weaken the state’s economy.

One example of a similar situation in the past is in the 1990’s
when California imposed an eight percent sales tax on bunker fuel.
 Ships simply chose to buy fuel elsewhere.  This increase
obliterated the bunkering business and, in turn, approximately 75
percent of the market left California.  The impact of the harbor
craft regulation on the tug and barge industry will have a greater
negative impact than the bunker tax and, unlike the bunker tax, the
harbor craft regulation will impact multiple business sectors. 
Ocean-going tugs operating as ships and only making port calls,
ship assist vessels and marine construction companies will all be
severely impacted.  The tug and barge industry powers the nation’s
economic engine and this regulation will irreparably harm the
industry.

3. Engine Hour Meters

The harbor craft regulation states,

All Harbor Craft – Installation and Use of Non-Resettable Hour
Meters.
		As of January 1, 2009, no person shall operate a harbor craft
within any of the
Regulated California Waters without an installed and properly
operating nonresettable hour meter, which accurately measures the
number of hours an
engine operates. The hour meter shall be installed on each diesel
engine on the
vessel in a manner that allows reasonable personnel access without
impediment.

AWO recommends that this section be clarified so that existing
engine hour meters are accepted to comply with the regulation.

4. Compliance Dates

The harbor craft regulation states,

(C) Compliance Schedules and Determination of Engine Model Year.
2. the engine’s effective model year based on the “Engine’s Model
Year + 5” method, which is as follows: The “Engine’s Model Year +
5” method extends the effective model year if the person uses an
emissions control strategy pursuant to this paragraph. To use this
method, the person must use an emission control strategy with the
existing in-use engine that reduces either diesel PM or NOx by a
minimum of 25 percent and does not increase either pollutant by
more than 10 percent, relative to the emissions of those
pollutants without the use of the emission control strategy. If
the emission control strategy is not a VDECS, the person shall
demonstrate compliance with this paragraph by submitting emissions
data that demonstrate the non-verified emission control technology
achieves a
diesel PM or NOx emission reduction of 25 percent or better, using
the
test methods specified in subsection (j). Upon approval of the
E.O., the
person may submit data derived from the use of other test methods
to
demonstrate the required 25 percent minimum emission reductions,
such as:
a. marine engine certification test data for the harbor craft
propulsion
or auxiliary engine, or engine manufacturer emission test data;
or
b. emissions test data derived from another engine that is
configured
and used in a substantially similar way to the in-use engine on
which the emission control strategy is to be used; or
c. emissions test data used to meet the regulatory requirements of
the
ARB Verification Procedure for the non-verified emission control
strategy implemented.
A person’s use of an emissions control strategy pursuant to this
provision extends the engine’s effective compliance date to the
compliance date for a similar engine that is five model years
newer (i.e., the actual model year for the engine with the
emissions control strategy + 5). For example, the owner of a 1995
model year engine on a tugboat with a homeport outside of SCAQMD
and which operates in Regulated California Waters for 750 hours in
2013, would normally be required to meet a December 31, 2014
compliance date, as set forth in Table 7. However, if an emissions
control strategy that meets the requirements of this provision is
implemented with this engine prior to the 2014 nominal compliance
date, the engine’s effective compliance date would be extended to
the compliance date for a 2000 model year engine (i.e., the 1995
model year + 5). Accordingly, in that scenario, the engine’s
effective compliance date would be December 31, 2016;

AWO recommends that CARB increase the compliance schedule for Tier
0 to Tier 1 engines from January 2008 till July 2009.  There will
not be enough time to comply with the January 2008 timeline.

AWO also recommends that the “Engine’s Model Year + 5” model be
changed so that five years are added to the compliance date
instead of the to the engine model year.  This would allow
operators utilizing engines built before 2003 to have more time to
comply with the regulation.  The operators using older equipment
are often doing so out of necessity because they are small
businesses or lack the financial resources to upgrade their
engines.  It is reasonable to request that these small operators
be given more time to comply with the regulation.  After the 2003
model year date, the +5 formula would apply to both engine model
year and compliance dates.  This would also allow companies to
replace the engines during a major overhaul cycle.


 

AWO recommends that engines with the model year 1996 and newer
should have a compliance extension of five additional years.  By
taking into account those companies that have been purchasing new
engines for their vessels using a company replacement cycle, CARB
will help offset the fiscal impact those companies will face.  An
engine with a model year 2003 would then be subject to compliance
on December 31, 2023.  This engine life cycle still does not
reflect the true life cycle of a tug engine; however, it does
reflect a compromise that will reduce the financial burden on the
industry.


 

The SCAQMD timeline should be removed from this regulation.  It is
unreasonable to expect companies operating within California waters
to adhere to two separate and unique timelines.  This will
undoubtedly limit the number of tugs able to operate in southern
California and place even more burden on those companies
attempting to conduct business in California.
 

5. Extensions

Section (E) of the harbor craft regulation explains compliance
extensions as follows:

“There is no suitable engine replacement (one year extension).”

AWO recommends that a three-year automatic extension be granted
when there is no suitable engine replacement.  Requesting annual
extensions for engines that have not been developed is unnecessary
and burdensome for a company.  The industry already has to face the
brunt of this regulation and it should not have to also face an
undue administrative burden.

		“A delay in engine delivery due to the manufacturer (six month
extension).”

AWO recommends that an automatic extension be granted to the
company as long as it submits documentation showing both that it
has ordered the engine and the manufacturer’s expected delivery
date.  There is an economic incentive for the engine manufacturers
to ensure that there are as few delays as possible in the delivery
of a new engine.  However, the burden should not fall on the
operator to continually submit requests for six-month extensions
when the manufacturer is delayed.  In order to alleviate the
administrative burden that this section imposes on the industry
and expedite the extension process, documentation from the
operator and manufacturer should be sufficient to warrant an
extension to the compliance date that reflects the manufacturing
delay.

“Installation difficulties (six month extension).”

AWO recommends that this extension should mirror the extension
comments made previously in regards to manufacturer delays. 
Currently this regulation imposes the burden on the operators when
the delays are out of their hands. 

“An owner has multiple vessels whose engines need to comply during
the same year (one time, one year extension).”

AWO recommends that this extension not be a one-time only
extension.  The impact on an operator with multiple vessels coming
into compliance will only be compounded if this extension is
limited to one use.
 

6. Unconstitutionality

AWO believes that portions of the regulation are unconstitutional.
First, the ability of California to regulate vessels up to 24
nautical miles offshore is unconstitutional.  The Submerged Lands
Act of 1953 granted coastal states ownership of the lands and
resources out to three nautical miles offshore.  The Outer
Continental Shelf Lands Act of 1953 established federal
jurisdiction over the resources beyond three nautical miles
offshore.  USC 43 CH 29 SUBCH II § 1312 states,

The seaward boundary of each original coastal State is approved
and confirmed as a line three geographical miles distant from its
coast line or, in the case of the Great Lakes, to the
international boundary.

USC 43 CH 29 SUBCH III § 1331 states, 

(a)	The term “outer Continental Shelf” means all submerged lands
lying seaward and outside of the area of lands beneath navigable
waters as defined in section 1301 of this title, and of which the
subsoil and seabed appertain to the United States and are subject
to its jurisdiction and control;

The harbor craft regulation states,

(65) “Regulated California Waters” means all of the following:
(A) all California internal waters;
(B) all California estuarine waters;
(C) all California ports, roadsteads, and terminal facilities
(collectively “ports”);
(D) all waters within 3 nautical miles of the California baseline,
starting at the
California-Oregon border and ending at the California-Mexico
border at
the Pacific Ocean, inclusive;
(E) all waters within 12 nautical miles of the California
baseline, starting at the
California-Oregon border and ending at the California-Mexico
border at
the Pacific Ocean, inclusive;
(F) all waters within 24 nautical miles of the California
baseline, starting at the
California-Oregon border to 34.43 degrees North, 121.12 degrees
West;
inclusive; and
(G) all waters within the area, not including any islands, between
the California
baseline and a line starting at 34.43 degrees North, 121.12
degrees West;
thence to 33.50 degrees North, 118.58 degrees West; thence to
32.48
degrees North, 117.67 degrees West; and ending at the
California-Mexico
border at the Pacific Ocean, inclusive.

AWO believes that CARB is violating the Submerged Lands Act and
exceeding its authority by regulating vessels up to 24 miles off
its coast. Therefore, items (E), (F) and (G) of the harbor craft
regulation should be deleted.

Secondly, it is the responsibility of CARB to adopt a regulation
that adheres to the spirit and letter of the Clean Air Act
209(e)(2), which states:

No such authorization shall be granted if the Administrator finds
that—
		(i) the determination of California is arbitrary and
capricious,
(ii) California does not need such California standards to meet
compelling and   extraordinary conditions, or
(iii) California standards and accompanying enforcement procedures
are not consistent with this section.

The regulation is not consistent with the Clean Air Act because it
exceeds federal standards while severely negatively impacting the
towing industry.  The impact to industry is to reach goals far
beyond federal standards.
 
Thirdly, AWO believes that the harbor craft regulation is
unconstitutional because it requires companies to allow CARB staff
to board their vessels, when this authority is solely under the
jurisdiction of the U.S. Coast Guard. The regulation states,

(k) Right of Entry.
An agent or employee of the Air Resources Board has the right of
entry to board any harbor craft for the purpose of inspecting
propulsion and auxiliary engines, emission control strategies,
fuel systems and fuel storage; collecting fuel sample(s) not to
exceed one liter per fuel tank; and acquiring and inspecting
records required pursuant to this section.

AWO believes the state is overstepping its regulatory authority by
requiring companies to allow CARB staff to board their vessels to
ensure compliance with the regulation.  First, the authority to
board the vessel is under the domain of the U.S. Coast Guard. 
Second, because of the post-September 11, 2001 atmosphere of
heightened security and resultant security requirements, there are
many instances in which CARB personnel would not be allowed to
board the vessel.  It is critical that the rule be written so that
it protects the integrity of existing federal security regulations,
requirements and procedures. 

Suggestions

AWO hopes that CARB will finally change its approach and listen
carefully to the concerns of industry.  The tug and barge industry
should be looked upon as a resource to assist the state in meeting
its goals.  Some suggested means of achieving emissions reductions
without punitive measures are as follows:

1)	Increase the compliance schedule for Tier 0 engines from
January 2008 till July 2009.  There will not be enough time to
comply with the January 2008 timeline.
2)	Increase the compliance schedule for engines purchased after
1995 by five years.  This increase would allow companies to more
easily offset the enormous expense of a new engine.  It should be
noted that an increase of five years to the compliance schedule
would still require the industry to retire engines before their
typical life cycle.
3)	Ocean-going tugs should only be required to comply with the
fuel requirements contained in the harbor craft regulation.  It is
unreasonable and potentially unconstitutional to impose this
onerous regulation on a vessel whose home port is in another state
that is participating in interstate commerce.  These vessels
routinely stay outside of the three-mile limit of state authority
and are often outside the 24-mile limit outlined in this
regulation. 
4)	Allow for an automatic extension to the compliance deadline
when the engine, parts or service are not available.  A tug
company should only be required to submit to CARB staff the
documentation showing that an engine, part or service has been
ordered and the manufacturer or service company’s documented
response with the anticipated date that the order can be
accommodated to receive an extension.  
5)	There should only be one compliance schedule for the state of
California.  Adopting a separate compliance schedule for the South
Coast Air Quality Management District (SCAQMD) only further
exacerbates the expense and burden of the regulation.  
6)	Authorize tax incentives and grants to tug companies to invest
in cleaner burning, more efficient engines.  It is uncertain
whether or not Carl Moyer funding will be available after the
adoption of the harbor craft regulation, since the funding is not
available to meet regulatory compliance.  This would allow small
businesses and companies heavily invested in equipment the
opportunity to find capital to make the necessary modifications to
their engines to meet the compliance standards.

Industry Impact

To get a better understanding of how flawed the financial impact
statement is, this section will detail how a real California tug
company will comply with this regulation.  The company has a total
of 10 tugs and operates a ship assist business.  The numbers
contained within this example will be in today’s dollar; any
future impacts would need to have an escalator of at least 10
percent annually due to inflation.

The engines in the tug company are model years 1996 and 1997 and
operate more than 1,500 hours annually.  Based on the proposed
regulation, the compliance date for these tugs would be 2015,
which means that this company would have to replace its entire
fleet’s engines during the same year.  Each tug would be out of
service for approximately 30 days, during which time the tug will
have to be ripped open and have the engines removed with a crane. 
Also, during this time the company would have to pay a charter tug
to cover the company’s existing contracts.

After taking into account lost revenues, engine costs, service
costs, service equipment costs and the expense to charter a
vessel, the company will have to invest $2.2 million per tug. 
This means that within a two-year period, if the one-time
extension for multiple vessels is utilized, the small business in
question will have to spend $22 million.  

This is one tug company of many that will probably not be able to
afford compliance with the harbor craft regulation as it is
currently written.  Companies will also have to examine the
various ports to determine if the enormous additional expense of
complying with the regulation is worth continuing to stay in
operation in California.  

However, if AWO’s suggestions are incorporated, the tug company in
the previous example will be able to spread the $22 million expense
over a period of five to 10 years.  This time will allow the
company to continue to use part of its fleet to generate revenue
so that it can pay the costs imposed by the regulation and not be
forced out of business.

Conclusion

The proposed regulation on harbor craft emissions reduction is
punitive and will strike a serious blow to the viability of the
towing industry in California waters.  The economic impact
statement is incorrect and does not accurately capture the true
costs associated with the regulation.  The regulation also does
not take into account the environmental benefits of transporting
goods along the waterways as opposed to on land.
 
AWO has worked cooperatively with CARB staff to help craft a
regulation that would allow the industry to continue providing
such a vital service.  Working in partnership with CARB, the
industry has submitted trip and vessel information to show that
ocean-going tugs should not be captured under the full weight of
this regulation.  AWO has requested automatic compliance
extensions in situations where there is no equipment available.
Implementing a hastily-constructed regulation would cripple an
industry and harm the overall economic health of the state. AWO
also opposes the state regulating vessels beyond its
constitutionally-mandated limit.  

The harbor craft regulation illustrates a policy with noble
intentions going awry.  The towing industry has attempted to work
with the state on a common-sense approach, offering its expertise
to achieve the goal of reducing engine emissions.  However, the
state has largely ignored our attempts at crafting a reasonable
yet effective regulation and is now on the verge of passing a rule
that would devastate the tug and barge industry.  There is not an
appreciation by the state of the severity of the regulation’s
impact on the entire maritime community.  The department is
attempting to impose an excessive, unreasonable regulation that
exceeds the state’s authority under the U.S. Constitution.
 

We strongly urge CARB to substantially modify the regulation,
taking into account comments submitted by AWO and the tug and
barge industry.  


Sincerely,

Jason A. Lewis


cc:	Governor Arnold Schwarzenegger