OMB Guts Marine Diesel Rule

Using its regulatory review authority, the White House Office of Management and Budget (OMB) recently gutted an EPA proposal to limit diesel emissions from large ships and tankers, which are a growing -- and still unregulated -- source of air pollution around coastal cities and ports, emitting about 273,000 tons of nitrogen oxide (NOx) per year.As originally prepared [1], EPA’s proposal contained two tiers. Tier 1 codified modest limits contained in a 1996 international agreement [2] known as Annex VI, which still needs to be ratified and remains unenforceable. Tier 2 required more stringent limits that would achieve an additional 30 percent reduction in NOx emissions from new engines beginning in 2007.

However, during its review (which began on April 15, 2002), OMB’s Office of Information and Regulatory Affairs [3] (OIRA) stripped out this second phase, according to EPA sources and documentation required by Executive Order 12866 [4], after the tanker industry weighed in heavily against it. With this change, the proposed rule (published in the Federal Register [5] on May 29) now merely lays out the possibility of the Tier 2 standards, and takes comment on not adopting them.

The Tier 1 limits, which are supported by industry [6], were left in tact, and would apply to all new engines by 2004. Yet by EPA’s own admission, this will not yield any new health or environmental benefits because manufacturers have already achieved compliance with the identical Annex VI limits [6], which apply to all ship engines built after Jan. 1, 2000.

Meanwhile, ship and tanker emissions continue to increase with the rise in international trade, now accounting for 14 percent of global NOx emissions and 16 percent of the world’s sulfur emissions, according to a report from the Bluewater Network, “A Stacked Deck: Air Pollution from Large Ships [7].” These emissions are associated with premature death, lung damage, chest pain, asthma aggravation, acid rain, global warming, smog and reduced visibility due to haze, along with many other detrimental environmental affects, according to EPA.

With commercial ships expected to double or triple in the next 20 years, this problem will only get worse unless further action is taken. Indeed, EPA estimates that even with its proposed Tier 1 limits, U.S. emissions from large ships will increase 6 percent by 2020 and 13 percent by 2030, with port cities disproportionately hurt.

Even the rejected Tier 2 limits seem too timid. Besides NOx, the Tier 2 proposal also addresses diesel emissions of hydrocarbons and carbon monoxide -- which are not touched by Tier 1 -- but does not tackle the larger problem of sulfur in fuel, which is correlated with particulate matter emissions. By contrast, a 1999 rule [8] required reductions in particulate matter from small and medium-sized marine diesel engines. “EPA has reduced sulfur levels for all categories of transportation, except large vessels … despite the fact that marine diesel engines represent the third largest source of [particulate matter] in the US,” according to the Bluewater Network, which successfully sued EPA to compel the proposed rule.

Moreover, given advances in technology, much higher NOx reductions seem well within reach. EPA states that technology is already available to meet the Tier 2 limits, noting that a Swedish program achieved a 45 percent reduction in NOx emissions between 1995 and 2001. The Bluewater Network argues that further emission reductions of 90 to 95 percent are now possible.

What’s more, such reductions are not expected to be prohibitively expensive. EPA projected that meeting the Tier 2 standards would cost industry about $1.6 million annually, which is less than 1 percent of annual shipbuilding revenue. Nonetheless, this was too much for industry lobbyists, and consequently, too much for OIRA.