U.S. Marine and Environmental Regulatory Update

The regulatory landscape is difficult to navigate, even for insiders – at a very high level, rules can be codified as federal laws or they can be set by agencies that reside within the executive branch.

For readers of Seatrade Maritime News, agencies recently in the spotlight have included the Federal Maritime Commission (FMC), which is independent and not part of a larger department like transport or commerce, and the Environmental Protection Administration (EPA), also an independent agency.

The EPA has been in the news lately, with a late June decision by the U.S. Supreme Court, the judicial branch, that would limit the EPA’s ability to make rules for the domestic power industry, but this would by no means completely remove the APE from the power to write rules. The Court’s decision itself is based on the idea that rules with big impacts on the economy, that power plant emissions issues certainly come into play, should be put in place by the Congress, not by unelected officials.

This would not directly impact shipping as it deals with CO regulations2 emissions from power plants in landlocked West Virginia. However, future efforts by federal agencies may be subject to further scrutiny.

Clean Boating Act 2022

In other headline-grabbing regulatory articles, agencies could enforce the actual laws, but could fill in the blanks and write the script on their own. In early July, the “Clean Shipping Act of 2022” (HR 8336) was introduced by two congressional Democrats representing districts that include California ports. The bill, with an idea to reduce carbon emissions from ships and in ports, would amend the Clean Air Act, which gives the EPA its mandates, last significantly revamped in 1990. It would give the the EPA the authority to apply carbon reduction baselines – down to a 100% reduction in carbon intensity by 2040, compared to 2024.

Similar to efforts in the European Union, ships moving between US ports or the US leg of overseas voyages would be covered. The bill encourages EPA to strive for consistency with International Maritime Organization rules, but would give EPA broad discretion to write its own language: “The administrator shall consider the net reduction in greenhouse gas emissions and potential negative impacts on public health, safety and the environment, including with respect to air quality, water quality and production and disposal solid waste.

This bill is still in its infancy in the House, and possibly in the Senate. The EPA also regulates emissions from diesel engines in inland and port trades.

Shipping Reform Act 2022

The FMC, described as an agency independent of the executive branch, will enforce the provisions of the Ocean Shipping Reform Act of 2022 (OSRA 2022), which was signed into law (drafted by Congress, not agency employees) by President Joe Biden in mid-June.

The important measures included in OSRA 2022 that the new law directs the FMC to act on are highlighted in the educational podcast “By Land and Sea” by maritime lawyer Lauren Beagan. Important items, for action at hand, are guidelines for detention and demurrage (D&D) bills, and three forthcoming regulations – on “unreasonable refusal to deal” (lines refusing to accept shipments of Export), D&D Prohibited Practices and “Unfair or Unfair Discriminatory Methods”.

Still, there could be a lot of script writing here too, as the FMC writes the precise rules. One analyst, Brian Whitlock of the Supply Chain group at consulting firm Gartner Group, wrote that: “The impact OSRA will have on shipping in the United States will rest entirely on the FMC and how it applies new rules”.

Reader Resources:

By land and by sea (regarding FMC, OSRA 2022): https://www.iheart.com/podcast/269-by-land-and-by-sea-98721110/

Clean Shipping Act of 2022: https://www.congress.gov/bill/117th-congress/house-bill/8336/text?r=3&s=1

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