Canadian shipowners say US EPA regulations will hurt Canada

by Carolyn Gruske

OTTAWA, Ontario—Calling it the “most ground-breaking regulatory change that has ever hit the marine industry, not just in the Great Lakes and St Lawrence where we primarily operate, but globally”, the Canadian Ship Owners Association (CSA) is warning that environmental protection rules made in the US threaten the Canadian short-sea industry.

The regulation in question was issued by the United States Environmental Protection Agency. Known as the 2013 Vessel General Permit (VGP), the regulation—in effect for five years—sets out rules for the treatment of discharges by commercial vessels in American-controlled waters of the Great Lakes and the St Lawrence Seaway. A variety of discharge is covered in the rules—26 in total including everything from runoff created by washing the decks, to graywater and bilgewater—but according to CSA president Robert Lewis-Manning, those regulations aren’t a concern since there are proven technological solutions available to ensure they are properly treated. The concern for Canadian shipowners comes with the rules regarding the treatment of ballast water.

Lewis-Manning says under the regulations certain ships will be required to carry equipment designed to kill foreign organisms in the ballast water and prevent them from entering the Great Lakes ecosystem. He said newly constructed vessels, or vessels currently under construction will be required to have the solutions installed “as early as December 19, 2013” with other classes of ships requiring the upgrades by 2014 or 2016.

He says the problem is the technology doesn’t exist yet.

“You have two different US agencies regulating the same thing through different statutory instruments. The US Coast Guard is the one that certifies the technologies for use in marine vessels in the United States, and the EPA relies on the US Coast Guard to do that. The interesting part is, especially in the areas where we operate, no technology has been developed or certified by the US Coast Guard, yet the EPA is demanding installation of the technology.”

Lewis-Manning says while there are proven solutions for ocean-going vessels, the freshwater of the Great Lakes and the St Lawrence presents technological hurdles that have yet to be overcome.

“Most of the current technology relies on salt in treating the water. Of course we are operating in some of the most unique freshwater ecosystems without that salt. That’s probably one of the major challenges in developing the technology—finding another solution that doesn’t rely on salt as an active agent,” he says.

“The Canadian domestic industry has already done some trials with advanced filtration, literally trying to filter out marine organisms as they are uptaking the ballast water. We know it’s not perfect, but the initial indications are that it has a positive impact and the technology will likely be available in very short order.

“We’re also aware of some companies that have been experimenting with biocides as a means to clean the tanks. The challenge with some of the more active substances is they require time in order to have an impact and a lot of our trading routes are very, very short. They can be less than a day, when some of the active substances require upwards of three-to-five days to have an impact, and they work much better on longer trade routes such as crossing an ocean.”

Besides the technical challenges, Lewis-Manning says there is another catch that puts the Canadian industry at a particular disadvantage. US domestic vessels that never leave the Great Lakes aren’t required to carry the ballast-cleansing technology.

He says the EPA has adopted a ruling originally created by the US Coast Guard that doesn’t take into account the nature of the Canadian industry.

“The Coast Guard has come up with what we consider an arbitrary demarcation to the application of that regulation and it has chosen to apply that technology ruling to some of the vessels that sail in North American waters. What it has essentially done in its rule-making is it put a line at Anticosti Island at the entrance to the St Lawrence River, and trades that are only upstream—everything west of Anticosti Island—will be exempt for the duration of this permit and everything on the other side of that line will have to install treatment technology.

“Our greatest challenge is a lot of our trades—and we don’t know exactly the specific number, but we think it’s approximately 50 percent—cross that line all the time. So we are in essence requiring a large part of our fleet to install technology that hasn’t been developed or certified by the US Coast Guard.”

In comparison, he says the majority of American ships only travel in the upper Great Lakes above the Welland Canal or Lake Ontario, which means they never cross the line and don’t require the technology.

Lewis-Manning explains this ruling comes at a particularly bad time for the Canadian industry. Currently, there are 14 new ships (which constitutes approximately 15 percent of the domestic fleet) under construction for Canadian owners. As new vessels, they would fall under the December 2013 deadline for installing the new technology.

“The 14 new ships have so many advances in technology and will improve environmental performance, especially in issues of air emissions, fuel efficiency. These ships are state-of-the-art. So it would be a shame not to leverage the advantages we’d get out of them because we cannot be compliant with ballast water regulations.”

Lewis-Manning says there would likely be orders placed for additional vessels, if the regulatory framework could be stabilized so ship owners would know exactly what to expect and have an idea of how much the new technology will actually cost.

“The Canadian marine industry is very fortunate the Canadian government worked hard to remove a duty that allowed us to build those ships at a cost-effective value. Globally, the marine industry is in a slump so Canadian domestic companies saw this as an opportunity to make that investment in a long-term solution. It’s difficult to have all the right economics to do it and then not have the right regulatory environment.”

While the Canadian industry can’t really rely on any support from its American counterpart, Lewis-Manning does say the federal government has been working on behalf of Canadian ship owners to put their case across to the EPA.

“We’re discussing this issue with them, almost on a weekly basis, it’s that important to our industry.”

While it seems the Canadian industry is at the mercy of US regulators, work is being done in this country to address the ballast water issue.

“Canada is now about to begin its regulatory process for ballast water regulations. We are really hoping Canada can be a leader in harmonizing ballast water regulations in North America. It’s well positioned to do that now that we’ve seen the US Coast Guard example, the EPA’s example. We’re hoping the Canadian regulatory framework will be the harmonizing effort for all the agencies in North American waters,” he explains.

Lewis-Manning says the work has already begun. A discussion paper on the topic has been issued and a public consultation round has already occurred. Now Transport Canada, with input from Fisheries and Oceans Canada, will begin writing the regulations. He’s expecting the framework to be fully developed with the next two years.