COUNCIL OF INDUSTRIES
P.O. BOX 70088, PT. RICHMOND, CA 94807
501(C)(3) FED ID# 94-0672760
October 4, 2017
California Air Resources Board 1001 ‘I’ Street
Sacramento, California 95812
Submitted Electronically to firstname.lastname@example.org
Comments on CARB Proposed At-Berth Regulation Amendment Concepts
Dear Ms. Csondes:
On behalf of the Council of Industries of West Contra Costa County (“COI”) and its members, I would like to thank California Air Resources Board (CARB) staff for considering comments on the proposed regulatory amendment concepts. This rule and others CARB is considering will directly impact the competitiveness of California’s maritime industry. As a result, COI submits the following thoughts on the proposed regulatory framework in the hope that CARB arrives at a rule that is flexible, predictable, and fair, in order to support the state’s environmental goals in a manner which also supports the renewed economic competitiveness of California’s maritime industry.
I. City of Richmond / Economic Impact
The Council of Industries is a business trade organization that supports and advocates for businesses in West Contra Costa County with an emphasis on supporting economic development and increased vitality of the counties’ cities.
The City of Richmond has both a public and private port area and receives non-liner ships of bulk commodities (aggregate, oils, food grade oil, logging, consumables, etc. as well as automobiles and petro-chemicals.)
The City of Richmond has long struggled with high unemployment but was invigorated with redevelopment monies until that was eliminated. The City has continued to struggle to recruit businesses to the City but the continuance and support of both the public and private port has supported the economics of the City and provided high paying jobs for local residents.
COI is deeply concerned by the proposed expansion of the At-Berth Regulation to other vessel categories. The impact to non-liner services, especially in small ports such as the City of Richmond will potentially be devastating. In the absence of the scheduled service that is the mainstay containerships, other vessel types can visit any port that provides the most cost-effective service, and the commodities they often carry are extremely price sensitive. In comparison, the hoteling emissions from non-liner ships are relatively small, in line with their much smaller auxiliary engines.
Despite being verified by CARB, the existing technologies are not mature. Making other vessel categories captive to start-up companies will create regulatory and business uncertainty in California and particularly in a City such as Richmond. Along with potential economic impacts, price sensitive break bulk, dry bulk, and ro-ro vessels could stop calling California ports. This would decimate the City of Richmond’s economic base. The bulk commodities in particular have very small profit margins and very competitive global markets.
In Richmond, some marine terminal operators are tenants of the public port and they cannot control any modification or expansion of the shoreside infrastructure that may be necessary to comply. These projects are public works infrastructure projects requiring the City and City Council’s direct involvement. Most ports in California- particularly the City of Richmond, do not have the financial wherewithal to provide the necessary shoreside infrastructure in relation to the level of maritime business that they service. This Rule should not impose new and distinct requirements on ports that would prohibit them from agreeing to manage the infrastructure or conduct their operations through a third party, either by lease or contract. CARB needs to consider the financial and economic impact that these proposed regulations will have to such cities as Richmond and provide acceptable exemptions to address this.
II. 3 Hour Rule / Visit Emissions Reduction
COI supports CARB’s proposal to eliminate the 3-hour rule. The 3-hour rule created substantial compliance problems due to its lack of accommodation for many factors outside the ocean carrier or terminal operator’s control. In its place, CARB is proposing to measure compliance on an individual vessel basis. In concept, the proposal provides an opportunity to simplify compliance and reporting. However, staff has also proposed an, as yet undefined, emission reduction threshold for each visit. COI is concerned that, depending on how it is structured, such a threshold would duplicate the problems of the existing 3-hour rule through the creation of a variable connection window requirement. This threshold, which would vary by vessel by visit, would be far harder to administer. We ask that the recommendations made by PMSA in their August 4, 2017 letter to CARB be considered.
III. Berthing Time Defined
COI appreciates that CARB staff is revisiting the definition of berthing time. In order to address the many issues that have been discussed, COI supports PMSA proposed definition:
“Berthing Time” (or Visit) means the period that begins when clearance to work the vessel is granted by Customs and Border Protection (CBP), or other governmental agency, and the gangway is down and safety nets secured. Berthing Time (or Visit) ends when the departure Pilot assumes navigational assistance.
IV. Updated Baseline
CARB staff has proposed updating the hypothetical baseline from Tier 0 to Tier 1. COI opposes this approach. Changing the baseline ignores the reductions that industry has achieved. In addition, measuring from a hypothetical baseline rather than a simpler metric such as emissions reduced or hours connected needlessly complicates reporting. Finally, because the At-Berth regulation is an operational control measure, it should not set different operational controls for different vessels. It will complicate compliance and create confusion.
V. Exemptions & Exemption Fees
COI supports the idea of providing exemptions from controlling emissions in some cases
Fees should not be assessed for actions that ocean carriers do not have discretion over. For example an exemption for both commissioning and re-commissioning of vessels, other mandated activities, or those outside the ocean carrier’s control such as power failures at the portside.
Fees should be moderated to reflect the dynamic nature of the industry and the necessary fleet changes and changes in world-wide trade flows, for example inability to connect to shoreside power, unavailability of of alternative technologies like bonnet systems
If CARB retains a “fleet average” approach as recommended, CARB should explore the use of the “fee exemption” as means of addressing the same connections issues by allowing the use of the fee to remove the applicable visit from the fleet average calculation.
VI. Shared Responsibility
These amendments must also be mindful of the fact that the largest and most glaring obstacle to compliance at present is not a lack of preparation by ocean carriers, or operating restrictions by terminals and stevedores, but it is the inadequate infrastructure necessary to meet compliance with the existing rule. Most vessels in bulk service are not prepared for connecting to shoreside power as there are many different international owners and vessel types that are not updated with the essential equipment.
Before trying to write a rule to address the many variable market dynamics of the ever-changing maritime industry, CARB should identify the fundamental responsibilities of infrastructure. Shoreside electrical infrastructure is public infrastructure constructed and owned by the City of Richmond and either operated directly by the City, as well as a marine terminal subject to a lease. It would be a substantial investment for the private terminals to add the necessary infrastructure for shoreside power. The significant cost for both the Public and Private terminals within the City of Richmond needs to be addressed.
As every port and every marine terminal within a port is unique, the infrastructure issues will need to be resolved case-by-case. To that end, CARB, in conjunction with the ports and maritime industry, should assess the need for additional infrastructure at California ports to address the ability of ocean vessels to meet future compliance levels. Such an assessment would also inform whether the shift to 100% compliance by 2022 is achievable.
VII. Alternative Technologies
The use of alternative technologies should be viewed as a way to accommodate vessel redeployment or vessels not already outfitted for shoreside electrification equipment. The first goal of the regulation should be to ensure that City ports- such as Richmond- have the financial ability to provide sufficient infrastructure in their ports. Failure to provide sufficient shoreside infrastructure should not result in the ocean vessels facing non-compliance.
VIII. Economic Analysis & Cost effectiveness
COI believes that it is important that CARB conduct a thorough economic analysis and evaluation of cost-effectiveness of the proposed rule. The escalation in costs for the proposal will be significant and in excess of the criteria to make this a regulation of significant economic impact to Cities – such as Richmond, Counties and the State. Tens of millions of dollars will need to be spent to add infrastructure, cable management systems, or alternative control technologies. CARB needs to consider the cost and financial impact on Cities such as Richmond that continues to struggle with a balanced budget.
Cargo has been diverted from west coast ports for the past decade as evidenced by declining market share and strong growth of east coast and gulf coast ports (see attached chart). This is especially important because CARB’s economic projections of future container growth at the time of the adoption of the current At-Berth Regulation were exceptionally aggressive, and relied on assumptions that cargo through California’s container ports would double by 2020.
As part of CARB’s cost-effectiveness and economic analysis, CARB should also analyze the environmental impacts of diversion. Cargo moved through east coast and gulf coast ports will have a higher greenhouse gas footprint than cargo moved through west coast ports. It is important that any regulation does not reduce California greenhouse gas emissions by increasing them elsewhere. Any proposal resulting in cargo diversion would cause California to lose twice: economically and environmentally. Diversion is even more likely for non-containerships.
For all of these reasons, COI hopes that CARB will start the first working group meeting on the economic implications that CARB staff previously proposed as soon as possible. COI and its members plan to be active members in that working group and any others that CARB convenes on this regulation.
IX. “Every Vessel” Standard and “Up To 100%” Goals and Aspirations
COI would recommend that instead of establishing this standard out of the gate, that the final goal for these proposals should initially be listed as “up to 100%” exactly as contemplated by the Board’s direction to staff. This will give CARB staff, industry, ports, and the public the opportunity to talk about what the most realistic regulatory standards should actually be during the rule development process.
Again, COI and its members wish to thank CARB staff for taking the time to discuss these issues. The COI is committed to work with CARB staff to ensure that this rulemaking process is done as thoroughly and thoughtfully as possible and with the most efficient and cost-effective results. The complexity of the issues will require further significant discussions. COI will meet with CARB at any time to discuss these issues at length. If you have any questions, please contact me (510)260-4820
Executive Director, Council of Industries
cc: COI BOARD