EPA to Begin Enforcing New Low Sulfur Fuel Standards for Vessels

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EPA is increasing enforcement of vessel pollution cases—specifically violations of fuel sulfur standards—in the North American and U.S. Caribbean Emissions Control Areas (“ECAs”), as demonstrated through its recent release of the “EPA Penalty Policy for Violations by Ships of the Sulfur in Fuel Standard and Related Provisions.”  This policy outlines how EPA will calculate penalties assessed for violations of Act to Prevent Pollution from Ships, the law that implements MARPOL, Annex VI.  The release of this policy coincides with the December 31, 2014 significant reduction in fuel sulfur content requirements – from 1.00% to 0.10%.  Fuel sulfur standards apply to ships operating in ECAs, and penalties assessed for violations of these standards are subject to an economic benefit component and a gravity component.  This two components are typical of EPA penalty assessments, and are assessed by EPA as it negotiates settlements.

The economic benefit component is based on an equation that takes into account cost of compliant fuel (fuel that has 0.10% sulfur) and noncompliance fuel.  EPA’s BEN model is used if the penalty is paid more than one year after the violation.  BEN calculates the savings a violator recognized from its noncompliance, incorporating the time value of money.

The gravity component takes into account “the nature, circumstances, extent and gravity of the violation, culpability of the violator, history of past violations, ability to pay, and other matters as justice may require.”  As shown in Table 3 of EPA’s Penalty Policy, the higher the sulfur content in the noncompliant fuel, the higher the gravity component of the penalty.  In its discussion of the gravity component, EPA also lists recordkeeping violations (Section II.B.ii.). Recordkeeping violations are often the low-hanging fruit in shipping enforcement cases.  This bulleted list is a concise summary—a quick reference—that ship operators  can easily, and should, review to ensure compliance of their fleet.