United States: The Evolving Ballast Water Conundrum

Last Updated: March 21 2014
Article by Jonathan K. Waldron, Jeanne Grasso and Patricia M. O'Neill

The U.S. Environmental Protection Agency ("EPA") recently issued long-awaited guidance regarding the coordination and interplay between the compliance date extensions the U.S. Coast Guard is issuing for ballast water management discharge standards and the EPA's approach to the same under the new Vessel General Permit for Discharges Incidental to the Normal Operation of Vessels ("2013 VGP"). Despite the Coast Guard's authority—and willingness—to grant extensions to its implementation schedule, the EPA confirmed that the implementation date for the 2013 VGP ballast water management standards would not be extended to match those granted by the Coast Guard. While the Coast Guard and EPA maintain a purportedly collaborative approach to addressing ballast water management challenges, the EPA's recent policy represents a split between the co‑regulators' respective enforcement approaches. As such, the EPA's divergence with the Coast Guard's policy means that even with a Coast Guard extension, vessel owners/ operators will not be in compliance with the 2013 VGP, unless they either install a Coast Guard-authorized Alternative Management System ("AMS"), which may need to be replaced in five years, or they do not discharge ballast water in a U.S. port, thus creating an untenable conundrum for those desiring to be in compliance.

By way of background, on June 21, 2012, the Coast Guard's Ballast Water Discharge Standard Final Rule went into effect, creating new compliance requirements for U.S.-flag and foreign-flag vessels equipped with ballast tanks operating in U.S. waters. In order to discharge ballast water into U.S. waters, vessels are required to use an approved ballast water management method in accordance with a phased-in schedule based on their ballast water capacity. Vessels have five options to comply, none of which are likely practical at this time: (1) installing a Coast Guard type-approved ballast water management system ("BWMS"); (2) installing an AMS; (3) using water from the U.S. public water system; (4) using shoreside reception facilities; or (5) not discharging ballast water in U.S. ports. Alternatively, vessel owners and operators may request from the Coast Guard an extension to the implementation schedule under certain conditions as there are no Coast Guard type-approved BWMSs—and no guaranty that the AMSs on the Coast Guard's authorized list will ultimately be type-approved.

The other part of the ballast water compliance equation is the EPA's 2013 VGP, effective December 19, 2013, which has its own ballast water discharge standards that are similar, but not identical, to the Coast Guard's standards. In response to industry requests for the EPA to delay its implementation schedule as did the Coast Guard, the EPA issued an "Enforcement Response Policy for EPA's 2013 Vessel General Permit" on December 27, 2013. Unlike the Coast Guard, the EPA refused to extend the implementation date for the 2013 VGP ballast water management requirements to match the extensions granted by the Coast Guard, but rather took a "low enforcement priority approach," leaving vessel owners/ operators in a compliance conundrum. Thus, despite being in compliance with the Coast Guard requirements, vessel owners/ operators would not be in compliance with the 2013 VGP.

To qualify for the EPA's "low enforcement priority policy," vessel owners/ operators must have received an extension from the Coast Guard and must be in compliance with all provisions of the 2013 VGP. In exercising its enforcement discretion, the EPA has stated that it will consider, among other factors, that there is no Coast Guard type-approved technology available. The EPA further explained that although the Coast Guard's decision to grant an extension of the implementing regulatory schedule for the required technology on a particular vessel will be considered by the EPA in enforcement decisions, it is not binding.

Regarding EPA enforcement, where a vessel has received an extension from the Coast Guard and is in compliance with all other provisions of the 2013 VGP except the ballast water discharge limits, the EPA may "take into account" the circumstances under which the Coast Guard issued the extension. In these circumstances, the EPA will "consider such violations of the 2013 VGP ballast water numeric discharge limit a low enforcement priority." The enforcement policy, however, does not apply if there are other VGP non-compliances (without further elaboration) or to situations of "grossly excessive ballast water discharges or those that may present an imminent and substantial endangerment, criminal violations..." "Grossly excessive ballast water discharges" and "imminent and substantial endangerment" clauses are not defined in the policy letter and present even more ambiguity as to what circumstances would lead the EPA to enforce violations of the 2013 VGP.

The EPA's approach here, and failure to act consistent with the Coast Guard, leaves vessel owners/operators with a few options, none of which are desirable: (1) install a Coast Guard authorized AMS, which may need to be replaced in five years if it does not get Coast Guard type-approval in the interim; (2) apply for an individual National Pollutant Discharge Elimination System ("NPDES") permit for each vessel as an alternative to the 2013 VGP, which could take months and be extremely costly while the EPA sorts out how it will handle such applications as EPA regions typically issue individual permits for land-based facilities for coverage in that particular region; or (3) enter into a consent decree following a violation of the 2013 VGP, which would set forth requirements for compliance going forward, but subjecting the vessel owner/operator to possible administrative, civil, or even criminal sanctions.

In summary, the EPA enforcement policy creates a conundrum for vessel owners/operators seeking a viable compliance option. Despite being granted an extension from the Coast Guard, a vessel owner/ operator still finds itself in violation of the EPA's 2013 VGP, and is therefore subject to potential enforcement by the EPA and possible citizen suits. Non-compliance could also have significant negative commercial implications if considered in charterer vetting inspections and vessel evaluations. Noncompliance could also lead to possible violations of existing charter party provisions or other commercial agreements that do not allow knowing or intentional regulatory or other violations. And, finally, non-compliance could pose issues with respect to insurance coverage and disclosures for publicly traded companies. While the EPA claims that VGP violations will be a low priority, the bottom line is that low or non-enforcement does not equal compliance—a conundrum indeed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jeanne Grasso
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