2024-11189. Investigation Into Conditions Affecting United States Carriers in Connection With Canadian Ballast Water Regulation in the United States/Canada Great Lakes Trade

AGENCY:

Federal Maritime Commission.

ACTION:

Notice of investigation and request for comments.

SUMMARY:

The Federal Maritime Commission (Commission) has initiated an investigation into conditions created by the Government of Canada (Canada) in connection with regulation of ballast water management systems that may adversely affect the operation of United States carriers in the United States/Canada Great Lakes trade.

DATES:

Submit comments on or before June 21, 2024.

ADDRESSES:

You may submit comments, identified by Docket No. FMC-2024-0008, by the following method:

Federal eRulemaking Portal: Your comments must be written and in English. You may submit your comments electronically through the Federal Rulemaking Portal at www.regulations.gov. To submit comments on that site, search for Docket No. FMC-2024-0008 and follow the instructions provided.

FOR FURTHER INFORMATION CONTACT:

For questions regarding submitting comments or the treatment of any confidential information, contact David Eng, Secretary; Phone: [phone]; Email: [e-mail].

SUPPLEMENTARY INFORMATION:

I. Introduction

Based on available information, it appears that conditions created by the Government of Canada (Canada) in connection with regulation of ballast water management systems may adversely affect the operation of United States carriers in the United States/Canada Great Lakes trade, in particular the carriers operating vessels that may become subject to regulation in September 2024, within the meaning of 46 U.S. Code, chapter 423 (Foreign Shipping Practices) (46 U.S.C. 42301-307). Title 46 U.S.C. 42302 authorizes the Federal Maritime Commission (Commission) to investigate these conditions, and chapter 423 authorizes the agency to take action in response.

II. Summary of Apparent Conditions

In 2020, the Lake Carriers Association (LCA) filed a petition with the Commission as to pending Canadian regulation of ballast water discharge on the Great Lakes. See FMC Docket No. 20-10, P1-20—Petition of the Lake Carriers' Association Pursuant to Section 19 of the Merchant Marine Act, 1920. LCA's petition alleged that Canadian regulation scheduled to take effect in September 2024 would create conditions unfavorable to shipping by requiring U.S. vessels to install new ballast water management systems. LCA argued that this would impose a severe burden while offering negligible environmental benefits, since the relevant U.S. carriers (Lakers) take in but do not discharge ballast water in Canadian waters. The petition asked the Commission to investigate and adopt its own regulations in response. The Commission opened an investigation under 46 U.S. Code, chapter 421 (Regulations Affecting Shipping in Foreign Trade). See FMC Docket No. 20-10. In that Chapter 421 proceeding, the FMC sought and received comments, including from the Government of Canada. See FMC Notices, 85 FR 37453 (June 22, 2020), 87 FR 6173 (February 3, 2022); Comments of the Embassy of Canada, Government of Canada, Docket No. 20-10 (Doc. No. 3) (July 22, 2020).

Since at least 2020, the U.S. Environmental Protection Agency (EPA) has been engaged in rulemaking to consider similar regulation. See Vessel Incidental Discharge National Standards of Performance, 85 FR 67818 (Oct. 26, 2020) (to be codified in 40 CFR part 139); Supplemental Notice, 88 FR 71788 (Oct. 18, 2023). The EPA's October 2023 Supplemental Notice in that rulemaking indicates that the agency is considering issuing a final rule that is less restrictive than the regulation due to take effect in Canada, as it would require the type of ballast water systems at issue only for covered vessels built in the future. See88 FR 71803-04 (explaining differences between proposed regulatory option and relevant Canadian regulation); id. at 71,808 (“EPA proposes to define a New Laker as a bulk carrier that operates exclusively on the Great Lakes and that is constructed after the effective date of [U.S. Coast Guard] regulations promulgated pursuant to [Clean Water Act] section 312(p)(5)(A)(i)”).

In February 2024, the LCA filed a public letter in the Commission's Chapter 421 proceeding. See Docket No. 20-10 (Doc. 8) (Feb. 13, 2024). The letter urged the Commission to move forward promptly. The LCA emphasized that its members' Lakers would have to prepare to comply with the stricter Canadian rules before the compliance date of September 8, 2024, even though the EPA was unlikely to require them to meet the stricter standards. Id. At 2-3. In addition, the letter stated that these U.S.-flagged Lakers had been effectively prevented from applying for an exemption or extension from the Canadian regulation, because relevant procedures were not expected to be in place prior to July 2024, despite the impending compliance date. Id. At 2, 4. The letter confirmed that only five of the existing U.S. Lakers would be affected by the regulation in September 2024 (one post-2008 vessel already has the required equipment); the approximately 50 other U.S. Lakers were built prior to 2009. Id. Attachment C. However, the LCA argued that the five post-2008 Lakers would be compelled either to install the required equipment, a “multimillion dollar investment” that they might well need to remove later in light of changing U.S. requirements, or to “walk away from the business.” Id. At 4.

In light of the above, the Commission will, on its own motion, open an investigation under 46 U.S. Code, Chapter 423 (Foreign Shipping Practices). See46 CFR part 555. In particular, the Commission will investigate whether the laws, rules, policies, or practices of Canada result in conditions that “adversely affect the operations of United States carriers in United States oceanborne trade” and that “do not exist for foreign carriers of [Canada] in the United States under the laws of the United States.” 46 U.S.C. 42302(a). Such conditions may exist here, in view of the LCA's allegations that U.S. carriers will suffer significant adverse effects from the impending Canadian regulation, but Canadian carriers operating in the United States are not subject to comparable requirements under U.S. law. Under 46 U.S.C. 42302(c), the Commission is to complete its investigation and render a decision within 120 days after it is initiated.

If the agency concludes that the standard of section 42302(a) is met, it is authorized to take certain actions to encourage remediation of those conditions. Specifically, the Commission may take actions “against any foreign carrier that is a contributing cause, or whose government is a contributing cause, to those conditions.” 46 U.S.C. 42304(a). Potential actions include imposing limits and/or fees on Canadian-flagged vessels that visit U.S. ports and requesting that the U.S. Department of Homeland Security and the U.S. Coast Guard refuse clearance and deny entry of such vessels into the U.S., or detain such vessels. See46 U.S.C. 42304, 42305. Any such fees could be substantial, as they are authorized by law at a level up to $2,559,636 per voyage. See46 CFR 506.4. Under section 42304(b), the Commission “may consult with, seek the cooperation of, or make recommendations as to other appropriate agencies of the United States government” prior to taking such action. When the Commission initiates a Chapter 423 investigation, it will notify the U.S. Secretary of State and may request that the Secretary “seek resolution of the matter through diplomatic channels.” 46 CFR 555.7. Before any action is taken under 46 U.S.C. 42304 or 42305, the relevant determination is submitted for Presidential review, within 10 days of receipt, under 46 U.S.C. 42306.

At this initial stage of the investigation, the Commission will focus on providing a route for interested parties, including the Government of Canada, as well as Canadian carriers operating in the Great Lakes trade, to provide information, perspectives, and proposed solutions.

III. Investigation and Initial Request for Comments

The Commission has determined that the above situation meets the threshold requirements for consideration under the relevant statutory and regulatory authority. See46 U.S.C. 42302; 46 CFR 555.3, 555.5. The Commission has therefore determined to initiate an investigation into whether the situation has created conditions that adversely affect the operations of United States carriers as described above. See46 U.S.C. 42302; 46 CFR 555.5, 555.6. To that end, the Commission has designated the General Counsel to lead an investigation into the conditions and to prepare a report on the investigation's findings and recommendations for Commission consideration.

Interested persons are requested to submit written comments containing arguments, experiences, and/or data relevant to the above-described conditions, with a particular focus on the situation of vessels that will become subject to the Canadian regulation described above in September 2024. It would be especially helpful for the agency to receive comments addressing what options exist for carriers to seek an exemption from the Canadian regulations going into effect in September 2024, and whether any such processes differ based on whether the carrier is a U.S. carrier or a Canadian carrier.

The Commission's jurisdiction under 46 U.S.C. 42302 is broad, and the agency welcomes comments not only from the Government of Canada, but also from container shipping interests, bulk cargo interests, vessel owners, individuals and groups with relevant information on commercial and environmental considerations, and anyone else with relevant information or perspectives on this matter.

As the Commission proceeds with this investigation, it may determine to request additional comment or gather information through other means as authorized under 46 U.S.C. 42303 and 46 CFR 555.5, 555.6.

By the Commission.

Dated: May 16, 2024.

David Eng,

Secretary.