California Vessel Fuel Standard Violations - $299,500 Fine

April 2013

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The California Air Resources Board (ARB) has been able to enforce the Regulation on Fuel Sulphur and Other Operational Requirements for Ocean-Going Vessels within California Waters and 24 Nautical Miles of the California Baseline since 1 December 2011. (See earlier website article: California - Enforcement of Vessel Fuel Standards up to 24 Miles from Coast)

The list of case settlements on the California ARB website (http://www.arb.ca.gov/enf/casesett/casesett.htm) shows that alleged violations of vessel fuel standard regulations are investigated on a very regular basis: A succession of settlements in recent months record fines of anywhere between $4,500 and $50,000 for “failure to operate on compliant distillate fuel upon entry into Regulated California Waters”. (In each case, however, ARB recorded that the companies involved had taken “prompt action after being notified of these violations and under ARB’s supervision began operating in a compliant fashion”.) 

One case which stands out is recorded in a Settlement Agreement and Release dated February 2013 in which penalties totalling $299,500 were agreed for alleged violations. The vessel in question allegedly failed to complete fully regulatory operational requirements on 34 occasions. In particular, it was alleged that the vessel failed to perform the required switch-over to low-sulphur distillate fuels for its main and boiler engines before entering regulated waters. 

The total penalty of $299,500 was agreed between the parties, calculated as follows:

  • $238,000: $7,000 per day for 34 days of alleged violation
  • $45,500: equivalent to the Non-Compliance Fee (the figure an owner/operator/charter can elect to pay instead of performing a fuel switch-over, for each port visit, but should be paid before leaving port) 
  • $16,000: believed to be the fuel cost saving made by the shipping company by not performing the fuel switch over.

 (The Settlement and Release document records the fact that the company assisted ARB fully in the investigation.)

The settlements show that the California ARB is taking its enforcement obligations very seriously. A fine approaching $300,000 (in a case where owners assisted in the investigation process) should serve as a salutary reminder of the importance of compliance.

 

Article by Naomi Cohen (naomi.cohen@simsl.com)