BILL ANALYSIS                                                                                                                                                                                                    Ó




                   Senate Appropriations Committee Fiscal Summary
                            Senator Kevin de León, Chair


          SB 793 (Lara) - Air pollution: oceangoing vessels.
          
          Amended: April 1, 2013          Policy Vote: T&H 11-0
          Urgency: No                     Mandate: No
          Hearing Date: May 23, 2013      Consultant: Mark McKenzie
          
          SUSPENSE FILE. AS PROPOSED TO BE AMENDED.

          
          Bill Summary: SB 793 would specify that, pursuant to existing  
          "at-berth" regulations, a vessel exceeding hours of service  
          limitations because testing and inspection of vessel equipment  
          have not validated safety shall be subject to minimum allowable  
          penalty rates if repairs necessary to complete the inspection  
          have been ordered or scheduled at the earliest practicable time.  
           The bill would require the California Air Resources Board (ARB)  
          to consider circumstances beyond the control of a vessel fleet  
          if, upon initial visit to a port, ARB finds that equipment  
          testing compliance efforts are affected by delays in  
          construction, technical issues, and requirements of third  
          parties.  

          Fiscal Impact: 
              Potential loss of penalty revenue, to the extent ARB must  
              charge the minimum allowable fees for exceeding hours of  
              operation under specified circumstances.

              Unknown estimated costs of up to $250,000 to update  
              regulations to update definitions, determine what  
              circumstances and technical issues that may be sufficient to  
              cause a failure of compliance under which minimum penalties  
              would apply.

          Background: In December 2007, ARB adopted a regulation to reduce  
          emissions from diesel auxiliary engines on certain vessels  
          berthed at California ports (Airborne Toxic Control Measure for  
          Auxiliary Diesel Engines Operated on Ocean-Going Vessels  
          At-Berth in a California Port regulation, otherwise known as the  
          "at-berth" or "cold-ironing" regulation).  The at-berth  
          regulation applies to all container ships, passenger/cruise  
          ships, and refrigerated-cargo ships that visit the Ports of  
          Hueneme, Long Beach, Los Angeles, Oakland, and San Diego.








          SB 793 (Lara)
          Page 1



          Among other things, the at-berth regulation: 
           Requires vessel fleet operators visiting California ports to  
            reduce at-berth emissions by either turning off auxiliary  
            engines and connecting to shore-based power, or using  
            alternative control techniques that achieve equivalent  
            emission reductions.  
           Requires that by January 1, 2014, at least 50 percent of a  
            vessel fleet visits to a port meet operational time limits, as  
            follows:  a vessel may operate its auxiliary diesel engines  
            for up to three hours if the vessel transfers the engines to  
            shore-based power, or up to five hours if the vessel does not  
            connect to shore-based power. 
           Requires a vessel fleet's onboard auxiliary diesel engine  
            power generation while docked at berth to be reduced by at  
            least 50 percent by January 1, 2014.
           Requires fleet operators to meet a 70 percent threshold for  
            both of these requirements by 2017 and to meet an 80 percent  
            threshold by 2020.
           Provides exemptions from limits on auxiliary diesel engine  
            hours of operation in cases of specified emergency events that  
            affect the provision of shore-based power.
           Imposes penalties on vessel fleet operators if these  
            thresholds are exceeded.

          Upon an initial visit to a California port, each ship must  
          undergo a "commissioning" process of review and inspection of  
          the shore power settings on-board a vessel to ensure  
          compatibility with land-side infrastructure and to ensure that  
          minimum standards are met.  The commissioning process has been  
          underway as fleet operators invest in capital improvements to  
          make vessels capable of connecting to external power sources and  
          ports have installed shore-side power infrastructure.  ARB  
          indicates that 60 berths are operational with shore-side power  
          to date, and expects another 34 berths to have that capability  
          in 2013.  As a result, there will be shore-side infrastructure  
          at all ports in California by January 1, 2014, when the at-berth  
          regulations are fully implemented.

          Proposed Law: SB 793 would specify that a ship that is equipped  
          to receive shore power but fails the commissioning process on  
          its initial visit would be deemed compliant with the limitations  
          on auxiliary diesel engine hours of operation if all of the  
          following conditions apply:  








          SB 793 (Lara)
          Page 2


           The vessel operator has made the necessary effort to complete  
            testing and inspection.
           The vessel operator has notified ARB.
           The vessel operator has properly recorded the testing and  
            validation procedures, detailing any lack of compatibility  
            that prevents connecting to shore-side power and any attempted  
            remedies, as specified.
           The vessel operator or terminal operator has ordered or  
            scheduled any necessary repairs for the earliest possible  
            time, and no later than the next visit to a berth equipped  
            with shore-side power.

          Staff Comments: This bill is intended to provide fleet operators  
          with relief from penalties for exceeding auxiliary diesel  
          operational time limits specified in the at-berth regulations in  
          cases where a vessel is equipped to receive shore power but  
          fails the commissioning process.  In those circumstances, the  
          bill would allow that visit to count as a compliant visit for  
          purposes of determining a fleet's minimum requirements, and any  
          onboard auxiliary diesel power generation would be excluded from  
          the fleet's power reduction calculations.  ARB indicates that  
          there have been no known problems with testing and validation of  
          vessels to date, and that if problems do occur after January 1,  
          2014, it has the flexibility to exempt from penalties vessels  
          that exceed operational time limits in appropriate circumstances  
          where fleet operators are making a good faith effort at  
          compliance.  Shipping companies would prefer to have a concrete  
          exemption in statute and regulations to provide more certainty  
          of relief.

          SB 793 would require ARB to revise the at-berth regulatory  
          package.  This would entail: initial consultations and workshops  
          with port and fleet staffs, and drafting of regulatory changes  
          in 2013-14; significant workload to calculate the impacts on  
          emissions, health risks, and quantification of economic and  
          environmental impacts in 2014-15; and additional workload to  
          finalize the amended regulations through the Office of  
          Administrative Law, submit SIP revisions based on the amended  
          regulation, and work with the US Environmental Protection Agency  
          to seek federal approval in 2014-15.  Ongoing costs would be  
          associated with implementation and enforcement of the changes.   
          Staff notes that since the rulemaking process is unlikely to be  
          completed until at least a year or more after the operative date  
          of the bill, it does not appear that the exemption provided in  








          SB 793 (Lara)
          Page 3


          the bill would be achievable by January 1, 2014, when the  
          penalty phase of the current regulations is implemented.

          Recommended Amendments: Staff recommends that codified  
          legislative intent on page 3, lines 19-27, be removed from  
          statutory provisions and inserted after line 3 on page 3.


          PROPOSED AMENDMENTS would:
                 Delete substantive parts of the bill, as contained in  
               subdivisions (a), (c), and (f) of proposed Section 39633 of  
               the Health and Safety Code
                 Insert additional legislative findings and declarations  
               that specify: (1) the bill is consistent with the language  
               and intent of the "at berth" regulations and legislative  
               intent in the bill; (2) the bill implements the SIP; and  
               (3) that existing regulations include a process whereby a  
               ARB may consider circumstances beyond the fleet's control  
               that may result in delayed compliance.
                 Require ARB to consider circumstances beyond the control  
               of a vessel fleet if, upon initial visit to a port, ARB  
               finds that compliance efforts are affected by delays in  
               construction, technical issues, and requirements of third  
               parties.
                 Specify that a vessel exceeding hours of service  
               limitations because testing and inspection of vessel  
               equipment have not validated safety shall be subject to  
               minimum allowable penalty rates if repairs necessary to  
               complete the inspection have been ordered or scheduled at  
               the earliest practicable time.